Issue Papers

Team II – Foreign Schools

Issue #1: United States Generally Accepted Accounting Principles 

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

Issue #2: Compliance audits...................................... 14

Issue #3: Definition of a foreign school......................... 25

Issue #4: Non-profit status for foreign schools.................. 33

Issue #5: Public foreign schools and financial responsibility.... 35

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

countrywide basis................................................. 39

Issue #7: Deferments for eligible non-citizens................... 41

Issue #8: Non-degree programs.................................... 42

Issue #9: New eligibility criteria for foreign medical schools... 49

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

veterinary schools in other countries............................. 72

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

foreign nursing schools, and foreign veterinary schools in other 

countries......................................................... 76

Issue #12: Eligibility requirements for foreign veterinary schools

.................................................................. 78

Issue #13: Eligibility requirements for foreign nursing schools.. 81

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

certified separately from larger school........................... 90
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: No

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. 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.

Updated information since 1/11-14 meeting:

The revised draft regulatory language would:

• As with the last draft, waive the financial audit submission 

requirement for the 289 foreign institutions that received 

less than $500,000 in U.S. Title IV program funds during the 

institution’s most recently completed fiscal year, unless an 

institution is in its initial provisional period of 

participation;

• Allow that the combined 82 public and non-profit foreign 

institutions that received at least $500,000 in U.S. Title IV 

program funds, but less than $3,000,000 in U.S. Title IV 

program funds during the institution’s fiscal year preceding 

the audit period, may submit audited financial statements 

prepared in accordance with the generally accepted accounting 

principles (GAAP) of the institution's home country. The 

draft would eliminate the provision requiring all public 

institutions controlled by the same government entity to 
4

submit audited financial statements translated to meet the 

requirements for domestic institutions if there is an unpaid 

liability due to the Secretary by any public institution 

controlled by the same government entity;

• Require that the 28 institutions that received $3,000,000 or 

more in U.S. Title IV program funds, and all institutions in 

an initial provisional period of participation must submit 

annually in English audited financial statements prepared in 

accordance with generally accepted accounting principles of 

the institution’s home country along with a financial 

statement for the same period that has been converted to U.S 

GAAP. 

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 

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

9 statements may be prepared under the auditing standards and 

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

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

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

13 the institution must submit its audited financial statement in 

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

15 standards of financial responsibility contained in this section, or 

16 qualify under an alternate standard of financial responsibility 

17 contained in this section.

18 * * * * *

19 §668.23 Compliance audits and audited financial statements.

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

21 the term “independent auditor” refers to an independent certified 
5

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

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

3 Standards qualification and independence standards, including 

4 standards related to organizational independence.

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

6 HEA program must at least annually have an independent auditor 

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

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

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

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

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

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

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

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

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

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

17 submit annually to the Secretary its compliance audit and its 

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

19 day of the institution's fiscal year.

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

21 considers the compliance audit and audited financial statement 

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

23 conducted in accordance with the Office of Management and Budget 

24 Circular A–133, “Audits of States, Local Governments, Institutions 

25 of Higher Education and Other and Non-Pprofit Organizations”; Office 

26 of Management and Budget Circular A–128, “Audits of State and Local 

27 Governments”, or the audit guides developed by and available from 

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

29 applicable to the entity, and provided that the Federal student aid 
6

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

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

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

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

5 (b) [Compliance audits for institutions.]

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

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

8 Secretary to make a determination of financial responsibility, an 

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

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

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

12 Secretary deems necessary to make that determination. Financial 

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

14 basis in accordance with generally accepted accounting principles, 

15 and audited by an independent auditor in accordance with generally 

16 accepted government auditing standards issued by the Comptroller 

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

18 Office of Management and Budget Circular A–133, “Audits of States, 

19 Local Governments, Institutions of Higher Education and Other Non20 Pprofit Organizations”, ; Office of Management and Budget Circular 

21 A–128, “Audits of State and Local Governments”; or in audit guides 

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

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

24 these financial statements, the institution must include a detailed 

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

26 entity as set forth in the Statement of Financial Accounting 

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

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

29 parties and a level of detail that would enable to Secretary to 
7

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

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

3 related entity including the nature and amount of any transactions 

4 between the related party and the institution, financial or 

5 otherwise, regardless of when they occurred.

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

7 requested by the Secretary in determining whether an institution is 

8 financially responsible, the Secretary may also require the 

9 submission of audited consolidated financial statements, audited 

10 full consolidating financial statements, audited combined financial 

11 statements or the audited financial statements of one or more 

12 related parties that have the ability, either individually or 

13 collectively, to significantly influence or control the institution, 

14 as determined by the Secretary.

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

16 institution must submit—

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

18 generally accepted accounting principles of the institution's home 

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

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

21 fiscal year; or

22 (ii) Audited financial statements translated to meet the 

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

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

25 its most recently completed fiscal year.

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

27 institution must disclose in a footnote to its financial statement 

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

29 program funds that the institution received during the fiscal year 
8

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

2 accordance with §600.5(d).

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

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

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

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

7 annually an audited financial statement. This financial statement 

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

9 accepted accounting principles, and audited by an independent 

10 auditor in accordance with generally accepted government auditing 

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

12 Department of Education's Office of Inspector General.

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

14 servicer that has a compliance or financial statement audit 

15 conducted under this section must—

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

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

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

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

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

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

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

23 documents.

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

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

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

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

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

29 and the institution's or third-party servicer's response, the 
9

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

2 institution or servicer and instructs the institution or servicer as 

3 to the manner of repayment.

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

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

6 programs, the servicer must notify each institution under whose 

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

8 servicer must also notify every institution that contracts with the 

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

10 liability was owed.

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

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

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

14 date of the Secretary's notification, unless—

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

16 procedures established in subpart H of this part; or

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

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

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

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

21 expenditures or compliance with applicable requirements and 

22 identifies liabilities, then the Secretary may determine that 

23 deferring recourse to the surety or guarantee is not appropriate 

24 because—

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

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

27 importance of deferring collection action until completion of 

28 available appeal proceedings; or
10

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

2 assurance that recourse to that protection will be fully available 

3 through the completion of available appeal proceedings; or

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

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

6 section.

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

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

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

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

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

12 under subpart H of this part unless—

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

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

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

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

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

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

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

20 that amount is repaid in full.

21 (h) Audit submission requirements for foreign institutions.

22 (1) Audited financial statements. (i) The Secretary waives for 

23 that fiscal year the submission of audited financial statements if 

24 the institution is a foreign public or non-profit institution that

25 received less than $500,000 in U.S. title IV program funds during 

26 its most recently completed fiscal year, unless that foreign public 

27 or non-profit institution is in its initial provisional period of 

28 participation, and received title IV program funds during that year, 

29 in which case the institution must submit, in English, audited 
11

1 financial statements prepared in accordance with generally accepted 

2 accounting principles of the institution’s home country.

3 (ii) Except as provided in paragraph (h)(1)(iii) of this section, 

4 a foreign institution that received $500,000 or more in U.S. title 

5 IV program funds during its most recently completed fiscal year and 

6 any institution in its initial provisional period f participation,

7 must submit, in English, for each most recently completed fiscal 

8 year in which it received title IV program funds, audited financial 

9 statements prepared in accordance with generally accepted accounting 

10 principles of the institution’s home country along with 

11 corresponding audited financial statements that translated to meet 

12 the requirements of paragraph (d) of this section.

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

14 (h)(1)(ii) of this section, a public or private nonprofit

15 institution that received $500,000 or more in U.S. title IV program 

16 funds, but less than $1,000,000 $3,000,000 in U.S. title IV program 

17 funds during its most recently completed fiscal year, may submit for 

18 that year, in English, an audited financial statements prepared in 

19 accordance with the generally accepted accounting principles of the 

20 institution's home country, and is not required to submit the 

21 corresponding audited financial statements that meet the 

22 requirements of paragraph (d) of this section, so long as there are 

23 no unpaid liabilities due to the Secretary the institution has been 

24 notified by the Secretary that from any public institution that is 

25 controlled by the same government entity.

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

27 liability to be “unpaid” if it is a final decision of the Department 

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

29 being repaid pursuant to a repayment agreement within 180 days, 
12

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

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

3 States. 

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

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

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

7 letter to a foreign institution that identifies problems with its 

8 financial condition or financial reporting and requires the 

9 submission of audited financial statements in the manner specified 

10 by the Secretary. 

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

12 * * * * *

Statutory Language with changes from the HEOA: 

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

* * * * *

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

Notwithstanding any other provisions of this title, the Secretary 

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

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

audit of an eligible institution with regard to the financial 

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

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

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

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

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

conducted by a qualified, independent organization or person in 

accordance with standards established by the Comptroller General for 

the audit of governmental organizations, programs, and functions, 

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

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

cognizant guaranty agencies, eligible lenders, State agencies, and 

the appropriate State agency notifying the Secretary under subpart 1 

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

this clause with respect to institutions of higher education that 

are foreign institutions, and may waive such requirements with 

respect to a foreign institution whose students receives less than 

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

the audit period;

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

chapter 75 of title 31, United States Code, deeming such audit to 
13

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;
14

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: No

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. 
15

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 
16

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.

Updated information since the 1/11-15 meeting: 

The Office of Postsecondary Education will recommend to the 

Inspector General some changes in the procedures with respect to the 

audit size for both Tier One and Tier Two alternatives within the 

Foreign School Audit Guide that will ensure the samples for each 

year audited are represented of the student files at the institution 

at the 95% confidence level.

For the Tier One Alternative (impacting 289 foreign schools), we are 

recommending for each year audited, the auditor use a minimum 

student sample of 25% of the student files, however in any case, all 

samples must include 10 students or the total number of students in 

the universe whichever is less.

For a standard compliance audit under the Tier Two Alternative 

(impacting 106 foreign schools), we are recommending to the 

Inspector General an audit sample requirement that would reflect a 

95% confidence rate, as our initial proposal did not necessarily 

guarantee a high confidence rate. 

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 
17

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

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

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

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

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

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

7 submit annually to the Secretary its compliance audit and its 

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

9 day of the institution's fiscal year.

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

11 considers the compliance audit and audited financial statement 

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

13 conducted in accordance with the Office of Management and Budget 

14 Circular A–133, “Audits of States, Local Governments, Institutions 

15 of Higher Education and Other and Non-Pprofit Organizations”; Office 

16 of Management and Budget Circular A–128, “Audits of State and Local 

17 Governments”, or the audit guides developed by and available from 

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

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

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

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

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

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

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

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

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

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

28 last compliance audit.
18

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

2 conducted in accordance with—

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

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

5 Auditing Standards. (This publication is available from the 

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

7 Washington, DC 20402); and

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

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

10 Inspector General.

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

12 its compliance audit report to guaranty agencies or eligible lenders 

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

14 Affairs, or nationally recognized accrediting agencies.

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

16 servicer that administers title IV, HEA programs for institutions 

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

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

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

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

21 administration of that program for that institution.

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

23 participating institution may submit a compliance audit report that 

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

25 for all institutions with which the servicer contracts.

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

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

28 the servicer's fiscal year.
19

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

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

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

4 Veterans Affairs, or nationally recognized accrediting agencies.

5 (d) [Audited financial statements]

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

7 servicer that has a compliance or financial statement audit 

8 conducted under this section must—

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

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

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

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

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

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

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

16 documents.

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

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

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

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

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

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

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

24 institution or servicer and instructs the institution or servicer as 

25 to the manner of repayment.

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

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

28 programs, the servicer must notify each institution under whose 

29 contract the servicer owes a liability of that determination. The 
20

1 servicer must also notify every institution that contracts with the 

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

3 liability was owed.

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

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

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

7 date of the Secretary's notification, unless—

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

9 procedures established in subpart H of this part; or

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

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

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

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

14 expenditures or compliance with applicable requirements and 

15 identifies liabilities, then the Secretary may determine that 

16 deferring recourse to the surety or guarantee is not appropriate 

17 because—

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

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

20 importance of deferring collection action until completion of 

21 available appeal proceedings; or

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

23 assurance that recourse to that protection will be fully available 

24 through the completion of available appeal proceedings; or

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

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

27 section.

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

29 the Secretary's notification, under paragraph (e)(1) of this 
21

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

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

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

4 under subpart H of this part unless—

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

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

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

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

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

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

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

12 that amount is repaid in full.

13 (h) Audit submission requirements for foreign institutions.

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

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

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

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

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

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

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

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

22 requirements:

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

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

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

26 for that 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, together with an alternative compliance 

29 audit or audits prepared in accordance with paragraph (h)(2)(ii) of 
22

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

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

3 title IV, HEA program funds;

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

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

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

7 fiscal year that is performed in accordance with audit guides 

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

9 Office of Inspector General, except as noted in paragraph 

10 (h)(2)(iii) of this section;

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

12 submit an alternative compliance audit performed in accordance with 

13 audit guides developed by, and available from, the Department of 

14 Education’s Office of Inspector General, that covers a period not to 

15 exceed three of the institution’s consecutive fiscal years if such 

16 audit is submitted either no later than six months after the last 

17 day of the most recent fiscal year, or contemporaneously with a 

18 standard compliance audit timely submitted under paragraph (h)(2)(i) 

19 or (h)(3)(ii) of this section for the most recently completed fiscal 

20 year, and if the following conditions are met:

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

22 program funds for its most recently completed fiscal year;

23 (B) The institution has timely submitted acceptable compliance 

24 audits for two successive consecutive fiscal years, and following 

25 such submission, has no history of late submission since then;

26 and

27 (C) The institution is fully certified;.
23

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

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

3 fiscal year included in such audit; and

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

5 performed in accordance with audit guides developed by, and 

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

7 General.

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

9 1]. 

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

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

12 foreign institution that identifies problems with its administrative 

13 capability or compliance reporting that may require specifies 

14 whether the compliance audit to must be performed at a higher level 

15 of engagement, and may require whether the compliance audit must to

16 be submitted annually.

17 * * * * *

Statutory Language with changes from the HEOA: 

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

* * * * *

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

Notwithstanding any other provisions of this title, the Secretary 

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

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

audit of an eligible institution with regard to the financial 

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

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

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

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

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

conducted by a qualified, independent organization or person in 

accordance with standards established by the Comptroller General for 

the audit of governmental organizations, programs, and functions, 

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

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

cognizant guaranty agencies, eligible lenders, State agencies, and 

the appropriate State agency notifying the Secretary under subpart 1 
24

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;
25

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: No

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 
26

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).

Updated information since 1/11-15 meeting:

We added a cross-reference to §668.5 in draft paragraph (1)(iii) of 

the definition of foreign institution to clarify the meaning of the 

term “written arrangements.” Based on comments received from the 

non-Federal negotiators at the last round of negotiated rulemaking, 

we added an exception in draft paragraph (1)(iv) of the definition 

of foreign institution for independent research done under certain 

circumstances during the dissertation phase of a doctoral program 

from the general prohibition on enrolling students in courses 

offered by a foreign institution in the United States. In draft 

paragraph (2) of the definition of foreign institution, we added 

clarity to the paragraph by defining the term educational 

enterprise. In draft §600.54(c)(1), we clarify that written 

arrangements do not include affiliation agreements for the provision 

of clinical training. Lastly, in draft §600.54(e)(2), we removed 

the reference to first professional degree.

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.
27

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

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

3 in the FFEL programs.

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

5 eligible and participating institutions except--

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

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

8 to foreign institutions; or

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

10 identifies specific provisions as inapplicable to foreign

11 institutions schools.

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

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

14 participate in the FFEL programs actually applies for that 

15 participation. Those procedures and criteria are contained in the 

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

17 * * * * *

18

19 §600.52 Definitions.

20 The following definitions apply to this subpart E:

21 * * * * *

22 Foreign institution or foreign school:

23 (1) An institution that—

24 (i) Iis not located in a State;

25 (ii) Except as provided with respect to Has no U.S. locations, 

26 except for clinical training offered under sites of foreign medical 

27 schools in accordance with §668.55(e)(1)(ii)(h)(1), foreign 

28 veterinary schools in accordance with §668.56(a)(1)(ii)(b), or and 

29 foreign nursing schools in accordance with §600.57(a)(2), --
28

1 (A) Has no U.S. locations;

2 (iiiB) Has no written arrangements, within the meaning of §668.5,

3 with institutions or organizations located in the United States for 

4 students enrolling at the foreign institution to take courses from 

5 institutions located in the United States; and

6 (ivC) Does not permit students to enroll in any course offered by 

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

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

9 United States, except that independent research done by an 

10 individual student in the United States for not more than one 

11 academic year is permitted, if it is conducted upon completion of 

12 required coursework and during the dissertation phase of a doctoral 

13 program under the guidance of faculty, and the research can only be 

14 performed in a facility in the United States;

15 (iiiv) Is legally authorized by the education ministry, council, or 

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

17 to provide an educational program beyond the secondary education 

18 level;

19 (ivvi) Awards degrees, certificates or other recognized educational 

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

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

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

23 prepare the student for gainful employment in a recognized 

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

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

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

27 educational requirements for licensure; and 
29

1 (B) Satisfies the educational requirements, including requirements 

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

3 or

4 (2) If an educational enterprise enrolls students both within a 

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

6 eligible to receive title IV, HEA program funds attending locations 

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

8 within a State, the locations outside a State must apply be approved

9 to participate as one or more foreign institutions and must meet all 

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

11 requirements of this part. For the purposes of this paragraph, an 

12 educational enterprise consists of two or more locations offering 

13 all or part of an educational program that are directly or 

14 indirectly under common ownership.

15

16 * * * * *

17

18 §600.54 Criteria for determining whether a foreign institution is 

19 eligible to apply to participate in the FFEL programs.

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

21 eligible institution of higher education in the United States and 

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

23 institution is a public or private nonprofit educational institution 

24 thatmeets the following requirements:—

25 (a) Except for a freestanding foreign graduate medical school, 

26 foreign veterinary school, or foreign nursing school, the foreign 

27 institution is a public or private nonprofit educational 

28 institution;
30

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

2 persons who—

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

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

5 credential;

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

7 eligible educational program beyond the secondary school level in 

8 the country in which the institution is located; and

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

10 not enter into a written arrangement under which with an ineligible 

11 institution or organization provides to provide any portion of one 

12 or more of thean eligible program offered by the foreign 

13 institution’s programs. For the purposes of this paragraph, written 

14 arrangements do not include affiliation agreements for the provision 

15 of clinical training for foreign medical, veterinary and nursing 

16 schools.

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

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

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

20 located, except as provided in §668.55(h)(1), §668.56(b), 

21 §600.57(a)(2), §600.55(h)(4)(ii) and the definition of foreign 

22 institution or foreign school found in §600.51; or

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

24 covered by the legal authorization of the main campus;

25 (cd) The foreign institution pProvides an eligible education 

26 program—

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

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

29 or professional degree awarded in the United States; 
31

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

2 full credit toward the equivalent of a baccalaureate degree awarded 

3 in the United States; or

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

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

6 other recognized educational credential and prepares students for 

7 gainful employment in a recognized occupation.;

8 (ii) [See Issue Paper 8]

9 (e) For a for-profit foreign medical, veterinary or nursing school10 -

11 (1) No portion of an eligible medical or veterinary program offered

12 may be at what would be an undergraduate level in the United States; 

13 and

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

15 first professional degree or joint degree program;

16 (f) [See Issue Paper 6]

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.
32

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]

21
33

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: No

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.

Updated information since 1/11-15 meeting:

We have amended the language to reflect the fact that some countries 

may have more than one recognized entity for the purpose of making 

determinations of the nonprofit status of its institutions. Some 

negotiators suggested that the Department allow a determination of 

nonprofit status by an entity other than a recognized tax authority 

of the country. As written, this type of information would be taken 

into account by the Department; however, it would be done as part of 

an individual determination of the status of an institution. The 

Department believes that the only entities it should recognize 

across the board for making determinations of nonprofit status are 

those that are responsible for administering the country’s tax laws.

Draft Regulatory Language:
34

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;

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

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

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

10 an organization to which contributions are tax-deductible in 

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

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

13 (2) For a foreign institution—

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

15 nonprofit corporations or associations; and

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

17 country is recognized by the Secretary for purposes of making 

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

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

20 educational institution; or 

21 (B) If the no recognized tax authority of the institution’s home 

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

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

24 purposes, the foreign institution demonstrates to the satisfaction

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

26 * * * * *
35

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: Yes

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.

Updated information since 1/11-15 meeting:

Tentative agreement on this issue was reached by the committee at 

the January meetings.

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 
36

1 Secretary determines whether an institution is financially 

2 responsible based on the institution's ability to—

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

4 statements;

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

6 participates; and

7 (3) Meet all of its financial obligations.

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

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

10 considers an institution to be financially responsible if the 

11 Secretary determines that—

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

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

14 §668.172 and appendices A and B to this subpart;

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

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

17 §668.173;

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

19 is not current in its debt payments if—

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

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

22 or audit opinion; or

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

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

25 filed suit to recover funds under those obligations; and

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

27 including but not limited to—
37

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

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

3 responsible under §668.22; and

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

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

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

7 public institution to be financially responsible if the institution—

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

9 public institution by the State, local or municipal government 

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

11 legal authority to make that designation; and

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

13 government entity confirming that the institution is a public 

14 institution; and

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

16 under §668.174.

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

18 financially responsible if the institution--

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

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

21 legal authority to make that designation; and

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

23 other government entity confirming that the institution is a public 

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

25 country or other government entity; and

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

27 §668.174.

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

29 institution satisfies all of the general standards of financial 
38

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

2 does not consider the institution to be financially responsible if—

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

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

5 opinion, or the auditor expressed doubt about the continued 

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

7 Secretary determines that a qualified or disclaimed opinion does not 

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

9 or

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

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

12 requirement, or the persons or entities affiliated with the 

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

14 program requirement.

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

16 institution is not financially responsible under the standards and 

17 provisions of this section or under an alternative standard in 

18 §668.175, or the institution does not submit its financial and 

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

20 under §668.23, the Secretary may—

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

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

23 participation in the Title IV, HEA programs; or

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

25 action against the institution under the procedures established in 

26 §668.13(d).

27 * * * * *
39

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

countrywide basis

Origin: ED

Statutory cites:

Regulatory cites: To be determined

Tentative agreement: Yes

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.

Updated information since 1/11-15 meeting:

Tentative agreement on this issue was reached by the committee at 

the January meetings. Changes have been made to conform the language 

to the changes to the definition of a foreign school (see Issue 

Paper 3).

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 thatmeets the following requirements--

8 * * *

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

10 authority to provide an eligible educational program beyond the 
40

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

2 located; and

3 * * * * *

4 (df) Proof that a foreign institution meets the requirements of 

5 paragraph (1)(iii)(b) of this section the definition of a foreign 

6 institution in §600.52 may be provided to the Secretary by a legal 

7 authorization from an the appropriate government entity education 

8 ministry, council, or equivalent agency—

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

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

11 the country; or

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

13 country.
41

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: N/A

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;
42

Issue #8: Non-degree programs 

Origin: ED

Statutory cites:

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

Tentative agreement: No

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 
43

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

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.

Updated information since 1/11-15 meeting:

Team I did not reach consensus on the two issues which may have a 

significant impact on the eligibility of these programs: (1) the 

definition of what it means to “provide gainful employment in a 

recognized occupation”; and (2) the definition of a credit hour in 

regulation for Title IV purposes. We have provided information on 

these issues because the regulations resulting from these issues may 

ultimately impact the programs in question here. However, they will 

not affect the translation of credits or other measures of academic 

work by foreign institutions for purposes of determining program 

length (a measure of both weeks and credit hours), which is the 

specific issue being addressed here. As we stated previously, the 

assignment of credits or other measures of academic work by foreign 

institutions vary greatly and we do not see a way to address the 

translation of measures of academic work by a means other than 

program-by-program determinations of comparability. Therefore, no 

changes have been made other than changes to conform the language to 

the changes to the definition of a foreign school (see Issue Paper 

3).

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 
44

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 criteria—

4 * * *

5 (cd) The foreign institution Pprovides an eligible education 

6 program—

7 * * *

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

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

10 other recognized educational credential and prepares students for 

11 gainful employment in a recognized occupation.;

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

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

14 paragraph (cd)(3)(i) of this section is equivalent to at least the 

15 definition of an academic year in §668.3. 

16

17 §668.8 Eligible program.

18 * * * * *

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

20 institution offers an undergraduate educational program in credit 

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

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

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

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

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

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

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

28 degree, or an equivalent degree as determined by the Secretary; or
45

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

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

3 professional degree, or equivalent degree as determined by the 

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

5 two academic years of study.

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

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

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

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

10 regard to the Title IV, HEA programs—

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

12 instruction;

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

14 instruction; and

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

16 * * * * *

17

18 §668.9 Relationship between clock hours and semester, trimester, 

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

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

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

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

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

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

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

26 or quarter hours.

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

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

29 diploma at the completion of the school's program of education is 
46

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

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

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

4 assistance.

5
47

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—
48

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.
49

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: No

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 
50

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 

medical school curriculum, including, but not limited 
51

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))

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 
52

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.

Updated information since 1/11-15 meeting:

Clinical training

• Affiliation agreements

The requirement that a foreign graduate medical school have 

formal affiliation agreements has been moved to a paragraph 

addressing clinical training. To conform to the changes made 

to Issue 10, the draft regulatory language would 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, except for those 

locations that are not used regularly, but instead are chosen 

by individual students who take no more than two electives at 

the location for no more than a total of eight weeks. Instead 

of requiring that affiliation agreements state how the site 

will achieve various objectives, the draft regulatory language 

would require the agreements to state how those objectives 

will be addressed. (§600.56(e))

• Application requirements

Changes have been made to conform these requirements to the 

requirements for allowable locations of clinical sites, and 

affiliation agreements as follows:

The draft regulatory language would require a foreign graduate 

medical school (i.e., a freestanding foreign medical school or 

a foreign institution that includes a foreign 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, 

except for those locations that are not used regularly, but 

instead are chosen by individual students who take no more 

than two electives at the location for no more than a total of 

eight weeks. (§600.20(c)(5))

For initial certification or for recertification, a foreign 

graduate medical school (i.e., a freestanding foreign medical 

school or a foreign institution that includes a foreign 

medical school) would be required to list on the application 

to participate all educational sites, and where they are 

located, except for those locations that are not used 

regularly, but instead are chosen by individual students who 

take no more than two electives at the location for no more 
53

than a total of eight weeks. In addition, the draft 

regulatory language has been changed to clarify that, for 

initial certification or for recertification, a foreign 

graduate medical school (i.e., a freestanding foreign medical 

school or a foreign institution that includes a foreign 

medical school) would be required to indicate whether it 

offers only post-baccalaureate/equivalent medical programs, 

other types of programs that lead to employment as a doctor of

osteopathic medicine, doctor or medicine, or both.

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

A foreign graduate medical school (i.e., a freestanding 

foreign medical school or a foreign institution that includes 

a foreign medical school) would be required to provide copies 

of the affiliation agreements with hospitals and clinics that 

it is required to have under §600.55(e)(2) as a part of any 

application for initial certification or recertification to 

participate in the Title IV programs; (§600.20(a)(4)(iii) and 

§600.20(b)(3)(iii))

Definitions

The draft regulations would define a post-baccalaureate/equivalent 

medical program as a program offered by a foreign graduate medical 

school that requires, as a condition of admission, that its students 

have already completed their non-medical undergraduate studies and 

that consists solely of courses and training leading to employment 

as a doctor of medicine or doctor of osteopathic medicine. 

General

These draft regulations would move (and modify, as described) the 

following two requirements from the “Other criteria” section to the 

“General” section of §668.55:

• The requirement that a foreign graduate medical school, 

regardless of whether it is located outside or inside the 

United States, provide and require its students to complete a 

program of clinical and classroom medical instruction of not 

less than 32 months in length, that is supervised closely by 

members of the school's faculty and that is: (1) In facilities 

adequately equipped and staffed to afford students 

comprehensive clinical and classroom medical instruction; or

(2) Through a training program for foreign medical students 

that has been approved by all medical licensing boards and 

evaluating bodies whose views are considered relevant by the 

Secretary.

• The existing requirement that a foreign graduate medical 

school have graduated classes during each of the two twelvemonth periods immediately preceding the date the Secretary 

receives the school's request for an eligibility 

determination. 

The draft regulatory language would make clear that a medical 

program may include, as part of its clinical training, no more than 

two electives consisting of no more than eight weeks at a site 

located in a foreign country other than the country in which the 

main campus is located or in the United States.
54

The draft regulatory language would clarify that a foreign medical 

school must appoint, instead of employ, only faculty whose academic 

credentials are the equivalent of credentials required of faculty 

teaching in the United States. 

Admission criteria

The draft regulatory language would remove from the admission 

criteria provisions for both types of medical programs the 

requirement that students have a specific educational background. 

(§600.56(c)(1) and §600.56(c)(2))

The draft regulatory language would also remove from the admission 

criteria provisions for integrated medical programs the requirement 

that students who are U.S. citizens, nationals or permanent 

residents take the Medical College Admission Test (MCAT) no later 

than three years after admission to the program. (§600.56(c)(2))

For a school having a post-baccalaureate equivalent medical program, 

the draft regulatory language would require an institution to have 

an admission standard that students who are U.S. citizens, nationals 

or permanent residents must have not only taken the Medical College 

Admission Test (MCAT), but also have reported their MCAT score to 

the institution. (§600.56(c)(1))

Collection and Submission of data

The draft regulatory language would:

• Clarify that a foreign graduate medical school must obtain and 

submit all data these regulations required it to submit at its 

own expense; (§600.56(d))

• Require a foreign graduate medical school to make the required 

submissions of data to its accrediting agency and, in the case 

of USMLE data, the Department, by September 30 of each year. 

• Require a foreign graduate medical school to submit: (1) MCAT 

scores for all specified students admitted during the 

preceding award year; (2) the residency placement percentage 

for all specified students graduating during the preceding 

award year; and (3) USMLE scores for all specified students 

earned during the preceding award year.

• Limit the requirements for the submission of USMLE data to 

Steps 1 and 2 (CS and CK) of the USMLE (note that all foreign 

medical schools, even those that meet the exceptions to the 

75% pass rate, must submit this data).

USMLE pass rate

The draft regulatory language would limit the required 75% pass 

rate to Step 1 and Step 2 of the USMLE, making clear that a 

foreign medical school must report separately on both Step 2-

Clinical Skills (Step 2-CS), and Step 2-Clinical Knowledge (Step 

2-CK). In addition, the draft regulatory language would require 

a school to count an individual student in the denominator for 

each time the student takes Step 1, Step 2-CS, and Step 2-CK

during the year.
55

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 freestanding foreign graduate medical school, or a foreign 

17 institution that includes a foreign graduate medical school, must 

18 include in its application to participate--

19 (i) A list of all educational sites and where they are located, 

20 including all sites at which offer all or a portion of a its student 

21 receive clinical training, except those clinical sites that are not 

22 used regularly, but instead are chosen by individual students who 

23 take no more than two electives at the location for no more than a 

24 total of eight weeks program in the country in which the main campus 

25 is located, the United States, or another country,; and 

26 (ii) Whether the school offers—
56

1 (A) Only post-baccalaureate/equivalent medical programs, as defined 

2 in §600.51;

3 (B) Other types of programs that lead to employment as a doctor of 

4 osteopathic medicine or doctor of medicine; or

5 (C) Both;

6 programs offered are first professional degree programs, post7 baccalaureate/equivalent programs, or both; and

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

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

10 that meet the requirements of required under §600.55(e)(1).

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

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

13 to the Secretary for a determination that the institution continues 

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

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

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

17 application to the Secretary and must submit all the supporting 

18 documentation indicated on the application to enable the Secretary 

19 to determine that it satisfies the relevant certification 

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

21 (2) A currently designated eligible institution that participates 

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

23 determination that the institution continues to meet the 

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

25 wishes to—

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

27 the scheduled expiration of the institution's current eligibility 

28 and certification designation; 
57

1 (ii) Reestablish eligibility and certification as a private 

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

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

4 in §600.31; or 

5 (iii) Reestablish eligibility and certification after the 

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

7 public institution.

8 (3) A freestanding foreign graduate medical school, or a foreign 

9 institution that includes a foreign graduate medical school, must 

10 include in its reapplication to participate--

11 (i) A list of all educational sites and where they are located, 

12 including all sites at which offer all or a portion of a its student 

13 receive clinical training, except those clinical sites that are not 

14 used regularly, but instead are chosen by individual students who 

15 take no more than two electives at the location for no more than a 

16 total of eight weeks program in the country in which the main campus 

17 is located, the United States, or another country,; and 

18 (ii) Whether the school offers—

19 (A) Only post-baccalaureate/equivalent medical programs, as defined 

20 in §600.51;

21 (B) Other types of programs that lead to employment as a doctor of 

22 osteopathic medicine or doctor of medicine; or

23 (C) Both;

24 programs offered are first professional degree programs, post25 baccalaureate/equivalent programs, or both; and

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

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

28 that meet the requirements of required under §600.55(e)(1).
58

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

2 eligible institution that wishes to expand the scope of its 

3 eligibility and certification and disburse title IV, HEA Program 

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

5 Secretary and wait for approval to—

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

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

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

9 §600.21: 

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

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

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

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

14 CFR part 668, subpart K. 

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

16 that provided educational programs at that location during the 

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

18 that year. 

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

20 under 34 CFR 668.188 if it adds that location. 

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

22 apply for approval of an additional location. 

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

24 degree programs when it previously offered only baccalaureate degree 

25 programs); 

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

27 apply to the Secretary for approval under §600.10(c); 
59

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

2 included in the institution's eligibility and certification 

3 designation; or

4 (5) For a freestanding foreign graduate medical school, or a 

5 foreign institution that includes a foreign graduate medical school, 

6 add a location which offers all or a portion of a clinical training 

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

8 which the main campus is located, except for those locations that 

9 are not used regularly, but instead are chosen by individual 

10 students who take no more than two electives at the location for no 

11 more than a total of eight weeks; or

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

13 * * * * *

14

15 §600.52 Definitions.

16 The following definitions apply to this subpart E:

17 * * * * *

18 Foreign graduate medical school: A foreign institution that 

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

20 most current edition of the World Directory of Medical Schools 

21 published by the World Health Organization (WHO).

22 * * * * *

23 National Committee on Foreign Medical Education and Accreditation 

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

25 by the Secretary to determine whether the medical school accrediting 

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

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

28 eligibility of accredited foreign graduate medical schools to 

29 participate in the FFEL Title IV, HEA programs. 
60

1 * * * * *

2 Post-baccalaureate/equivalent medical program: A program offered by 

3 a foreign graduate medical school that requires, as a condition of 

4 admission, that its students have already completed their non5 medical undergraduate studies and that consists solely of courses 

6 and training leading to employment as a doctor of medicine or doctor 

7 of osteopathic medicine. 

8 * * * * *

9

10 §600.55 Additional criteria for determining whether a foreign 

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

12 FFEL Title IV, HEA programs.

13 (a) General. (1) The Secretary considers a foreign graduate 

14 medical school to be eligible to apply to participate in the FFEL

15 Title IV, HEA programs if, in addition to satisfying the criteria in 

16 §600.54 of this part (except the criterion in §600.54 that the 

17 institution be public or private nonprofit), the school satisfies 

18 all of the following criteria of this section.:

19 (2) The A foreign graduate medical school must provides, and in the 

20 normal course requires its students to complete, a program of 

21 clinical and classroom medical instruction of not less than 32 

22 months in length, that is supervised closely by members of the 

23 school's faculty and that is provided either—

24 (i) Outside the United States, Is pProvided in facilities 

25 adequately equipped and staffed to afford students comprehensive 

26 clinical and classroom medical instruction; or

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

28 medical students that has been a Is aApproved by all medical 
61

1 licensing boards and evaluating bodies whose views are considered 

2 relevant by the Secretary.; and

3 (iii) Includes, as part of its clinical training, no more than two 

4 electives consisting of no more than eight weeks at a site located 

5 in a foreign country other than the country in which the main campus 

6 is located or in the United States. 

7 (3) The A foreign graduate medical school may employs must appoint

8 for the program described in paragraph (a)(2) of this section only 

9 those faculty members whose academic credentials are the equivalent 

10 of credentials required of faculty members teaching the same or 

11 similar courses at medical schools in the United States.

12 (4) TheA foreign graduate medical school hasmust have graduated 

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

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

15 an eligibility determination.

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

17 medical school must—

18 (1) Be approved by an accrediting body—

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

20 medical school educational programs and facilities in the country 

21 where the school is located; and

22 (ii) Whose standards of accreditation of graduate medical schools—

23 (1) Hhave been evaluated by the NCFMEA or its successor committee of 

24 medical expertsadvisory panel of medical experts established by the 

25 Secretary; and (2) Hhave been determined to be comparable to 

26 standards of accreditation applied to medical schools in the United 

27 States; or

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

29 institution that satisfies the requirements in §600.4(a)(5)(i).
62

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

2 having a post-baccalaureate equivalent medical program must have

3 admission criteria that include the following: 

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

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

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

7 in the social sciences, history, and languages 

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

9 courses deemed essential preparation for completing the medical 

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

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

12 organic chemistry, and physics; and

13 (3) require sStudents accepted for admission who are U.S. citizens, 

14 nationals or permanent residents must to have taken the Medical 

15 College Admission Test (MCAT) and to have reported their score to 

16 the foreign medical school; and

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

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

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

20 include the following: 

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

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

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

24 coursework in the social sciences, history, and languages; 

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

26 courses deemed essential preparation for completing the medical 

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

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

29 organic chemistry, and physics; and
63

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

2 citizens, nationals or permanent residents to take the Medical 

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

4 admission to the program; and

5 (2) A foreign graduate medical school must determine the consent 

6 requirements for and require the necessary consents of all students 

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

8 permanent residents to enable the school to comply with the 

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

10 section.

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

12 school must obtain, at its own expense, and by September 30 of each 

13 year, submit—

14 (1) Take all necessary steps to obtain To its accrediting authority 

15 and, on request, to the Secretary, the scores on the MCAT or 

16 successor examination, of all students admitted during the preceding 

17 award year who are U.S. citizens, nationals, or eligible permanent 

18 residents, and submit the scores annually to its accrediting 

19 authority and, on request, to the Secretary, together with a 

20 statement of the number of times each student took the examination;

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

22 on request, to the Secretary, To its accrediting authority and, on 

23 request, to the Secretary, the percentage of students graduating 

24 during the preceding award year its graduates (including at least 

25 all graduates who are U.S. citizens, nationals or eligible permanent 

26 residents) who obtain placement in an accredited U.S. medical 

27 residency program, and pay such fees as are necessary to determine 

28 this percentage;
64

1 (3) To the Secretary, Eexcept upon written notice from the 

2 Secretary that the necessary information has been obtained by the 

3 Secretary for the year directly from the Educational Commission for 

4 Foreign Medical Graduates (ECFMG) or other responsible third 

5 parties, the foreign graduate medical school must obtain annually, 

6 at its own expense, all scores, disaggregated by step/test--i.e., 

7 Step 1, Step 2-Clinical Skills (Step 2-CS), and Step 2-Clinical 

8 Knowledge (Step 2-CK)--and attempt, earned during the preceding 

9 award year by theat least each student and graduate who is a U.S. 

10 citizen, national or eligible permanent resident during the 

11 enrollment and following graduation, on all parts Step 1, Step 2-CS, 

12 and Step 2-CK of the U.S. Medical Licensing Examination (USMLE), 

13 together with the dates the student has taken each part test, 

14 including any failed testsexaminations; and

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

16 on request, to the Secretary. 

17 (1) The A foreign graduate medical school must provides, and in the 

18 normal course requires its students to complete, a program of 

19 clinical and classroom medical instruction of not less than 32 

20 months in length, that is supervised closely by members of the 

21 school's faculty and that is provided either—

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

23 and staffed to afford students comprehensive clinical and classroom 

24 medical instruction; or

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

26 medical students that has been approved by all medical licensing 

27 boards and evaluating bodies whose views are considered relevant by 

28 the Secretary. 
65

1 (ii) The A foreign graduate medical school may employs for the 

2 program described in paragraph (e)(1)(i) of this section only those 

3 faculty members whose academic credentials are the equivalent of 

4 credentials required of faculty members teaching the same or similar 

5 courses at medical schools in the United States.

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

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

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

9 an eligibility determination.;

10 (e) Requirements for clinical training. (1)(i) A foreign graduate 

11 medical school must have a formal affiliation agreement with any 

12 hospital or clinic at which all or a portion of its providing all or 

13 a portion of a clinical training program is provided, except for 

14 those locations that are not used regularly, but instead are chosen 

15 by individual students who take no more than two electives at the 

16 location for no more than a total of eight weeks; 

17 (ii) The agreements described in paragraph (e)(2)(i) of this 

18 section must state how the following will be addressed at each site 

19 will—

20 (A) Maintain Maintenance of the school’s standards;

21 (B) Appointment of faculty to the medical school staff;

22 (C) Design of the curriculum;

23 (D) Supervise Supervision of students;

24 (E) Provide Provision of liability insurance; and 

25 (F) Evaluate Evaluation of student performance; and

26 (2) A foreign graduate medical school must notify its accrediting 

27 body within one year of any material changes in—

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

29 training programs; 
66

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

2 with hospitals and clinics described in paragraph (e)(1)(i) of this 

3 section.

4 (f) Citizenship and USMLE pass rate percentages. (1)(i)(A) During 

5 the academic year preceding the year for which any of the school's 

6 students seeks an FFEL Title IV, HEA program loan, at least 60 

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

8 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 (B) 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;

15 and

16 (ii) For a foreign graduate medical school outside of Canada, for 

17 each step Step 1, Step 2-CS, and Step 2-CK of the USMLE administered 

18 by the ECFMG, at least 6075 percent of the school's U.S. citizen, 

19 national, or eligible permanent resident students and graduates who 

20 took any that step/test of the examinations administered by the 

21 Educational Commission for Foreign Medical Graduates (ECFMG) 

22 (including the ECFMG English test) in the year preceding the year 

23 for which any of the school's students seeks an FFEL Title IV, HEA 

24 program loan must have received a passing scores on the exams that 

25 step/test; or

26 (2)(i) The school's had a clinical training program was approved by 

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

28 State.; and
67

1 (ii) The school continues to operate a clinical training program in 

2 at least one State that approves the program.

3 (3) In performing the calculation required in paragraph (f)(1)(ii)

4 of this section, a foreign graduate medical school shall—

5 (i) Ccount as a graduate each U.S. citizen, national, or eligible 

6 permanent resident person who graduated from the school during the 

7 three years preceding the year for which the calculation is 

8 performed.;

9 (ii) Count each U.S. citizen, national, or eligible permanent 

10 resident who takes more than one step/test of the USMLE examination 

11 in a year in the denominator for each of those steps/tests; and 

12 (iii) Count each U.S. citizen, national, or eligible permanent 

13 resident who repeats a step/test of the USMLE examination in a year 

14 only once for each attempt in the denominator for that step/test; 

15 (g) Other criteria. (1) As part of establishing, publishing, and 

16 applying reasonable satisfactory academic progress standards, a 

17 foreign graduate medical school must include as a quantitative 

18 component a maximum timeframe in which a student must complete his 

19 or her educational program that must—

20 (i) Be no longer than 150 percent of the published length of the 

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

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

23 (ii) Notwithstanding the requirement that the program be an

24 undergraduate program, mMeet the requirements of 

25 §668.16(e)(2)(ii)(B), (C) and (D); 

26 (2) A foreign graduate medical school must document the educational 

27 remediation it provides to assist students in making satisfactory 

28 academic progress; 
68

1 (3) A foreign graduate medical school must publish all the 

2 languages in which instruction is offered.;

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

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

5 portion of a clinical training program;

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

7 section must state how the site will—

8 (A) Maintain the school’s standards;

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

10 (C) Design the curriculum;

11 (D) Supervise students;

12 (E) Provide liability insurance; and 

13 (F) Evaluate student performance; and

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

15 body within one year of any changes in—

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

17 training programs; 

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

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

20 section.

21 (h) 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 
69

States and for the determination that such institutions are 

comparable to an institution of higher education as defined in 

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

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

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

criteria shall include a requirement that a student attending such 

school outside the United States is ineligible for loans made, 

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

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

a graduate medical school located outside the United States--

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

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

United States were not persons described in section 484(a)(5) in the 

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

part B of title

IV; and

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

graduates of the graduate medical school outside the United States 

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

the examinations administered by the Educational Commission for 

Foreign Medical Graduates received a passing score in the year 

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

B of Title IV; or

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

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

(II) the institution—

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

State as of January 1,

1992; and

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

one State that is approved by that State;

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

approved by a State as of January 1,

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

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

(iii) [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.
70

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

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

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

(iii) REPORT.—

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

the Higher Education

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

submit a report to the Secretary and to the authorizing committees 

recommending eligibility criteria for participation in the loan 

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

(aa) are located outside of the United States;

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

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

January 1, 2008.

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

advisory panel’s eligibility criteria shall include recommendations 

regarding the appropriate levels of performance for graduate medical 

schools described in such subclause in the following areas:

(aa) Entrance requirements.

(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.
71

(IV) AUTHORITY.—The Secretary may—

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

described in subclause (I), issue proposed regulations establishing 

criteria for the eligibility of graduate medical schools described 

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

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

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

regulations under item (aa), issue final regulations establishing 

such criteria for eligibility.

* * * * *
72

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: No

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.

Updated information since the 1/11-15 meeting:

The draft language would add an exception to the eligibility 

requirements for clinical training located in a foreign country 

other than the country in which the main campus is located or in the 

United States, in order for students attending the site to be 

eligible to borrow Title IV, HEA program funds (i.e., required to be 

located in an approved comparable country, required on-site 

evaluation and specific approval of the site by the institution’s 

medical accrediting agency, and the requirement that instruction 

must be offered in conjunction with medical educational programs 

offered to students enrolled in accredited medical schools located 

in that approved foreign country). A location would not have to 

meet these requirements if it is accredited by the Liaison Committee 

on Medical Education (LCME), or if no individual student takes more 

than two electives at the location and the combined length of the 

electives does not exceed eight weeks.

Draft Regulatory Language:
73

1 §600.55 Additional criteria for determining whether a foreign 

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

3 FFEL Title IV, HEA loan programs.

4 * * * * *

5 (h) Location of a program. (1) Except as provided in paragraph 

6 (h)(3)(ii) of this section, all portions of a graduate medical 

7 education program offered to U.S. students must be located in a 

8 country whose medical school accrediting standards are comparable to 

9 standards used in the United States, as determined by the NCFMEA, 

10 except for clinical sites located in the United States in accordance 

11 with §668.55(d)(1)(ii);

12 (2) No portion of the preclinical didactic components of the

13 educational program offered to U.S. students may be located outside 

14 of the country in which the main campus of the foreign medical 

15 school is located;

16 (3)(i) Except as provided in paragraph (h)(3)(ii) of this section, 

17 for any part of the clinical training portion of the educational 

18 program located in a foreign country other than the country in which 

19 the main campus is located or in the United States, in order for 

20 students attending the site to be eligible to borrow Title IV, HEA 

21 program funds—

22 (A) The site must be located in an NCFMEA approved comparable 

23 foreign country;

24 (B) The institution’s medical accrediting agency must have 

25 conducted an on-site evaluation and specifically approved the 

26 clinical training sites in order for students attending the site to 

27 be eligible to borrow FFEL Title IV, HEA program funds; and 
74

1 (C) If any component of the clinical training program is located in 

2 an approved comparable foreign country other than the country in 

3 which the main campus is located or in the United States cClinical 

4 instruction must be offered in conjunction with medical educational 

5 programs offered to students enrolled in accredited medical schools 

6 located in that approved foreign country.

7 (ii) A clinical training site located in a foreign country other 

8 than the country in which the main campus is located or in the 

9 United States is not required to meet the requirements of paragraph 

10 (h)(3)(i) of this section in order for students attending that site 

11 to be eligible to borrow Title IV, HEA program funds if-—

12 (A) The location is accredited by the Liaison Committee on Medical 

13 Education (LCME); or 

14 (B) No individual student takes more than two electives at the 

15 location and the combined length of the electives does not exceed 

16 eight weeks.

17 * * * * *

18

19 §600.56 Additional criteria for determining whether a foreign 

20 veterinary school is eligible to apply to participate in the FFEL

21 Title IV, HEA loan programs.

22 * * * * *

23 (cb) Location of a program. No portion of the foreign veterinary 

24 educational program may be located outside of the country in which 

25 the main campus of the foreign veterinary school is located, except 

26 for clinical sites located in the United States;

27 (2) For a veterinary school that is neither public nor private 

28 nonprofit, the school's students must complete their clinical 
75

1 training at an approved veterinary school located in the United 

2 States.
76

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: No

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.

Updated information since 11/16-20 meeting:

We have made no substantive changes to the draft regulatory language 

put forward for the last meeting as it is consistent with USMLE 

standards.

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 Title IV, HEA loan programs.

4 * * * * *

5 (h) Location of a program. (1) Except as provided in paragraph 

6 (h)(3)(ii) of this section, all portions of a graduate medical 

7 education program offered to U.S. students must be located in a 

8 country whose medical school accrediting standards are comparable to 

9 standards used in the United States, as determined by the NCFMEA, 
77

1 except for clinical sites located in the United States in accordance 

2 with §668.55(d)(1)(ii);

3 (2) No portion of the preclinical didactic components of the

4 educational program offered to U.S. students may be located outside 

5 of the country in which the main campus of the foreign medical 

6 school is located;

7 (3) [location of clinical sites—see Issue Paper 10]

8 * * * * *

9 §600.56 Additional criteria for determining whether a foreign 

10 veterinary school is eligible to apply to participate in the FFEL

11 Title IV, HEA loan programs.

12 * * * * *

13 (cb) Location of a program. (1) No portion of the foreign 

14 veterinary educational program offered to U.S. students may be 

15 located outside of the country in which the main campus of the 

16 foreign medicalveterinary school is located, except for clinical 

17 sites located in the United States;

18 (2) [location of clinical sites for for-profit schools—see Issue 

19 Paper 10]

20

21 §600.57 Additional criteria for determining whether a foreign 

22 nursing school is eligible to apply to participate in the FFEL Title 

23 IV, HEA loan programs.

24 [for paragraphs (a)-(c) see Issue Paper 13]

25 (d) Location of a program. (1) No portion of the foreign nursing

26 program offered to U.S. students may be located outside of the 

27 country in which the main campus of the foreign nursing school is 

28 located, except for clinical sites located in the United States;
78

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: No

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.

Updated information since 1/11-15 meeting: The draft regulatory 

language continues to require foreign veterinary schools to be 

accredited by the American Veterinary Medical Association (AVMA). 

Proposed additional regulatory language would also allow a foreign 

veterinary school to qualify if it is provisionally accredited by 

AVMA. In addition, for schools located in a country where the AVMA 

does not conduct accreditation site visits the AVMA accreditation 

requirement would not apply.

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:
79

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

2 students to complete, a program of clinical and classroom veterinary 

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

4 faculty, and that is provided either—

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

6 and staffed to afford students comprehensive clinical and classroom 

7 veterinary instruction,; or

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

9 veterinary students that has been approved by all veterinary 

10 licensing boards and evaluating bodies whose views are considered 

11 relevant by the Secretary.

12 (2) The school has graduated classes during each of the two twelve13 month periods immediately preceding the date the Secretary receives 

14 the school's request for an eligibility determination.

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

16 (a)(1) of this section only those faculty members whose academic 

17 credentials are the equivalent of credentials required of faculty 

18 members teaching the same or similar courses at veterinary schools 

19 in the United States. 

20 (4) The school is accredited or provisionally accredited by the 

21 American Veterinary Medical Association (AVMA).

22 (5) AVMA accreditation is not required if the AVMA does not conduct 

23 accreditation reviews of schools located in the country where the 

24 foreign school is located.

25

26 (4) For a veterinary school that is neither public nor private non27 profit, the school's students complete their clinical training at an 

28 approved veterinary school located in the United States. [moved to 

29 paragraph (c)(b)]
80

1 (b) [Reserved] The school is accredited by the American Veterinary 

2 Medical Association.

3 (b)(c) Location of a program [see Issue Papers 10 and 11]
81

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.

In addition, several new definitions would be added to the 

definitions in 600.52. The new definitions are derived from 
82

definitions relating to nursing schools in the Public Health Service 

Act.

Updated information since 1/11-15 meeting:

The draft has been revised to provide an alternative means of 

furnishing NCLEX-RN pass rate data to the Secretary. Paragraph 

(a)(8) has been revised to note that part of the program is provided 

pursuant to the agreements required by (a)(2) and (a)(3). 

Paragraph(c) has been revised to specify that after the school 

reimburses the Department for the cost of a defaulted loan, the loan 

is assigned to the school. In the case of a FFEL loan, the guaranty 

agency would assign the loan to the school after the Department pays 

a claim on the loan to the GA. In the case of a Direct Loan, the 

Department would assign the loan to the school.

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 postsecondary

5 education in professional nursing leading to a degree equivalent to 

6 an associate degree in the United States. 

7

8 Collegiate school of nursing: A school which provides primarily or 

9 exclusively a minimum of a two-year program of postsecondary

10 education in professional nursing leading to a degree equivalent to 

11 a bachelor of arts, bachelor of science, or bachelor of nursing in 

12 the United States, or to a degree equivalent to a graduate degree in 

13 nursing in the United States, and including advanced training 

14 related to the program of education 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 two-year program of postsecondary education in 

19 professional nursing leading to the equivalent of a diploma in the 
83

1 United States or to equivalent indicia that the program has been 

2 satisfactorily completed.

3

4 Foreign institution or school: [see Issue Paper 3]

5

6 Passing score: The minimum passing score as defined by the 

7 Educational Commission for Foreign Medical Graduates (ECFMG), or by

8 on the National Council Licensure Examination for Registered Nurses 

9 (NCLEX-RN), as applicable.

10

11 Secondary school: A school that provides secondary education as 

12 determined under the laws of the country in which the school is 

13 located.

14 * * * * *

15 §600.57 Additional criteria for determining whether a foreign 

16 nursing school is eligible to apply to participate in the FFEL 

17 programs.

18 (a) The Secretary considers a foreign nursing school to be eligible 

19 to apply to participate in the FFEL programs if, in addition to 

20 satisfying the criteria in this part (except the criterion in 

21 §600.54 that the institution be public or private nonprofit), the 

22 nursing school satisfies all of the following criteria:

23 (1) The nursing school is an associate degree school of nursing, a 

24 collegiate school of nursing, or a diploma school of nursing. 

25 (2) The nursing school has an agreement with a hospital located in 

26 the United States or an accredited school of nursing located in the 

27 United States that requires students of the nursing school to 

28 complete the student’s clinical training at the hospital or 

29 accredited school of nursing.
84

1 (3) The nursing school has an agreement with an accredited school 

2 of nursing located in the United States providing that students 

3 graduating from the nursing school located outside of the United 

4 States also receive a degree from the accredited school of nursing 

5 located in the United States.

6 (4) The nursing school certifies only Federal Stafford Loan program 

7 loans or Federal PLUS program loans, as those terms are defined in 

8 §668.2, for students attending the nursing school.

9 (5) The nursing school reimburses the Secretary for the cost of any 

10 loan defaults for current and former students included in the 

11 calculation of the institution’s cohort default rate during the 

12 previous fiscal year.

13 (6)(i) The nursing school determines the consent requirements for 

14 and requires the necessary consents of all students accepted for 

15 admission who are U.S. citizens, nationals, or eligible permanent 

16 residents to enable the school to comply with the collection and 

17 submission requirements of paragraph (a)(6)(ii) of this section.

18 (ii) The nursing school annually either—

19 (A) Obtains, at its own expense, all results achieved scores earned

20 by students and graduates who are U.S. citizens, nationals, or 

21 eligible permanent residents on the National Council Licensure 

22 Examination for Registered Nurses (NCLEX-RN), together with the 

23 dates the student has taken the examination, including any failed 

24 examinations,; and 

25 (B) Pprovides such results scores to its accrediting authority and, 

26 on request, to the Secretary; or

27 .(B) obtains a report or reports from the National Council of State 

28 Boards of Nursing (NCSB), or an NCSB affiliate or NCSB contractor, 

29 reflecting the percentage of the school’s students and graduates 
85

1 taking the NCLEX-RN in the preceding year who passed the 

2 examination, or the data from which the percentage could be derived, 

3 and provides the report to the Secretary.

4 (7) Not less than 75 percent of the school’s students and graduates 

5 who are either U.S. citizens, nationals, or eligible permanent 

6 residents who took the NCLEX-RN ational Council Licensure 

7 Examination for Registered Nurses in the year preceding the year for 

8 which the institution is certifying a Federal Stafford Loan or a 

9 Federal Plus Loan, received a passing score on such passed the

10 examination.

11 (8) The school provides, including under the agreements described 

12 in paragraphs (a)(2) and (a)(3) of this section, and in the normal 

13 course requires its students to complete, a program of clinical and 

14 classroom nursing instruction that is supervised closely by members 

15 of the school’s faculty that is provided in facilities adequately 

16 equipped and staffed to afford students comprehensive clinical and 

17 classroom nursing instruction, through a training program for 

18 foreign nursing students that has been approved by all nurse 

19 licensing boards and evaluating bodies whose views are considered 

20 relevant by the Secretary.

21 (9) The school has graduated classes during each of the two twelve22 month periods immediately preceding the date the Secretary receives 

23 the school’s request for an eligibility determination.

24 (10) The school employs only those faculty members whose academic 

25 credentials are the equivalent of credentials required of faculty 

26 members teaching the same or similar courses at nursing schools in 

27 the United States.

28 (b) For purposes of paragraph (a)(5) of this section, the cost of a 

29 loan default is the sum of the defaulted loan’s—
86

1 (i) Outstanding principal;

2 (ii) Accrued interest;

3 (iii) Unpaid late fees and collection costs;

4 (iv) Special allowance payments; 

5 (v) Reinsurance payments; and

6 (vi) Any related or similar payments the Secretary is obligated to 

7 make on the loan.

8 (c) After a school reimburses the Secretary for the amount 

9 specified in paragraph (b) of this section, the loan is assigned to

10 the school, and the borrower remains liable to the school for the 

11 outstanding balance of the loan, payable to the holder of the loan

12 under the terms and conditions specified in the promissory note.

13 (d) [location of the preclinical portion of a nursing program—see 

14 Issue Paper 11] 

15

16 §600.57 58 Duration of eligibility determination.

17 * * * * *

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—
87

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

a graduate medical school located outside the United States--

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

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

United States were not persons described in section

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

seeking a loan under part B of title

IV; and

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

graduates of the graduate medical school outside the United States 

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

the examinations administered by the Educational Commission for 

Foreign Medical Graduates received a passing score in the year 

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

B of Title IV; or

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

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

(II) the institution—

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

State as of January 1,

1992; and

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

one State that is approved by that State;

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

approved by a State as of January 1,

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

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

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

States—

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

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

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

the United States that requires the students of the nursing school 

to complete the students’ clinical training at such hospital or 

accredited school of nursing;

(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;
88

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

any loan defaults for current and former students included in the 

calculation of the institution’s cohort default rate during the 

previous fiscal year; and

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

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

Council Licensure Examination for Registered Nurses in the year 

preceding the year for which the institution is certifying a Federal 

Stafford Loan under section 428, an unsubsidized Federal Stafford 

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

received a passing score on such examination.

42 U.S.C. § 296. Definitions. 

As used in this title:

* * *

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

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

State.

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

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

in a college or university which provides primarily or exclusively a 

program of education in professional nursing and related subjects 

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

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

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

advanced training related to such program of education provided by 

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

university is accredited.

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

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

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

or university which provides primarily or exclusively a two-year 

program of education in professional nursing and allied subjects 

leading to an associate degree in nursing or to an equivalent 

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

university is accredited.

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

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

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 
89

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.
90

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

certified separately from larger school

Origin: ED

Statutory cites:

Regulatory cites: §600.20 §600.52 and §668.13

Tentative agreement: No

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.

Updated information since 1/11-15 meeting: 

The requirement that foreign medical, veterinary, and nursing 

schools be certified separately has been removed from the proposed 

regulations. Instead, the Department will track foreign medical, 

veterinary and nursing schools that are part of a larger foreign 

school as components of that foreign school. In addition, the draft 

regulatory language has been revised to limit the proposed threeyear certification period to private, for profit foreign schools. 

The certification period for public and private nonprofit foreign 

schools would remain six years.

Draft Regulatory Language:

1 §600.52 Definitions.

2 The following definitions apply to this subpart E:

3 * * * * *

4 Foreign graduate medical school: A foreign institution that 

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

6 most current edition of the World Directory of Medical Schools

7 published by the World Health Organization (WHO). (or, for a foreign 

8 institution that is a university, a component of that foreign

9 institution) having as its sole mission providing an educational 

10 program that leads to a degree of medical doctor, doctor of 

11 osteopathic medicine, or the equivalent. A reference in these 

12 regulations to a foreign graduate medical school as “freestanding” 
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1 pertains solely to those schools that qualify in themselves as 

2 foreign institutions and not to schools that are components of 

3 universities that qualify as foreign institutions.

4 * * * * *

5 Foreign nursing school: A foreign institution (or, for a foreign

6 institution that is a university, a component of that foreign 

7 institution) that is an associate degree school of nursing, a 

8 collegiate school of nursing, or a diploma school of nursing. A 

9 reference in these regulations to a foreign nursing school as 

10 “freestanding” pertains solely to those schools that qualify in 

11 themselves as foreign institutions and not to schools that are 

12 components of universities that qualify as foreign institutions.

13

14 * * * * *

15 Foreign veterinary school: A foreign institution (or, for a foreign 

16 institution that is a university, a component of that foreign 

17 institution) having as its sole mission providing an educational 

18 program that leads to the degree of doctor or veterinary medicine, 

19 or the equivalent. A reference in these regulations to a foreign 

20 veterinary school as “freestanding” pertains solely to those schools 

21 that qualify in themselves as foreign institutions and not to 

22 schools that are components of universities that qualify as foreign 

23 institutions.

24

25

26 §668.13 Certification procedures.

27 (a) Requirements for certification. (1) The Secretary certifies an 

28 institution to participate in the title IV, HEA programs if the 

29 institution qualifies as an eligible institution under 34 CFR part 
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1 600, meets the standards of this subpart and 34 CFR part 668, 

2 subpart L, and satisfies the requirements of paragraph (a)(2) (3) 

3 of this section.

4 (2) The Secretary certifies a foreign graduate medical school, a 

5 foreign veterinary school, and a foreign nursing school separately, 

6 regardless of whether the medical school, veterinary school, or 

7 nursing school is freestanding or is part of a larger institution.

8 (2)(3)Except as provided in paragraph (a)(3) (3) (4) of this 

9 section, if an institution wishes to participate for the first time 

10 in the title IV, HEA programs or has undergone a change in ownership 

11 that results in a change in control as described in 34 CFR 600.31, 

12 the institution must require the following individuals to complete 

13 title IV, HEA program training provided or approved by the Secretary 

14 no later than 12 months after the institution executes its program 

15 participation agreement under §668.14:

16 (i) The individual the institution designates under §668.16(b)(1) 

17 as its title IV, HEA program administrator.

18 (ii) The institution's chief administrator or a high level 

19 institutional official the chief administrator designates.

20 (3)(4)(i) An institution may request the Secretary to waive the 

21 training requirement for any individual described in paragraph 

22 (a)(2)(3) of this section.

23 (ii) When the Secretary receives a waiver request under paragraph 

24 (a)(3)(4)(i) of this section, the Secretary may grant or deny the 

25 waiver, require another institutional official to take the training, 

26 or require alternative training.

27 (b) Period of participation. (1) If the Secretary certifies that 

28 an institution meets the standards of this subpart, the Secretary 

29 also specifies the period for which the institution may participate 
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1 in a Title IV, HEA program. An institution's period of participation 

2 expires six years after the date that the Secretary certifies that 

3 the institution meets the standards of this subpart, except that— 

4 (i) The period of participation for a private, for profit foreign 

5 institution expires three years after the date of the Secretary’s 

6 certification; and 

7 (ii) Tthe Secretary may specify a shorter period.

8 (2)(3)Provided that an institution has submitted an application for 

9 a renewal of certification that is materially complete at least 90 

10 days prior to the expiration of its current period of participation, 

11 the institution's existing certification will be extended on a month 

12 to month basis following the expiration of the institution's period 

13 of participation until the end of the month in which the Secretary 

14 issues a decision on the application for recertification.