Certification Procedures 1

Proposed Regulations Redline - Brad Adams - Proposed Revisions highlighted

§ 668.13 Certification.

(a) Requirements for certification.

(1)

(i) The Secretary certifies an institution to participate in the title IV, HEA programs if the

institution qualifies as an eligible institution under 34 CFR part 600, meets the standards of this

subpart and 34 CFR part 668, subpart L, and satisfies the requirements of paragraph (a)(2) of this

section.

(ii) On application from the institution, the Secretary certifies a location of an institution that

meets the requirements of § 668.13(a)(1)(i) as a branch if it satisfies the definition of ‘‘branch’’

in 34 CFR 600.2.

(2) Except as provided in paragraph (a)(3) of this section, if an institution wishes to participate for the

first time in the title IV, HEA programs or has undergone a change in ownership that results in a change

in control as described in 34 CFR 600.31, the institution must require the following individuals to

complete title IV, HEA program training provided or approved by the Secretary no later than 12 months

after the institution executes its program participation agreement under § 668.14:

(i) The individual the institution designates under § 668.16(b)(1) as its title IV, HEA program

administrator.

(ii) The institution's chief administrator or a high-level institutional official the chief administrator

designates.

(3)

(i) An institution may request the Secretary to waive the training requirement for any individual

described in paragraph (a)(2) of this section.

(ii) When the Secretary receives a waiver request under paragraph (a)(3)(i) of this section, the

Secretary may grant or deny the waiver, require another institutional official to take the training, or

require alternative training.

(b) Period of participation.

(1) If the Secretary certifies that an institution meets the standards of this subpart, the Secretary also

specifies the period for which the institution may participate in a title IV, HEA program. An institution's

period of participation expires no more than six years after the date that the Secretary certifies that the

institution meets the standards of this subpart, except that -

(i) The period of participation for a private, for profit foreign institution expires three years after

the date of the Secretary's certification; and

(ii) The Secretary may specify a shorter period.

(2) Provided that an institution has submitted an application for a renewal of certification that is

materially complete at least 90 days prior to the expiration of its current period of participation, the

institution's existing certification will be extended on a month to month basis following the expiration of

the institution's period of participation until the end of the month in which the Secretary issues a

decision on the application for recertification.

(3) In the event that the Secretary does not make a determination to grant or deny certification within

12 months of the expiration of its current period of participation, the institution will automatically be 

granted renewal of certification, which may be provisional.

(c) Provisional certification.

(1)(i) The Secretary may provisionally certify an institution if -

(A) The institution seeks initial participation in a Title IV, HEA program;

(B) The institution is an eligible institution that has undergone a change in ownership that

results in a change in control according to the provisions of 34 CFR part 600;

(C) The institution is a participating institution -
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(1) That is applying for a certification that the institution meets the standards of this subpart;

(2) That the Secretary determines has jeopardized its ability to perform its financial 

responsibilities by not meeting the factors of financial responsibility under § 668.15 and 

subpart L of this part or the standards of administrative capability under § 668.16; and

(3) Whose participation has been limited or suspended under subpart G of this part, or

voluntarily enters into provisional certification;

(D) The institution seeks a renewal of participation in a Title IV, HEA program after the 

expiration of a prior period of participation in that program; or

(E) The institution is a participating institution that was accredited or preaccredited by a 

nationally recognized accrediting agency on the day before the Secretary withdrew the 

Secretary's recognition of that agency according to the provisions contained in 34 CFR part 

6023; or

(F) The institution is a participating institution that has been provisionally recertified under the 

automatic recertification requirement in paragraph (b)(3) of this section. .

(ii) An institution’s certification automatically becomes provisional upon notification from the 

Secretary if—

(A) The institution triggers one of the financial responsibility events under §668.171(c) or (d) 

and, as a result, the Secretary requires the institution to post financial protection;

(B) The reviewer or auditor conducting the program review or audit of the institution has identified 

received the same finding of material noncompliance ion more than twoone consecutive 

program reviews or audits; or

(C) The institution or an owner of the institution with control over that institution, as defined in

34 CFR 600.31, also owns another institution with outstanding liabilities owed to the 

Department that are past due by at least 90 days and are not being paid back in 

accordance with a settlement agreement between the institution and the Secretary.

(iii) A proprietary institution's certification automatically becomes provisional at the start of a fiscal 

year after it did not derive at least 10 percent of its revenue for its preceding fiscal year from 

sources other than Title IV, HEA program funds, as required under § 668.14(b)(16).

(2) If the Secretary provisionally certifies an institution, the Secretary also specifies the period for which 

the institution may participate in a Title IV, HEA program. Except as provided in paragraphs (c) (3) and

(4) of this section, a provisionally certified institution's period of participation expires -

(i) Not later than the end of the first complete award year following the date on which the 

Secretary provisionally certified the institution under paragraph (c)(1)(i)(A) of this section;

(ii) Not later than the end of the second complete award year following the date on which the 

Secretary provisionally certified an institution that had been fully certified for reasons related to 

substantial liabilities (aggregate liability meeting or exceeding 5 percent of title IV, HEA revenue 

for the previous fiscal year) owed or potentially owed to the Department for discharges related 

to borrower defense to repayment or false certification, or for other consumer protection law 

concerns as violations identified by the Secretary that would meet or exceed 5 percent of title 

IV, HEA revenue for the previous fiscal year;

(iii) Not later than the end of the third complete award year following the date on which the 

Secretary provisionally certified the institution under paragraphs (c)(1)(i)(B), (C), and (D) (iii), (iii), 

(iv) or (c)(1)(ii)(e)(2) of this section; and

(ivii) If the Secretary provisionally certified the institution under paragraph (c)(1)(iv)(E) of this 

section, not later than 18 months after the date that the Secretary withdrew recognition from the 

institution’s nationally recognized accrediting agency.

(3) Notwithstanding the maximum periods of participation provided for in paragraph (c)(2) of this 

section, if the Secretary provisionally certifies an institution, the Secretary may specify a shorter period 

of participation for that institution.

(4) For the purposes of this section, “provisional certification” means that the Secretary certifies that an

institution has demonstrated to the Secretary's satisfaction that the institution -

(i) Is capable of meeting the standards of this subpart within a specified period; and
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(ii) Is able to meet the institution's responsibilities under its program participation agreement,

including compliance with any additional conditions specified in the institution's program

participation agreement that the Secretary requires the institution to meet in order for the

institution to participate under provisional certification.

(d) Revocation of provisional certification.

(1) If, before the expiration of a provisionally certified institution's period of participation in a Title IV,

HEA program, the Secretary determines that the institution is unable to meet its responsibilities under

its program participation agreement, the Secretary may revoke the institution's provisional certification

for participation in that program.

(2)

(i) If the Secretary revokes the provisional certification of an institution under paragraph (d)(1) of

this section, the Secretary sends the institution a notice by certified mail, return receipt requested.

The Secretary also may transmit the notice by other, more expeditious means, if practical.

(ii) The revocation takes effect on the date that the Secretary mails the notice to the institution.

(iii) The notice states the basis for the revocation, the consequences of the revocation to the

institution, and that the institution may request the Secretary to reconsider the revocation. The

consequences of a revocation are described in § 668.26.

(3)

(i) An institution may request reconsideration of a revocation under this section by submitting to

the Secretary, within 20 days of the institution's receipt of the Secretary's notice, written evidence

that the revocation is unwarranted. The institution must file the request with the Secretary by

hand-delivery, mail, or facsimile transmission.

(ii) The filing date of the request is the date on which the request is -

(A) Hand-delivered;

(B) Mailed; or

(C) Sent by facsimile electronic transmission.

(iii) Documents filed by electronic transmission must be transmitted to the Secretary in accordance

with instructions provided by the Secretary in the notice of revocation.

(iv) The Secretary discourages the use of facsimile transmission for documents longer than five

pages.

(4)

(i) The designated department official making the decision concerning an institution's request for

reconsideration of a revocation is different from, and not subject to supervision by, the official who

initiated the revocation of the institution's provisional certification. The deciding official promptly

considers an institution's request for reconsideration of a revocation and notifies the institution, by

certified mail, return receipt requested, of the final decision. The Secretary also may transmit the

notice by other, more expeditious means, if practical.

(ii) If the Secretary determines that the revocation is warranted, the Secretary's notice informs the

institution that the institution may apply for reinstatement of participation only after the later of

the expiration of -

(A) Eighteen months after the effective date of the revocation; or

(B) A debarment or suspension of the institution under Executive Order (E.O.) 12549 (3 CFR,

1986 comp., p. 189) or the Federal Acquisition Regulations, 48 CFR part 9, subpart 9.4.

(iii) If the Secretary determines that the revocation of the institution's provisional certification is

unwarranted, the Secretary's notice informs the institution that the institution's provisional

certification is reinstated, effective on the date that the Secretary's original revocation notice was

mailed, for a specified period of time.
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(5) The mailing date of a notice of revocation or a request for reconsideration of a revocation is the date

evidenced on the original receipt of mailing from the U.S. Postal Service or another service that provides

delivery confirmation for that document.

§ 668.14 Program participation agreement.

(a)

(1) An institution may participate in any Title IV, HEA program, other than the LEAP and NEISP programs,

only if the institution enters into a written program participation agreement with the Secretary, on a

form approved by the Secretary. A program participation agreement conditions the initial and continued

participation of an eligible institution in any Title IV, HEA program upon compliance with the provisions

of this part, the individual program regulations, and any additional conditions specified in the program

participation agreement that the Secretary requires the institution to meet.

(2) An institution's program participation agreement applies to each branch campus and other location 

of the institution that meets the applicable requirements of this part unless otherwise specified by the

Secretary.

(3) An institution’s program participation agreement must be signed by—

(i) An authorized representative of the institution; and

(ii) For a proprietary or private nonprofit institution, by an authorized representative of an

entity with direct or indirect ownership of the institution if that entity has the power to exercise 

substantial control over the institution. The Secretary considers the following as examples of 

circumstances in which an entity has such power--

(A) If the entity has at least 50 percent control over the institution through direct or

indirect ownership, or by voting rights , or by its right to appoint board members to the 

institution or any other entity, whether by itself or in combination with other entities or

natural persons with which it is affiliated or related, or pursuant to a proxy or voting or 

similar agreement;

(B) If the entity has the power to block significant actions;

(C) If the entity is the 100 percent direct or indirect interest holder of the institution; or

(D) If the entity voluntarily provides or will provide the financial statements to meet

any of the requirements of 34 CFR 600.20(g), (h), or Subpart L of this part.

(4) The Department must notify a person (whether the owner is a natural person or a corporate entity)

 prior to requesting that such person sign any program participation agreement (including provisional or 

temporary provisional program participation agreements) if the Department intends to impose a 

personal financial guarantee on the person for performance of the institution’s responsibilities, 

but in no event shall the Department require any person to personally guarantee financial performance 

 (whether the person is a natural person or a corporate entity) if the institution meets the criteria 

under 20 U.S.C. §1099c(e)(4). 

(b) By entering into a program participation agreement, an institution agrees that -

* * *

(17) The Secretary, guaranty agencies and lenders as defined in 34 CFR part 682, nationally recognized

accrediting agencies, the Secretary of Veterans Affairs, State agencies recognized under 34 CFR part

603 for the approval of public postsecondary vocational education, and State agencies that legally

authorize institutions and branch campuses or other locations of institutions to provide postsecondary

education, and State attorneys general have the authority to share with each other any information
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pertaining to the institution's eligibility for or participation in the Title IV, HEA programs or any 

information on fraud and abuse;

* * *

(26) If an educational program offered by the institution is required to prepare a student for gainful 

employment in a recognized occupation, the institution must -

(i) Demonstrate a reasonable relationship between the length of the program and entry level 

requirements for the recognized occupation for which the program prepares the student. The 

Secretary considers the relationship to be reasonable if the number of clock hours provided in

the program does not exceed the greater of -

(A) One hundred and fifty percent of the minimum number of clock hours required for 

training in the recognized occupation for which the program prepares the student, as 

established by the State in which the institution is located, if the State has established 

such a requirement, or as established by any Federal agency; or

(B) The minimum number of clock hours required for training in the recognized 

occupation for which the program prepares the student as established in a State 

adjacent to the State in which the institution is located; and

(ii) Establish the need for the training for the student to obtain employment in the recognized 

occupation for which the program prepares the student;

* * *

(32) In each State in which the institution is physically located or in which the institution is otherwise 

required to obtain State approval under 34 CFR 600.9, the institution must—

(i) Ensure that each program is programmatically accredited, if such accreditation is required by

a Federal governmental entity or by a governmental entity in the State; and

(ii) Ensure that each program satisfies the applicable educational prerequisites for professional 

licensure or certification requirements in the State so that a student who completes the 

program and seeks employment in that State qualifies to take any licensure or certification 

exam that is needed for the student to practice or find employment in an occupation that the 

program prepares students to enter.

* * *

(e) If an institution is provisionally certified, the Secretary may apply such conditions as are determined 

to be appropriate to the institution, including –

(1) For an institution that the Secretary determines is likelymay be at risk of closure—

(i) Submission of a teach-out plan or agreement to the Department and to the institution’s

recognized accrediting agency;

(ii) Submission of a records retention plan to the Department; and

Commented [A1]: The Department is aware of significant 

variation across states in the minimum required length

of programs tied to licensure in many states in a variety of 

fields. Otherwise-equivalent programs that require many 

more hours in one state can lead students in that

state to spend more time in school and take

on more student loan debt. For instance, an AIR analysis 

found that state requirements for cosmetology licenses 

range from 1,000 hours to more than twice as long, at 

2,300 hours.

[https://www.ncsl.org/Portals/1/Documents/Labor/Licensin 

g/Reddy_PBAExaminationofCosmetologyLicensingIssues_31 

961.pdf] Requiring students, depending on the state, to 

spend much longer in equivalent programs results

in those students using up more of their lifetime eligibility 

for Pell Grants or other federal financial aid, possibly making 

it harder for them to pursue later training.

The Department seeks feedback on the appropriate 

maximum length of aid for a gainful employment 

program in these situations where equivalent programs

have substantially different lengths. The Department would 

not limit the discretion of the states to establish program 

length requirements but is concerned about the costs to the 

student of providing aid eligibility beyond the minimum 

state licensing requirements for programs that go far 

beyond the length that most institutions offer. Options 

might include, for example capping the length of aid for a 

program that receives federal aid at:

--The minimum clock hours required in the state, or the 

minimum plus a tolerance that allows programs to offer one 

additional course. For example, if a state requires 1,500 

hours for cosmetology, capping the aid at 1,500 or

1,650 hours to allow for an additional course equivalent to 3 

credit hours.

--The minimum clock hours in a state

in the same metropolitan statistical area (MSA) as the 

institution, if that state’s minimum hours are higher than

the those in that institution’s state. For example, if an

institution’s home state requires 1,500 hours for

cosmetology and it is in the same MSA as a state that

requires 1,800 hours, the minimum length would be 1,800.

--The lesser of the minimum number of hours required by 

the state or of the national median for the number of hours 

required. For example, if the national median is 1,500 

hours, aid at an institution in a state with a minimum of 

1,000 hours would still be capped at 1,000 hours, while aid 

at an institution in a state that requires 2,000 hours would 

be capped at 1,500 hours.

--Other permutations of the above ideas, such as allowing a 

tolerance of 125 percent above the minimum.

...
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(iii) The release of holds on student transcripts over a de minimis amount, and the release of all 

holds on student transcripts in the event of a closure;

(2) Restrictions on the additionapplications for the approval of of new programs or locations for Title IV eligibility;

(3) Restrictions on the rate of growth in enrollment of students in Title IV programs or of Title IV volume;

(4) Restrictions on the provisionally certified institution providing a teach-out on behalf of another institution;

(5) Restrictions on the acquisition of another participating institution by the provisionally certified 

institution, which may include the posting of financial surety in an amount determined by the Secretary 

but not less than 10 percent of the acquired institution’s Title IV volume for the prior fiscal year. This 

surety is in addition to any other required surety;

(6) Additional reporting requirements, which may include, but are not limited to, cash balances, an 

actual and protected cash flow statement, student rosters, and interim unaudited financial statements;

(7) Limitations on the institution entering into a new written arrangement with another eligible 

institution or an ineligible institution or organization for that other eligible institution or ineligible 

institution or organization to provide between 25 and 50 percent of the provisionally certified

institution’s educational program under 34 CFR §668.5(a) or (c);

(8) For an institution alleged or found to have engaged in substantial misrepresentations to students, 

engaged in aggressive recruiting practices, or violated incentive compensation rules, requirements to 

submit new marketing and other recruiting materials for the review and approval of the Secretary; 

and

(9) Such other conditions as the Secretary deems necessary or appropriate.

(f) If a proprietary institution seeks to convert to nonprofit status following a change in ownership, the 

following conditions will apply to the institution following the change in ownership, in addition to any 

other conditions that the Secretary may deem appropriate—

(1) The institution must continue to meet the requirements under §668.28(a) and §668.28(b) until the 

Department has accepted, reviewed and approved the institution's financial statements and compliance 

audits that cover two complete consecutive fiscal years with passing 90/10 reporting under its new 

ownership, or until the Department approves the institution’s request to convert to nonprofit status,

whichever is laterearlier;

(2) The institution must continue to meet the gainful employment requirements of Subpart Q of this 

part until the Department has accepted, reviewed, and approved the institution's financial statements 

and compliance audits that cover two complete consecutive fiscal years under its new ownership, or 

until the Department approves the institution’s request to convert to nonprofit status, whichever is

laterearlier; and

(3) The institution will be required to submit regular and timely reports on agreements entered into with 

its former for-profit owner or persons or entities affiliated with its former for-profit owner or related 

persons or entities, so long as the institution participates as a nonprofit institution

(g) If an institution is initially certified as a nonprofit institution, or if a proprietary institution has 

converted to nonprofit status following a change in ownershipif it has undergone a change of 

ownership and seeks to convert to nonprofit status, the following conditions will apply to the institution
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upon initial certification or following the change in ownership, as applicable, and in addition to any other 

conditions that the Secretary may deem appropriate:

(1) The institution will be required to submit regular and timely reports on accreditor and state 

authorization agency actions and any new servicing agreements until the Department has accepted, 

reviewed and approved the institution's financial statements and compliance audits that cover two 

complete consecutive fiscal years following initial certification, or, in the case of a proprietary 

institution has converted to nonprofit status following a change in ownership, until the Department 

has accepted, reviewed, and approved the institution's financial statements and compliance audits 

that cover two complete consecutive fiscal years under its new ownership, or until the Department 

approves the institution’s request to convert to nonprofit status, whichever is earlier two complete 

fiscal years under its new ownership or until the Department approves the institution’s request to 

convert to nonprofit status, whichever is later; and

(2) The institution will be required to submit regular and timely reports on communications from the 

Internal Revenue Service or any state or foreign country related to tax-exempt or nonprofit status so

long as the institution participates as a nonprofit institution.

(he)

(1) A program participation agreement becomes effective on the date that the Secretary signs the 

agreement.

(2) A new program participation agreement supersedes any prior program participation agreement 

between the Secretary and the institution.

(if)

(1) Except as provided in paragraphs (g) and (h) of this section, the Secretary terminates a program 

participation agreement through the proceedings in subpart G of this part.

(2) An institution may terminate a program participation agreement.

(3) If the Secretary or the institution terminates a program participation agreement under paragraph (f) 

of this section, the Secretary establishes the termination date.

(jg) An institution's program participation agreement automatically expires on the date that -

(1) The institution changes ownership that results in a change in control as determined by the Secretary 

under 34 CFR part 600; or

(2) The institution's participation ends under the provisions of § 668.26(a) (1), (2), (4), or (7).

(kh) An institution's program participation agreement no longer applies to or covers a location of the 

institution as of the date on which that location ceases to be a part of the participating institution.

§ 668.43 Institutional information.

(a) Institutional information that the institution must make readily available to enrolled and prospective 

students under this subpart includes, but is not limited to -

* * *

(5) The academic program of the institution, including -

(i) The current degree programs and other educational and training programs;
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(ii) The instructional, laboratory, and other physical facilities which relate to the academic 

program;

(iii) The institution's faculty and other instructional personnel; and

(iv) Any plans by the institution for improving the academic program of the institution, upon a 

determination by the institution that such a plan exists.; and

(v) If an educational program is designed to meet educational requirements for a specific 

professional license or certification that is required for employment in an occupation, or is 

advertised as meeting such requirements, information regarding whether completion of that 

program would be sufficient to meet licensure requirements in a State for that occupation, 

including -

(A) A list of all States for which the institution has determined that its curriculum meets 

the State educational requirements for licensure or certification;

(B) A list of all States for which the institution has determined that its curriculum does 

not meet the State educational requirements for licensure or certification; and

(C) A list of all States for which the institution has not made a determination that its 

curriculum meets the State educational requirements for licensure or certification;