UNITED STATES DEPARTMENT OF EDUCATION

OFFICE OF POSTSECONDARY EDUCATION

Issue Paper 5: Changes of Ownership and Change in Control

Session 3: March 14-18, 2022

Issue: Changes of Ownership and Change in Control

Statutory cites: §498(i) of the Higher Education Act of 1965, as amended 

Regulatory cites: 34 CFR 600.2, 600.4, 600.20, 600.21, 600.31; 668.14 (see Certification 

Procedures issue paper); Subpart L (see Financial Responsibility issue paper)

Proposed Regulations Redline 

§ 600.2 Definitions.

Additional location: A physical facility that is geographically apartseparate from the main campus of the 

institution and within the same ownership structure of the institution, at which the institution offers at 

least 50 percent of an educational program. An additional location participates in the tTitle IV, HEA

programs only through the certification of the main campus and may qualify as a branch campus. 

* * * 

Branch campus: A physical facility that is separate fromn additional location of an institution that is 

geographically apart and independent of the main campus of the institution and within the same 

ownership structure of the institution, and that also. The Secretary considers a location of an institution 

to be independent of the main campus if the location -

(1) Is approved by the Secretary as a branch campus; and

(2) Is independent from the main campus, meaning the location—

(1i) Is permanent in nature; 

(2ii) Offers courses in educational programs leading to a degree, certificate, or other recognized 

educational credential; 

(3iii) Has its own faculty and administrative or supervisory organization; and 

(4iv) Has its own budgetary and hiring authority.

* * *

Distance education: 

(1) Education that uses one or more of the technologies listed in paragraphs (2)(i) through (iv) of this 

definition to deliver instruction to students who are separated from the instructor or instructors and to 

support regular and substantive interaction between the students and the instructor or instructors, 

either synchronously or asynchronously. 

(2) The technologies that may be used to offer distance education include -
Changes of Ownership and Changes in Control 2

(i) The internet; 

(ii) One-way and two-way transmissions through open broadcast, closed circuit, cable, 

microwave, broadband lines, fiber optics, satellite, or wireless communications devices; 

(iii) Audio conference; or 

(iv) Other media used in a course in conjunction with any of the technologies listed in 

paragraphs (2)(i) through (iii) of this definition. 

(3) For purposes of this definition, an instructor is an individual responsible for delivering course content 

and who meets the qualifications for instruction established by an institution's accrediting agency.

(4) For purposes of this definition, substantive interaction is engaging students in teaching, learning, and 

assessment, consistent with the content under discussion, and also includes at least two of the following 

-

(i) Providing direct instruction; 

(ii) Assessing or providing feedback on a student's coursework; 

(iii) Providing information or responding to questions about the content of a course or 

competency; 

(iv) Facilitating a group discussion regarding the content of a course or competency; or 

(v) Other instructional activities approved by the institution's or program's accrediting agency. 

(5) An institution ensures regular interaction between a student and an instructor or instructors by, prior 

to the student's completion of a course or competency -

(i) Providing the opportunity for substantive interactions with the student on a predictable and 

scheduled basis commensurate with the length of time and the amount of content in the course 

or competency; and 

(ii) Monitoring the student's academic engagement and success and ensuring that an instructor 

is responsible for promptly and proactively engaging in substantive interaction with the student 

when needed on the basis of such monitoring, or upon request by the student.

(6) Except for an additional location at a correctional institution as described in the definition of an 

additional location in this section, fFor an institution that offers on-campus programs and distance 

education programs, the distance education programs are associated with the main campus of the 

institution. For an institution that only offers distance education programs, the institution is located 

where its administrative offices are located and approved by its accrediting agency.

* * *

Main campus: The primary physical facility at which the institution offers eligible programs, within the 

same ownership structure of the institution, and certified as the main campus by the Department and 

the institution’s accrediting agency. 

* * *
Changes of Ownership and Changes in Control 3

Nonprofit institution: An institution that meets the requirements of either paragraph (1) or (2) of this 

definition.-

(1)(i) For aA domestic institution, no part of the net earnings of the institution benefits any private 

entity or natural person, and, for a private nonprofit institution, the institution that--

(Ai) Is owned and operated by one or more nonprofit corporations or associations and the 

Secretary has determined that no part of the net earnings of which benefits any private for-profit 

entityshareholder or individual, as determined by the Secretary;

(Bii) Is legally authorized to operate as a nonprofit organization by each State in which it is 

physically located; and

(Ciii) 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)).;except that

(iiv) In determining whether the requirements of paragraph (1)(i)(A) of this definition have been

met When making the determination regarding net earnings, the Secretary considers the entirety 

of the relationship between the institution, the nonprofit entities in its ownership structure, and 

other parties. By way of example, for purposes of participating in the Federal student aid 

programs, a nonprofit institution is generally not an institution that--:

(A) Is an obligor (either directly or through any entity in its ownership chain) on a debt owed to 

a former owner of the institution or a natural person or entity related to or affiliated with the 

former owner of the institution; or

(B) Either directly or through any entity in its ownership chain, enters into, or maintains, a 

revenue-sharingbased servicing agreement with any party (including related or unrelated 

parties, or a former owner of the institution or a natural person or entity related to or affiliated 

with the former owner of the institution), unless the institution demonstrates that payments 

under the revenue-sharing agreement are reasonable based on the market price for such 

services or materials, including demonstrating a reasonable relationship to the cost of the 

services or materials provided; or

(C) Is a party (either directly or indirectly) to any other agreements (including lease 

agreements) with a former owner of the institution or a natural person or entity related to or 

affiliated with the former owner of the institution under which the institution is obligated to 

make any payments, unless the institution demonstrates that the payments under the 

agreement are comparable to payments in an arm’s-length transaction at fair market value;

or.

(D) Engages in an excess benefit transaction with any natural person or entity.

(2) For a foreign institution -

* * *

§ 600.4 Institution of higher education.

(a) An institution of higher education is a public or other private nonprofit educational institution that -

Commented [A1]: Revised
Changes of Ownership and Changes in Control 4

(1) Is in a State, or for purposes of the Federal Pell Grant, Federal Supplemental Educational Opportunity 

Grant, Federal Work-Study, and Federal TRIO programs may also be located in the Federated States of 

Micronesia or the Marshall Islands;

(2) Admits as regular students only persons who -

(i) Have a high school diploma;

(ii) Have the recognized equivalent of a high school diploma; or

(iii) Are beyond the age of compulsory school attendance in the State in which the institution is 

physically located;

(3) Is legally authorized to provide an educational program beyond secondary education in the State in 

which the institution is physically located in accordance with § 600.9;

(4)

(i) Provides an educational program -

(A) For which it awards an associate, baccalaureate, graduate, or professional degree;

(B) That is at least a two-academic-year program acceptable for full credit toward a 

baccalaureate degree; or

(C) That is at least a one academic year training program that leads to a certificate, or other 

nondegree recognized credential, and prepares students for gainful employment in a recognized 

occupation; and

(ii) May provide a comprehensive transition and postsecondary program, as described in 34 CFR 

part 668, subpart O; and

(5) Is -

(i) Accredited or preaccredited; or

(ii) Approved by a State agency listed in the FEDERAL REGISTER in accordance with 34 CFR part 603, if

the institution is a public postsecondary vocational educational institution that seeks to participate 

only in Federal student assistance programs.

(b) An institution is physically located in a State if it has a campus or other instructional site in that State.

(c) The Secretary does not recognize the accreditation or preaccreditation of an institution unless the 

institution agrees to submit any dispute involving an adverse action, such as the final denial, withdrawal, 

or termination of accreditation, to arbitration before initiating any other legal action.

§ 600.20 Notice and application procedures for establishing, reestablishing, maintaining, or expanding 

institutional eligibility and certification.

* * *

(g) Application for provisional extension of certification.

(1) If a private nonprofit institution, a private for-profit institution, or a public institution participating in 

the title IV, HEA programs undergoes a change in ownership that results in a change of control as 
Changes of Ownership and Changes in Control 5

described in 34 CFR 600.31, the Secretary may continue the institution's participation in those programs 

on a provisional basis, if—

(i) No later than 90 days prior to the change in ownership, the institution provides notifies the 

Secretary notice of the proposed change on a fully completed form designated by the Secretary 

and supported by the Sstate authorization and accrediting documents identified in paragraph 

(g)(32)(i) and (ii) of this section, and supported by copies of the financial statements identified in 

paragraph (g)(32)(iii) and (iv) of this section; and

(ii) The institution promptly reports If the proposed ownership structure reported to the 

Secretary under paragraph (g)(1)(i) of this section changes, any changes to the proposed 

ownership structure identified under paragraph (g)(1)(i) of this section, provided that must be 

reported to the Secretary promptly, and the change in ownership cannot occur earlier than 90 

days following the date the change is reported to the Secretary; and

(iii) The institution under the new ownership submits a “materially complete application” that is 

received by the Secretary no later than 10 business days after the day the change occurs. 

(2iii) Notwithstanding the submission of the items required byunder paragraphs (g)(1)(i) -and (iii) of this 

section, the Secretary may determine that the participation of the institution should not be 

approvedcontinued following the change in ownership.

(32) For purposes of this section, a private nonprofit institution, a private for-profit institution, or a 

public institution submits a materially complete application if it submits a fully completed application 

form designated by the Secretary supported by -

(i) A recently updated copy of the institution's State license or equivalent document that, as of the 

day before the change in ownership, authorized or will authorize the institution to provide a 

program of postsecondary education in the State in which it is physically located, supplemented 

with documentation that—as of the day before the change in ownership—the State license 

remained in effect;

(ii) A recently updated copy of the document from the institution's accrediting association that, as 

of the day before the change in ownership, granted or will grant the 

institution accreditation status, including approval of any non-degree programs it offers, 

supplemented with documentation that—as of the day before the change in ownership—the 

accreditation remained in effect;

(iii) Audited financial statements of for the institution's two most recently completed fiscal years 

that are prepared and audited in accordance with the requirements of 34 CFR 668.23; and

(iv) Audited financial statements of for the institution's new owner's two most recently completed 

fiscal years that are prepared and audited in accordance with the requirements of 34 CFR 668.23,

or equivalent information financial statements for that owner that areis acceptable to the 

Secretary.; or, if at least two years of audited such financial statements are not available, financial 

surety protection in the amount of at least 25 percent of the institution’s prior year volume of title 

IV aid, as required in 34 CFR 668.176; and

(v) If deemed necessary by the Secretary, financial surety protection in the amount of at least an 

additional 10 percent of the institution’s prior year volume of title IV aid, or a larger amount as 

determined by the Secretary. If any entity in the new ownership structure holds a 50 percent or 

greater direct or indirect voting or equity interest in another institution or institutions, the financial 

Commented [A2]: Revised
Changes of Ownership and Changes in Control 6

protection may also include the prior year volume of tTitle IV aid, or a larger amount as 

determined by the Secretary, for all institutions under such common ownership. 

(4) The institution must notify enrolled and prospective students of the proposed change in 

ownership, and submit evidence that such disclosure was made, no later than 90 days prior to the 

change.

(h) Terms of the extension.

(1) If the Secretary approves the institution's materially complete application, the Secretary provides the 

institution with a temporary provisional Program Participation Agreement (TPPPA). The provisional PPA 

extends the terms and conditions of the program participation agreement that were in effect for the 

institution before its change of ownership.

(2) The TPPPA provisional PPA expires on the earlier of -

(i) The last day of the month following the month in which the change of ownership occurred, 

unless the provisions of paragraph (h)(3) of this section apply.The date on which the Secretary 

signs a new provisional program participation agreement (PPPA);

(ii) The date on which the Secretary notifies the institution that its application is denied; or

(iii) The last day of the month following the month in which the change of ownership occurred, 

unless the provisions of paragraph (h)(3) of this section apply. The date on which the Secretary 

co-signs a new provisional program participation agreement (PPPA).

(3) If the provisional TPPPA will expire under the provisions of paragraph (h)(2)(iii) of this section, the 

Secretary extends the provisional TPPPA on a month-to-month basis after the expiration date described 

in paragraph (h)(2)(iii) of this section if, prior to that expiration date, the institution provides the 

Secretary with the financial information required under 34 CFR 668.176.

(i) A “same day” balance sheet showing the financial position of the institution, as of the date of the 

ownership change, that is prepared in accordance with Generally Accepted Accounting Principles (GAAP) 

published by the Financial Accounting Standards Board and audited in accordance with Generally 

Accepted Government Auditing Standards (GAGAS) published by the U.S. General Accounting Office;

(ii) If not already provided, approval of the change of ownership from the State in which the institution 

is located by the agency that authorizes the institution to legally provide postsecondary education in 

that State;

(iii) If not already provided, approval of the change of ownership from the institution's accrediting 

agency; and

(iv) A default management plan unless the institution is exempt from providing that plan under 34 CFR 

668.14(b)(15).

§ 600.21 Updating application information.

(a) Reporting requirements. Except as provided in paragraph (b) of this section, an eligible institution 

must report to the Secretary, in a manner prescribed by the Secretary no later than 10 days after the 

change occurs, of any change in the following: 

* * *
Changes of Ownership and Changes in Control 7

(6)(i) Changes in ownership. An eligible institution must report aAny change in the ownership of the 

institution that does not result in a change of control as described in § 600.31 and subject to the 

requirements of § 600.20(g) and (h), whereby a natural person or entity acquires at least a 5 percent 

ownership interest (direct or indirect) of the institution but that does not result in a change of control 

as described in § 600.31.

(ii) Changes in control. A natural person or legal entity's ability to affect substantially the actions of the 

institution if that natural person or legal entity did not previously have this ability. The Secretary 

considers a natural person or legal entity to have this ability if the person -

(iA) The natural person acquires,Holds alone or together with another member or members of 

his or hertheir family, at least a 25 percent “ownership or voting interest” in the institution

(direct or indirect) (as defined in § 600.31(b)) in the institution; 

(iiB) The entity acquires, alone or together with an affiliated natural person or entity, at least a 

25 percent ownership or controlling interest in the institution (director or indirect) (as defined 

in § 600.31(b)) in the institution;

(iiiC) The natural person or entity acquiresRepresents or holds, either alone or together with 

another natural person or entity, under a voting trust, power of attorney, proxy, or similar 

agreement, at least a 25 percent ““ownership interest” or controlling interest in the institution

(direct or indirect), (as defined in § 600.31(b)) in the institution; or

(ivD) The natural person becomesIs a general partner, managing member, the chief executive 

officer, or chief financial officer, director, or other officer of the institution or of an entity 

whichthat has at least a 25 percent “ownership interest” or controlling interest (direct or 

indirect) (as defined in § 600.31(b)) in the institution; or

(vE) The entity becomes a general partner or managing member of an entity whichthat has at 

least a 25 percent “ownership interest” or controlling interest in the institution (direct or 

indirect) (as defined in § 600.31(b)) in the institution.

* * *

(14) In addition to the reporting required paragraphs (a)(6) and (b) of this section, aAny change in the 

ownership of the institution that does not result in a change of control as described in § 600.31 and is

subject to the requirements of § 600.20(g) and (h) but does not result in a change of control as 

described in § 600.31 and is not addressed under paragraph (a)(6) of this section, including the 

addition or elimination of any entities in the ownership structure, a change of entity from one type of 

business structure to another, and any excluded transactions under § 600.31(e).

(15) In addition to the reporting required by paragraphs (a)(6), (a)(14) and (b) of this section, any change 

in the ownership of the institution that does not result in a change of control as described in § 600.31 

and subject to the requirements of § 600.20(g) and (h), whereby a natural person or entity acquires at 

least a 5 percent ownership interest (direct or indirect) of the institution.

(b) Additional reporting from institutions owned by publicly-traded corporations. An institution that is 

owned by a publicly-traded corporation must report to the Secretary any change in the information 
Changes of Ownership and Changes in Control 8

described in paragraph (a)(6) or (14) of this section when it notifies its accrediting agency, but no later 

than 10 days after the institution learns of the change. 

§ 600.31 Change in ownership resulting in a change in control for private nonprofit, private for-profit 

and public institutions.

(a)

(1) Except as provided in paragraph (a)(2) of this section, a private nonprofit, private for-profit, or public 

institution that undergoes a change in ownership that results in a change in control ceases to qualify as 

an eligible institution upon the change in ownership and control. A change of ownership that results in a 

change in control includes any change by which a person who has or thereby acquires an ownership 

interest in the entity that owns the institution or the parent of that entity, acquires or loses the ability to 

control the institution.

(2) If a private nonprofit, private for-profit, or public institution has undergone a change in ownership 

that results in a change in control, the Secretary may, under the provisions of § 600.20(g) and (h), 

continue the institution's participation in the title IV, HEA programs on a provisional basis, provided that 

the institution submits, under the provisions of § 600.20(g), a materially complete application -

(i) No later than 10 business days after the change occurs; or

(ii) For an institution owned by a publicly -traded corporation, no later than 10 business days after 

the institution knew, or should have known of the change based upon SEC filings, that the change 

occurred.

(3) In order to reestablish eligibility and to resume participation in the title IV, HEA programs, the 

institution must demonstrate to the Secretary that after the change in ownership and control -

(i) The institution satisfies all the applicable requirements contained in §§ 600.4, 600.5, and 600.6, 

except that if the institution is a proprietary institution of higher education or postsecondary 

vocational institution, it need not have been in existence for two years before seeking eligibility; 

and

(ii) The institution qualifies to be certified to participate under 34 CFR part 668, subpart B.

(b) Definitions. The following definitions apply to terms used in this section:

Closely-held corporation. Closely-held corporation (including the term “close corporation”) means -

(1) A corporation that qualifies under the law of the State of its incorporation or organization as 

a statutory closeclosely-held corporation; or

(2) If the State of incorporation or organization has no definition of closely-held corporationstatutory

close corporation provision, a corporation the stock of which -

(i) Is held by no more than 30 persons; and

(ii) Has not been and is not planned to be publicly offered.

Control. Control (including the terms controlling, controlled by and under common control with) means 

the possession, direct or indirect, of the power to direct or cause the direction of the management and 

policies of a person, whether through the ownership of voting securities, by contract, or otherwise.

Ownership or ownership interest.
Changes of Ownership and Changes in Control 9

(1) Ownership or ownership interest means a direct or indirect legal or beneficial interest in an 

institution or legal entity, its corporate parent which may include a voting interest, or a right to share 

in the profitsderived from the operation of an institution or its corporate parent.

(2) For the purposes of determining whether a change in ownership has occurred, changes in the

ownership of the following are not included:- Ownership or ownership interest does not include an 

ownership interest held by -

(i) A mutual fund that is regularly and publicly traded.;

(ii) A U.S. institutional investor, as defined in 17 CFR 240.15a-6(b)(7).;

(iii) A profit-sharing plan of the institution or its corporate parent, provided that all full-time 

permanent employees of the institution or its corporate parent are included in the plan.; or

(iv) An employee stock ownership plan (ESOP).

Parent. The legal entity parent or parent entity is the entity that controls the institution or a legal 

entity specified entity directly or indirectly through one or more intermediate entitiesrmediaries.

Person. Person includes a legal entity or a natural person.

Wholly-owned subsidiary. A wholly-owned subsidiary is one substantially all of whose outstanding voting 

securities are owned by its parent together with the parent's other wholly-owned subsidiaries.

(c) Standards for identifying changes of ownership and control -

(1) Closely-held corporation. A change in ownership and control occurs when -

(i) A person acquires more than 50 percent of the total outstanding voting stock of the 

corporation;

(ii) A person who holds an ownership interest in the corporation acquires control of more than 

50 percent of the outstanding voting stock of the corporation; or

(iii) A person who holds or controls 50 percent or more of the total outstanding stock of the 

corporation ceases to hold or control that proportion of the stock of the corporation.

(2) Publicly traded corporations required to be registered with the Securities and Exchange 

Commission (SEC). A change in ownership and control occurs when -

(i) A person acquires such ownership and control of the corporation so that the corporation is 

required to file a Form 8K with the SEC notifying that agency of the change in control; or

(ii) (A) A person who is a controlling shareholder of the corporation ceases to be a controlling 

shareholder. A controlling shareholder is a shareholder who holds or controls through agreement 

both 25 percent or more of the total outstanding voting stock of the corporation and more shares 

of voting stock than any other shareholder. A controlling shareholder for this purpose does not 

include a shareholder whose sole stock ownership is held as a U.S. institutional investor, as defined 

in 17 CFR 240.15a-6(b)(7), held in mutual funds, held through a profit-sharing plan, or held in an 

Employee Stock Ownership Plan (ESOP).

(B) When a change of ownership occurs as a result of paragraph (c)(2)(ii)(A) of this section, the 

institution may submit its most recent quarterly financial statement as filed with the SEC, along 

with copies of all other SEC filings made after the close of the fiscal year for which a compliance 
Changes of Ownership and Changes in Control 10

audit has been submitted to the Department of Education, instead of the “same day” balance 

sheet.

(C) If a publicly-traded institution is provisionally certified due to a change in ownership 

under paragraph (c)(2)(ii) of this section, and that institution experiences another change of 

ownership under paragraph (c)(2)(ii) of this section, an approval of the subsequent change in 

ownership does not extend the original expiration date for the provisional certification provided 

that any current controlling shareholder was listed on the change of ownership application for 

which the original provisional approval was granted.

(3) Other entities.

(i) The term “other entities” means any entity whichthat is not closely held nor required to be 

registered with the SEC, and includes includes limited liability companies, limited liability 

partnerships, limited partnerships, and similar types of legal entities. A change in ownership and 

control of an entity that is neither closely-held nor required to be registered with the SEC occurs 

when -–

(ii) The Secretary deems the following changes to constitute a change in ownership resulting in a 

change of control of such an entity:

(A) A person (or combination of persons) acquires at least 50 percent of the total 

outstanding voting interests in the entity, or otherwise acquires 50 percent control.;

(B) A person (or combination of persons) who holds less than a 50 percent voting 

interest in an entity acquires at least 50 percent of the outstanding voting interests in 

the entity, or otherwise acquires 50 percent control.;

(C) A person (or combination of persons) who holds at least 50 percent of the voting 

interests in the entity ceases to hold at least 50 percent voting interest in the entity, or 

otherwise ceases to hold 50 percent control.;

(D) A partner in a general partnership acquires or ceases to own at least 50 percent of 

the voting interests in the general partnership, or otherwise acquires or ceases to hold 

50 percent control.;

(E) Any change of a general partner of a limited partnership (or similar entity) if that 

general partner also holds an equity interest.;

(F) Any change in a managing member of a limited liability company (or similar entity) if 

that managing member also holds an equity interest.;

(G) Notwithstanding its voting interests, a A person becomes the sole member or 

shareholder of a limited liability company or other entity whichthat has a acquires or 

ceases to hold a 100 percent or equivalent direct or indirect interest in the institution.;

(H) An entity that has a member or members ceases to have any members.

(I) An entity that has no members becomes an entity with a member or members.

(HJ) ANotwithstanding its voting interests, a person is replaced as the sole member or 

shareholder of a limited liability company or other entity whichthat has a 100 percent 

or equivalent direct or indirect interest in the institution.; oror
Changes of Ownership and Changes in Control 11

(KIH) The addition or removal of any personentity that provides or will provide the 

audited financial statements to meet any of the requirements inof § 600.20(g) or , (h) or 

Subpart L of 34 CFR part 668, subpart L. 

(iii) The Secretary deems the following interests to satisfy the 50 percent thresholds described 

above: 

(A) A combination of persons, although each witheach of whom holds less than 50

percent voting or controllingownership interest in an entity, hold a combined 

votingownership interest of at least 50 percent as a result of proxy agreements, voting 

agreements, or other agreements (whether or not the agreement is set forth in a 

written document), or by operation of State law.;

(B) A combination of persons, although each withof whom holds less than 50 percent

voting or controllingownership interest in an entity, holds a combined voting or 

controllingownership interest of at least 50 percent as a result of common ownership,

management, and or control of that entity, either directly or indirectly; or.

(C) A combination of individuals who are family members as defined in § 600.21, 

although each withof whom holds less than 50 percent voting or controllingownership

interest in an entity, holds a combined voting or controllingownership interest of at 

least 50 percent. 

(iv) (D) Notwithstanding paragraphs (c)(3)(ii)- and (iii) of this sectionthe foregoing--

(A1) If a person who alone or in combination with other persons (as described in 

paragraphs (c)(3)(i)-(iii) of this section) hasholds less than a 50 percent ownership 

voting or controlling interest in an entity, the Secretary may determine that the person, 

either alone or in combination with other persons, has actual control over that entity 

and is subject to the requirements of this section;. and

(B2) Any person who alone or in combination with other persons has the right to 

appoint a majority of any class of board members of an entity or an institution is 

deemed to have control. 

(i) A person who has or acquires an ownership interest acquires both control of at least 25 percent

of the total of outstanding voting stock of the corporation and control of the corporation; or

(ii) A person who holds both ownership or control of at least 25 percent of the total outstanding 

voting stock of the corporation and control of the corporation, ceases to own or control that 

proportion of the stock of the corporation, or to control the corporation.

(4) General partnership or sole proprietorship. A change in ownership and control occurs when a person 

who has or acquires an ownership interest acquires or loses control as described in this section.

(45) Wholly owned subsidiary. An entity that is a wholly owned subsidiary changes ownership and 

control when its parent entity changes ownership and control as described in this section.

(56) Nonprofit institution. A nonprofit institution changes ownership and control when a change takes 

place that is described in paragraphs (c)(3) and (d) of this section.
Changes of Ownership and Changes in Control 12

(67) Public institution. The Secretary does not consider that a public institution undergoes a change in 

ownership that results in a change of control if there is a change in governance and the institution after 

the change remains a public institution, provided -

(i) The new governing authority is in the same State as included in the institution's program 

participation agreement; and

(ii) The new governing authority has acknowledged the public institution's continued 

responsibilities under its program participation agreement.

(d) Covered transactions. For the purposes of this section, a change in ownership of an institution that 

results in a change of control may include, but is not limited to -

(1) The sale of the institution;

(2) The transfer of the controlling interest of stock of the institution or its parent corporation;

(3) The merger of two or more eligible institutions;

(4) The division of one institution into two or more institutions;

(5) The transfer of the liabilities of an institution to its parent corporation;

(6) A transfer of assets that comprise a substantial portion of the educational business of the institution, 

except where the transfer consists exclusively in the granting of a security interest in those assets; or

(7) A change in status as a for-profit, nonprofit, or public institution; or.

(8) The acquisition of an institution or an additional location of an institution to become an additional 

location of another institution, unless the acquired institution or location closed or ceased to provide 

educational instruction. 

(e) Excluded transactions. A change in ownership and control reported under § 600.21 and otherwise

subject to this section does not include a transfer of ownership and control of all or part of an owner's 

equity or partnership interest in an institution, the institution's parent corporation, or other legal entity 

that has signed the institution's Program Participation Agreement -

(1) From an owner to a “family member” of that owner as defined in § 600.21(f); or

(2) Upon the retirement or death of the owner; or

(3) Upon the resignation from the operation of the institution by an individual owner who has been 

involved in the management of the institution for at least two years preceding the transfer and who has 

established and retained the ownership interest for at least two years prior to the transfer, to another 

individual owner person with a direct or indirect ownership interest in the institution who has been 

involved in the management of the institution for at least two years preceding the transfer and who has 

established and retained the ownership interest for at least two years prior to the transfer.

Last updated on 3/16/2022