Issue Paper 4

Session 2: February 5-8, 2018

Issue: Sanctions for Programs Based on D/E Rates

Statutory cites: 20 U.S.C. § 1221e-3; 20 U.S.C. § 3474; 20 U.S.C. § 1231a; 20 U.S.C. 

§§ 1001(b)(1), 1002(b)(1)(A)(i), (c)(1)(A); 20 U.S.C. § 1088(b)

Regulatory cites: 34 CFR §§ 668.403, 668.409 (citation added in session 2), and 668.410

Summary of

Changes: We propose to eliminate the loss of eligibility to participate in title IV, 

HEA programs as a possible sanction under the D/E rates measure, as well as restrictions on 

starting new programs that are similar to low-performing programs. We propose that 

notifications would be provided to students and prospective students for any year an educational 

program is determined by the Secretary to be low performing. We propose to add a requirement 

to notify students/prospective students that the institution has made or is making changes to the 

program to improve its outcomes. We propose to remove a requirement that the institution 

receive acknowledgment from the student that they have received the notification. For 

prospective students, we propose that they receive the notification on first contact with the 

institution, but not again prior to enrollment.

§668.409 Final determination of the D/E rates measure..

(a) Notice of determination. For each award year for which the Secretary calculates a 

D/E rates measure for a GEan educational program, the Secretary issues a notice of 

determination informing the institution of the following:

(1) The final D/E rates for the program as determined under §§§668.404, § and 668.405, 

and, if applicable, §668.406;.

(2) The final determination by the Secretary of whether the program is passing, failing, 

in the zone, or ineligible, acceptable or low-performing under the D/E rates measure, as 

described in §668.403, and the consequences of that determination;.

(3) Whether the program could become ineligible based on its final D/E rates for the next 

award year for which D/E rates are calculated for the program;
(4) (3) Whether the institution is required to provide the student warninga notification

under §668.410(a); and).

(5) If the program's final D/E rates are failing or in the zone, instructions on how it may 

make an alternate earnings appeal pursuant to §668.406.

(b) Effective date of Secretary's final determination. The Secretary's determination as 

to the D/E rates measure is effective on the date that is specified in the notice of determination. 

The determination, including, as applicable, the determination with respect to an appeal under 

§668.406, constitutes the final decision of the Secretary with respect to the D/E rates measure 

and the Secretary provides for no further appeal of that determination.

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094)

§668.410 Consequences of Notification for low-performing programs .

(a) General. For any year in which an educational program is determined by the 

Secretary to be low performing under the D/E rates measure., the institution must provide a

notification to students and prospective students. 

(a) Student warning—(1) Events requiring a warning to students and prospective 

students. The institution must provide a warning with respect to a GE program to students and to 

prospective students for any year for which the Secretary notifies an institution that the program 

could become ineligible based on its final D/E rates measure for the next award year.

(2) (b) Content of warning. notification. Unless otherwise specified by the Secretary in a 

notice published in the Federal Register, the warningnotification must—-- 
(i)1) State that: “This program has not passedmet standards established by the U.S. 

Department of Education. The Department based these standards on the amounts students 

borrow for enrollment in this program and their reported earnings. If in the future the program 

does not pass the standards, students who are then enrolled may not be able to use federal student

grants or loans to pay for the program, and may have to find other ways, such as private loans, to 

pay for the program.”;the reported earnings that were reported to the Internal Revenue Service. 

Similar programs offered at other institutions may have better outcomes under this measure. 

Please note, however, that this program measure could be affected if a significant number of 

students who completed our program graduates did not report all of their income, such as tip 

income, or were self-employed and had business expenses that reduced the earnings being 

reported.”;

(ii)2) Refer students and prospective students to (and include a link for) College 

Navigator, its successor site, or another similar Federal resource, for information about other 

similar programs.; and

(iii)3) For warningsanotification provided to enrolled students—--

(A)i) Describe the academic and financial options available to students to continue their 

education in another program at the institution, including whether the students could transfer 

credits earned in the program to another program at the institution and which course credits 

would transfer, in the event that the program loses eligibility for title IV, HEA program funds;; 

and

(B)ii) Indicate whether or not the institution will—
(1) Continuehas made, or is making, changes to provide instruction in the educational 

program that are designed to allow students to complete the program;improve its outcomes, and

provide details about those changes.

(2) Refund the tuition, fees, and other required charges paid to the institution by, or on 

behalf of, students for enrollment in the program; and

(C) Explain whether the students could transfer credits earned in the program to another 

institution.

(3) Consumer testing. The Secretary will conduct consumer testing to determine how to 

make the student warning as meaningful as possible.

(4) (c) Alternative languages. To the extent practicable, the institution must provide 

alternatives to the English-language student warningnotification for those students and 

prospective students for whom English is not their first language.

(5) (d) Delivery to students. (i) (1) An institution must provide the warningnotification required 

under this section in writing to each student enrolled in the program no later than 30 days after 

the date of the Secretary's notice of determination under §668.409 by—--

(A)i) Hand-delivering the warningnotification as a separate document to the student 

individually or as part of a group presentation; or

(B)ii) Sending the warningnotification to the primary email address used by the 

institution for communicating with the student about the program.

(ii) (2) If the institution sends the warningnotification by email, the institution must—--

(A) (i) Ensure that the warningnotification is the only substantive content in the email;
(B) Receive electronic or other written acknowledgement from the student that the student 

has received the email;

(C) (ii) Send the warningnotification using a different address or method of delivery if the 

institution receives a response that the email could not be delivered; and

(D) (iii) Maintain records of its efforts to provide the warningsnotification required by this 

section. 

(6) e) Delivery to prospective students — (i) — (1) General. An institution must 

provide any warningnotification required under this section to each prospective student or to 

each third party acting on behalf of the prospective student at the first contact about the program 

between the institution and the student or the third party acting on behalf of the student by—--

(A)i) Hand-delivering the warningnotification as a separate document to the prospective 

student or third party individually, or as part of a group presentation;

(B)ii) Sending the warning notification to the primary email address used by the 

institution for communicating with the prospective student or third party about the program;

(C)iii) Providing the prospective student or third party a copy of the disclosure template 

as required by §668.412(e) that includes the student warningnotification required by this section; 

or

(D)iv) Providing the warningnotification orally to the student or third party if the contact 

is by telephone.

(ii) Special warning requirements before enrolling a prospective student. (A) Before an 

institution enrolls, registers, or enters into a financial commitment with a prospective student 

with respect to the program, the institution must provide any warning required under this section 
to the prospective student in the manner prescribed in paragraph (a)(6)(i)(A) through (C) of this 

section.

(B) An institution may not enroll, register, or enter into a financial commitment with the 

prospective student with respect to the program earlier than—

(1) Three business days after the institution first provides the student warning to the 

prospective student; or

(2) If more than 30 days have passed from the date the institution first provided the student 

warning to the prospective student, three business days after the institution provides another 

warning as required by this paragraph.

(iii) Email delivery and acknowledgement. If the institution sendsprovides the 

warningnotification to the prospective student or the third party by email, including by providing 

the prospective student or third party an electronic copy of the disclosure template, the institution 

must—--

(A)i) Ensure that the warningnotification is the only substantive content in the email;

(B) Receive electronic or other written acknowledgement from the prospective student or 

third party that the student or third party has received the email;

(C) (ii) Send the warningnotification using a different address or method of delivery if the 

institution receives a response that the email could not be delivered; and

(D)iii) Maintain records of its efforts to provide the warning required under this 

section.notification. 
(7) f) Disclosure template. Within 30 days of receiving notice from the Secretary that 

the institution must provide a student warning for the programnotification under this section, the 

institution must update the educational program’s disclosure template described in §668.412 to 

include the warningnotification in paragraph (a)(2b) of this section or such other 

warningnotification specified by the Secretary in a notice published in the Federal Register. 

(b) Restrictions—(1) Ineligible program. Except as provided in §668.26(d), an institution 

may not disburse title IV, HEA program funds to students enrolled in an ineligible program.

(2) Period of ineligibility. (i) An institution may not seek to reestablish the eligibility of a 

failing or zone program that it discontinued voluntarily, reestablish the eligibility of a program 

that is ineligible under the D/E rates measure, or establish the eligibility of a program that is 

substantially similar to the discontinued or ineligible program, until three years following the 

date specified in the notice of determination informing the institution of the program's 

ineligibility or the date the institution discontinued the failing or zone program.

(ii) An institution may not seek to reestablish the eligibility of a program that it 

discontinued voluntarily after receiving draft D/E rates that are failing or in the zone, or establish 

the eligibility of a program that is substantially similar to the discontinued program, until—

(A) Final D/E rates that are passing are issued for the program for that award year; or

(B) If the final D/E rates for the program for that award year are failing or in the zone, three 

years following the date the institution discontinued the program.
(iii) For the purposes of this section, an institution voluntarily discontinues a program on the 

date the institution provides written notice to the Secretary that it relinquishes the title IV, HEA 

program eligibility of that program.

(iv) For the purposes of this subpart, a program is substantially similar to another program if 

the two programs share the same four-digit CIP code. The Secretary presumes a program is not 

substantially similar to another program if the two programs have different four-digit CIP codes 

but the institution must provide an explanation of how the new program is not substantially 

similar to the ineligible or voluntarily discontinued program with its certification under 

§668.414.

(3) Restoring eligibility. An ineligible program, or a failing or zone program that an 

institution voluntarily discontinues, remains ineligible until the institution establishes the 

eligibility of that program under §668.414(c).

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094, 1099c)