Tuesday, 

July 20, 2010 

Part II 

Department of 

Education 

34 CFR Parts 600, 668, and 682 

Foreign Institutions—Federal Student Aid 

Programs; Proposed Rule 


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42190 Federal Register / Vol. 75, No. 138 / Tuesday, July 20, 2010 / Proposed Rules 

DEPARTMENT OF EDUCATION 

34 CFR Parts 600, 668, and 682 

RIN 1840–AD03 

[Docket ID ED–2010–OPE–0009] 

Foreign Institutions—Federal Student 

Aid Programs 

AGENCY: Office of Postsecondary 

Education, Department of Education. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Secretary proposes to 

implement provisions related to the 

eligibility of foreign institutions for 

participation in the Federal student aid 

programs that were added to the Higher 

Education Act of 1965, as amended 

(HEA), by the Higher Education 

Opportunity Act of 2008 (HEOA), as 

well as other provisions related to the 

eligibility of a foreign institution by 

amending the regulations for 

Institutional Eligibility Under the 

Higher Education Act of 1965, the 

Student Assistance General Provisions, 

and the Federal Family Education Loan 

(FFEL) Program. 

DATES: We must receive your comments 

on or before August 19, 2010. 

ADDRESSES: Submit your comments 

through the Federal eRulemaking Portal 

or via postal mail, commercial delivery, 

or hand delivery. We will not accept 

comments by fax or by e-mail. Please 

submit your comments only one time, in 

order to ensure that we do not receive 

duplicate copies. In addition, please 

include the Docket ID at the top of your 

comments. 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov to submit 

your comments electronically. 

Information on using Regulations.gov, 

including instructions for finding a 

regulation, submitting a comment, 

finding a comment, and signing up for 

e-mail alerts, is available on the site 

under ‘‘How To Use Regulations.gov’’ in 

the Help section. 

• Postal Mail, Commercial Delivery, 

or Hand Delivery. If you mail or deliver 

your comments about these proposed 

regulations, address them to Wendy 

Macias, U.S. Department of Education, 

1990 K Street, NW., room 8017, 

Washington, DC 20006–8502. 

Privacy Note: The Department’s policy for 

comments received from members of the 

public (including those comments submitted 

by mail, commercial delivery, or hand 

delivery) is to make these submissions 

available for public viewing in their entirety 

on the Federal eRulemaking Portal at http:// 

www.regulations.gov. Therefore, commenters 

should be careful to include in their 

comments only information that they wish to 

make publicly available on the Internet 

FOR FURTHER INFORMATION CONTACT: For 

general information or information 

related to nonprofit status for foreign 

institutions, public foreign institutions 

and financial responsibility, eligibility 

of training programs at foreign 

institutions, and foreign graduate 

medical schools, Wendy Macias. 

Telephone: (202) 502–7526 or via the 

Internet at: Wendy.Macias@ed.gov. 

For information related to audited 

financial statements and compliance 

audits, Anthony Gargano. Telephone: 

(202) 502–7519, or via the Internet at: 

Anthony.Gargano@ed.gov. 

For information related to the 

definition of a foreign institution, Gail 

McLarnon. Telephone: (202) 219–7048, 

or via the Internet at: 

Gail.McLarnon@ed.gov. 

For information related to single legal 

authorization for groups of foreign 

institutions, foreign veterinary schools, 

foreign nursing schools and certification 

of foreign institutions, Brian Smith. 

Telephone: (202) 502–7551, or via the 

Internet at Brian.Smith@ed.gov. 

If you use a telecommunications 

device for the deaf, call the Federal 

Relay Service, toll free, at 1–800–877– 

8339. 

Individuals with disabilities can 

obtain this document in an accessible 

format (e.g., braille, large print, 

audiotape, or computer diskette) on 

request to one of the contact persons 

listed under FOR FURTHER INFORMATION

CONTACT. 

SUPPLEMENTARY INFORMATION: 

Invitation To Comment 

As outlined in the section of this 

notice entitled Negotiated Rulemaking, 

significant public participation, through 

three public hearings and three 

negotiated rulemaking sessions, has 

occurred in developing this notice of 

proposed rulemaking (NPRM). In 

accordance with the requirements of the 

Administrative Procedure Act, we invite 

you to submit comments regarding these 

proposed regulations on or before 

August 19, 2010. To ensure that your 

comments have maximum effect in 

developing the final regulations, we 

urge you to identify clearly the specific 

section or sections of the proposed 

regulations that each of your comments 

addresses and to arrange your comments 

in the same order as the proposed 

regulations. 

We invite you to assist us in 

complying with the specific 

requirements of Executive Order 12866, 

including its overall requirements to 

assess both the costs and the benefits of 

the proposed regulations and feasible 

alternatives, and to make a reasoned 

determination that the benefits of these 

proposed regulations justify their costs. 

Please let us know of any further 

opportunities we should take to reduce 

potential costs or increase potential 

benefits while preserving the effective 

and efficient administration of the 

programs. 

During and after the comment period, 

you may inspect all public comments 

about these proposed regulations by 

accessing Regulations.gov. You may also 

inspect the comments, in person, in 

room 8031, 1990 K Street, NW., 

Washington, DC, between the hours of 

8:30 a.m. and 4:00 p.m., Eastern time, 

Monday through Friday of each week 

except Federal holidays. 

Assistance to Individuals With 

Disabilities in Reviewing the 

Rulemaking Record 

On request, we will supply an 

appropriate aid, such as a reader or 

print magnifier, to an individual with a 

disability who needs assistance to 

review the comments or other 

documents in the public rulemaking 

record for these proposed regulations. If 

you want to schedule an appointment 

for this type of aid, please contact one 

of the persons listed under FOR FURTHER

INFORMATION CONTACT. 

Negotiated Rulemaking 

Section 492 of the HEA requires the 

Secretary, before publishing certain 

proposed regulations for programs 

authorized by Title IV of the HEA, to 

obtain public involvement in the 

development of the proposed 

regulations. After obtaining advice and 

recommendations from the public, 

including individuals and 

representatives of groups involved in 

the Federal student financial assistance 

programs, the Secretary in many cases 

must subject the proposed regulations to 

a negotiated rulemaking process. 

Proposed regulations that the 

Department publishes on which the 

negotiators reached consensus must 

conform to final agreements resulting 

from that process unless the Secretary 

reopens the process or provides a 

written explanation to the participants 

stating why the Secretary has decided to 

depart from the agreements. Further 

information on the negotiated 

rulemaking process can be found at: 

http://www.ed.gov/policy/highered/leg/ 

hea08/index.html. 

On May 26, 2009, the Department 

published a notice in the Federal 

Register (74 FR 24728) announcing our 

intent to establish two negotiated 

rulemaking committees to prepare 

proposed regulations. One committee 

would focus on issues related to 


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program integrity (Team I—Program 

Integrity Issues). A second committee 

would focus on issues related to the 

eligibility of foreign institutions for 

participation in the Title IV, HEA 

programs (Team II—Foreign School 

Issues). On September 9, 2009, the 

Department published a second notice 

in the Federal Register (74 FR 46399) 

listing the topics the committees were 

likely to address and requested 

nominations of individuals for 

membership on the committees who 

could represent the interests of key 

stakeholder constituencies on each 

committee. 

Team II—Foreign School Issues (Team 

II) met to develop proposed regulations 

during the months of November 2009, 

January 2010, and February 2010. 

The Department developed a list of 

proposed regulatory provisions based on 

the provisions contained in the HEOA 

and from advice and recommendations 

submitted by individuals and 

organizations as testimony to the 

Department in a series of three public 

hearings held on— 

• June 15–16, 2009, at the 

Community College of Denver in 

Denver, Colorado; 

• June 18–19, 2009, at the University 

of Arkansas in Little Rock, Arkansas; 

• June 22–23, 2009, at the 

Community College of Philadelphia in 

Pennsylvania. 

In addition, the Department accepted 

written comments on possible 

regulatory provisions submitted directly 

to the Department by interested parties 

and organizations. A summary of all 

comments received orally and in writing 

is posted as background material in the 

docket for this NPRM. Transcripts of the 

regional meetings can be accessed at 

http://www.ed.gov/policy/highered/leg/ 

hea08/index.html. 

Staff within the Department also 

identified issues for discussion and 

negotiation. 

At its first meeting, Team II reached 

agreement on its protocols. The agenda 

included the issues identified for the 

Committee’s consideration. 

Team II included the following 

members: 

• Harrison Wadsworth, representing 

the International Education Council. 

• Yvonne Oberhollenzer and John 

Hayton (alternate), Australian Education 

International North America, 

representing the Embassy of Australia, 

the Embassy of New Zealand, the British 

Council and the German Academic 

Exchange Service. 

• Judy Stymest, McGill University, 

and Alexander Leipziger (alternate), 

Canadian Embassy, representing the 

Canadian Association of Student 

Financial Aid Administrators. 

• Warren Ross and Jerry Thornton 

(alternate), representing the 

International University of Nursing and 

the University of Medicine and Health 

Sciences. 

• Cynthia Holden, American 

University of the Caribbean, and James 

McIntyre (alternate), McIntyre Law 

Firm, PLLC, representing American 

University of the Caribbean. 

• Nancy Perri, Ross University School 

of Medicine, and William Clohan 

(alternate), DeVry Inc., representing 

Ross University School of Medicine. 

• Steven Rodger, and Patrick 

Donnellan (alternate) representing R3 

Education Inc. 

• Ronald Blumenthal and Rebecca 

Campoverde (alternate) representing 

Kaplan, Inc. 

• Charles Modica, representing St. 

George’s University. 

• Betsy Mayotte, American Student 

Assistance, and Jacqueline Fairbairn 

(alternate), Great Lakes Higher 

Education Guaranty Corporation, 

representing guaranty agencies. 

• David Bergeron and Gail McLarnon 

(alternate), U.S. Department of 

Education, representing the Federal 

Government. 

The Committee’s protocols provided 

that the Committee would operate by 

consensus, meaning there must be no 

dissent by any member. Under the 

protocols, if the Committee reaches 

consensus on all issues, the Department 

will use the consensus-based language 

in the proposed regulations and 

Committee members and the 

organizations whom they represent will 

refrain from commenting negatively on 

the package, except as provided for in 

the agreed upon protocols. 

During the meetings, Team II 

reviewed and discussed drafts of 

proposed regulations. At the final 

meeting in February 2010, Team II 

reached consensus on the proposed 

regulations in this document. 

More information on the work of 

Team II can be found at http:// 

www2.ed.gov/policy/highered/reg/ 

hearulemaking/2009/negregsummerfall.html. 

Summary of Proposed Changes 

These proposed regulations would 

implement provisions related to the 

eligibility of foreign institutions to 

participate in the Title IV, HEA 

programs including— 

• Establishing submission 

requirements for compliance audits and 

audited financial statements specific to 

foreign institutions; 

• Clarifying and revising the 

definition of a foreign institution; 

• Establishing a definition of 

nonprofit status specific to foreign 

institutions; 

• Establishing a financial 

responsibility standard for foreign 

public institutions that is comparable to 

the financial responsibility standard for 

domestic public institutions; 

• Permitting a single legal 

authorization for groups of foreign 

institutions under the purview of a 

single government entity; 

• Establishing eligibility of training 

programs at foreign institutions; 

• Establishing institutional eligibility 

criteria specific to foreign graduate 

medical schools, foreign veterinary 

schools, and foreign nursing schools; 

and 

• Revising the maximum certification 

period for some foreign institutions. 

Significant Proposed Regulations 

We group major issues according to 

subject, with appropriate sections of the 

proposed regulations referenced in 

parentheses. We discuss other 

substantive issues under the sections of 

the proposed regulations to which they 

pertain. Generally, we do not address 

proposed regulatory provisions that are 

technical or otherwise minor in effect. 

Until amended effective July 1, 2010, 

section 102(a)(1)(C) of the HEA 

provided that foreign institutions may 

participate in the Title IV, HEA 

programs ‘‘only for purposes of part B of 

Title IV.’’ Part B of Title IV contains the 

statutory requirements for the FFEL 

Program. With the enactment of the 

Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111– 

152) (HCERA) on March 30, 2010, as of 

July 1, 2010, there will be no new 

originations of FFEL Program loans. All 

new originations with a first 

disbursement on or after July 1, 2010, 

will be made via the William D. Ford 

Federal Direct Loan (Direct Loan) 

Program, including loans for students 

attending foreign institutions. At the 

time these proposed regulations were 

negotiated, it was unclear whether the 

proposed legislation that would end the 

FFEL Program would be enacted. As a 

result, these proposed regulations 

reference participation in the FFEL 

Program, except as noted. When the 

Department publishes final regulations 

to implement these proposed 

regulations, it will correct those 

references in the regulations resulting 

from these proposed regulations to 

indicate participation in the Direct Loan 

Program, rather than the FFEL Program. 

Any substantive or technical changes to 

the Title IV, HEA program regulations 


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resulting from the HCERA will be 

addressed through future rulemaking 

efforts. For more information about the 

transition of foreign institutions to the 

Direct Loan Program, contact the Office 

of Federal Student Aid’s Foreign 

Schools Team at 

fsa.foreign.schools@ed.gov or (202) 377– 

3168. 

Part 600 Institutional Eligibility Under 

the Higher Education Act of 1965, as 

Amended. 

Nonprofit Status for Foreign 

Institutions (§ 600.2) 

Statute: Section 102(a)(2)(A) of the 

HEA directs the Secretary to establish 

criteria by regulation for the 

determination that foreign institutions 

are comparable to an institution of 

higher education as defined in section 

101 of the HEA—which specifies that an 

institution of higher education must be 

a public or other nonprofit institution— 

except that foreign graduate medical 

schools, foreign veterinary schools, and 

foreign nursing schools may be forprofit. Sections 101(a)(4) and 101(b)(2) 

of the HEA identify nonprofit 

institutions as one type of institution 

that may be an institution of higher 

education and, therefore, may be 

eligible to apply to participate in the 

Title IV, HEA programs. 

Current Regulations: Section 600.54 

provides that, to participate in the Title 

IV, HEA programs, a foreign institution 

must be a public or private nonprofit 

educational institution. Foreign 

graduate medical schools, foreign 

veterinary schools, and foreign nursing 

schools are excepted from this 

requirement by section 102(a)(2)(A) of 

the HEA. Section 600.2 defines a 

nonprofit institution as an institution 

that— 

• Is owned and operated by one or 

more nonprofit corporations or 

associations, no part 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 (IRS) 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)). 

Proposed Regulations: Under 

proposed § 600.2, a new paragraph (2) of 

the definition of a nonprofit institution 

would provide that if a recognized tax 

authority of a foreign institution’s home 

country is recognized by the Secretary 

for purposes of making determinations 

of an institution’s nonprofit status for 

Title IV, HEA purposes, the Secretary 

would automatically accept that tax 

authority’s determination of nonprofit 

educational status for any institution 

located in that country. If a 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, HEA 

program purposes, a foreign institution 

would have to demonstrate to the 

satisfaction of the Secretary that it is a 

nonprofit educational institution. The 

proposed regulations would also make 

clear that a nonprofit foreign institution 

may not be owned by a for profit entity, 

directly or indirectly. A foreign 

institution that did not meet this 

definition of a nonprofit foreign 

institution would not be eligible to 

participate in the Title IV, HEA 

programs unless it was a medical, 

veterinary, or nursing school. 

Reasons: As foreign institutions must 

be nonprofit institutions to participate 

in the Title IV, HEA programs, unless 

they are medical, veterinary, or nursing 

schools, the Department believes it is 

necessary to delineate in regulations the 

requirements for demonstrating 

nonprofit status for foreign institutions. 

Some non-Federal negotiators originally 

suggested that the Department should 

always defer to any determination by a 

foreign country that an institution is 

nonprofit. The Department pointed out 

that a domestic institution must be 

determined by the U.S. IRS to be a 

nonprofit organization in order to be 

eligible as a nonprofit institution for 

participation in the Title IV, HEA 

programs. The Department also noted 

that certain countries may not have 

standards for the determination of 

nonprofit status that are comparable to 

those used in the United States, and 

may not ensure that the institution’s net 

earnings do not benefit any private 

shareholder or individual. Therefore, to 

make the proposed regulations as 

comparable as possible to those 

applicable to domestic institutions, the 

Department proposed, and the 

Committee agreed, that a determination 

that an institution is nonprofit by an 

entity in the institution’s foreign 

country would qualify an institution as 

nonprofit only if the determination is 

made by a recognized tax authority of 

the country, and the Secretary has 

recognized that tax authority as one that 

can make a determination using criteria 

that are similar to those used by the IRS. 

In response to non-Federal negotiators 

pointing out that some countries may 

have more than one recognized entity 

for the purpose of making 

determinations of the nonprofit status of 

its institutions, the Department made 

clear during the negotiations that under 

the language proposed, the Secretary 

may recognize more than one tax 

authority in a country. Some nonFederal negotiators suggested that the 

Department allow a determination of 

nonprofit status to be made by an entity 

other than a recognized tax authority of 

the country. The Department noted that, 

as the proposed language was written, 

information submitted by such entities 

would be taken into account by the 

Department; however, this would be 

done as part of an individual 

determination of the eligibility 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. 

Definition of a Foreign Institution 

(§§ 600.51, 600.52, 600.54, 682.200 and 

682.611) 

Statute: Section 102(a)(1)(C) of the 

HEA provides that an ‘‘institution of 

higher education,’’ only for the purposes 

of part B of Title IV, includes an 

institution outside the United States 

that is comparable to an institution of 

higher education as that term is defined 

in section 101 of the HEA and is an 

institution that has been approved by 

the Secretary. Section 102(a)(2)(A) of the 

HEA requires the Secretary to establish 

regulatory criteria for the approval of 

such institutions and for the 

determination that they are comparable. 

Current Regulations: Subpart E of 34 

CFR part 600 (§§ 600.51 through 600.57) 

contains the eligibility requirements 

that a foreign institution must meet to 

participate in the FFEL Program. 

Current § 600.51 explains the purpose 

and scope of subpart E and provides 

that a foreign institution is eligible to 

participate in the FFEL Program if it is 

comparable to an eligible institution of 

higher education located in the United 

States and has been approved by the 

Secretary. Implementing a statutory 

provision in section 481(b)(4) of the 

HEA, current § 600.51 also provides that 

a program offered by a foreign school 

through any use of a 

telecommunications or correspondence 

course or through a direct assessment 

program is not an eligible program. 

Current § 600.52 contains the 

definitions associated with subpart E 

and defines foreign institution as an 

institution that is not located in a State. 

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 


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Northern Mariana Islands, the Republic 

of the Marshall Islands, the Federal 

States of Micronesia, and the Republic 

of Palau. 

Current § 600.54 contains the criteria 

the Secretary uses to determine whether 

a foreign institution is eligible to apply 

to participate in the FFEL Program. A 

public or private nonprofit foreign 

institution may apply to participate in 

the FFEL Program if the institution— 

• Admits as regular students only 

those students with a secondary school 

completion credential or its recognized 

equivalent; 

• Is legally authorized by an 

appropriate authority to provide an 

eligible program beyond the secondary 

school level in the country in which the 

institution is located; and 

• Provides eligible programs for 

which the institution is legally 

authorized to award the equivalent of an 

associate, baccalaureate, graduate, or 

professional degree awarded in the 

United States; provides an eligible 

program that is at least a two-academic 

year program acceptable for full credit 

toward the equivalent of a baccalaureate 

degree awarded in the United States; or, 

provides an eligible program that is 

equivalent to at least a one-academic 

year training program in the United 

States that leads to a certificate, degree, 

or other recognized educational 

credential and prepares students for 

gainful employment in a recognized 

occupation. 

Currently, §§ 668.2 and 682.200 do 

not contain a reference to the definition 

of foreign institution in the list of 

definitions set forth in 34 CFR part 600. 

Lastly, current § 682.611 provides that 

a foreign school is required to comply 

with the provisions of part 682 unless 

the regulations or other official 

Department of Education publications 

or documents state otherwise. 

Proposed Regulations: The proposed 

regulations would remove and reserve 

§ 682.611, remove the definition of 

foreign school from § 682.200(b)(1), and 

add references to §§ 668.2(a)(2) and 

682.200(a)(2) specifying that the 

definition of foreign institution is 

contained in regulations for Institutional 

Eligibility under the HEA, as amended, 

34 CFR part 600. These proposed 

revisions would consolidate the 

requirements and definitions related to 

the eligibility of foreign institutions to 

apply for Title IV, HEA program 

participation in subpart E of 34 CFR part 

600. The proposed regulations would 

revise § 600.51(c) to incorporate the 

provisions of removed § 682.611, i.e., 

that a foreign institution must comply 

with all requirements for eligible and 

participating institutions except to the 

extent those provisions are inconsistent 

with the HEA, 34 CFR part 600, or other 

regulatory provisions specific to foreign 

institutions. Proposed § 600.51(c) would 

also exempt foreign institutions from 

requirements that the Secretary 

identifies through a notice in the 

Federal Register. 

The proposed regulations would 

amend § 600.52 to include a detailed 

definition of foreign institution. Under 

the definition proposed, foreign 

institution would mean, for the 

purposes of students who receive Title 

IV, HEA program aid, an institution 

that— 

• Is not located in a State; 

• Except with respect to clinical 

training offered at foreign graduate 

medical, veterinary, and nursing 

schools, has no U.S. locations; 

• Has no written arrangements, 

within the meaning of § 668.5, with 

institutions or organizations located in 

the U.S. for students at foreign 

institutions to take a portion of the 

program from institutions located in the 

U.S.; 

• Does not permit students to enroll 

in any course offered by the foreign 

institution in the U.S. except for 

independent research under very 

limited circumstances; 

• Is legally authorized by the 

education ministry, council, or 

equivalent agency of its home country to 

provide an education program beyond 

the secondary level; 

• Awards degrees, certificates, or 

other recognized educational credentials 

in accordance with § 600.54(d) that are 

officially recognized by the institution’s 

home country; and 

• For any program designed to 

prepare the student for employment in 

a recognized occupation, provides a 

credential that satisfies the educational 

requirements in the institution’s home 

country for entry into that occupation, 

including licensure; and satisfies the 

educational requirements for entry into 

that occupation in the U.S., including 

licensure. 

The proposed definition of foreign 

institution would also require that 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 

apply to participate as one or more 

foreign institutions and must meet all 

requirements of the definition of foreign 

institution and other requirements of 34 

CFR part 600. Under the proposed 

regulations, educational enterprise 

would mean an enterprise consisting of 

two or more locations offering all or part 

of an educational program that are 

directly or indirectly under common 

control. 

The proposed regulations would 

amend the threshold criteria in § 600.54 

for determining whether a foreign 

institution is comparable to a domestic 

‘‘institution of higher education’’ as that 

term is defined in the HEA, and eligible 

for Title IV, HEA program participation. 

Proposed § 600.54(a) states that to be 

eligible, a foreign institution that is not 

a freestanding foreign graduate medical, 

veterinary, or nursing school must be a 

public or private nonprofit educational 

institution (i.e., a for-profit foreign 

institution may participate only if it is 

a freestanding foreign graduate medical, 

veterinary, or nursing school). Proposed 

§ 600.54(c)(1) would prohibit an eligible 

foreign institution from entering into a 

written arrangement under which an 

ineligible institution or organization 

provides any portion of one or more of 

the eligible foreign institution’s 

programs. Written arrangements would 

not include affiliation agreements for 

the provision of clinical training for 

foreign graduate medical, veterinary, 

and nursing schools under this 

proposed change. Proposed 

§ 600.54(c)(2) would require that an 

additional location of a foreign 

institution must separately meet the 

proposed definition of foreign 

institution in § 600.52 if it is located 

outside of the country in which the 

main campus is located, except for 

clinical locations of foreign graduate 

medical, veterinary, and nursing 

schools, as provided for in 

§ 600.55(h)(1), § 600.56(b), 

§ 600.57(a)(2), § 600.55(h)(3), and except 

for locations at which independent 

research is conducted as part of a 

doctoral program as provided for in the 

definition of foreign institution in 

§ 600.52. Under proposed § 600.52(c)(2), 

an additional location of a foreign 

institution would also have to meet 

separately the definition of foreign 

institution, even if that location is 

within the same country as the main 

campus, if it is not covered by the legal 

authorization of the main campus. 

Lastly, proposed § 600.54(e) would 

prohibit any portion of an eligible forprofit foreign graduate medical or 

veterinary program from being offered at 

what would be an undergraduate level 

in the U.S. and would deny Title IV, 

HEA program eligibility to any joint 

degree programs offered at for-profit 

foreign graduate medical, veterinary, or 

nursing schools. 

Reasons: Proposed §§ 600.52 and 

600.54, revising and adding detail to the 


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definition of foreign institution, are 

necessary to ensure that a foreign 

institution is comparable to institutions 

in the United States, in accordance with 

section 102(a)(1)(C) of the HEA, before 

the foreign institution is allowed to 

apply for Title IV, HEA program 

participation. The Department is 

concerned that a foreign institution that 

is not comparable to a domestic 

institution, especially in terms of the 

quality of its educational programs, may 

misuse Federal funds to the detriment of 

its students who may have to borrow 

heavily in order to attend the foreign 

institution. The proposed regulations 

also more fully implement the scheme 

of the HEA, which distinguishes 

between foreign and domestic 

institutions and includes provisions 

unique to each. For example, these 

regulations would prevent a domestic 

institution from claiming to be a foreign 

institution by virtue of the fact that it 

has established an offshore location, 

thereby avoiding the requirements 

applied to domestic institutions such as 

recognized accreditation, but that sends 

its students to the United States for the 

majority of the required coursework. 

During the first round of negotiated 

rulemaking, the Federal negotiator 

explained the need for a more detailed 

definition of foreign institution and 

sought comments and feedback from the 

non-Federal negotiators. Several 

negotiators urged the Department to 

define foreign institution in a way that 

ensures quality control through high 

academic standards and avoids abuse of 

the Title IV, HEA programs. The nonFederal negotiators suggested requiring 

that foreign institutions be subject to 

accreditation by accreditors recognized 

by the Department as a means of 

ensuring comparability with domestic 

institutions. The Federal negotiator 

explained that the Department does not 

recognize U.S. accreditors for 

accreditation of institutions outside the 

United States. In light of this fact, the 

non-Federal negotiators suggested a 

requirement that foreign institutions be 

‘‘legally authorized’’ by an appropriate 

authority in the country in which the 

institution is located, such as a Ministry 

of Education or other governmental 

agency. Other non-Federal negotiators 

also urged the Department to be flexible 

in this area because such authority 

could reside in different branches of 

government depending on the country. 

Recognizing that there might be 

pressure on some foreign governments 

to set minimal standards because 

educational institutions are an 

important part of their economy, several 

non-Federal negotiators suggested that 

the Department require foreign 

countries to recognize the degrees and 

licenses offered by a foreign institution. 

In the second round of negotiations, 

the Department responded with draft 

language that addressed many of the 

non-Federal negotiators’ suggestions 

from the first round of discussion. 

However, the Department’s inclusion of 

provisions prohibiting foreign 

institutions from entering into written 

arrangements with institutions located 

in the United States and preventing 

foreign institution students from 

engaging in courses, research, work, and 

other pursuits within the United States 

drew objections from the non-Federal 

negotiators. The Federal negotiator 

explained that these provisions 

addressed abuses witnessed by the 

Department whereby an institution sets 

up an offshore campus to claim foreign 

institution status and thus avoids 

domestic requirements even though the 

institution is, for all intents and 

purposes, a domestic institution. The 

non-Federal negotiators felt the 

language prohibiting students from 

engaging in pursuits within the U.S. was 

too broad and urged the Department to 

make exceptions for research conducted 

in the United States by PhD students. 

The non-Federal negotiators also 

requested that the Department clarify 

what it meant by ‘‘written arrangements’’ 

in the provision that would prohibit 

foreign institutions from having written 

arrangements with U.S. institutions or 

organizations, noting that many foreign 

institutions have multiple types of 

written arrangements with institutions 

in the U.S. 

Based on comments received from the 

non-Federal negotiators at the second 

round of negotiated rulemaking, the 

Department returned to the last round 

with language that added a crossreference to § 668.5 in draft paragraph 

(1)(iii) of the definition of foreign 

institution to clarify the meaning of 

written arrangements. The proposed 

language also 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, the Department sought to 

further distinguish between foreign and 

domestic institutions by prohibiting 

foreign locations of an educational 

enterprise from being considered 

additional locations of a domestic 

location of the educational enterprise if 

the enterprise has at least twice as many 

students enrolled in foreign locations as 

those enrolled in domestic locations. 

This provision would prevent a 

predominantly foreign educational 

enterprise from establishing a minor 

presence within the United States for 

the purpose of circumventing the 

statutory provision limiting foreign 

institution participation to the Direct 

Loan program (or, before July 1, 2010, to 

the FFEL program), so as to provide 

other Title IV grant, loan, and workstudy funds to students at what are 

really foreign institutions. In addition, 

in response to requests by non-Federal 

negotiators, the Department added 

clarity to the paragraph by describing an 

‘‘educational enterprise’’ as an entity 

that consists of two or more locations 

offering all or part of an educational 

program that are directly or indirectly 

under common ownership. Locations 

are considered to be ‘‘indirectly’’ under 

common ownership if, at any level, the 

locations are owned and controlled by 

the same parties, or related parties, 

within the meaning of § 600.31. In draft 

§ 600.54(c)(1), the Department clarified 

that written arrangements do not 

include affiliation agreements for the 

provision of clinical training. 

The non-Federal negotiators were 

comfortable with the majority of the 

Department’s proposed language but 

several non-Federal negotiators 

continued to raise concerns about the 

proposed language prohibiting U.S. 

locations of foreign institutions and 

written arrangements with institutions 

located in the United States. The 

Federal negotiator stated that foreign 

institutions are free to establish U.S. 

locations and have written arrangements 

with institutions located in the United 

States, but that such locations and 

institutions would need to be separately 

certified and meet the requirements 

applicable to domestic institutions in 

order for U.S. students attending them 

to receive Title IV, HEA program funds. 

In this regard, the Department does not 

want a foreign institution to send its 

U.S. students to a U.S. location of a 

foreign institution, or to a U.S. 

institution with which it has an 

agreement for their training, because 

students enrolled in a foreign institution 

are only eligible for Direct Loan program 

(or, before July 1, 2010, FFEL program) 

loans. Instead the Department wants 

U.S. students attending postsecondary 

institutions in the United States to be 

eligible for the full range of Title IV, 

HEA program funds available to 

domestic institutions. The Federal 

negotiator noted that it would be 

acceptable for a U.S. student to transfer 

officially from a foreign institution to an 


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institution in the U.S. that would be 

separately certified as a domestic 

institution. The non-Federal negotiators 

asked the Department to clarify that the 

proposed definition of foreign 

institution would apply only for the 

purposes of students who receive Title 

IV, HEA program funds. For example, a 

foreign institution would not be 

prohibited from having U.S. locations, 

but the locations would not be 

recognized as part of the institution for 

Title IV purposes, so no student 

attending the location, or enrolled in a 

program designed to be offered there in 

whole or in part, would be eligible to 

receive Title IV, HEA program funds. 

Similarly, a foreign institution may also 

maintain agreements with a U.S. 

institution or organization so that 

students of the foreign institution may 

continue to engage in exchange 

opportunities offered by U.S. 

institutions, but the agreement would 

not be recognized for Title IV, HEA 

purposes, so no student attending the 

U.S. institution, or enrolled in a 

program designed to be offered there in 

whole or in part, would be eligible to 

receive Title IV, HEA program funds. 

The Department noted that the Title IV, 

HEA program regulations are always 

applicable for Title IV, HEA program 

purposes only, but agreed to add the 

clarification. 

Certification of Foreign Institutions 

(§§ 600.52 and 668.13) 

Statute: Section 102(a)(5) of the HEA 

requires the Secretary to certify an 

institution’s qualifications as an 

institution of higher education in 

accordance with subpart 3, part H of 

Title IV. Under section 498(g)(1) of the 

HEA, the Secretary is authorized to 

certify an institution’s eligibility for 

purposes of participating in the Title IV, 

HEA programs for a period of up to six 

years. 

Current Regulations: Section 600.52 of 

the Institutional Eligibility regulations 

defines foreign graduate medical school 

as a foreign institution that is listed in 

the most current edition of the World 

Directory of Medical Schools. Foreign 

nursing school and foreign veterinary 

school are not currently defined in 

§ 600.52. 

Section 668.13(b)(1) of the General 

Provisions regulations specifies that an 

institution’s period of participation 

expires six years after the date of 

certification, except that the Secretary 

may specify a shorter period. 

Proposed Regulations: The proposed 

regulations would modify the definition 

of foreign graduate medical school and 

add definitions for the terms foreign 

nursing school and foreign veterinary 

school in § 600.52. In addition, the 

proposed regulations would modify the 

regulations governing certification 

procedures in § 668.13. 

The proposed definition of foreign 

graduate medical school in § 600.52 

would be modified by removing the 

reference to the World Directory of 

Medical Schools (see the discussion 

under Foreign Graduate Medical 

Schools below) and replacing it with 

language specifying that a foreign 

graduate medical school is a foreign 

institution or component of a foreign 

institution that has, as its sole mission, 

providing an educational program that 

leads to a degree of medical doctor, 

doctor of osteopathy, or its equivalent. 

The proposed definition would clarify 

that references to a foreign graduate 

medical school as ‘‘freestanding’’ pertain 

solely to a school that qualifies by itself 

as a foreign institution, and not to a 

school that is a component of a larger 

university that qualifies as a foreign 

institution. Similar language is included 

in the proposed definitions for the terms 

foreign nursing school and foreign 

veterinary school. 

The proposed regulations would 

amend § 668.13(b)(1) to specify that the 

period of participation for a private, forprofit foreign institution expires three 

years after the date the institution is 

certified by the Secretary, rather than 

the current six years. 

Reasons: The National Committee on 

Foreign Medical Education and 

Accreditation (NCFMEA) recommended 

that a foreign graduate medical school 

that is a component of a larger foreign 

institution be certified as a separate 

institution of higher education from the 

larger institution (Recommendation 

14(a)). The Department initially 

proposed implementing this 

recommendation and applying it to 

foreign nursing and veterinary schools 

as well. Under that proposal, a graduate 

medical, nursing, or veterinary school 

that is part of a larger institution would 

be given its own OPEID number. Cohort 

default rates for the graduate medical, 

nursing, or veterinary school would be 

calculated independently of the cohort 

default rate for the larger foreign 

institution. 

After discussions with the nonFederal negotiators regarding the 

administrative burdens that separate 

certification of non-freestanding 

graduate medical, veterinary, and 

nursing schools would entail, the 

Department decided to withdraw this 

proposal. Instead, the Department will 

track such graduate medical, veterinary, 

and nursing schools separately from the 

larger institution. To facilitate this, the 

Department proposed regulations that 

clarify the distinction between 

‘‘freestanding’’ graduate medical, 

veterinary, and nursing schools and 

graduate medical, veterinary, and 

nursing schools that are components of 

a larger foreign institution. 

The NCFMEA also recommended that 

all foreign graduate medical schools be 

certified for a period of no more than 

three years (Recommendation 14(b)). 

The Department initially proposed 

reducing the certification period for all 

foreign institutions from six years to 

three years to provide the Department 

with more oversight over foreign 

institutions. Non-Federal negotiators 

noted that the Department’s proposal to 

decrease the certification period would 

be administratively burdensome for 

institutions. Some non-Federal 

negotiators felt that the increased 

administrative burden might lead 

foreign institutions that enroll small 

numbers of Title IV borrowers to 

reconsider participating in the Title IV, 

HEA programs. Non-Federal negotiators 

also noted that for-profit foreign 

institutions might have difficulty raising 

capital based on three-year certifications 

rather than six-year certifications. 

Non-Federal negotiators also 

contended that the reduction in the 

certification period would not provide 

much benefit to the Department. They 

felt that the relevant information for an 

institution would not be likely to 

change significantly in three years. The 

non-Federal negotiators also pointed out 

that this change would increase the 

workload for the Department staff who 

review and approve institutional 

eligibility applications for foreign 

institutions. 

The Department continues to believe 

that reducing the certification period 

will give the Department better 

oversight over foreign institutions, 

particularly over institutions that enroll 

large numbers of Title IV borrowers. 

However, the Department acknowledges 

that decreasing the certification period 

from six to three years would be 

unnecessary for certain types of 

institutions. Therefore, the Department 

revised its proposal by limiting the 

three-year certification period to private, 

for-profit medical, veterinary, and 

nursing schools. These institutions, 

among all participating foreign 

institutions, continue to receive by far 

the largest amounts of Title IV, HEA 

program funds. Under the revised 

proposal, public and nonprofit 

institutions would continue to be 

recertified every six years. 


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42196 Federal Register / Vol. 75, No. 138 / Tuesday, July 20, 2010 / Proposed Rules 

Single Legal Authorization for Groups 

of Foreign Institutions (§ 600.54) 

Statute: Section 101(a)(2) of the HEA 

requires a domestic institution of higher 

education to be legally authorized by 

the State in which it is located to 

provide a program of postsecondary 

education. Section 102(a)(2)(A) of the 

HEA requires the Secretary, through 

regulation, to develop eligibility criteria 

for foreign institutions of higher 

education that are comparable to the 

eligibility criteria for U.S. institutions of 

higher education. Section 498(a) and (b) 

of the HEA require the Secretary to 

determine whether an institution is 

legally authorized and to prepare and 

prescribe an application form for 

purposes of determining that the 

requirements of eligibility, 

accreditation, financial responsibility, 

and administrative capability are met. 

Current Regulations: Section 

600.54(b) of the current regulations 

requires a foreign institution to be 

legally authorized by an appropriate 

authority to provide postsecondary 

education in the country where the 

institution is located. 

Proposed Regulations: Proposed 

§ 600.54(f) would provide three different 

methods for a foreign institution to 

prove that it is legally authorized to 

provide postsecondary education in the 

country where the institution is located. 

The documentation from a foreign 

country’s education ministry, council, 

or equivalent agency may either be— 

• A single legal authorization that 

covers all eligible foreign institutions in 

the country; 

• A single legal authorization that 

covers all eligible foreign institutions in 

a jurisdiction within the country; or 

• Separate legal authorizations for 

each eligible foreign institution in the 

country. 

Reasons: To ease administrative 

burden for foreign institutions, the 

Department sought to determine if 

compliance with any of the foreign 

institution eligibility criteria could be 

demonstrated at a nationwide level, for 

all eligible institutions within a country, 

rather than at the individual institution 

level. After discussions with the nonFederal negotiators and our own 

internal review of the Title IV 

institutional eligibility criteria, the 

Department determined that the 

requirement for proof of legal 

authorization to provide postsecondary 

education could be provided this way. 

Non-Federal negotiators were 

generally supportive of the 

Department’s proposal. However, they 

did raise some concerns. Some nonFederal negotiators felt that institutions 

should not have to rely on a national 

government to develop a nationwide list 

of institutions legally authorized to 

provide postsecondary education in the 

country. They contended that some 

national governments might not have 

the resources to develop and maintain 

such a list. The non-Federal negotiators 

argued that for institutions in some 

countries, it might be cumbersome and 

time-consuming to obtain such a list 

from the national government. This 

would have the effect of slowing down 

the eligibility certification processes for 

some foreign institutions. These nonFederal negotiators recommended that 

institutions retain the option of 

providing the Department with their 

own individual legal authorizations, 

rather than relying on a nationwide list. 

Other non-Federal negotiators 

believed that it was too constricting to 

limit the authority for developing the 

list of institutions to an agency of the 

national government. They noted that in 

some countries, such as Canada, legal 

authorization to provide postsecondary 

education is provided by the provincial 

governments, not by the national 

government. These non-Federal 

negotiators requested that the 

Department make provision for legal 

authorizations from government entities 

at a provincial level, not at the national 

level. 

The Department agreed with these 

recommendations. In addition to 

allowing proof of legal authorization to 

be provided on a nationwide basis, the 

proposed regulations allow for proof of 

legal authorization to be provided for all 

eligible institutions in a jurisdiction 

within the country, and continue to 

allow proof of legal authorization to be 

provided separately for each eligible 

institution in a country. 

Eligibility of Training Programs at 

Foreign Institutions (§ 600.54) 

Statute: Section 101(b)(1) of the HEA 

provides, in part, that one type of 

educational program that a Title IV 

‘‘institution of higher education’’ may 

provide to be eligible to apply to 

participate in the Title IV, HEA 

programs is a training program of at 

least one year that prepares students for 

gainful employment in a recognized 

occupation. Section 102(a)(2)(A) 

provides for participation in the Title 

IV, HEA programs by entities that are 

comparable to such institutions under 

regulations prescribed by the Secretary. 

Current Regulations: Section 600.54 

provides that, in order to be eligible to 

apply to participate in the Title IV, HEA 

programs, 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 twoacademic-year program acceptable for 

full credit toward the equivalent of a 

U.S. baccalaureate degree, or be 

equivalent to at least a one-academicyear training program that leads to a 

certificate, degree, or other recognized 

educational credential and prepares 

students for gainful employment in a 

recognized occupation. 

Section 668.3 defines an academic 

year as— 

• 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. 

Proposed Regulations: Under the 

proposed regulations, a foreign 

institution would have to demonstrate 

to the satisfaction of the Secretary (who 

would make program-by-program 

determinations of comparability) that 

the amount of academic work required 

by a program it seeks to qualify as 

eligible is at least a one-academic-year 

training program that 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. 

Reasons: The Department believes the 

proposed regulations are necessary 

because many foreign institutions use 

educational measurements other than 

conventional U.S. semester, trimester, 

quarter credits and clock-hours. As the 

definition of an academic year—the 

program length measurement used 

here—specifically references these U.S. 

measurements, it is necessary to make 

some sort of comparability 

determination in order to determine the 

eligibility of these programs at foreign 

institutions, and the eligibility of those 

foreign institutions that do not offer any 

other type of Title IV, HEA eligible 

program. The non-Federal negotiators 


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Federal Register / Vol. 75, No. 138 / Tuesday, July 20, 2010 / Proposed Rules 42197 

provided the Department with 

information regarding the definition of 

non-degree programs by different 

countries, units of measurement for 

programs in other countries, and 

evaluation and comparability 

determinations made by private entities. 

The information provided consistently 

indicates that the assignment of credits 

or other measures of academic work by 

foreign institutions vary greatly. As a 

result, under the proposed regulations, 

the Secretary would make 

determinations of comparability on a 

program-by-program basis, based on 

information provided by a foreign 

institution to demonstrate that the 

amount of academic work required by a 

program it seeks to qualify as eligible is 

comparable to at least a one-academicyear training program that is equivalent 

to the academic work required for 

eligibility of these programs at domestic 

institutions. 

Two of the issues under negotiation 

by the Team I negotiating committee 

(Program Integrity Issues)—the 

definition of what it means to ‘‘provide 

gainful employment in a recognized 

occupation’’ and the definition of a 

credit hour for Title IV, HEA program 

purposes—could impact the eligibility 

of all programs, offered at foreign and 

domestic institutions, that are eligible 

because they are at least one academic 

year in length and prepare students for 

gainful employment in a recognized 

occupation. These Team I issues are 

distinct from the issue negotiated here 

by Team II—i.e., 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). 

Foreign Graduate Medical Schools 

(§§ 600.20, 600.21, 600.52, 600.55) 

Statute: Section 102(a)(2)(A) of the 

HEA provides that 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 of the HEA, 

except that a foreign graduate medical, 

veterinary or nursing school may be forprofit. That section also provides that, 

except for foreign graduate medical 

schools that had a clinical training 

program that was approved by a State as 

of January 1, 1992, at least 60 percent 

of students and graduates must not be 

persons described in section 484(a)(5) of 

the HEA in the year preceding the year 

for which students are seeking Title IV, 

HEA program loans, and that at least 60 

percent of students and graduates taking 

the United States Medical Licensing 

Examination (USMLE) administered by 

the Educational Commission for Foreign 

Medical Graduates (ECFMG) must have 

received a passing score in that 

preceding year. 

Effective July 1, 2010, the HEOA 

amended sections 102(a)(2)(A) and (B) 

of the HEA to (1) increase the pass rate 

threshold for the USMLE from 60 

percent to 75 percent; (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; 

and (3) allow for the promulgation, 

through regulations, of new eligibility 

criteria for foreign graduate medical 

schools that have a clinical training 

program approved by a State prior to 

January 1, 2008, but that would not 

meet the otherwise—applicable 

requirement that at least 60 percent of 

their students and graduates not be 

persons described in section 484(a)(5) of 

the HEA in the year preceding the year 

for which students are seeking Title IV, 

HEA program loans. Section 

102(a)(2)(B)(iii)(IV)(aa) of the HEA 

provides that such new eligibility 

criteria must be based on the 

recommendations contained in a report 

to be prepared by August 14, 2009, by 

the NCFMEA. The NCFMEA is a panel 

of medical experts that evaluates the 

medical school accrediting agency 

standards used in the foreign country 

where medical education is provided to 

determine comparability to the 

standards of accreditation applied to 

medical schools in the United States. 

The statute required the NCFMEA’s 

report to address: entrance 

requirements; retention and graduation 

rates; successful placement of students 

in U.S. medical residency programs; 

passage rate of students on the USMLE; 

the assessment of program quality by 

State medical boards; the extent to 

which graduates would be unable to 

practice medicine in one or more States, 

based on the judgment of a State 

medical board; any areas recommended 

by the Comptroller General (i.e., head of 

the Government Accountability Office 

(GAO)) under section 1101 of the 

HEOA; and any additional areas the 

Secretary may require. The statute 

provides that the regulations must, at a 

minimum, require a USMLE pass rate of 

at least 75 percent. 

The HEOA also provides that the 

Department may issue an NPRM 

addressing the new eligibility criteria 

for foreign graduate medical schools no 

earlier than 180 days after the 

submission of the report, and may issue 

final regulations no earlier than one year 

after the issuance of the NPRM. 

Current Regulations: Neither § 600.20, 

which addresses the application 

procedures for establishing, 

reestablishing, maintaining, or 

expanding institutional eligibility and 

certification, nor § 600.21, which 

addresses when and how an institution 

must update application information, 

currently include any provisions 

specific to foreign graduate medical 

schools. Section 600.52 defines 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 World 

Directory of Medical Schools published 

by the World Health Organization 

(WHO). The regulations do not currently 

include a definition of clinical training, 

the NCFMEA, or a post-baccalaureate/ 

equivalent medical program. Section 

600.55(a)(5) contains the additional 

criteria for determining whether a 

foreign graduate medical school is 

eligible to apply to participate in the 

Title IV, HEA programs. Currently, a 

foreign graduate medical school 

generally must, in addition to satisfying 

the criteria in § 600.54 for determining 

a foreign institution’s eligibility (except 

the criterion that the institution be 

public or private nonprofit), satisfy all 

of the following criteria: 

• Provide, and require its students to 

complete a program of clinical and 

classroom medical instruction of not 

less than 32 months that is supervised 

closely by members of the school’s 

faculty and that is provided either (1) 

Outside the United States, in facilities 

adequately equipped and staffed to 

afford students comprehensive clinical 

and classroom medical instruction; or 

(2) In the United States, 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. 

• Have graduated classes during each 

of the two twelve-month periods 

immediately preceding the date the 

Secretary receives the school’s request 

for an eligibility determination. 

• Employ only those faculty members 

whose academic credentials are the 

equivalent of credentials required of 

faculty members teaching the same or 

similar courses at medical schools in the 

United States; 

• Be approved by an accrediting body 

(1) that is legally authorized to evaluate 

the quality of graduate medical school 

educational programs and facilities in 

the country where the school is located; 

and (2) whose standards of accreditation 


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42198 Federal Register / Vol. 75, No. 138 / Tuesday, July 20, 2010 / Proposed Rules 

of graduate medical schools have been 

evaluated by the advisory panel of 

medical experts established by the 

Secretary and have been determined to 

be comparable to standards of 

accreditation applied to medical schools 

in the United States. 

In addition, current regulations 

provide that foreign graduate medical 

schools that do not have a clinical 

training program that has been 

continuously approved by a State since 

January 1, 1992, must— 

• During the academic year preceding 

the year for which any of the school’s 

students seeks a FFEL program loan, 

have at least 60 percent of those 

enrolled as full-time regular students in 

the school and at least 60 percent of the 

school’s most recent graduating class be 

persons who did not meet the 

citizenship and residency criteria 

contained in section 484(a)(5) of the 

HEA, 20 U.S.C. 1091(a)(5); and 

• For a foreign graduate medical 

school outside of Canada, have at least 

60 percent of the school’s students and 

graduates who took any step of the 

USMLE administered by the ECFMG 

(including the ECFMG English test) in 

the year preceding the year for which 

any of the school’s students seeks a 

FFEL program loan to have received 

passing scores on the exams. In 

performing the calculation, a foreign 

graduate medical school must count as 

a graduate each person who graduated 

from the school during the three years 

preceding the year for which the 

calculation is performed. 

Proposed Regulations: Location of a 

graduate medical education program, 

affiliation agreements, and application 

and notification procedures for foreign 

graduate medical schools 

Section 600.55(h)(2) of the proposed 

regulations would provide that no 

portion of the medical education 

program offered to U.S. students by a 

foreign graduate medical school, other 

than the clinical training portion of the 

program, would be allowed to be 

located outside of the country in which 

the main campus of the school is 

located. 

For clinical training sites located 

outside the United States, proposed 

§ 600.55(h)(1) would require that, with 

two exceptions, all portions of the 

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. Under 

proposed § 600.55(h)(3), with the same 

two exceptions, if any portion of the 

clinical training portion of the 

educational 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 on-site 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. The two 

exceptions are that these criteria would 

not have to be met if the clinical 

training location is included in the 

accreditation of a medical program 

accredited by the Liaison Committee on 

Medical Education (LCME), or if no 

individual student takes more than two 

electives at the clinical training location 

and the combined length of the electives 

does not exceed eight weeks. 

Proposed § 600.55(e)(1) would require 

a foreign graduate medical school to 

have: (1) A formal affiliation agreement 

with any hospital or clinic at which all 

or a portion of the school’s core clinical 

training or required clinical rotations 

are provided; and (2) either a formal 

affiliation agreement or other written 

arrangements with any hospital or clinic 

at which all or a portion of its clinical 

rotations that are not required are 

provided, 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 combined 

total of eight weeks. 

The proposed regulations would 

require these affiliation agreements or 

other written arrangements to state how 

the following will be addressed at each 

site: (1) Maintenance of the school’s 

standards; (2) appointment of faculty to 

the medical school staff; (3) design of 

the curriculum; (4) supervision of 

students; (5) provision of liability 

insurance; and (6) evaluation of student 

performance. 

Proposed § 600.20(a)(3)(iii) and 

§ 600.20(b)(3)(iii) would require a 

foreign graduate medical school (i.e., a 

freestanding foreign graduate medical 

school or a foreign institution that 

includes a foreign graduate medical 

school) to provide copies of the 

affiliation agreements with hospitals 

and clinics that it is required to have 

under proposed § 600.55(e)(2) as a part 

of any application for initial 

certification or recertification to 

participate in the Title IV, HEA 

programs. 

Proposed § 600.20(a)(3)(i)(A) and 

§ 600.20(b)(3)(i)(A) would provide that, 

for initial certification or for 

recertification, a foreign graduate 

medical school (i.e., a freestanding 

foreign graduate medical school or a 

foreign institution that includes a 

foreign graduate 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 

than a combined total of eight weeks. 

In § 600.52, the proposed regulations 

would add a definition of clinical 

training. Clinical training would be 

defined as the portion of a graduate 

medical education program that counts 

as a clinical clerkship for purposes of 

medical licensure. Proposed 

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

would require freestanding foreign 

graduate medical schools, and foreign 

institutions that include a foreign 

graduate medical school, to identify, for 

each clinical site reported in the 

certification or recertification 

application as required under 

§§ 600.20(a)(3)(i)(A) and (b)(3)(i)(A), the 

type of clinical training (core, required 

clinical rotation, not required clinical 

rotation) offered at that site. 

Proposed § 600.20(c)(5) would require 

a foreign graduate medical school (i.e., 

a freestanding foreign graduate medical 

school or a foreign institution that 

includes a foreign graduate medical 

school) that adds a location that offers 

all or a portion of the school’s core 

clinical training or required clinical 

rotations to apply to the Secretary and 

wait for approval if it wishes to provide 

Title IV, HEA program funds to the 

students at that location, except for 

those locations that are included in the 

accreditation of a medical program 

accredited by the LCME. If a foreign 

graduate medical school (i.e., a 

freestanding foreign graduate medical 

school or a foreign institution that 

includes a foreign graduate medical 

school) adds a location that offers all or 

a portion of the school’s clinical 

rotations that are not required, proposed 

§ 600.21(a)(10) would require the school 

to notify the Secretary no later than 10 

days after the location is added, except 

for those locations that are included in 

the accreditation of a medical program 

accredited by the LCME, or 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 combined total of 

eight weeks. 


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In addition, proposed 

§ 600.20(a)(3)(ii) and § 600.20(b)(3)(ii) 

would require that, for initial 

certification or for recertification, a 

foreign graduate medical school (i.e., a 

freestanding foreign graduate medical 

school or a foreign institution that 

includes a foreign graduate medical 

school) indicate whether it offers (1) 

only post-baccalaureate/equivalent 

medical programs; (2) other types of 

programs that lead to employment as a 

doctor of osteopathic medicine or doctor 

of medicine; or (3) both. Proposed 

§ 600.52 would define a postbaccalaureate/equivalent medical 

program as a program that consists 

solely of courses and training leading to 

employment as a doctor of medicine or 

doctor of osteopathic medicine, and is 

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. 

General 

Proposed § 600.52 would replace the 

definition of a foreign graduate medical 

school and clarify that a foreign 

graduate medical school can be freestanding or a component of an eligible 

foreign institution. 

Proposed § 600.55(a)(1) would 

continue to provide that, in addition to 

satisfying the general criteria for 

determining a foreign institution’s 

eligibility (except the criterion that the 

institution be public or private 

nonprofit), a foreign graduate medical 

school would have to satisfy all 

applicable criteria in this section, except 

that the proposed regulations would 

clarify that the general criteria that must 

be satisfied are all applicable criteria in 

part 600, rather than just § 600.55. 

Proposed § 600.55(a)(2) would require 

a foreign graduate medical school to 

provide, and require its students to 

complete, a program of clinical training 

and classroom medical instruction of 

not less than 32 months, that is 

supervised closely by members of the 

school’s faculty, and that is both (1) 

provided in facilities adequately 

equipped and staffed to afford students 

comprehensive clinical and classroom 

medical instruction; and (2) approved 

by all medical licensing boards and 

evaluating bodies whose views are 

considered relevant by the Secretary, 

regardless of whether it is located 

outside or inside the United States. 

In addition, the proposed regulations 

would make clear that a foreign 

graduate medical school may offer, as 

part of its clinical training, no more than 

two electives consisting of a combined 

total of no more than eight weeks per 

student at a site located in a foreign 

country other than the country in which 

the main campus is located or in the 

United States, unless that location is 

included in the accreditation of a 

medical program that is accredited by 

the LCME. 

Proposed § 600.55(a)(3) would require 

that a foreign graduate medical school 

appoint, rather than employ, only those 

faculty members whose academic 

credentials are the equivalent of 

credentials required of faculty members 

teaching the same or similar courses at 

medical schools in the United States. 

Finally, proposed § 600.55(a)(4) 

would continue to require 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. 

Accreditation 

The proposed regulations would make 

no substantive changes to the 

accreditation requirements for foreign 

graduate medical schools. 

Admission Criteria and Collection and 

Submission of Data 

Section 668.55(c) would require a 

foreign graduate medical school with a 

post-baccalaureate/equivalent medical 

program to require students accepted for 

admission who are U.S. citizens, 

nationals, or permanent residents to 

have taken the Medical College 

Admission Test (MCAT) and to have 

reported their scores to the school. In 

addition, § 600.55(c) would 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 in 

proposed § 600.55(d) for MCAT scores, 

residency placement, and USMLE 

scores. 

Proposed § 600.55(d) would require a 

foreign graduate medical school to 

obtain, at its own expense, and by 

September 30 of each year submit to its 

accrediting authority: (1) MCAT scores 

for all students who are U.S. citizens, 

nationals, or eligible permanent 

residents admitted during the preceding 

award year and the number of times 

each student took the exam; and (2) the 

percentage of students who are U.S. 

citizens, nationals, or eligible 

permanent residents graduating during 

the preceding award year who are 

placed in an accredited U.S. medical 

residency. A school would have to 

submit the data on MCAT scores and 

placement in a U.S. residency program 

to the Secretary only upon request. In 

addition, proposed § 600.55(d) would 

require a foreign graduate medical 

school to obtain, at its own expense and 

by September 30 of each year submit to 

the Secretary, unless the Secretary 

notifies schools that it will receive the 

information directly from the ECFMG, 

or other responsible third parties, 

USMLE scores earned during the 

preceding award year by at least each 

student who is a U.S. citizen, national, 

or eligible permanent resident, and each 

graduate who is a U.S. citizen, national, 

or eligible permanent resident who 

graduated during the three preceding 

years, and the date each student took 

each test, including any failed tests. The 

USMLE scores submitted would have to 

be disaggregated by step/test for Step 1, 

which assesses knowledge and 

application of basic science concepts; 

Step 2–Clinical Skills (Step 2–CS), 

which assesses knowledge of clinical 

science principles; and Step 2–Clinical 

Knowledge (Step 2–CK), which tests a 

student’s ability to examine and interact 

with patients and colleagues, and by 

attempt. A school would not be required 

to submit data on the USMLE Step 3, 

which provides a final assessment of a 

physician’s ability to assume 

independent delivery of general medical 

care. All foreign graduate medical 

schools would be required to submit 

these data, even those that are not 

required to meet the 60 percent/75 

percent USMLE pass rate requirement. 

Notification to Accrediting Body 

Proposed § 600.55(e)(2) would require 

a foreign graduate medical school to 

notify its accrediting body within one 

year of any material changes in (1) the 

educational programs, including 

changes in clinical training programs; 

and (2) the overseeing bodies in the 

formal affiliation agreements with 

hospitals and clinics. 

Citizenship and USMLE Pass Rate 

Percentages 

Proposed § 600.55(f)(1)(i)(B) would 

allow a foreign graduate medical school 

to be exempt from the existing 

citizenship requirement (in proposed 

§ 600.55(f)(1)(i)(A)) that at least 60 

percent of the school’s students and 

recent graduates not be U.S. citizens, 

nationals, or eligible permanent 

residents if it had a clinical training 

program approved by a State as of 

January 1, 2008, and continues to 

operate a clinical training program in at 

least one State that approves the 

program. In addition, proposed 

§ 600.55(f)(2)(ii) would allow a foreign 


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graduate medical school that was 

eligible to participate in the Title IV, 

HEA programs and exempt from the 

USMLE pass rate requirement based on 

having a clinical training program 

approved by a State as of January 1, 

1992, to continue to be eligible and 

exempt from the USMLE pass rate 

requirement as long as it continues to 

operate a clinical training program in at 

least one State that approves the 

program. Proposed § 600.55(f)(1)(ii) 

would make the following changes to 

the USMLE pass rate requirement: 

• Increase the USMLE pass rate 

threshold from 60 percent to 75 percent 

(§ 600.55(f)(1)(ii)). 

• Limit the pass rate requirement to 

Step 1, Step 2–CS, and Step 2–CK, 

excluding Step 3. 

• Require a foreign graduate medical 

school to have at least a 75 percent pass 

rate on each step/test of the USMLE 

(limited to Step 1, Step 2–CS, and Step 

2–CK), rather than a combined pass rate 

for all steps/tests. 

• Require foreign graduate medical 

schools to include in the calculation 

only U.S. citizens, nationals, or eligible 

permanent residents, rather than all 

students taking the USMLE. 

• Require foreign graduate medical 

schools to include only first time test 

takers in the calculation. 

For example, the award year 2011– 

2012 pass rate for the USMLE–Step 1 

would be calculated as follows: 

Those from the denominator who 

passed Step 1. 

All U.S. citizens, nationals, and 

eligible permanent residents who are 

students during award year 2010–2011, 

or who graduated in award year 2008– 

2009, 2009–2010, or 2010–2011, and 

took Step 1 of the exam for the first time 

in award year 2010–2011. 

Under proposed § 600.55(f)(4), if the 

result of any step/test pass rate would 

be based on fewer than eight students, 

a single pass rate would be determined 

for the school based on the performance 

of U.S. citizens, nationals, and eligible 

permanent residents on Step 1, Step 2– 

CS and Step 2–CK combined. If that 

combined pass rate would be based on 

fewer than eight step/test results, the 

school would be deemed to have no 

pass rate for that year, and the results 

for the year would be combined with 

each subsequent year until a pass rate 

based on at least eight step/test results 

could be derived. 

Other Criteria 

Proposed § 600.55(g)(1) would require 

a foreign graduate medical school to 

apply existing § 668.16(e)(2)(ii)(B), (C), 

and (D) for establishing a quantitative 

satisfactory academic progress policy 

and require that a student complete his 

or her educational program within 150 

percent of the published length of the 

educational program. In addition, 

proposed § 600.55(g)(2) would require a 

foreign graduate medical school to 

document the educational remediation 

it provides to assist students in making 

satisfactory academic progress. Finally, 

proposed § 600.55(g)(3) would require a 

foreign graduate medical school to 

publish all the languages in which 

instruction is offered. 

Reasons: As required by statute, the 

recommendations of the 2009 Report to 

the U.S. Congress by the National 

Committee on Foreign Medical 

Education and Accreditation 

Recommending Institutional Eligibility 

Criteria for Participation by Certain 

Foreign Medical Schools in the Federal 

Family Education Loan Program 

(NCFMEA report) that could be 

implemented through regulations were 

taken into consideration in the 

development of these proposed 

regulations. The report is available at 

http://www2.ed.gov/about/bdscomm/ 

list/ncfmea-dir/ 

reporttocongress2009.pdf. The 

Department determined that the 

following recommendations made by 

the NCFMEA could be addressed 

through regulatory change: 1(a), 1(b), 3, 

4(a), 4(b), 4(c), 9(a), 9(b), 10, 12(a), 12(b), 

14(a) and 14(b). The Committee’s 

consideration of these recommendations 

is discussed below in relation to the 

areas of the proposed regulations to 

which they pertain, except for 

Recommendations 14(a) and 14(b), 

which are discussed under Certification 

of Foreign Institutions (§§ 600.52, and 

668.13) above. 

Although the HEOA specified that the 

NCFMEA was to take into account in 

the development of their 

recommendations the results of the 

GAO report related to foreign graduate 

medical schools, the HEOA specified a 

later deadline for the issuance of the 

GAO report than for the NCFMEA 

recommendations. As a result, the GAO 

report was not completed in time for the 

NCFMEA to take it into account. The 

GAO report was published June 2010. 

The Department will take the GAO 

report into consideration as the 

rulemaking process continues. Although 

the statute directed the NCFMEA to 

make recommendations for a specific 

group of schools, the NCFMEA stated on 

page seven of its report, ‘‘It also suggests 

the recommendations contained within 

the report be applied to all foreign 

graduate medical schools participating 

in the FFEL program. The NCFMEA 

does not believe that two sets of criteria 

should be applied, given the millions of 

dollars in Federal student loans 

disbursed annually to foreign graduate 

medical schools that are already 

participating in the FFEL program. If 

performance levels are set to ensure 

quality, they should apply to all.’’ The 

Department in general agrees with this 

recommendation; thus, these proposed 

regulations for foreign graduate medical 

schools would apply to all foreign 

graduate medical schools, except where 

noted. Some non-Federal negotiators 

believed the NCFMEA report contains a 

contradictory statement indicating the 

NCFMEA’s desire to limit its 

recommendations for change to a 

specific group of schools (‘‘The foreign 

medical schools that are subject to the 

recommendations contained within this 

report are identified as * * * having 

American citizens/permanent residents 

constitute more than 40 percent of its 

fulltime enrollment and/or graduates 

from the preceding year.’’ page five). 

These non-Federal negotiators were 

concerned about the large overall 

administrative burden that the proposed 

regulations as a whole would have on 

foreign graduate medical schools with 

small numbers of U.S. students with 

Title IV, HEA program loans. The 

Department made clear during the 

negotiations that it believes the 

statement identified by the non-Federal 

negotiators is merely a restating of the 

statute. Regardless, the Department 

believes that these proposed regulations 

are important to the integrity of the Title 

IV, HEA programs and should apply to 

all foreign graduate medical schools, 

except where noted. 

Location of a Graduate Medical 

Education Program, Affiliation 

Agreements, and Application and 

Notification Procedures for Foreign 

Graduate Medical Schools 

Under section 102(a)(2)(B) of the 

HEA, a foreign graduate medical school 

must be accredited or preaccredited by 

an accrediting agency recognized by the 

Secretary, or approved under foreign 

accrediting standards found comparable 

by the NCFMEA to standards applied in 

the United States. In order for this 

provision to have effect, and as the 

Department’s implementing regulations 

have always provided, an accrediting 

body approved by NCFMEA must be 

legally authorized to evaluate the 

quality of the medical school 

educational programs and facilities in 

the country in which those schools are 

located. The Department generally 

construes this requirement for 

comparable accreditation to mean that 

(except for clinical training locations in 

the U.S. that are provided for in the 

statute) the graduate medical program 


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must be located in the country in which 

the main campus of the school is 

located. Although a medical accrediting 

body may accredit locations of 

institutions in other countries, the 

Department believes this is the best 

interpretation of the statute because, 

with limited exceptions, an accrediting 

body’s actual authority does not extend 

beyond the country in which it is 

established. The Department currently 

does not approve for participation in the 

Title IV, HEA programs any educational 

program in which a portion of what is 

commonly referred to as the basic 

science part of the program is located 

outside of the country in which the 

main campus is located. However, the 

Department has allowed for the clinical 

training part of the program to be 

located in an approved comparable 

foreign country other than the country 

in which the main campus is located, if 

the site is located in an NCFMEA 

approved country, the institution’s 

medical accrediting agency has 

conducted an on-site evaluation and 

specifically approved the site, and the 

clinical instruction is offered in 

conjunction with medical educational 

programs offered to students enrolled in 

accredited medical schools located in 

that foreign country. The Department’s 

initial proposal reflected this policy, 

which is also the approach 

recommended by NCFMEA 

Recommendation 12(a). 

Several non-Federal negotiators felt 

this initial proposal was too limiting. 

The Committee discussed at length the 

different parts of a graduate medical 

program and the characteristics of each 

part that might justify different 

treatment. In addition to distinguishing 

between the basic science and the 

clinical training parts of the program, 

the Committee discussions 

distinguished between the different 

parts of clinical training referred to in 

these proposed regulations as the core 

rotations, the required clinical rotations 

(the electives that students are required 

to take), and the not required clinical 

rotations (the electives that students can 

choose). 

In general, some non-Federal 

negotiators felt that matriculating in 

different countries as part of a graduate 

medical program would benefit students 

by exposing them to medical education 

and practice in different environments 

and cultures. One non-Federal 

negotiator argued that allowing a 

portion of the basic science part of the 

program to be located in the United 

States would assist in providing a 

smooth transition to clinical training in 

the United States. The negotiator also 

proposed a way of achieving what some 

non-Federal negotiators felt was 

sufficient oversight to permit a portion 

of the basic science part of the program 

to be located in a non-NCFMEA 

approved foreign country other than the 

country in which the main campus is 

located: Limiting a school to the 

establishment of one such site, limiting 

the amount of the program that could be 

offered there, requiring a visit and 

approval by the school’s accrediting 

body, setting cohort default rate and 

USMLE pass rate thresholds, requiring 

specific evaluations by the school’s 

accrediting body, requiring a formal 

agreement/recognition of the accrediting 

body’s authority by the country in 

which the site was located, and 

requiring an NCFMEA determination 

that the accrediting body has 

demonstrated its capacity to conduct 

off-site and on-site reviews of the site 

that are comparable to the reviews 

conducted of the main campus and 

additional locations within the country 

in which the main campus is located. 

Others suggested that a portion of the 

basic science part of the program be 

allowed to be located in a country other 

than the country in which the main 

campus is located if the location is 

accredited by a comparable accrediting 

agency. 

Non-Federal negotiators also argued 

for more leniency regarding the offering 

of the clinical training part of the 

program in countries other than the 

country in which the main campus is 

located. While some felt that all clinical 

training should be permitted to be 

located in another country without as 

much oversight as the Department 

proposed, others felt that leniency was 

appropriate only for the clinical rotation 

part because exposure to different 

medical environments and cultures was 

most important during the hospitalbased part of the clinical training where 

the students are in direct contact with 

patients and medical residents. Other 

non-Federal negotiators felt that 

leniency was appropriate only for the 

not-required-clinical-rotation part, 

because that is when a student will most 

benefit from the exposure without the 

program losing coherence. The 

Committee discussed how the notrequired-clinical-rotation part of the 

program may be very individualized, 

with numerous sites, sometimes 

suggested by students, at which 

students study for short periods of time. 

They pointed out that, as a result, some 

sites are only used for a short period of 

time. They noted that an accrediting 

body would not have the time or 

resources to visit and approve these 

short-term sites. Non-Federal 

negotiators suggested various ways of 

achieving what they felt was sufficient 

oversight of these locations: e.g., 

limiting the amount of the program that 

could be offered there, limiting the 

amount of the program an individual 

student could take at the location, and 

limiting the number of students who 

could attend the location. The nonFederal negotiators pointed to language 

in the September 2009 NCFMEA 

Guidelines for Requesting a 

Comparability Determination (page 17) 

that omits any mention of non-core 

portions of a clinical training program 

in its discussion of the site visits that 

the school’s accrediting body is required 

to make (the document is available at 

http://www2.ed.gov/about/bdscomm/ 

list/ncfmea-dir/ncfmea-guidelines.pdf). 

In addition, some non-Federal 

negotiators felt that locations that are 

included in the accreditation of a 

medical program accredited by the 

LCME, such as locations of some 

Canadian schools, should be exempt 

because the LCME accrediting standards 

are those that are applied to medical 

schools in the United States. The 

Department agreed. 

Because of the lack of direct authority 

of accrediting bodies from different 

countries, the Department held firm on 

limiting the location of the basic science 

portion of the program to the 

institution’s home country. The 

Department reiterated its belief that the 

basic sciences part of a graduate medical 

program should be located in the same 

country as the main campus so that the 

majority of the classroom instruction 

part of the program will be under the 

direct authority of the school’s 

accrediting body. In one draft of the 

proposed regulations, the Department 

referred to this part of the program as 

the ‘‘didactic components.’’ A nonFederal negotiator pointed out that this 

term could be construed to include 

lectures and other instruction that take 

place during the clinical training 

portion of the program. The non-Federal 

negotiator argued that blurring the line 

between the ‘‘basic science’’ and the 

‘‘clinical training’’ portions of the 

programs could lead to an interpretation 

of the regulations whereby a foreign 

graduate medical school would offer 

parts of what is really the basic science 

portion of the program in the United 

States. As a result, the Committee 

agreed to add a definition of clinical 

training to the proposed regulations to 

make clear that only parts of the 

program that meet that definition may 

be located in the United States. The 

definition was also added to clarify the 

terminology that the proposed 

regulations are using for the 


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components of clinical training, as 

provisions both here and elsewhere in 

the proposed regulations differentiate 

among these components. 

The Department agreed that it was 

acceptable to balance less oversight of a 

short-term location at which individual 

students were taking a small portion of 

the not-required-clinical-rotation part of 

the program, with the benefits of 

exposure to other medical environments 

and cultures. The Department believes 

this is warranted because of the 

individualized nature of the notrequired-clinical-rotation part of the 

program, when individual sites are often 

used for short periods of time. The 

Department also agreed that locations in 

countries other than the country in 

which the main campus is located that 

are included in the accreditation of a 

medical program accredited by the 

LCME should also be exempt from 

meeting the three criteria (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) because the LCME accrediting 

standards are those that are applied to 

medical schools in the United States. 

Therefore, the Department’s final 

proposal, which was agreed to by the 

Committee, provided that clinical 

training may be offered outside the 

United States and the country in which 

the main campus is located without the 

site meeting the three criteria, if the 

location is included in the accreditation 

of a medical program accredited by the 

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. 

Because of the importance and more 

standardized nature of core and 

required clinical rotations, proposed 

§ 600.55(e)(1) would require a foreign 

graduate medical school to have a 

formal affiliation agreement with any 

hospital or clinic at which all or a 

portion of the school’s core clinical 

training or required clinical rotations 

are provided. However, for any hospital 

or clinic at which only clinical rotations 

that are not required are provided, a 

school would be permitted to have other 

written arrangements instead of a formal 

affiliation agreement, and the proposed 

regulations would not require a school 

to have any written arrangements 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 combined total of eight 

weeks. Also, in accordance with 

NCFMEA Recommendation 12(b), 

proposed § 600.20(a)(3)(iii) and 

§ 600.20(b)(3)(iii) would require a 

foreign graduate medical school to 

provide as a part of any application for 

initial certification or recertification to 

participate in the Title IV, HEA 

programs, copies of the affiliation 

agreements that it is required to have for 

locations that offer the core and 

required-clinical-rotation parts of the 

clinical training, but not copies of 

written arrangements for locations 

offering the not-required-clinicalrotation part of the program. The 

Department was persuaded by the nonFederal negotiators who noted that it 

would be quite burdensome for 

institutions to execute formal affiliation 

agreements with the sites of rotations 

that are not required, because there are 

often so many of them and use is often 

for the short-term. They assured the 

Department that other written 

arrangements, such as letters of good 

standing, insurance arrangements, and 

other documents specific to a particular 

student, are made with these locations 

that cover the elements of formal 

affiliation agreements. Because of the 

multitude of documentation comprising 

the written arrangements with these 

often short-term sites, the Department 

did not believe it was necessary to 

require a regular submission to the 

Department. In accordance with 

NCFMEA Recommendation 12(b), to 

ensure continuity of the eligible 

program from the main campus to 

remote locations, the proposed 

regulations would require that all 

required affiliation agreements or other 

written arrangements address 

maintenance of the school’s standards, 

appointment of faculty, design of the 

curriculum, provision of liability 

insurance, and supervision and 

evaluation of student performance. 

Although an institution would not be 

required to have formal affiliation 

agreements with locations that offer the 

not-required-clinical-rotation part of the 

clinical training, proposed 

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

would provide that, for initial 

certification or for recertification, a 

foreign graduate medical school would 

be required to list these locations and 

where they are located on the 

application to participate, along with 

the sites at which the non-clinical, core 

clinical, and required-clinical-rotation 

parts of the program are offered, except 

that those not-required-clinical-rotation 

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 combined total of eight weeks, do 

not have to be listed. The Department 

believes it is essential for the 

Department to be aware of all locations 

of an institution to which Title IV, HEA 

program funds are provided, and agreed 

to make an exception only for sites that 

are not used regularly and, therefore, 

would be difficult and burdensome to 

track. Some non-Federal negotiators 

indicated that most institutions can and 

do track the locations the proposed 

regulations would require them to 

report to the Department, so providing 

this information to the Department 

would not be unduly burdensome. 

Consistent with these proposed 

regulations, proposed § 600.20(c)(5) 

would require a foreign graduate 

medical school that adds a location that 

offers all or a portion of the school’s 

core clinical training or required clinical 

rotations to apply to the Secretary and 

wait for the Secretary’s approval before 

providing Title IV, HEA program funds 

to the students at the location. In 

proposed 600.21(a)(10), they would 

allow a foreign graduate medical school 

that adds a location that offers all or a 

portion of the school’s clinical rotations 

that are not required to provide Title IV, 

HEA program funds to the students at 

the location without waiting for 

approval from the Secretary, provided 

the school notifies the Secretary no later 

than 10 days after the location is added. 

As with the proposed exceptions to the 

requirements for offering a portion of 

the clinical training portion of the 

program outside of the country in which 

the main campus of the school is 

located, and the proposed regulations 

specifying when affiliation agreements 

would be required, an exception from 

the prior approval requirement for 

adding locations offering core/required 

rotations would be allowed for those 

locations that are included in the 

accreditation of a medical program 

accredited by the LCME. No notification 

to the Department would be required for 

adding LCME locations, or locations 

offering only non-core, non-required 

rotations 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 combined total of eight weeks. 

So that the Department may track and 

enforce provisions specific to postbaccalaureate/equivalent medical 

programs, proposed §§ 600.20(a)(3)(ii) 

and 600.20(b)(3)(ii) would require that, 

for initial certification or for 

recertification, a foreign graduate 

medical school (i.e., a freestanding 


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foreign graduate medical school or a 

foreign institution that includes a 

foreign graduate medical school) 

indicate whether it offers only postbaccalaureate/equivalent medical 

programs, other types of programs that 

lead to employment as a doctor of 

osteopathic medicine or doctor of 

medicine, or both. 

Finally, a proposed definition of 

NCFMEA was added to make clear that 

the NCFMEA is the operational 

committee of medical experts 

established by the Secretary to 

determine whether the medical school 

accrediting standards used in other 

countries are comparable to those 

applied to medical schools in the U.S., 

for purposes of evaluating the eligibility 

of accredited foreign graduate medical 

schools to participate in the Title IV, 

HEA programs. 

General 

Proposed § 600.52 would remove from 

the definition of a foreign graduate 

medical school the requirement that a 

foreign graduate medical school be a 

foreign institution that qualifies to be 

listed in, and is listed as a medical 

school in, the most current edition of 

the World Directory of Medical Schools 

published by the World Health 

Organization (WHO) as the Department 

believes it is no longer a needed 

measure of comparability in light of the 

proposed new criteria for foreign 

graduate medical schools as well as the 

proposed changes to the definition of a 

foreign institution. 

Proposed § 600.55(a)(1) would clarify 

that the general criteria that must be 

satisfied is all applicable criteria in part 

600, rather than just § 600.54, to make 

clear that, unless otherwise specified, 

all the provisions of part 600 apply to 

foreign institutions, including foreign 

graduate medical schools. Current 

regulations require only instruction that 

is offered outside of the United States to 

be provided in facilities adequately 

equipped and staffed to afford students 

comprehensive clinical and classroom 

medical instruction, and require only 

the training located in the United States 

to be approved by all medical licensing 

boards and evaluating bodies whose 

views are considered relevant by the 

Secretary. Proposed § 600.55(a)(2) 

would apply these provisions to all 

portions of the medical program, 

regardless of whether the program is 

located outside or inside the United 

States, as the Department believes they 

are good requirements regardless of 

location. To provide consistency with 

the proposed provisions addressing the 

location of clinical training (see the 

discussion of Location of a graduate 

medical education program, affiliation 

agreements, and application and 

notification procedures for foreign 

graduate medical schools above), the 

proposed regulations would make clear 

that a foreign graduate medical school 

may offer, as part of its clinical training, 

no more than two electives consisting of 

a combined total of no more than eight 

weeks per student at a site located in a 

foreign country other than the country 

in which the main campus is located or 

in the United States, unless that location 

is included in the accreditation of a 

medical program that is accredited by 

the LCME. Non-Federal negotiators 

noted that foreign graduate medical 

schools do not necessarily directly 

employ faculty for the clinical training 

portion of the program, but rather 

appoint them and the individuals are 

usually employed by the hospital or 

clinic at which the clinical training 

takes place. The Committee agreed the 

regulations should be changed to reflect 

actual practice. 

Admission Criteria and Collection and 

Submission of Data 

The Department initially proposed 

that, consistent with NCFMEA 

Recommendations 1(a) and 1(b), a 

foreign graduate medical school would 

have to require students who it admits 

to have a specific educational 

background (e.g., for a postbaccalaureate equivalent medical 

program, 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). 

Several of the non-Federal negotiators 

felt that such provisions were unduly 

limiting. The Committee, including the 

Department, ultimately agreed it would 

be more appropriate for the NCFMEA to 

establish these provisions as guidelines 

for accrediting bodies. The Department 

had also included as a part of its initial 

proposal, that a school having an 

integrated program for a first 

professional program leading to a Doctor 

of Medicine (M.D.) degree, or its 

equivalent, must require students who 

are U.S. citizens, nationals, or 

permanent residents to take the MCAT 

no later than three years after admission 

to the program. Although this provision 

was consistent with NCFMEA 

Recommendation 1(b), the Department 

was ultimately persuaded to remove the 

provision by non-Federal negotiators 

who pointed out that requiring students 

to take the MCAT early in the program 

would distract them from the education 

that was preparing them to take the 

USMLE. 

Ultimately, the Department agreed to 

retain from Recommendations 1(a) and 

1(b) only the provision that would 

require U.S. students who are admitted 

to a school having a post-baccalaureate 

equivalent medical program to have 

taken the MCAT and to report the score. 

This provision would not require a 

foreign graduate medical school to give 

weight to a U.S. student’s score on the 

MCAT as part of its admission 

requirements. Although some nonFederal negotiators expressed concern 

that the MCAT would not be readily 

available to U.S. students who are 

residing outside of the United States 

prior to enrolling in a foreign graduate 

medical school, it was determined that 

the MCAT is administered several times 

during the year in countries around the 

world. 

The inclusion of the requirement that 

a foreign graduate medical school 

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 scores reflects NCFMEA 

Recommendations 9(a), 3, and 4(a), but 

limits the requirement to U.S. citizens, 

nationals, or eligible permanent 

residents. These proposed regulations 

would not establish eligibility 

thresholds for MCAT scores or 

residency placement. As indicated in 

the discussion of these 

recommendations in the NCFMEA 

report, the NCFMEA believes, and the 

Department agrees, that successful 

performance by an institution in these 

three areas may be valuable for the 

evaluation of the quality of education 

being provided to students attending 

foreign graduate medical schools. The 

data will facilitate the NCFMEA’s 

further study of the issues, strengthen 

the accreditation process, and allow for 

the potential development of additional 

recommendations for regulatory change, 

and/or the NCFMEA standards for 

evaluating accrediting bodies of foreign 

graduate medical schools. Non-Federal 

negotiators argued, and the Department 

agreed, that the Department’s main 

concern is how well students from the 

United States, who represent potential 

borrowers of Title IV, HEA funds, are 

doing at these schools. The non-Federal 

negotiators felt that it was inappropriate 

to include non-U.S. students who may 

not have as much at stake when they 

take the United States’ MCAT or 

USMLE, or attempt to be placed in a 


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U.S. residency, and, thus, may skew the 

data. 

Some non-Federal negotiators 

expressed concern that requiring foreign 

institutions to obtain student consent 

for the release of information may be in 

violation of certain countries’ privacy 

laws. In response to the Department’s 

request for specific information, the 

Department was provided with an 

analysis of the privacy laws and 

requirements of one country that had 

been identified as one that could have 

problems in this area. After analyzing 

the information, the Department 

concluded that there would be several 

ways that institutions in that country 

could legally obtain the required 

information from students, and 

committed to working with those 

schools and schools in any country that 

have concerns to facilitate compliance. 

The Department noted, however, that 

the Department cannot waive statutory 

or regulatory requirements used to 

determine institutional eligibility and 

that if a foreign country’s privacy laws 

did preclude obtaining the information 

and materials necessary for establishing 

compliance the institutions located in 

those countries would not be able to 

qualify for participation in the Title IV, 

HEA programs. 

The proposed regulations state that 

collection and submission of data must 

be done at the institution’s own expense 

to emphasize that the institution is 

ultimately responsible for providing this 

information. In the future, the 

Department may be able to obtain the 

necessary USMLE pass rates directly 

from the ECFMG. However, unless and 

until the Secretary notifies institutions 

that this is the case, an institution 

would be required to take whatever 

steps are necessary to obtain and 

provide the data to its accrediting 

agency and the Secretary. Currently, an 

institution can obtain a student’s 

consent for USMLE pass rate data on 

Steps 1 and 2 by requiring students to 

sign ECFMG’s Institutional Request for 

an Official USMLE Transcript Form 173. 

The form and information on its use are 

available at the ECFMG’s Web site at 

http://www.ecfmg.org/usmle/ 

transcripts/index.html. We also note 

that the ECFMG has established an 

online procedure by which schools can 

obtain data on Steps 1 and 2 directly 

from the ECFMG (see the ECFMG’s Web 

site at http://www.ecfmg.org/ 

emswp.html). As this procedure is still 

new, the Committee was not able to 

ascertain whether the data provided to 

schools in this manner would be 

sufficient for schools to meet the 

requirements of these proposed 

regulations. As information becomes 

available, the Department will evaluate 

the appropriateness of these data for 

meeting the proposed requirement. 

Although the Department originally 

proposed requiring schools to submit 

data on all steps of the USMLE, nonFederal negotiators pointed out that it 

would be extremely difficult for schools 

to obtain data on Step 3. The nonFederal negotiators noted that this 

difficulty stems from the fact that Step 

3, which is administered by the 

Federation of State Medical Boards 

(FSMB), is taken by students after they 

have graduated from the institution and 

a student cannot sign a consent to 

provide information on Step 3 to third 

parties until he or she is actually taking 

the test. Although the Department is 

continuing to explore the collection of 

data from the FSMB for evaluating its 

use in the future, the Department agrees 

that it would be unreasonable to require 

institutions to be responsible for its 

collection and submission at this time. 

As one of the purposes of the data 

submission provision is to provide data 

for the evaluation of whether additional 

performance measures should be 

required of foreign graduate medical 

schools, all foreign graduate medical 

schools, even those that are exempt 

from meeting the 60 percent/75 percent 

USMLE pass rate requirement, would 

have to submit the data under proposed 

§ 600.55(d). 

The Department believes that the 

proposed periods for which data must 

be collected and the proposed annual 

September 30 submission deadline will 

provide for consistent submission of 

data by all schools, taking into 

consideration the timing of the events 

for which data must be obtained. As 

these data, other than the USMLE data, 

are to be collected for the use of the 

accrediting bodies and, indirectly, by 

the NCFMEA, schools would be 

required to make submissions of the 

data to their accrediting bodies but, 

except for data on the USMLE, would be 

required to submit such data to the 

Secretary only upon request. The 

Secretary would collect the USMLE data 

on a regular basis in support of the 

requirement in § 600.55(f)(1)(ii) that an 

institution have at least a 75 percent 

pass rate on the USMLE. 

Notification to Accrediting Body 

Proposed § 600.55(e)(2), which would 

require a foreign graduate medical 

school to notify its accrediting body 

within one year of any material changes 

in educational programs and the 

overseeing bodies in the formal 

affiliation agreements with hospitals 

and clinics, would reflect NCFMEA 

Recommendations 12(a) and 12(b) and 

would allow a school’s accrediting body 

to assess any substantive impact the 

change would have on the school’s 

operations. 

Citizenship and USMLE Pass Rate 

Percentages 

The proposed change in 

§ 600.55(f)(1)(i)(B) would allow a foreign 

graduate medical school to be exempt 

from the existing citizenship rate 

requirement if it had a clinical training 

program approved by a State as of 

January 1, 2008, and continues to 

operate a clinical training program in at 

least one State that approves the 

program reflects the statutory change 

made by the HEOA. As a result, both 

foreign graduate medical schools that 

had a clinical training program 

approved by a State as of January 1, 

1992, and those that had a clinical 

training program approved by a State as 

of January 1, 2008, are exempt from the 

citizenship rate provision, provided the 

school continues to operate a clinical 

training program in at least one State 

that approves the program. The increase 

in the USMLE pass rate threshold from 

60 percent to 75 percent also reflects a 

change made by the HEOA, as does 

proposed § 600.55(f)(2)(ii), which would 

allow a foreign graduate medical school 

that was eligible and exempt from the 

USMLE pass rate requirement based on 

having a clinical training program 

approved by a State as of January 1, 

1992, to continue to be eligible and 

exempt from the USMLE pass rate 

requirement as long as it continues to 

operate a clinical training program in at 

least one State that approves the 

program. 

Although the Department originally 

proposed requiring pass rate 

information for all steps of the USMLE, 

as stated previously in the discussion of 

the submission of USMLE pass data 

under Admission criteria and collection 

and submission of data above, the 

Department believes that it would be 

unreasonable to require institutions to 

obtain data on Step 3 of the USMLE for 

inclusion in the pass rate at this time. 

As suggested by NCFMEA 

Recommendations 4(b) and 4(c), the 

proposed regulations would require a 

foreign graduate medical school to have 

at least a 75 percent pass rate on each 

step/test of the USMLE (limited to Step 

1, Step 2–CS, and Step 2–CK), rather 

than a combined pass rate for all steps/ 

tests. This approach would provide an 

assessment of the sequential 

performance of students on the USMLE, 

which the NCFMEA and the Department 

believe provides a better measure of a 

medical program’s effectiveness by 

evaluating how well it prepares students 


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for each step/test of the USMLE and, in 

particular, will allow for the judgment 

of the performance of each institution in 

preparing students for future clinical 

performance. 

The Committee decided to limit the 

USMLE pass rate calculation to U.S. 

citizens, nationals, and eligible 

permanent residents for the reasons 

discussed for limiting the collection and 

submission of data related to MCAT 

scores, placement in a U.S. medical 

residency program, and the USMLE in 

the same manner (see Admission criteria 

and collection and submission of data 

above). That is, the Committee desired 

to focus the pass rate on the students the 

Department is most concerned about, 

students from the United States, who 

represent potential borrowers of Title 

IV, HEA funds, and to prevent a school’s 

rate from being lowered by non-U.S. 

students who may not be as invested in 

passing the USMLE as U.S. students. 

As for the actual calculation used to 

determine the pass rate for each step/ 

test of the USMLE, the Department had 

suggested a rate that would have 

required an institution to count an 

individual student in the denominator 

for each time the student took Step 1, 

Step 2–CS and Step 2–CK. The 

Department believed this approach was 

consistent with NCFMEA 

Recommendation 4(b) and was a better 

measure of how well prepared students 

were by the medical education program 

because it would reflect failures on 

repeated attempts. Some non-Federal 

negotiators felt that this approach was 

too burdensome and not an appropriate 

means of achieving the Department’s 

goal. They argued that the pass rates of 

students in subsequent attempts is 

typically quite low; thus, such a 

measure would be redundant and not 

more indicative of the quality of the 

institution’s instruction. Eventually, the 

non-Federal negotiators suggested that 

the calculation be limited to first time 

test takers only. The non-Federal 

negotiators noted that reports issued in 

other contexts about pass rates for 

domestic schools have included only 

first time test takers. Ultimately, the 

Department was persuaded that a 

proposed regulation that would require 

foreign graduate medical schools to 

include only first time test takers in the 

calculation provided a better evaluation 

of an institution’s performance than that 

required under current regulations, and 

had the benefit of being comparable to 

rates published for domestic schools. 

The non-Federal negotiators raised 

strong concerns about the pass rate’s 

applicability to schools with small 

numbers of U.S. students. They pointed 

out that such a school’s eligibility for 

participation could be put at risk by the 

failure of just a small number of 

students, or even one student, for those 

with fewer than four students who 

would be included in the cohort for the 

calculation. The non-Federal negotiators 

felt that schools with small numbers of 

students should be exempt from this 

requirement or, at the very least, the 

regulations should provide an 

alternative way for these institutions to 

comply. The Department noted that the 

statute does not provide for exempting 

institutions from this requirement. 

However, in response to these concerns, 

the Department proposed an alternative 

way to comply in § 600.55(f)(4) to allow 

for the use of a rate that would combine 

the performance of U.S. students on 

Step 1, Step 2–CS and Step 2–CK, if the 

result of any step/test pass rate would 

be based on fewer than eight students. 

If that combined pass rate would be 

based on fewer than eight step/test 

results, the school would be deemed to 

have no pass rate for that year, and the 

results for the year would be combined 

with each subsequent year until a pass 

rate based on at least eight step/test 

results could be derived. The 

Department believes that this approach 

applies the pass rate provision to all 

institutions, while appropriately 

mitigating the unduly harsh effect a 

small number of failures could have on 

the pass rate calculation for schools 

with small numbers of U.S. students. 

Other Criteria 

The proposed requirements in 

§ 600.55(g)(1) and (g)(2) that would 

require a foreign graduate medical 

school to 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 document the 

educational remediation it provides to 

assist students in making satisfactory 

academic progress adopts NCFMEA 

Recommendation 9(b), but requires 

schools to document, rather than submit 

to the Department as the NCFMEA 

recommended, any educational 

remediation provided. 

For consistency with current 

regulations, in adopting NCFMEA 

Recommendation 9(b), suggesting that a 

student’s enrollment prior to graduation 

must not exceed 150 percent of the 

normal length of the program, the 

proposed regulations refer to existing 

§§ 668.16(e)(2)(ii)(B), (C), and (D). These 

regulations, currently applicable to 

undergraduate programs, provide 

additional requirements as to the 

quantitative aspect of a foreign graduate 

medical school’s institutional 

satisfactory academic progress 

standards. 

Although the Committee agreed with 

the NCFMEA that there is merit to 

requiring institutions to document the 

remediation it provides to assist 

students in making satisfactory 

academic progress so that, as needed, 

the Department, the NCFMEA, or the 

accrediting body may collect and 

examine the data to see if this is an area 

of concern that may need to be 

addressed, they did not believe it was 

necessary or cost effective to require the 

regular submission of these data to the 

Department. 

Finally, proposed § 600.55(g)(3), 

which would require a foreign graduate 

medical school to publish all the 

languages in which instruction is 

offered, would provide information to 

students that could be essential to a 

student’s success in the program. 

Although NCFMEA Recommendation 

10 suggested requiring schools to 

publish the primary language of 

instruction, and if not English, identify 

any alternate language of instruction, 

the Committee agreed that requiring 

schools to publish all languages in 

which instruction is offered would be 

more beneficial and no more 

burdensome. 

Foreign Veterinary Schools (§ 600.56) 

Statute: Section 102(a)(2)(A)(ii) of the 

HEA stipulates that Title IV borrowers 

attending a foreign for-profit veterinary 

school must complete clinical training 

at an approved veterinary school located 

in the United States. The HEA does not 

establish additional eligibility criteria 

specific to foreign veterinary schools. 

Section 102(a)(2)(A) of the HEA requires 

the Secretary, through regulations, to 

develop eligibility criteria for foreign 

institutions that are comparable to the 

eligibility criteria for domestic 

‘‘institutions of higher education.’’ 

Current Regulations: Section 600.56 of 

the Institutional Eligibility regulations 

includes additional eligibility criteria 

for foreign veterinary schools. Under 

§ 600.56(a)(1)(i), foreign veterinary 

school facilities outside the United 

States must be adequately equipped and 

staffed to provide students 

comprehensive clinical and classroom 

veterinary instruction. Under 

§ 600.56(a)(1)(ii), foreign veterinary 

school programs provided inside the 

United States must be approved by all 

veterinary licensing boards and 

evaluating bodies that the Secretary 

considers to be relevant. Under 

§ 600.56(a)(3), the credentials of faculty 

members employed by the foreign 

veterinary school must be equivalent to 

the credentials of faculty members 


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teaching the same or similar courses in 

the United States. 

Proposed Regulations: The proposed 

regulations would combine the 

requirements in § 600.56(a)(1)(i) and 

§ 600.56(a)(1)(ii) into one paragraph, 

eliminating the distinction in those 

sections between portions of veterinary 

programs provided inside and outside of 

the United States. Proposed 

§ 600.56(a)(4) would require a foreign 

veterinary school to be accredited or 

provisionally accredited by an 

organization acceptable to the Secretary. 

Proposed § 600.56(a)(4) would also 

specify that the requirement for 

accreditation or provisional 

accreditation does not take effect until 

July 1, 2015. Finally, proposed 

§ 600.56(b)(2)(i) would require that, for 

a for-profit veterinary school, the 

school’s students must complete their 

clinical training at an approved 

veterinary school located in the United 

States. Under proposed 

§ 600.56(b)(2)(ii), for a veterinary school 

that is public or private nonprofit, the 

school’s students may complete their 

clinical training at an approved 

veterinary school located in the United 

States or in the home country, and may 

also take clinical training at a location 

outside of the United States or the home 

country if no individual student takes 

more than two electives at the location 

and the combined length of the 

elective(s) does not exceed eight weeks. 

Reasons: The Department proposed 

revising the regulations governing 

eligibility criteria for foreign veterinary 

schools to improve the Department’s 

process for making determinations of 

eligibility of foreign veterinary schools 

to participate in the Title IV, HEA 

programs. The Department’s expertise 

with regard to making independent 

evaluations of the academic quality of 

veterinary programs is limited, and 

currently the Department relies heavily 

on information provided to us by the 

foreign veterinary school to make 

eligibility determinations. If the school 

has been accredited or reviewed by the 

American Veterinary Medical 

Association (AVMA), the Department 

considers reports provided by the 

AVMA to the school to assist in making 

eligibility determinations. 

The Department initially proposed to 

build on the Department’s current 

practice by requiring AVMA 

accreditation for foreign veterinary 

schools applying to participate in the 

Title IV, HEA programs. We believed 

that requiring AVMA accreditation 

would provide the Department with an 

assurance of the academic quality of the 

veterinary program. AVMA standards 

for accrediting veterinary schools are 

detailed and specific, and the AVMA 

has the expertise and resources to 

evaluate veterinary schools that the 

Department lacks. In addition, the 

AVMA has a history of accrediting 

foreign veterinary school academics. For 

example, veterinary schools in Canada, 

Australia, and the Netherlands are 

currently accredited by the AVMA. 

Non-Federal negotiators generally 

acknowledged the high quality of the 

AVMA’s accreditation standards and 

procedures. One non-Federal negotiator 

agreed that it was logical to require 

AVMA accreditation of foreign 

veterinary schools, as most U.S. 

students studying at those schools 

ultimately practice as veterinarians in 

the United States. However, several 

non-Federal negotiators had concerns 

about requiring AVMA accreditation as 

a condition for participation in the Title 

IV, HEA programs. 

Some non-Federal negotiators pointed 

out that the process for receiving AVMA 

accreditation is lengthy and expensive. 

Non-Federal negotiators asserted that 

the standards of foreign accrediting 

agencies such as the Veterinary Schools 

Accreditation Advisory Committee 

(VSAAC), which accredits veterinary 

schools in Australia and New Zealand, 

and the Royal College of Veterinary 

Surgeons (RCVS), which accredits 

veterinary schools in the United 

Kingdom, are comparable to the 

AVMA’s standards. These non-Federal 

negotiators contended that it would be 

unnecessarily burdensome to require a 

veterinary school that has already been 

accredited by an agency such as VSAAC 

to also obtain AVMA accreditation to 

participate in the Title IV, HEA 

programs. The non-Federal negotiators 

cautioned the Department that foreign 

veterinary schools that enroll small 

numbers of Title IV borrowers may 

determine that obtaining AVMA 

accreditation is not cost effective, and 

may choose to end their participation in 

the Title IV, HEA programs. This would 

have the effect of limiting the options of 

U.S. students considering attending 

foreign veterinary schools. 

Other non-Federal negotiators 

contended that it is extremely difficult 

for for-profit veterinary schools to 

obtain AVMA accreditation. Although 

they felt that for-profit veterinary 

schools can meet AVMA’s standards 

around facilities, curriculum, and 

faculty, the AVMA standards also 

require veterinary schools to have a 

strong research component. These 

negotiators stated that for-profit 

veterinary schools tend not to have the 

resources to pursue research to the 

extent required by AVMA. These 

negotiators pointed out that public 

veterinary schools often have State 

sources of funding for research 

programs, while for-profit veterinary 

schools do not. The expense of 

establishing a research program 

acceptable to AVMA could be 

prohibitive for most for-profit veterinary 

schools. These non-Federal negotiators 

contended that, for purposes of 

preparing students for employment as 

competent veterinarians in most nonresearch venues, it is not necessary to 

include a research component of the 

kind required by AVMA. 

In addition, non-Federal negotiators 

expressed concerns that foreign 

veterinary schools without AVMA 

accreditation that currently participate 

in the Title IV, HEA programs might be 

forced out of the Title IV, HEA programs 

if the Department went forward with its 

proposal. The effective date for most of 

the regulations in this NPRM is 

expected to be July 1, 2011. As the 

accreditation process can take several 

years, even a school that ultimately 

receives AVMA accreditation might not 

be able to obtain AVMA accreditation 

before the regulations become effective. 

Although AVMA offers provisional 

accreditation for schools in the U.S. or 

Canada that are on track to become 

accredited, it currently does not offer 

provisional accreditation to other 

schools. 

As an alternative, non-Federal 

negotiators recommended using other 

measures, such as pass rates on 

licensing exams, licensure rates, or 

default rates, to determine eligibility of 

a foreign veterinary school. In addition, 

non-Federal negotiators recommended 

that the Department delay the effective 

date for the accreditation provision of 

the proposed regulations for up to ten 

years, if the Department goes forward 

with the AVMA requirement. 

The Department noted that using 

measures such as pass rates on licensing 

examinations can be operationally 

complicated, raising concerns over 

privacy rights, obtaining exam results, 

and calculating pass rates in ways that 

are not disadvantageous to schools with 

low numbers of Title IV students. In 

addition, pass rates would not 

necessarily be a reliable indicator of the 

academic credentials of the faculty at a 

foreign veterinary school, and would 

provide no indication that the facilities 

at the veterinary school are adequate 

and safe for the students or for the 

animals housed in the facilities. 

Instead, the Department accepted the 

recommendation of some of the nonFederal negotiators to replace the 

proposed requirement that a foreign 

veterinary school be accredited or 

provisionally accredited by the AVMA, 


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with a requirement that the school be 

accredited or provisionally accredited 

by an agency acceptable to the 

Secretary. Although the Department 

continues to believe that AVMA 

accreditation is the most desirable 

standard for foreign schools that train 

students for veterinary practice in the 

United States, we recognize that other 

accrediting agencies may also be 

satisfactory for this purpose. Under the 

revised regulations, foreign veterinary 

schools must still be accredited or 

provisionally accredited by an agency 

with expertise in accrediting veterinary 

education programs, but the agency 

does not have to be the AVMA. This 

gives the Department some flexibility in 

evaluating schools’ compliance with the 

accreditation requirement, and gives 

schools some flexibility with regard to 

obtaining accreditation. 

In addition, the Department delayed 

the effective date of the accreditation 

requirement until July 1, 2015, giving 

foreign veterinary schools that are 

currently in the Title IV, HEA programs 

approximately five years after final 

regulations are published to obtain 

accreditation from an acceptable 

accrediting agency. The Department 

believes that five years should be 

sufficient time for a school to obtain 

accreditation or provisional 

accreditation from an acceptable 

accrediting agency. In addition, Title IV 

borrowers who are currently enrolled in 

a foreign veterinary school should be 

able to complete their education 

programs before the five years elapses. 

Newly enrolled Title IV borrowers 

coming into those schools after this 

NPRM is published should be advised 

by the school’s financial aid officers that 

there is a possibility that the school 

could lose Title IV, HEA program 

eligibility after July 1, 2015, so those 

borrowers can plan accordingly. 

The Department proposed combining 

the requirements in § 600.56(a)(1)(i) and 

in § 600.56(a)(1)(ii) into one paragraph 

to simplify the regulations, and to 

eliminate the distinction between 

veterinary school activities in the 

United States and outside the United 

States for purposes of these particular 

requirements. The Department did not 

believe that this distinction in the 

current regulations served any useful 

purpose. The non-Federal negotiators 

did not express concerns about this 

modification to the existing regulations. 

Regarding the provisions addressing 

the location of a foreign veterinary 

school in proposed § 600.57(b), the 

Committee agreed to be consistent with 

provisions that would permit some 

clinical training locations of foreign 

graduate medical schools to be outside 

of the United States and of the country 

in which the main campus of the school 

is located. Proposed § 600.57(b) would 

permit students who attend a public or 

private nonprofit foreign veterinary 

school to take no more than two 

electives at the clinical training location 

per student, as long as the elective(s) 

have a combined length of not more 

than eight weeks. This provision could 

not be extended to for-profit veterinary 

schools because the statute requires 

students who attend these schools to 

complete their clinical training in the 

United States. 

Foreign Nursing Schools (§ 600.57) 

Statute: The HEOA amended section 

102(a)(2)(A) of the HEA to provide 

specific standards for foreign nursing 

schools. The amendments are effective 

beginning July 1, 2010, except that, for 

nursing schools that were eligible for 

Title IV, HEA program participation on 

August 13, 2008 (the day before 

enactment of the HEOA), they are 

effective July 1, 2012. 

The HEA, as amended by the HEOA 

and HCERA, provides that a foreign 

nursing school, including a for-profit 

nursing school, may not participate in 

the Title IV, HEA programs 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 296)) located in the United 

States that requires the students of the 

nursing school to complete the students’ 

clinical training at the hospital or 

accredited school of nursing; 

• 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; 

• Certifies only Federal Direct 

Stafford loans under section 

455(a)(2)(A) of the HEA, Federal Direct 

Unsubsidized loans under section 

455(a)(2)(D) of the HEA, or Federal 

Direct PLUS loans under section 

455(a)(2)(B) of the HEA for students 

attending the school; and 

• Reimburses the Secretary for the 

cost of any loan defaults for current and 

former students included in the 

calculation of the school’s cohort 

default rate during the previous fiscal 

year. 

In addition, the HEOA amendments to 

the HEA require that at least 75 percent 

of the individuals who were students or 

graduates of a foreign nursing school, 

and who took the National Council 

Licensure Examination for Registered 

Nurses (NCLEX–RN) in the year 

preceding the year for which the school 

is certifying a Title IV, HEA program 

loan, received a passing score on the 

NCLEX–RN. 

Current Regulations: Current 

regulations do not define foreign 

nursing school, or specify Title IV 

eligibility criteria unique to foreign 

nursing schools. 

Proposed Regulations: The proposed 

regulations would add several new 

definitions relating to foreign nursing 

schools to § 600.52, would redesignate 

current § 600.57 as § 600.58, and would 

add a new § 600.57 specifying 

additional Title IV eligibility criteria for 

foreign nursing schools. The proposed 

regulations would add definitions to 

§ 600.52 for associate degree school of 

nursing, collegiate school of nursing, 

and diploma school of nursing. The 

proposed new definitions are derived 

from definitions relating to nursing 

schools in section 801 of the Public 

Health Service Act, as amended (42 

U.S.C. 201 et seq.), as required by the 

HEA as amended by the HEOA. 

Under the proposed definitions, the 

primary distinction between the three 

types of nursing schools is the type of 

degree offered by the school. For an 

associate degree school of nursing, the 

nursing program must lead to a degree 

equivalent to an associate degree in the 

U.S. For a collegiate school of nursing, 

the nursing program must lead to a 

degree equivalent to a bachelor of arts, 

a bachelor of science, or a bachelor of 

nursing in the U.S, or to a degree 

equivalent to a graduate degree in 

nursing in the U.S. For a diploma school 

of nursing, the nursing program must 

lead to the equivalent of a diploma in 

the U.S. or to other indicators 

equivalent to a diploma that 

demonstrate that the student has 

satisfactorily completed the program. 

Proposed new § 600.57 would require 

a foreign nursing school to meet the 

applicable eligibility criteria elsewhere 

in part 600. In addition, a foreign 

nursing school must— 

• Meet the definition of associate 

degree school of nursing, collegiate 

school of nursing, or diploma school of 

nursing; 

• Have an agreement with a hospital 

located in the United States or an 

accredited school of nursing located in 

the United States that requires students 

of the nursing school to complete the 

student’s clinical training at the hospital 

or accredited school of nursing; 

• Have an agreement with an 

accredited school of nursing located in 

the United States providing that 

students graduating from the nursing 

school located outside of the United 


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42208 Federal Register / Vol. 75, No. 138 / Tuesday, July 20, 2010 / Proposed Rules 

States also receive a degree from the 

accredited school of nursing located in 

the United States; 

• Only certify Federal Stafford Loan 

program loans or Federal PLUS program 

loans for students attending the nursing 

school; 

• Reimburse 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; 

• 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 

requirements for collection and 

submission of NCLEX–RN results or 

pass rates; 

• Annually, at its own expense, 

obtain all results on the NCLEX–RN 

achieved by students and graduates who 

are U.S. citizens, nationals, or eligible 

permanent residents, together with the 

dates the student has taken the 

examination (including any failed 

examinations) and provide the results to 

the Secretary; 

• As an alternative to obtaining the 

NCLEX results individually, the school 

may obtain a report or reports from the 

National Council of State Boards of 

Nursing (NCSB), or an NCSB affiliate or 

NCSB contractor, reflecting the 

percentage of the school’s students and 

graduates taking the NCLEX–RN in the 

preceding year who passed the 

examination, or the data from which the 

percentage could be derived, and 

provide the report to the Secretary; 

• Demonstrate at least a 75 percent 

pass rate on the NCLEX–RN for all of 

the U.S. citizens, nationals, or eligible 

permanent residents who were students 

or graduates of the school and who took 

the NCLEX–RN in the year preceding 

the year for which the institution is 

certifying Federal Stafford or Federal 

Plus loans; 

• Provide a program of clinical and 

classroom nursing instruction, which 

students are normally required to 

complete, that is supervised closely by 

members of the school’s faculty. The 

program, which includes programs 

provided through agreements with 

nursing schools in the United States, 

must be provided in facilities 

adequately equipped and staffed to 

afford students comprehensive clinical 

and classroom nursing instruction, 

through a training program for foreign 

nursing students that has been approved 

by all nurse licensing boards and 

evaluating bodies whose views are 

considered relevant by the Secretary; 

• Have graduated classes during each 

of the two twelve-month periods 

immediately preceding the date the 

Secretary receives the school’s request 

for an eligibility determination; and 

• Employ only those faculty members 

whose academic credentials are the 

equivalent of credentials required of 

faculty members teaching the same or 

similar courses at nursing schools in the 

United States. 

In addition, the proposed regulations 

would specify that for purposes of 

reimbursing the Secretary for defaulted 

loans, the cost of a loan default is the 

sum of the defaulted loan’s— 

• Outstanding principal; 

• Accrued interest; 

• Unpaid late fees and collection 

costs; 

• Special allowance payments; 

• Reinsurance payments; and 

• Any related or similar payments the 

Secretary is obligated to make on the 

loan. 

The proposed regulations also would 

specify that after a school reimburses 

the Secretary for the cost of a loan 

default, the loan is assigned to the 

school. The borrower remains liable to 

the school for the outstanding balance of 

the loan, under the terms and 

conditions specified in the promissory 

note. 

Finally, proposed § 600.57(d) would 

provide that no portion of the foreign 

nursing program offered to U.S. students 

may be located outside of the country in 

which the main campus of the foreign 

nursing school is located, except for 

clinical sites located in the United 

States. 

Reasons: The Department modeled 

the proposed language in new § 600.57 

on the provisions in the HEOA 

regarding foreign nursing schools, as 

well as on language in existing 

§§ 600.55 and 600.56, which provide 

additional eligibility criteria for foreign 

graduate medical schools and foreign 

veterinary schools. In addition, in an 

effort to alleviate some of the burden 

entailed in demonstrating compliance 

with the NCLEX–RN pass rate 

requirement, the Department provided 

leeway for the school to obtain and 

submit, if available, reports on NCLEX– 

RN results from the NCSB, or one of its 

affiliates or contractors, showing the 

percentage of students from the school 

who passed the NCLEX–RN. 

In most cases, the non-Federal 

negotiators did not have concerns or 

questions regarding the proposed 

language in § 600.57 that was modeled 

on language in sections §§ 600.55 and 

600.56. However, non-Federal 

negotiators did have concerns relating to 

several of the provisions unique to 

foreign nursing schools. 

The non-Federal negotiators believed 

that the new requirements in 

§§ 600.57(a)(2) and 600.57(a)(3), 

requiring agreements between foreign 

nursing schools and U.S nursing schools 

and hospitals, would force many foreign 

nursing schools that currently 

participate in the Title IV, HEA 

programs out of the Title IV, HEA 

programs. The non-Federal negotiators 

stated that most foreign nursing schools 

do not currently have such agreements 

and could not revamp their nursing 

programs to provide clinical training in 

the U.S. for their Title IV students. This 

issue was of special concern with regard 

to foreign nursing schools that enroll 

relatively small numbers of Title IV 

borrowers. The Title IV loan amounts 

such schools receive might not be 

sufficient enough to justify the expense 

of revamping their nursing programs. 

The Department noted that the 

proposed regulations reflect the statute, 

and that any regulations developed by 

the Department must be consistent with 

statutory requirements. 

Non-Federal negotiators also had 

concerns about the statutory provision, 

reflected in proposed § 600.57(a)(5), 

requiring a foreign nursing school to 

reimburse the Secretary for the cost of 

loan defaults for loans included in the 

calculation of a school’s cohort default 

rate. Discussion of the reimbursement 

requirement centered around two major 

topics: the cost of a loan default and the 

status of the loan after the school 

reimburses the Secretary. Proposed 

§§ 600.57(b) and 600.57(c) address these 

two issues. 

At the time that these proposed 

regulations were being negotiated, it 

was unclear whether foreign institutions 

would continue to participate in the 

FFEL program or be required to switch 

over to the Direct Loan Program. Given 

this uncertainty, the Department drafted 

proposed §§ 600.57(b) and 600.57(c) in 

such a way that the regulations could 

apply to either a FFEL loan or a Direct 

Loan. 

The cost of a loan default, as specified 

in proposed § 600.57(b), includes some 

items that only apply to FFEL loans, 

such as special allowance payments, 

reinsurance payments, and payments of 

other fees. For a Direct Loan, the 

calculation of cost of a loan default 

would not include such costs. The cost 

of loan default for a Direct Loan would 

include such items as outstanding 

principal, accrued interest, and unpaid 

late fees or collection costs. 

Proposed § 600.57(c) would specify 

that after a school reimburses the 

Secretary for the cost of a loan default, 


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the loan would be assigned to the 

school. The borrower would be required 

to repay the loan to the school, under 

the terms and conditions of the 

promissory note. The reimbursement by 

the school would not change the 

school’s official cohort default rate or 

exempt the school from the 

consequences of its cohort default rate. 

In the initial discussions with the 

non-Federal negotiators, the nonFederal negotiators emphasized the 

importance of borrowers remaining 

liable for repayment of the loan after the 

school has reimbursed the Department 

for the loan default. The non-Federal 

negotiators stressed that if the 

reimbursement is deemed to have paid 

off the loan, the borrower’s obligation to 

repay the loan would effectively be 

discharged. This would provide a 

perverse incentive for borrowers to 

default deliberately on their Title IV 

loans. 

The Department agreed with the nonFederal negotiators. Initially we 

proposed that after the Secretary is 

reimbursed, the loan would remain with 

the loan holder, who would continue to 

collect on the loan. However, the 

Department determined that after it 

received the reimbursement payment, it 

would have no financial interest in the 

loan, and would have no statutory basis 

for collecting on the loan. Accordingly, 

the Department modified the proposed 

regulatory language to require that the 

loan to be assigned to the school. 

Although non-Federal negotiators 

supported borrowers remaining liable 

for the loan, some non-Federal 

negotiators had concerns about how 

assigning the loan to the school would 

affect the borrower. One non-Federal 

negotiator asked how NSLDS reporting, 

loan rehabilitation, and total and 

permanent disability discharges would 

be handled for these loans. 

The Department did not address in 

detail operational matters with regard to 

defaulted loans assigned to a school. 

Instead, the Department pointed out that 

currently a FFEL loan can fall out of the 

FFEL program, usually due to a due 

diligence failure. The terms and 

conditions on the promissory note 

remain in effect on these loans, and loan 

holders continue to collect on them. 

Procedures currently in place for FFEL 

loans that have lost their eligibility 

would apply to defaulted Title IV loans 

that are assigned to a foreign nursing 

school. 

Non-Federal negotiators questioned 

how foreign schools could comply with 

proposed § 600.57(a)(8), which would 

require that the clinical training 

provided at a U.S. school or hospital be 

‘‘supervised closely’’ by members of the 

foreign school’s faculty, in light of the 

fact that that training would already be 

supervised by faculty of the U.S. school. 

The Department noted that faculty at the 

U.S. clinical training facility could be 

appointed as faculty of the foreign 

school as well, and that, in any event, 

the foreign graduate medical school 

needs to have its own faculty supervise 

its entire program. The Department 

emphasized that Title IV eligibility is 

based on a school offering an eligible 

program, not a portion of an eligible 

program. The foreign school would have 

to develop agreements with U.S. schools 

that ensure continuity between the 

training offered at the foreign school 

and at the U.S. school. 

Non-Federal negotiators also 

questioned the provision in 

§ 600.57(a)(8) requiring a training 

program to be approved ‘‘by all licensing 

boards and evaluating bodies whose 

views are considered relevant by the 

Secretary.’’ Non-Federal negotiators 

asked how a nursing program could be 

expected to obtain approval from state 

licensing boards in all 50 states. The 

Department responded that the 

Department would focus on the 

licensing boards and evaluating bodies 

applicable to the state where the 

training program is located, not 

licensing boards and evaluating bodies 

for all of the states, in determining 

compliance with this eligibility 

requirement, although approval or 

disapproval decisions from other states 

would be considered if available. 

Proposed § 600.57(d) would provide 

that no portion of the foreign nursing 

program offered to U.S. students may be 

located outside of the country in which 

the main campus of the foreign nursing 

school is located, except for clinical 

sites located in the United States, to 

protect the coherence of the educational 

program and ensure continuity of 

oversight by the foreign government. 

The statute requires these nursing 

programs to provide their clinical 

training in the United States. 

As negotiated, proposed § 600.57(d) 

does not reflect the inapplicability, 

through June 30, 2012, to foreign 

nursing schools that were participating 

in a Title IV, HEA program as of August 

13, 2008, of the HEOA’s new eligibility 

requirements for foreign nursing 

schools. In the final regulations, the 

Department will specify that this section 

becomes effective on July 1, 2012, with 

respect to foreign nursing schools that 

were participating in a Title IV, HEA 

program as of August 13, 2008. 

Part 668 Student Assistance General 

Provisions Audited Financial 

Statements (§ 668.23) 

Statute: Section 487(c)(1)(A)(i) of the 

HEA was amended by the HEOA to give 

the Secretary the authority to modify the 

financial and compliance audit 

requirements for foreign institutions, 

and the authority to waive the audit 

requirements for foreign institutions 

that receive less than $500,000 in Title 

IV, HEA program funds in the preceding 

year. 

Current Regulations: Currently, under 

§ 668.23(a)(2), an annual submission of 

both a compliance audit and audited 

financial statements is required of all 

institutions participating in the Title IV, 

HEA programs. Section 668.23(d)(1) 

requires that an institution’s audited 

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 and A–128 regarding 

audits of States, Local Government and 

Non-Profit Organizations, or in audit 

guides developed by, and available 

from, the Department of Education’s 

Office of Inspector General, whichever 

is applicable. Section 668.15(h) permits 

a foreign institution whose enrolled 

students received less than $500,000 in 

U.S. 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 

institution’s home country. Current 

regulations notwithstanding, on May 15, 

2009, the Department of Education 

published a Dear Colleague Letter 

(GEN–09–06) that announced that the 

Secretary was waiving the annual 

audited financial statements 

requirement for foreign institutions 

whose enrolled students received less 

than $500,000 in U.S. FFEL Program 

funds during the award year preceding 

the audit period. The waiver applies to 

any audited financial statements for 

such a foreign institution due on or after 

August 14, 2008, the effective date of 

the HEOA amendment described 

previously, and renders unnecessary 

§ 668.15(h), providing for submission of 

audits prepared under home country 

standards. 

Proposed Regulations: Proposed 

§ 668.23 would establish new financial 

audit submission requirements for 

foreign institutions as follows: 


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• For a public or nonprofit foreign 

institution that received less than 

$500,000 in U.S. Title IV, HEA program 

funds during the institution’s most 

recently completed fiscal year, the 

audited financial statements submission 

would be waived, unless the institution 

is in its initial provisional period of 

participation and received Title IV, HEA 

program funds during that year, in 

which case the institution must submit, 

in English, audited financial statements 

prepared in accordance with the 

generally accepted accounting 

principles of the institution’s home 

country. 

• For a public or nonprofit foreign 

institution that received at least 

$500,000 but less than $3,000,000 in 

U.S. Title IV, HEA program funds 

during its most recently completed 

fiscal year, the institution would be 

allowed to submit for that year, in 

English, audited financial statements 

prepared in accordance with the 

generally accepted accounting 

principles of the institution’s home 

country in lieu of financial statements 

prepared in accordance with U.S. 

GAAP. 

• For a public or nonprofit foreign 

institution that received at least 

$3,000,000 but less than $5,000,000 in 

U.S. Title IV, HEA program funds 

during its most recently completed 

fiscal year, the institution would be 

required to submit once every three 

years audited financial statements 

prepared in accordance with the 

generally accepted accounting 

principles of both the institution’s home 

country and U.S. GAAP, but for the two 

years in between would be allowed to 

submit, in English, audited financial 

statements prepared in accordance with 

the generally accepted accounting 

principles of the institution’s home 

country in lieu of financial statements 

prepared in accordance with U.S. 

GAAP. 

• For a public or nonprofit foreign 

institution that received $5,000,000 or 

more in U.S. Title IV, HEA program 

funds during its most recently 

completed fiscal year, and for any forprofit foreign institution, the institution 

would be required to submit for that 

year audited financial statements 

prepared in accordance with the 

generally accepted accounting 

principles of both the institution’s home 

country and U.S. GAAP. 

Proposed § 668.23(h)(3)(i) would 

allow the Secretary to issue a letter to 

a foreign institution that has been 

identified as having problems with its 

financial condition or financial 

reporting that would require the foreign 

institution to submit its audited 

financial statements in the manner 

specified by the Secretary. 

In addition, the proposed regulations 

would: (1) Remove the superseded 

language in § 668.15 addressing 

submission of financial audits for 

foreign institutions; (2) make technical 

corrections to reflect the Office of 

Management and Budget’s (OMB’s) 2003 

rescission of Circular A–128 and 

expansion of Circular A–133 to include 

State and local governments and (3) add 

‘‘issued by the Comptroller General of 

the United States’’ to § 668.23(d)(1) to 

make clear that United States generally 

accepted government auditing standards 

must be used for all submitted financial 

statements, including those from foreign 

institutions. The removal of the 

superseded language in § 668.15(h) 

would not impact the Secretary’s ability 

to make a determination of financial 

responsibility for any foreign 

institution. The Secretary would make 

such a determination on the basis of 

financial statements submitted under 

proposed § 668.23(h). 

These proposed regulations would 

supersede the May 15, 2009, Dear 

Colleague Letter (GEN–09–06). The 

proposed regulations would apply the 

waiver of the annual audited financial 

statements requirement to public or 

nonprofit foreign institution that 

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

IV, HEA program funds during the 

institution’s most recently completed 

fiscal year, instead of applying it to 

foreign institutions that received less 

than $500,000 in U.S. Title IV, HEA 

Program funds during the award year 

preceding the audit period, as the Dear 

Colleague Letter does. This would 

match the Title IV, HEA program funds 

being administered by a foreign 

institution with the period of time 

covered in the audited financial 

statements of the institution. If this 

proposed provision becomes final, the 

Department will provide 

implementation guidance to institutions 

addressing the change in the period 

used to determine the amount of Title 

IV, HEA program funds received by a 

foreign institution. 

Reasons: The negotiators reached 

agreement on the proposed regulatory 

language only after extensive 

negotiations and significant 

compromises. 

The Department initially proposed to 

require audited financial statements 

prepared in accordance with U.S. 

GAAP, which is the requirement for 

domestic institutions, for public foreign 

institutions that received $1,000,000 or 

more in U.S. Title IV, HEA program 

funds, or private foreign institutions 

that received $500,000 or more in U.S. 

Title IV, HEA program funds, as well as 

for any institution in its initial 

provisional period of participation. For 

public foreign institutions, if an 

institution received at least $500,000 in 

U.S. Title IV, HEA program funds, but 

less than $1,000,000 in U.S. Title IV, 

HEA program funds during the 

institution’s fiscal year preceding the 

audit period, the institution would have 

been allowed to submit audited 

financial statements prepared in 

accordance with the generally accepted 

accounting principles of the 

institution’s home country in lieu of 

financial statements prepared in 

accordance with U.S. GAAP. If there 

was 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 prepared in accordance with 

U.S. GAAP. 

Upon hearing the Department’s initial 

proposal, some non-Federal negotiators 

argued that nonprofit foreign 

institutions should be treated the same 

as public foreign institutions. Others 

opined that requiring the audited 

financial statements to be prepared in 

accordance with U.S. GAAP was cost 

prohibitive, and suggested that a nonU.S. GAAP financial statement such as 

the International Financial Reporting 

Standards (IFRS) would be comparable 

and provide the Department with the 

information it needs. Another nonFederal negotiator suggested that the 

cost of preparing audited financial 

statements would be paid by students in 

the form of higher tuition and fees. It 

was also suggested that a rating from a 

financial rating agency such as Moody’s 

or Standard and Poor’s could be used as 

an indicator of financial solvency. 

Several non-Federal negotiators 

suggested that the Department should 

accept audited financial statements 

prepared under the institution’s home 

country accounting standards from 

nonprofit or public foreign institutions 

where the Department determined those 

home country standards were 

comparable to U.S. GAAP, regardless of 

the amount of U.S Title IV, HEA 

program funds that an institution may 

have received in the fiscal year 

preceding the audit. Non-Federal 

negotiators pointed out that no evidence 

had been presented during the 

negotiating sessions that international 

accounting principles are inferior to 

U.S. GAAP, and noted that an 

institution’s compliance audit would 

continue to be used to demonstrate that 


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Title IV, HEA program funds are being 

handled appropriately. 

Other suggestions made by the nonFederal negotiators included that the 

Department tie its requirement of U.S. 

GAAP financial statements to a foreign 

institution’s cohort default rate, given 

that such rates are generally lower than 

those for domestic institutions, and that 

public foreign institutions be relieved 

from submitting U.S. GAAP financial 

statements if the total number of U.S. 

students enrolled at that entity was less 

than fifty, regardless of the amount of 

U.S. Title IV, HEA program funds 

received during the institution’s fiscal 

year. 

The Department responded that it 

believes there is a risk threshold of Title 

IV, HEA program dollars administered 

by foreign institutions where the 

audited financial statements for those 

institutions should be provided in the 

same format and at the level of testing 

required from domestic institutions. 

These submissions would be reviewed 

on an equal footing with domestic 

institutions, and allow the Department 

to evaluate efficiently and effectively 

the financial condition of those 

institutions. The Department explained 

that financial statements prepared under 

U.S. GAAP provide Department staff 

with detailed information about the 

financial condition and operation of an 

institution. The additional information 

comes from the analysis of the audited 

financial statements, the accompanying 

audit opinion letters and related 

disclosures, and items in the footnote 

disclosures. Although the Department 

explored the use of IFRS as an 

alternative to U.S. GAAP, the 

Department believes it is premature to 

consider doing so now because the 

adoption of IFRS by the U.S. and other 

countries is proceeding slowly and 

inconsistently within the different 

countries. 

After consideration of the feedback 

from the non-Federal negotiators, the 

Department agreed to treat nonprofit 

and public foreign institutions alike, 

and removed the requirement that an 

unpaid liability due to the Secretary by 

related public institutions would 

require the submission of audited 

financial statements prepared in 

accordance with U.S. GAAP. In order to 

reach a compromise with the nonFederal negotiators, the Department 

agreed to raise the threshold for 

nonprofit and public foreign institutions 

that would be allowed to submit audited 

financial statements prepared in 

accordance with the generally accepted 

accounting principles of the 

institution’s home country from 

$1,000,000 to $3,000,000 in U.S. Title 

IV, HEA program funds. 

The Department also clarified that a 

foreign institution required to submit 

audited financial statements prepared in 

accordance with U.S. GAAP would be 

required also to submit a copy of the 

institution’s audited financial 

statements that were prepared under the 

institution’s home country accounting 

standards for the same period. By doing 

so, the Department would be able to 

perform a comparative analysis between 

both sets of financial statements to 

determine if the requirement to provide 

U.S. GAAP financial statements could 

be changed in the future. 

Upon hearing the revised regulatory 

proposals, several non-Federal 

negotiators suggested that, in lieu of a 

required annual submission of any 

audited financial statements, the 

Department could simply rely on 

applying the exception provided to the 

Secretary under § 668.23(h)(3)(i) and 

require an institution to submit audited 

financial statements on only an ‘‘as 

needed’’ basis. Some non-Federal 

negotiators suggested raising the 

threshold to as much as $10,000,000 in 

U.S. Title IV, HEA program funds. 

Others suggested that a threshold 

should be based on a percentage of U.S. 

Title IV, HEA program funds received 

against the total student generated 

revenues by an institution. 

The Department responded to these 

concerns with a final modification for 

public and nonprofit institutions that 

receive at least $3,000,000 but less than 

$5,000,000 in U.S. Title IV, HEA 

program funds annually. The 

Department was unwilling to accept 

only audited financial statements 

prepared in the home country standards 

on an ongoing basis for these 

institutions due to the unknown 

comparability of these submissions to 

audited financial statements prepared 

under U.S. GAAP. However, the 

Department proposed having these 

institutions submit U.S. GAAP financial 

statements once every three years, rather 

than every year, which would allow the 

Department to achieve the appropriate 

level of monitoring while providing 

some burden relief to these institutions. 

This proposal was discussed in detail, 

and consensus was reached on this 

issue. 

Compliance Audits (§ 668.23) 

Statute: Section 487(c)(1)(A)(i) of the 

HEA was amended by the HEOA to give 

the Secretary the authority to modify the 

financial and compliance audit 

requirements for foreign institutions, 

and the authority to waive the audit 

requirements for foreign institutions 

that receive less than $500,000 in Title 

IV, HEA program funds in the preceding 

year. 

Current Regulations: Section 

668.23(a)(2) of the current regulations 

requires an annual submission of both a 

compliance audit and audited financial 

statements from all institutions 

participating in the Title IV, HEA 

programs. 

Sections 668.23(b)(1) and (2) require 

that an institution’s compliance audit 

must cover, on a fiscal year basis, all 

Title IV, HEA program transactions, and 

must cover all of those transactions that 

have occurred since the period covered 

by the institution’s last compliance 

audit. They also require that the 

compliance audit under this section be 

conducted in accordance with the 

general standards for compliance audits 

contained in the U.S. GAO Government 

Auditing Standards and procedures for 

audits contained in audit guides 

developed by the Department of 

Education’s Office of Inspector General. 

The Inspector General’s current 

Foreign School Audit Guide, as 

amended, includes an Alternative 

Compliance Engagement that may be 

used for foreign institutions whose 

enrolled students received less than the 

$500,000 threshold in U.S. Title IV, 

HEA program funds. 

Proposed Regulations: The proposed 

regulations would separate foreign 

institutions into two groups, 

establishing new compliance audit 

requirements for foreign institutions 

based upon whether the institution 

received less than $500,000 or $500,000 

or more in U.S. Title IV, HEA program 

funds during the institution’s most 

recently completed fiscal year. 

Under proposed § 668.23(h)(2)(ii) and 

(iii), foreign institutions that receive less 

than $500,000 per year in U.S. Title IV, 

HEA program funds would be required 

to submit compliance audits under an 

alternative compliance audit performed 

in accordance with the audit guide from 

the Department’s Office of Inspector 

General. The proposed regulations 

would require an annual submission of 

the compliance audit, except that, under 

certain conditions as described in the 

following paragraphs, an institution 

would submit a compliance audit 

annually for two consecutive years, 

then, once notified by the Secretary, 

would be permitted to submit a 

cumulative compliance audit every 

three years thereafter. 

In order to submit a cumulative 

compliance audit once every three years 

instead of annually, a foreign institution 

would be required to have received less 

than $500,000 U.S. in U.S. Title IV, HEA 

program funds for its most recently 


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completed fiscal year, be fully certified, 

have timely submitted and had accepted 

compliance audits for two consecutive 

fiscal years, and have no history of late 

submissions since then. 

Under an alternative compliance 

audit, the auditor performs prescribed 

procedures and reports the findings, 

but, unlike a standard compliance audit, 

is not required to express an opinion of 

the reliability of the institution’s 

assertions concerning the institution’s 

compliance with the requirements. The 

alternative compliance audit is 

performed as an agreed-upon 

procedures attestation engagement, and 

the standard compliance audit is 

performed as an examination-level 

attestation engagement. An alternative 

compliance audit is an agreed-upon 

procedures attestation engagement, 

which consists of specific procedures 

performed on a subject matter and is 

substantially narrower in scope than a 

standard compliance audit, which is an 

examination-level attestation 

engagement. 

Under proposed § 668.23(h)(2)(i), 

foreign institutions that receive 

$500,000 or more per year in U.S. Title 

IV, HEA program funds, as in the 

current regulations, would be required 

to submit annual compliance audits 

using the standard audit procedures for 

foreign institutions set out in the audit 

guide issued by the Office of Inspector 

General. 

When an institution submits a 

standard compliance audit because it 

received more than $500,000 in U.S. 

Title IV, HEA program funds in its 

previous year, the institution must also 

submit any alternative compliance audit 

or audits for preceding years that were 

prepared in accordance with proposed 

§ 668.23(h)(2)(ii) for any preceding fiscal 

year or years in which the foreign 

institution received less than $500,000 

in U.S. Title IV, HEA program funds. 

Section 668.23(h)(3)(ii) of the 

proposed regulations would provide the 

Secretary with the authority to require 

that a foreign institution’s compliance 

audit must be performed at a higher 

level of engagement, and/or require that 

a compliance audit must be submitted 

to the Secretary annually, if the 

institution has been notified by the 

Secretary about problems with its 

administrative capability or compliance 

reporting. 

Section 668.23(h)(2) of the proposed 

regulations would make clear that, as 

under current regulations, a foreign 

institution’s compliance audit must be 

done on a fiscal year basis, and all Title 

IV, HEA program transactions that have 

occurred since the period covered by 

the institution’s last compliance audit 

must be covered. For institutions that 

are permitted to submit one compliance 

audit every three years, this requirement 

ensures that the compliance audit is 

cumulative. Also, when an institution is 

required to submit a compliance audit, 

the compliance audit must be submitted 

no later than six months after the last 

day of the institution’s preceding fiscal 

year. 

Reasons: The Department believes 

that by allowing foreign institutions that 

receive $500,000 or less in U.S. Title IV, 

HEA program funds per year to make 

less frequent audit submissions, the 

proposed regulations would provide a 

basis to establish a streamlined set of 

compliance audit requirements that 

would provide flexibility and cost 

benefits to a large number of relatively 

small foreign institutions and would 

reduce the reporting burden for the 

majority of foreign institutions that 

currently participate in the Title IV, 

HEA programs. 

The proposed regulations would also 

allow the Department to concentrate its 

resources on reviewing compliance 

audits from larger volume institutions 

and institutions that have demonstrated 

Title IV, HEA program problems, which 

represent the Department’s greatest 

financial risk. It would also be more 

efficient to review the cumulative audit 

submissions from lower-volume foreign 

institutions. Approximately 75% of the 

foreign institutions that participate in 

the Title IV, HEA programs are in this 

lower-volume group, and these 

institutions account for less than 7.5% 

of total Title IV, HEA program funds 

received by foreign institutions. Where 

problems are identified with a foreign 

institution, § 668.23(h)(3)(ii) of the 

proposed regulations provides that the 

Secretary may require the compliance 

audit to be performed at a higher level 

of engagement and may require the 

compliance audit to be submitted 

annually. 

Public Foreign Institutions and 

Financial Responsibility (§ 668.171) 

Statute: Section 487(c)(1)(B) of the 

HEA provides that the Secretary shall 

prescribe regulations, as necessary, to 

provide for the establishment of 

reasonable standards of financial 

responsibility for institutions that 

participate in the Title IV, HEA 

programs. Section 102(a)(2)(A) of the 

HEA provides that the Secretary shall 

prescribe regulations for determining 

the comparability of foreign institutions 

to Title IV ‘‘institutions of higher 

education.’’ 

Current Regulations: 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. 

Proposed Regulations: The proposed 

regulations would permit a foreign 

public institution to meet the financial 

responsibility requirements in a manner 

similar to domestic public institutions. 

That is, the Secretary would consider 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 would not meet this 

standard of financial responsibility if it 

was in violation of any past 

performance requirement. 

If a foreign public institution did not 

meet the new requirements, 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. Although 

the full faith and credit provision would 

provide an alternate way of meeting the 

financial responsibility standards for 

public foreign institutions, it would not 

excuse the institution from required 

submissions of audited financial 

statements (see the discussion under 

Audited Financial Statements above). If 

a government entity provided full faith 

and credit backing, the entity would be 

held liable for any Title IV, HEA 

program liabilities that were not paid by 

the institution. 

Reasons: Current § 668.171(c) is not 

addressed to foreign institutions. 

Therefore, the proposed regulations 

would establish a financial 

responsibility standard for public 

foreign institutions that is comparable to 

public domestic institutions that 

participate in the Title IV, HEA 

programs. Although the Department has 

not identified specific countries that 

would be willing to provide the 


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proposed full faith and credit backing, 

and one non-Federal negotiator reported 

that a particular country with several 

public institutions that participate in 

the Title IV, HEA programs did not 

think that it would be willing to provide 

such backing, the Committee agreed that 

it was a good idea to make this 

alternative available. 

Executive Order 12866 

Regulatory Impact Analysis 

Under Executive Order 12866, the 

Secretary must determine whether the 

regulatory action is ‘‘significant’’ and 

therefore subject to the requirements of 

the Executive Order and subject to 

review by the OMB. Section 3(f) of 

Executive Order 12866 defines a 

‘‘significant regulatory action’’ as an 

action likely to result in a rule that may 

(1) have an annual effect on the 

economy of $100 million or more, or 

adversely affect a sector of the economy, 

productivity, competition, jobs, the 

environment, public health or safety, or 

State, local, or tribal governments or 

communities in a material way (also 

referred to as an ‘‘economically 

significant’’ rule); (2) create serious 

inconsistency or otherwise interfere 

with an action taken or planned by 

another agency; (3) materially alter the 

budgetary impacts of entitlement grants, 

user fees, or loan programs or the rights 

and obligations of recipients thereof; or 

(4) raise novel legal or policy issues 

arising out of legal mandates, the 

President’s priorities, or the principles 

set forth in the Executive order. 

Pursuant to the terms of the Executive 

Order, it has been determined this 

proposed regulatory action would not 

have an annual effect on the economy 

of more than $100 million. Therefore, 

this action is not ‘‘economically 

significant’’ and subject to OMB review 

under section 3(f)(1) of Executive Order 

12866. Notwithstanding this 

determination, the Secretary has 

assessed the potential costs and benefits 

of this regulatory action and has 

determined that the benefits justify the 

costs. 

Need for Federal Regulatory Action 

These proposed regulations are 

needed to implement provisions of the 

HEA, as amended by the HEOA, 

particularly related to audit 

requirements for foreign institutions, the 

USMLE pass rate for foreign graduate 

medical schools, clinical training 

programs of foreign graduate medical 

schools, eligibility criteria for foreign 

graduate medical schools that have a 

clinical training program approved by a 

State prior to January 1, 2008, clinical 

training programs for foreign veterinary 

schools, provisions for participation by 

for-profit foreign nursing schools, and 

eligibility restrictions applicable to forprofit (and, later, all) foreign nursing 

schools. A brief description of the 

proposed rules, the reasons for adopting 

them, and an analysis of their effects is 

presented in the following sections of 

this NPRM: 

Definition of a Foreign Institution 

(§§ 600.51, 600.52, 600.54, 682.200, 

682.611): Section 102(a)(2)(A) of the 

HEA requires the Secretary to establish 

regulatory criteria for the approval of 

foreign institutions and for the 

determination that they are comparable 

to an institution of higher education 

within the United States. Proposed 

§§ 600.52 and 600.54 would include a 

more detailed definition of foreign 

institution to ensure that a foreign 

institution is comparable to institutions 

in the United States, in accordance with 

HEA section 102(a)(1)(C), before 

allowing a foreign institution to 

participate in the Title IV, HEA 

programs. The Department is concerned 

that a foreign institution that is not 

comparable to a domestic institution, 

especially in terms of the quality of its 

educational programs, may misuse 

Federal funds to the detriment of its 

students who may have to borrow 

heavily in order to attend the foreign 

institution. The proposed regulations 

also more fully implement the scheme 

of the HEA, which distinguishes 

between foreign and domestic 

institutions and includes provisions 

unique to each. For example, these 

regulations would prevent a domestic 

institution from claiming to be a foreign 

institution by virtue of the fact that it 

has established an offshore location, 

thereby avoiding the requirements 

applied to domestic institutions such as 

recognized accreditation, but that sends 

its students to the United States for the 

majority of the required coursework. 

As described in the preamble section 

related to this provision, under current 

regulations a foreign institution is 

eligible to participate if it is comparable 

to an institution of higher education 

located in the United States; has been 

approved by the Secretary; does not 

offer its programs through any use of 

telecommunications, correspondence 

course, or direct assessment program; is 

not located in a State as defined in 

§ 600.2; admits as regular students only 

those with a secondary school 

credential or recognized equivalent; and 

is legally authorized by an appropriate 

authority to provide an eligible program 

beyond the secondary level in the 

country in which it is located. The 

foreign institution must also provide 

eligible programs for which the 

institution is authorized to award the 

equivalent of an associate, 

baccalaureate, graduate, or professional 

degree in the United States; or a twoyear program acceptable for full credit 

towards the equivalent of a 

baccalaureate degree awarded in the 

United States; or a program equivalent 

to a one-academic year training program 

that leads to a certificate, degree, or 

other credential and prepares a student 

for gainful employment in a recognized 

occupation. 

The proposed regulations would 

consolidate the definitions and 

requirements related to the eligibility of 

foreign institutions to apply for Title IV, 

HEA program eligibility in subpart E of 

34 CFR 600. As is the current practice, 

foreign institutions would be required to 

comply with all other requirements for 

eligible and participating institutions 

except to the extent the provisions are 

inconsistent with the HEA, 34 part CFR 

600, or other regulatory provisions 

specific to foreign institutions. Proposed 

§ 600.51(c) would also exempt foreign 

institutions from requirements that the 

Secretary identifies through a notice in 

the Federal Register. The proposed 

regulations would amend § 600.52 to 

include a detailed definition of foreign 

institution. Under the definition 

proposed, foreign institution would 

mean, for the purposes of students who 

receive Title IV, HEA program aid, an 

institution that is not located in a State; 

has no U.S. locations except with 

respect to clinical training for foreign 

graduate medical, veterinary, and 

nursing schools; has no written 

agreements with institutions or 

organizations located in the United 

States for students to take a portion of 

the program in the United States; does 

not permit students to enroll in any 

course offered by the foreign institution 

in the United States except for 

independent research under very 

limited circumstances; is legally 

authorized by an agency of its home 

country to provide an education 

program beyond its secondary level; 

awards degrees that are officially 

recognized by the institution’s home 

country; and, for a program designed to 

prepare a student for gainful 

employment in a recognized 

occupation, provides a credential that 

satisfies the education requirements in 

the institution’s home country for entry 

into that occupation and satisfies the 

educational requirements for entry into 

that occupation in the United States, 

including licensure. Proposed 

§ 600.54(a) clarifies that, with the 

exception of freestanding foreign 


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graduate medical, veterinary, or nursing 

schools that may be for-profit, foreign 

institutions must be public or private 

nonprofit education institutions to be 

eligible. 

Nonprofit Status for Foreign 

Institutions (§ 600.2): As foreign 

institutions must be public or private 

nonprofit institutions to participate in 

the Title IV, HEA programs, unless they 

are medical, veterinary, or nursing 

schools, the Department believes it is 

necessary to delineate in regulations the 

requirements for demonstrating 

nonprofit status for foreign institutions. 

Current section 600.2 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 (IRS) 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)). 

Under proposed § 600.2, a new 

paragraph (2) of the definition of a 

nonprofit institution would provide that 

if a recognized tax authority of a foreign 

institution’s home country is recognized 

by the Secretary for purposes of making 

determinations of an institution’s 

nonprofit status for Title IV, HEA 

purposes, the Secretary would 

automatically accept that tax authority’s 

determination of nonprofit educational 

status for any institution located in that 

country. If a 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, HEA program purposes, a foreign 

institution would have to demonstrate 

to the satisfaction of the Secretary that 

it is a nonprofit educational institution. 

The proposed regulations would also 

make clear that a nonprofit foreign 

institution may not be owned by a for 

profit entity, directly or indirectly. A 

foreign institution that did not meet this 

definition of a nonprofit foreign 

institution would not be eligible to 

participate in the Title IV, HEA 

programs unless it was a medical, 

veterinary, or nursing school. 

The proposed regulations should 

increase comparability in the 

determination of nonprofit status 

between domestic and foreign 

institutions. A domestic institution 

must be determined by the IRS to be a 

nonprofit organization in order to be 

eligible as a nonprofit institution for 

participation in the Title IV, HEA 

programs. Additionally, certain 

countries may not have standards for 

the determination of nonprofit status 

that are comparable to those used in the 

United States, and may not ensure that 

the institution’s net earnings do not 

benefit any private shareholder or 

individual. Therefore, to make the 

proposed regulations as comparable as 

possible to those applicable to domestic 

institutions, the Department proposed, 

and the Committee agreed, that a 

determination that an institution is 

nonprofit by an entity in the 

institution’s foreign country would 

qualify an institution as nonprofit only 

if the determination is made by a 

recognized tax authority of the country, 

and the Secretary has recognized that 

tax authority as one that can make a 

determination using criteria that are 

similar to those used by the U.S. IRS. 

The Secretary may recognize more than 

one tax authority in a country. 

Information submitted by entities other 

than recognized tax authorities would 

be taken into account by the 

Department; however, this would be 

done as part of an individual 

determination of the eligibility of an 

institution. 

Foreign Graduate Medical Schools 

(§§ 600.20, 600.21, 600.52, 600.55): As 

discussed in the section of the preamble 

related to this provision, the proposed 

regulations reflect amendments made to 

the sections 102(a)(2)(A) and (B) of the 

HEA by the HEOA and the requirement 

in 102(a)(2)(B)(iii)(IV)(aa) of the HEA 

that the regulations be based on the 

recommendations of the 2009 NCFMEA 

report. The NCFMEA is a panel of 

medical experts that 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 United States. 

Current section 600.52 defines 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 World Directory of Medical Schools 

published by the World Health 

Organization. The regulations do not 

define clinical training, the NCFMEA, or 

a post-baccalaureate/equivalent medical 

degree. Neither section 600.20, which 

addresses the application procedures for 

establishing, reestablishing, 

maintaining, or expanding institutional 

eligibility and certification, nor 

§ 600.21, which addresses when and 

how an institution must update 

application information, currently 

include any provisions specific to 

foreign graduate medical schools. 

Foreign graduate medical schools 

generally must meet the criteria in 

§ 600.54 for determining a foreign 

institution’s eligibility (except the 

criterion that the institution be public or 

private nonprofit), as well as the 

additional criteria in § 600.55(a)(5). The 

additional criteria include the 

following: (1) Providing and requiring 

students to complete a program of 

clinical and classroom medical 

instruction of not less than thirty-two 

months that is supervised closely by 

faculty and that is provided (a) outside 

the United States in facilities adequately 

equipped and staffed to afford students 

comprehensive clinical and classroom 

medical instruction, or (b) in the United 

States, 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; (2) having graduated classes 

during each of the two twelve-month 

periods immediately preceding the date 

the Secretary receives the school’s 

request for an eligibility determination; 

(3) employing only those faculty 

members whose academic credentials 

are the equivalent of credentials 

required of faculty members teaching 

the same or similar courses at medical 

schools in the United States; and (4) 

being approved by an accrediting body 

that is legally authorized to evaluate 

graduate medical schools in the country 

where the school is located and whose 

standards of accreditation have been 

evaluated by the advisory panel of 

medical experts established by the 

Secretary and have been determined to 

be comparable to standards of 

accreditation applied to medical schools 

in the United States. In addition, current 

regulations provide that foreign 

graduate medical schools that do not 

have a clinical training program that has 

been continuously approved by a State 

since January 1, 1992, must: (1) During 

the academic year preceding the year for 

which any of the school’s students seeks 

a FFEL program loan, have at least 60 

percent of those enrolled as full-time 

regular students in the school and at 

least 60 percent of the school’s most 

recent graduating class be persons who 

did not meet the citizenship and 

residency criteria contained in section 

484(a)(5) of the HEA, 20 U.S.C. 

1091(a)(5); and (2) for a foreign graduate 

medical school outside of Canada, have 

at least 60 percent of the school’s 

students and graduates who took any 

step of the USMLE administered by the 


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ECFMG (including the ECFMG English 

test) in the year preceding the year for 

which any of the school’s students seeks 

a FFEL program loan to have received 

passing scores on the exams. 

The proposed regulations would deal 

with location requirements for foreign 

medical education programs, affiliation 

agreements, application and notification 

procedures, accreditation, admission 

criteria, collection and submission of 

data, citizenship and USMLE pass rate 

percentages, maximum timeframes for 

program completion, required 

documentation related to educational 

remediation a school provides as part of 

a satisfactory academic progress policy, 

and publication of the languages in 

which instruction is offered. 

Proposed § 600.55(h) contains 

regulations concerning the locations 

where a foreign graduate medical school 

can establish its program. No portion of 

the medical education program offered 

to United States students by a foreign 

graduate medical school, other than the 

clinical training portion of the program, 

would be allowed to be offered outside 

the country where the main campus of 

the school is located. In addition to 

distinguishing between the basic 

science and the clinical training parts of 

the program, the Committee discussions 

distinguished between the different 

parts of clinical training; referred to in 

these proposed regulations as the core, 

the required clinical rotation (the 

electives that students are required to 

take), and the not required clinical 

rotation (the electives that students can 

choose). The proposed regulations set 

three criteria for clinical training sites 

outside the United States—the 

requirement 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 if a location is in a 

comparable foreign country outside the 

country of the program’s main campus; 

and the requirement that instruction be 

offered in conjunction with medical 

educational programs offered to 

students enrolled in accredited medical 

schools located in that approved foreign 

country—but allow two exceptions. The 

two exceptions would permit a foreign 

graduate medical school to have a 

clinical training program in a foreign 

country other than the country in which 

the main campus is located or in the 

United States without meeting these 

three criteria if the clinical training 

location is included in the accreditation 

of a medical program accredited by the 

LCME, or if no individual student takes 

more than two electives at the clinical 

training location and the combined 

length of the electives does not exceed 

eight weeks. 

Proposed § 600.55(e)(1) would require 

a foreign graduate medical school to 

have: (1) A formal affiliation agreement 

with any hospital or clinic at which all 

or a portion of the school’s core clinical 

training or required clinical rotations 

are provided; and (2) either a formal 

affiliation agreement or other written 

arrangements with any hospital or clinic 

at which all or a portion of its clinical 

rotations that are not required are 

provided, 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 combined 

total of eight weeks. The proposed 

regulations would require these 

affiliation agreements or other written 

arrangements to state how the following 

will be addressed at each site: (1) 

Maintenance of the school’s standards; 

(2) appointment of faculty to the 

medical school staff; (3) design of the 

curriculum; (4) supervision of students; 

(5) provision of liability insurance; and 

(6) evaluation of student performance. 

In addition, the proposed regulations 

would require a foreign graduate 

medical school to do the following in its 

application for participation in Title IV, 

HEA programs: (1) To provide copies of 

the affiliation agreements with hospitals 

and clinics that it is required to have 

under proposed § 600.55(e)(2); (2) to list 

all educational sites associated with its 

program on its application for 

participation, except those not used 

regularly that are chosen by individual 

students who take no more than two 

electives there for no more than a 

combined total of eight weeks; (3) to 

apply for certification and wait for 

approval before dispensing Title IV, 

HEA program funds at any additional 

location that offers core clinical 

training, except for those locations 

included in the accreditation of a 

medical program accredited by the 

LCME; and (4) 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 or doctor of medicine, or both. 

The Department believes that 

distinguishing between the parts of the 

medical education program allows a 

balance between effective oversight and 

exposure to other medical environments 

and cultures for short-term elective 

training. 

Other proposed regulations address 

general definitions and requirements 

related to foreign graduate medical 

programs. The proposed regulations 

would change the definition of a foreign 

graduate medical school, removing the 

requirement that a school qualify for 

listing in the World Directory of 

Medical Schools and clarifying that 

schools would have to meet all 

applicable criteria for foreign 

institution’s Title IV, HEA program 

eligibility in part 600, not just the 

criteria in § 600.55. In its place, the 

definition proposed would clarify that a 

foreign graduate medical school can be 

free-standing or a component of an 

eligible foreign institution. Current 

regulations require only clinical training 

and classroom instruction that is offered 

outside of the United States to be 

provided in facilities adequately 

equipped and staffed to afford students 

comprehensive clinical and classroom 

medical instruction, and require only 

the clinical training and classroom 

instruction located in the United States 

to be approved by all medical licensing 

boards and evaluating bodies whose 

views are considered relevant by the 

Secretary. Proposed § 600.55(a)(2) 

would apply these provisions to the 

entire medical program, regardless of 

whether a particular portion is located 

outside or inside the United States, as 

the Department believes both are good 

requirements for medical education 

regardless of location. In § 600.52, the 

proposed regulations would add a 

definition of clinical training. Clinical 

training would be defined as the portion 

of a graduate medical education 

program that counts as a clinical 

clerkship for purposes of medical 

licensure. Proposed §§ 600.20(a)(3)(i)(B) 

and (b)(3)(i)(B) would require 

freestanding foreign graduate medical 

schools, and foreign institutions that 

include a foreign graduate medical 

school, to identify, for each clinical site 

reported in the certification or 

recertification application as required 

under §§ 600.20(a)(3)(i)(A) and 

(b)(3)(i)(A), the type of clinical training 

(core, required clinical rotation, not 

required clinical rotation) offered at that 

site. Proposed § 600.55(a)(3) would 

require foreign graduate medical schools 

to appoint, rather than employ, faculty 

members with comparable academic 

credentials to those teaching similar 

courses at U.S. medical schools. The 

proposed regulations make no 

substantive changes to existing 

accreditation requirements for foreign 

graduate medical schools. 

The proposed regulations also address 

admission criteria and collection and 

submission of data in order to provide 

data for the evaluation of whether 

additional performance measures 

should be required of foreign graduate 

medical schools. Proposed § 668.55(c) 


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would require foreign graduate medical 

school with a post-baccalaureate/ 

equivalent medical program to require 

U.S. citizens, nationals, or permanent 

residents accepted as students to have 

taken the MCAT and have reported the 

scores to the school. To provide 

information valuable for the future 

evaluation of the quality of education 

being provided to students attending 

foreign graduate medical schools, 

foreign graduate medical schools must 

determine consent requirements, obtain 

necessary consents from U.S. citizens, 

nationals, or eligible permanent 

residents, and comply with the 

collection and submission requirements 

in proposed § 600.55(d) for MCAT 

scores, residency placement, and 

USMLE examination scores. Proposed 

§ 600.55(d) requires that schools obtain 

the required information at their own 

expense, submit MCAT scores and 

medical residency data to their 

accrediting agency by September 30 of 

each year, and submit the USMLE 

scores for Step 1, Step 2—Clinical 

Skills, and Step 2—Clinical Knowledge 

to the Department annually by 

September 30 unless the Department 

informs the school that it will get the 

USMLE scores from ECFMG. The 

provision in proposed § 600.55(e)(2) 

would require a foreign graduate 

medical school to notify its accrediting 

body within one year of any material 

changes in educational programs, and 

the overseeing bodies and in the formal 

affiliation agreements with hospitals 

and clinics would reflect NCFMEA 

Recommendations 12(a) and 12(b) and 

would allow a school’s accrediting body 

to assess any substantive impact the 

change would have on the school’s 

operations. 

The proposed change in 

§ 600.55(f)(1)(i)(B) to allow a foreign 

graduate medical school to be exempt 

from the existing citizenship 

requirement if it had a clinical training 

program approved by a State as of 

January 1, 2008, and continues to 

operate a clinical training program in at 

least one State that approves the 

program, reflects a change made by the 

HEOA. As a result, both foreign 

graduate medical schools that had a 

clinical training program approved by a 

State as of January 1, 1992, and those 

that had a clinical training program 

approved by a State as of January 1, 

2008, are exempt from the citizenship 

rate provision, provided the school 

continues to operate a clinical training 

program in at least one State that 

approves the program. 

The increase in the USMLE pass rate 

threshold from 60 percent to 75 percent 

also reflects a change made by the 

HEOA, as does proposed 

§ 600.55(f)(2)(ii), which would allow a 

foreign graduate medical school that 

was eligible to participate in the Title 

IV, HEA programs and exempt from the 

USMLE pass rate requirement based on 

having a clinical training program 

approved by a State as of January 1, 

1992, to continue to be eligible and 

exempt from the USMLE pass rate 

requirement as long as it continues to 

operate a clinical training program in at 

least one State that approves the 

program. Proposed § 600.55(f)(1)(ii) 

would make the following changes to 

the USMLE pass rate requirement: (1) 

Increase the USMLE pass rate threshold 

from 60 percent to 75 percent 

(§ 600.55(f)(1)(ii)); (2) limit the pass rate 

requirement to Step 1, Step 2—CS, and 

Step 2—CK, excluding Step 3; (3) 

require a foreign graduate medical 

school to have at least a 75 percent pass 

rate on each step/test of the USMLE 

(limited to Step 1, Step 2—CS, and Step 

2—CK), rather than a combined pass 

rate for all steps/tests; (4) require foreign 

graduate medical schools to include in 

the calculation only U.S. citizens, 

nationals, or eligible permanent 

residents, rather than all students taking 

the USMLE; and (5) require foreign 

graduate medical schools to include 

only first time test takers in the 

calculation. As described in the 

preamble section related to this 

provision, under proposed 

§ 600.55(f)(4), pass rates must be based 

on at least eight step/test results. 

Proposed § 600.55(g)(1) would require 

a foreign graduate medical school to 

follow existing regulations currently 

applicable to undergraduate programs 

for establishing a maximum timeframe 

in which a student must complete his or 

her program of medical education and 

require that a student complete his or 

her program within 150 percent of the 

published length of the program. This 

adopts NCFMEA Recommendation 9(b). 

In addition, proposed § 600.55(g)(2) 

would require a foreign graduate 

medical school to document the 

educational remediation it provides to 

assist students in making satisfactory 

academic progress. In the future, the 

Department or the NCFMEA may collect 

and examine the data to see if this is an 

area of concern that may need to be 

addressed, but they did not believe it 

was currently necessary or cost effective 

to require the regular submission of 

these data to the Department. Finally, 

proposed § 600.55(g)(3) would require a 

foreign graduate medical school to 

publish all the languages in which 

instruction is offered. Although 

NCFMEA Recommendation 10 

suggested requiring schools to publish 

the primary language of instruction, and 

if not English, identify any alternate 

language of instruction, the Committee 

agreed that requiring schools to publish 

all languages in which instruction is 

offered would be more beneficial and no 

more burdensome. 

Foreign Veterinary Schools (§ 600.56): 

Section 102(a)(2)(A)(ii) of the HEA 

stipulates that Title IV borrowers 

attending a foreign for-profit veterinary 

school must complete clinical training 

at an approved veterinary school located 

in the United States. The HEA does not 

establish additional eligibility criteria 

specific to foreign veterinary schools, 

and requires the Secretary to develop, 

through regulation, eligibility criteria for 

foreign institutions that are comparable 

to the eligibility criteria for domestic 

institutions of higher education. Under 

current regulations, foreign veterinary 

school facilities outside the United 

States must be adequately equipped and 

staffed to provide students 

comprehensive clinical and classroom 

veterinary instruction, foreign 

veterinary school programs provided 

inside the United States must be 

approved by all veterinary licensing 

boards and evaluating bodies that the 

Secretary considers to be relevant, and 

the credentials of faculty members 

employed by the foreign veterinary 

school must be equivalent to the 

credentials of faculty members teaching 

the same or similar courses in the 

United States. 

The Department proposed revising the 

regulations governing eligibility criteria 

for foreign veterinary schools to 

improve the Department’s process for 

making determinations of eligibility of 

foreign veterinary schools to participate 

in the Title IV, HEA programs. The 

proposed regulations would apply the 

current regulatory standards regarding 

facilities, approvals and faculty 

credentials without distinguishing 

between portions of veterinary programs 

provided inside and outside of the 

United States, and, as of July 1, 2015, 

would require a foreign veterinary 

school to be accredited or provisionally 

accredited by an organization acceptable 

to the Secretary. As required by the 

HEA, the proposed regulations also 

distinguish between for-profit foreign 

veterinary schools and those that are 

public or private nonprofit. Students 

from a for-profit foreign veterinary 

school must complete their clinical 

training at an approved veterinary 

school located in the United States. 

Students from public or private 

nonprofit foreign veterinary schools 

may complete their clinical training at 

an approved veterinary school located 


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in the United States or in the home 

country, and may also take clinical 

training outside the United States or the 

home country if no individual student 

takes more than two electives at the 

location and the combined length of the 

elective does not exceed eight weeks. 

The Department agreed to be consistent 

with medical school provisions that 

would permit some clinical training 

locations of foreign graduate medical 

schools to be outside of the United 

States and the country in which the 

main campus of the school is located. 

This provision could not be extended to 

for-profit veterinary schools because the 

statute requires students who attend 

these schools to complete their clinical 

training in the United States. 

Foreign Nursing Schools (§ 600.57): 

The HEOA amended section 

102(a)(2)(A) of the HEA to provide 

specific standards for foreign nursing 

schools. The amendments are effective 

beginning July 1, 2010, except that, for 

nursing schools that were eligible for 

Title IV, HEA program participation on 

August 13, 2008 (the day before 

enactment of the HEOA), they are 

effective July 1, 2012. The HEA, as 

amended by the HEOA and HCERA, 

provides that a foreign nursing school, 

including a for-profit nursing school, 

may not participate in the Title IV, HEA 

programs unless the school: (1) Has an 

clinical training agreement with a 

hospital or accredited school of nursing 

located in the United States; (2) 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; (3) certifies only 

Federal Direct Stafford Loans under 

section 455(a)(2)(A) of the HEA, Federal 

Direct Unsubsidized Stafford Loans 

under section 455(a)(2)(D) of the HEA, 

or Federal Direct PLUS loans under 

section 455(a)(2)(B) of the HEA for 

students attending the school; and (4) 

reimburses the Secretary for the cost of 

any loan defaults for current and former 

students included in the calculation of 

the school’s cohort default rate during 

the previous fiscal year. In addition, the 

HEOA amendments to the HEA require 

that at least 75 percent of the 

individuals who were students or 

graduates of a foreign nursing school, 

and who took the National Council 

Licensure Examination for Registered 

Nurses (NCLEX–RN) in the year 

preceding the year for which the school 

is certifying a Title IV, HEA program 

loan, received a passing score on the 

NCLEX–RN. Current regulations do not 

define the term ‘‘foreign nursing school’’, 

or specify Title IV, HEA program 

eligibility criteria unique to foreign 

nursing schools. 

The proposed regulations would add 

several new definitions relating to 

foreign nursing schools to § 600.52, and 

would add a new § 600.57 specifying 

additional Title IV eligibility criteria for 

foreign nursing schools. The proposed 

regulations would add definitions to 

§ 600.52 for the terms associate degree 

school of nursing, collegiate school of 

nursing, and diploma school of nursing, 

with the primary distinction between 

the three types of nursing schools being 

the type of degree offered by the school. 

For an associate degree school of 

nursing, the nursing program must lead 

to a degree equivalent to an associate 

degree in the U.S. For a collegiate 

school of nursing, the nursing program 

must lead to a degree equivalent to a 

bachelor of arts, a bachelor of science, 

or a bachelor of nursing in the U.S., or 

to a degree equivalent to a graduate 

degree in nursing in the U.S. For a 

diploma school of nursing, the nursing 

program must lead to the equivalent of 

a diploma in the U.S. or to other indicia 

equivalent to a diploma that 

demonstrates that the student has 

satisfactorily completed the program. 

These definitions are drawn from the 

Public Health Service Act, as required 

by the foreign nursing school provisions 

of the HEOA amendments to the HEA. 

Proposed new § 600.57 would require 

a foreign nursing school to meet the 

applicable eligibility criteria elsewhere 

in part 600. In addition, a foreign 

nursing school must meet the statutory 

requirements described above as well as 

the following eligibility criteria: (1) 

Meet the definition of associate degree 

school of nursing, collegiate school of 

nursing, or diploma school of nursing; 

(2) reimburse the Department 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; (3) 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 requirements 

for collection and submission of 

NCLEX–RN results or pass rates; (4) 

annually, at its own expense, obtain all 

results on the NCLEX–RN achieved by 

students and graduates who are U.S. 

citizens, nationals, or eligible 

permanent residents, together with the 

dates the student has taken the 

examination (including any failed 

examinations) and provide the results to 

the Secretary; (5) as an alternative to 

obtaining the NCLEX results 

individually, the school may obtain a 

report or reports from the National 

Council of State Boards of Nursing 

(NCSB), or an NCSB affiliate or NCSB 

contractor, reflecting the percentage of 

the school’s students and graduates 

taking the NCLEX–RN in the preceding 

year who passed the examination, or the 

data from which the percentage could 

be derived, and provide the report to the 

Secretary; (6) provide, a program of 

clinical and classroom nursing 

instruction, which students are 

normally required to complete, that is 

supervised closely by members of the 

school’s faculty. The program, which 

includes programs provided through 

agreements with nursing schools in the 

United States, must be provided in 

facilities adequately equipped and 

staffed to afford students comprehensive 

clinical and classroom nursing 

instruction, through a training program 

for foreign nursing students that has 

been approved by all nurse licensing 

boards and evaluating bodies whose 

views are considered relevant by the 

Secretary; (7) have graduated classes 

during each of the two twelve-month 

periods immediately preceding the date 

the Secretary receives the school’s 

request for an eligibility determination; 

and (8) employ only those faculty 

members whose academic credentials 

are the equivalent of credentials 

required of faculty members teaching 

the same or similar courses at nursing 

schools in the United States. 

The proposed regulations also would 

specify that after a school reimburses 

the Secretary for the cost of a loan 

default, the loan is assigned to the 

school. The borrower remains liable to 

the school for the outstanding balance of 

the loan, under the terms and 

conditions specified in the promissory 

note. 

Proposed § 600.56(b) would provide 

that no portion of the foreign nursing 

program offered to U.S. students may be 

located outside of the country in which 

the main campus of the foreign nursing 

school is located, except for clinical 

sites, which by statute must be located 

in the United States. 

Single Legal Authorization for Groups 

of Foreign Institutions (§ 600.54) 

To ease administrative burden for 

foreign institutions, the Department 

sought to determine if compliance with 

any of the foreign institution 

institutional eligibility criteria could be 

demonstrated at a nationwide level, for 

all eligible institutions within a country, 

rather than at the individual institution 

level. After discussions with the nonFederal negotiators and our own 


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internal review of the Title IV 

institutional eligibility criteria, the 

Department determined that the 

requirement for proof of legal 

authorization to provide postsecondary 

education could be provided this way. 

Section 600.54(b) of the current 

regulations requires a foreign institution 

to be legally authorized by an 

appropriate authority to provide 

postsecondary education in the country 

where the institution is located. 

Proposed § 600.54(f) would provide 

three different methods for a foreign 

institution to prove that it is legally 

authorized to provide postsecondary 

education in the country where the 

institution is located. The 

documentation from a foreign country’s 

education ministry, council, or 

equivalent agency may either be: (1) A 

single legal authorization that covers all 

eligible foreign institutions in the 

country; (2) a single legal authorization 

that covers all eligible foreign 

institutions in a jurisdiction within the 

country; or (3) separate legal 

authorizations for each eligible foreign 

institution in the country. 

The proposed regulations reflect 

recommendations made in response to 

concerns raised by non-Federal 

negotiators about reliance on national 

governments to produce lists of 

institutions legally authorized to 

provide postsecondary education 

because of efficiency and provincial 

level regulation of educational providers 

in some countries. In addition to 

allowing proof of legal authorization to 

be provided on a nationwide basis, the 

proposed regulations allow for proof of 

legal authorization to be provided for all 

eligible institutions in a jurisdiction 

within the country, and continue to 

allow proof of legal authorization to be 

provided separately for each eligible 

institution in a country. 

Eligibility of Training Programs at 

Foreign Institutions (§ 600.54): Section 

101(b)(1) of the HEA provides, in part, 

that one type of educational program 

that a Title IV ‘‘institution of higher 

education’’ may provide to be eligible to 

apply to participate in the Title IV, HEA 

programs, is a training program of at 

least one year that prepares students for 

gainful employment in a recognized 

occupation. Section 102(a)(2)(A) 

provides for participation in the Title 

IV, HEA programs by entities that are 

comparable to such institutions under 

regulations prescribed by the Secretary. 

Current regulations provide that, in 

order to be eligible to apply to 

participate in the Title IV, HEA 

programs, 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 twoacademic year program acceptable for 

full credit toward the equivalent of a 

U.S. baccalaureate degree, or be 

equivalent to at least a one-academicyear training program that leads to a 

certificate, degree, or other recognized 

educational credential and prepares 

students for gainful employment in a 

recognized occupation. 

Under the proposed regulations, a 

foreign institution would have to 

demonstrate to the satisfaction of the 

Secretary (who would make programby-program determinations of 

comparability) 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. 

The Department believes the 

proposed regulations are necessary 

because many foreign institutions use 

educational measurements other than 

conventional U.S. semester, trimester, 

quarter credits and clock-hours. The 

non-Federal negotiators provided the 

Department with information regarding 

the definition of non-degree programs 

by different countries, units of 

measurement for programs in other 

countries, and evaluation and 

comparability determinations made by 

private entities. The information 

provided consistently indicates that the 

assignment of credits or other measures 

of academic work by foreign institutions 

vary greatly. As the definition of an 

academic year—the program length 

measurement used here—specifically 

references these U.S. measurements, it 

is necessary to make some sort of 

comparability determination in order to 

determine the eligibility of these 

programs at foreign institutions, and in 

some cases to determine the eligibility 

of the foreign institution itself. Under 

the proposed regulations, the Secretary 

would make determinations of 

comparability on a program-by-program 

basis, based on information provided by 

a foreign institution to demonstrate that 

the amount of academic work required 

by a program it seeks to qualify as 

eligible as comparable to at least a oneacademic-year training program is 

equivalent to the academic work 

required for eligibility of these programs 

at domestic institutions. 

Audited Financial Statements 

(§ 668.23): Section 487(c)(1)(A)(i) of the 

HEA was amended by the HEOA to give 

the Secretary the authority to modify the 

financial and compliance audit 

requirements for foreign institutions and 

the authority to waive the audit 

requirements for foreign institutions 

that receive less than $500,000 in Title 

IV, HEA program funds in the preceding 

year. Currently, under § 668.23(a)(2), an 

annual submission of both a compliance 

audit and audited financial statements 

is required of all institutions 

participating in the Title IV, HEA 

programs. Section 668.23(d)(1) requires 

that an institution’s financial statements 

must be prepared on an accrual basis in 

accordance with U.S. GAAP, and 

audited by an independent auditor in 

accordance with U.S. GAGAS, or in 

compliance with guidance in Office of 

Management and Budget Circular A–133 

and A–128 or in audit guides developed 

by, and available from, the Department 

of Education’s Office of Inspector 

General. 

The proposed regulations categorize 

foreign institutions by control and 

amount of Title IV, HEA program funds 

received during the institution’s most 

recently completed fiscal year and 

establish new financial audit 

submission requirements. For a public 

or nonprofit foreign institution that 

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

IV, HEA program funds during the 

institution’s most recently completed 

fiscal year, the audited financial 

statements submission normally would 

be waived. However, if the institution is 

in its initial provisional period of 

participation, and received Title IV, 

HEA program funds during that year, 

the institution must submit, in English, 

audited financial statements prepared in 

accordance with generally accepted 

accounting principles of the 

institution’s home country. For a public 

or nonprofit foreign institution that 

received at least $500,000 but less than 

$3,000,000 in U.S. Title IV, HEA 

program funds during its most recently 

completed fiscal year, the institution 

would be allowed to submit for that 

year, in English, audited financial 

statements prepared in accordance with 

the generally accepted accounting 

principles of the institution’s home 

country in lieu of financial statements 

prepared in accordance with U.S. 

GAAP. For a public or nonprofit foreign 

institution that received at least 

$3,000,000 but less than $5,000,000 in 


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U.S. Title IV, HEA program funds 

during its most recently completed 

fiscal year, the institution would be 

required to submit once every three 

years audited financial statements 

prepared in accordance with the 

generally accepted accounting 

principles of both the institution’s home 

country and U.S. GAAP, but, for the two 

years in between, would be allowed to 

submit in English, audited financial 

statements prepared in accordance with 

the generally accepted accounting 

principles of the institution’s home 

country in lieu of financial statements 

prepared in accordance with U.S. 

GAAP. Foreign institutions that receive 

more than $5,000,000 or more annually 

would remain subject to current 

requirements for audited financial 

statements prepared in accordance with 

U.S. GAAP. 

The proposed regulations also allow 

the Secretary to issue a letter to a foreign 

institution that has been identified as 

having problems with its financial 

condition or financial reporting that 

requires the foreign institution to submit 

its audited financial statements in the 

manner specified by the Secretary. 

Compliance Audits (§ 668.23): Current 

regulations require an annual 

submission of both a compliance audit 

and audited financial statements from 

all institutions participating in the Title 

IV, HEA programs. An institution’s 

compliance audit must cover on a fiscal 

year basis, all Title IV, HEA program 

transactions, and must cover all of those 

transactions that have occurred since 

the period covered by the institution’s 

last compliance audit and be conducted 

in compliance with the general 

standards for compliance audits 

contained in the U.S. GAO Government 

Auditing Standards and procedures for 

audits contained in audit guides 

developed by the Department of 

Education’s Office of Inspector General. 

The current Inspector General’s Audit 

Guide concerning compliance audits for 

foreign institutions includes an 

Alternative Compliance Engagement 

that may be used for foreign institutions 

whose enrolled students received less 

than the $500,000 threshold in U.S. 

Title IV, HEA program funds. 

The proposed regulations would 

separate foreign institutions into two 

groups, establishing new compliance 

audit requirements for foreign 

institutions based upon whether the 

institution received less than $500,000 

or $500,000 or more in U.S. Title IV, 

HEA program funds during the 

institution’s most recently completed 

fiscal year. For foreign institutions that 

receive less than $500,000 per year in 

U.S. Title IV, HEA program funds would 

be required to submit compliance audits 

under an alternative compliance audit 

performed in accordance with the audit 

guide from the Department’s Office of 

Inspector General. Under an alternative 

compliance audit, the auditor performs 

prescribed procedures and reports the 

findings, but, unlike a standard 

compliance audit, is not required to 

express an opinion of the reliability of 

the institution’s assertions concerning 

the institution’s compliance with the 

requirements. The alternative 

compliance audit is performed as an 

agreed-upon procedures attestation 

engagement, and the standard 

compliance audit is performed as an 

examination-level attestation 

engagement. The proposed regulations 

would require an annual submission of 

the compliance audit, except that, in 

specified circumstances, an institution 

would submit a compliance audit 

annually for two consecutive years, 

then, once notified by the Department, 

would be permitted to submit a 

compliance audit every three years 

thereafter. To qualify for these less 

frequent submission requirements, a 

foreign institution would be required to 

have received less than $500,000 in the 

most recently completed fiscal year, be 

fully certified, have timely submitted 

and had accepted compliance audits for 

two consecutive fiscal years, and have 

no history of late submissions since 

then. 

Foreign institutions that receive 

$500,000 or more in U.S. Title IV, HEA 

program funds would be required to 

submit an annual compliance audit 

using the standard audit procedures for 

foreign institutions in the audit guide 

issued by the Office of Inspector 

General. The compliance audit would 

be submitted along with any alternative 

compliance audits for any preceding 

fiscal years in which the institutions 

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

IV, HEA program funds. 

Section 668.23(h)(3)(ii) of the 

proposed regulations would provide the 

Secretary with the authority to require 

that a foreign institution’s compliance 

audit be performed at a higher level of 

engagement, and/or require that a 

compliance audit must be submitted to 

the Secretary annually if it has been 

identified that the institution has 

problems with its administrative 

capability or compliance reporting. 

Section 668.23(h)(2) of the proposed 

regulations would make clear that, as 

under the current regulations, a foreign 

institution’s compliance audit must be 

done on a fiscal year basis, and all Title 

IV, HEA program transactions that have 

occurred since the period covered by 

the institution’s last compliance audit 

must be covered. Also, a compliance 

audit must be submitted no later than 

six months after the last day of the 

institution’s fiscal year. 

The Department believes the 

proposed regulations provide a basis to 

establish a streamlined set of 

compliance audit requirements that 

would provide flexibility and cost 

benefits to the large number of relatively 

small foreign institutions and reduce the 

reporting burden for the majority of 

foreign institutions. Approximately 75% 

of the foreign institutions that 

participate in the Title IV, HEA 

programs are in this lower-volume 

group, and these institutions account for 

less than 7.5% of total Title IV, HEA 

program funds received by foreign 

institutions. The proposed regulations 

should allow the Department to 

concentrate its resources on reviewing 

compliance audits from the larger 

volume institutions and institutions that 

have demonstrated Title IV, HEA 

program problems that represent the 

Department’s greatest financial risk. 

Public Foreign Schools and Financial 

Responsibility (§ 668.171) 

Section 487(c)(1)(B) of the HEA 

provides that the Secretary shall 

prescribe regulations, as necessary, to 

provide for the establishment of 

reasonable standards of financial 

responsibility for institutions that 

participate in the Title IV, HEA 

programs. Section 102(a)(2)(A) provides 

that the Secretary shall prescribe 

regulations for determining the 

comparability of foreign schools to Title 

IV ‘‘institutions of higher education.’’ 

Current 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. Current § 668.171(c) is not 

addressed to foreign institutions. The 

proposed regulations would permit a 

foreign public institution to meet the 

financial responsibility in a manner 

similar to domestic public institutions 

as described above. If a foreign public 

institution did not meet the new 

requirements, 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. 


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Although the full faith and credit 

provision would provide an alternate 

way of meeting the financial 

responsibility standards for public 

foreign institutions, it would not excuse 

the institution from required 

submissions of audited financial 

statements. 

The following section addresses the 

alternatives that the Secretary 

considered in implementing these 

regulations. These alternatives are also 

discussed in more detail in the Reasons 

sections of this preamble related to the 

specific regulatory provisions. 

Regulatory Alternatives Considered 

Definition of a Foreign Institution 

(§§ 600.51, 600.52, 600.54, 682.200, 

682.611): As described in the section of 

the preamble related to this provision, 

there were extensive comments and 

negotiations related to the definition of 

a foreign institution. In response to the 

Department’s position that a more 

detailed definition of foreign institution 

is necessary and request for comments, 

several non-Federal negotiators urged 

the Department to define the term to 

ensure quality control through high 

academic standards and suggested 

subjecting foreign institutions to 

accreditation by accreditors recognized 

by the Department. When the 

Department indicated that it does not 

recognize U.S. accreditors for 

accreditation of institutions outside the 

United States, the non-Federal 

negotiators suggested a requirement that 

foreign institutions be ‘‘legally 

authorized’’ by an appropriate authority 

in the country in which the institution 

is located, with some negotiators urging 

the Department to be flexible in this 

area as such authority could reside in 

different branches of government 

depending on the country. Several nonFederal negotiators suggested that the 

Department require foreign countries to 

recognize the degrees and licenses 

offered by a foreign institution. 

The Department drafted regulatory 

language that responded to these 

suggestions and also included 

provisions prohibiting foreign 

institutions from entering into written 

arrangements with institutions located 

in the United States and preventing 

foreign institution students from 

engaging in courses, research, work, and 

other pursuits within the United States 

that drew objections from the nonFederal negotiators. The Department 

included these provisions to address 

abuses whereby an institution sets up an 

offshore campus to claim foreign 

institution status and thus avoids 

domestic requirements even though the 

institution is, for all intents and 

purposes, a domestic institution, but the 

non-Federal negotiators felt the 

language was too broad and urged the 

Department to make exceptions for 

research conducted in the United States 

by PhD students. In responding to these 

comments, the Department clarified the 

meaning of the terms written agreement 

and educational enterprise and sought 

to further distinguish between foreign 

and domestic institutions by prohibiting 

foreign locations of an educational 

enterprise from being considered 

additional locations of a domestic 

location of the educational enterprise if 

the enterprise has at least twice as many 

students enrolled in foreign locations as 

those enrolled in domestic locations. 

The non-Federal negotiators were 

comfortable with the majority of the 

Department’s proposed language but 

several non-Federal negotiators 

continued to raise concerns about the 

proposed language prohibiting U.S. 

locations of foreign institutions and 

written arrangements with institutions 

located in the United States. The 

Department indicated that foreign 

institutions can establish locations in 

the United States, but that such 

locations and institutions would need to 

be separately certified and meet the 

requirements applicable to domestic 

institutions in order for U.S. students 

attending them to receive Title IV, HEA 

funds. The Department does not want a 

foreign institution to send its U.S. 

students to a U.S. location of a foreign 

institution or to a U.S. institution with 

which it has an agreement for their 

training because students enrolled in a 

foreign institution are only eligible for 

Direct Loan program (or, before July 1, 

2010, FFEL program) loans. Instead, the 

Department wants U.S. students 

attending postsecondary institutions in 

the United States to be eligible for the 

full range of Title IV, HEA program 

funds available to domestic institutions. 

Foreign Graduate Medical Schools 

(§§ 600.20, 600.21, 600.52, 600.55): The 

Department’s initial proposal related to 

the location of foreign graduate medical 

schools reflected the approach 

recommended by NCFMEA 

Recommendation 12(a) and the 

Department’s current policy of allowing 

clinical training sites outside of the 

program’s main country if the site is 

located in an NCFMEA approved 

country, the institution’s medical 

accrediting agency has conducted an onsite evaluation and specifically 

approved the site, and the clinical 

instruction is offered in conjunction 

with medical educational programs 

offered to students enrolled in 

accredited medical schools located in 

that foreign country. Several nonFederal negotiators felt this initial 

proposal was too limiting and that 

matriculating in different countries as 

part of a graduate medical program 

would benefit students by exposing 

them to medical education and practice 

in different environments and cultures. 

After negotiations involving possible 

locations for the basic science portion of 

the program as well as accreditation 

requirements for clinical training sites, 

the proposed framework that 

distinguishes the basic science, required 

clinical training, and elective clinical 

training was established. The 

Department reiterated its belief that the 

basic sciences part of a graduate medical 

program should be located in the same 

country as the main campus so that the 

classroom instruction part of the 

program will be under the direct 

authority of the school’s accrediting 

body. In addition, the Department 

agreed to the position of some nonFederal negotiators who felt that clinical 

locations that are included in the 

accreditation of a medical program 

accredited by the LCME, such as 

locations of some Canadian schools, 

should be eligible regardless of locale 

because the LCME accrediting standards 

are those that are applied to medical 

schools in the United States. 

The Department initially proposed 

that, consistent with NCFMEA 

Recommendations 1(a) and 1(b), a 

foreign graduate medical school would 

have to require students who it admits 

to have a specific educational 

background (e.g., for a postbaccalaureate/equivalent medical 

program, 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). 

Several of the non-Federal negotiators 

felt that such provisions were unduly 

limiting, and ultimately the negotiators 

agreed it would be more appropriate for 

the NCFMEA to establish these 

provisions as guidelines for accrediting 

bodies. The Department had also 

included as a part of its initial proposal, 

that a school having an integrated 

program for a first professional program 

leading to a Doctor of Medicine (M.D.) 

degree, or its equivalent must require 

students who are U.S. citizens, 

nationals, or permanent residents to 

take the MCAT no later than three years 

after admission to the program. The 

Department was ultimately persuaded to 

remove the provision by non-Federal 

negotiators who pointed out that 

requiring students to take the MCAT 

early in the program would distract 


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them from the education that was 

preparing them to take the USMLE. 

Ultimately, the Department agreed to 

retain from Recommendations 1(a) and 

1(b) only the provision that would 

require U.S. students who are admitted 

to a school having a post-baccalaureate/ 

equivalent medical program to have 

taken the MCAT and to report the score. 

This provision would not require a 

foreign graduate medical school to give 

weight to a U.S. student’s score on the 

MCAT as part of its admission 

requirements. 

The Department originally proposed 

requiring schools to submit data on all 

steps of the USMLE, but non-Federal 

negotiators pointed out that it would be 

extremely difficult for schools to obtain 

data on Step-3 as it is taken by students 

after they have graduated from the 

institution and a student cannot sign a 

consent to provide information on Step 

3 to third parties until he or she is 

actually taking the test. Although the 

Department is continuing to explore the 

collection of data from the FSMB for 

evaluating its use in the future, the 

Department agrees that it would be 

unreasonable to require institutions to 

be responsible for its collection and 

submission at this time. To focus the 

USMLE pass rate on the students the 

Department is most concerned about 

and allow comparability to domestic 

schools, the USMLE pass rate 

calculation was limited to U.S. citizens, 

nationals, and eligible permanent 

residents taking the tests for the first 

time. 

Some non-Federal negotiators 

expressed concern that requiring foreign 

institutions to obtain student consent 

for the release of information may be in 

violation of certain countries’ privacy 

laws. After reviewing an analysis of the 

privacy laws and requirements of one 

country that had been identified as one 

that could have problems in this area, 

the Department concluded that there 

would be several ways that institutions 

in that country could legally obtain the 

required information from students, and 

committed to working with those 

schools and schools in any country that 

have concerns to facilitate compliance. 

The Department noted, however, that 

the Department cannot waive statutory 

or regulatory requirements used to 

determine institutional eligibility and 

that if a foreign country’s privacy laws 

did preclude obtaining the information 

and materials necessary for establishing 

compliance, the institutions located in 

those countries unfortunately would not 

be able to qualify for participation in the 

Title IV, HEA programs. 

Foreign Veterinary Schools (§ 600.56): 

The Department’s initial proposal built 

on current practice by requiring AVMA 

accreditation for foreign veterinary 

schools applying to participate in Title 

IV, HEA programs. The AVMA’s 

standards are detailed and specific, it 

has the expertise to evaluate foreign 

veterinary programs that the Department 

lacks, and it has a history of accrediting 

foreign veterinary programs as 

veterinary schools in Australia, Canada, 

the Netherlands and other foreign 

countries are currently accredited by the 

AVMA. Non-Federal negotiators 

acknowledged the quality of the 

AVMA’s accreditation standards and the 

logic of requiring it for foreign 

veterinary schools as most U.S. students 

at those schools eventually practice in 

the United States. However, several 

non-Federal negotiators had concerns 

about requiring AVMA accreditation as 

it is a lengthy and expensive process, 

many foreign accrediting agencies have 

comparable standards, some schools 

with a small number of U.S. students 

would opt out of receiving Title IV, HEA 

program funds thus limiting the options 

for U.S. students, and it is difficult for 

for-profit veterinary schools to obtain 

AVMA accreditation because of the 

research component. The non-Federal 

negotiators suggested using other 

measures such as pass rates on licensing 

exams, licensure rates, or default rates 

to determine eligibility of foreign 

veterinary schools. The Department 

noted that using measures such as pass 

rates on licensing examinations can be 

operationally complicated, raising 

concerns over privacy rights, obtaining 

exam results, and calculating pass rates 

in ways that are not disadvantageous to 

schools with low numbers of Title IV, 

HEA program students. In addition, pass 

rates would not necessarily be a reliable 

indicator of the academic credentials of 

the faculty at a foreign veterinary 

school, and would provide no 

indication that the facilities at the 

veterinary school are adequate and safe 

for the students or for the animals 

housed in the facilities. Instead, the 

Department accepted the 

recommendation of some of the nonFederal negotiators to replace the 

proposed requirement that a foreign 

veterinary school be accredited or 

provisionally accredited by the AVMA, 

with a requirement that the school be 

accredited or provisionally accredited 

by an agency acceptable to the 

Secretary. This gives the Department 

some flexibility in evaluating school’s 

compliance with the accreditation 

requirement, and gives schools some 

flexibility with regard to obtaining 

accreditation. In addition, the 

Department delayed the effective date of 

the accreditation requirement until July 

1, 2015, giving foreign veterinary 

schools that are currently in the Title IV, 

HEA programs approximately five years 

after final regulations are published to 

obtain accreditation from an acceptable 

accrediting agency. 

Foreign Nursing Schools (§ 600.57): 

As described in the preamble section 

related to this provision, the Department 

modeled the proposed language on 

portions of the HEOA related to foreign 

nursing schools and on existing 

regulatory language related to foreign 

medical and veterinary schools. For the 

most part, the non-Federal negotiators 

accepted this approach, but had some 

concerns about the provisions specific 

to foreign nursing programs. In 

particular, the requirement for clinical 

training to be provided in the United 

States, the requirement that a foreign 

nursing school reimburse the 

Department for the cost of loan defaults 

for loans included in the calculation of 

a school’s cohort default rate, and the 

status of loans post-default were subject 

to extensive discussion. 

Audited Financial Statements 

(§ 668.23): The negotiators reached 

agreement on the proposed regulatory 

language on financial audits only after 

extensive negotiations and significant 

compromise. As detailed in the section 

of the preamble related to this 

provision, the Department initially 

proposed to require audited financial 

statements prepared in accordance with 

the same requirements for domestic 

institutions (U.S. GAAP) for public 

institutions that received $1,000,000 or 

more in U.S. Title IV, HEA program 

funds, or private foreign institutions 

that received $500,000 or more in U.S. 

Title IV, HEA program funds, as well as 

for any institution 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, HEA 

program funds during the institution’s 

fiscal year preceding the audit period, 

the institution would have been allowed 

to submit audited financial statements 

prepared in accordance with the 

generally accepted accounting 

principles of the institution’s home 

country in lieu of financial statements 

prepared in accordance with U.S. 

GAAP. If there was 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 

prepared in accordance with U.S. 

GAAP. Non-Federal negotiators argued 


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that foreign nonprofit institutions 

should be treated the same as foreign 

public institutions, the requirement to 

submit audited financial statements 

prepared in accordance with U.S. GAAP 

was cost prohibitive, a non-U.S. GAAP 

financial statement such as one 

prepared in accordance with 

International Financial Reporting 

Standards (IFRS) would be comparable 

and provide any information the 

Department with the information it 

needs, or that the audited financial 

statement requirement should be tied to 

cohort default rates. 

After consideration of the feedback 

from the non-Federal negotiators, the 

Department revised its initial proposal 

to treat nonprofit and public foreign 

institutions alike, and eliminated the 

provision that would have required all 

public institutions controlled by the 

same government entity to submit 

audited financial statements prepared in 

accordance with the same requirements 

for domestic institutions if there is an 

unpaid liability due to the Secretary by 

any public institution controlled by the 

same government entity. In addition, the 

Department raised the threshold for 

nonprofit and public foreign institutions 

that would be allowed to submit audited 

financial statements prepared in 

accordance with the generally accepted 

accounting principles of the 

institution’s home country from 

$1,000,000 to $3,000,000 in U.S. Title 

IV, program funds. The Department also 

clarified that it would require that 

foreign institutions that would be 

required to submit audited financial 

statements prepared in accordance with 

U.S. GAAP would also be required to 

submit a copy of an institution’s audited 

financial statements for the same period 

that were prepared under the 

institution’s home country standards, 

allowing a comparative analysis to 

determine if the requirement to provide 

U.S. GAAP financial statements could 

be changed in the future. 

Non-Federal negotiators responded to 

this revised proposal with additional 

comments on the thresholds for audit 

requirements and a suggestion to 

eliminate the $3,000,000 cap and rely 

entirely upon ‘‘exceptions’’ that would 

permit the Secretary to require U.S. 

GAAP financial statements on a case-bycase basis. The Department reiterated its 

view that did not view the matter in 

terms of rigor of accounting standards of 

other countries, but a level of risk that 

justified requiring submission of U.S. 

GAAP financial statements. The 

Department offered a final revised 

proposal that modified the audit 

submission requirements for public and 

nonprofit institutions that receive at 

least $3,000,000 but less than 

$5,000,000 in U.S. Title IV, HEA 

program funds annually. Pursuant to the 

revised proposal, institutions in this 

group would submit financial 

statements prepared in accordance with 

home country accounting standards and 

U.S. GAAP for one year, and then, if no 

problems were identified, submit 

financial statements prepared in 

accordance with the home country 

standards for the next two years and 

once every three years, rather every 

year, U.S. GAAP financial statements. 

Benefits 

Benefits provided in these regulations 

include submission requirements for 

compliance audits and audited financial 

statements specific to foreign 

institutions; a revised definition of a 

foreign institution and a definition of 

nonprofit status specific to foreign 

institutions; the creation of a financial 

responsibility standard for foreign 

public institutions that is comparable to 

the financial responsibility standard for 

domestic public institutions; permission 

for a single legal authorization for 

groups of foreign institutions under the 

purview of a single government entity; 

the establishment of program eligibility 

requirements specific to training 

programs at foreign institutions; 

institutional eligibility criteria specific 

to foreign graduate medical schools, 

foreign veterinary schools, and foreign 

nursing schools; and revised maximum 

certification periods for some foreign 

institutions. The revised requirements 

for audited financial statements improve 

comparability between foreign and 

domestic institutions and enhance the 

security of Title IV, HEA program funds 

while taking into account the burden on 

foreign institutions of different sizes. 

The specific eligibility criteria for 

foreign graduate medical schools allow 

students to benefit from exposure to 

other medical environments and 

cultures while ensuring a comparable 

education to that available in domestic 

institutions. It is difficult to quantify 

benefits related to the new institutional 

and other third-party requirements, as 

there is little specific data available on 

the effect of the provisions on 

borrowers, institutions, or the Federal 

taxpayer. The Department is interested 

in receiving comments or data that 

would support a more rigorous analysis 

of the impact of these provisions. 

As discussed in greater detail under 

Net Budget Impacts below, these 

proposed provisions result in net costs 

to the government of $0.0 million over 

2011–2015. 

Costs 

Several of the provisions 

implemented though this NPRM would 

require regulated entities to update 

existing policies and procedures related 

to financial and compliance audits. 

Other proposed regulations generally 

would require discrete changes in 

specific parameters associated with 

existing requirements—such as changes 

to clinical training programs, 

application procedures, USMLE pass 

rates, and notification requirements— 

rather than wholly new requirements. 

Accordingly, entities wishing to 

continue to participate in the student 

aid programs have already absorbed 

many of the administrative costs related 

to implementing these proposed 

regulations. Marginal costs over this 

baseline are primarily due to new 

procedures that, while possibly 

significant in some cases, are an 

unavoidable cost of continued program 

participation. As discussed above, 

foreign nursing schools would be 

required to reimburse the Department 

for the costs of defaults for loans 

included in the calculation of the 

school’s cohort default rate for the 

previous year. This is estimated to cost 

the participating schools approximately 

$3.1 to $3.9 million a year in gross 

default costs. As the subsequent holders 

of the loans, the schools would be able 

to pursue recovery of those funds, 

reducing the anticipated net costs to 

approximately $1.7 to $2.2 million. 

Some foreign institutions could choose 

to withdraw from participation in the 

Title IV, HEA programs as a result of 

these provisions. However, the 

Department believes the flexibility and 

targeting of the negotiated provisions 

should allow institutions to remain in 

the programs while enhancing the 

security of Title IV, HEA program funds 

and ensuring compliance with statutory 

requirements. 

In assessing the potential impact of 

these proposed regulations, the 

Department recognizes that certain 

provisions are likely to increase 

workload for some program 

participants, as described below. (This 

additional workload is discussed in 

more detail under the Paperwork 

Reduction Act of 1995 section of this 

preamble.) Additional workload would 

normally be expected to result in 

estimated costs associated with either 

the hiring of additional employees or 

independent auditors or opportunity 

costs related to the reassignment of 

existing staff from other activities. In 

total, these changes are estimated to 

increase burden on entities participating 

in the Federal Student Assistance 


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programs by 18,684 hours. Of this 

increased burden, 18,364 hours are 

associated with foreign institutions and 

320 hours are associated with 

borrowers, generally reflecting the time 

required to read new disclosures or 

submit required information. 

Approximately 95 percent of this 

burden is associated with the financial 

and compliance audit requirements in 

proposed § 668.23. As described in the 

Paperwork Reduction Act section of this 

NPRM, if the regulatory changes had not 

been proposed, the burden associated 

with the financial statement and 

compliance audit requirements would 

be significantly higher. The monetized 

cost of this additional burden, using 

loaded wage data developed by the 

Bureau of Labor Statistics and used for 

domestic institutions, is $466,569 of 

which $461,321 is associated with 

foreign institutions and $5,248 with 

individuals. The wage data for foreign 

institutions was assumed to be 

comparable to domestic institutions as 

many are located in developed 

economies with wages similar to those 

in the United States, institutions located 

in countries with lower wage scales 

have to compete for employees familiar 

with the lending programs, and 

substituting U.S. wage rates for those in 

lower wage countries results in a 

conservative estimate. For institutions, 

an hourly rate of $24.88 was used to 

monetize the burden of these 

provisions. This was a blended rate 

based on wages of $15.51 for office and 

administrative staff and $36.33 for 

managers and financial professionals, 

assuming that office staff would perform 

55 percent of the work affected by these 

regulations. Given the limited data 

available, the Department is particularly 

interested in comments and supporting 

information related to possible burden 

stemming from the proposed 

regulations. Estimates included in this 

notice will be reevaluated based on any 

information received during the public 

comment period. 

Net Budget Impacts 

The provisions implemented by these 

proposed regulations are estimated to 

have a net budget impact of ¥$2.6 

million over FY 2011–2015, from 

savings associated with the assignment 

of defaulted loans from foreign nursing 

schools. Consistent with the 

requirements of the Credit Reform Act 

of 1990, budget cost estimates for the 

student loan programs reflect the 

estimated net present value of all future 

non-administrative Federal costs 

associated with a cohort of loans. (A 

cohort reflects all loans originated in a 

given fiscal year.) 

These estimates were developed using 

the Office of Management and Budget’s 

Credit Subsidy Calculator. This 

calculator will also be used for reestimates of prior-year costs, which will 

be performed each year beginning in FY 

2009. The OMB calculator takes 

projected future cash flows from the 

Department’s student loan cost 

estimation model and produces 

discounted subsidy rates reflecting the 

net present value of all future Federal 

costs associated with awards made in a 

given fiscal year. Values are calculated 

using a ‘‘basket of zeros’’ methodology 

under which each cash flow is 

discounted using the interest rate of a 

zero-coupon Treasury bond with the 

same maturity as that cash flow. To 

ensure comparability across programs, 

this methodology is incorporated into 

the calculator and used governmentwide to develop estimates of the Federal 

cost of credit programs. Accordingly, 

the Department believes it is the 

appropriate methodology to use in 

developing estimates for these proposed 

regulations. That said, however, in 

developing the following Accounting 

Statement, the Department consulted 

with OMB on how to integrate our 

discounting methodology with the 

discounting methodology traditionally 

used in developing regulatory impact 

analyses. 

Absent evidence on the impact of 

these proposed regulations on student 

behavior, budget cost estimates were 

based on behavior as reflected in 

various Department data sets and 

longitudinal surveys listed under 

Assumptions, Limitations, and Data 

Sources. Program cost estimates were 

generated by running projected cash 

flows related to each provision through 

the Department’s student loan cost 

estimation model. Student loan cost 

estimates are developed across five risk 

categories: two-year proprietary 

institutions, two-year public and private 

institutions, not-for-profit; freshman and 

sophomore at four-year institutions, 

junior and senior at four-year 

institutions, and graduate students. Risk 

categories have separate assumptions 

based on the historical pattern of 

behavior—for example, the likelihood of 

default or the likelihood to use statutory 

deferment or discharge benefits—of 

borrowers in each category. 

Estimates indicate that three foreign 

graduate medical schools may become 

eligible under these provisions in the 

next few years but that this would 

potentially shift volume among schools 

but not significantly increase the total 

volume of loans. The Department 

estimates no budgetary impact for most 

of the proposed regulations included in 

this NPRM as there is no data indicating 

that the provisions will have any impact 

on the volume or composition of 

Federal student aid programs. The 

provision requiring foreign nursing 

schools to reimburse the Secretary for 

defaulted loans is expected to generate 

approximately $2.6 million in savings 

for the Department between 2011 and 

2015. 

Assumptions, Limitations, and Data 

Sources 

Impact estimates provided in the 

preceding section reflect a pre-statutory 

baseline in which the HEOA changes 

implemented in these proposed 

regulations do not exist. Costs have been 

quantified for five years. In general, 

these estimates should be considered 

preliminary; they will be reevaluated in 

light of any comments or information 

received by the Department prior to the 

publication of the final regulations. The 

final regulations will incorporate this 

information in a revised analysis. 

In developing these estimates, a wide 

range of data sources were used, 

including data from the National 

Student Loan Data System; operational 

and financial data from Department of 

Education systems, including especially 

the Fiscal Operations Report and 

Application to Participate (FISAP); and 

data from a range of surveys conducted 

by the National Center for Education 

Statistics such as the 2008 National 

Postsecondary Student Aid Survey, the 

1994 National Education Longitudinal 

Study, and the 1996 Beginning 

Postsecondary Student Survey. Data 

from other sources, such as the U.S. 

Census Bureau, were also used. Data on 

administrative burden at participating 

institutions are extremely limited; 

accordingly, as noted earlier in this 

discussion, the Department is 

particularly interested in receiving 

comments in this area. 

Elsewhere in this SUPPLEMENTARY

INFORMATION section we identify and 

explain burdens specifically associated 

with information collection 

requirements. See the heading 

Paperwork Reduction Act of 1995. 

Accounting Statement 

As required by OMB Circular A–4 

(available at http:// 

www.Whitehouse.gov/omb/Circulars/ 

a004/a-4.pdf), in Table 2, we have 

prepared an accounting statement 

showing the classification of the 

expenditures associated with the 

provisions of these proposed 

regulations. This table provides our best 

estimate of the changes in Federal 

student aid payments as a result of these 

proposed regulations. Expenditures are 


wwoods2 on DSKDVH8Z91PROD with PROPOSALS2
42224 Federal Register / Vol. 75, No. 138 / Tuesday, July 20, 2010 / Proposed Rules 

classified as transfers from the Federal 

government to student loan borrowers. 

TABLE 2—ACCOUNTING STATEMENT: 

CLASSIFICATION OF ESTIMATED EXPENDITURES

[In millions] 

Category Transfers 

Annualized Monetized 

Costs.

$3.9. 

Cost of defaults for 

foreign nursing 

schools and cost of 

compliance with 

paperwork requirements. 

Annualized Monetized 

Transfers.

$0. 

From Whom To 

Whom? 

Federal Government 

To Student Loan 

Borrowers. 

Clarity of the Regulations 

Executive Order 12866 and the 

Presidential memorandum on ‘‘Plain 

Language in Government Writing’’ 

require each agency to write regulations 

that are easy to understand. 

The Secretary invites comments on 

how to make these proposed regulations 

easier to understand, including answers 

to questions such as the following: 

• Are the requirements in the 

proposed regulations clearly stated? 

• Do the proposed regulations contain 

technical terms or other wording that 

interferes with their clarity? 

• Does the format of the proposed 

regulations (grouping and order of 

sections, use of headings, paragraphing, 

etc.) aid or reduce their clarity? 

• Would the proposed regulations be 

easier to understand if we divided them 

into more (but shorter) sections? (A 

‘‘section’’ is preceded by the symbol ‘‘§ ’’ 

and a numbered heading; for example, 

§ 601.30.) 

• Could the description of the 

proposed regulations in the 

‘‘Supplementary Information’’ section of 

this preamble be more helpful in 

making the proposed regulations easier 

to understand? If so, how? 

• What else could we do to make the 

proposed regulations easier to 

understand? 

To send any comments that concern 

how the Department could make these 

proposed regulations easier to 

understand, see the instructions in the 

ADDRESSES section of this preamble. 

Regulatory Flexibility Act Certification 

The Secretary certifies that these 

proposed regulations would not have a 

significant economic impact on a 

substantial number of small entities. 

These proposed regulations would affect 

foreign institutions that participate in 

Title IV, HEA programs and loan 

borrowers. The definition of ‘‘small 

entity’’ in the Regulatory Flexibility Act 

encompasses ‘‘small businesses,’’ ‘‘small 

organizations,’’ and ‘‘small governmental 

jurisdictions.’’ The definition of ‘‘small 

business’’ comes from the definition of 

‘‘small business concern’’ under section 

3 of the Small Business Act as well as 

regulations issued by the U.S. Small 

Business Administration. The SBA 

defines a ‘‘small business concern’’ as 

one that is ‘‘organized for profit; has a 

place of business in the U.S.; operates 

primarily within the U.S. or makes a 

significant contribution to the U.S. 

economy through payment of taxes or 

use of American products, materials or 

labor * * *’’ ‘‘Small organizations,’’ are 

further defined as any ‘‘not-for-profit 

enterprise that is independently owned 

and operated and not dominant in its 

field.’’ For the purposes of the 

Regulatory Flexibility Act analysis, the 

foreign institutions would not fall 

within the definition of small 

businesses or small organizations based 

upon this definition of ‘‘small business 

concern.’’ 

The definition of ‘‘small entity’’ also 

includes ‘‘small governmental 

jurisdictions,’’ which includes ‘‘school 

districts with a population less than 

50,000.’’ The definition of ‘‘small 

governmental jurisdictions’’ is not 

applicable to this rule. The Secretary 

invites comments from small 

institutions and other affected entities 

as to whether they believe the proposed 

changes would have a significant 

economic impact on them and, if so, 

requests evidence to support that belief. 

Paperwork Reduction Act 

Sections 600.20, 600.21, 600.54, 

600.55, 600.56, 600.57, 668.13, 668.23, 

and 668.171 contain information 

collection requirements. Under the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3507(d)), the Department has 

submitted a copy of these sections to 

OMB for its review. 

Section 600.20—Application 

Procedures for Establishing, 

Reestablishing, Maintaining, or 

Expanding Institutional Eligibility and 

Certification 

Proposed § 600.20(a)(3) and 

§ 600.20(b)(3) would provide that, for 

initial certification or for recertification, 

a foreign graduate medical school (i.e., 

a freestanding foreign graduate medical 

school or a foreign institution that 

includes a foreign graduate medical 

school) 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 

than a total of eight weeks; 

• Identify, for each clinical site 

reported in the certification or 

recertification application, the type of 

clinical training (core, required clinical 

rotation, not required clinical rotation) 

offered at that site; 

• Indicate whether it offers only postbaccalaureate/equivalent medical 

programs, other types of programs that 

lead to employment as a doctor of 

osteopathic medicine, doctor or 

medicine, or both; 

• Provide copies of the affiliation 

agreements with hospitals and clinics 

that it is required to have as a part of 

any application for initial certification 

or recertification to participate in the 

Title IV, HEA programs. 

Proposed § 600.20(c)(5) would require 

a foreign graduate medical school that 

adds a location that offers all or a 

portion of the school’s core clinical 

training or required clinical rotations, to 

apply to the Secretary and wait for 

approval if it wishes to provide Title IV, 

HEA program funds to the students at 

that location, except for those locations 

that are included in the accreditation of 

a medical program accredited by the 

LCME. 

While we recognize that there would 

be burden assessed under 

§§ 600.20(a)(3) and 600.20(c)(5), we do 

not anticipate either an initial eligibility 

application or an application to expand 

eligibility at this time. 

We estimate that 58 public 

institutions would take .58 hours (35 

minutes) per institution to submit a 

reapplication, which would increase 

burden by 34 hours. We estimate that 10 

private nonprofit institutions would 

take .58 hours (35 minutes) per 

institution to submit a reapplication, 

which would increase burden by 6 

hours. We estimate that 3 for-profit 

institutions would take .58 hours (35 

minutes) per institution to submit a 

reapplication, which would increase 

burden by 2 hours. There would be a 

total 42 hours of burden associated with 

§ 600.20(b)(3) in OMB Control Number 

1845–0012. 

Section 600.21—Updating Application 

Information 

Proposed § 600.21(a)(10) would 

require, if a foreign graduate medical 

school adds a location that offers all or 

a portion of the school’s clinical 

rotations that are not required, that the 


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Federal Register / Vol. 75, No. 138 / Tuesday, July 20, 2010 / Proposed Rules 42225 

school notify the Department no later 

than 10 days after the location is added, 

except for those locations that are 

included in the accreditation of a 

medical program accredited by the 

LCME, or those 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 combined total of eight 

weeks. This requirement mirrors the 

requirement of proposed § 600.20(c)(5). 

We estimate that 6 public institutions 

would take .17 hours (10 minutes) per 

institution to fulfill the reporting 

requirement, which would increase 

burden by 1 hour. We estimate that 1 

private nonprofit institution would take 

.17 hours (10 minutes) to fulfill the 

reporting requirement, which would 

increase burden by 10 minutes. We 

estimate 1 for-profit institution would 

take .17 hours (10 minutes) to fulfill the 

reporting requirement, which would 

increase burden by 10 minutes. 

Therefore, the proposed total increase in 

burden would be 1 hour and 20 minutes 

associated with § 600.21(a)(10) in OMB 

Control Number 1845–0012. 

Section 600.54—Criteria for 

Determining Whether a Foreign 

Institution Is Eligible To Apply To 

Participate in the FFEL Programs 

Under proposed § 600.54(d)(3)(ii), a 

foreign institution would have to 

demonstrate to the satisfaction of the 

Secretary (who would make programby-program determinations of 

comparability) 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 an academic year as 

defined in § 668.3. 

We estimate that 93 public 

institutions would take .17 (10 minutes) 

to demonstrate the comparability of the 

academic work and would increase 

burden by 16 hours. We estimate that 33 

private institutions would take .17 (10 

minutes) to demonstrate the 

comparability of the academic work and 

would increase burden by 6 hours. 

Therefore, the proposed total increase in 

burden would be 22 hours associated 

with § 600.54(d)(3)(ii) in OMB 1845– 

NEWA. 

Section 600.55—Additional Criteria for 

Determining Whether a Foreign 

Graduate Medical School Is Eligible To 

Apply To Participate in the Title IV, 

HEA Programs 

Proposed § 668.55(c)(2) would 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 in 

proposed § 600.55(d) for Medical 

College Admission Test (MCAT) scores, 

residency placement, and U.S. Medical 

Licensing Examination (USMLE) scores. 

We estimate that 58 public 

institutions would take .50 hours (30 

minutes) to develop this consent form 

and would increase burden by 29 hours. 

We estimate that 5 private nonprofit 

institutions would take .50 hours (30 

minutes) to develop this consent form 

and would increase burden by 5 hours. 

We estimate that 3 for-profit institutions 

would take .50 hours (30 minutes) to 

develop this consent form and would 

increase burden by 2 hours. We estimate 

that 2,800 individuals would take .08 

hours (5 minutes) to complete this 

consent form and would increase 

burden by 224 hours. Therefore, the 

total proposed burden increase would 

be 260 hours associated with 

§ 600.55(c)(2) in OMB 1845–NEWA. 

Proposed § 600.55(d) would require a 

foreign graduate medical school to 

obtain, at its own expense, and by 

September 30 of each year submit to its 

accrediting authority for all students 

who are U.S. citizens, nationals, or 

eligible permanent residents: (1) MCAT 

scores for students admitted during the 

preceding award year and the number of 

times each student took the exam; and 

(2) the percentage of students graduating 

during the preceding award year who 

are placed in an accredited U.S. medical 

residency. A school would have to 

submit the data on MCAT scores and 

placement in a U.S. residency program 

to the Department only upon request. In 

addition, proposed § 600.55(d) would 

require a foreign graduate medical 

school to obtain, at its own expense and 

by September 30 of each year submit to 

the Department, unless the Department 

notifies schools that it will receive the 

information directly from the ECFMG, 

or other responsible third parties, 

USMLE scores earned during the 

preceding award year on the first 

attempt by at least each student, and 

each student who graduated during the 

three preceding years, and the date each 

student/graduate took each test, 

including any failed tests. The USMLE 

scores submitted would have to be 

disaggregated by step/test for Step 1, 

Step 2–Clinical Skills (Step 2–CS), and 

Step 2–Clinical Knowledge (Step 2–CK), 

and by attempt. A school would not be 

required to submit data on the USMLE 

Step 3. 

We estimate that 58 public 

institutions would require 1.25 hours (1 

hour 15 minutes) to create this annual 

report and would increase burden by 73 

hours. We estimate that 10 private 

nonprofit institutions would require 

1.25 hours (1 hour 15 minutes) to create 

this annual report and would increase 

burden 13 hours. We estimate that 3 forprofit institutions would require 1.25 

hours (1 hour 15 minutes) to create this 

annual report and would increase 

burden by 4 hours. Therefore, the total 

proposed burden increase would be 90 

hours associated with § 600.55(d) in 

OMB 1845–NEWA. 

Proposed § 600.55(e)(2) would require 

a foreign graduate medical school to 

notify its accrediting body within one 

year of any material changes in (1) the 

educational programs, including 

changes in clinical training programs; 

and (2) the overseeing bodies and (3) the 

formal affiliation agreements with 

hospitals and clinics. 

We estimate that 15 public 

institutions would require .82 hours (50 

minutes) to complete the accrediting 

agency clinical training notifications 

and would increase burden by 12 hours. 

We estimate that 3 private nonprofit 

institutions would require .82 hours (50 

minutes) to complete the accrediting 

agency clinical training notifications 

and would increase burden by 3 hours. 

We estimate that 1 for-profit institution 

would require .82 hours (50 minutes) to 

complete the accrediting agency clinical 

training notifications and would 

increase burden by 1 hour. Therefore, 

the total proposed burden increase 

would be 16 hours associated with 

§ 600.55(e) in OMB 1845–NEWA. 

Proposed § 600.55(g)(1) would require 

a foreign graduate medical school to 

apply the existing satisfactory academic 

progress regulations in § 668.16(e) for 

establishing a maximum timeframe in 

which a student must complete their 

educational program and require that a 

student complete their educational 

program within 150 percent of the 

published length of the educational 

program. In addition, proposed 

§ 600.55(g)(2) would require a foreign 

graduate medical school to document 

the educational remediation it provides 

to assist students in making satisfactory 

academic progress. 

We estimate that 58 public 

institutions would require 2.5 hours 

(2 hours 30 minutes) to update the 

satisfactory academic policy and 

document remediation provided to 

student and would increase burden by 

145 hours. We estimate that 10 for 

private nonprofit institutions would 

require 2.5 hours (2 hours 30 minutes) 

to update the satisfactory academic 

policy and document remediation 

provided to student and would increase 

burden by 25 hours. We estimate that 3 


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42226 Federal Register / Vol. 75, No. 138 / Tuesday, July 20, 2010 / Proposed Rules 

for-profit institutions would require 2.5 

hours (2 hours 30 minutes) to update 

the satisfactory academic policy and 

document remediation provided to 

student and would increase burden by 

7 hours and 30 minutes. The total 

proposed burden for increase would be 

177 hours and 30 minutes associated 

with § 600.55(g)(1) and (2) in OMB 

1845–NEW2. 

Finally, proposed § 600.55(g)(3) 

would require a foreign graduate 

medical school to publish all the 

languages in which instruction is 

offered. 

We estimate that 58 public 

institutions would require .33 hours (20 

minutes) to publish the languages in 

which instruction is provided 

increasing burden by 19 hours. We 

estimate that 10 private nonprofit 

institutions would require .33 hours (20 

minutes) to publish the languages in 

which instruction is provided 

increasing burden by 3 hours. We 

estimate that 3 for-profit institutions 

would require .33 hours (20 minutes) to 

publish the languages in which 

instruction is provided increasing 

burden by 1 hour. Therefore, the total 

proposed burden increase would be 23 

hours associated with § 600.55(g)(3) in 

OMB 1845–NEWA. 

In total, we estimate that proposed 

§ 600.55 would increase by 389 hours in 

OMB 1845–NEWA, and 177 hours and 

30 minutes in OMB 1845–NEW2. 

Section 600.56—Additional Criteria for 

Determining Whether a Foreign 

Veterinary School Is Eligible To Apply 

To Participate in the FFEL Programs 

Proposed § 600.56(a)(4) would require 

a foreign veterinary school to be 

accredited or provisionally accredited 

by an organization acceptable to the 

Secretary. Proposed § 600.56(a)(4) 

would also specify that the requirement 

for accreditation or provisional 

accreditation does not take effect until 

July 1, 2015. 

The Department has delayed the 

effective date of the accreditation 

requirement until July 1, 2015. This 

allows foreign veterinary schools that 

are currently in the Title IV, HEA 

programs approximately five years after 

final regulations are published to obtain 

accreditation from an acceptable 

accrediting agency. Therefore, no 

burden assessment has been made at 

this time, but the issue will be reviewed 

closer to the effective date of this 

section of the regulations thereby 

enabling the Department to use a more 

accurate number of participating 

veterinary schools in its assessment. 

Section 600.57—Additional Criteria for 

Determining Whether a Foreign 

Nursing School Is Eligible To Apply To 

Participate in the FFEL Program 

The proposed regulations would add 

a new § 600.57 specifying additional 

Title IV, HEA program eligibility criteria 

for foreign nursing schools. These 

criteria include § 600.57(a)(6)(i), where 

the school must 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 requirements 

for collection and submission of 

National Council Licensure 

Examination for registered Nurses 

(NCLEX–RN) results or pass rates. 

We estimate that 3 new nursing 

institutions would require .50 hours (30 

minutes) to develop the consent form 

increasing burden by 1 hour and 30 

minutes. We estimate that 1,200 

individuals would require .08 hours (10 

minutes) to respond to this consent form 

and increasing burden by 96 hours in 

OMB Control Number 1845–NEWA. 

The foreign nursing school eligibility 

also includes § 600.57(a)(6)(ii) where an 

institution must annually, at its own 

expense, obtain all results on the 

NCLEX–RN achieved by students and 

graduates who are U.S. citizens, 

nationals, or eligible permanent 

residents, together with the dates the 

student has taken the examination 

(including any failed examinations) and 

provide the results to the Department. 

As an alternative to obtaining the 

NCLEX results individually, the school 

may obtain a report or reports from the 

National Council of State Boards of 

Nursing (NCSB), or an NCSB affiliate or 

NCSB contractor, reflecting the 

percentage of the school’s students and 

graduates taking the NCLEX–RN in the 

preceding year who passed the 

examination, or the data from which the 

percentage could be derived, and 

provide the report to the Department. 

We estimate that 3 new nursing 

institutions would require 1.5 hours 

(1 hour 30 minutes) to compile this 

annual report submission increasing 

burden by 4 hours 30 minutes in OMB 

Control Number 1845–NEWA. In total, 

we estimate there would be 102 hours 

of burden associated with § 600.57(a)(6) 

in OMB Control Number 1845–NEWA. 

In addition, proposed § 600.57(c) 

would specify that after a school 

reimburses the Department for the cost 

of a loan default, the loan would be 

assigned to the school. The borrower 

would remain liable to the school for 

the outstanding balance of the loan, 

under the terms and conditions 

specified in the promissory note. 

While burden would normally be 

associated with notification and 

collection activity, because there is no 

history of Federal borrowing for 

attendance at these schools and due to 

the extended period of time prior to a 

student borrower defaulting on a Title 

IV, HEA loan at a newly approved 

foreign nursing school during the first 

year after the implementation of the 

final regulations, we believe that it 

would be inappropriate to project 

burden to schools and individuals at 

this time. 

Section 668.13—Certification 

Procedures 

The proposed regulations would 

amend § 668.13(b)(1) to specify that the 

period of participation for a private, forprofit foreign institution expires three 

years after the date the institution is 

certified by the Department, rather than 

the current six years. 

While the duration of the approval 

process is reduced from six years to 

three years and, therefore, the time 

associated with the submission for 

recertification will be filed more often, 

this proposed change in the regulations 

does not represent a substantive impact 

on the amount of annual burden 

generated by these regulations. We do 

not estimate a change in the burden as 

a result of the proposed regulations to 

OMB 1845–0022. 

Section 668.23—Compliance Audits 

and Audited Financial Statements 

The proposed regulation in 

§ 668.23(h)(1) would revise financial 

statement submission requirements for 

foreign institutions receiving Title IV, 

HEA program funds in the most recently 

completed fiscal year. 

• In § 668.23(h)(1)(i)—For a public or 

nonprofit foreign institution that 

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

IV, HEA program funds during the 

institution’s most recently completed 

fiscal year, the audited financial 

statements submission would be 

waived, unless the institution is in its 

initial provisional period of 

participation and received Title IV, HEA 

program funds during that year, in 

which case the institution must submit, 

in English, audited financial statements 

prepared in accordance with the 

generally accepted accounting 

principles of the institution’s home 

country. 

• In § 668.23(h)(1)(iii)(A)—For a 

public or nonprofit foreign institution 

that received $500,000 or more in U.S. 

Title IV, HEA program funds, but less 

than $3,000,000 in U.S. Title IV, HEA 


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Federal Register / Vol. 75, No. 138 / Tuesday, July 20, 2010 / Proposed Rules 42227 

program funds during its most recently 

completed fiscal year, the institution 

would be allowed to submit for that 

year, in English, audited financial 

statements prepared in accordance with 

the generally accepted accounting 

principles of the institution’s home 

country in lieu of financial statements 

prepared in accordance with U.S. 

GAAP. 

• In § 668.23(h)(1)(iii)(B)—For a 

public or nonprofit foreign institution 

that received at least $3,000,000 but less 

than $5,000,000 in U.S. Title IV, HEA 

program funds during its most recently 

completed fiscal year, the institution 

would be required to submit once every 

three years audited financial statements 

prepared in accordance with the 

generally accepted accounting 

principles of both the institution’s home 

country and U.S. GAAP, but for the two 

years in between would be allowed to 

submit, in English, audited financial 

statements prepared in accordance with 

the generally accepted accounting 

principles of the institution’s home 

country in lieu of financial statements 

prepared in accordance with U.S. 

GAAP. 

• In § 668.23(h)(1)(ii)—For a public or 

nonprofit foreign institution that 

received $5,000,000 or more in U.S. 

Title IV, HEA program funds during its 

most recently completed fiscal year, and 

for any for-profit foreign institution, the 

institution would be required to submit 

for that year audited financial 

statements prepared in accordance with 

the generally accepted accounting 

principles of both the institution’s home 

country and U.S. GAAP. 

We estimate that 15 public 

institutions would require 35 hours for 

the translation of financial statements to 

English increasing burden by 525 hours. 

We estimate that 15 private institutions 

would require 35 hours for the 

translation of financial statements to 

English increasing burden by 525 hours 

for a total of 1,050 hours. 

We estimate 20 public institutions 

would require 100 hours for the 

preparation of the U.S. GAAP financial 

statement increasing burden by 2,000 

hours. We estimate that 8 private 

nonprofit institutions would require 100 

hours for the preparation of the U.S. 

GAAP financial statement increasing 

burden by 800 hours. We estimate that 

four for-profit institutions require 100 

hours for the preparation of the U.S. 

GAAP financial statement increasing 

burden by 400 hours for a total of 3,200 

hours. Collectively, we estimate that 

there would be 4,250 hours of burden 

associated with proposed § 668.23(h)(1) 

in OMB Control Number 1845–0038. 

Proposed § 668.23(h)(2) would 

separate foreign institutions into two 

groups, establishing new compliance 

audit requirements for foreign 

institutions based upon whether the 

institution received less than $500,000 

or $500,000 or more in U.S. Title IV, 

HEA program funds during the 

institution’s most recently completed 

fiscal year. 

For foreign institutions that receive 

less than $500,000 per year in U.S. Title 

IV, HEA program funds, under proposed 

§ 668.23(h)(2)(ii) and (iii) they would be 

required to submit compliance audits 

under an alternative compliance audit 

performed in accordance with the audit 

guide from the Department’s Office of 

Inspector General. The alternative 

compliance audit is performed as an 

agreed-upon procedures attestation 

engagement, and the standard 

compliance audit is performed as an 

examination-level attestation 

engagement. An alternative compliance 

audit is an agreed-upon procedures 

attestation engagement, which consists 

of specific procedures performed on a 

subject matter and is substantially 

narrower in scope than a standard 

compliance audit, which is an 

examination level attestation. 

The proposed regulations would 

require an annual submission of the 

compliance audit, except that, under 

certain conditions as described in the 

following paragraphs, an institution 

would submit a compliance audit 

annually for two consecutive years, 

then, if notified by the Department, 

would be permitted to submit a 

cumulative compliance audit every 

three years thereafter as long as the 

institution continued to receive less 

than $500,000 in U.S. Title IV funds 

each fiscal year being audited. 

We anticipate 269 public institutions 

would require 25 hours to provide the 

alternate compliance audit increasing 

burden by 6,725 hours. We anticipate 81 

private institutions would require 25 

hours to provide the alternate 

compliance audit increasing burden by 

2,025 hours. Collectively we anticipate 

a total of 8,750 hours of increased 

burden for § 668.23(h)(2)(ii) and (iii) in 

OMB Control Number 1845–0038. 

For foreign institutions that receive 

$500,000 or more per year in U.S. Title 

IV, HEA program funds, as in the 

current regulations, under proposed 

§ 668.23(h)(2)(i) they would be required 

to submit annual compliance audits 

using the standard audit procedures for 

foreign institutions set out in the audit 

guide issued by the Office of Inspector 

General. This compliance audit would 

be submitted together with an 

alternative compliance audit or audits 

prepared in accordance with proposed 

§ 668.23(h)(2)(ii) for any preceding fiscal 

year or years in which the foreign 

institution received less than $500,000 

in U.S. Title IV, HEA program funds. 

We estimate 90 public institutions 

would require 40 hours to submit a full 

compliance audit increasing burden by 

3,600 hours. We estimate 29 private 

nonprofit institutions would require 40 

hours to submit a full compliance audit 

increasing burden by 1,160 hours. We 

estimate 4 for-profit institutions would 

require 40 hours to submit a full 

compliance audit increasing burden by 

160 hours for a total of 4,920 hours. 

Collectively, we estimate that there 

would be 13,670 hours of increased 

burden associated with § 668.23(h)(2)(i) 

in OMB Control 1845–0038. 

In total, we estimate that the burden 

related to proposed § 668.23(h) would 

increase by 17,920 hours in OMB 

Control Number 1845–0038. 

Although audited financial statements 

and compliance audits have long been 

required of foreign schools, no separate 

calculation of the burden of those 

requirements had been done until now. 

As a result, by and large the burdens 

estimated are not new. What is new is 

the reduction in already-existing 

burdens that would result from the 

proposed regulations if finalized. 

In relation to the proposed 

requirement to submit audited financial 

statements, if the proposed regulations 

(allowing for alternate submissions for 

institutions with funding over $500,000 

in U.S. Title IV, HEA program funds) 

had not been offered, there would have 

been 123 foreign institutions required to 

submit annually audited financial 

statements prepared in accordance with 

U.S. GAAP at a burden of 12,300 hours 

(123 institutions × 100 hours = 12,300 

hours). The proposed regulations reduce 

that burden by 9,100 hours (proposed 

burden of 3,200 hours subtracted from 

estimated burden of 12,300 hours 

required under current regulations). 

In relation to the proposed 

requirement to submit a compliance 

audit, if the proposed regulations had 

not been offered, there would have been 

an annual standard compliance audit 

submission requirement burden of 

17,500 hours over two years (350 

institutions × 25 hours annual burden × 

2 years) that foreign institutions 

disbursing less than $500,000 in U.S. 

Title IV, HEA program funds would 

have had to complete. The proposed 

regulations decrease burden by allowing 

for submission of alternative 

compliance audits once every three 

years upon notification from the 

Department. 


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42228 Federal Register / Vol. 75, No. 138 / Tuesday, July 20, 2010 / Proposed Rules 

Section 668.171—General (Subpart L— 

Financial Responsibility) 

Proposed § 668.171 would consider 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. A foreign 

public institution would not meet this 

standard of financial responsibility if it 

was in violation of any past 

performance requirements in § 668.174. 

If a foreign public institution did not 

meet the new requirements, 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. Although 

the full faith and credit provision would 

provide an alternate way of meeting the 

financial responsibility standards for 

public foreign institutions, it would not 

excuse the institution from required 

submissions of audited financial 

statements. In addition, if a government 

entity provided full faith and credit 

backing, the entity would be held liable 

for any Title IV, HEA program liabilities 

that were not paid by the institution. 

We estimate 13 public institutions 

would require 16 hours to obtain 

documentation from the applicable 

government entity at an increase in 

burden of 208 hours in OMB Control 

Number 1845–0022. 

COLLECTION OF INFORMATION

Regulatory section Information collection Collection 

600.20—Application procedures for establishing, reestablishing, maintaining, or expanding institutional eligibility and certification.This proposed regulation change would add 

information that must be collected to determine the eligibility of foreign graduate medical schools to participate in Title IV programs.

OMB 1845–0012. The burden would increase 

by 42 hours. 

This regulatory change may require changes 

to the form, but they cannot be completed 

until the language of the final rule is determined. 

600.21—Updating application information ......... This proposed regulation would identify when 

a foreign graduate medical school must notify the Department of specific changes in 

locations used by the school.

OMB 1845–0012. The burden would increase 

by 1 hour and 20 minutes. 

This regulatory change may require changes 

to the form, but they cannot be completed 

until the language of the final rule is determined. 

600.54—Criteria for determining whether a foreign institution is eligible to participate in the 

FFEL programs.

This proposed regulation would require that 

the foreign institution demonstrate that its 

academic work for training program of at 

least one-academic-year is equivalent to an 

academic year as defined for domestic institutions.

OMB 1845–NEWA. This would be a new collection. A separate 60-day Federal Register notice will be published to solicit comment. The burden would increase by 22 

hours. 

600.55—Additional criteria for determining 

whether a foreign graduate medical school is 

eligible to apply to participate in the Title IV, 

HEA programs.

This proposed regulation would require the 

schools to provide a consent form allowing 

the school to receive a copy of the students’ MCAT score; would require a medical school to produce annually and to provide to its accrediting agency a report with 

data regarding its students who are US citizens, nationals, or eligible permanent residents, some of which data would be required to be submitted to the Department 

on an annual basis; and would require the 

school to notify their accrediting body within 

one year of material changes to its educational program and formal affiliation 

agreements. This section also would require schools to identify the languages in 

which it provides instruction.

OMB 1845–NEWA. This would be a new collection. A separate 60-day Federal Register notice will be published to solicit comment. The burden would increase by 389 

hours. 

600.55(g)(2)—Additional criteria for determining 

whether a foreign graduate medical school is 

eligible to apply to participate in the Title IV, 

HEA programs.

This proposed regulation would require the 

foreign graduate medical schools to expand 

the satisfactory academic progress policy 

requirements to include foreign graduate 

medical schools and calculations of maximum timeframes to complete the program, 

and document any student remediation regarding SAP.

OMB 1845–NEW2. This would be a new collection. A separate 60-day Federal Register notice will be published to solicit comment. The burden would increase by 177 

hours and 30 minutes. 

600.57—Additional criteria for determining 

whether a foreign nursing school is eligible to 

apply to participate in the FFEL program.

This proposed regulation would require the 

schools to provide a consent form allowing 

the school to receive a copy of the students’ NCLEX–RN results or pass rate and 

would require a nursing school to annually 

produce and provide to the Department a 

report with data regarding the results of the 

NCLEX–RN exam taken by its students and 

graduates.

OMB 1845–NEWA. This would be a new collection. A separate 60-day Federal Register notice will be published to solicit comment. The burden would increase by 102 

hours. 


wwoods2 on DSKDVH8Z91PROD with PROPOSALS2
Federal Register / Vol. 75, No. 138 / Tuesday, July 20, 2010 / Proposed Rules 42229 

COLLECTION OF INFORMATION—Continued 

Regulatory section Information collection Collection 

668.13—Certification procedures ....................... The proposed regulation would change the 

certification time frame for for-profit schools 

from 6 to 3 years.

OMB 1845–0022. We do not anticipate a 

change in burden. 

668.23(h)(1)—Compliance audits and audited 

financial statements.

The proposed regulation would change the requirements of institutions for submission of 

audited financial statements to the Department and would change the requirements 

of institutions for submission of compliance 

audits to the Department.

OMB 1845–0038. The burden would increase 

by 17,920 hours. 

668.171—General (Subpart L—Financial Responsibility).The proposed regulation would provide an alternate method to show financial responsibility by showing that it is a public institution 

designated by the proper governing authority in the country and by providing documentation of the full faith and credit of that 

country.

OMB 1845–0022. The burden would increase 

by 208 hours. 

If you want to comment on the 

proposed information collection 

requirements, please send your 

comments to the Office of Information 

and Regulatory Affairs, OMB, Attention: 

Desk Officer for U.S. Department of 

Education. Send these comments by 

e-mail to OIRA_DOCKET@omb.eop.gov 

or by fax to (202) 395–6974. You may 

also send a copy of these comments to 

the Department contact named in the 

ADDRESSES section of this preamble. 

We consider your comments on these 

proposed collections of information in— 

• Deciding whether the proposed 

collections are necessary for the proper 

performance of our functions, including 

whether the information will have 

practical use; 

• Evaluating the accuracy of our 

estimate of the burden of the proposed 

collections, including the validity of our 

methodology and assumptions; 

• Enhancing the quality, usefulness, 

and clarity of the information we 

collect; and 

• Minimizing the burden on those 

who must respond. This includes 

exploring the use of appropriate 

automated, electronic, mechanical, or 

other technological collection 

techniques or other forms of information 

technology (e.g., permitting electronic 

submission of responses). 

OMB is required to make a decision 

concerning the collections of 

information contained in these 

proposed regulations between 30 and 60 

days after publication of this document 

in the Federal Register. Therefore, to 

ensure that OMB gives your comments 

full consideration, it is important that 

OMB receives the comments within 30 

days of publication. This does not affect 

the deadline for your comments to us on 

the proposed regulations. 

Intergovernmental Review 

These programs are not subject to 

Executive Order 12372 and the 

regulations in 34 CFR part 79. 

Assessment of Educational Impact 

In accordance with section 411 of the 

General Education Provisions Act, 20 

U.S.C. 1221e–4, the Secretary 

particularly requests comments on 

whether these proposed regulations 

would require transmission of 

information that any other agency or 

authority of the United States gathers or 

makes available. 

Electronic Access to This Document: 

You can view this document, as well as 

all other Department of Education 

documents published in the Federal 

Register, in text or Adobe Portable 

Document Format (PDF) on the Internet 

at the following site: http://www.ed.gov/ 

news/fedregister. To use PDF you must 

have Adobe Acrobat Reader, which is 

available free at this site. If you have 

questions about using PDF, call the U.S. 

Government Printing Office (GPO), toll 

free, at 1–888–293–6498; or in the 

Washington, DC, area at (202) 512–1530. 

Note: The official version of this document 

is the document published in the Federal 

Register. Free Internet access to the official 

edition of the Federal Register and the Code 

of Federal Regulations is available on GPO 

Access at: http://www.gpoaccess.gov/nara/ 

index.html. 

Catalog of Federal Domestic Assistance 

Numbers: 84.063 Federal Pell Grant Program; 

84.033 Federal Work-Study Program; 84.379 

TEACH Grant Program; 84.069 LEAP). 

List of Subjects 

34 CFR Part 600 

Colleges and universities, Foreign 

relations, Grant programs—education, 

Loan programs—education, Reporting 

and recordkeeping requirements, 

Student aid, Vocational education. 

34 CFR Part 668 

Administrative practice and 

procedure, Aliens, Colleges and 

universities, Consumer protection, 

Grant programs—education, Loan 

programs—education, Reporting and 

recordkeeping requirements, Selective 

Service System, Student aid, Vocational 

education. 

34 CFR Part 682 

Administrative practice and 

procedure, Colleges and universities, 

Education, Loan programs—education, 

Reporting and recordkeeping 

requirements, Student aid. 

Dated: July 12, 2010. 

Arne Duncan, 

Secretary of Education. 

For the reasons discussed in the 

preamble, the Secretary proposes to 

amend parts 600, 668, and 682 of title 

34 of the Code of Federal Regulations as 

follows: 

PART 600—INSTITUTIONAL 

ELIGIBILITY UNDER THE HIGHER 

EDUCATION ACT OF 1965, AS 

AMENDED 

1. The authority citation for part 600 

continues to read as follows: 

Authority: 20 U.S.C. 1001, 1002, 1003, 

1088, 1091, 1094, 1099b, and 1099c, unless 

otherwise noted. 

2. Section 600.2 is amended by 

revising paragraphs (1) and (2) of the 

definition of Nonprofit institution. 

The revision reads as follows: 

§ 600.2 Definitions. 

* * * * * 

Nonprofit institution: An institution 

that— 


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(1)(i) Is owned and operated by one or 

more nonprofit corporations or 

associations, no part of the net earnings 

of which benefits any private 

shareholder or individual; 

(ii) Is legally authorized to operate as 

a nonprofit organization by each State in 

which it is physically located; and 

(iii) 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)); or 

(2) For a foreign institution— 

(i) An institution that is owned and 

operated only by one or more nonprofit 

corporations or associations; and 

(ii)(A) If a 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, is determined by that tax 

authority to be a nonprofit educational 

institution; or 

(B) If no 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 foreign institution 

demonstrates to the satisfaction of the 

Secretary that it is a nonprofit 

educational institution. 

* * * * * 

3. Section 600.20 is amended by: 

A. Revising paragraph (a). 

B. Adding a new paragraph (b)(3). 

C. In paragraph (c)(4), removing the 

word ‘‘or’’. 

D. Redesignating paragraph (c)(5) as 

paragraph (c)(6). 

E. Adding a new paragraph (c)(5). 

The revision and additions read as 

follows: 

§ 600.20 Application procedures for 

establishing, reestablishing, maintaining, or 

expanding institutional eligibility and 

certification. 

(a) Initial eligibility application. 

(1) An institution that wishes to 

establish its eligibility to participate in 

any HEA program must submit an 

application to the Secretary for a 

determination that it qualifies as an 

eligible institution under this part. 

(2) If the institution also wishes to be 

certified to participate in the title IV, 

HEA programs, it must indicate that 

intent on the application, and submit all 

the documentation indicated on the 

application to enable the Secretary to 

determine that it satisfies the relevant 

certification requirements contained in 

34 CFR part 668, subparts B and L. 

(3) A freestanding foreign graduate 

medical school, or a foreign institution 

that includes a foreign graduate medical 

school, must include in its application 

to participate— 

(i)(A) A list of all educational sites 

and where they are located, including 

all sites at which its students receive 

clinical training, except those clinical 

training sites 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; and 

(B) The type of clinical training (core, 

required clinical rotation, not required 

clinical rotation) offered at each site 

listed on the application in accordance 

with paragraph (a)(3)(i)(A) of this 

section; and 

(ii) Whether the school offers— 

(A) Only post-baccalaureate/ 

equivalent medical programs, as defined 

in § 600.52; 

(B) Other types of programs that lead 

to employment as a doctor of 

osteopathic medicine or doctor of 

medicine; or 

(C) Both; and 

(iii) Copies of the formal affiliation 

agreements with hospitals or clinics 

providing all or a portion of a clinical 

training program required under 

§ 600.55(e)(1). 

(b) * * * 

(3) A freestanding foreign graduate 

medical school, or a foreign institution 

that includes a foreign graduate medical 

school, must include in its reapplication 

to participate— 

(i)(A) A list of all educational sites 

and where they are located, including 

all sites at which its students receive 

clinical training, except those clinical 

training sites 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; and 

(B) The type of clinical training (core, 

required clinical rotation, not required 

clinical rotation) offered at each site 

listed on the application in accordance 

with paragraph (b)(3)(i)(A) of this 

section; and 

(ii) Whether the school offers— 

(A) Only post-baccalaureate/ 

equivalent medical programs, as defined 

in § 600.52; 

(B) Other types of programs that lead 

to employment as a doctor of 

osteopathic medicine or doctor of 

medicine; or 

(C) Both; and 

(iii) Copies of the formal affiliation 

agreements with hospitals or clinics 

providing all or a portion of a clinical 

training program required under 

§ 600.55(e)(1). 

* * * * * 

(c) * * * 

(5) For a freestanding foreign graduate 

medical school, or a foreign institution 

that includes a foreign graduate medical 

school, add a location that offers all or 

a portion of the school’s core clinical 

training or required clinical rotations, 

except for those locations that are 

included in the accreditation of a 

medical program accredited by the 

Liaison Committee on Medical 

Education (LCME); or 

* * * * * 

4. Section 600.21 is amended by 

adding paragraph (a)(10) to read as 

follows: 

§ 600.21 Updating application information. 

(a) * * * 

(10) For a freestanding foreign 

graduate medical school, or a foreign 

institution that includes a foreign 

graduate medical school, the school 

adds a location that offers all or a 

portion of the school’s clinical rotations 

that are not required, except for those 

that are included in the accreditation of 

a medical program accredited by the 

Liaison Committee on Medical 

Education (LCME), or 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. 

* * * * * 

5. Section 600.51 is amended by 

revising paragraph (c) to read as follows: 

§ 600.51 Purpose and scope. 

* * * * * 

(c) A foreign institution must comply 

with all requirements for eligible and 

participating institutions except— 

(1) To the extent those provisions are 

inconsistent with this subpart or other 

provisions of these regulations or the 

HEA specific to foreign institutions; or 

(2) When the Secretary, through a 

notice in the Federal Register, identifies 

specific provisions as inapplicable to 

foreign institutions. 

* * * * * 

6. Section 600.52 is amended by: 

A. Adding, in alphabetical order, a 

definition of Associate degree school of 

nursing. 

B. Adding, in alphabetical order, a 

definition of Clinical training. 

C. Adding, in alphabetical order, a 

definition of Collegiate school of 

nursing. 

D. Adding, in alphabetical order, a 

definition of Diploma school of nursing. 

E. Revising the definition of Foreign 

graduate medical school. 

F. Revising the definition of Foreign 

institution. 

G. Adding, in alphabetical order, a 

definition of Foreign nursing school. 


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H. Adding, in alphabetical order, a 

definition of Foreign veterinary school. 

I. Adding, in alphabetical order, a 

definition of National Committee on 

Foreign Medical Education and 

Accreditation (NCFMEA). 

J. Revising the definition of Passing 

score. 

K. Adding, in alphabetical order, a 

definition of Post-baccalaureate/ 

equivalent medical program. 

The additions and revisions read as 

follows: 

§ 600.52 Definitions. 

Associate degree school of nursing: A 

school that provides primarily or 

exclusively a two-year program of 

postsecondary education in professional 

nursing leading to a degree equivalent to 

an associate degree in the United States. 

Clinical training: The portion of a 

graduate medical education program 

that counts as a clinical clerkship for 

purposes of medical licensure 

comprising core, required clinical 

rotation, and not required clinical 

rotation. 

Collegiate school of nursing: A school 

that provides primarily or exclusively a 

minimum of a two-year program of 

postsecondary education in professional 

nursing leading to a degree equivalent to 

a bachelor of arts, bachelor of science, 

or bachelor of nursing in the United 

States, or to a degree equivalent to a 

graduate degree in nursing in the United 

States, and including advanced training 

related to the program of education 

provided by the school. 

Diploma school of nursing: A school 

affiliated with a hospital or university, 

or an independent school, which 

provides primarily or exclusively a twoyear program of postsecondary 

education in professional nursing 

leading to the equivalent of a diploma 

in the United States or to equivalent 

indicia that the program has been 

satisfactorily completed. 

Foreign graduate medical school: A 

foreign institution (or, for a foreign 

institution that is a university, a 

component of that foreign institution) 

having as its sole mission providing an 

educational program that leads to a 

degree of medical doctor, doctor of 

osteopathic medicine, or the equivalent. 

A reference in these regulations to a 

foreign graduate medical school as 

‘‘freestanding’’ pertains solely to those 

schools that qualify by themselves as 

foreign institutions and not to schools 

that are components of universities that 

qualify as foreign institutions. 

Foreign institution: 

(1) For the purposes of students who 

receive title IV aid, an institution that— 

(i) Is not located in a State; 

(ii) Except as provided with respect to 

clinical training offered under 

§ 600.55(h)(1), § 600.56(b), or 

§ 600.57(a)(2)— 

(A) Has no U.S. location; 

(B) Has no written arrangements, 

within the meaning of § 668.5, with 

institutions or organizations located in 

the United States for students enrolling 

at the foreign institution to take courses 

from institutions located in the United 

States; 

(C) Does not permit students to enroll 

in any course offered by the foreign 

institution in the United States, 

including research, work, internship, 

externship, or special studies within the 

United States, except that independent 

research done by an individual student 

in the United States for not more than 

one academic year is permitted, if it is 

conducted during the dissertation phase 

of a doctoral program under the 

guidance of faculty, and the research 

can only be performed in a facility in 

the United States; 

(iii) Is legally authorized by the 

education ministry, council, or 

equivalent agency of the country in 

which the institution is located to 

provide an educational program beyond 

the secondary education level; 

(iv) Awards degrees, certificates, or 

other recognized educational credentials 

in accordance with § 600.54(d) that are 

officially recognized by the country in 

which the institution is located; and 

(v) For any program designed to 

prepare the student for employment in 

a recognized occupation, with or 

without licensure, provides a credential, 

including a degree, that— 

(A) Satisfies the educational 

requirements in the country in which 

the institution is located for entry into 

that occupation, including educational 

requirements for licensure; and 

(B) Satisfies the educational 

requirements, including requirements 

for licensure, for entry into that 

occupation in the United States; or 

(2) If the 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 apply to participate 

as one or more foreign institutions and 

must meet all requirements of paragraph 

(1) of this definition, and the other 

requirements of this part. For the 

purposes of this paragraph, an 

educational enterprise consists of two or 

more locations offering all or part of an 

educational program that are directly or 

indirectly under common ownership. 

Foreign nursing school: A foreign 

institution (or, for a foreign institution 

that is a university, a component of that 

foreign institution) that is an associate 

degree school of nursing, a collegiate 

school of nursing, or a diploma school 

of nursing. A reference in these 

regulations to a foreign nursing school 

as ‘‘freestanding’’ pertains solely to those 

schools that qualify by themselves as 

foreign institutions and not to schools 

that are components of universities that 

qualify as foreign institutions. 

Foreign veterinary school: A foreign 

institution (or, for a foreign institution 

that is a university, a component of that 

foreign institution) having as its sole 

mission providing an educational 

program that leads to the degree of 

doctor of veterinary medicine, or the 

equivalent. A reference in these 

regulations to a foreign veterinary 

school as ‘‘freestanding’’ pertains solely 

to those schools that qualify by 

themselves as foreign institutions and 

not to schools that are components of 

universities that qualify as foreign 

institutions. 

National Committee on Foreign 

Medical Education and Accreditation 

(NCFMEA): The operational committee 

of medical experts established by the 

Secretary to determine whether the 

medical school accrediting standards 

used in other countries are comparable 

to those applied to medical schools in 

the U.S., for purposes of evaluating the 

eligibility of accredited foreign graduate 

medical schools to participate in the 

title IV, HEA programs. 

Passing score: The minimum passing 

score as defined by the Educational 

Commission for Foreign Medical 

Graduates (ECFMG), or on the National 

Council Licensure Examination for 

Registered Nurses (NCLEX–RN), as 

applicable. 

Post-baccalaureate/equivalent 

medical program: 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. 

* * * * * 

7. Section 600.54 is revised to read as 

follows: 

§ 600.54 Criteria for determining whether a 

foreign institution is eligible to apply to 

participate in the FFEL programs. 

The Secretary considers a foreign 

institution to be comparable to an 

eligible institution of higher education 

in the United States and eligible to 

apply to participate in the FFEL 


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42232 Federal Register / Vol. 75, No. 138 / Tuesday, July 20, 2010 / Proposed Rules 

programs if the foreign institution meets 

the following requirements: 

(a) Except for a freestanding foreign 

graduate medical school, foreign 

veterinary school, or foreign nursing 

school, the foreign institution is a public 

or private nonprofit educational 

institution. 

(b) The foreign institution admits as 

regular students only persons who— 

(1) Have a secondary school 

completion credential; or 

(2) Have the recognized equivalent of 

a secondary school completion 

credential. 

(c)(1) Notwithstanding § 668.5, an 

eligible foreign institution may not enter 

into a written arrangement under which 

an ineligible institution or organization 

provides any portion of one or more of 

the eligible foreign institution’s 

programs. For the purposes of this 

paragraph, written arrangements do not 

include affiliation agreements for the 

provision of clinical training for foreign 

medical, veterinary, and nursing 

schools. 

(2) An additional location of a foreign 

institution must separately meet the 

definition of a foreign institution in 

§ 600.52 if it is— 

(i) Located outside of the country in 

which the main campus is located, 

except as provided in § 600.55(h)(1), 

§ 600.56(b), § 600.57(a)(2), 

§ 600.55(h)(3), and the definition of 

foreign institution found in § 600.52; or 

(ii) Located within the same country 

as the main campus, but is not covered 

by the legal authorization of the main 

campus. 

(d) The foreign institution provides an 

eligible education program— 

(1) For which the institution is legally 

authorized to award a degree that is 

equivalent to an associate, 

baccalaureate, graduate, or professional 

degree awarded in the United States; 

(2) That is at least a two-academicyear program acceptable for full credit 

toward the equivalent of a baccalaureate 

degree awarded in the United States; or 

(3)(i) That is equivalent to at least a 

one-academic-year training program in 

the United States that leads to a 

certificate, degree, or other recognized 

educational credential and prepares 

students for gainful employment in a 

recognized occupation. 

(ii) An institution must demonstrate 

to the satisfaction of the Secretary that 

the amount of academic work required 

by a program in paragraph (d)(3)(i) of 

this section is equivalent to at least the 

definition of an academic year in 

§ 668.3. 

(e) For a for-profit foreign medical, 

veterinary, or nursing school— 

(1) No portion of an eligible medical 

or veterinary program offered may be at 

what would be an undergraduate level 

in the United States; and 

(2) The title IV, HEA program 

eligibility does not extend to any joint 

degree program. 

(f) Proof that a foreign institution 

meets the requirements of paragraph 

(1)(iii) of the definition of a foreign 

institution in § 600.52 may be provided 

to the Secretary by a legal authorization 

from the appropriate education 

ministry, council, or equivalent 

agency— 

(i) For all eligible foreign institutions 

in the country; 

(ii) For all eligible foreign institutions 

in a jurisdiction within the country; or 

(iii) For each separate eligible foreign 

institution in the country. 

(Authority: 20 U.S.C. 1082, 1088) 

8. Section 600.55 is revised to read as 

follows: 

§ 600.55 Additional criteria for determining 

whether a foreign graduate medical school 

is eligible to apply to participate in the title 

IV, HEA programs. 

(a) General. (1) The Secretary 

considers a foreign graduate medical 

school to be eligible to apply to 

participate in the title IV, HEA programs 

if, in addition to satisfying the criteria 

of this part (except the criterion in 

§ 600.54 that the institution be public or 

private nonprofit), the school satisfies 

the criteria of this section. 

(2) A foreign graduate medical school 

must provide, and in the normal course 

require its students to complete, a 

program of clinical training 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— 

(i) Is provided in facilities adequately 

equipped and staffed to afford students 

comprehensive clinical training and 

classroom medical instruction; 

(ii) Is approved by all medical 

licensing boards and evaluating bodies 

whose views are considered relevant by 

the Secretary; and 

(iii) As part of its clinical training, 

does not offer more than two electives 

consisting of no more than eight weeks 

per student at a site located in a foreign 

country other than the country in which 

the main campus is located or in the 

United States, unless that location is 

included in the accreditation of a 

medical program accredited by the 

Liaison Committee on Medical 

Education (LCME). 

(3) A foreign graduate medical school 

must appoint for the program described 

in paragraph (a)(2) of this section only 

those faculty members whose academic 

credentials are the equivalent of 

credentials required of faculty members 

teaching the same or similar courses at 

medical schools in the United States. 

(4) A foreign graduate medical school 

must have graduated classes during 

each of the two twelve-month periods 

immediately preceding the date the 

Secretary receives the school’s request 

for an eligibility determination. 

(b) Accreditation. A foreign graduate 

medical school must— 

(1) Be approved by an accrediting 

body— 

(i) That is legally authorized to 

evaluate the quality of graduate medical 

school educational programs and 

facilities in the country where the 

school is located; and 

(ii) Whose standards of accreditation 

of graduate medical schools have been 

evaluated by the NCFMEA or its 

successor committee of medical experts 

and have been determined to be 

comparable to standards of accreditation 

applied to medical schools in the 

United States; or 

(2) Be a public or private nonprofit 

educational institution that satisfies the 

requirements in § 600.4(a)(5)(i). 

(c) Admission criteria. (1) A foreign 

graduate medical school having a postbaccalaureate/equivalent medical 

program must require students accepted 

for admission who are U.S. citizens, 

nationals, or permanent residents to 

have taken the Medical College 

Admission Test (MCAT) and to have 

reported their scores to the foreign 

medical school; and 

(2) A foreign graduate medical school 

must 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 of 

paragraph (d) of this section. 

(d) Collection and submission of data. 

A foreign graduate medical school must 

obtain, at its own expense, and by 

September 30 of each year, submit— 

(1) To its accrediting authority and, 

on request, to the Secretary, the scores 

on the MCAT or successor examination, 

of all students admitted during the 

preceding award year who are U.S. 

citizens, nationals, or eligible 

permanent residents, together with a 

statement of the number of times each 

student took the examination; 

(2) To its accrediting authority and, 

on request, to the Secretary, the 

percentage of students graduating 

during the preceding award year 

(including at least all graduates who are 


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U.S. citizens, nationals, or eligible 

permanent residents) who obtain 

placement in an accredited U.S. medical 

residency program; 

(3) To the Secretary, except upon 

written notice from the Secretary that 

the necessary information has been 

obtained by the Secretary for the year 

directly from the Educational 

Commission for Foreign Medical 

Graduates (ECFMG) or other responsible 

third parties, all scores, disaggregated by 

step/test—i.e., Step 1, Step 2—Clinical 

Skills (Step 2—CS), and Step 2— 

Clinical Knowledge (Step 2—CK), or the 

successor examinations—and attempt, 

earned during the preceding award year 

by at least each student and graduate 

who is a U.S. citizen, national, or 

eligible permanent resident, on Step 1, 

Step 2—CS, and Step 2—CK, or the 

successor examinations, of the U.S. 

Medical Licensing Examination 

(USMLE), together with the dates the 

student has taken each test, including 

any failed tests; 

(e) Requirements for clinical training. 

(1)(i) A foreign graduate medical school 

must have— 

(A) A formal affiliation agreement 

with any hospital or clinic at which all 

or a portion of the school’s core clinical 

training or required clinical rotations 

are provided; and 

(B) Either a formal affiliation 

agreement or other written arrangements 

with any hospital or clinic at which all 

or a portion of its clinical rotations that 

are not required are provided, 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. 

(ii) The agreements described in 

paragraph (e)(1)(i) of this section must 

state how the following will be 

addressed at each site— 

(A) Maintenance of the school’s 

standards; 

(B) Appointment of faculty to the 

medical school staff; 

(C) Design of the curriculum; 

(D) Supervision of students; 

(E) Provision of liability insurance; 

and 

(F) Evaluation of student 

performance. 

(2) A foreign graduate medical school 

must notify its accrediting body within 

one year of any material changes in— 

(i) The educational programs, 

including changes in clinical training 

programs; and 

(ii) The overseeing bodies and in the 

formal affiliation agreements with 

hospitals and clinics described in 

paragraph (e)(1)(i) of this section. 

(f) Citizenship and USMLE pass rate 

percentages. (1)(i)(A) During the 

academic year preceding the year for 

which any of the school’s students seeks 

an title IV, HEA program loan, at least 

60 percent of those enrolled as full-time 

regular students in the school and at 

least 60 percent of the school’s most 

recent graduating class must have been 

persons who did not meet the 

citizenship and residency criteria 

contained in section 484(a)(5) of the 

HEA, 20 U.S.C. 1091(a)(5); or 

(B) The school must have had a 

clinical training program approved by a 

State prior to January 1, 2008, and must 

continue to operate a clinical training 

program in at least one State that 

approves the program; and 

(ii) Except as provided in paragraph 

(f)(4) of this section, for a foreign 

graduate medical school outside of 

Canada, for Step 1, Step 2—CS, and 

Step 2—CK, or the successor 

examinations, of the USMLE 

administered by the ECFMG, at least 75 

percent of the school’s U.S. citizen, 

national, or eligible permanent resident 

students and graduates who took that 

step/test of the examination in the year 

preceding the year for which any of the 

school’s students seeks a title IV, HEA 

program loan must have received a 

passing score on that step/test and are 

taking the step/test for the first time; or 

(2)(i) The school must have had a 

clinical training program approved by a 

State as of January 1, 1992; and 

(ii) The school must continue to 

operate a clinical training program in at 

least one State that approves the 

program. 

(3) In performing the calculation 

required in paragraph (f)(1)(ii) of this 

section, a foreign graduate medical 

school shall— 

(i) Count as a graduate each U.S. 

citizen, national, or eligible permanent 

resident who graduated from the school 

during the three years preceding the 

year for which the calculation is 

performed; and 

(ii) Count each U.S. citizen, national, 

or eligible permanent resident who 

takes more than one step/test of the 

USMLE examination in a year in the 

denominator for each of those steps/ 

tests; 

(4)(i) If the calculation described in 

paragraph (f)(1)(ii) of this section would 

result in any step/test pass rate based on 

fewer than eight students, a single pass 

rate for the school is determined instead 

based on the performance of the 

school’s U.S. citizen, national, and 

eligible permanent resident students 

and graduates on Step 1, Step 2—CS, 

and Step 2—CK combined; 

(ii) If combining the results on all 

three step/tests as permitted in 

paragraph (f)(4)(i) of this section would 

result in a pass rate based on fewer than 

eight step/test results, the school is 

deemed to have no pass rate for that 

year and the results for the year are 

combined with each subsequent year 

until a pass rate based on at least eight 

step/test results is derived. 

(g) Other criteria. (1) As part of 

establishing, publishing, and applying 

reasonable satisfactory academic 

progress standards, a foreign graduate 

medical school must include as a 

quantitative component a maximum 

timeframe in which a student must 

complete his or her educational program 

that must— 

(i) Be no longer than 150 percent of 

the published length of the educational 

program measured in academic years, 

terms, credit hours attempted, clock 

hours completed, etc., as appropriate; 

and 

(ii) Meet the requirements of 

§ 668.16(e)(2)(ii)(B), (C) and (D). 

(2) A foreign graduate medical school 

must document the educational 

remediation it provides to assist 

students in making satisfactory 

academic progress. 

(3) A foreign graduate medical school 

must publish all the languages in which 

instruction is offered. 

(h) Location of a program. (1) Except 

as provided in paragraph (h)(3)(ii) of 

this section, all portions of a 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, except for 

clinical training sites located in the 

United States. 

(2) No portion of the graduate medical 

educational program offered to U.S. 

students, other than the clinical training 

portion of the program, may be located 

outside of the country in which the 

main campus of the foreign medical 

school is located. 

(3)(i) Except as provided in paragraph 

(h)(3)(ii) of this section, for any part of 

the clinical training portion of the 

educational program 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— 

(A) The site must be located in an 

NCFMEA approved comparable foreign 

country; 

(B) The institution’s medical 

accrediting agency must have conducted 

an on-site evaluation and specifically 

approved the clinical training site; and 


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(C) Clinical instruction must be 

offered in conjunction with medical 

educational programs offered to 

students enrolled in accredited medical 

schools located in that approved foreign 

country. 

(ii) A clinical training site located in 

a foreign country other than the country 

in which the main campus is located or 

in the United States is not required to 

meet the requirements of paragraph 

(h)(3)(i) of this section in order for 

students attending that site to be eligible 

to borrow title IV, HEA program funds 

if— 

(A) The location is included in the 

accreditation of a medical program 

accredited by the Liaison Committee on 

Medical Education (LCME); or 

(B) No individual student takes more 

than two electives at the location and 

the combined length of the electives 

does not exceed eight weeks. 

9. Section 600.56 is revised as 

follows: 

§ 600.56 Additional criteria for determining 

whether a foreign veterinary school is 

eligible to apply to participate in the FFEL 

programs. 

(a) The Secretary considers a foreign 

veterinary school to be eligible to apply 

to participate in the FFEL programs if, 

in addition to satisfying the criteria in 

this part (except the criterion in § 600.54 

that the institution be public or private 

nonprofit), the school satisfies all of the 

following criteria: 

(1) The school provides, and in the 

normal course requires its students to 

complete, a program of clinical and 

classroom veterinary instruction that is 

supervised closely by members of the 

school’s faculty, and that is provided in 

facilities adequately equipped and 

staffed to afford students comprehensive 

clinical and classroom veterinary 

instruction through a training program 

for foreign veterinary students that has 

been approved by all veterinary 

licensing boards and evaluating bodies 

whose views are considered relevant by 

the Secretary. 

(2) The school has graduated classes 

during each of the two twelve-month 

periods immediately preceding the date 

the Secretary receives the school’s 

request for an eligibility determination. 

(3) The school employs for the 

program described in paragraph (a)(1) of 

this section 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. 

(4) Effective July 1, 2015, the school 

is accredited or provisionally accredited 

by an organization acceptable to the 

Secretary for the purpose of evaluating 

veterinary programs. 

(b)(1) No portion of the foreign 

veterinary educational program offered 

to U.S. students, other than the clinical 

training portion of the program as 

provided for in paragraph (b)(2) of this 

section, may be located outside of the 

country in which the main campus of 

the foreign veterinary school is located; 

(2)(i) For a veterinary school that is 

neither public nor private nonprofit, the 

school’s students must complete their 

clinical training at an approved 

veterinary school located in the United 

States; 

(ii) For a veterinary school that is 

public or private nonprofit, the school’s 

students may complete their clinical 

training at an approved veterinary 

school located— 

(A) In the United States; 

(B) In the home country; or 

(C) Outside of the United States or the 

home country, if no individual student 

takes more than two electives at the 

location and the combined length of the 

elective does not exceed eight weeks. 

Authority: 20 U.S.C. 1002 and 1092. 

10. Section 600.57 is redesignated as 

§ 600.58 and a new § 600.57 is added to 

read as follows: 

§ 600.57 Additional criteria for determining 

whether a foreign nursing school is eligible 

to apply to participate in the FFEL program. 

(a) The Secretary considers a foreign 

nursing school to be eligible to apply to 

participate in the FFEL programs if, in 

addition to satisfying the criteria in this 

part (except the criterion in § 600.54 

that the institution be public or private 

nonprofit), the nursing school satisfies 

all of the following criteria: 

(1) The nursing school is an associate 

degree school of nursing, a collegiate 

school of nursing, or a diploma school 

of nursing. 

(2) The nursing school has an 

agreement with a hospital located in the 

United States or an accredited school of 

nursing located in the United States that 

requires students of the nursing school 

to complete the student’s clinical 

training at the hospital or accredited 

school of nursing. 

(3) The nursing school has an 

agreement with an accredited school of 

nursing located in the United States 

providing that 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. 

(4) The nursing school certifies only 

Federal Stafford Loan program loans or 

Federal PLUS program loans, as those 

terms are defined in § 668.2, for 

students attending the nursing school. 

(5) 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. 

(6)(i) The nursing school determines 

the consent requirements for and 

requires 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 of 

paragraph (a)(6)(ii) of this section. 

(ii) The nursing school annually 

either— 

(A) Obtains, at its own expense, all 

results achieved by students and 

graduates who are U.S. citizens, 

nationals, or eligible permanent 

residents on the National Council 

Licensure Examination for Registered 

Nurses (NCLEX–RN), together with the 

dates the student has taken the 

examination, including any failed 

examinations, and provides such results 

to the Secretary; or 

(B) Obtains a report or reports from 

the National Council of State Boards of 

Nursing (NCSB), or an NCSB affiliate or 

NCSB contractor, reflecting the 

percentage of the school’s students and 

graduates taking the NCLEX–RN in the 

preceding year who passed the 

examination, or the data from which the 

percentage could be derived, and 

provides the report to the Secretary. 

(7) Not less than 75 percent of the 

school’s students and graduates who are 

U.S. citizens, nationals, or eligible 

permanent residents who took the 

NCLEX–RN in the year preceding the 

year for which the institution is 

certifying a Federal Stafford Loan or a 

Federal Plus Loan, passed the 

examination. 

(8) The school provides, including 

under the agreements described in 

paragraphs (a)(2) and (a)(3) of this 

section, and in the normal course 

requires its students to complete, a 

program of clinical and classroom 

nursing instruction that is supervised 

closely by members of the school’s 

faculty that is provided in facilities 

adequately equipped and staffed to 

afford students comprehensive clinical 

and classroom nursing instruction, 

through a training program for foreign 

nursing students that has been approved 

by all nurse licensing boards and 

evaluating bodies whose views are 

considered relevant by the Secretary. 

(9) The school has graduated classes 

during each of the two twelve-month 

periods immediately preceding the date 

the Secretary receives the school’s 

request for an eligibility determination. 


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(10) The school employs only those 

faculty members whose academic 

credentials are the equivalent of 

credentials required of faculty members 

teaching the same or similar courses at 

nursing schools in the United States. 

(b) For purposes of paragraph (a)(5) of 

this section, the cost of a loan default is 

the sum of the defaulted loan’s— 

(1) Outstanding principal; 

(2) Accrued interest; 

(3) Unpaid late fees and collection 

costs; 

(4) Special allowance payments; 

(5) Reinsurance payments; and 

(6) Any related or similar payments 

the Secretary is obligated to make on the 

loan. 

(c) After a school reimburses the 

Secretary for the amount specified in 

paragraph (b) of this section, the loan is 

assigned to the school, and the borrower 

remains liable to the school for the 

outstanding balance of the loan, under 

the terms and conditions specified in 

the promissory note. 

(d) No portion of the foreign nursing 

program offered to U.S. students may be 

located outside of the country in which 

the main campus of the foreign nursing 

school is located, except for clinical 

sites located in the United States. 

PART 668—STUDENT ASSISTANCE 

GENERAL PROVISIONS 

11. The authority citation for part 668 

continues to read as follows: 

Authority: 20 U.S.C. 1001, 1002, 1003, 

1070g, 1085, 1088, 1091, 1092, 1094, 1099c, 

and 1099c–1, unless otherwise noted. 

12. Section 668.2 is amended by 

adding the words ‘‘Foreign institution’’ 

immediately after ‘‘Federal Family 

Education Loan (FFEL) programs’’ in the 

list of definitions in paragraph (a). 

13. Section 668.13(b) is revised to 

read as follows: 

§ 668.13 Certification procedures. 

* * * * * 

(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 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. 

§ 668.15 [Amended] 

14. Section 668.15 is amended by 

removing paragraph (h). 

15. Section 668.23 is amended by: 

A. In paragraph (a)(5), removing the 

words ‘‘ ‘‘Audits of Institutions of Higher 

Education and Other Non-profit 

Organizations’’; Office of Management 

and Budget Circular A–128, ‘‘Audits of 

State and Local Governments’’ ’’ and 

adding, in their place, the words 

‘‘Audits of States, Local Governments, 

and Non-Profit Organizations’’ ’’. 

B. In paragraph (d)(1)— 

Adding the words ‘‘issued by the 

Comptroller General of the United 

States’’ after ‘‘with generally accepted 

government auditing standards’’ and 

removing the words ‘‘ ‘‘Audits of 

Institutions of Higher Education and 

Other Non-profit Organizations’’; Office 

of Management and Budget Circular 

A–128, ‘‘Audits of State and Local 

Governments’’ ’’; and adding, in their 

place, ‘‘Audits of States, Local 

Governments, and Non-Profit 

Organizations’’. 

C. Removing paragraph (d)(3). 

D. Redesignating paragraph (d)(4) as 

paragraph (d)(3). 

E. Redesignating paragraph (d)(5) as 

paragraph (d)(4). 

F. Adding paragraph (h). 

The addition reads as follows: 

§ 668.23 Compliance audits and audited 

financial statements. 

* * * * * 

(h) Audit submission requirements for 

foreign institutions. (1) Audited 

financial statements. (i) The Secretary 

waives for that fiscal year the 

submission of audited financial 

statements if the institution is a foreign 

public or nonprofit institution that 

received less than $500,000 in U.S. title 

IV program funds during its most 

recently completed fiscal year, unless 

that foreign public or nonprofit 

institution is in its initial provisional 

period of participation, and received 

title IV program funds during that year, 

in which case the institution must 

submit, in English, audited financial 

statements prepared in accordance with 

generally accepted accounting 

principles of the institution’s home 

country. 

(ii) Except as provided in paragraph 

(h)(1)(iii) of this section, a foreign 

institution that received $500,000 or 

more in U.S. title IV program funds 

during its most recently completed 

fiscal year must submit, in English, for 

each most recently completed fiscal year 

in which it received title IV program 

funds, audited financial statements 

prepared in accordance with generally 

accepted accounting principles of the 

institution’s home country along with 

corresponding audited financial 

statements that meet the requirements of 

paragraph (d) of this section. 

(iii) In lieu of making the submission 

required by paragraph (h)(1)(ii) of this 

section, a public or private nonprofit 

institution that received— 

(A) $500,000 or more in U.S. title IV 

program funds, but less than $3,000,000 

in U.S. title IV program funds during its 

most recently completed fiscal year, 

may submit for that year, in English, 

audited financial statements prepared in 

accordance with the generally accepted 

accounting principles of the 

institution’s home country, and is not 

required to submit the corresponding 

audited financial statements that meet 

the requirements of paragraph (d) of this 

section; 

(B) At least $3,000,000, but less than 

$5,000,000 in U.S. title IV, program 

funds during its most recently 

completed fiscal year, must submit in 

English, for each most recently 

completed fiscal year, audited financial 

statements prepared in accordance with 

the generally accepted accounting 

principles of the institution’s home 

country along with corresponding 

audited financial statements that meet 

the requirements of paragraph (d) of this 

section, except that an institution that 

continues to receive at least $3,000,000 

but less than $5,000,000, in U.S. title IV 

funds during its most recently 

completed fiscal year may omit the 

audited financial statements that meet 

the requirements of paragraph (d) of this 

section for up to two consecutive years 

following the submission of audited 

financial statements that meet the 

requirements of paragraph (d) of this 

section. 

(2) Compliance audits. A foreign 

institution’s compliance audit must 

cover, on a fiscal year basis, all title IV, 

HEA program transactions, and must 

cover all of those transactions that have 

occurred since the period covered by 

the institution’s last compliance audit. 

A compliance audit that is due under 

this paragraph must be submitted no 

later than six months after the last day 

of the institution’s fiscal year, and must 

meet the following requirements: 


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(i) If the foreign institution received 

$500,000 or more in U.S. dollars in title 

IV, HEA program funds during its most 

recently completed fiscal year, it must 

submit a standard compliance audit for 

that year that is performed in 

accordance with audit guides developed 

by, and available from, the Department 

of Education’s Office of Inspector 

General, together with an alternative 

compliance audit or audits prepared in 

accordance with paragraph (h)(2)(ii) of 

this section for any preceding fiscal year 

or years in which the foreign institution 

received less than $500,000 in U.S. 

dollars in title IV, HEA program funds; 

(ii) If the foreign institution received 

less than $500,000 U.S. in title IV, HEA 

program funds for its most recently 

completed fiscal year, it must submit an 

alternative compliance audit for that 

prior fiscal year that is performed in 

accordance with audit guides developed 

by, and available from, the Department 

of Education’s Office of Inspector 

General, except as noted in paragraph 

(h)(2)(iii) of this section. 

(iii) If so notified by the Secretary, a 

foreign institution may submit an 

alternative compliance audit performed 

in accordance with audit guides 

developed by, and available from, the 

Department of Education’s Office of 

Inspector General, that covers a period 

not to exceed three of the institution’s 

consecutive fiscal years if such audit is 

submitted either no later than six 

months after the last day of the most 

recent fiscal year, or contemporaneously 

with a standard compliance audit timely 

submitted under paragraph (h)(2)(i) or 

(h)(3)(ii) of this section for the most 

recently completed fiscal year, and if 

the following conditions are met: 

(A) The institution received less than 

$500,000 in title IV, HEA program funds 

for its most recently completed fiscal 

year. 

(B) The institution has timely 

submitted acceptable compliance audits 

for two consecutive fiscal years, and 

following such submission, has no 

history of late submission since then. 

(C) The institution is fully certified. 

(3)(i) Exceptions. Notwithstanding the 

provisions of paragraphs (h)(1)(i) and 

(h)(1)(iii) of this section, the Secretary 

may issue a letter to a foreign institution 

that identifies problems with its 

financial condition or financial 

reporting and requires the submission of 

audited financial statements in the 

manner specified by the Secretary. 

(ii) Notwithstanding the provisions of 

paragraphs (h)(2)(ii) and (h)(2)(iii) of 

this section, the Secretary may issue a 

letter to a foreign institution that 

identifies problems with its 

administrative capability or compliance 

reporting that may require the 

compliance audit to be performed at a 

higher level of engagement, and may 

require the compliance audit to be 

submitted annually. 

16. Section 668.171 is amended by 

revising paragraph (c) to read as follows: 

§ 668.171 General. 

* * * * * 

(c) Public institutions. (1) The 

Secretary considers a domestic public 

institution to be financially responsible 

if the institution— 

(i)(A) 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 

(B) Provides a letter from an official 

of that State or other government entity 

confirming that the institution is a 

public institution; and 

(ii) Is not in violation of any past 

performance requirement under 

§ 668.174. 

(2) The Secretary considers a foreign 

public institution to be financially 

responsible if the institution— 

(i)(A) 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 

(B) 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; and 

(ii) Is not in violation of any past 

performance requirement under 

§ 668.174. 

* * * * * 

PART 682—FEDERAL FAMILY 

EDUCATION LOAN (FFEL) PROGRAM 

17. The authority citation for part 682 

continues to read as follows: 

Authority: 20 U.S.C. 1071–1087–2, unless 

otherwise noted. 

18. Section 682.200 is amended by: 

A. Adding the words ‘‘Foreign 

institution’’ immediately after ‘‘Federal 

Family Education Loan Program 

(formerly known as the Guaranteed 

Student Loan (GSL) Program’’ in the list 

of definitions in paragraph (a)(2). 

B. Removing the definition of Foreign 

school in paragraph (b). 

§ 682.611 [Removed] 

19. Section 682.611 is removed and 

reserved. 

[FR Doc. 2010–17313 Filed 7–19–10; 8:45 am] 

BILLING CODE 4000–01–P 


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