39498 Federal Register / Vol. 74, No. 150 / Thursday, August 6, 2009 / Proposed Rules 

DEPARTMENT OF EDUCATION 

34 CFR Parts 600 and 602 

RIN 1840–AD00 

[Docket ID ED–2009–OPE–0009] 

Institutional Eligibility Under the 

Higher Education Act of 1965, as 

Amended, and the Secretary’s 

Recognition of Accrediting Agencies 

AGENCY: Office of Postsecondary 

Education, Department of Education. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Secretary proposes to 

amend the regulations in 34 CFR part 

600, governing institutional eligibility, 

and part 602, governing the Secretary’s 

recognition of accrediting agencies. The 

Secretary is amending these regulations 

to implement changes to the Higher 

Education Act of 1965, as amended 

(HEA), resulting from enactment of the 

Higher Education Reconciliation Act of 

2005 (HERA), Public Law 109–171, and 

the Higher Education Opportunity Act 

(HEOA), Public Law 110–315, and to 

clarify, improve, and update the current 

regulations. 

DATES: We must receive your comments 

on or before September 8, 2009. 

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 

www.regulations.gov to submit your 

comments electronically. Information 

on using Regulations.gov, including 

instructions for accessing agency 

documents, submitting comments, and 

viewing the docket, is available on the 

site under ‘‘How to Use This Site.’’ 

• Postal Mail, Commercial Delivery, 

or Hand Delivery. If you mail or deliver 

your comments about these proposed 

regulations, address them to Ann 

Clough, U.S. Department of Education, 

1990 K Street, NW., room 8043, 

Washington, DC 20006–8542. 

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 

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: Ann 

Clough. Telephone: (202) 502–7484 or 

via the Internet at: ann.clough@ed.gov 

If you use a telecommunications 

device for the deaf (TDD), call the 

Federal Relay Service (FRS), toll free, at 

1–800–877–8339. 

Individuals with disabilities may 

obtain this document in an accessible 

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

audiotape, or computer diskette) on 

request to the contact person listed 

under FOR FURTHER INFORMATION

CONTACT. 

SUPPLEMENTARY INFORMATION: 

Invitation To Comment 

We invite you to submit comments 

regarding these proposed regulations. 

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 

and its overall requirement of reducing 

regulatory burden that might result from 

these proposed regulations. 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 program. 

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 8043, 1990 K Street, NW., 

Washington, DC, between the hours of 

8:30 a.m. and 4 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 the 

person listed under FOR FURTHER

INFORMATION CONTACT. 

Negotiated Rulemaking 

Section 492 of the HEA requires the 

Secretary, before publishing any 

proposed regulations for programs 

authorized by title IV of the HEA (title 

IV, HEA programs), to obtain public 

involvement in the development of the 

proposed regulations. After obtaining 

advice and recommendations from 

individuals and representatives of 

groups involved in, or affected by, the 

Federal recognition of accrediting 

agencies, the Secretary must subject the 

proposed regulations for the title IV, 

HEA programs to a negotiated 

rulemaking process. All proposed 

regulations that the Department 

publishes must conform to final 

agreements resulting from that process 

unless the Secretary reopens the process 

or provides a written explanation to the 

participants in that process stating why 

the Secretary has decided to depart from 

the agreements. Further information on 

the negotiated rulemaking process may 

be found at: www.ed.gov/policy/ 

highered/leg/hea08/index.html. 

On September 8, 2008, the 

Department published a notice in the 

Federal Register (73 FR 51990) 

announcing our intent to establish 

negotiated rulemaking committees to 

develop proposed regulations to (1) 

implement the changes made to the 

HEA by the HEOA, and (2) possibly 

address the provision added to section 

207(c) of the HEA by the HEOA that 

requires the Secretary to submit to a 

negotiated rulemaking process any 

regulations the Secretary chooses to 

develop under amended section 

207(b)(2) of the HEA, regarding the 

prohibition on a teacher preparation 

program from which the State has 

withdrawn approval or terminated 

financial support from accepting or 

enrolling any student who received title 

IV aid. 

On December 31, 2008, the 

Department published a notice in the 

Federal Register (73 FR 80314) 

announcing our intent to establish five 

negotiated rulemaking committees to 

prepare proposed regulations. The 

notice indicated that no requests from 

the public were received to negotiate the 

provision added to section 207(c) of the 

HEA. The five committees that were 

established were: (1) A committee on 

lender and general loan issues (Loans 

Team I); (2) a committee on schoolbased loan issues (Loans Team II); (3) a 

committee on accreditation issues; (4) a 

committee on discretionary grant 

programs; and (5) a committee on 

general and non-loan programmatic 

issues. The notice informed the public 

that, due to the large volume of changes 

made by the HEOA that needed to be 

implemented through negotiated 

rulemaking, not all provisions would be 

addressed during this round of 

committee meetings. The notice 

requested nominations of individuals 


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for membership on the committees who 

could represent the interests 

significantly affected by the proposed 

regulations and had demonstrated 

expertise or experience in the relevant 

subjects under negotiation. The 

Accreditation Committee (‘‘the 

Committee’’) met in three sessions to 

develop proposed regulations: session 1, 

March 4–6, 2009; session 2, April 21– 

23, 2009; and session 3, May 18–19, 

2009. This notice of proposed 

rulemaking (NPRM) proposes 

regulations relating to accreditation that 

were discussed by the Committee. 

The Department developed a list of 

proposed regulatory changes from 

advice and recommendations submitted 

by individuals and organizations in 

testimony to the Department in a series 

of six public hearings held on: 

• September 19, 2008, at Texas 

Christian University in Fort Worth, 

Texas. 

• September 29, 2008, at the 

University of Rhode Island in 

Providence, Rhode Island. 

• October 2, 2008, at the Pepperdine 

University in Malibu, California. 

• October 6, 2008, at Johnson C. 

Smith University in Charlotte, North 

Carolina. 

• October 8, 2008, at the U.S. 

Department of Education in 

Washington, DC. 

• October 15, 2008, at Cuyahoga 

Community College in Warrensville 

Heights, Ohio. 

In addition, the Department accepted 

written comments on possible 

regulatory changes submitted directly to 

the Department by interested parties 

and organizations. All regional meetings 

and a summary of all comments 

received orally and in writing are posted 

as background material in the docket 

and may also be accessed at 

www.ed.gov/HEOA. Staff within the 

Department also identified issues for 

discussion and negotiation. 

The Accreditation Committee was 

made up of the following members: 

• Michale McComis, Accrediting 

Commission of Career Schools and 

Colleges of Technology, and Roger 

Williams (alternate), Accrediting 

Council for Continuing Education and 

Training. 

• Ralph Wolff, Accrediting 

Commission for Senior Colleges and 

Universities, Western Association of 

Schools and Colleges, and Belle 

Wheelan (alternate), Commission on 

Colleges, Southern Association of 

Colleges and Schools. 

• Sharon Tanner, The National 

League for Nursing Accrediting 

Commission, and Betty Horton 

(alternate), Association of Specialized 

and Professional Accreditors. 

• Marshall Hill, Nebraska 

Coordinating Commission for 

Postsecondary Education, and Kathryn 

Dodge (alternate), New Hampshire 

Postsecondary Education Commission. 

• Alan Mabe, University of North 

Carolina, and Mary Anne Hanner 

(alternate), Eastern Illinois University. 

• Sonia Jacobson, Georgetown 

University, and Susan Hattan 

(alternate), National Association of 

Independent Colleges and Universities. 

• Ronald Blumenthal, Kaplan Higher 

Education, and William Clohan 

(alternate), DeVry Inc. 

• Linda Michalowski, California 

Community Colleges, and Jim Hermes 

(alternate), American Association of 

Community Colleges. 

• Michael Offerman, Capella 

Education Company, and Muriel Oaks 

(alternate), Washington State University. 

• Phyllis Worthy Dawkins, Johnson 

C. Smith University, and Jose ́ Jaime 

Rivera (alternate), University of the 

Sacred Heart. 

• Kendal Nystedt, University of 

Arizona, and Jacob Littler (alternate), 

Mesabi Range College. 

• Terry Hartle, American Council on 

Education, and Becky Timmons 

(alternate), American Council on 

Education. 

• Kay Gilcher, U.S. Department of 

Education. 

The Committee’s protocols provided 

that the Committee would operate by 

consensus, meaning there must be no 

dissent by any member in order for the 

Committee to be considered to have 

reached agreement. Under the protocols, 

if the Committee reaches final 

consensus on all issues, the Department 

will use the consensus-based language 

in the proposed regulations and 

members of the Committee and the 

organizations whom they represent will 

refrain from commenting negatively on 

the package, except where permitted by 

the agreed-upon protocols. 

During its meetings, the Committee 

reviewed and discussed drafts of 

proposed regulations. At the final 

meeting in May 2009, the Committee 

reached consensus on all of the 

proposed regulations in this NPRM. 

More information on the work of this 

committee may be found at: 

www.ed.gov/policy/highered/reg/ 

hearulemaking/2009/ 

accreditation.html. 

Summary of Proposed Changes 

This NPRM reflects the Department’s 

proposals to revise current regulations 

and adopt new regulations governing 

the recognition of accrediting agencies 

as a result of the following changes 

made to the HEA by the HERA and the 

HEOA: 

• The addition of a definition of 

‘‘distance education’’ and separate 

references to distance education and 

correspondence education. (See section 

103 of the HEA). 

• The addition of an eligible program 

under title IV of the HEA—an 

instructional program that uses direct 

assessment of a student’s learning in 

lieu of credit or clock hours. (See 

section 418(b)(4) of the HEA). 

• The addition of a definition of a 

‘‘teach-out plan’’ and a new provision 

that agencies must require the 

institutions they accredit to submit a 

teach-out plan to the agency under 

certain circumstances. (See sections 

487(f)(2) and 496(c)(3) of the HEA). 

• The addition of several new 

provisions pertaining to distance 

education and correspondence 

education. (See sections 496(a)(4)(B) 

and 496(q) of the HEA). 

• Expanded due process requirements 

for agencies. (See section 496(a)(6) of 

the HEA). 

• The addition of a requirement that 

accrediting agencies confirm that 

institutions have transfer of credit 

policies. (See section 496(c)(9) of the 

HEA). 

• The addition of a requirement that 

accreditation team members be welltrained and knowledgeable about their 

responsibilities regarding distance 

education. (See section 496(c)(1) of the 

HEA). 

• The addition of requirements that 

agencies monitor enrollment growth at 

institutions. (See sections 496(c)(2) and 

496(q) of the HEA). 

• Changes to agency disclosure 

requirements. (See section 496(c)(7) of 

the HEA). 

The NPRM also reflects changes to 

existing regulations governing 

institutional eligibility by revising the 

definition of ‘‘correspondence course’’ 

to be compatible with the new 

definition of ‘‘correspondence 

education’’ in the accrediting agency 

recognition regulations. 

Further, the NPRM reflects changes to 

existing regulations governing the 

process for recognizing accrediting 

agencies, including the following: 

• The addition of a definition of 

‘‘recognition’’. 

• Modifications to record-keeping 

and confidentiality requirements. 

• Combining current subparts C and 

D into one subpart in order to 

streamline procedures for agency 

review; establishing the senior 

Department official as the deciding 

official, with appeal to the Secretary; 


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and providing a list of the various laws 

regarding public requests for 

information with which the Secretary 

must comply. 

• Additions and modifications to 

existing requirements related to 

substantive change. 

Significant Proposed Regulations 

We group major issues according to 

subject, with appropriate sections of the 

proposed regulations referenced in 

parentheses. 

Definitions 

Correspondence Course (§ 600.2) 

Statute: There is no definition of 

‘‘correspondence course’’ in the HEA. 

Institutional eligibility requirements in 

section 102(a)(3) of the HEA generally 

provide that institutions offering more 

than 50 percent of their courses by 

correspondence, or enrolling 50 percent 

or more of their students in 

correspondence courses, are ineligible 

for title IV, HEA program assistance. 

Current Regulations: Current § 600.2 

contains a definition of 

‘‘correspondence course’’. The 

definition describes how a 

correspondence course is delivered to 

students who are not physically 

attending classes at the institution. It 

does not address the nature of the 

pedagogy. 

Proposed Regulations: The proposed 

regulations would amend the definition 

of ‘‘correspondence course’’ in § 600.2 

to draw a clearer contrast with distance 

education, defined in section 103 of the 

HEA. The proposed definition addresses 

pedagogy by noting that the interaction 

between the instructor and the student 

in a correspondence course is limited, is 

not regular and substantive, and is 

primarily initiated by the student. The 

proposed definition also notes that a 

correspondence course is typically 

designed so that a student proceeds 

through the course at the student’s own 

pace. 

Reasons: Because of the different 

statutory treatment of distance 

education and correspondence courses, 

it is critical to differentiate between the 

two delivery modes. A definition of 

correspondence course that focuses 

exclusively on the exchange of materials 

between the institution and a student 

does not draw a useful distinction 

because both distance education and 

correspondence courses are delivered to 

students who are separated from the 

instructor. Given that the primary 

distinguishing factor between the two is 

the nature of the interaction between the 

instructor and the student, the 

definition must include information 

about this characteristic of the 

pedagogy, or instructional model. 

Distance Education (§§ 600.2; 602.3) 

Statute: Section 103 of the HEA 

defines ‘‘distance education’’ as 

education that uses one or more 

technologies to deliver education to 

students who are separated from the 

instructor and to support regular and 

substantive interaction between the 

students and the instructor, either 

synchronously or asynchronously. The 

definition contains a list of 

technologies. 

Current Regulations: Current 

regulations in § 600.2 do not include a 

definition of ‘‘distance education’’. 

However, current regulations in § 600.2 

include a definition of 

‘‘telecommunications course’’, which 

was previously used in the HEA and 

corresponding regulations. This 

definition of ‘‘telecommunications 

course’’ is essentially the same as the 

new definition of ‘‘distance education’’ 

in the HEA, as amended by the HEOA. 

Current regulations in § 602.3 include 

a definition of ‘‘distance education’’ that 

encompasses correspondence study. 

Proposed Regulations: The proposed 

regulations would add the statutory 

definition of ‘‘distance education’’ in 

both §§ 600.2 and 602.3. The definition 

would state that ‘‘distance education’’ 

means education that uses one or more 

technologies to deliver instruction to 

students who are separated from the 

instructor and to support regular and 

substantive interaction between the 

students and the instructor, either 

synchronously or asynchronously. The 

technologies may include the internet; 

one-way and two-way transmissions 

through open broadcast, closed circuit, 

cable, microwave, broadband lines, fiber 

optics, satellite, or wireless 

communications devices; audio 

conferencing; or video cassettes, DVDs, 

and CD–ROMs, if the cassettes, DVDs, or 

CD–ROMs are used in a course in 

conjunction with any of the other 

technologies listed. 

Reasons: The proposed regulations 

reflect changes made by the HEOA. 

Compliance Report (§ 602.3) 

Statute: There is no definition of 

‘‘compliance report’’ in the HEA. Under 

section 496(l) of the HEA, to continue to 

be recognized by the Secretary, an 

agency that has been determined by the 

Secretary to be out of compliance with 

any of the criteria for recognition, or to 

have failed to apply those criteria 

effectively, may be given no more than 

12 months to come into compliance, 

except upon grant of an extension for 

good cause shown. 

Current Regulations: ‘‘Compliance 

report’’ is not used in the current 

regulations in part 602 governing the 

Secretary’s recognition of accrediting 

agencies. 

Proposed Regulations: The proposed 

regulations would add a definition of 

‘‘compliance report’’ in § 602.3. A 

‘‘compliance report’’ would be defined 

as a written report that the Department 

requires an agency to file to demonstrate 

that the agency has addressed 

deficiencies specified in a decision 

letter from the senior Department 

official or the Secretary. 

Reasons: The proposed regulations 

would combine former subparts C and 

D, which detail the Secretary’s process 

for recognizing accrediting agencies, 

and the process whereby an accrediting 

agency’s recognition could be limited, 

suspended, or terminated, into a single 

subpart C. The proposed regulations in 

subpart C would allow agencies to be 

out of compliance for no more than 12 

months, after which time a decision on 

recognition would be made on the basis 

of a compliance report. The proposed 

definition of ‘‘compliance report’’ in 

§ 602.3 describes this key component of 

the recognition process. 

Correspondence Education (§ 602.3) 

Statute: There is no definition of 

‘‘correspondence education’’ in the 

HEA. Section 496(a)(4)(B) and (q) of the 

HEA includes references to 

correspondence education alongside 

references to distance education. 

Section 496(a)(4)(B) provides that if an 

agency has, or seeks to include, within 

its scope of recognition the evaluation of 

the quality of institutions or programs 

offering distance education or 

correspondence education, it must meet 

various requirements, which are 

specified in that section. It further 

provides that a recognized agency may 

add distance education or 

correspondence education to its scope 

of recognition by providing written 

notice to the Secretary. Section 496(q) of 

the HEA provides that the Secretary 

must require a review at the next 

available National Advisory Committee 

on Institutional Quality and Integrity 

(‘‘NACIQI’’ or ‘‘Advisory Committee’’) 

meeting of a change in scope of an 

accrediting agency that expanded its 

scope of recognition to include distance 

education or correspondence education 

by written notice to the Secretary, if the 

enrollment of an institution accredited 

by that agency that offers distance 

education or correspondence education 

increases by 50 percent or more within 

any one institutional fiscal year. 

Current Regulations: Current 

regulations in § 602.3 include a 


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definition of ‘‘distance education’’ that 

encompasses correspondence study as 

well as education delivered to students 

using one or more technologies 

specified in the definition. 

Proposed Regulations: The proposed 

regulations would add a definition of 

‘‘correspondence education’’ in § 602.3. 

The proposed definition would clearly 

distinguish between correspondence 

education and distance education, 

particularly with respect to the nature of 

the interaction between the instructor 

and the students. ‘‘Correspondence 

education’’ would be defined as 

education provided through one or more 

courses by an institution under which 

the institution provides instructional 

materials, by mail or electronic 

transmission, including examinations 

on the materials, to students who are 

separated from the instructor. The 

proposed definition would specify that 

interaction between the instructor and 

the student is limited, is not regular and 

substantive, and is primarily initiated 

by the student and that correspondence 

courses are typically self-paced. The 

proposed definition would also specify 

that correspondence education is not 

distance education. 

Reasons: Section 496 of the HEA 

refers several times to ‘‘distance 

education or correspondence 

education’’. For example, the HEA 

requires that an agency’s standards 

‘‘effectively address the quality of an 

institution’s distance education or 

correspondence education’’ and that an 

agency require ‘‘an institution that offers 

distance education or correspondence 

education to have processes through 

which the institution establishes that 

the student who registers in a distance 

education or correspondence education 

course or program is the same student 

who participates in and completes the 

program and receives the academic 

credit.’’ The separate references to these 

two types of education indicate that 

they are distinct from one another for 

HEA purposes. 

The Department originally proposed a 

definition of ‘‘correspondence 

education’’, adapted from the definition 

of ‘‘correspondence course’’ in current 

§ 600.2, that included ‘‘home study’’ 

and described how information is sent 

back and forth between the institution 

and the student. The non-Federal 

negotiators commented that the term 

‘‘home study’’ is no longer in general 

use. In addition, they stated that the 

significant difference between distance 

education and correspondence 

education is that correspondence 

education generally is designed to be 

self-paced, with minimal interaction 

between the student and the instructor. 

The Department amended the proposed 

definition to remove the term ‘‘home 

study’’ and to include the concepts 

relating to pedagogy or instructional 

model. 

Designated Federal Official (§ 602.3) 

Statute: The HEA does not include a 

definition of ‘‘Designated Federal 

Official’’. Section 10(e) and (f) of the 

Federal Advisory Committee Act 

(FACA), 5 U.S.C. Appdx. 1, refers to a 

‘‘designated officer or employee of the 

Federal Government’’ who has 

responsibilities under FACA related to 

advisory committee meetings. 

Current Regulations: Current 

regulations do not include a definition 

of ‘‘Designated Federal Official’’. 

Proposed Regulations: The proposed 

regulations in § 602.3 would define 

‘‘Designated Federal Official’’ as the 

Federal officer designated under section 

10(f) of FACA, 5 U.S.C. Appdx. 1. 

Reasons: Section 114(d)(2)(A) of the 

HEA authorizes the Chairperson of the 

NACIQI to establish the agenda for 

Advisory Committee meetings. Prior to 

passage of the HEOA, the Chairperson of 

NACIQI did not have this role. FACA 

requires that a designated officer or 

employee of the Federal Government 

approve the agenda for an advisory 

committee meeting. The proposed 

definition of ‘‘Designated Federal 

Official’’, which specifies the role of the 

Federal officer under FACA, is needed 

to clarify that, although the HEA now 

authorizes the Chairperson of the 

Advisory Committee to establish the 

agenda, it must still be approved by the 

Federal official designated under FACA. 

Direct Assessment Program (§ 602.3) 

Statute: Section 481(b)(4) of the HEA 

stipulates that for purposes of title IV, 

HEA programs, ‘‘eligible program’’ 

includes an instructional program that 

uses direct assessment of student 

learning, or recognizes the direct 

assessment of student learning by 

others, in lieu of credit hours or clock 

hours as a measure of student learning. 

The assessment must be consistent with 

the institution’s or program’s 

accreditation. The HEA also provides 

that the Secretary will determine 

initially whether each program for 

which an institution proposes to use 

direct assessment is an eligible program. 

Current Regulations: There are no 

current regulations in part 602 that 

reflect direct assessment programs. 

Regulations for Federal Student Aid 

Programs in 34 CFR 668.10 list the 

information an institution must provide 

to the Secretary in order to have a direct 

assessment program approved as an 

eligible program for title IV, HEA 

purposes. 34 CFR 668.10 includes a 

requirement that an accrediting agency 

review and approve the program for 

inclusion in the institution’s grant of 

accreditation, and that the agency 

evaluate the institution’s claim of the 

direct assessment program’s equivalence 

in terms of credit or clock hours. 

Proposed Regulations: The proposed 

regulations would add a definition of 

‘‘direct assessment program’’ in § 602.3 

that incorporates the language of the 

HEA and includes the accrediting 

agency role in approving a direct 

assessment program for title IV, HEA 

purposes, consistent with the 

requirements in 34 CFR 668.10. A 

‘‘direct assessment program’’ would be 

defined as an instructional program 

that, in lieu of credit hours or clock 

hours as a measure of student learning, 

utilizes direct assessment of student 

learning, or recognizes the direct 

assessment of student learning by 

others, and meets the conditions of 34 

CFR 668.10. For title IV, HEA purposes, 

the institution must obtain approval for 

the direct assessment program from the 

Secretary under 34 CFR 668.10(g) or (h), 

as applicable. As part of that approval, 

the accrediting agency must evaluate the 

programs and include them in the 

institution’s grant of accreditation or 

preaccreditation; and review and 

approve the institution’s claim of each 

direct assessment program’s equivalence 

in terms of credit or clock hours. 

Reasons: The proposed definition of 

‘‘direct assessment program’’ would 

restate definitional language from the 

HEA, refer to the section of the Student 

Assistance General Provisions 

regulations that relate to direct 

assessment programs, and indicate the 

accrediting agency role in approving a 

direct assessment program. Some of the 

non-Federal negotiators indicated their 

unfamiliarity with direct assessment 

programs and asked for clarification of 

the term and of the phrase ‘‘or 

recognizes the direct assessment of 

student learning by others.’’ In 

particular, they asked whether prior 

learning assessment, where students 

demonstrate that they possess collegelevel knowledge of a subject that has 

been acquired outside of a traditional 

classroom setting, such as at work, 

through volunteer service, or through 

other experiences, would be covered by 

the proposed definition. In response, the 

Department explained that, because 

prior learning assessment is a process 

that results in a student being granted a 

certain number of academic credits (or 

credit hours), prior learning does not 

meet the definition of a direct 

assessment program. 


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A direct assessment program is one 

where the institution identifies a set of 

competencies that a student must 

demonstrate through successful 

performance on assessments in order to 

be awarded an academic credential. The 

skills and knowledge that a student has 

acquired outside of the institution may 

help the student to complete the 

assessments associated with one or 

more of the competencies more quickly 

than another student, and to accelerate 

completion of a full program. A student 

who is enrolled in a direct assessment 

program is not required to earn a certain 

number of credits, or to remain in the 

program for a specific length of time. 

The institution may develop the 

assessments, or it may rely upon 

assessments developed by others, to 

measure the student’s learning. 

The Department notes that ‘‘direct 

assessment program’’ has no fixed 

meaning outside the context of the title 

IV, HEA Federal student aid programs. 

The process that an institution has to go 

through to gain approval from the 

Secretary for a direct assessment 

program to be eligible for title IV, HEA 

program purposes under 34 CFR 668.10, 

which includes reviews and actions on 

the part of accrediting agencies, is 

sufficient to satisfy program eligibility 

requirements of the HEA. 

Recognition (§ 602.3) 

Statute: The HEA does not include a 

definition of ‘‘recognition’’. 

Current Regulations: There is no 

definition of ‘‘recognition’’ in the 

current regulations. 

Proposed Regulations: The proposed 

regulations would add a definition of 

‘‘recognition’’ in § 602.3. Under the 

proposed definition, ‘‘recognition’’ 

would mean an unappealed 

determination by the senior Department 

official, or a determination by the 

Secretary on appeal, that an accrediting 

agency complies with the criteria for 

recognition and that the agency is 

effective in its application of those 

criteria. As a result of that 

determination of compliance, an 

accrediting agency that has been given 

a grant of recognition by the Secretary 

is regarded as a reliable authority 

regarding the quality of education or 

training offered by the institutions or 

programs it accredits. The proposed 

definition would specify that the grant 

remains in effect for the term specified 

except upon a determination made in 

accordance with subpart C, as revised in 

these proposed regulations, that the 

agency no longer complies with the 

criteria for recognition or that it is no 

longer effective in its application of 

those criteria. 

Reasons: The proposed definition 

would clarify that, through proceedings 

conducted under subpart C of part 602, 

the Department may withdraw 

recognition before the period of 

recognition granted expires. The 

definition would also reflect that, 

although an agency that is recognized is 

deemed a reliable authority regarding 

the quality of education or training 

offered by the institutions or programs 

it accredits, recognition is based on a 

determination that the agency is in 

compliance with the statutory and 

regulatory criteria for recognition and is 

effective in its application of those 

criteria. 

Scope of Recognition (§ 602.3) 

Statute: The HEA does not include a 

definition of ‘‘scope of recognition’’. 

Section 496(a)(4)(B) of the HEA requires 

an accrediting agency that has or wants 

to include distance education or 

correspondence education in its scope 

of recognition to demonstrate that its 

standards effectively address the quality 

of an institution’s distance education or 

correspondence education. 

Current Regulations: Current 

regulations in § 602.3 define ‘‘scope of 

recognition’’ and identify five areas for 

which recognition may be granted. 

Proposed Regulations: The proposed 

regulations would amend the definition 

of ‘‘scope of recognition’’ in § 602.3 by 

adding the phrase ‘‘or correspondence 

education’’ to paragraph (5), which 

addresses activities related to distance 

education. 

Reasons: The proposed regulations 

reflect changes made by the HEOA. 

Teach-Out Agreement (§ 602.3) 

Statute: Section 496(c)(6) of the HEA 

requires that teach-out agreements 

between institutions be approved by the 

accrediting agency in accordance with 

its standards. The HEA does not provide 

a definition of ‘‘teach-out agreement’’. 

Current Regulations: Current 

regulations in § 602.3 provide a 

definition of ‘‘teach-out agreement’’, 

which is a written agreement between 

institutions that provides for the 

equitable treatment of students. It 

applies in situations where an 

institution stops offering an educational 

program before all students enrolled in 

that program have completed their 

program of study. Under § 602.24(c) of 

the current regulations, if an agency is 

an institutional accrediting agency, and 

its accreditation or preaccreditation 

enables institutions to obtain eligibility 

to participate in title IV, HEA programs, 

the agency must require an institution 

that enters into a teach-out agreement 

with another institution to submit that 

teach-out agreement to the agency for 

approval. 

Proposed Regulations: The proposed 

regulations would amend the definition 

of ‘‘teach-out agreement’’ by limiting its 

scope to situations where an institution, 

or a location of an institution that 

provides one hundred percent of at least 

one program offered, ceases to operate 

before all enrolled students have 

completed their program of study. In 

addition, the definition would require 

that the agreement provide a reasonable 

opportunity for affected students to 

complete their program of study. The 

proposed changes to current regulations 

in § 602.24(c) are discussed under 

‘‘Teach-out Plans and Agreements.’’ 

Reasons: The Department initially 

proposed amending the definition of 

‘‘teach-out agreement’’ to make it clear 

that the agreement should provide for a 

reasonable opportunity for students to 

complete their program of study if an 

institution or an institutional location 

that provides one hundred percent of at 

least one program, stops offering one or 

more of its programs before all students 

have completed their program of study. 

There was consensus with adding the 

language about providing a reasonable 

opportunity for students to complete 

their program of study. 

However, several of the non-Federal 

negotiators objected to the proposal that 

a teach-out agreement cover an 

institutional location that stops offering 

one or more of its programs. They noted 

that this is a common occurrence and 

that it is the responsibility of the 

institution to respond to the needs of its 

students when this happens. A teachout agreement should only apply in 

situations where the institution or 

location providing one hundred percent 

of at least one program ceases to 

operate. The Department concurred. 

Teach-Out Plan (§ 602.3) 

Statute: Section 496(c)(3) of the HEA 

requires an institution to submit for 

approval to the accrediting agency a 

teach-out plan under specified 

conditions. Section 487(f)(2) of the HEA 

defines a ‘‘teach-out plan’’ as a written 

plan developed by an institution that 

provides for the equitable treatment of 

students if an institution ceases to 

operate before all students have 

completed their program of study, and 

may include, if required by the 

institution’s accrediting agency, a teachout agreement between institutions. 

Current Regulations: Current 

regulations do not include a definition 

of ‘‘teach-out plan’’. 

Proposed Regulations: The proposed 

regulations would add a definition of 

‘‘teach-out plan’’ in § 602.3. The 


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proposed regulations would define a 

‘‘teach-out plan’’ as a written plan 

developed by an institution that 

provides for the equitable treatment of 

students if an institution, or an 

institutional location that provides one 

hundred percent of at least one program, 

ceases to operate before all students 

have completed their program of study, 

and may include, if required by the 

institution’s accrediting agency, a teachout agreement between institutions. 

Reasons: The Department proposes a 

definition that incorporates the statutory 

definition and clarifies that the 

requirement for an institution to have a 

teach-out plan applies when an 

institutional location that provides one 

hundred percent of at least one program 

ceases to operate before all students 

have completed their program of study. 

This is consistent with the treatment of 

locations under the closed school 

discharge provisions in 34 CFR 

682.402(d)(1)(ii)(C) and 685.214(a)(2)(ii). 

Under these provisions, a student’s loan 

may be discharged if the student is not 

able to complete the program of study 

for which the loan was provided 

because the institution, or any location 

or branch the student attended, closed. 

The proposed language was acceptable 

to the non-Federal negotiators. 

Other Major Issues 

Accreditation Team Members (§ 602.15) 

Statute: Section 496(c)(1) of the HEA 

stipulates that in order to be recognized 

by the Secretary as a reliable authority 

as to the quality of education or training 

offered by an institution seeking to 

participate in title IV, HEA programs, 

the agency must perform, at regularly 

established intervals, on-site inspections 

and reviews of institutions of higher 

education (which may include 

unannounced site visits) with particular 

focus on educational quality and 

program effectiveness, and ensure that 

accreditation team members are welltrained and knowledgeable with respect 

to their responsibilities. The HEOA 

added a reference to distance education 

to the HEA’s requirement that team 

members be well-trained and 

knowledgeable with respect to their 

responsibilities. 

Current Regulations: Current 

regulations in § 602.15(a)(2) require 

individuals serving on agency review 

teams and decision-making bodies and 

establishing agency policies to be 

competent and knowledgeable, qualified 

by education and experience in their 

own right, and trained by the agency on 

its standards, policies, and procedures. 

Proposed Regulations: Proposed 

§ 602.15(a)(2) would clarify that an 

individual’s qualifications and the 

agency’s training of that individual on 

his or her responsibilities regarding the 

agency’s standards, policies, and 

procedures, to conduct its on-site 

evaluations, apply or establish its 

policies, and make its accrediting and 

preaccrediting decisions, should be 

appropriate for that individual’s role. In 

addition, the proposed regulations 

would specify that if an agency’s scope 

of recognition includes the evaluation of 

distance education and correspondence 

education, then the individuals must be 

trained in their responsibilities 

regarding distance education and 

correspondence education. 

Reasons: The Department noted that 

the statutory language included the new 

reference to ‘‘responsibilities regarding 

distance education’’ and that in several 

other provisions of section 496 of the 

HEA, distance education is paired with 

correspondence education. The 

Department’s initial proposal included a 

reference to ‘‘correspondence 

education’’ in this section but did not 

limit in any way the requirement that 

individuals be trained in their 

responsibilities regarding distance 

education and correspondence 

education. Some non-Federal 

negotiators asked that the requirement 

apply only to those agencies that have 

distance education and correspondence 

education in their scope of recognition. 

The Department agreed with this 

suggestion and also with the observation 

made during the negotiations that only 

those individuals who evaluate 

institutions that offer distance education 

or correspondence education would 

need to be qualified and trained 

accordingly. 

A non-Federal negotiator presented a 

revised draft for consideration by the 

negotiators, which addressed this issue 

and further clarified the requirement. 

This language was acceptable to all the 

negotiators and is reflected in the 

proposed regulations. 

Record Keeping and Confidentiality 

(§§ 602.15; 602.27) 

Statute: Section 496(a) of the HEA 

requires the Secretary to establish 

recognition criteria by which the 

Secretary will determine, for the 

purposes of the HEA or other Federal 

purposes, if an agency or association is 

a reliable authority as to the quality of 

education or training offered by the 

institutions or programs it accredits. 

These criteria require that the agency 

adhere to sound administrative 

requirements. Section 496(a)(4) provides 

that the Secretary’s recognition criteria 

must require that recognized agencies 

consistently apply and enforce their 

standards for the duration of the 

accreditation period. Section 496(o) 

requires the Secretary to promulgate 

regulations establishing procedures for 

recognition. Section 496(n) requires the 

Secretary to conduct a comprehensive 

evaluation of accrediting agencies 

seeking recognition, including an 

independent evaluation of the 

information provided by the agency. 

Section 487(a)(15) of the HEA requires, 

as part of the institution’s Program 

Participation Agreement in title IV, HEA 

programs, that the institution 

acknowledge the authority of the 

Secretary, the institution’s accrediting 

agency, and others to share information 

pertaining to the institution’s eligibility 

to participate in title IV, HEA programs, 

and regarding any fraud and abuse on 

the part of the institution. 

Current Regulations: Section 

602.15(b)(1) of the current regulations 

requires an accrediting agency to 

maintain complete and accurate records 

of its last two full accreditation or 

preaccreditation reviews of each 

institution or program it accredits and 

provides a list of the various documents 

that must be included in those records. 

Section 602.27(e) of the current 

regulations requires agencies to disclose 

to the Department the name of any 

accredited institution or program that 

the agency has reason to believe is 

failing to meet title IV, HEA program 

responsibilities or is engaged in fraud or 

abuse, along with the agency’s reasons 

for concern. Section 602.27(f) of the 

current regulations provides for the 

Secretary to ask the agency for 

information that may bear upon an 

institution’s compliance with title IV, 

HEA program responsibilities and 

stipulates that the Secretary may ask for 

this information in order to assist the 

Department in resolving problems with 

the institution’s participation in the title 

IV, HEA programs. 

Proposed Regulations: The proposed 

regulations in § 602.15(b)(1) would 

require the accrediting agency to retain 

its records of its last full accreditation 

or preaccreditation review of each 

institution or program it accredits. 

Proposed § 602.15(b)(2) would require 

the agency to maintain records of all its 

decisions made throughout an 

institution’s or program’s affiliation 

with the agency regarding the 

accreditation and preaccreditation of the 

institution or program, which would 

include the accrediting agency’s 

decisions about substantive changes that 

affect the title IV, HEA program 

eligibility. 

The Department proposes to 

restructure the regulations in § 602.27 to 

include a new paragraph (b) to address 


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the confidentiality of communications 

between the agency and the Department. 

Specifically, proposed § 602.27(b) 

would address situations in which an 

agency has a policy relating to 

notification to an accredited institution 

or program of communications that 

occur between the agency and the 

Department pursuant to proposed 

§ 602.27(a)(6) and (7) (i.e., current 

§ 602.27(e) and (f)). Under the proposed 

regulations, these policies would need 

to provide for a case-by-case review by 

the agency of the contact with the 

Department and the circumstances 

surrounding it to assess whether that 

contact should remain confidential. The 

proposed regulation would further 

require that upon a specific request by 

the Department to keep the contact 

confidential, the agency must consider 

the contact confidential. Proposed 

§ 602.27(a)(6) would remove the 

language in current § 602.27(e) 

acknowledging that the Secretary may 

ask for information to assist in resolving 

problems with title IV, HEA program 

participation. 

Reasons: As reflected in section 

496(m) of the HEA, the Department 

engages in recognition proceedings to 

ensure that accrediting agencies that 

serve as gatekeepers for Federal 

programs are reliable authorities as to 

the quality of postsecondary education 

provided by the institutions or programs 

they accredit. The Department has had 

some concern about accrediting 

agencies maintaining sufficient 

information relevant to an institution’s 

accreditation, as is necessary for 

agencies to fulfill their gatekeeping 

roles. Additionally, there has been a 

significant increase over time in the 

number of substantive changes at 

institutions that affect an institution’s 

title IV, HEA program eligibility. 

Agencies have not always been able to 

provide the Department with 

information related to substantive 

changes. While needing to ensure that 

required documentation is retained by 

agencies, the Department does not want 

to overly burden agencies by requiring 

them to retain multiple cycles of 

information, which can be voluminous. 

Therefore, the proposed regulations in 

§ 602.15(b)(1) would require that an 

agency retain all documentation of its 

last full accreditation or 

preaccreditation review of each 

institution or program. The proposed 

regulations in § 602.15(b)(2) would 

require agencies to retain all decisions 

made throughout an institution’s 

affiliation with the agency and 

significantly related correspondence for 

substantive changes as well as for 

decisions regarding the accreditation or 

preaccreditation of an institution or 

program. Appropriate documentation 

must be retained with all decisions. 

The non-Federal negotiators agreed 

with the proposed changes to 

§ 602.15(b)(1) to reduce the number of 

review cycles of information to be 

retained. None of the negotiators 

objected to the proposed requirement 

that agencies retain information about 

substantive changes. Several nonFederal negotiators expressed concern 

about the proposed changes related to 

confidentiality. Issues of confidentiality 

regarding contact between the 

Department and accrediting agencies 

have long been a concern to the 

Department. 

The Department respects the 

important role that collegiality and 

frank exchanges play in effective 

accrediting practice. However, the 

Department has found that agency 

policies providing for automatic 

disclosure to accredited institutions and 

programs of all departmental 

communications are at odds in some 

circumstances with both the 

gatekeeping role of recognized 

accreditors and the Department’s 

fiduciary responsibilities to ensure that 

Federal programs are run efficiently and 

effectively and are protected against 

fraud and abuse. In trying to reach the 

proper balance, the Department has 

proposed changes to § 602.27(b), 

including a requirement for agencies 

with policies regarding notification to 

an institution or program of contact 

with the Department to review each 

contact on a case-by-case basis to 

properly assess whether confidentiality 

should be maintained. In addition, if the 

Department specifically requests that a 

contact it has with an agency remain 

confidential, then the agency is required 

to consider that contact confidential. 

The Department believes these 

provisions strike the appropriate 

balance, and are necessary to ensure 

that the Federal fiscal interest and the 

interests of students and institutions are 

fully protected. The sentence in current 

§ 602.27(e) referring to the Secretary’s 

authority to request information from 

accrediting agencies to resolve problems 

with title IV, HEA program participation 

would be removed as extraneous. 

Non-Federal negotiators expressed 

concern about the Department’s initial 

proposal in this area, which would have 

prohibited an agency from establishing 

a policy of providing notification to an 

institution regarding contact with the 

Department. The Department revised its 

proposed approach in response, to 

permit agencies to have policies within 

the limits described above, and the nonFederal negotiators did not object to the 

revised language. 

Student Achievement (§ 602.16) 

Statute: Section 496(a)(5)(A) of the 

HEA provides that an accrediting 

agency’s standard by which it assesses 

an institution’s success with respect to 

student achievement in relation to the 

institution’s mission may include 

different standards for different 

institutions or programs, as established 

by the institution including, as 

appropriate, consideration of State 

licensing examinations, course 

completion, and job placement rates. 

The phrase ‘‘which may include 

different standards for different 

institutions or programs, as established 

by the institution’’ was added by the 

HEOA. 

The Rule of Construction in section 

496(p) of the HEA, added by the HEOA, 

stipulates that an accrediting agency is 

not restricted from setting, with the 

involvement of its members, and 

applying, accreditation standards for or 

to institutions or programs that seek 

review by the agency. In addition, the 

Rule of Construction stipulates that an 

institution is not restricted from 

developing and using institutional 

standards to show its success with 

respect to student achievement, which 

achievement may be considered as part 

of any accreditation review. 

Current Regulations: Current 

regulations in § 602.16(a)(1)(i) replicate 

the statutory language in section 

496(a)(5)(A) of the HEA, except that 

they do not include the phrase that was 

added by the HEOA. 

Proposed Regulations: The proposed 

regulations in § 602.16(a)(1)(i) would 

replicate the new statutory language in 

section 496(a)(5)(A) of the HEA. The 

proposed regulations in § 602.16(e) 

would replicate the Rule of 

Construction in section 496(p). 

Reasons: While section 496(g) of the 

HEA, as amended by the HEOA, 

prohibits the Secretary from establishing 

any criteria that specify, define, or 

prescribe the standards that accrediting 

agencies use to assess any institution’s 

success with respect to student 

achievement, the Secretary is obligated 

to amend the current regulations that do 

not reflect the new language in the HEA 

regarding the kind of student 

achievement standards recognized 

agencies must have. 

The Department’s initial proposed 

regulations did not include the Rule of 

Construction from the statute. Several 

non-Federal negotiators asked that the 

Rule of Construction be incorporated 

into the regulations. The Department 

included in the proposed regulations 


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the Rule of Construction from the 

statute. The non-Federal negotiators 

agreed with the Department that an 

accrediting agency would need to make 

a judgment about whether an institution 

developed and used reasonable 

standards to show its success with 

respect to student achievement. 

Distance Education and 

Correspondence Education (§§ 602.16; 

602.17; 602.18; 602.27) 

Statute: Section 496(a)(4)(B) of the 

HEA, as amended by the HEOA, 

specifies that if an agency has or seeks 

to include within its scope of 

recognition the evaluation of the quality 

of institutions or programs offering 

distance education or correspondence 

education, the agency must, in addition 

to meeting the other requirements, 

demonstrate that its standards 

effectively address the quality of an 

institution’s distance education or 

correspondence education with respect 

to the standards specified in section 

496(a)(5). However, the statute provides 

that the agency is not required to have 

separate standards, procedures, or 

policies for the evaluation of distance 

education or correspondence education 

in order to meet the requirements of 

section 496(a)(4)(B). Section 496(a)(4)(B) 

of the HEA, as amended by the HEOA, 

also provides that if an accrediting 

agency that accredits institutions is 

already recognized by the Secretary, it 

will not be required to obtain the 

approval of the Secretary to expand its 

scope of recognition to include distance 

education or correspondence education, 

provided that the agency notifies the 

Secretary in writing of the change in 

scope. 

Section 496(a)(4)(B) further specifies 

that an agency must require an 

institution that offers distance education 

or correspondence education to have 

processes through which the institution 

establishes that the student who 

registers in a distance education or 

correspondence education course or 

program is the same student who 

participates in and completes the 

program and receives the academic 

credit. 

Section 496(q) of the HEA specifies 

that the Secretary shall require a review, 

at the next available Advisory 

Committee meeting, of any recognized 

accrediting agency that has included 

distance education or correspondence 

education in its scope of recognition 

through written notice to the Secretary, 

if the enrollment of an institution the 

agency accredits that offers distance 

education or correspondence education 

has increased by 50 percent or more 

within any one institutional fiscal year. 

Current Regulations: Current 

regulations require an agency to submit 

to the Secretary any proposed change in 

its policies, procedures, or accreditation 

or preaccreditation standards that might 

alter its scope of recognition. Current 

regulations do not include any 

requirement for verifying the identity of 

students enrolled in distance education 

or correspondence education courses 

and programs. 

Proposed Regulations: The 

Department proposes to restructure 

§ 602.16 and add a new paragraph (c). 

The new paragraph would provide that 

if an agency has or seeks to include 

within its scope of recognition the 

evaluation of the quality of institutions 

or programs that offer distance 

education or correspondence education, 

the agency’s standards must effectively 

address the quality of its institutions’ 

distance education or correspondence 

education in the specified areas. The 

agency would not be required to have 

separate standards, procedures, or 

policies for the evaluation of distance 

education or correspondence education. 

Section 602.17, which requires the 

application of accrediting standards in 

reaching an accrediting agency decision, 

would be amended by adding a new 

paragraph (g) to implement the new 

student verification requirements. The 

proposed regulations would provide 

that agencies require institutions that 

offer distance education or 

correspondence education to have 

processes in place through which the 

institution would establish that the 

student who registers in a distance 

education or correspondence education 

course or program is the same student 

who participates in and completes the 

course or program and receives the 

academic credit. The agency would 

meet this requirement if it requires 

institutions to verify the identity of a 

student who participates in class or 

coursework by using methods such as a 

secure login and pass code or proctored 

examinations, and new or other 

technologies and practices that are 

effective in verifying student identity. 

The agency would also be required to 

make clear, in writing, that institutions 

must use processes that protect student 

privacy and must notify students at the 

time of registration or enrollment of any 

projected additional student charges 

associated with the verification of 

student identity. 

Section 602.18 would be amended to 

reflect changes made by the HEOA to 

section 496(a)(4) regarding an 

institution’s application and 

enforcement of standards that respect its 

stated mission, including religious 

mission. 

As noted in the discussion of recordkeeping and confidentiality, § 602.27 

would be restructured. The proposed 

regulations would add a new paragraph 

(5) to redesignated paragraph (a) that 

would provide for notification to the 

Secretary that an agency is expanding 

its scope of recognition to include 

distance education or correspondence 

education as provided for in section 

496(a)(4)(B)(i)(I) of the HEA, as 

amended by the HEOA. The proposed 

regulations would specify that the 

expansion of scope would be effective 

on the date the Department receives the 

notification. 

Reasons: The proposed changes to the 

regulations reflect changes to the HEA 

made by the HEOA. The proposed 

regulations would require an agency’s 

standards to address distance education 

and correspondence education 

effectively if the agency evaluates 

institutions offering distance education 

or correspondence education. 

Some of the non-Federal negotiators 

asked whether an agency whose scope 

of recognition already includes distance 

education would be required to notify 

the Secretary if it wanted to expand its 

scope to include correspondence 

education, now that correspondence 

education is specified separately in the 

law. The Department’s position is that, 

as the definition of distance education 

in the current regulations includes 

correspondence study, any previous 

grant of a scope of recognition that 

included distance education 

automatically encompassed 

correspondence education, and there is 

no need for further action on the part of 

agencies currently recognized for 

distance education by the Department. If 

the proposed regulations are finalized as 

drafted, the Department contemplates 

including on its Web site listing of 

recognized accrediting agencies a 

notation that agencies having a scope of 

recognition that included distance 

education as of the August 14, 2008, 

enactment of the HEOA are also 

recognized for correspondence 

education pending re-evaluation of each 

agency as it comes before the 

Department for renewal of recognition. 

Once the regulations become effective, 

agencies whose scope includes distance 

education that come up for renewal of 

their recognition would be expected to 

demonstrate how they evaluate both 

distance education and correspondence 

education in accordance with proposed 

§ 602.16(c). An agency that accredits 

institutions and does not already 

include distance education or 

correspondence education in its scope 

of recognition but that desires to do so 

would need to either submit a 


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notification of expansion of scope (for 

distance education, correspondence 

education, or both), or request an 

expansion of scope to include these in 

applying for renewal of recognition, and 

in either event, in subsequent reviews 

for renewal of recognition, demonstrate 

how it evaluates these modes of 

education in accordance with proposed 

§ 602.16(c). An agency that accredits 

only programs could not expand its 

scope by notification because section 

496(q) of the HEA limits this option to 

institutional accreditors. Because of the 

limitation, programmatic accreditors 

would be required to apply for an 

expansion of scope to include distance 

education, correspondence education, 

or both. The Department proposes to 

include programmatic accreditors that 

accredit stand-alone institutions in the 

set of agencies that may expand their 

scope by notification. 

In addition to the changes the 

Department initially proposed for 

§ 602.27(a)(5) to reflect the substance of 

the new statutory provision for 

including distance education or 

correspondence education in an 

agency’s scope of recognition upon 

written notice by a recognized agency to 

the Secretary, the non-Federal 

negotiators requested that the 

Department include the applicable 

statutory citation in the proposed 

regulation. The Department agreed. The 

Department also included a provision 

specifying the effective date of such a 

notification so it would be clear to both 

agencies and the Department when the 

change in scope was effective. 

Much of the discussion regarding 

distance education at the negotiated 

rulemaking sessions centered on the 

new requirement to verify student 

identity. Some of the non-Federal 

negotiators expressed concern about the 

cost of implementing the new 

provisions, saying they wanted to 

ensure that the requirements would be 

affordable. They were reluctant to 

include requirements that would be 

considered ‘‘forward-looking’’ in that 

they would address new or emerging 

technologies for verifying student 

identity. The Department’s initial 

position was that the concern about 

forward-looking requirements could be 

addressed by specifying that new 

identification technologies and practices 

would have to be adopted only as they 

become widely accepted, reasoning that 

a technology or practice would not 

become widely accepted and used 

unless it was affordable. Nevertheless, 

several non-Federal negotiators were 

concerned about including the ‘‘widely 

accepted’’ language and proposed 

revising the draft regulation to require 

instead use of ‘‘new or other 

technologies and practices that are 

effective in verifying student identity,’’ 

in addition to secure logins and pass 

codes and proctored examinations. As 

one of the non-Federal negotiators 

explained, peer reviewers conducting 

on-site reviews will assess an 

institution’s use of technology and 

verification practices in relation to those 

technologies and practices that are 

widely used and are affordable, and if 

an institution is using ineffective 

methods of identification verification, 

they will note that finding. The nonFederal negotiators also wanted to make 

it explicit that the methods used to 

verify the identity of students would be 

determined by the institution. As the 

draft language provided that the 

methods chosen must be effective in 

verifying student identification, the 

Department accepted the changes 

proposed by the non-Federal 

negotiators. 

The Department originally proposed 

specifying that institutions should not 

use or rely on technologies that interfere 

with student privacy. Several nonFederal negotiators recommended 

retaining this concept, but rephrasing 

the language to present the concept 

more positively. Non-Federal 

negotiators also suggested including 

language about processes or methods, 

which would be broader than referring 

to technologies. For these reasons, the 

proposed requirement related to student 

privacy was restated to require that 

institutions make clear in writing that 

institutions must use processes that 

protect student privacy. To address the 

concern of several non-Federal 

negotiators that students be made aware 

in advance of any additional charges 

associated with administering distance 

education or correspondence education 

examinations, the proposed regulations 

would require institutions to notify 

students at the time of registration or 

enrollment of any projected additional 

charges associated with verification of 

student identity. 

Due Process (§§ 602.18; 602.23; 602.25) 

Statute: The HEOA amended section 

496(a)(6) of the HEA to include 

expanded due process requirements 

with which agencies must comply. The 

new provisions require that an agency 

establish and apply review procedures 

throughout the accrediting process, 

including evaluation and withdrawal 

proceedings, which comply with 

specified due process procedures. The 

agency must provide adequate written 

specification of requirements, including 

clear standards for an institution of 

higher education or program to be 

accredited, and clearly identify any 

deficiencies at the institution or 

program examined. In evaluation and 

withdrawal proceedings, the procedures 

must provide sufficient opportunity for 

a written response by an institution or 

program regarding any deficiencies 

identified by the agency, to be 

considered by the agency within a 

timeframe determined by the agency 

and prior to final action. 

Upon written request of an institution 

or program, the agency must provide an 

opportunity for the appeal of any 

adverse action, including denial, 

withdrawal, suspension, or termination 

of accreditation, taken against the 

institution or program, prior to such 

action becoming final at a hearing before 

an appeals panel. The appeals panel 

will not include current members of the 

agency’s underlying decision-making 

body that made the adverse decision, 

and its members must be subject to a 

conflict of interest policy. The agency’s 

due process procedures must provide 

for the right of an institution or program 

to representation and participation by 

counsel during an appeal of an adverse 

action. 

The due process procedures must also 

provide for a process, in accordance 

with written procedures developed by 

the agency, through which an 

institution or program, before a final 

adverse action based solely upon a 

failure to meet a standard or criterion 

pertaining to finances, may on one 

occasion seek review of significant 

financial information that was 

unavailable to the institution or program 

prior to the determination of the adverse 

action, and that bears materially on the 

financial deficiencies identified by the 

agency. If the agency determines that 

the new financial information submitted 

by the institution or program meets the 

criteria of significance and materiality, 

the agency must consider the new 

financial information prior to the 

adverse action becoming final. Any 

determination by the agency with 

respect to the new financial information 

is not separately appealable by the 

institution or program. 

Current Regulations: Current due 

process regulations in § 602.25 require 

that an agency have procedures that 

afford an institution or program a 

reasonable period of time to comply 

with an agency’s requests for 

information and documents. An agency 

must notify an institution or program in 

writing of any adverse action or action 

to place the institution or program on 

probation or show cause and the basis 

for the action. Institutions or programs 

must be permitted to appeal an adverse 

action, and they have the right to be 


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represented by counsel during the 

appeal. The agency must notify the 

institution or program in writing of the 

result of its appeal and the basis for the 

decision. 

Proposed Regulations: The proposed 

regulations would amend the due 

process provisions in § 602.25, and two 

other sections, §§ 602.18 and 602.23, 

that bear on due process requirements. 

Section 602.18, ‘‘Ensuring consistency 

in decision-making,’’ would be 

amended to include a new paragraph (a) 

that would require an agency to have 

written specification of the 

requirements for accreditation and 

preaccreditation that includes clear 

standards for an institution or program 

to be accredited. The proposed 

regulations in § 602.18 would also 

include a new paragraph (e) that would 

require an agency to provide an 

institution or program with a detailed 

written report that clearly identifies any 

deficiencies in the institution’s or 

program’s compliance with agency 

standards. 

Section 602.23, ‘‘Operating 

procedures all agencies must have,’’ 

would be amended by removing the 

phrase ‘‘upon request’’ from the 

requirement in paragraph (a) that an 

agency must maintain and make 

available to the public certain written 

materials. The current regulations 

would also be changed by adding at the 

end of current paragraph (c)(1), which 

concerns the review of complaints, a 

stipulation that an agency may not 

complete its review and make a decision 

regarding a complaint against an 

institution unless, in accordance with 

published procedures, it ensures that 

the institution or program has sufficient 

opportunity to provide a response to the 

complaint. 

The proposed regulations would 

restructure § 602.25 of the current 

regulations to accommodate the 

appropriate placement of several new 

statutory requirements by redesignating 

several current paragraphs, removing 

current paragraph (c) and adding several 

new paragraphs. New paragraph (a) 

would require an agency to provide 

adequate written specification of its 

requirements, including clear standards, 

for an institution or program to be 

accredited or preaccredited. New 

paragraph (c) would require an agency 

to provide written specification of any 

deficiencies identified at the institution 

or program examined. New paragraph 

(d) would require an agency to provide 

sufficient opportunity for a written 

response by an institution or program 

regarding any deficiencies identified by 

the agency, to be considered by the 

agency within a timeframe determined 

by the agency and before any adverse 

action is taken. 

Some of the information in current 

paragraph (c) would be included in a 

new paragraph (f), including the 

requirement that an agency provide an 

opportunity, upon written request of an 

institution or program, for the 

institution or program to appeal any 

adverse action prior to the action 

becoming final. New paragraph (f) 

would also provide that the appeal must 

take place before an appeals panel that 

may not include current members of the 

agency’s decision-making body that took 

the initial adverse action and is subject 

to a conflict of interest policy. The 

appeals panel would affirm, amend, or 

reverse the adverse action. At the option 

of the agency, either the appeals panel 

or the original decision-making body 

would be responsible for implementing 

the decision of the appeals panel. 

Under the proposed regulations in 

paragraph (f)(2), the agency would be 

required to recognize the right of the 

institution or program to employ 

counsel to represent the institution or 

program during its appeal, and this 

would include making any presentation 

that the agency permits the institution 

or program to make on its own during 

the appeal. 

The proposed regulations in 

paragraph (h)(1) would require an 

agency to provide a process, in 

accordance with written procedures, 

through which an institution or program 

may seek review of new financial 

information if all of the following 

conditions are met: (1) The financial 

information was not available to the 

institution or program until after the 

decision that is subject to appeal was 

made; (2) the financial information 

provided is significant and bears 

materially on the financial deficiencies 

identified by the agency (the criteria of 

significance and materiality would be 

determined by the agency); and (3) the 

only remaining deficiency cited by the 

agency in support of a final adverse 

action decision is the institution’s or 

program’s failure to meet an agency 

standard pertaining to finances. Under 

proposed paragraph (h)(2), a review of 

new financial information would be 

permitted only one time, and a 

determination by the agency with 

respect to the new information provided 

would not provide the basis of an 

appeal. 

Reasons: The Department proposes 

changes to all of the sections of the 

regulations that have a bearing on due 

process to implement the new HEA 

requirements contained in the HEOA. 

With respect to ensuring consistency in 

agency decisions, the Department 

initially proposed requiring that 

agencies provide institutions or 

programs with a written report that 

assessed the institution’s or program’s 

compliance with the agency’s standards, 

including any deficiencies identified by 

the agency. Some of the non-Federal 

negotiators suggested changing the 

language to require that agencies 

provide institutions or programs with 

reports that clearly identify any 

deficiencies in the institution’s or 

program’s compliance with agency 

standards. The Department agreed to 

adopt the alternate language proposed 

by the non-Federal negotiators. 

The additional provisions on an 

agency’s handling of complaints were 

proposed to make it clear that 

institutions or programs must be given 

sufficient opportunity to provide a 

response to a complaint before the 

agency takes any action. 

There was considerable discussion 

during the negotiated rulemaking 

sessions about the proposed new 

language in § 602.25. Some of the nonFederal negotiators described their 

current appeals process, and indicated 

that when an appeal is received, it is 

reviewed by a separate appeals panel 

that then makes a recommendation to 

the board or commission, which in turn 

makes the decision on the appeal. It 

became clear during the discussion that 

even though the appeals panel might 

have members who did not serve on the 

original decision-making body, the 

appeals panel made a recommendation, 

rather than a decision, and the original 

decision-making body was under no 

obligation to accept the 

recommendation. This is problematic 

because, if an appeals panel conclusion 

is not the final decision, the effect of a 

successful appeal may be negated. 

The Department proposed requiring 

that the appeals panel be a decisionmaking body, noting that the statute 

calls for an opportunity to appeal an 

action ‘‘prior to such action becoming 

final at a hearing before an appeals 

panel * * * .’’ The Department also 

noted that the reference to the original 

decision being made by the agency’s 

‘‘underlying decisionmaking body’’ 

made clear that the appeals panel was 

a decision-making body. Otherwise, 

there would be no need to refer to the 

original body as the ‘‘underlying’’ 

decision-making body. This proposal 

generated a significant amount of 

discussion and concern. Several nonFederal negotiators expressed concern 

that if the appeals panel were a separate 

decision-making body that made an 

accreditation decision, it would need to 

comply with all the requirements for an 

agency decision-making body, including 


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having as one of its members a member 

of the public, and would result in a 

decision being made by a smaller and 

less diverse body than the board or 

commission. 

Other non-Federal negotiators stated 

that, in some cases, an appeals panel 

might need additional information and 

need to solicit information from the 

original decision-making body. In other 

cases, an appeals panel might determine 

that the original decision did not take 

into account all the necessary 

information, and therefore should be 

reversed or amended. In some cases, a 

successful appeal would identify a 

procedural error made in earlier 

proceedings, but would not involve an 

inquiry into substantive issues for 

purposes of making the accreditation 

decision. In a circumstance where the 

appeals panel determined that some 

citations of deficiencies were supported 

and others were not, there would need 

to be a new decision on accreditation, 

but the appeals panel might not be in a 

position to make that decision. Upon 

consideration of these scenarios, the 

Department proposed having the 

appeals panel affirm, amend, or reverse 

the adverse action, but permitting either 

the appeals panel or the original 

decision-making body to implement the 

decision of the appeals panel. This 

would provide agencies with some 

flexibility. However, to make it clear 

that the original decision-making body 

could not disregard a decision made by 

the appeals panel, the proposed 

regulations include a provision that if 

the original decision-making body is 

responsible for implementing the 

decision, it must act in a manner 

consistent with the appeals panel’s 

decision. The proposed regulations 

would not require agencies to provide 

institutions or programs with a 

continual opportunity to appeal. 

There was also discussion during 

negotiated rulemaking about whether 

the new financial information that may 

now be provided would have to be 

reviewed during an appeal, or whether 

it could be reviewed at an earlier time. 

The Department revised the proposed 

regulations to allow for flexibility in 

handling the new financial information. 

The new financial information could be 

reviewed during an appeal or at an 

earlier stage. In either case the agency 

could exercise discretion to designate in 

its procedures which group of people 

will conduct the review. Under the 

proposed provisions, it would be 

possible to stay an appeal while a 

separate body reviewed the financial 

information. 

Finally, there was extensive 

discussion about the circumstances 

under which an agency should be 

deemed to be taking a final adverse 

action based solely on failure to comply 

with financial criteria. Some of the nonFederal negotiators expressed their 

belief that to trigger the new provision 

that allows for new financial 

information to be considered an 

institution or program must have been 

cited initially only on deficiencies 

related to financial criteria. The 

Department’s position, reflecting the 

language in the statute, is that an 

institution or program could have been 

cited initially for multiple issues, but 

that if all of the issues involving nonfinancial criteria were resolved, new 

financial information could be brought 

forward for review before the adverse 

action became final. This position is 

reflected in the proposed regulations. 

Monitoring and Reevaluation of 

Accredited Institutions and Programs 

(§ 602.19) 

Statute: Section 496(c)(1) of the HEA 

requires accrediting agencies to perform 

on-site inspections and reviews of 

institutions of higher education at 

regularly established intervals. Section 

496(c)(2) of the HEA includes a 

requirement that accrediting agencies 

monitor the growth of programs at 

institutions experiencing significant 

enrollment growth. Section 496(a)(4)(A) 

requires agencies to consistently apply 

and enforce standards that ensure that 

the courses or programs offered are of 

sufficient quality to achieve their stated 

objectives for the duration of the 

accreditation period. 

Section 496(a)(4)(B)(i)(II) of the HEA 

permits a recognized agency to expand 

its scope of recognition to include 

distance education or correspondence 

education by notifying the Secretary of 

that change in writing. This eliminates 

the need for a recognized agency to 

obtain separate approval from the 

Secretary for the change. However, 

section 496(q) of the HEA requires 

review by the NACIQI of an agency that 

changed its scope through written 

notice to the Secretary if the enrollment 

of an institution that offers distance 

education or correspondence education 

that is accredited by that agency 

increases by 50 percent or more within 

any one institutional fiscal year. 

Current Regulations: Current 

regulations in § 602.19 require an 

accrediting agency to evaluate, at 

regularly established intervals, the 

institutions or programs it has 

accredited or preaccredited. The agency 

is required to monitor institutions or 

programs throughout their accreditation 

or preaccreditation period to ensure that 

they remain in compliance with agency 

standards. Current regulations require 

agencies to conduct special evaluations 

or site visits as necessary. 

Proposed Regulations: The proposed 

regulations would amend § 602.19(b) by 

requiring that an agency demonstrate it 

has, and effectively applies, a set of 

monitoring and evaluation approaches 

that enables the agency to identify 

problems with an institution’s or 

program’s compliance with agency 

standards, and that takes into account 

institutional program strengths and 

stability. Proposed § 602.19(b) would 

require that these approaches to 

monitoring include periodic reports, 

and collection and analysis of key data 

and indicators identified by the agency, 

including, but not limited to, fiscal 

information and measures of student 

achievement. This section of the 

proposed regulations would include a 

cross-reference to § 602.16(f) to clarify 

that an agency is not precluded from 

setting and applying its own 

accreditation standards; nor are 

institutions of higher education 

precluded from developing and using 

institutional standards to show their 

success with respect to student 

achievement. 

The proposed regulations would add 

new paragraphs (c) through (e) to this 

section. Section 602.19(c) of the 

proposed regulations would require an 

agency to monitor the overall growth of 

the institutions or programs it accredits 

and to collect information on headcount 

enrollment at least annually. Section 

602.19(d) of the proposed regulations 

would add a requirement for 

institutional accrediting agencies to 

monitor the growth of programs at 

institutions experiencing significant 

enrollment growth and would provide 

that the determination of what is 

significant growth would be made by 

the agency. Finally, the proposed 

regulations, in § 602.19(e), would 

require an agency that has notified the 

Secretary in writing of an expanded 

scope, as provided in section 

496(a)(4)(B)(i)(II) of the HEA, to monitor 

the headcount enrollment of each 

institution it has accredited that offers 

distance education or correspondence 

education. If any of those institutions 

experiences an increase in headcount 

enrollment of 50 percent or more within 

one institutional fiscal year, the agency 

would be required to report that 

information to the Secretary within 30 

days of acquiring that information. 

Reasons: Many of the proposed 

regulations would implement changes 

required by the HEOA. These changes 

include the requirements that agencies 

monitor growth of programs at 

institutions experiencing significant 


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enrollment growth and monitor 

headcount enrollment at institutions the 

agency accredits that offer distance or 

correspondence education. Other 

changes to the current regulations are 

being proposed, as a result of 

discussions both during the negotiated 

rulemaking process and within the 

Department, in an effort to ensure that 

the regulations properly reflect statutory 

requirements and provide for greater 

consistency while accommodating 

differences across institutions. The 

Department believes the current 

regulatory requirement regarding an 

agency’s monitoring to ensure 

compliance with all of an agency’s 

standards is too broad in scope and too 

limiting in method. Therefore the 

proposed regulations would stipulate 

that an agency monitor an institution to 

identify specific problems with the 

institution’s or program’s compliance 

with accrediting agency standards and 

provide more flexibility for agencies as 

to how they manage the review. 

The Department’s initial proposal for 

this section of the regulations would 

have required an agency to collect and 

analyze key data and performance 

indicators, and included an illustrative 

list of the data an agency might collect 

and analyze when monitoring 

institutions or programs. Some nonFederal negotiators expressed concerns 

about the illustrative list in the 

proposed regulations. Some stated their 

belief that certain items on that list 

encroached on areas where the 

Secretary is prohibited from regulating, 

while others wanted the list eliminated 

altogether because it could be 

interpreted as a requirement that 

agencies collect all the information 

included on the list and, thus, could 

increase institutional burdens. It was 

also noted that programmatic 

accrediting agencies do not collect 

specific financial data, such as audits. A 

few non-Federal negotiators objected to 

the use of the term ‘‘performance 

indicators’’ because they stated that this 

could lead to a requirement that an 

agency establish ‘‘bright lines’’ for 

assessing these indicators. Still other 

negotiators indicated that they had no 

objections to including an illustrative 

list in the regulations. 

The Department clarified that the goal 

was not to be prescriptive, and that the 

list was intended to be illustrative, as 

shown by the use of the words ‘‘these 

may include but are not limited to.’’ The 

Department also reminded the nonFederal negotiators that much of the 

proposed language was already in the 

standards section of the statute and 

current regulations. In addition, the 

Department noted that this section of 

the regulations concerns monitoring— 

the agency’s application and 

enforcement of its standards, policies, 

and procedures—rather than the 

substance of agency accrediting 

standards, as to which the Secretary is 

prohibited from regulating. 

Based on the discussions with 

negotiators and among Department staff, 

as well as a shared goal of all 

participants to ensure proper 

monitoring of institutions and programs, 

the proposed language in § 602.19(b) 

was modified. The modifications reflect 

a proposal made by the non-Federal 

negotiators to combine some of the 

paragraphs from the initial proposal and 

to eliminate redundancy. 

The proposed language would 

provide accrediting agencies with 

flexibility regarding their monitoring of 

institutions and programs and at the 

same time ensure they will review and 

analyze key data and indicators, 

including fiscal information and 

measures of student achievement. The 

Department expects agencies to examine 

and take appropriate action based on the 

fiscal, student achievement, and other 

data collected through the monitoring 

process. The Department noted that this 

is an area of great importance and that 

the Department’s responsibility to 

ensure effective and efficient monitoring 

takes place is fundamental. The 

Department made clear that it accepted 

the proposals by the non-Federal 

negotiators because the proposals 

adequately reflect these principles. 

Substantive Change (§ 602.22) 

Statute: Section 496(a) of the HEA 

requires the Secretary to establish 

recognition criteria to determine if an 

accrediting agency is a reliable authority 

as to the quality of education or training 

offered by an institution or program it 

accredits. 

Section 496(a)(1) of the HEA requires 

an agency to demonstrate the ability and 

experience to operate as an accrediting 

agency. Section 496(a)(4) of the HEA 

requires an agency to consistently apply 

and enforce standards that ensure 

courses or programs are of sufficient 

quality to achieve the stated objectives 

for which they are offered throughout 

the duration of the accreditation period. 

Section 496(a)(5) of the HEA requires 

the agency to have standards that 

address the quality of an institution or 

program in a number of areas. The first 

area is an institution’s or program’s 

success with respect to student 

achievement in relation to an 

institution’s mission, including, as 

appropriate, consideration of course 

completion, consideration of State 

licensing examinations, and job 

placement rates. In addition, standards 

must address an institution’s or 

program’s curricula; faculty; facilities, 

equipment, and supplies; fiscal and 

administrative capacity; recruiting and 

admissions practices, academic 

calendars, catalogs, publications, 

grading, and advertising; measures of 

program length and the objectives of the 

degrees or credentials offered; record of 

student complaints; and record of 

compliance with an institution’s 

program responsibilities under title IV 

of the HEA. Finally, section 496(c) of 

the HEA requires the agency to follow 

various operating procedures, including, 

but not limited to, conducting regular 

on-site visits to institutions it accredits, 

monitoring the growth of programs at 

institutions with significant enrollment 

growth, reviewing an institution’s plans 

for the addition of new branch 

campuses, and conducting visits to new 

branch campuses and to institutions 

following a change of ownership. 

Current Regulations: Section 602.22 of 

the current regulations requires an 

agency to maintain an adequate 

substantive change policy that ensures 

any substantive change to the 

educational mission or program or 

programs of an institution after it has 

been accredited does not adversely 

affect the capacity of the institution to 

continue to meet the agency’s standards. 

Section 602.22(a)(2) lists seven types of 

changes that, at the least, must be 

included in the agency’s definition of 

substantive change. Section 602.22(b) of 

the current regulations allows the 

agency to establish procedures to grant 

prior approval of a substantive change. 

Section 602.22(c) provides that if the 

agency’s accreditation of an institution 

enables the institution to participate in 

title IV, HEA programs, the agency’s 

procedures for approval of an additional 

location must include certain processes. 

Proposed Regulations: The proposed 

regulations would amend the list of 

events that would constitute a 

substantive change. Proposed 

§ 602.22(a)(2)(iii) would include the 

addition of courses or programs that 

represent a significant departure ‘‘from 

the existing offerings of educational 

programs,’’ in place of the current 

language regarding a significant 

departure ‘‘in content.’’ Proposed 

§ 602.22(a)(2)(iv) would be amended to 

clarify that the addition of programs of 

study at a degree or credential level 

different from, rather than only those 

above the level already included in the 

institution’s accreditation, would be 

considered a substantive change. (The 

meaning of ‘‘program of study’’ is 

elaborated on further within this 


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preamble in the discussion of § 602.24, 

teach-out plans and agreements.) 

The proposed regulations would add 

to the list of substantive changes, a 

provision to implement the requirement 

in 34 CFR 668.5(c)(3)(ii)(C) that an 

eligible institution’s accrediting agency 

determine that an institution’s 

arrangement to contract out more than 

25 percent of an educational program to 

entities that are not eligible on their 

own to participate in title IV, HEA 

programs meets the agency’s standards 

for the contracting out of educational 

services. 

The proposed regulations would 

further modify § 602.22(a)(2) by adding 

a new paragraph (viii) to provide greater 

flexibility to accrediting agencies in 

granting prior approval of additional 

locations where at least 50 percent of an 

educational program is offered. The new 

flexibility would apply to institutions 

that, according to agency criteria, have 

demonstrated sufficient capacity to add 

locations, and no longer need prior 

agency approval for each addition. 

These criteria would require an 

institution to provide satisfactory 

evidence that it has: A system to ensure 

quality across a distributed enterprise 

that includes clearly identified 

academic control; regular evaluation of 

the locations; adequate faculty, 

facilities, resources and academic and 

student support systems; financial 

stability; and long-range planning for 

expansion. To qualify for these 

preapprovals, an institution must also 

have successfully completed at least one 

cycle of accreditation of maximum 

length offered by the agency and one 

renewal, or been accredited for at least 

ten years, and already have at least three 

additional locations that the agency has 

approved. The agency must require 

timely reporting by the institution to the 

agency of each additional location 

established under the agency’s approval 

and the agency’s preapproval may not 

extend longer than five years. The 

proposed regulations would not allow 

the agency to preapprove an 

institution’s addition of locations under 

this process after the institution 

undergoes a change in ownership until 

and unless the institution demonstrates 

it meets the conditions outlined in this 

section of the proposed regulations 

under its new ownership. Further, 

agencies would be required to have an 

effective mechanism for visiting a 

representative sample of additional 

locations approved under paragraph 

(a)(2)(viii) at reasonable intervals. 

The proposed regulations in new 

paragraphs § 602.22(a)(2)(ix) and (x) 

would also require that agencies include 

as substantive changes the acquisition of 

any other institution or program or 

location of another institution, and the 

addition of a permanent location at the 

site of a teach-out the institution is 

conducting. 

The proposed changes to § 602.22(a) 

also would include the addition of a 

new paragraph (3) requiring an agency 

to define, as part of its substantive 

change policy, when changes made at or 

proposed by an institution are 

considered sufficiently extensive to 

require the agency to conduct a new 

comprehensive review of that 

institution. 

Proposed changes to § 602.22(b) 

would retain the agency’s ability to 

determine its own procedures for 

granting prior approval of a substantive 

change. However, those procedures 

must specify an effective date on which 

the change would be included in the 

program’s or institution’s accreditation. 

The proposed regulations would require 

that the effective date not be retroactive, 

with a limited exception for changes of 

ownership. 

Finally, a proposed addition to 

§ 602.22(c) would clarify the 

requirement that an agency have an 

effective mechanism for conducting 

visits to additional locations of 

institutions that operate more than three 

additional locations. The proposed 

regulations specify that the agency must 

visit a representative sample of those 

locations at reasonable intervals. 

Reasons: In recognition of the pace at 

which change is occurring within the 

higher education community, including 

the addition of new locations of 

institutions, the development of new 

curricula, and ownership changes, the 

Department believed that it was 

important to bring these issues to the 

negotiators for discussion. The 

Department sought to ensure continued 

effective compliance with the statute in 

developing regulations that recognize 

the changing nature of higher education, 

while maintaining fiduciary 

responsibility. 

Many institutions now operate as 

distributed enterprises. That business 

model is one that encompasses the 

establishment of multiple locations 

operated within the context of a single 

administrative system. The current 

regulations pertaining to substantive 

change do not accommodate this type of 

innovative model, because an 

accrediting agency must focus on 

individual additional locations of an 

institution. The current regulations do 

not allow an agency to determine if an 

institution has a system to ensure 

quality across a distributed enterprise 

and to consider the unit of analysis to 

be the system as a whole rather than 

each individual location. 

The Department’s approach to address 

new types of institutional organizational 

structures was to use the substantive 

change provisions to modify and clarify 

the additional location approval 

requirements that apply to traditional 

institutions, and those that apply to 

institutions that operate on a model 

where the establishment of locations is 

a standard practice that is carried out in 

a manner that ensures quality across all 

of the individual locations. Initial 

language proposed by the Department to 

the negotiators did not, in the opinion 

of some non-Federal negotiators, 

provide the appropriate clarity, and 

some non-Federal negotiators 

questioned the proposed use of the 

phrase ‘‘addition of multiple locations’’ 

rather than simply using ‘‘the addition 

of locations’’ noting that a change in the 

phrasing may lead to some confusion. 

Some non-Federal negotiators stated 

that the Department’s proposed 

restructuring of the regulations was 

difficult to follow and that the two 

headings the Department initially 

proposed to add in order to draw a 

distinction between types of institutions 

were misleading. The Department 

agreed to review the language and 

redrafted the proposed regulations by 

further restructuring the language, and 

removing the headings. However, the 

Department retained use of the phrase 

‘‘distributed enterprise’’ because it 

describes the concept intended without 

unduly limiting the business models 

covered. 

Some non-Federal negotiators raised a 

concern about the language initially 

proposed in § 602.22(a)(2)(iii) regarding 

a change in academic content, while 

appreciating the intent of the language, 

and asked the Department to amend the 

language to provide clarity. The revised 

language discussed with and agreed to 

by the negotiators would provide for a 

substantive change to include the 

addition of courses or programs that 

represent a significant departure from 

the existing offerings of educational 

programs, or methods of delivery, from 

those that were offered when the agency 

last evaluated the institution. There was 

further discussion about what 

constituted a ‘‘significant departure’’ 

from existing offerings. Several nonFederal negotiators raised examples 

such as changing individual courses 

within a program, altering the syllabus 

from one year to the next, or changing 

text books for a course or program, and 

asked the Department if those would 

constitute a significant departure in 

existing offerings of educational 

programs, or method of delivery. The 


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Department clarified that a significant 

departure from the existing offerings of 

educational programs, while determined 

by the agency, would not result from an 

individual course or text book change, 

or from the change in some faculty 

members. However, an agency might 

consider it significant if an entire 

department of faculty members left an 

institution or, as one non-Federal 

negotiator pointed out as an example, if 

an institution or program began 

delivering courses through distance 

education that were not previously 

available at the institution. 

Teach-out Plans and Agreements 

(§ 602.24) 

Statute: Section 496(c)(3) of the HEA, 

added by the HEOA, specifies that, 

among other requirements, to be 

recognized by the Secretary as a reliable 

authority as to the quality of education 

or training offered by an institution 

seeking to participate in title IV, HEA 

programs, an accrediting agency must 

require an institution it accredits to 

submit a teach-out plan for approval by 

the accrediting agency if any of three 

events occurs: (1) The Department 

notifies the accrediting agency of an 

action against the institution pursuant 

to section 487(f) of the HEA; (2) the 

accrediting agency acts to withdraw, 

terminate or suspend the accreditation 

of an institution; or (3) the institution 

notifies the accrediting agency that the 

institution intends to cease operations. 

Section 487(f) of the HEA defines 

‘‘teach-out plan’’ and adds an 

institutional requirement that in the 

event the Secretary initiates a limitation, 

suspension, or termination of the 

participation of an institution of higher 

education in any program under title IV 

under the authority of section 

487(c)(1)(F) of the HEA, or initiates an 

emergency action under the authority of 

section 487(c)(1)(G) of the HEA, and its 

prescribed regulations, the institution is 

required to prepare a teach-out plan for 

submission to the institution’s 

accrediting agency in compliance with 

section 496(c) of the HEA, the 

Secretary’s regulations on teach-out 

plans, and the standards of the 

institution’s accrediting agency. 

Current Regulations: The current 

regulations specify that if an agency’s 

accreditation enables an institution to 

obtain eligibility to participate in the 

title IV, HEA programs, the agency must 

require the institution to submit any 

teach-out agreement the institution 

enters into with another institution for 

agency approval. ‘‘Teach-out 

agreement’’ is defined in the current 

regulations in § 602.3. 

Proposed Regulations: The proposed 

regulations would restructure 

§ 602.24(c) of the current regulations to 

include teach-out plans as well as teachout agreements. The proposed 

regulations would expand accrediting 

agency responsibilities by providing 

that agencies require the institutions 

they accredit or preaccredit to submit a 

teach-out plan to the agency for 

approval upon the occurrence of any of 

four events: (1) The Secretary notifies 

the agency that the Secretary has 

initiated an emergency action against an 

institution in accordance with section 

487(c)(1)(G) of the HEA, or has initiated 

a limitation, suspension, or termination 

of the participation of an institution of 

higher education in any title IV, HEA 

program, in accordance with section 

487(c)(1)(F) of the HEA, and that a 

teach-out plan is required; (2) the 

agency acts to withdraw, terminate or 

suspend the accreditation or 

preaccreditation of the institution; (3) 

the institution notifies the agency that it 

intends to cease operations entirely or 

close a location that provides one 

hundred percent of at least one program; 

or (4) a State licensing or authorizing 

agency notifies the agency that an 

institution’s license or legal 

authorization to provide an educational 

program has been or will be revoked. 

The proposed regulations would 

require an agency to evaluate each 

teach-out plan to ensure it provides for 

the equitable treatment of students 

under criteria established by the agency, 

specifies additional charges, if any, and 

provides for notification to the students 

of any additional charges. An agency 

that approves a teach-out plan that 

includes a program that is accredited by 

another recognized accrediting agency 

would be required to notify that 

accrediting agency of its approval. The 

proposed regulations would also specify 

that an agency may require an 

institution it accredits or preaccredits to 

enter into a teach-out agreement with 

another institution of higher education 

as part of its teach-out plan. 

The proposed regulations would also 

amend the current requirement with 

respect to the submission of any teachout agreement by an institution to an 

agency to clarify that the agreement 

must be submitted for agency approval 

whether it was entered into at the 

institution’s own volition or at the 

request of the agency. 

Current regulations would also be 

amended to add additional specificity to 

the requirement that the agency approve 

a teach-out agreement only if it provides 

for the equitable treatment of students. 

Under the proposed regulations, the 

agency’s obligation would pertain to 

circumstances in which either an entire 

institution, or one of its locations at 

which it provides one hundred percent 

of at least one program offered, ceased 

operations, and would include requiring 

that the teach-out institution have the 

necessary experience, resources, and 

support services to remain stable, carry 

out its mission, and meet all obligations 

to existing students. The proposed 

regulations would also require that a 

teach-out institution provide students 

with information about additional 

charges, if any. 

The proposed regulations would also 

amend paragraph (d) in the current 

regulations in § 602.24 to specify that if 

an institution the agency accredits or 

preaccredits closes without a teach-out 

plan or agreement, the agency must 

work with the Department and 

appropriate State agency, to the extent 

feasible, to assist students in finding 

reasonable opportunities to complete 

their education without additional 

charges. 

Reasons: The Department proposes to 

specify that a teach-out plan would be 

required in the three circumstances 

specified in the statute: The Department 

initiates an emergency action or an 

action to limit, suspend or terminate an 

institution’s participation in the title IV, 

HEA programs; the accrediting agency 

acts to withdraw, terminate or suspend 

the institution; or the institution 

indicates it intends to cease operations. 

The Department initially proposed 

referencing the subpart of the Student 

Assistance General Provisions 

regulations that contain the regulations 

governing limitation, suspension, 

termination, and emergency actions. 

Some of the non-Federal negotiators 

stated that requiring a teach-out plan if 

the Secretary initiates an emergency 

action, or an action to limit, suspend, or 

terminate an institution in accordance 

with subpart G of 34 CFR part 668, 

might result in confusion and 

application of the teach-out 

requirements beyond the intent of the 

statute, because subpart G is broad and 

refers to requirements such as posting of 

surety. They stated that requiring teachout plans when the Department requires 

letters of credit or places an institution 

on heightened cash monitoring is not 

mandated under the statute and should 

be avoided. The Department agrees that 

a requirement that an institution post a 

letter of credit, or be subject to 

heightened cash monitoring, imposed 

outside of a subpart G proceeding, 

should not, on its own, trigger a 

requirement that the institution submit 

a teach-out plan to its accrediting 

agency for approval. The Department 

agreed to modify the language it 


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originally proposed by adding a 

reference to the statutory provisions 

governing emergency actions and 

actions to limit, suspend, or terminate 

the participation of an institution in the 

title IV, HEA programs. In addition, to 

reduce any confusion over when agency 

action is required, the proposed 

regulation was further revised to specify 

that when the Department notifies an 

institution and its accrediting agency 

that the Department is initiating an 

emergency, limitation, suspension, or 

termination action, it will also indicate 

in the notice that a teach-out plan is 

required. 

The proposed regulations also provide 

that an accrediting agency must require 

submission of a teach-out plan when a 

State licensing or authorizing agency 

notifies the agency that an institution’s 

license or legal authorization to provide 

an educational program has been or will 

be revoked. This provision was added 

because loss of State licensing leads 

directly to the loss of accreditation and 

institutional eligibility, and may well be 

followed by closure. There was support 

from the non-Federal negotiators for 

including this provision. 

The addition of a provision in 

proposed § 602.24(c)(3) that, if an 

agency approves a teach-out plan that 

includes a program that is accredited by 

another recognized accrediting agency, 

it must notify that agency of its 

approval, was made to ensure 

appropriate sharing of important 

information. The new provision in 

proposed § 602.24(c)(4) that an agency 

may require an institution to enter into 

a teach-out agreement as part of its 

teach-out plan was added to reflect new 

statutory language in section 487(f) of 

the HEA. In view of this new language, 

the proposed regulations would also 

modify the requirement for submission 

of teach-out agreements for agency 

approval (found in proposed 

§ 602.24(c)(5) as restructured), to clarify 

that the agreements must be submitted 

for approval regardless of whether the 

institution enters into the agreement on 

its own, or at the request of the agency. 

There was extensive discussion about 

what the statutory definition of ‘‘teachout plan’’ in section 487(f)(2) of the HEA 

means in requiring a teach-out plan or 

agreement when an institution ceases to 

operate before all students complete 

their ‘‘program of study.’’ Whereas 

‘‘program’’ is defined in the regulations 

in § 602.3 to mean a postsecondary 

educational program that leads to an 

academic or professional degree, 

certificate, or other recognized 

educational credential, there is no 

definition of ‘‘program of study.’’ In 

order to implement a teach-out plan or 

agreement, however, it is necessary to 

understand the concept of a ‘‘program of 

study.’’ The Department understands a 

program of study to be the specific area 

of study, or major, within the context of 

a degree or certificate program. Thus, to 

characterize an English major at a fouryear institution, the student would be 

enrolled in a baccalaureate program 

with English as the program of study. 

What is important, and the reason for 

the distinction between ‘‘program’’ and 

‘‘program of study’’ with respect to 

teach-outs, is that students need to be 

provided with the opportunity to 

complete their specific program of study 

when an institution or location offering 

100 percent of at least one program 

ceases to operate. Thus, a student in a 

baccalaureate degree program who is 

preparing to become a teacher must be 

able to complete all the teacher 

education courses needed for a degree 

in that major. 

The Department initially proposed 

that agencies evaluate a teach-out plan 

to ensure it provides for the equitable 

treatment of students under criteria 

established by the agency and does not 

result in duplicative or increased costs. 

The Department was concerned that 

students not be charged additional 

money for a program for which they had 

already paid tuition and fees. Moreover, 

the concept of accrediting agencies 

working with the Department and the 

State licensing agency, to the extent 

feasible, to ensure that students whose 

institution has closed have reasonable 

opportunities to complete their 

programs without additional charges is 

included in the current regulations. 

Some of the non-Federal negotiators 

noted that institutions that take on 

responsibility for teach-outs often lose 

substantial money to ensure that 

students are taught out properly. 

Sometimes, the closing institution did 

not provide its students with an 

adequate education, and the students 

being taught out need additional 

education or training to enable them to 

complete their program and be 

successful. Sometimes this involves 

students re-taking a course. Hence, 

prohibiting ‘‘duplicative charges’’ 

through teach-out approval 

requirements cannot be presumed to be 

in students’ best interests. The 

institution conducting a teach-out must 

have flexibility, and placing too many 

prohibitions or prescriptions on the 

teach-out plan may preclude the 

establishment of appropriate teach-out 

arrangements. The non-Federal 

negotiators agreed that it would be 

better to require that the teach-out plan 

ensure students are notified of any 

additional charges that the teach-out 

will entail. The Department agreed with 

the non-Federal negotiators. It should be 

noted that the Department’s 

expectations are that students will not 

incur additional or duplicative charges 

for participating in a teach-out to 

complete their programs of study. If, as 

the exception, and not the rule, an 

institution serving as a teach-out 

institution must charge the students, it 

should ensure that any charges are 

reasonable, taking into consideration the 

impact on the student. Further, the 

Department believes it is important for 

a teach-out plan to specify if there are 

additional charges. To be approved, a 

teach-out plan must provide for 

notification to the students of any 

additional charges. 

Several non-Federal negotiators raised 

a question about what constitutes 

closure of an institution or location. 

They noted that there have been 

situations in which an institution or 

location moved, and did not close, but 

the Department deemed the institution 

to have closed. During the discussion, 

the Department clarified that normally a 

move of an institution or location across 

the street would be viewed as a change 

of address, and would not constitute 

closure. However if, for example, an 

institution or location moved 20 miles, 

there would have to be an examination 

of the circumstances. A 20-mile move in 

a rural area might not have a major 

impact on the majority of an 

institution’s students, whereas a 20-mile 

move in an urban area could 

disadvantage an institution’s students to 

the point where they could no longer 

attend the institution. In ascertaining 

whether an institution or location has 

closed or moved, key considerations are 

whether the institution’s faculty, staff 

and students move with the institution 

or location. 

Under the proposed regulations, the 

requirement that agencies work with the 

Department regarding closed schools 

would apply to those schools that close 

without a teach-out plan or agreement. 

The Department proposed to require 

that students be given reasonable 

opportunities to complete their 

education ‘‘without duplicative or 

increased charges.’’ Several negotiators 

presented various points of view on the 

proposal regarding closed institutions 

and locations when there is no teach-out 

plan or agreement. Some non-Federal 

negotiators suggested focusing on what 

was being done to protect the students 

and noted that what is best for the 

students must be evaluated on a caseby-case basis. Other non-Federal 

negotiators expressed concern that the 

proposed language could be read to 

imply that the accrediting agency would 


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be required to assume a financial 

obligation for teaching out the students 

in such circumstances. However, a nonFederal negotiator stated a belief that, 

while it is understandable that 

accrediting agencies do not want the 

regulations to imply that they have any 

liability for the educational expenses of 

students when an institution or location 

closes without a teach-out plan or 

agreement in place, it is likely that 

accrediting agencies will incur ordinary 

in-kind expenses, such as some 

expenditure of staff time, in complying 

with the recognition criteria pertaining 

to teach-outs and school closures. 

The Department agrees that it expects 

agencies to expend staff time and make 

other ordinary and customary 

commitments of agency resources in the 

course of assisting students in finding 

reasonable opportunities to complete 

their programs of study, but that 

agencies are not expected to pay for the 

educational expenses of students in this 

situation. In addition, to avoid the 

appearance that the Department is 

creating any new or unusual financial 

obligations for agencies, the Department 

agreed to remove the references to 

‘‘ensuring’’ that students do not incur 

‘‘additional or duplicative charges’’ in 

favor of language simply requiring that 

agencies ‘‘assist students’’ in finding 

reasonable opportunities to complete 

their programs ‘‘without additional 

charge.’’ 

Transfer of Credit (§ 602.24) 

Statute: As amended by the HEOA, 

section 496(c)(9) of the HEA specifies, 

among other requirements, that to be 

recognized by the Secretary as a reliable 

authority as to the quality of education 

or training offered by an institution 

seeking to participate in title IV, HEA 

programs, an accrediting agency must 

confirm, as part of the agency’s review 

for initial or renewal of accreditation, 

that an institution has transfer of credit 

policies that are publicly disclosed and 

that include a statement of the criteria 

established by the institution regarding 

the transfer of credit earned at another 

institution of higher education. 

Section 485(h) of the HEA contains a 

new HEOA requirement that institutions 

publicly disclose their transfer of credit 

policies in a readable and 

comprehensible manner. This section 

also specifies that neither the Secretary 

nor the NACIQI is authorized to require 

particular policies, procedures, or 

practices by institutions with respect to 

transfer of credit. 

Current Regulations: There are no 

current regulations addressing transfer 

of credit. 

Proposed Regulations: Proposed 

§ 602.24(e) would incorporate the 

provisions of the HEA regarding the 

new requirement in the HEOA that 

accrediting agencies confirm that 

institutions have transfer of credit 

policies that are publicly disclosed and 

include a statement of the criteria 

established by the institution regarding 

the transfer of credit earned at another 

institution of higher education. The 

proposed regulations include a crossreference to the paragraph in 34 CFR 

668.43 that the Department plans to 

include in a final rule to reflect the 

HEOA’s new institutional disclosure 

requirement regarding transfer of credit 

policies. In the final regulations 

governing accrediting agencies, the 

complete cross-reference will be 

inserted in § 602.24. 

Reasons: The new paragraph would 

implement the new statutory provisions 

contained in the HEOA. Some of the 

non-Federal negotiators expressed 

concern about a perceived lack of clarity 

regarding availability of information and 

were interested in having a definition of 

‘‘publicly disclosed’’ to make it clear 

that the information must be readily 

available to students and their advisors. 

To address this concern, the proposed 

regulations provide a reference to the 

new institutional disclosure 

requirement that will require 

institutions to disclose the information 

specified regarding transfer of credit in 

a readable and comprehensible manner. 

Some non-Federal negotiators wanted 

to add language requiring that the 

criteria established by the institution 

regarding the transfer of credit earned at 

another institution of higher education 

be fair. These negotiators stated that the 

issue of transfer of credit is a serious 

one and that full disclosure of this kind 

of information is needed so students can 

assess the fairness of an institution’s 

policies and can decide whether to 

apply to the institution. Other nonFederal negotiators said there was a 

problem with expanding the statutory 

language, noting the Rule of 

Construction in section 485 of the HEA 

that constrains the Secretary from 

elaborating on the requirement. In 

addition, the regulations governing 

accrediting agencies require only that 

the agencies confirm that institutions 

being reviewed publicly disclose their 

transfer of credit policies. The more 

specific requirements on transfer of 

credit in section 485 of the HEA govern 

institutions, not accrediting agencies. 

The proposed regulations reflect the 

statutory language, but include a crossreference to the institutional transfer of 

credit provisions to address some of the 

non-Federal negotiators’ concerns. 

Summary of Agency Actions (§ 602.26) 

Statute: Section 496(c)(7) of the HEA 

specifies that, among other 

requirements, to be recognized by the 

Secretary as a reliable authority as to the 

quality of education or training offered 

by an institution seeking to participate 

in title IV, HEA programs, an 

accrediting agency must make available 

to the public and the State licensing or 

authorizing agency, and submit to the 

Secretary, a summary of agency actions 

including the accreditation or renewal 

of accreditation of an institution; the 

final denial, withdrawal, suspension, or 

termination of accreditation of an 

institution; any findings made in 

connection with the action taken, 

together with the official comments of 

the affected institution; and any other 

adverse action taken with respect to an 

institution or placement on probation of 

an institution. 

Current Regulations: Section 

602.26(b) of the current regulations 

requires an agency to provide written 

notice of (1) a final decision to place an 

institution or program on probation or 

an equivalent status, and (2) a final 

decision to deny, withdraw, suspend, 

revoke, or terminate the accreditation or 

preaccreditation of an institution or 

program. The notice must be provided 

to the Secretary, the appropriate State 

licensing or authorizing agency, and 

appropriate accrediting agencies at the 

same time the accrediting agency 

notifies the institution, but no later than 

30 days after the decision. 

Section 602.26(c) of the current 

regulations requires an accrediting 

agency to provide written notice to the 

public of the decisions identified in 

§ 602.26(b)(1) and (b)(2) within 24 hours 

of its notice to the institution or 

program. 

Section 602.26(d) of the current 

regulations requires that with respect to 

any decision listed in § 602.26(b)(2), the 

agency must make available to the 

Secretary, the appropriate State 

licensing or authorizing agency, and the 

public upon request, no later than 60 

days after the decision, a brief statement 

summarizing the reasons for the 

agency’s decision and the comments, if 

any, that the affected institution or 

program might wish to make with 

regard to that decision. 

Proposed Regulations: The proposed 

regulations regarding disclosure of 

accrediting agency actions would 

require accrediting agencies to provide 

written notice of a final decision to take 

any other adverse action not listed in 

§ 602.26(b)(2), as defined by the agency, 

to the Secretary and the State licensing 

or authorizing agency. The proposed 


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regulations would also add a crossreference to require agencies to provide 

written notice to the public within 24 

hours of their notice to the institution or 

program of any other adverse action. 

Finally, the proposed regulations 

would specify in new paragraph (d) that 

the accrediting agency, in addition to 

providing to the public a brief statement 

summarizing the reasons for the 

agency’s decision, must provide the 

official comments of the affected 

institution or program, or evidence that 

the institution or program was offered 

the opportunity to provide official 

comments. The information must be 

provided to the public whether or not 

the agency receives a request for the 

information. 

Reasons: Many of the new provisions 

in the HEA are already addressed by 

current regulations. During negotiated 

rulemaking, the non-Federal negotiators 

requested that the accrediting agencies 

be permitted to define the other adverse 

actions, not specified in the regulations, 

about which the agencies would be 

required to provide information. The 

non-Federal negotiators also requested 

that the regulations clarify that agencies 

need provide only official comments of 

an institution or program or, if there are 

no official comments, evidence that the 

institution or program was offered an 

opportunity to provide official 

comments. The Department agreed with 

the non-Federal negotiators. 

Recognition of Agencies by the Secretary 

(Subpart C) 

Statute: Section 496(o) of the HEA 

authorizes the Secretary to develop 

regulations that provide procedures for 

the recognition of accrediting agencies 

and for administrative appeals. Section 

496(l)(1)(B) of the HEA specifies the 12- 

month timeframe by which 

noncompliant agencies must take 

appropriate action to come into 

compliance, absent an extension of the 

timeframe by the Secretary upon good 

cause shown. Section 496(d) of the HEA 

stipulates that the period of recognition 

not exceed five years. Section 114 of the 

HEA, as amended by the HEOA, 

restructures the NACIQI and provides 

for the establishment of the NACIQI 

meeting agenda by the Chairperson of 

NACIQI; under the FACA, 5 U.S.C. 

Appdx. 1, approval of the meeting 

agenda by the Secretary’s designated 

Federal official is also required. Section 

496(q) of the HEA requires a review, at 

the next available NACIQI meeting, of 

an agency that has included distance 

education or correspondence education 

in its scope of recognition through 

written notice to the Secretary, if the 

enrollment of an accredited institution 

that offers distance education or 

correspondence education has increased 

by 50 percent or more within any one 

institutional fiscal year. Section 496(a) 

and (c) of the HEA describes various 

kinds of institutional and agency 

information that must be made available 

to the public, the Secretary or the State 

licensing or authorizing agency, as 

applicable. Along with HEA 

requirements, the Department must 

comply with requirements in the 

Freedom of Information Act, 5 U.S.C. 

§ 552; the Trade Secrets Act, 18 U.S.C. 

§ 1905; the Privacy Act of 1974, as 

amended, 5 U.S.C. § 552a; the FACA, 5 

U.S.C. Appdx. 1; and all other 

applicable laws, in considering whether 

and when information obtained from 

accrediting agencies may, or must, be 

disclosed to the public. 

Current Regulations: There are two 

sets of recognition procedures in the 

current regulations. Subpart C provides 

review procedures only for an agency’s 

application for initial or continued 

recognition, and does not stipulate 

procedures for other types of 

Departmental review pertaining to 

recognition proceedings. Subpart D 

provides procedures for limitation, 

suspension, or termination of 

recognition. Under subparts C and D, 

the Secretary has the authority to make 

a decision regarding an accrediting 

agency’s recognition, as well as for any 

appeal the accrediting agency may bring 

related to that decision. 

Section 602.30(c) of the current 

regulations states that the Secretary does 

not make available to the public any 

confidential agency materials 

Department staff review during the 

evaluation of an agency’s application for 

recognition or compliance with the 

criteria for recognition. 

Proposed Regulations: The proposed 

regulations would reflect changes made 

by the HEOA regarding the review of 

distance education and correspondence 

education, and the role of the 

Chairperson of the Advisory Committee 

in establishing the meeting agenda. 

Under the FACA, approval of the 

meeting agenda by the Secretary’s 

designated Federal official is also 

required; ‘‘Designated Federal Official’’ 

is defined in proposed § 602.3. 

The proposed regulations would 

combine subparts C and D, thereby 

streamlining agency review and 

establishing procedures for the 

following activities: Applications for an 

expansion of scope; submission and 

review of compliance reports, as defined 

in proposed § 602.3; reviews of 

increases in headcount enrollment 

described in proposed § 602.19(e); and 

staff analyses based on reviews of 

agencies during their period of 

recognition. The proposed regulations 

would establish the senior Department 

official as the decision-maker on 

recognition proceedings and the 

Secretary as the decision-maker on 

appeals. Proposed subpart C would also 

make explicit the authority of the senior 

Department official to make a decision 

in a recognition proceeding in the event 

that the statutory authority or 

appropriations for the Advisory 

Committee ends or that there are fewer 

duly appointed Advisory Committee 

members than needed to constitute a 

quorum, and under extraordinary 

circumstances when there are serious 

questions about an agency’s compliance 

that require prompt attention. Proposed 

subpart C would clarify that an agency 

may be given no more than 12 months 

to address identified deficiencies, after 

which time a decision on recognition 

would be made on the basis of a 

compliance report, unless the senior 

Department official (or Secretary, on 

appeal), on review of the report, 

determines good cause exists to extend 

that timeframe. 

Proposed § 602.31 would identify 

laws governing the Secretary’s 

processing and decision-making on 

requests for public disclosure of 

information obtained during agency 

recognition proceedings. Proposed 

§ 602.31 would also provide procedures 

that an agency may follow in seeking to 

protect the confidentiality of trade 

secrets and commercial or financial 

information that is privileged or 

confidential in documents submitted to 

the Department in recognition 

proceedings. Section 602.31(f)(1) of the 

proposed regulations would provide the 

citations of the various laws to which 

the Secretary’s release of information is 

subject, including the Freedom of 

Information Act (FOIA); the Trade 

Secrets Act; the Privacy Act of 1974, as 

amended; and the Federal Advisory 

Committee Act. 

The proposed regulations would add 

a set of procedures an agency may 

follow when submitting documents to 

the Department for recognition 

proceedings in order to assist the 

Department in its efforts to avoid 

disclosing those materials that are 

entitled to protection from disclosure 

under applicable law. These procedures 

include: Allowing the agency to redact 

information that would identify 

individuals or institutions and is not 

essential to the Department’s review of 

the agency; specifying that the agency 

make a good faith effort to designate all 

business information within the 

submission that the agency believes 

would be exempt from disclosure under 


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exemption 4 of FOIA; identifying any 

other material the agency believes 

would be exempt from public 

disclosure, the factual basis for the 

request, and any legal basis the agency 

has identified for withholding the 

document from disclosure; and ensuring 

that the documents submitted are only 

those required for Department review or 

as specifically requested by the 

Department. The proposed regulations 

would also make clear that a blanket 

designation of material submitted as 

meeting the exemptions in FOIA will 

not be considered to be in good faith 

and will be disregarded. Finally, the 

proposed regulations would clarify that 

the Secretary processes all FOIA 

requests in accordance with 34 CFR part 

5 and that all documents provided to 

the Advisory Committee are available to 

the public. 

Reasons: The Department proposes to 

combine subparts C and D to establish 

consistent procedures that govern the 

recognition process. The intent behind 

current regulations in subpart D—which 

establishes a separate process that 

involves subcommittees of the Advisory 

Committee for all limitation, suspension 

and termination actions—was to 

expedite these types of actions. 

However, in practice, scheduling and 

logistical issues have made it 

cumbersome for Department staff and 

the Advisory Committee to manage two 

processes. 

Proposed subpart C would make clear 

the parallel processes by which the 

Department staff and the Advisory 

Committee make recommendations on 

recognition that are forwarded, along 

with the complete record, to the senior 

Department official for a decision. The 

Department clarified during negotiated 

rulemaking that the NACIQI is, by 

definition, an advisory committee that 

makes recommendations and is not a 

decision-making body. Current 

regulations in § 602.33 that provide 

procedures for appealing NACIQI’s 

recommendation are confusing given 

that an appeal suggests that a decision 

has been made, whereas in fact, NACIQI 

is only making a recommendation. 

In lieu of current § 602.33, proposed 

§ 602.35 would provide a process by 

which the agency and Department staff 

may respond to the Advisory 

Committee’s recommendation before the 

senior Department official makes his or 

her recognition decision. Under the 

proposed regulations, decision-making 

authority would reside with the senior 

Department official, whose decisions 

would be appealable by the agency to 

the Secretary under proposed § 602.37. 

The proposed changes to establish the 

senior Department official as the 

decision-maker on recognition and the 

Secretary as the decision-maker on 

appeals would strengthen due process 

by ensuring that the appeal is not 

adjudicated by the initial decisionmaker. Under the current regulations, 

the decision-making authority on both 

recognition and appeals resides with the 

Secretary. 

The proposed regulations in 

§§ 602.32, 602.34, and 602.36 would 

increase transparency and efficiency, 

and implement HEOA provisions 

regarding distance and correspondence 

education. These proposed regulations 

would detail proceedings for staff and 

Advisory Committee review of 

applications for recognition or renewal 

of recognition, expansions of scope, 

compliance reports, and reviews of 

increases in headcount enrollment 

described in proposed § 602.19(e). 

Proposed § 602.33 would provide 

procedures for reviews of agencies 

during the period of recognition. 

Timeframes for various stages of the 

review process would be specified to 

strengthen due process for agencies. 

The Department’s initial proposed 

language in subpart C incorporated the 

concept that an agency’s compliance 

with the criteria for recognition includes 

the requirement that an agency ‘‘is 

effective in its performance with respect 

to those criteria.’’ Some non-Federal 

negotiators expressed concern regarding 

the word ‘‘performance’’ because they 

believed that term is difficult to define. 

They suggested that the language be 

amended to incorporate the statutory 

concept of ‘‘effective application’’ of the 

criteria. The Department agreed to 

replace the language regarding 

‘‘performance’’ with the phrase 

‘‘effectively applies those criteria.’’ 

While addressing non-Federal 

negotiators’ concerns regarding the 

word ‘‘performance,’’ the proposed 

language would retain the statutory 

concept of ‘‘effectiveness’’ and the 

judgment associated with how an 

agency applies its standards. 

During the discussions regarding 

proposed § 602.37, which would specify 

procedures for appealing the senior 

Department official’s decision to the 

Secretary, some non-Federal negotiators 

expressed concerns regarding provisions 

for the consideration by the Secretary of 

additional information not contained in 

the record. In response, the Department 

added language specifying that the 

information be ‘‘relevant and material’’ 

and ‘‘pertaining to an agency’s 

compliance with recognition criteria.’’ A 

parallel change was made to proposed 

§ 602.36 which outlines procedures for 

review and decision by the senior 

Department official. Current regulations 

are silent about procedures in instances 

when new and relevant information 

becomes available after the NACIQI 

meeting but prior to the decision being 

made. In the interest of transparency 

and due process, the Department 

decided to make explicit in the 

proposed regulations the senior 

Department official’s and the Secretary’s 

authority to review all relevant 

information prior to making a decision 

on recognition. Proposed §§ 602.36 and 

602.37 would outline procedures by 

which the senior Department official 

and the Secretary, respectively, may 

proceed in such cases. 

Proposed § 602.33 would establish a 

procedure for review of agencies during 

the period of recognition so that the 

Department may ensure an agency’s 

continued compliance with subpart B, 

and initiate action as necessary. Some 

non-Federal negotiators expressed 

concern that the Department not act 

arbitrarily and provide adequate notice 

to and communication with the agency 

when conducting a review during an 

agency’s period of recognition. In 

response to concerns expressed by nonFederal negotiators, the Department 

added language to reflect the 

consultation between Department staff 

and the agency, and the provision to the 

agency of the documentation concerning 

the inquiry. 

Proposed § 602.36(b) would make 

explicit the senior Department official’s 

authority to make a decision in a 

recognition proceeding in the event that 

statutory authority or appropriations for 

the Advisory Committee ends, or there 

are fewer duly appointed Advisory 

Committee members than needed to 

constitute a quorum. The intent behind 

proposed § 602.36(b) is to allow the 

Department to act expeditiously and 

responsibly in the absence of an 

Advisory Committee when the 

Department has concerns regarding an 

agency’s continued compliance with 

subpart B. Some non-Federal negotiators 

suggested that the senior Department 

official only exercise this authority in 

extraordinary circumstances. In 

response to non-Federal negotiators’ 

concerns, the Department added 

language to proposed § 602.36(b), which 

would specify that the senior 

Department official would make a 

decision in the absence of an Advisory 

Committee only in extraordinary 

circumstances when the Department has 

serious concerns regarding an agency’s 

compliance with subpart B that require 

prompt attention. 

One non-Federal negotiator expressed 

concern that the Secretary could 

withhold appointments to NACIQI in 

order to prevent the constitution of a 


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quorum so that the senior Department 

official could exercise the authority to 

make a decision without NACIQI review 

of the matter. The Department clarified 

that this was not the intent of the 

provision and further stated that the 

withholding of appointments by the 

Secretary alone would not prevent a 

quorum. 

The Secretary is obligated to comply 

with the HEA and other applicable 

statutes, including FOIA and FACA. 

Current regulations do not accurately 

reflect the Secretary’s disclosure 

obligations under FOIA and other 

statutes and must be revised to reflect 

the applicable law. In revising the 

regulations, the Department is 

attempting to spell out the options 

available to agencies when submitting 

material that the agencies view as 

confidential to the Department for 

review in recognition proceedings. 

There was extensive discussion 

among the negotiators about what 

material is to be considered 

confidential. Several non-Federal 

negotiators expressed concern about 

how to safeguard confidentiality, ensure 

the integrity of the process, and preserve 

the relationship between the agency and 

the institution. In particular, they 

expressed concern that if the agency 

were unable to provide guarantees of 

confidentiality to its institutions, this 

would undermine the relationship 

between the agency and its accredited 

institutions or programs and indeed the 

entire accreditation process. 

The Department acknowledged the 

importance of confidentiality for 

agencies and institutions, but at the 

same time, wanted to make the agencies 

and institutions fully aware of the 

requirements with which the Secretary 

must comply in the event a request for 

disclosure is made under FOIA or 

FACA. The Department also clarified 

that should the Inspector General or any 

other Federal entity seek to review an 

agency or an institution, proposed 

procedures under subpart C for 

redacting information and marking 

documents confidential will not apply, 

as these proposed regulations pertain 

only to the recognition process. 

Several non-Federal negotiators 

suggested that the Department could 

review required documents on a secure 

Web site and thereby not take 

possession of them. Others suggested 

the Department send staff to the agency 

to review documents, but leave them in 

the agency’s possession. The 

Department explained that it needed to 

have a complete and accurate record of 

the documents in its possession to 

substantiate the Department’s review, 

and would, therefore, not be able to 

utilize a secure Web site or an on-site 

review of documents. The Department’s 

control of the documents reviewed 

further protects the integrity of the 

review process. For example, if the 

Department needed to retrieve a 

reviewed document in the future, and 

had to rely on obtaining the document 

from a Web site, it would have no way 

to ensure that the document on the Web 

site was the same document it had 

originally reviewed. 

Another non-Federal negotiator raised 

concerns about complaints being 

released to the public before they could 

be substantiated. The Department 

clarified that FOIA pertains to all 

documents submitted to the Department 

and other Federal Government agencies. 

Finally, some non-Federal negotiators 

expressed concerns about the conduct of 

unannounced site visits by Department 

staff to an institution or program as part 

of the review of an agency. This 

provision exists in both current 

§ 602.31(b)(1) and proposed 

§ 602.31(e)(1). Some non-Federal 

negotiators stated that this was in 

conflict with their responsibilities under 

the Health Insurance Portability and 

Accountability Act (HIPAA). The 

Department reviewed HIPAA materials 

and found nothing that precludes the 

Department from performing 

unannounced site visits. Nevertheless, 

the Department will cooperate with 

health care providers and their business 

associates with respect to applicable 

procedures required by HIPAA. 

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 Office of Management and 

Budget (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 that 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 not 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 

As discussed in this NPRM, these 

proposed regulations are needed to 

implement the provisions of the HEA, as 

amended. In particular, these proposed 

regulations address the provisions 

related to the recognition of accrediting 

agencies by the Secretary. 

In addition, these proposed 

regulations are needed to ensure that the 

Department fulfills its fiduciary 

responsibility regarding the appropriate 

use of Federal funds made available by 

the Department to institutions of higher 

education under title IV of the HEA. The 

Secretary grants recognition to 

accrediting agencies that are considered 

by the Department to be reliable 

authorities regarding the quality of 

education or training offered by the 

institutions or programs they accredit. 

Congress requires that an institution of 

higher education be accredited by an 

accrediting agency recognized by the 

Secretary in order to receive Federal 

funds authorized under title IV, HEA 

programs. 

Section 492 of the HEA requires the 

Secretary, before publishing any 

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 individuals and 

representatives from relevant 

constituent groups, the Secretary must 

subject the proposed regulations for the 

title IV, HEA programs to a negotiated 

rulemaking process. All proposed 

regulations that the Department 

publishes must conform to final 

agreements resulting from that process 

unless the Secretary reopens the process 

or provides a written explanation to the 

participants in that process stating why 

the Secretary has decided to depart from 

the agreements. The 2009 negotiated 

rulemaking committee for accreditation 

reached consensus on the proposed 

regulatory language contained in this 


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NPRM. A summary of the proposed 

regulatory language agreed upon by 

negotiators is available in the 

Significant Proposed Regulations 

section. 

Regulatory Alternatives Considered 

The following section addresses the 

alternatives that the Department 

considered in implementing the 

discretionary portions of the HEOA 

provisions. These alternatives are also 

discussed in more detail in the Reasons 

sections of this NPRM related to the 

specific proposed regulatory provisions. 

A broad range of alternatives to these 

proposed regulations was considered as 

part of the negotiated rulemaking 

process. These alternatives were 

reviewed in detail in the preamble to 

this NPRM under both the Regulatory 

Impact Analysis and the Reasons 

sections accompanying the discussion 

of each proposed regulatory provision. 

However, the Department is interested 

in receiving comments related to other 

alternatives to the proposed regulations. 

To send any comments that concern 

alternatives to these proposed 

regulations, see the instructions in the 

ADDRESSES section of this NPRM. 

Benefit-Cost Analysis 

Benefits 

The benefits of these proposed 

regulations would include: Ensuring 

that accrediting agencies are reliable 

authorities as to the quality of education 

or training offered by an institution or 

program they accredit; ensuring that the 

Department fulfills its fiduciary 

responsibility for institutional funding 

under title IV, HEA programs; and 

establishing consistency between 

statutory language and regulatory 

language. An additional benefit of the 

proposed regulations would be 

providing accrediting agencies with 

greater clarity on regulations regarding 

the following: Distance and 

correspondence education; accreditation 

team members; transfer of credit; teachout plan approval; definition of 

recognition; demonstration of 

compliance; recognition procedures, 

including procedures for NACIQI; direct 

assessment programs; monitoring; 

substantive change; record keeping and 

confidentiality; and due process and 

appeals. However, it is difficult to 

quantify benefits related to the proposed 

regulations. The Department is 

interested in receiving comments or 

data that would support a more rigorous 

analysis of the benefits of these 

provisions. 

Costs 

Many of the statutory provisions 

implemented through this NPRM would 

not require accrediting agencies and 

institutions to develop new disclosures, 

materials, or accompanying 

dissemination processes. Other 

proposed regulations generally would 

require discrete changes in specific 

parameters associated with existing 

guidance rather than wholly new 

requirements. Accordingly, accrediting 

agencies wishing to continue to be 

recognized by the Secretary and 

institutions wishing to continue to 

participate in title IV, HEA programs are 

estimated to have already absorbed most 

of the administrative costs related to 

implementing these proposed 

regulations. 

In assessing the potential impact of 

these proposed regulations, the 

Department recognizes that certain 

provisions are likely to increase 

workload for some program 

participants. 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 opportunity costs related 

to the reassignment of existing staff from 

other activities. Given the limited data 

available, the Department is particularly 

interested in comments and supporting 

information related to possible 

administrative burden to accrediting 

agencies and institutions stemming from 

the proposed regulations. Estimates 

included in this notice will be 

reevaluated based on any information 

received during the public comment 

period. 

Two new statutory concepts reflected 

in proposed § 602.25 do not exist in 

current regulations: (1) An institution’s 

or program’s right to appeal adverse 

accrediting agency actions to an appeals 

panel that is subject to a conflict of 

interest policy and that does not contain 

members of the underlying decisionmaking body; and (2) an institution’s or 

program’s right to review of new 

financial information, if the institution 

or agency meets certain conditions, 

before the accrediting agency takes a 

final adverse action. 

Although accrediting agencies must 

be prepared to respond to appeals and 

to requests for review of new financial 

information, institutions or programs 

decide whether to undertake these 

appeals and make these requests. We do 

not expect the new provisions to affect 

the number of institutions or programs 

that appeal an accrediting agency 

adverse action; therefore, there would 

be no additional costs to institutions or 

programs. Based on the discussion on 

this issue at negotiated rulemaking and 

historical data on appeals, it is likely 

that no more than five institutions per 

year will be able to meet the 

qualifications to be considered under 

the new provision for review of new 

financial information and will seek such 

a review. The proposed regulations 

would also require that an accrediting 

agency confirm, as part of the agency’s 

review for initial or renewal of 

accreditation, that institutions that 

participate in title IV, HEA programs 

have transfer of credit policies that are 

publicly disclosed and that include 

statements of the criteria established by 

the institutions regarding the transfer of 

credit earned at another institution of 

higher education. As accrediting 

agencies are already required to review 

various policies and procedures at the 

institutions they accredit, we expect the 

addition of this provision will add a few 

minutes to an accreditation review. We 

do not have the data to provide a more 

refined estimate at this time. As 

indicated above, we will adjust the 

estimate based on any comments 

received. 

In addition, the proposed regulations 

would require an agency that has or 

seeks to include the evaluation of 

distance education or correspondence 

education within its scope of 

recognition to require participating 

institutions that offer distance education 

or correspondence education to have 

processes in place through which the 

institutions establish that the student 

who registers in a distance education or 

correspondence education course or 

program is the same student who 

participates in and completes the course 

or program and receives the academic 

credit. It is standard practice for 

institutions that offer distance or 

correspondence education to have 

processes that verify the identity of 

students; therefore, this provision will 

not have an impact on institutions. 

Some accrediting agencies that evaluate 

distance education or correspondence 

already review those processes when 

they conduct accreditation reviews. For 

those agencies that will have to add a 

step to their evaluation process, the time 

added to the review process is expected 

to minimal. We will refine our estimate 

if we receive comments that would 

enable us calculate any additional costs 

associated with this provision. 

Finally, the proposed regulations 

would require participating institutions 

to submit a teach-out plan to their 

accrediting agency upon the occurrence 

of any of the following: An emergency 


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action of the Secretary against an 

institution, or an action by the Secretary 

to limit, suspend, or terminate an 

institution’s participation in any title IV, 

HEA program; an agency action to 

withdraw, terminate, or suspend the 

accreditation or preaccreditation of the 

institution; the institution notifies the 

accrediting agency that it intends to 

cease operations entirely or close a 

location that provides one hundred 

percent of at least one program; or a 

State licensing or authorizing agency 

notifies the accrediting agency that an 

institution’s license or legal 

authorization to provide an educational 

program has been or will be revoked. As 

indicated in the Paperwork Reduction 

Act section, we expect the average time 

needed to develop a teach-out plan is 

four hours. Based on historical data that 

show the number of institutions that are 

subject to Department action, lose 

institutional eligibility, or close, and an 

estimate of the number of locations that 

offer one hundred percent of a program, 

we estimate that approximately 70 

institutions per year will be required to 

submit a teach-out plan to their 

accrediting agency. Most of the 

institutions and locations that close 

offer only one or two programs. For 

some institutions, the plan will be very 

simple: the institution will teach out its 

students. For other institutions, 

preparing a plan may involve doing 

research to determine what nearby 

schools offer similar programs; in most 

cases, the institution will already know, 

as the nearby schools will have been 

their competitors. In a few cases, more 

work may be needed to develop the 

teach-out plan. This is likely to occur 

when the affected institution or location 

has offered several different programs. 

Given the wide variety of situations, our 

best estimate is that the average amount 

of time needed to complete a teach-out 

plan is four hours. Using May 2009 

Bureau of Labor information that the 

average hourly wage for private, nonagricultural workers is $18.54, the total 

estimated cost for carrying out this 

provision is $5,191 (70 institutions × 4 

hours/institution × $18.54/hour). 

Net Budget Impacts 

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. 

The net budget impact of these 

proposed regulations on accrediting 

agencies and institutions of higher 

education is estimated to be minimal. 

As previously mentioned, many of the 

statutory provisions implemented 

through this NPRM will not require 

accrediting agencies and institutions to 

develop new disclosures, materials, or 

accompanying dissemination processes. 

In addition, the Department takes steps 

in these proposed regulations to limit 

the administrative burden on 

accrediting agencies and institutions. 

The Department believes that most of 

the administrative costs related to 

implementing these proposed 

regulations have already been absorbed 

by accrediting agencies and institutions. 

As noted in the chart in the Paperwork 

Reduction Act section of the preamble, 

the net effect on the work of accrediting 

agencies and institutions is estimated to 

be 3,212 hours. Assuming that the 

employee cost of implementing the new 

requirements is $18.54/hour (based on 

average wage information from the 

Bureau of Labor Statistics), the net 

budget impact of these proposed 

regulations is estimated to be $59,550. 

The net budget impact of these 

proposed regulations on the Department 

is also estimated to be minimal. Primary 

additional costs would be incurred for 

administering these regulations should 

NACIQI decide to convene more than 

two national meetings annually. 

Because the HEOA provisions afford the 

NACIQI chair the authority to set the 

agenda for NACIQI meetings with the 

approval of the designated Federal 

official, it is conceivable that NACIQI 

may choose to meet more often than 

twice a year. Should this occur, the 

Department would incur additional 

administrative costs resulting from 

convening one or more additional 

meetings. The estimated cost to the 

Department of convening another 

NACIQI meeting is $55,300. No 

additional costs to the Department 

resulting from these proposed 

regulations are anticipated. 

In analyzing the net budget impacts of 

these proposed regulations, feedback 

was received from non-Federal 

negotiators during negotiated 

rulemaking and from Department staff. 

However, data on administrative burden 

at participating accrediting agencies and 

institutions are extremely limited; 

accordingly, as noted above, the 

Department is particularly interested in 

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. 

Assumptions, Limitations, and Data 

Sources 

Because these proposed regulations 

would largely restate statutory 

requirements that would be selfimplementing in the absence of 

regulatory action, 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. 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. 

Clarity of the Regulations 

Executive Order 12866 and the 

Presidential memorandum ‘‘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, 

§ 600.2.) 

• 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 

directly affect accrediting agencies and 

institutions of higher education that 


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participate in title IV, HEA programs. 

The U.S. Small Business Administration 

Size Standards define organizations as 

‘‘small entities’’ if they are for-profit or 

nonprofit organizations with total 

annual revenue below $5,000,000 or if 

they are organizations controlled by 

governmental entities with populations 

below 50,000. 

A significant percentage of the 

accrediting agencies and institutions 

participating in title IV, HEA programs 

meet the definition of ‘‘small entities’’. 

The Department estimates that 

approximately 40 accrediting agencies 

and 2,310 postsecondary institutions 

meet the definition of ‘‘small entity’’. 

The proposed regulatory action would 

not substantively change regulations 

governing institutional eligibility and 

the Secretary’s recognition of 

accrediting agencies in a way that 

would result in a material increase or 

decrease in the number of institutions 

participating in title IV of the HEA or in 

the number of accrediting agencies 

recognized by the Secretary. For these 

accrediting agencies and institutions, 

the new requirements under the 

proposed regulations are not expected to 

impose significant new costs. Although 

the proposed regulations contain some 

new requirements, many agencies and 

institutions have policies in place that 

are similar to the new requirements. The 

Department estimates that costs 

attributable to complying with the new 

requirements are likely to be small. 

As noted in the Paperwork Reduction 

Act section of this NPRM, the net effect 

on the work of accrediting agencies and 

institutions is estimated to be 3,212 

hours. For the approximately 2,350 

small entities covered by the proposed 

regulations, the net budget impact is 

estimated to be 1,851 hours. Using the 

May 2009 Bureau of Labor data for the 

average hourly wage of private, nonagricultural workers, $18.54 per hour, 

the estimated cost of the new provisions 

to small entities is $34,318. 

The impact of the proposed 

regulations on individuals is not subject 

to the Regulatory Flexibility Act. 

The Secretary invites comments from 

small accrediting agencies and 

institutions 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 of 1995 

Proposed §§ 602.15, 602.19, 602.24, 

602.25, 602.26, 602.27, 602.31, and 

602.32 contain information collection 

requirements. Under the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

3507(d)), the Department of Education 

has submitted a copy of these sections 

to OMB for its review. 

Section 602.15—Administrative and 

Fiscal Responsibilities 

Proposed § 602.15 would require 

accrediting agencies to demonstrate 

certain administrative responsibilities, 

including maintenance of all accrediting 

documentation for each institution from 

the last full accreditation or 

preaccreditation review. Under the 

current regulations, agencies are 

required to maintain this documentation 

for the previous two accreditation or 

preaccreditation reviews. Accrediting 

agencies must maintain documents 

regarding substantive change decisions 

under this requirement in the current 

regulations. The proposed regulation 

would reduce the administrative burden 

to maintenance of only one full 

accreditation or preaccreditation review. 

Although this represents a reduction of 

the burden on agencies under OMB 

Control Number 1840–0788, the 

reduced hours for maintaining only one 

complete review cycle are negligible 

because the agencies already collect the 

information. 

Section 602.19—Monitoring and 

Reevaluation of Accredited Institutions 

and Programs 

Proposed § 602.19(b) would require 

agencies to collect data to ensure that 

the institutions they accredit remain in 

compliance with their regulations. This 

proposed regulation would clarify the 

language in the current regulation 

regarding the data that agencies must 

collect to ensure that institutions and 

programs remain in compliance with 

their accrediting standards. Because the 

current regulation requires agencies to 

collect this information, the proposed 

regulatory language change would not 

represent any additional reporting 

burden under OMB Control Number 

1840–0788. 

Proposed § 602.19(c) would require 

agencies to monitor the enrollment 

growth of institutions or programs they 

accredit each year. This proposed 

regulation would represent a change in 

the information that accrediting 

agencies must collect currently. It 

would require that agencies collect 

information to monitor enrollment 

growth for the institutions or programs 

that they accredit. The Department 

believes that institutions already collect 

enrollment data, but estimates that this 

regulation would increase the burden to 

each of the 61 recognized accrediting 

agencies by a total of 122 hours under 

OMB Control Number 1840–0788. 

Proposed § 602.19(e) would require 

accrediting agencies that expanded their 

scope to include distance education or 

correspondence education by notice to 

the Secretary to monitor enrollment 

growth of the institutions they accredit 

that offer distance education or 

correspondence education. These 

agencies must report to the Department, 

within 30 days, any institution that 

experiences enrollment growth of 50 

percent or more during a fiscal year. The 

content of the report is described in 

§ 602.31(d). 

Proposed § 602.19(e) would represent 

a change in the information that some 

accrediting agencies must collect. The 

proposed regulation would only affect 

institutional accrediting agencies and 

programmatic accrediting agencies that 

accredit freestanding institutions that 

currently do not have distance 

education in their scope of recognition. 

Department staff review of currently 

recognized accrediting agencies shows 

that 27 agencies would not be affected 

by this proposed regulation. However 15 

of the remaining recognized agencies 

may be affected if any decide to include 

distance education in their scope of 

recognition in the future. The 

Department estimates that the 

additional reporting requirement would 

increase the burden to accrediting 

agencies by a total of 60 hours under 

OMB Control Number 1840–0788 if all 

15 agencies decided to add distance 

education or correspondence education 

to their scope of recognition. 

Section 602.24—Additional Procedures 

Certain Institutional Accreditors Must 

Have 

Proposed § 602.24 would mandate 

that an accrediting agency require an 

institution it accredits to submit a teachout plan for approval by the accrediting 

agency if any of following events occurs: 

The Department initiates an emergency 

action against an institution, or an 

action by the Secretary to limit, 

suspend, or terminate an institution 

participating in any title IV, HEA 

program; the accrediting agency acts to 

withdraw, terminate, or suspend the 

accreditation or preaccreditation of the 

institution; the institution notifies the 

agency that it intends to cease 

operations entirely or close a location 

that provides one hundred percent of at 

least one program; or a State licensing 

or authorizing agency notifies the 

agency that an institution’s license or 

legal authorization to provide an 

educational program has been or will be 

revoked. If the teach-out plan requires a 

teach-out agreement, proposed § 602.24 

would also identify the components of 

the teach-out agreement. The 


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39520 Federal Register / Vol. 74, No. 150 / Thursday, August 6, 2009 / Proposed Rules 

Department estimates that the proposed 

regulation would place an additional 

burden on 70 institutions each year for 

a total of 280 hours under OMB Control 

Number 1840–0788. 

Section 602.25—-Due Process 

Proposed § 602.25 would include two 

new statutory concepts. Proposed 

§ 602.25(f) would provide for an 

institution’s or program’s right to appeal 

any adverse accrediting agency action 

before an appeals panel that is subject 

to a conflict of interest policy and does 

not contain members of the underlying 

decision-making body. Proposed 

§ 602.25(h) would provide for an 

institution’s or program’s right for the 

review of new financial information, if 

it meets certain conditions, before the 

accrediting agency takes a final adverse 

action. 

Although accrediting agencies must 

be prepared to respond to appeals and 

to requests for review of new financial 

information, the decision to undertake 

these actions is a voluntary one on the 

part of an institution. The new 

provisions are not expected to have any 

effect on the number of institutions that 

appeal an accrediting agency adverse 

action, and therefore, there would be 

not additional costs to institutions. 

Based on the discussion on this issue at 

negotiated rulemaking, and historical 

data on appeals, it is likely that no more 

than five institutions per year will be 

able to meet the qualifications to be 

considered under the new provision for 

review of new financial information and 

will seek such a review. 

Agencies are already required to have 

an appeal process; the burden 

associated with revising existing 

procedures to conform with the new 

requirements is estimated to be 610 

hours, which is based on 61 accrediting 

agencies × 10 hours. The estimated 

burden is associated primarily with 

implementing the regulation in the 

initial year as agencies establish new 

procedures. The burden is estimated to 

be 2,440 hours, based on 61 accrediting 

agencies × 40 hours. The burden for 

maintaining this process in subsequent 

years is expected to be minimal, given 

that we expect no more than five 

agencies will meet the requirements for 

such a review. 

Section 602.26—Notification of 

Accrediting Decisions 

Proposed § 602.26(b) would require 

agencies to provide a written notice to 

the Secretary of any final decision that 

is considered by the agency to be an 

adverse action and of final decisions 

withdrawing, suspending, revoking, or 

terminating an institution’s or program’s 

accreditation or preaccreditation. 

Proposed § 602.26(d) would require 

agencies to make available to the 

Secretary and the public a statement 

regarding the reasons for withdrawing, 

suspending, revoking, or terminating an 

institution’s or program’s accreditation 

or preaccreditation. The statement must 

include either comments from the 

affected institution or program regarding 

that decision or evidence that the 

affected institution or program was 

offered the opportunity to provide 

comments. The proposed change would 

clarify existing language and would 

require that the statement provide 

evidence that the affected institution or 

program was offered an opportunity to 

provide comments if no comments were 

received. The proposed changes do not 

constitute any new reporting 

requirements and, therefore, do not 

represent any additional burden on 

accrediting agencies under OMB Control 

Number 1840–0788. 

Section 602.27—Other Information an 

Agency Must Provide the Department 

Proposed § 602.27(a) would require an 

accrediting agency to provide to the 

Secretary a copy of any annual report it 

prepares, an updated directory of its 

accredited institutions and programs, 

any proposed changes to its policies, 

procedures, or accreditation standards 

that might alter its scope of recognition 

or compliance with the Criteria for 

Recognition, and a notification if it is 

changing its scope of recognition to 

include distance education or 

correspondence education. Further, if 

requested by the Secretary, an agency 

must provide a summary of the major 

accrediting activities conducted during 

the year. The proposed regulation also 

would require an accrediting agency to 

provide to the Department, if the 

Secretary requests, any information 

regarding an institution’s compliance 

with its title IV, HEA program 

responsibilities. 

Although the proposed changes 

would primarily clarify language in the 

current regulations, the changes would 

also affect the reporting requirement 

regarding adding distance education or 

correspondence education to an 

agency’s scope of recognition. The 

proposed regulation would remove the 

requirement for institutional accrediting 

agencies, and programmatic accrediting 

agencies that accredit freestanding 

institutions, to submit an application to 

the Department if an agency wished to 

add distance education or 

correspondence education to its scope 

of recognition; the proposed changes 

would only require agencies to notify 

the Department that its scope has been 

changed to include distance education 

or correspondence education. Therefore, 

the proposed changes to the regulation 

would not impose any new burden on 

accrediting agencies and, in the case of 

adding distance education or 

correspondence education to a scope of 

recognition, it would reduce the burden 

on agencies. Department staff estimates 

the burden on the 15 agencies that 

would be affected by the proposed 

regulation would be reduced by 300 

hours under OMB Control Number 

1840–0788 if all the agencies decided to 

add distance education or 

correspondence education to their scope 

of recognition. 

Section 602.31—Agency Submissions to 

the Department 

Proposed § 602.31(a) would require 

accrediting agencies to submit an 

application for recognition or renewal of 

recognition at the end of the period of 

recognition granted by the Secretary, 

generally every five years. The 

application would be required to 

demonstrate that the agency complies 

with the Department’s Criteria for 

Recognition as defined in CFR 34 part 

602. The proposed regulation would 

clarify what documents should be 

provided with an agency’s application 

for recognition. The language of the 

proposed regulation would not impose 

a new reporting burden on agencies 

under OMB Control Number 1840–0788. 

Proposed § 602.31(b) would require 

accrediting agencies that wish to expand 

their scope of recognition to submit an 

application to the Secretary. The 

proposed language would not place any 

additional reporting burden on 

accrediting agencies because the current 

regulations also require the submission 

of an application when an agency seeks 

to expand its scope of recognition. The 

language of the proposed regulation 

would not impose a new reporting 

burden on agencies under OMB Control 

Number 1840–0788. 

Proposed § 602.31(c) would require 

that agencies provide a compliance 

report when it has been determined that 

they do not fully comply with the 

criteria for recognition or are ineffective 

in applying those criteria. In order for 

the Secretary to determine that agencies 

are reliable authorities regarding the 

quality of education or training offered 

by their accredited institutions or 

programs, agencies must demonstrate 

that they fully comply with 34 part 602, 

subpart B. Therefore, while no 

requirement to submit a compliance 

report exists in the current regulations, 

the proposed language reflects the 

existing practice of the Department. The 

proposed changes to the regulation 


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would not impose a new reporting 

burden on agencies under OMB Control 

Number 1840–0788. 

Proposed § 602.31(d) would require 

agencies that notify the Department that 

they are changing their scope of 

recognition to include distance 

education or correspondence education 

to annually monitor enrollment growth 

of the institutions they accredit that 

offer distance education. A report would 

be required to be sent to the Department 

for each institution that reports a 50 

percent or higher increase of headcount 

enrollment during a fiscal year. The 

report must address the capacity of each 

institution to accommodate significant 

growth in enrollment and to maintain 

educational quality; the circumstances 

that led to the growth; and any other 

applicable information affecting 

compliance with the regulation. As 

noted in the discussion of proposed 

§ 602.19(e), this section of the regulation 

would only affect the 15 institutional 

accrediting agencies and programmatic 

accrediting agencies that accredit 

freestanding institutions that currently 

do not have distance education in their 

scope of recognition. Based on the 

Department’s previous experience with 

institutions that have experienced 

significant growth, this provision may 

affect no more than 3 institutions per 

year. Therefore, the proposed changes 

would increase the burden to the 15 

affected accrediting agencies by 60 

hours under OMB Control Number 

1840–0788 if they all add distance 

education to their scope of recognition. 

Section 602.32—Procedures for 

Department Review of Applications for 

Recognition or for Change in Scope, 

Compliance Reports, and Increases in 

Enrollment 

Proposed § 602.32(f) would require 

the Department to forward to the agency 

a draft analysis of an agency’s 

application for recognition that includes 

any identified areas of non-compliance, 

the proposed recognition 

recommendation, and a copy of all 

third-party comments that the 

Department received. The agency could 

then provide a written response to the 

draft staff analysis and the third-party 

comments. The proposed change would 

simplify the language of the current 

regulation in that it combines several 

paragraphs of the current regulation into 

a single paragraph. The current 

regulations also require that the 

Department invite accrediting agencies 

to provide a written response to all draft 

analyses developed by Department staff 

as well as all third-party comments 

received by the Department. Therefore, 

the proposed changes would not impose 

a new reporting burden on agencies 

under OMB Control Number 1840–0788. 

Consistent with the discussion above, 

the following chart describes the 

sections of the proposed regulations 

involving information collection, the 

information being collected, and the 

collection that the Department will 

submit to the Office of Management and 

Budget for approval and public 

comment under the Paperwork 

Reduction Act. 

Regulatory 

section Information section Collection 

§ 602.15 ........... Accrediting agencies must demonstrate certain administrative responsibilities, 

including maintenance of all accrediting documentation for each institution 

from the last full accreditation or preaccreditation review. Previously, agencies were required to maintain this information covering the previous two 

accreditation or preaccreditation reviews. Although the current regulation 

does not explicitly mention documents relating to substantive change decisions, the requirement for agencies to maintain these documents was covered under the current regulation’s requirement to maintain all documents 

related to accrediting decisions and special reports. A substantive change 

request would be considered a special report that had to be submitted to 

the agency for a decision. Further, an agency’s decision regarding the substantive change request was, in fact, an accreditation decision and was reflected in a decision letter that either allowed the substantive change to be 

covered under the agency’s grant of accreditation or denied the request and 

did not allow the change to be covered under the agency’s grant of accreditation. Section 496(c)(1)of the HEA.

OMB 1840–0788 Although this represents a 

reduction of the burden on agencies under 

OMB Control Number 1840–0788, since 

the agencies already collect the information, the reduced hours for maintaining only 

one complete review cycle is negligible. 

§ 602.19(b) ....... Agencies must collect data to ensure that the institutions they accredit remain 

in compliance with their regulations. This proposed regulation would clarify 

the language in the current regulation regarding the data agencies should 

collect to ensure that institutions and programs remain in compliance with 

their accrediting standards. Section 496(a)(4)(A) of the HEA.

OMB 1840–0788 There is no additional paperwork burden associated with this section of the regulation. 

§ 602.19(c) ....... Agencies must monitor the enrollment growth of institutions each year. This 

proposed regulation would represent a change in the information that accrediting agencies must collect. It would require that agencies collect information to monitor enrollment growth for the institutions or programs that 

they accredit. Section 496(c)(2) of the HEA.

OMB 1840–0788 It is estimated that this regulation would increase the burden to the 61 

recognized accrediting agencies by 122 

hours. 

§ 602.19(e) ....... Accrediting agencies that expand their scope to include distance education or 

correspondence education by notice to the Secretary must monitor enrollment growth of institutions that offer distance education or correspondence 

education and report to the Department, within 30 days, any institution that 

experiences enrollment growth of 50 percent or more during a fiscal year. 

Section 496(q) of the HEA.

OMB 1840–0788 It is estimated that this regulation would increase the burden for 15 of 

the remaining recognized agencies by 60 

hours if all decided to include distance 

education in their scope of recognition in 

the future. 


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Regulatory 

section Information section Collection 

§ 602.24 ........... Approximately 70 institutions per year will be required to submit a teach-out 

plan to their accrediting agency. Most of the institutions and locations that 

close offer only one or two programs. For some institutions, the plan will be 

very simple: The institution will teach out its students. For other institutions, 

preparing a plan may involve doing some research to determine what nearby schools offer similar programs but in most cases, the institution will already know, as the nearby schools will have been their competitors. In a 

few cases, more work may be needed to develop a plan. Given the wide 

variety of situations, our best estimate is that the average amount of time 

needed to complete a plan is 4 hours. Therefore, the total amount of time is 

280 hours (70 institutions × 4 hours). Section 496(c)(3) of the HEA.

OMB 1840–0788 It is estimated that this regulation would increase the burden on 70 institutions each year for a total of 280 

hours. 

§ 602.25(f) ........ Section 602.25(f) includes the new statutory concept of an institution’s or program’s right to appeal any adverse accrediting agency action before an appeals panel that is subject to a conflict of interest policy and does not contain members of the underlying decision-making body.OMB 1840–0788 It is estimated that this regulation would increase the burden on 61 

accrediting agencies primarily in the first 

year of implementation for a total of 610 

hours. 

Agencies are already required to have an appeal process; the negligible burden is estimated to be 610 hours, which is based on 61 accrediting agencies × 10 hours. Section 496(a)(6) of the HEA.

§ 602.25(h) ....... Section 602.25(h) includes the new statutory concept of an institution’s or program’s right to review new financial information, if it meets current provisions, before the accrediting agency takes a final adverse action.OMB 1840–0788 It is estimated that this regulation would increase the burden on 61 

accrediting agencies primarily in the first 

year of implementation for a total of 2440 

hours. 

The estimated burden is associated primarily with implementing the regulation 

in the initial year as agencies establish new procedures. The time is estimated to be 2440 hours, based on 61 accrediting agencies × 40 hours. 

Section 496(a)(6) of the HEA.

§ 602.26(b) ....... Agencies must provide a written notice to the Secretary of any final decision 

that is considered by the agency to be an adverse action as well as final 

decisions withdrawing, suspending, revoking, or terminating an institution’s 

or program’s accreditation or preaccreditation. Section 496(c)(7) of the HEA.

OMB 1840–0788 There is no additional paperwork burden associated with this section of the regulation. 

§ 602.26(d) ....... Requires agencies to make available to the Secretary and the public a statement regarding the reasons for withdrawing, suspending, revoking, or terminating an institution’s or program’s accreditation or preaccreditation. The 

statement must include any comments that affected institutions or programs 

want to make with regard to that decision or evidence that the institution or 

program was offered the opportunity to provide comments. The proposed 

changes provide clarifying language and add that the statement must provide evidence that an institution or program was offered an opportunity to 

provide comments if no comments were received. Section 496(c)(7) of the 

HEA.

OMB 1840–0788 There is no additional paperwork burden associated with this section of the regulation. 

§ 602.27(a) ....... Requires agencies to provide to the Secretary a copy of any annual report it 

prepares, an updated directory of its accredited institutions and programs, 

any proposed changes in an agency’s policies procedures or accreditation 

standards that might alter its scope of recognition or compliance with the 

Criteria for Recognition, and a notification if it is changing its scope of recognition to include distance education or correspondence education. Further, if requested by the Secretary, agencies must provide a summary of 

the major accrediting activities conducted during the year. It also would require agencies to provide to the Department, if the Secretary requests, any 

information regarding an institution’s compliance with its title IV, HEA program responsibilities. Although the proposed changes to the regulation primarily clarify language that is in the current regulation, the changes would 

impact the reporting requirement regarding adding distance education or 

correspondence education to an agency’s scope of recognition. The proposed regulation would remove the requirement for institutional accrediting 

agencies to submit an application to the Department if an agency wished to 

add distance education or correspondence education to its scope of recognition and only require agencies to notify the Department that its scope 

has been changed to include distance education or correspondence education. Sections 496(a)(4) and 487(a)(15) of the HEA.

OMB 1840–0788 It is estimated that burden 

on the 15 agencies that would be affected 

by the proposed regulation would be reduced by 300 hours if all the agencies decided to add distance education or correspondence education to their scope of 

recognition. 

§ 602.31(a) ....... Requires accrediting agencies to submit an application for recognition or renewal of recognition at the end of the period of recognition granted by the 

Secretary, generally every five years. The application must demonstrate 

that the agency complies with the Department’s Criteria for Recognition as 

defined in CFR 34 Part 602. The proposed regulation clarifies what documents should be provided with an agency’s application for recognition. Section 496(d) of the HEA.

OMB 1840–0788 There is no additional paperwork burden associated with this section of the regulation. 


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Regulatory 

section Information section Collection 

§ 602.31(b) ....... Requires accrediting agencies that wish to expand their scope of recognition 

to submit an application to the Secretary. The proposed language would not 

place any additional reporting burden on accrediting agencies since the current regulations also require the submission of an application when an 

agency seeks to expand its scope of recognition. Section 496(a)(4)(B) of 

the HEA.

OMB 1840–0788 There is no additional paperwork burden associated with this section of the regulation. 

§ 602.31(c) ....... Requires agencies to provide a compliance report when it has been determined that they do not fully comply with the criteria for recognition or are ineffective in applying those criteria. In order for the Secretary to determine 

that agencies are reliable authorities regarding the quality of education or 

training offered through their accredited institutions or programs, agencies 

must demonstrate that they fully comply with 34 part 602 subpart B. Therefore, while the requirement to submit a compliance report is not identified in 

the current regulation, the proposed language would place in writing what 

has been the practice of the Department in order to comply with Higher 

Education Act, as amended. Sections 496(a) and (c) of the HEA.

OMB 1840–0788 There is no additional paperwork burden associated with this section of the regulation. 

§ 602.31(d) ....... Requires agencies that notify the Department that they are changing their 

scope of recognition to include distance education or correspondence education to annually monitor enrollment growth of the institutions they accredit 

that offer distance education. A report would be required to be sent to the 

Department for each institution that reports a 50 percent or higher increase 

of headcount enrollment during a fiscal year. The report must address the 

capacity of each institution to accommodate significant growth in enrollment 

and to maintain educational quality; the circumstances that led to the 

growth; and any other applicable information affecting compliance with the 

regulation. As noted in the discussion of proposed § 602.19(e) this section 

of the regulation would only affect the 15 institutional accrediting agencies 

and programmatic accrediting agencies that accredit freestanding institutions that currently do not have distance education in their scope of recognition. Section 496(a)(4)(B) and (q) of the HEA.

OMB 1840–0788 It is estimated that this regulation would increase the burden of 15 of 

the remaining recognized agencies by 60 

hours if all decided to include distance 

education in their scope of recognition in 

the future. Based on prior experiences with 

institutions experiencing significant growth, 

the burden is estimated to apply to 3 institutions per year. 

§ 602.32 ........... Requires the Department to forward to the agency a draft analysis of an 

agency’s application for recognition that includes any identified areas of 

non-compliance, the proposed recognition recommendation, and a copy of 

all third-party comments that the Department received. The agency could 

then provide a written response to the draft staff analysis and the third-party 

comments. The proposed change would simplify the language of the current 

regulation in that it combines several paragraphs of the current regulation 

into a single paragraph. The current regulations also require that the Department invite accrediting agencies to provide a written response to all 

draft analyses developed by Department staff as well as all third-party comments received by the Department. Section 496(o) of the HEA.

OMB 1840–0788 There is no additional paperwork burden associated with this section of the regulation. 

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 email 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 

This program is 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 may 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: 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. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS3
39524 Federal Register / Vol. 74, No. 150 / Thursday, August 6, 2009 / Proposed Rules 

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: www.gpoaccess.gov/nara/ 

index.html. 

(Catalog of Federal Domestic Assistance 

Number does not apply.) 

List of Subjects in 34 CFR 600 and 34 

CFR 602 

Colleges and universities, Education, 

Reporting and recordkeeping 

requirements. 

Dated: July 28, 2009. 

Arne Duncan, 

Secretary of Education. 

For the reasons discussed in the 

preamble, the Secretary proposes to 

amend parts 600 and 602 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: 

A. Revising the definition of 

Correspondence course. 

B. Adding in alphabetical order a new 

definition of Distance education. 

C. Removing the definition of 

Telecommunications course. 

The addition and revision read as 

follows: 

§ 600.2 Definitions. 

* * * * * 

Correspondence course: (1) A course 

provided by an institution under which 

the institution provides instructional 

materials, by mail or electronic 

transmission, including examinations 

on the materials, to students who are 

separated from the instructor. 

Interaction between the instructor and 

student is limited, is not regular and 

substantive, and is primarily initiated 

by the student. Correspondence courses 

are typically self-paced. 

(2) If a course is part correspondence 

and part residential training, the 

Secretary considers the course to be a 

correspondence course. 

(3) A correspondence course is not 

distance education. 

* * * * * 

Distance education means education 

that uses one or more of the 

technologies listed in paragraphs (1) 

through (4) of this definition to deliver 

instruction to students who are 

separated from the instructor and to 

support regular and substantive 

interaction between the students and 

the instructor, either synchronously or 

asynchronously. The technologies may 

include— 

(1) The internet; 

(2) One-way and two-way 

transmissions through open broadcast, 

closed circuit, cable, microwave, 

broadband lines, fiber optics, satellite, 

or wireless communications devices; 

(3) Audio conferencing; or 

(4) Video cassettes, DVDs, and CD– 

ROMs, if the cassettes, DVDs, or CD– 

ROMs are used in a course in 

conjunction with any of the 

technologies listed in paragraphs (1) 

through (3) of this definition. 

* * * * * 

PART 602—THE SECRETARY’S 

RECOGNITION OF ACCREDITING 

AGENCIES 

3. The authority citation for part 602 

continues to read as follows: 

Authority: 20 U.S.C. 1099b, unless 

otherwise noted. 

4. Section 602.3 is amended by: 

A. Adding in alphabetical order a new 

definition of Compliance report. 

B. Adding in alphabetical order a new 

definition of Correspondence education. 

C. Adding in alphabetical order a new 

definition of Designated Federal 

Official. 

D. Adding in alphabetical order a new 

definition of Direct assessment program. 

E. Revising the definition of Distance 

education. 

F. Adding in alphabetical order a new 

definition of Recognition. 

G. Revising paragraph (5) of the 

definition of Scope of recognition. 

H. Revising the definition of Teachout agreement. 

I. Adding in alphabetical order a new 

definition of Teach-out plan. 

The additions and revisions read as 

follows: 

§ 602.3 What definitions apply to this part? 

* * * * * 

Compliance report means a written 

report that the Department requires an 

agency to file to demonstrate that the 

agency has addressed deficiencies 

specified in a decision letter from the 

senior Department official or the 

Secretary. 

Correspondence education means: 

(1) Education provided through one or 

more courses by an institution under 

which the institution provides 

instructional materials, by mail or 

electronic transmission, including 

examinations on the materials, to 

students who are separated from the 

instructor. 

(2) Interaction between the instructor 

and the student is limited, is not regular 

and substantive, and is primarily 

initiated by the student. 

(3) Correspondence courses are 

typically self-paced. 

(4) Correspondence education is not 

distance education. 

Designated Federal Official means the 

Federal officer designated under section 

10(f) of the Federal Advisory Committee 

Act, 5 U.S.C. Appdx. 1. 

Direct assessment program means an 

instructional program that, in lieu of 

credit hours or clock hours as a measure 

of student learning, utilizes direct 

assessment of student learning, or 

recognizes the direct assessment of 

student learning by others, and meets 

the conditions of 34 CFR 668.10. For 

title IV, HEA purposes, the institution 

must obtain approval for the direct 

assessment program from the Secretary 

under 34 CFR 668.10(g) or (h) as 

applicable. As part of that approval, the 

accrediting agency must— 

(1) Evaluate the program(s) and 

include them in the institution’s grant of 

accreditation or preaccreditation; and 

(2) Review and approve the 

institution’s claim of each direct 

assessment program’s equivalence in 

terms of credit or clock hours. 

Distance education means education 

that uses one or more of the 

technologies listed in paragraphs (1) 

through (4) of this definition to deliver 

instruction to students who are 

separated from the instructor and to 

support regular and substantive 

interaction between the students and 

the instructor, either synchronously or 

asynchronously. The technologies may 

include— 

(1) The internet; 

(2) One-way and two-way 

transmissions through open broadcast, 

closed circuit, cable, microwave, 

broadband lines, fiber optics, satellite, 

or wireless communications devices; 

(3) Audio conferencing; or 

(4) Video cassettes, DVDs, and CD– 

ROMs, if the cassettes, DVDs, or CD– 

ROMs are used in a course in 

conjunction with any of the 

technologies listed in paragraphs (1) 

through (3) of this definition. 

* * * * * 

Recognition means an unappealed 

determination by the senior Department 

official under § 602.36, or a 

determination by the Secretary on 

appeal under § 602.37, that an 

accrediting agency complies with the 

criteria for recognition listed in subpart 

B of this part and that the agency is 


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effective in its application of those 

criteria. A grant of recognition to an 

agency as a reliable authority regarding 

the quality of education or training 

offered by institutions or programs it 

accredits remains in effect for the term 

granted except upon a determination 

made in accordance with subpart C of 

this part that the agency no longer 

complies with the subpart B criteria or 

that it has become ineffective in its 

application of those criteria. 

* * * * * 

Scope of recognition or scope * * * 

(5) Coverage of accrediting activities 

related to distance education or 

correspondence education. 

* * * * * 

Teach-out agreement means a written 

agreement between institutions that 

provides for the equitable treatment of 

students and a reasonable opportunity 

for students to complete their program 

of study if an institution, or an 

institutional location that provides one 

hundred percent of at least one program 

offered, ceases to operate before all 

enrolled students have completed their 

program of study. 

Teach-out plan means a written plan 

developed by an institution that 

provides for the equitable treatment of 

students if an institution, or an 

institutional location that provides one 

hundred percent of at least one program, 

ceases to operate before all students 

have completed their program of study, 

and may include, if required by the 

institution’s accrediting agency, a teachout agreement between institutions. 

* * * * * 

5. Section 602.15 is amended by: 

A. Revising paragraph (a)(2). 

B. In paragraph (b)(1), removing the 

word ‘‘two’’ and removing the letter ‘‘s’’ 

from the word ‘‘reviews’’ the first time 

it appears. 

C. Revising paragraph (b)(2). 

The revisions read as follows: 

§ 602.15 Administrative and fiscal 

responsibilities. 

* * * * * 

(a) * * * 

(2) Competent and knowledgeable 

individuals, qualified by education and 

experience in their own right and 

trained by the agency on their 

responsibilities, as appropriate for their 

roles, regarding the agency’s standards, 

policies, and procedures, to conduct its 

on-site evaluations, apply or establish 

its policies, and make its accrediting 

and preaccrediting decisions, including, 

if applicable to the agency’s scope, their 

responsibilities regarding distance 

education and correspondence 

education; 

* * * * * 

(b) * * * 

(2) All decisions made throughout an 

institution’s or program’s affiliation 

with the agency regarding the 

accreditation and preaccreditation of 

any institution or program and 

substantive changes, including all 

correspondence that is significantly 

related to those decisions. 

* * * * * 

6. Section 602.16 by amended by: 

A. Redesignating paragraphs (c) and 

(d) as paragraphs (d) and (e), 

respectively. 

B. Revising paragraph (a)(1)(i). 

C. Adding new paragraphs (c) and (f). 

The additions and revision read as 

follows: 

§ 602.16 Accreditation and 

preaccreditation standards. 

(a) * * * 

(1) * * * 

(i) Success with respect to student 

achievement in relation to the 

institution’s mission, which may 

include different standards for different 

institutions or programs, as established 

by the institution, including, as 

appropriate, consideration of State 

licensing examinations, course 

completion, and job placement rates. 

* * * * * 

(c) If the agency has or seeks to 

include within its scope of recognition 

the evaluation of the quality of 

institutions or programs offering 

distance education or correspondence 

education, the agency’s standards must 

effectively address the quality of an 

institution’s distance education or 

correspondence education in the areas 

identified in paragraph (a)(1) of this 

section. The agency is not required to 

have separate standards, procedures, or 

policies for the evaluation of distance 

education or correspondence education. 

* * * * * 

(f) Nothing in paragraph (a) of this 

section restricts— 

(1) An accrediting agency from 

setting, with the involvement of its 

members, and applying accreditation 

standards for or to institutions or 

programs that seek review by the 

agency; or 

(2) An institution from developing 

and using institutional standards to 

show its success with respect to student 

achievement, which achievement may 

be considered as part of any 

accreditation review. 

* * * * * 

7. Section 602.17 is amended by: 

A. In paragraph (e), removing the 

word ‘‘and’’ at the end of the paragraph. 

B. In paragraph (f), removing the 

punctuation ‘‘.’’ and adding, in its place, 

the words ‘‘; and’’. 

C. Adding a new paragraph (g). 

The addition reads as follows: 

§ 602.17 Application of standards in 

reaching an accrediting decision. 

* * * * * 

(g) Requires institutions that offer 

distance education or correspondence 

education to have processes in place 

through which the institution 

establishes that the student who 

registers in a distance education or 

correspondence education course or 

program is the same student who 

participates in and completes the course 

or program and receives the academic 

credit. The agency meets this 

requirement if it— 

(1) Requires institutions to verify the 

identity of a student who participates in 

class or coursework by using, at the 

option of the institution, methods such 

as— 

(i) A secure login and pass code; 

(ii) Proctored examinations; and 

(iii) New or other technologies and 

practices that are effective in verifying 

student identification; and 

(2) Makes clear in writing that 

institutions must use processes that 

protect student privacy and notify 

students of any projected additional 

student charges associated with the 

verification of student identity at the 

time of registration or enrollment. 

* * * * * 

8. Section 602.18 is amended by: 

A. Revising the introductory text. 

B. Redesignating paragraphs (a), (b), 

and (c) as paragraphs (b), (c), and (d), 

respectively. 

C. In newly redesignated paragraph 

(c), removing the word ‘‘and’’ at the end 

of the paragraph. 

D. In newly redesignated paragraph 

(d), removing the punctuation ‘‘.’’ and 

adding, in its place, the words ‘‘; and’’. 

E. Adding new paragraphs (a) and (e). 

The additions and revision read as 

follows: 

§ 602.18 Ensuring consistency in decisionmaking. 

The agency must consistently apply 

and enforce standards that respect the 

stated mission of the institution, 

including religious mission, and that 

ensure that the education or training 

offered by an institution or program, 

including any offered through distance 

education or correspondence education, 

is of sufficient quality to achieve its 

stated objective for the duration of any 

accreditation or preaccreditation period 

granted by the agency. The agency 

meets this requirement if the agency— 

(a) Has written specification of the 

requirements for accreditation and 

preaccreditation that include clear 


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standards for an institution or program 

to be accredited; 

* * * * * 

(e) Provides the institution or program 

with a detailed written report that 

clearly identifies any deficiencies in the 

institution’s or program’s compliance 

with the agency’s standards. 

* * * * * 

9. Section 602.19 is amended by: 

A. Revising paragraph (b). 

B. Adding new paragraphs (c), (d), 

and (e). 

The revision and additions read as 

follows: 

§ 602.19 Monitoring and reevaluation of 

accredited institutions and programs. 

* * * * * 

(b) The agency must demonstrate it 

has, and effectively applies, a set of 

monitoring and evaluation approaches 

that enables the agency to identify 

problems with an institution’s or 

program’s continued compliance with 

agency standards and that takes into 

account institutional or program 

strengths and stability. These 

approaches must include periodic 

reports, and collection and analysis of 

key data and indicators, identified by 

the agency, including, but not limited 

to, fiscal information and measures of 

student achievement, consistent with 

the provisions of § 602.16(f). This 

provision does not require institutions 

or programs to provide annual reports 

on each specific accreditation criterion. 

(c) Each agency must monitor overall 

growth of the institutions or programs it 

accredits and, at least annually, collect 

headcount enrollment data from those 

institutions or programs. 

(d) Institutional accrediting agencies 

must monitor the growth of programs at 

institutions experiencing significant 

enrollment growth, as reasonably 

defined by the agency. 

(e) Any agency that has notified the 

Secretary of a change in its scope in 

accordance with § 602.27(a)(5) must 

monitor the headcount enrollment of 

each institution it has accredited that 

offers distance education or 

correspondence education. If any such 

institution has experienced an increase 

in headcount enrollment of 50 percent 

or more within one institutional fiscal 

year, the agency must report that 

information to the Secretary within 30 

days of acquiring such data. 

* * * * * 

10. Section 602.22 is amended by: 

A. In paragraph (a)(2)(iii), removing 

the words ‘‘, in either content’’ and 

adding, in their place, the words ‘‘from 

the existing offerings of educational 

programs,’’. 

B. In paragraph (a)(2)(iv), removing 

the words ‘‘courses or’’, adding the 

words ‘‘of study’’ after the word 

‘‘programs’’ the first time it appears, and 

removing the word ‘‘above’’ and adding, 

in its place, the words ‘‘different from’’. 

C. Revising paragraph (a)(2)(vii). 

D. Adding new paragraphs (a)(2)(viii), 

(a)(2)(ix), and (a)(2)(x). 

E. Adding a new paragraph (a)(3). 

F. Revising paragraph (b). 

G. Revising paragraph (c), 

introductory text. 

H. In paragraph (c)(2), adding the 

words ‘‘a representative sample of’’ 

immediately after the words ‘‘visits to’’. 

The additions and revisions read as 

follows: 

§ 602.22 Substantive change. 

(a) * * * 

(2) * * * 

(vii) If the agency’s accreditation of an 

institution enables the institution to 

seek eligibility to participate in title IV, 

HEA programs, the entering into a 

contract under which an institution or 

organization not certified to participate 

in the title IV, HEA programs offers 

more than 25 percent of one or more of 

the accredited institution’s educational 

programs. 

(viii)(A) If the agency’s accreditation 

of an institution enables it to seek 

eligibility to participate in title IV, HEA 

programs, the establishment of an 

additional location at which the 

institution offers at least 50 percent of 

an educational program. The addition of 

such a location must be approved by the 

agency in accordance with paragraph (c) 

of this section unless the accrediting 

agency determines, and issues a written 

determination stating that the 

institution has— 

(1) Successfully completed at least 

one cycle of accreditation of maximum 

length offered by the agency and one 

renewal, or has been accredited for at 

least ten years; 

(2) At least three additional locations 

that the agency has approved; and 

(3) Met criteria established by the 

agency indicating sufficient capacity to 

add additional locations without 

individual prior approvals, including at 

a minimum satisfactory evidence of a 

system to ensure quality across a 

distributed enterprise that includes— 

(i) Clearly identified academic 

control; 

(ii) Regular evaluation of the 

locations; 

(iii) Adequate faculty, facilities, 

resources, and academic and student 

support systems; 

(iv) Financial stability; and 

(v) Long-range planning for 

expansion. 

(B) The agency’s procedures for 

approval of an additional location, 

pursuant to paragraph (a)(2)(viii)(A) of 

this section, must require timely 

reporting to the agency of every 

additional location established under 

this approval. 

(C) Each agency determination or 

redetermination to preapprove an 

institution’s addition of locations under 

paragraph (a)(2)(viii)(A) of this section 

may not exceed five years. 

(D) The agency may not preapprove 

an institution’s addition of locations 

under paragraph (a)(2)(viii)(A) of this 

section after the institution undergoes a 

change in ownership resulting in a 

change in control as defined in 34 CFR 

600.31 until the institution 

demonstrates that it meets the 

conditions for the agency to preapprove 

additional locations described in this 

paragraph. 

(E) The agency must have an effective 

mechanism for conducting, at 

reasonable intervals, visits to a 

representative sample of additional 

locations approved under paragraph 

(a)(2)(viii)(A) of this section. 

(ix) The acquisition of any other 

institution or any program or location of 

another institution. 

(x) The addition of a permanent 

location at a site at which the institution 

is conducting a teach-out for students of 

another institution that has ceased 

operating before all students have 

completed their program of study. 

(3) The agency’s substantive change 

policy must define when the changes 

made or proposed by an institution are 

or would be sufficiently extensive to 

require the agency to conduct a new 

comprehensive evaluation of that 

institution. 

(b) The agency may determine the 

procedures it uses to grant prior 

approval of the substantive change. 

However, these procedures must specify 

an effective date, which is not 

retroactive, on which the change is 

included in the program’s or 

institution’s accreditation. An agency 

may designate the date of a change in 

ownership as the effective date of its 

approval of that substantive change if 

the accreditation decision is made 

within 30 days of the change in 

ownership. Except as provided in 

paragraph (c) of this section, these 

procedures may, but need not, require a 

visit by the agency. 

(c) Except as provided in paragraph 

(a)(2)(viii)(A) of this section, if the 

agency’s accreditation of an institution 

enables the institution to seek eligibility 

to participate in title IV, HEA programs, 

the agency’s procedures for the approval 

of an additional location where at least 


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50 percent of an educational program is 

offered must provide for a 

determination of the institution’s fiscal 

and administrative capacity to operate 

the additional location. In addition, the 

agency’s procedures must include— 

* * * * * 

11. Section 602.23 is amended by: 

A. Revising paragraph (a) introductory 

text. 

B. Revising paragraph (c)(1). 

The revisions read as follows: 

§ 602.23 Operating procedures all 

agencies must have. 

(a) The agency must maintain and 

make available to the public written 

materials describing— 

* * * * * 

(c) * * * 

(1) Review in a timely, fair, and 

equitable manner any complaint it 

receives against an accredited 

institution or program that is related to 

the agency’s standards or procedures. 

The agency may not complete its review 

and make a decision regarding a 

complaint unless, in accordance with 

published procedures, it ensures that 

the institution or program has sufficient 

opportunity to provide a response to the 

complaint; 

* * * * * 

12. Section 602.24 is amended by: 

A. Revising paragraph (c). 

B. Adding new paragraphs (d) and (e). 

The addition and revision read as 

follows: 

§ 602.24 Additional procedures certain 

institutional accreditors must have. 

* * * * * 

(c) Teach-out plans and agreements. 

(1) The agency must require an 

institution it accredits or preaccredits to 

submit a teach-out plan to the agency 

for approval upon the occurrence of any 

of the following events: 

(i) The Secretary notifies the agency 

that the Secretary has initiated an 

emergency action against an institution, 

in accordance with section 487(c)(1)(G) 

of the HEA, or an action to limit, 

suspend, or terminate an institution 

participating in any title IV, HEA 

program, in accordance with section 

487(c)(1)(F) of the HEA, and that a 

teach-out plan is required. 

(ii) The agency acts to withdraw, 

terminate, or suspend the accreditation 

or preaccreditation of the institution. 

(iii) The institution notifies the 

agency that it intends to cease 

operations entirely or close a location 

that provides one hundred percent of at 

least one program. 

(iv) A State licensing or authorizing 

agency notifies the agency that an 

institution’s license or legal 

authorization to provide an educational 

program has been or will be revoked. 

(2) The agency must evaluate the 

teach-out plan to ensure it provides for 

the equitable treatment of students 

under criteria established by the agency, 

specifies additional charges, if any, and 

provides for notification to the students 

of any additional charges. 

(3) If the agency approves a teach-out 

plan that includes a program that is 

accredited by another recognized 

accrediting agency, it must notify that 

accrediting agency of its approval. 

(4) The agency may require an 

institution it accredits or preaccredits to 

enter into a teach-out agreement as part 

of its teach-out plan. 

(5) The agency must require an 

institution it accredits or preaccredits 

that enters into a teach-out agreement, 

either on its own or at the request of the 

agency, to submit that teach-out 

agreement for approval. The agency may 

approve the teach-out agreement only if 

the agreement is between institutions 

that are accredited or preaccredited by 

a nationally recognized accrediting 

agency, is consistent with applicable 

standards and regulations, and provides 

for the equitable treatment of students 

by ensuring that— 

(i) The teach-out institution has the 

necessary experience, resources, and 

support services to— 

(A) Provide an educational program 

that is of acceptable quality and 

reasonably similar in content, structure, 

and scheduling to that provided by the 

institution that is ceasing operations 

either entirely or at one of its locations; 

and 

(B) Remain stable, carry out its 

mission, and meet all obligations to 

existing students; and 

(ii) The teach-out institution 

demonstrates that it can provide 

students access to the program and 

services without requiring them to move 

or travel substantial distances and that 

it will provide students with 

information about additional charges, if 

any. 

(d) Closed institution. If an institution 

the agency accredits or preaccredits 

closes without a teach-out plan or 

agreement, the agency must work with 

the Department and the appropriate 

State agency, to the extent feasible, to 

assist students in finding reasonable 

opportunities to complete their 

education without additional charges. 

(e) Transfer of credit policies. The 

accrediting agency must confirm, as part 

of its review for initial accreditation or 

preaccreditation, or renewal of 

accreditation, that the institution has 

transfer of credit policies that— 

(1) Are publicly disclosed in 

accordance with § 668.43(x); and 

(2) Include a statement of the criteria 

established by the institution regarding 

the transfer of credit earned at another 

institution of higher education. 

* * * * * 

13. Section 602.25 is revised to read 

as follows: 

§ 602.25 Due process. 

The agency must demonstrate that the 

procedures it uses throughout the 

accrediting process satisfy due process. 

The agency meets this requirement if 

the agency does the following: 

(a) Provides adequate written 

specification of its requirements, 

including clear standards, for an 

institution or program to be accredited 

or preaccredited. 

(b) Uses procedures that afford an 

institution or program a reasonable 

period of time to comply with the 

agency’s requests for information and 

documents. 

(c) Provides written specification of 

any deficiencies identified at the 

institution or program examined. 

(d) Provides sufficient opportunity for 

a written response by an institution or 

program regarding any deficiencies 

identified by the agency, to be 

considered by the agency within a 

timeframe determined by the agency, 

and before any adverse action is taken. 

(e) Notifies the institution or program 

in writing of any adverse accrediting 

action or an action to place the 

institution or program on probation or 

show cause. The notice describes the 

basis for the action. 

(f) Provides an opportunity, upon 

written request of an institution or 

program, for the institution or program 

to appeal any adverse action prior to the 

action becoming final. 

(1) The appeal must take place at a 

hearing before an appeals panel that— 

(i) May not include current members 

of the agency’s decision-making body 

that took the initial adverse action; 

(ii) Is subject to a conflict of interest 

policy; and 

(iii) Affirms, amends, or reverses the 

adverse action, which will be 

implemented by the appeals panel or by 

the original decision-making body, at 

the agency’s option. If the original 

decision-making body is responsible for 

implementing the appeals panel’s 

decision, that body must act regarding 

the institution’s or program’s 

accreditation status in a manner 

consistent with the appeals panel’s 

decision. 

(2) The agency must recognize the 

right of the institution or program to 

employ counsel to represent the 


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institution or program during its appeal, 

including to make any presentation that 

the agency permits the institution or 

program to make on its own during the 

appeal. 

(g) The agency notifies the institution 

or program in writing of the result of its 

appeal and the basis for that result. 

(h)(1) The agency must provide for a 

process, in accordance with written 

procedures, through which an 

institution or program may, before the 

agency reaches a final adverse action 

decision, seek review of new financial 

information if all of the following 

conditions are met: 

(i) The financial information was 

unavailable to the institution or program 

until after the decision subject to appeal 

was made. 

(ii) The financial information is 

significant and bears materially on the 

financial deficiencies identified by the 

agency. The criteria of significance and 

materiality are determined by the 

agency. 

(iii) The only remaining deficiency 

cited by the agency in support of a final 

adverse action decision is the 

institution’s or program’s failure to meet 

an agency standard pertaining to 

finances. 

(2) An institution or program may 

seek the review of new financial 

information described in paragraph 

(h)(1) of this section only once and any 

determination by the agency made with 

respect to that review does not provide 

a basis for an appeal. 

(Authority: 20 U.S.C. 1099b) 

14. Section 602.26 is amended by: 

A. In paragraph (b)(2), removing the 

punctuation ‘‘;’’ and adding, in its place, 

the punctuation ‘‘.’’. 

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

C. In paragraph (c), removing the 

words ‘‘(b)(1) and (b)(2)’’ and adding, in 

their place, the words ‘‘(b)(1), (b)(2), and 

(b)(3)’’. 

D. Revising paragraph (d). 

The addition and revision read as 

follows: 

§ 602.26 Notification of accrediting 

decisions. 

* * * * * 

(b) * * * 

(3) A final decision to take any other 

adverse action, as defined by the 

agency, not listed in paragraph (b)(2) of 

this section; 

* * * * * 

(d) For any decision listed in 

paragraph (b)(2) of this section, makes 

available to the Secretary, the 

appropriate State licensing or 

authorizing agency, and the public, no 

later than 60 days after the decision, a 

brief statement summarizing the reasons 

for the agency’s decision and the official 

comments that the affected institution 

or program may wish to make with 

regard to that decision, or evidence that 

the affected institution has been offered 

the opportunity to provide official 

comment; 

* * * * * 

15. Section 602.27 is revised to read 

as follows: 

§ 602.27 Other information an agency 

must provide the Department. 

(a) The agency must submit to the 

Department— 

(1) A copy of any annual report it 

prepares; 

(2) A copy, updated annually, of its 

directory of accredited and 

preaccredited institutions and programs; 

(3) A summary of the agency’s major 

accrediting activities during the 

previous year (an annual data 

summary), if requested by the Secretary 

to carry out the Secretary’s 

responsibilities related to this part; 

(4) Any proposed change in the 

agency’s policies, procedures, or 

accreditation or preaccreditation 

standards that might alter its— 

(i) Scope of recognition, except as 

provided in paragraph (a)(5) of this 

section; or 

(ii) Compliance with the criteria for 

recognition; 

(5) Notification that the agency has 

expanded its scope of recognition to 

include distance education or 

correspondence education as provided 

in section 496(a)(4)(B)(i)(I) of the HEA. 

Such an expansion of scope is effective 

on the date the Department receives the 

notification; 

(6) The name of any institution or 

program it accredits that the agency has 

reason to believe is failing to meet its 

title IV, HEA program responsibilities or 

is engaged in fraud or abuse, along with 

the agency’s reasons for concern about 

the institution or program; and 

(7) If the Secretary requests, 

information that may bear upon an 

accredited or preaccredited institution’s 

compliance with its title IV, HEA 

program responsibilities, including the 

eligibility of the institution or program 

to participate in title IV, HEA programs. 

(b) If an agency has a policy regarding 

notification to an institution or program 

of contact with the Department in 

accordance with paragraph (a)(6) or 

(a)(7) of this section, it must provide for 

a case-by-case review of the 

circumstances surrounding the contact, 

and the need for the confidentiality of 

that contact. Upon a specific request by 

the Department, the agency must 

consider that contact confidential. 

(Authority: 20 U.S.C. 1099b) 

16. Subpart C is revised to read as 

follows: 

Subpart C—The Recognition Process 

Application and Review by Department Staff 

Sec. 

602.30 Activities covered by recognition 

procedures. 

602.31 Agency submissions to the 

Department. 

602.32 Procedures for Department review of 

applications for recognition or for change 

in scope, compliance reports, and 

increases in enrollment. 

602.33 Procedures for review of agencies 

during the period of recognition. 

Review by the National Advisory Committee 

on Institutional Quality and Integrity 

602.34 Advisory Committee meetings. 

602.35 Responding to the Advisory 

Committee’s recommendation. 

Review and Decision by the Senior 

Department Official 

602.36 Senior Department official’s 

decision. 

Appeal Rights and Procedures 

602.37 Appealing the senior Department 

official’s decision to the Secretary. 

602.38 Contesting the Secretary’s final 

decision to deny, limit, suspend, or 

terminate an agency’s recognition. 

Subpart C—The Recognition Process 

Application and Review by Department 

Staff 

§ 602.30 Activities covered by recognition 

procedures. 

Recognition proceedings are 

administrative actions taken on any of 

the following matters: 

(a) Applications for initial or 

continued recognition submitted under 

§ 602.31(a). 

(b) Applications for an expansion of 

scope submitted under § 602.31(b). 

(c) Compliance reports submitted 

under § 602.31(c). 

(d) Reviews of agencies that have 

expanded their scope of recognition by 

notice, following receipt by the 

Department of information of an 

increase in headcount enrollment 

described in § 602.19(e). 

(e) Staff analyses identifying areas of 

non-compliance based on a review 

conducted under § 602.33. (Authority: 

20 U.S.C. 1099b) 

§ 602.31 Agency submissions to the 

Department. 

(a) Applications for recognition or 

renewal of recognition. An accrediting 

agency seeking initial or continued 

recognition must submit a written 

application to the Secretary. Each 

accrediting agency must submit an 

application for continued recognition at 


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least once every five years, or within a 

shorter time period specified in the final 

recognition decision. The application 

must consist of— 

(1) A statement of the agency’s 

requested scope of recognition; 

(2) Evidence, including 

documentation, that the agency 

complies with the criteria for 

recognition listed in subpart B of this 

part and effectively applies those 

criteria; and 

(3) Evidence, including 

documentation, of how an agency that 

includes or seeks to include distance 

education or correspondence education 

in its scope of recognition applies its 

standards in evaluating programs and 

institutions it accredits that offer 

distance education or correspondence 

education. 

(b) Applications for expansions of 

scope. An agency seeking an expansion 

of scope by application must submit a 

written application to the Secretary. The 

application must— 

(1) Specify the scope requested; 

(2) Include documentation of 

experience in accordance with 

§ 602.12(b); and 

(3) Provide copies of any relevant 

standards, policies, or procedures 

developed and applied by the agency 

and documentation of the application of 

these standards, policies, or procedures. 

(c) Compliance reports. If an agency is 

required to submit a compliance report, 

it must do so within 30 days following 

the end of the period for achieving 

compliance as specified in the decision 

of the senior Department official or 

Secretary, as applicable. 

(d) Review following an increase in 

headcount enrollment. If an agency that 

has notified the Secretary in writing of 

its change in scope to include distance 

education or correspondence education 

in accordance with § 602.27(a)(5) 

reports an increase in headcount 

enrollment in accordance with 

§ 602.19(e) for an institution it accredits, 

or if the Department notifies the agency 

of such an increase at one of the 

agency’s accredited institutions, the 

agency must, within 45 days of 

reporting the increase or receiving 

notice of the increase from the 

Department, as applicable, submit a 

report explaining— 

(1) How the agency evaluates the 

capacity of the institutions or programs 

it accredits to accommodate significant 

growth in enrollment and to maintain 

educational quality; 

(2) The specific circumstances 

regarding the growth at the institution(s) 

or programs(s) that triggered the review 

and the results of any evaluation 

conducted by the agency; and 

(3) Any other information that the 

agency deems appropriate to 

demonstrate the effective application of 

the criteria for recognition or that the 

Department may require. 

(e) Consent to sharing of information. 

By submitting an application for 

recognition, the agency authorizes 

Department staff throughout the 

application process and during any 

period of recognition— 

(1) To observe its site visits to one or 

more of the institutions or programs it 

accredits or preaccredits, on an 

announced or unannounced basis; 

(2) To visit locations where agency 

activities such as training, review and 

evaluation panel meetings, and decision 

meetings take place, on an announced 

or unannounced basis; 

(3) To obtain copies of all documents 

the staff deems necessary to complete its 

review of the agency; and 

(4) To gain access to agency records, 

personnel, and facilities. 

(f) Public availability of agency 

records obtained by the Department. (1) 

The Secretary’s processing and decision 

making on requests for public disclosure 

of agency materials reviewed under this 

part are governed by the Freedom of 

Information Act, 5 U.S.C. 552; the Trade 

Secrets Act, 18 U.S.C. 1905; the Privacy 

Act of 1974, as amended, 5 U.S.C 552a; 

the Federal Advisory Committee Act, 5 

U.S.C. Appdx. 1; and all other 

applicable laws. In recognition 

proceedings, agencies may— 

(i) Redact information that would 

identify individuals or institutions that 

is not essential to the Department’s 

review of the agency; 

(ii) Make a good faith effort to 

designate all business information 

within agency submissions that the 

agency believes would be exempt from 

disclosure under exemption 4 of the 

Freedom of Information Act (FOIA), 5 

U.S.C. § 552(b)(4). A blanket designation 

of all information contained within a 

submission, or of a category of 

documents, as meeting this exemption 

will not be considered a good faith effort 

and will be disregarded; 

(iii) Identify any other material the 

agency believes would be exempt from 

public disclosure under FOIA, the 

factual basis for the request, and any 

legal basis the agency has identified for 

withholding the document from 

disclosure; and 

(iv) Ensure documents submitted are 

only those required for Department 

review or as requested by Department 

officials. 

(2) The Secretary processes FOIA 

requests in accordance with 34 CFR part 

5 and makes all documents provided to 

the Advisory Committee available to the 

public. 

(Authority: 20 U.S.C. 1099b) 

§ 602.32 Procedures for Department 

review of applications for recognition or for 

change in scope, compliance reports, and 

increases in enrollment. 

(a) After receipt of an agency’s 

application for initial or continued 

recognition, or change in scope, or an 

agency’s compliance report, or an 

agency’s report submitted under 

§ 602.31(d), Department staff publishes 

a notice of the agency’s application or 

report in the Federal Register inviting 

the public to comment on the agency’s 

compliance with the criteria for 

recognition and establishing a deadline 

for receipt of public comment. 

(b) The Department staff analyzes the 

agency’s application for initial or 

renewal of recognition, compliance 

report, or report submitted under 

§ 602.31(d) to determine whether the 

agency satisfies the criteria for 

recognition, taking into account all 

available relevant information 

concerning the compliance of the 

agency with those criteria and in the 

agency’s effectiveness in applying the 

criteria. The analysis of an application 

for recognition and, as appropriate, of a 

compliance report, or of a report 

required under § 602.31(d), includes— 

(1) Observations from site visit(s), on 

an announced or unannounced basis, to 

the agency or to a location where agency 

activities such as training, review and 

evaluation panel meetings, and decision 

meetings take place and to one or more 

of the institutions or programs it 

accredits or preaccredits; 

(2) Review of the public comments 

and other third-party information the 

Department staff receives by the 

established deadline, and the agency’s 

responses to the third-party comments, 

as appropriate, as well as any other 

information Department staff assembles 

for purposes of evaluating the agency 

under this part; and 

(3) Review of complaints or legal 

actions involving the agency. 

(c) The Department staff analyzes the 

materials submitted in support of an 

application for expansion of scope to 

ensure that the agency has the requisite 

experience, policies that comply with 

subpart B of this part, capacity, and 

performance record to support the 

request. 

(d) Department staff’s evaluation of an 

agency may also include a review of 

information directly related to 

institutions or programs accredited or 

preaccredited by the agency relative to 

their compliance with the agency’s 

standards, the effectiveness of the 


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standards, and the agency’s application 

of those standards. 

(e) If, at any point in its evaluation of 

an agency seeking initial recognition, 

Department staff determines that the 

agency fails to demonstrate compliance 

with the basic eligibility requirements 

in §§ 602.10 through 602.13, the staff— 

(1) Returns the agency’s application 

and provides the agency with an 

explanation of the deficiencies that 

caused staff to take that action; and 

(2) Recommends that the agency 

withdraw its application and reapply 

when the agency can demonstrate 

compliance. 

(f) Except with respect to an 

application that has been returned or is 

withdrawn under paragraph (e) of this 

section, when Department staff 

completes its evaluation of the agency, 

the staff— 

(1) Prepares a written draft analysis of 

the agency; 

(2) Sends the draft analysis including 

any identified areas of non-compliance 

and a proposed recognition 

recommendation, and all supporting 

documentation, including all third-party 

comments the Department received by 

the established deadline, to the agency; 

(3) Invites the agency to provide a 

written response to the draft analysis 

and proposed recognition 

recommendation and third-party 

comments, specifying a deadline that 

provides at least 30 days for the 

agency’s response; 

(4) Reviews the response to the draft 

analysis the agency submits, if any, and 

prepares the written final analysis. The 

final analysis includes a recognition 

recommendation to the senior 

Department official, as the Department 

staff deems appropriate, including, but 

not limited to, a recommendation to 

approve, deny, limit, suspend, or 

terminate recognition, require the 

submission of a compliance report and 

continue recognition pending a final 

decision on compliance, approve or 

deny a request for expansion of scope, 

or revise or affirm the scope of the 

agency; and 

(5) Provides to the agency, no later 

than seven days before the Advisory 

Committee meeting, the final staff 

analysis and any other available 

information provided to the Advisory 

Committee under § 602.34(c). 

(g) The agency may request that the 

Advisory Committee defer acting on an 

application at that Advisory Committee 

meeting if Department staff fails to 

provide the agency with the materials 

described, and within the timeframes 

provided, in paragraphs (f)(3) and (f)(5) 

of this section. If the Department staff’s 

failure to send the materials in 

accordance with the timeframe 

described in paragraph (f)(3) or (f)(5) of 

this section is due to the failure of the 

agency to submit reports to the 

Department, other information the 

Secretary requested, or its response to 

the draft analysis, by the deadline 

established by the Secretary, the agency 

forfeits its right to request a deferral of 

its application. 

(Authority: 20 U.S.C. 1099b) 

§ 602.33 Procedures for review of 

agencies during the period of recognition. 

(a) Department staff may review the 

compliance of a recognized agency with 

the criteria for recognition at any time— 

(1) At the request of the Advisory 

Committee; or 

(2) Based on any information that, as 

determined by Department staff, appears 

credible and raises issues relevant to 

recognition. 

(b) The review may include, but need 

not be limited to, any of the activities 

described in § 602.32(b) and (d). 

(c) If, in the course of the review, and 

after provision to the agency of the 

documentation concerning the inquiry 

and consultation with the agency, 

Department staff notes that one or more 

deficiencies may exist in the agency’s 

compliance with the criteria for 

recognition or in the agency’s effective 

application of those criteria, it— 

(1) Prepares a written draft analysis of 

the agency’s compliance with the 

criteria of concern. The draft analysis 

reflects the results of the review, and 

includes a recommendation regarding 

what action to take with respect to 

recognition. Possible recommendations 

include, but are not limited to, a 

recommendation to limit, suspend, or 

terminate recognition, or require the 

submission of a compliance report and 

to continue recognition pending a final 

decision on compliance; 

(2) Sends the draft analysis including 

any identified areas of non-compliance, 

and a proposed recognition 

recommendation, and all supporting 

documentation to the agency; and 

(3) Invites the agency to provide a 

written response to the draft analysis 

and proposed recognition 

recommendation, specifying a deadline 

that provides at least 30 days for the 

agency’s response. 

(d) If, after review of the agency’s 

response to the draft analysis, 

Department staff concludes that the 

agency has demonstrated compliance 

with the criteria for recognition, the staff 

notifies the agency in writing of the 

results of the review. If the review was 

requested by the Advisory Committee, 

staff also provides the Advisory 

Committee with the results of the 

review. 

(e) If, after review of the agency’s 

response to the draft analysis, 

Department staff concludes that the 

agency has not demonstrated 

compliance, the staff— 

(1) Notifies the agency that the draft 

analysis will be finalized for 

presentation to the Advisory Committee; 

(2) Publishes a notice in the Federal 

Register including, if practicable, an 

invitation to the public to comment on 

the agency’s compliance with the 

criteria in question and establishing a 

deadline for receipt of public comment; 

(3) Provides the agency with a copy of 

all public comments received and, if 

practicable, invites a written response 

from the agency; 

(4) Finalizes the staff analysis as 

necessary to reflect its review of any 

agency response and any public 

comment received; and 

(5) Provides to the agency, no later 

than seven days before the Advisory 

Committee meeting, the final staff 

analysis and a recognition 

recommendation and any other 

information provided to the Advisory 

Committee under § 602.34(c). 

(f) The Advisory Committee reviews 

the matter in accordance with § 602.34. 

(Authority: 20 U.S.C. 1099b) 

Review by the National Advisory 

Committee on Institutional Quality and 

Integrity 

§ 602.34 Advisory Committee meetings. 

(a) Department staff submits a 

proposed schedule to the Chairperson of 

the Advisory Committee based on 

anticipated completion of staff analyses. 

(b) The Chairperson of the Advisory 

Committee establishes an agenda for the 

next meeting and, in accordance with 

the Federal Advisory Committee Act, 

presents it to the Designated Federal 

Official for approval. 

(c) Before the Advisory Committee 

meeting, Department staff provides the 

Advisory Committee with— 

(1) The agency’s application for 

recognition or for expansion of scope, 

the agency’s compliance report, or the 

agency’s report submitted under 

§ 602.31(d), and supporting 

documentation; 

(2) The final Department staff analysis 

of the agency developed in accordance 

with § 602.32 or § 602.33, and any 

supporting documentation; 

(3) At the request of the agency, the 

agency’s response to the draft analysis; 

(4) Any written third-party comments 

the Department received about the 

agency on or before the established 

deadline; 


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(5) Any agency response to third-party 

comments; and 

(6) Any other information Department 

staff relied upon in developing its 

analysis. 

(d) At least 30 days before the 

Advisory Committee meeting, the 

Department publishes a notice of the 

meeting in the Federal Register inviting 

interested parties, including those who 

submitted third-party comments 

concerning the agency’s compliance 

with the criteria for recognition, to make 

oral presentations before the Advisory 

Committee. 

(e) The Advisory Committee considers 

the materials provided under paragraph 

(c) of this section in a public meeting 

and invites Department staff, the 

agency, and other interested parties to 

make oral presentations during the 

meeting. A transcript is made of all 

Advisory Committee meetings. 

(f) The written motion adopted by the 

Advisory Committee regarding each 

agency’s recognition will be made 

available during the Advisory 

Committee meeting. The Department 

will provide each agency, upon request, 

with a copy of the motion on 

recognition at the meeting. Each agency 

that was reviewed will be sent an 

electronic copy of the motion relative to 

that agency as soon as practicable after 

the meeting. 

(g) After each meeting of the Advisory 

Committee at which a review of 

agencies occurs, the Advisory 

Committee forwards to the senior 

Department official its recommendation 

with respect to each agency, which may 

include, but is not limited to, a 

recommendation to approve, deny, 

limit, suspend, or terminate recognition, 

to grant or deny a request for expansion 

of scope, to revise or affirm the scope of 

the agency, or to require the agency to 

submit a compliance report and to 

continue recognition pending a final 

decision on compliance. 

(Authority: 20 U.S.C. 1099b) 

§ 602.35 Responding to the Advisory 

Committee’s recommendation. 

(a) Within ten days following the 

Advisory Committee meeting, the 

agency and Department staff may 

submit written comments to the senior 

Department official on the Advisory 

Committee’s recommendation. The 

agency must simultaneously submit a 

copy of its written comments, if any, to 

Department staff. Department staff must 

simultaneously submit a copy of its 

written comments, if any, to the agency. 

(b) Comments must be limited to— 

(1) Any Advisory Committee 

recommendation that the agency or 

Department staff believes is not 

supported by the record; 

(2) Any incomplete Advisory 

Committee recommendation based on 

the agency’s application; and 

(3) The inclusion of any 

recommendation or draft proposed 

decision for the senior Department 

official’s consideration. 

(c)(1) Neither the Department staff nor 

the agency may submit additional 

documentary evidence with its 

comments unless the Advisory 

Committee’s recognition 

recommendation proposes finding the 

agency noncompliant with, or 

ineffective in its application of, a 

criterion or criteria for recognition not 

identified in the final Department staff 

analysis provided to the Advisory 

Committee. 

(2) Within ten days of receipt by the 

Department staff of an agency’s 

comments or new evidence, if 

applicable, or of receipt by the agency 

of the Department staff’s comments, 

Department staff, the agency, or both, as 

applicable, may submit a response to 

the senior Department official. 

Simultaneously with submission, the 

agency must provide a copy of any 

response to the Department staff. 

Simultaneously with submission, 

Department staff must provide a copy of 

any response to the agency. 

(Authority: 20 U.S.C. 1099b) 

Review and Decision by the Senior 

Department Official 

§ 602.36 Senior Department official’s 

decision. 

(a) The senior Department official 

makes a decision regarding recognition 

of an agency based on the record 

compiled under §§ 602.32, 602.33, 

602.34, and 602.35 including, as 

applicable, the following: 

(1) The materials provided to the 

Advisory Committee under § 602.34(c). 

(2) The transcript of the Advisory 

Committee meeting. 

(3) The recommendation of the 

Advisory Committee. 

(4) Written comments and responses 

submitted under § 602.35. 

(5) New evidence submitted in 

accordance with § 602.35(c)(1). 

(6) A communication from the 

Secretary referring an issue to the senior 

Department official’s consideration 

under § 602.37(e). 

(b) In the event that statutory 

authority or appropriations for the 

Advisory Committee ends, or there 

are fewer duly appointed Advisory 

Committee members than needed to 

constitute a quorum, and under 

extraordinary circumstances when there 

are serious concerns about an agency’s 

compliance with subpart B of this part 

that require prompt attention, the senior 

Department official may make a 

decision in a recognition proceeding 

based on the record compiled under 

§ 602.32 or § 602.33 after providing the 

agency with an opportunity to respond 

to the final staff analysis. Any decision 

made by the senior Department official 

absent a recommendation from the 

Advisory Committee may be appealed to 

the Secretary as provided in § 602.37. 

(c) Following consideration of an 

agency’s recognition under this section, 

the senior Department official issues a 

recognition decision. 

(d) Except with respect to decisions 

made under paragraph (f) or (g) of this 

section and matters referred to the 

senior Department official under 

§ 602.37(e) or (f), the senior Department 

official notifies the agency in writing of 

the senior Department official’s decision 

regarding the agency’s recognition 

within 90 days of the Advisory 

Committee meeting or conclusion of the 

review under paragraph (b) of this 

section. 

(e) The senior Department official’s 

decision may include, but is not limited 

to, approving, denying, limiting, 

suspending, or terminating recognition, 

granting or denying an application for 

an expansion of scope, revising or 

affirming the scope of the agency, or 

continuing recognition pending 

submission and review of a compliance 

report under §§ 602.32 and 602.34 and 

review of the report by the senior 

Department official under this section. 

(1)(i) The senior Department official 

approves recognition if the agency 

complies with the criteria for 

recognition listed in subpart B of this 

part and if the agency effectively applies 

those criteria. 

(ii) If the senior Department official 

approves recognition, the recognition 

decision defines the scope of 

recognition and the recognition period. 

The recognition period does not exceed 

five years, including any time during 

which recognition was continued to 

permit submission and review of a 

compliance report. 

(iii) If the scope or period of 

recognition is less than that requested 

by the agency, the senior Department 

official explains the reasons for 

approving a lesser scope or recognition 

period. 

(2)(i) Except as provided in paragraph 

(e)(3) of this section, if the agency either 

fails to comply with the criteria for 

recognition listed in subpart B of this 

part, or to apply those criteria 

effectively, the senior Department 


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official denies, limits, suspends, or 

terminates recognition. 

(ii) If the senior Department official 

denies, limits, suspends, or terminates 

recognition, the senior Department 

official specifies the reasons for this 

decision, including all criteria the 

agency fails to meet and all criteria the 

agency has failed to apply effectively. 

(3)(i) Except as provided in paragraph 

(e)(3)(ii) of this section, if a recognized 

agency fails to demonstrate compliance 

with or effective application of a 

criterion or criteria, but the senior 

Department official concludes that the 

agency will demonstrate or achieve 

compliance with the criteria for 

recognition and effective application of 

those criteria within 12 months or less, 

the senior Department official may 

continue the agency’s recognition, 

pending submission by the agency of a 

compliance report, review of the report 

under §§ 602.32 and 602.34, and review 

of the report by the senior Department 

official under this section. In such a 

case, the senior Department official 

specifies the criteria the compliance 

report must address, and a time period, 

not longer than 12 months, during 

which the agency must achieve 

compliance and effectively apply the 

criteria. The compliance report 

documenting compliance and effective 

application of criteria is due not later 

than 30 days after the end of the period 

specified in the senior Department 

official’s decision. 

(ii) If the record includes a 

compliance report, and the senior 

Department official determines that an 

agency has not complied with the 

criteria for recognition, or has not 

effectively applied those criteria, during 

the time period specified by the senior 

Department official in accordance with 

paragraph (e)(3)(i) of this section, the 

senior Department official denies, 

limits, suspends, or terminates 

recognition, except, in extraordinary 

circumstances, upon a showing of good 

cause for an extension of time as 

determined by the senior Department 

official and detailed in the senior 

Department official’s decision. If the 

senior Department official determines 

good cause for an extension has been 

shown, the senior Department official 

specifies the length of the extension and 

what the agency must do during it to 

merit a renewal of recognition. 

(f) If the senior Department official 

determines, based on the record, that a 

decision to deny, limit, suspend, or 

terminate an agency’s recognition may 

be warranted based on a finding that the 

agency is noncompliant with, or 

ineffective in its application of, a 

criterion or criteria of recognition not 

identified earlier in the proceedings as 

an area of noncompliance, the senior 

Department official provides— 

(1) The agency with an opportunity to 

submit a written response and 

documentary evidence addressing the 

finding; and 

(2) The staff with an opportunity to 

present its analysis in writing. 

(g) If relevant and material 

information pertaining to an agency’s 

compliance with recognition criteria, 

but not contained in the record, comes 

to the senior Department official’s 

attention while a decision regarding the 

agency’s recognition is pending before 

the senior Department official, and if the 

senior Department official concludes the 

recognition decision should not be 

made without consideration of the 

information, the senior Department 

official either— 

(1)(i) Does not make a decision 

regarding recognition of the agency; and 

(ii) Refers the matter to Department 

staff for review and analysis under 

§ 602.32 or § 602.33, as appropriate, and 

consideration by the Advisory 

Committee under § 602.34; or 

(2)(i) Provides the information to the 

agency and Department staff; 

(ii) Permits the agency to respond to 

the senior Department official and the 

Department staff in writing, and to 

include additional evidence relevant to 

the issue, and specifies a deadline; 

(iii) Provides Department staff with an 

opportunity to respond in writing to the 

agency’s submission under paragraph 

(g)(2)(ii) of this section, specifying a 

deadline; and 

(iv) Issues a recognition decision 

based on the record described in 

paragraph (a) of this section, as 

supplemented by the information 

provided under this paragraph. 

(h) No agency may submit 

information to the senior Department 

official, or ask others to submit 

information on its behalf, for purposes 

of invoking paragraph (g) of this section. 

Before invoking paragraph (g) of this 

section, the senior Department official 

will take into account whether the 

information, if submitted by a third 

party, could have been submitted in 

accordance with § 602.32(a) or 

§ 602.33(e)(2). 

(i) If the senior Department official 

does not reach a final decision to 

approve, deny, limit, suspend, or 

terminate an agency’s recognition before 

the expiration of its recognition period, 

the senior Department official 

automatically extends the recognition 

period until a final decision is reached. 

(j) Unless appealed in accordance 

with § 602.37, the senior Department 

official’s decision is the final decision of 

the Secretary. 

(Authority: 20 U.S.C. 1099b) 

Appeal Rights and Procedures 

§ 602.37 Appealing the senior Department 

official’s decision to the Secretary. 

(a) The agency may appeal the senior 

Department official’s decision to the 

Secretary. Such appeal stays the 

decision of the senior Department 

official until final disposition of the 

appeal. If an agency wishes to appeal, 

the agency must— 

(1) Notify the Secretary and the senior 

Department official in writing of its 

intent to appeal the decision of the 

senior Department official, no later than 

ten days after receipt of the decision; 

(2) Submit its appeal to the Secretary 

in writing no later than 30 days after 

receipt of the decision; and 

(3) Provide the senior Department 

official with a copy of the appeal at the 

same time it submits the appeal to the 

Secretary. 

(b) The senior Department official 

may file a written response to the 

appeal. To do so, the senior Department 

official must— 

(1) Submit a response to the Secretary 

no later than 30 days after receipt of a 

copy of the appeal; and 

(2) Provide the agency with a copy of 

the senior Department official’s 

response at the same time it is 

submitted to the Secretary. 

(c) Neither the agency nor the senior 

Department official may include in its 

submission any new evidence it did not 

submit previously in the proceeding. 

(d) On appeal, the Secretary makes a 

recognition decision, as described in 

§ 602.36(e). If the decision requires a 

compliance report, the report is due 

within 30 days after the end of the 

period specified in the Secretary’s 

decision. The Secretary renders a final 

decision after taking into account the 

senior Department official’s decision, 

the agency’s written submissions on 

appeal, the senior Department official’s 

response to the appeal, if any, and the 

entire record before the senior 

Department official. The Secretary 

notifies the agency in writing of the 

Secretary’s decision regarding the 

agency’s recognition. 

(e) The Secretary may determine, 

based on the record, that a decision to 

deny, limit, suspend, or terminate an 

agency’s recognition may be warranted 

based on a finding that the agency is 

noncompliant with, or ineffective in its 

application with respect to, a criterion 

or criteria for recognition not identified 

as an area of noncompliance earlier in 

the proceedings. In that case, the 


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Secretary, without further consideration 

of the appeal, refers the matter to the 

senior Department official for 

consideration of the issue under 

§ 602.36(f). After the senior Department 

official makes a decision, the agency 

may, if desired, appeal that decision to 

the Secretary. 

(f) If relevant and material 

information pertaining to an agency’s 

compliance with recognition criteria, 

but not contained in the record, comes 

to the Secretary’s attention while a 

decision regarding the agency’s 

recognition is pending before the 

Secretary, and if the Secretary 

concludes the recognition decision 

should not be made without 

consideration of the information, the 

Secretary either— 

(1)(i) Does not make a decision 

regarding recognition of the agency; and 

(ii) Refers the matter to Department 

staff for review and analysis under 

§ 602.32 or § 602.33, as appropriate, and 

review by the Advisory Committee 

under § 602.34; and consideration by 

the senior Department official under 

§ 602.36; or 

(2)(i) Provides the information to the 

agency and the senior Department 

official; 

(ii) Permits the agency to respond to 

the Secretary and the senior Department 

official in writing, and to include 

additional evidence relevant to the 

issue, and specifies a deadline; 

(iii) Provides the senior Department 

official with an opportunity to respond 

in writing to the agency’s submission 

under paragraph (f)(2)(ii) of this section, 

specifying a deadline; and 

(iv) Issues a recognition decision 

based on all the materials described in 

paragraphs (d) and (f) of this section. 

(g) No agency may submit information 

to the Secretary, or ask others to submit 

information on its behalf, for purposes 

of invoking paragraph (f) of this section. 

Before invoking paragraph (f) of this 

section, the Secretary will take into 

account whether the information, if 

submitted by a third party, could have 

been submitted in accordance with 

§ 602.32(a) or § 602.33(e)(2). 

(h) If the Secretary does not reach a 

final decision on appeal to approve, 

deny, limit, suspend, or terminate an 

agency’s recognition before the 

expiration of its recognition period, the 

Secretary automatically extends the 

recognition period until a final decision 

is reached. 

(Authority: 20 U.S.C. 1099b) 

§ 602.38 Contesting the Secretary’s final 

decision to deny, limit, suspend, or 

terminate an agency’s recognition. 

An agency may contest the Secretary’s 

decision under this part in the Federal 

courts as a final decision in accordance 

with applicable Federal law. Unless 

otherwise directed by the court, a 

decision of the Secretary to deny, limit, 

suspend, or terminate the agency’s 

recognition is not stayed during an 

appeal in the Federal courts. 

(Authority: 20 U.S.C. 1099b) 

17. Subpart D is removed in its 

entirety. 

18. Subpart E is redesignated as 

subpart D. 

[FR Doc. E9–18368 Filed 8–5–09; 8:45 am] 

BILLING CODE 4000–01–P 


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