Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Rules and Regulations 2493 

§ 226.2 Requesting a smaller claims 

proceeding. 

A claimant may request consideration 

of a claim under the smaller claims 

procedures in this part at the time of 

filing a claim. The claimant may change 

its choice as to whether to have its claim 

considered under the smaller claims 

procedures or the standard Board 

procedures at any time before service of 

the initial notice. If the claimant 

changes its choice, but the initial notice 

has already been issued, the claimant 

shall request reissuance of the initial 

notice indicating the updated choice. 

Once the claimant has served the initial 

notice on any respondent, the claimant 

may not amend its choice without 

consent of the other parties and leave of 

the Board. A claimant’s request to 

change its choice as to whether to have 

its claim considered under the smaller 

claims procedures or the standard Board 

procedures shall follow the procedures 

set forth in § 220.5(a)(1) of this 

subchapter. If the request is made 

following service of the initial notice on 

any respondent, the claimant’s request 

shall indicate whether the other parties 

consent to the request. 

■ 7. Section 226.4 is amended by 

revising paragraphs (a), (d)(2)(iii), and 

(d)(3) to read as follows: 

§ 226.4 Nature of a smaller claims 

proceeding. 

(a) Proceeding before a Copyright 

Claims Officer. Except as provided in 

§ 222.13(e), a smaller claims proceeding 

shall be heard by not fewer than one 

Copyright Claims Officer (Officer). The 

Officers shall hear smaller claims 

proceedings on a rotating basis at the 

Board’s discretion. 

* * * * * 

(d) * * * 

(2) * * * 

(iii) May submit witness statements 

that comply with § 222.15(b)(2) of this 

subchapter. No later than seven days 

before the merits conference, an 

opposing party may request that the 

witness whose statement was submitted 

appear at the merits conference so that 

the party may ask the witness questions 

relating to the witness’s testimony. The 

failure of a witness to appear in 

response to such a request shall not 

preclude the presiding Officer from 

accepting the statement, but the 

presiding Officer may take the inability 

to question the witness into account 

when considering the weight of the 

witness’s testimony. 

(3) Failure to submit evidence. If a 

party fails to submit evidence in 

accordance with the presiding Officer’s 

request or submits evidence that was 

not served on the other parties or 

provided by the other side, the 

presiding Officer may discuss this with 

the parties during the merits conference 

or may schedule a separate conference 

to discuss the missing evidence with the 

parties. The presiding Officer shall 

determine an appropriate remedy, if 

any, including but not limited to 

drawing an adverse inference with 

respect to disputed facts, pursuant to 17 

U.S.C. 1506(n)(3), if it would be in the 

interests of justice. 

* * * * * 

Dated: January 2, 2024. 

Shira Perlmutter, 

Register of Copyrights and Director of the 

U.S. Copyright Office. 

Approved by: 

Carla D. Hayden, 

Librarian of Congress. 

[FR Doc. 2024–00596 Filed 1–12–24; 8:45 am] 

BILLING CODE 1410–30–P 

DEPARTMENT OF VETERANS 

AFFAIRS 

38 CFR Part 21 

RIN 2900–AR56 

85/15 Rule Calculations, Waiver 

Criteria, and Reports 

AGENCY: Department of Veterans Affairs. 

ACTION: Final rule. 

SUMMARY: The Department of Veterans 

Affairs (VA) is amending its educational 

assistance regulations by eliminating the 

four 85/15 rule calculation exemptions 

for students in receipt of certain types 

of institutional aid. Currently, VA 

regulations provide exceptions that 

allow certain categories of students to be 

considered ‘‘non-supported’’ for 

purposes of the 85/15 rule 

notwithstanding their receipt of 

institutional aid. In this final rule, VA 

is eliminating these exceptions, thus 

clarifying the types of scholarships that 

educational institutions must include in 

their calculations of ‘‘supported’’ 

students. Also, VA is revising the 

criteria that shall be considered by the 

Director of Education Service when 

granting an 85/15 rule compliance 

waiver. Lastly, VA is amending the 

timeline for certain educational 

institutions’ submission of 85/15 

compliance reports. 

DATES: This rule is effective February 

15, 2024. The provisions of this final 

rule shall apply to all terms that begin 

on or after January 16, 2025, to include 

all 85/15 waivers pending before VA on 

that date. 

FOR FURTHER INFORMATION CONTACT: 

Thomas Alphonso, Assistant Director, 

Policy and Procedures Education 

Service, Department of Veterans Affairs, 

810 Vermont Avenue NW, Washington, 

DC 20420, (202) 461–9800. (This is not 

a toll-free number.) 

SUPPLEMENTARY INFORMATION: The 85/15 

rule (38 U.S.C. 3680A(d); 38 CFR 

21.4201(a)) prohibits the Department of 

Veterans Affairs (VA) from paying 

educational assistance benefits to any 

new students once ‘‘more than 85 

percent of the students enrolled in the 

[program of education] are having all or 

part of their tuition, fees, or other 

charges paid to or for them by the 

educational institution or by the 

Department of Veterans Affairs.’’ 38 

U.S.C. 3680A(d)(1). ‘‘Institutional aid’’ 

refers to the financial assistance that is 

provided by the educational institution 

to the student that includes any 

scholarship, aid, waiver, or assistance, 

but does not include loans and funds 

provided under section 401(b) of the 

Higher Education Act of 1965 or 

financial assistance from a third-party. 

‘‘VA aid’’ refers to financial benefits 

paid under Chapters 30, 31, 33, 35 and 

36 of Title 38 and Chapter 1606 of Title 

10. VA refers to students who receive 

such institutional or VA aid as 

‘‘supported students.’’ Conversely, no 

less than 15 percent of the students 

enrolled in the program must be 

attending without having any of their 

tuition, fees, or other charges paid to or 

for them by the educational institution 

or VA (referred to as ‘‘non-supported 

students’’). The 85/15 rule is a market 

validation tool designed to prevent 

schools from inflating tuition charges 

for VA education beneficiaries. The rule 

functions by requiring a school to enroll 

no less than 15 percent of its students 

paying the full tuition charge without 

institutional or VA aid. If a school fails 

to enroll enough non-supported 

students, the cost of the program is 

presumed to be out of step with the 

competitive market and thus too 

expensive for VA to continue to support 

due to the burden on taxpayers. 

Currently, in accordance with 38 CFR 

21.4201, educational institutions are 

required to track the percentage of 

supported and non-supported students 

enrolled in each of their approved 

programs and to confirm their 

compliance with the required 85/15 

percent ratio (38 CFR 21.4201(e)–(f)). 

During the time that the ratio of 

supported to non-supported students 

exceeds 85 percent, no new students 

can be certified to receive VA education 

benefits for that program (38 CFR 

21.4201(g)(2)). ‘‘New students’’ include 


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2494 Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Rules and Regulations 

students returning after a break in 

enrollment unless the break is wholly 

due to circumstances beyond the 

student’s control (38 CFR 21.4201(g)(6)). 

The 85/15 rule does allow VA to 

continue to pay benefits for students 

already enrolled in the program and 

receiving benefits prior to the ratio of 

supported students exceeding 85 

percent of the total population enrolled 

in the program (38 CFR 21.4201(g)(2)). 

Further, although students receiving 

Veteran Readiness and Employment (38 

U.S.C. chapter 31) or Survivors’ and 

Dependents’ Educational Assistance (38 

U.S.C. chapter 35) benefits must be 

counted as supported students when 

calculating 85/15 rule compliance, VA 

notes that the rule does not prohibit the 

enrollment of new chapter 31 and 

chapter 35 students while the 85 

percent ratio is exceeded. The rules 

regarding reporting requirements and 

how individual students must be 

assessed based on their program of 

education and campus location are 

detailed in 38 CFR 21.4201. 

Specifically, paragraph (e) details the 

rules regarding how to compute the 85/ 

15 percent ratio, and paragraph (e)(2) 

provides special rules by which some 

students, even though they are in 

receipt of institutional aid, are 

nonetheless counted as ‘‘non-supported 

students.’’ 

VA is amending 38 CFR 21.4201(e)(2) 

to define ‘‘non-supported students’’ and 

‘‘supported students’’ and remove 

paragraphs (e)(2)(i) through (e)(2)(iv), 

which diminish the effectiveness of the 

market validation mechanism of the 

rule. Although 38 U.S.C. 3680A(d)(1) 

explicitly states that the 85 percent side 

of the ratio (i.e., the supported student 

count) should include all students 

‘‘having all or part of their tuition, fees, 

or other charges paid to or for them by 

the educational institution or by the 

Department of Veterans Affairs,’’ current 

VA regulations at 38 CFR 21.4201(e)(2) 

create tension with this essential goal of 

the 85/15 rule by providing four 

categories of students who are 

considered ‘‘non-supported’’ students 

notwithstanding their receipt of 

institutional aid. Currently, the four 

categories of such ‘‘non-supported’’ 

students are as follows: (1) non-Veteran 

students not in receipt of institutional 

aid; (2) all graduate students receiving 

institutional aid; (3) students in receipt 

of any Federal aid (other than VA 

benefits); and (4) undergraduate and 

non-college degree students receiving 

any assistance provided by the 

educational institution, if the 

institutional policy for granting this aid 

is the same for Veterans and nonVeterans alike. VA is removing all four 

categories. 

Removal of the first and third 

categories will have no impact because 

these students are already considered 

‘‘non-supported,’’ as they are not 

receiving institutional or VA aid. 

Regarding whether Federal aid (other 

than VA benefits), such as student loans 

and grants, is considered ‘‘institutional 

aid,’’ VA has never considered it to be 

institutional aid and will continue to 

not consider it institutional aid. 

Through this final rule (as further 

detailed below in the section titled 

REMOVAL OF INSTITUTIONAL AID 

EXEMPTION), VA is adding a regulatory 

definition that clarifies why it is not 

appropriate to classify Federal, state, or 

municipal grant funding as 

‘‘institutional aid.’’ Therefore, recipients 

of these funds are to be counted as 

‘‘non-supported,’’ barring receipt of 

other prohibited funding. Consequently, 

the removal of these ‘‘exclusions,’’ 

which are not included to begin with, 

amounts to a clarification of current 

practice since their numbers would 

remain on the 15 percent side of the 

ratio calculation. 

The practical impact is in the removal 

of the second and fourth categories, 

which provide that students can be in 

receipt of institutional aid and still be 

considered non-supported. These two 

categories (and particularly the fourth 

category) have created loopholes that 

educational institutions have exploited 

since the inception of the Post-9/11 GI 

Bill (PGIB). The problem stems from the 

fact that the PGIB pays up to the full 

amount of tuition and fees directly to 

educational institutions. This is unlike 

prior VA educational benefits 

implemented since 1952, from the 

Korean War GI Bill through the 

Montgomery GI Bill, for which VA pays 

a one-size-fits-all stipend amount 

directly to the beneficiary, and the 

beneficiary then pays tuition, fees, or 

other approved education-related 

expenses to the school using the stipend 

and/or other means. Under the prior 

model, if the tuition and fees exceed the 

stipend amount, then the beneficiary 

incurs out-of-pocket costs. By the same 

token, if the tuition and fees are less 

than the stipend amount, then the 

beneficiary may apply the funds 

towards other education costs. When 

beneficiary payments are structured this 

way, there is no incentive for an 

educational institution to inflate costs, 

as such a tactic might drive VA 

beneficiaries away in a competitive free 

market. Conversely, since under the 

PGIB, VA pays the net charges for 

tuition and fees (subject to benefit level 

and statutory caps for certain types of 

educational institutions) directly to the 

educational institution, the same 

competitive market forces do not apply. 

Consequently, the only students who 

can serve to validate the cost 

effectiveness of the program are those 

non-supported students who are 

counted on the 15 percent side of the 

85/15 rule. However, given that the 

provisions in sections 21.4201(e)(2)(ii) 

and (iv) stipulate that certain 

scholarship recipients are to be 

considered ‘‘non-supported,’’ a school 

can meet its 15 percent non-supported 

requirement while providing 

scholarships to some number of 

students so long as the students are 

graduate level, or the terms of the 

scholarship are such that Veterans and 

non-Veterans alike may qualify. These 

students are likewise not motivated by 

competitive free market forces because 

their actual charges for tuition and fees 

are reduced. Because these students are 

allowed, through sections 

21.4201(e)(2)(ii) and (iv), to be 

considered ‘‘non-supported,’’ they serve 

as a false-positive market validation for 

the tuition and fee charges levied on 

VA. This undermines the operative 

mechanism of the 85/15 rule by 

allowing schools to inflate their tuition 

and fees since there is no longer an 

effective counterweight. 

The original GI Bill (for Veterans of 

World War II, in effect from 1944 to 

1948) also paid tuition and fees directly 

to schools and was fraught with abuses 

and overcharges by schools. After 

investigating the abuses of the original 

GI Bill, Congress, when designing the 

successor Korean War GI Bill, took steps 

to eliminate such abuses by making 

payments directly to students and by 

instituting the 85/15 rule. Now that 

PGIB once again pays tuition and fees 

directly to schools, and having 

witnessed the same abuses seen under 

the original GI Bill, VA needs to 

restructure its implementation of the 85/ 

15 rule to give the rule the force it was 

originally intended to have when 

payments are being made directly to 

schools. As this presents an immediate 

exploitation of taxpayers’ investment in 

Veterans’ education and training, VA 

must emphasize the fundamental 

objective of the rule and strictly adhere 

to the requirement that students 

counted on the 15 percent side of the 

85/15 rule are not ‘‘having all or part of 

their tuition, fees, or other charges paid 

to or for them by the educational 

institution or by the Department of 

Veterans Affairs.’’ VA is accomplishing 

this by removing all exceptions listed in 

section 21.4201(e)(2), thus ensuring that 

every student who receives institutional 


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Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Rules and Regulations 2495 

or VA aid will be counted as a 

‘‘supported student.’’ 

These changes also clarify 

requirements for schools, thereby 

making it easier for schools operating in 

good faith to remain in compliance. The 

current various classifications of 

students are difficult for the School 

Certifying Officials (SCO) at educational 

institutions to follow, which can lead to 

improper payments and overpayments. 

Currently, when school officials have 

questions about making accurate 

student count calculations, they must 

individually reach out to their state 

Education Liaison Representative or VA 

staff in Washington, DC. As a result, the 

guidance they receive may be delayed or 

vary slightly depending upon the 

source. Further, some schools may opt 

not to seek VA guidance and instead 

rely on their own interpretations of the 

85/15 rule. All of these scenarios have 

resulted in non-supported calculations 

by schools which do not reflect the 

intent of the regulation’s underlying 

statute. The removal of all four current 

exceptions to the ‘‘non-supported’’ side 

of the 85/15 ratio will simplify the 

calculation of the 85/15 ratio—meaning, 

any student receiving any funding from 

either VA, or the school will be 

considered ‘‘supported.’’ Further, these 

amendments will resolve related 

compliance process issues by removing 

ambiguity about the appropriate 

classification of students in receipt of 

aid. These regulatory amendments will 

both simplify and promote consistency 

in calculating and reporting 85/15 

counts and will better align the 

regulation with its underlying statute. 

There may be instances where certain 

schools have a large percentage of their 

students (both Veteran and non-Veteran 

alike) in receipt of institutional aid, 

even if the amount of the aid is 

insignificant. In these situations, it is 

unlikely that the school’s institutional 

aid program is a subterfuge to disguise 

tuition inflation while complying with 

the 85/15 rule. In response to any 

concerns that such schools would be 

unfairly placed in noncompliance with 

the 85/15 rule by operation of this rule, 

VA notes that whenever an educational 

institution exceeds the 85 percent limit, 

it may apply for a waiver of the 85/15 

rule under 38 CFR 21.4201(h). 

Accordingly, VA is amending section 

21.4201(h) to allow an education 

institution to demonstrate that although 

its program is in violation of 85/15, its 

non-VA scholarship recipients are 

effectively serving as market validation, 

and, therefore, continued enrollment of 

new VA education beneficiaries is 

nonetheless in the best interest of the 

students and the Federal government. 

Consequently, the elimination of section 

21.4201(e)(2) does not mean that all 

generous schools will be eliminated 

from the GI Bill. It merely means that, 

on a case-by-case basis, a wellintentioned generous school could be 

granted a waiver while simultaneously 

limiting the potential for 

miscalculations and misapplication of 

scholarship information, whether 

intentional or unintentional. 

Regarding the current 85/15 waiver 

criteria, VA further amends the criteria 

found at 38 CFR 21.4201(h) by removing 

paragraphs (2) and (3) while leaving 

paragraph (1) in place and modifying 

paragraph (4). This is necessary because, 

while current regulations list four 

criteria to be considered, only 

paragraphs (1) and (4) (the availability 

of comparable education facilities 

effectively open to Veterans in the 

vicinity of the school requesting a 

waiver; and the general effectiveness of 

the school’s program in providing 

educational and employment 

opportunities to the Veteran population 

it serves) are cogent indicators of a 

program’s qualifications to obtain a 

waiver. 

Paragraph (2) only applies to schools 

in receipt of a Strengthening Institutions 

Program grant or a Special Needs 

Program grant administered by the 

Department of Education (ED). The 

Strengthening Institutions Program 

grant is only available to accredited 

institutions of higher learning. However, 

many GI Bill-approved institutions are 

non-degree granting and thus ineligible 

for these programs. Specifically, data 

from a February 2023 study showed that 

56% of institutions then approved for 

receipt of GI Bill institutions, were nondegree granting. Therefore, this criterion 

is irrelevant when considering waiver 

requests for such programs. 

Furthermore, the ‘‘Special Needs 

Program’’ grants referenced in paragraph 

(2) as being located in title 34, parts 

624–626, of the Code of Federal 

Regulations no longer exist at that 

reference. VA rarely receives waiver 

requests from schools in receipt of 

either of these grants, so the criterion in 

paragraph (2) rarely is satisfied. This 

absence of qualifying schools therefore 

is not dispositive in the adjudication of 

waiver requests. Paragraph (3)— 

previous compliance history of the 

school—is of no independent value to 

VA’s decision-making because if a 

school has failed to satisfy the criterion 

in paragraph (3), then the program’s 

approval would be suspended or 

withdrawn by the State Approving 

Agency (SAA). Consequently, by 

default, the Director of Education 

Service bases decisions on waiver 

requests almost exclusively on a 

school’s performance relative to the 

criteria in paragraphs (1) and (4). 

However, because paragraphs (2) and (3) 

are included in this regulation, schools 

must expend resources to address these 

criteria in their requests. Likewise, the 

Director must expend resources to 

respond to these criteria in his or her 

decision. Therefore, VA is removing 

paragraphs (2) and (3) to conserve both 

school and VA resources. It is important 

to note that because these criteria have 

been functionally irrelevant in the 

adjudication of waiver requests, such a 

removal will have no substantive effect 

on the likely outcome of any future 

waiver request decisions. 

Additionally, VA is amending the list 

of factors to be considered in paragraph 

(4) because the current list is not 

particularly helpful to the decision 

maker. The list contains only two 

criteria, and one of them—ratio of 

educational and general expenditures to 

full-time equivalency enrollment—is 

difficult to ascertain and verify while 

also being of questionable utility. 

Therefore, there is only one practical 

and pertinent factor—the percentage of 

Veteran-students completing the entire 

course—generally left to consider. 

Accordingly, VA is amending the list to 

provide a broad range of factors that 

may be considered (although the list 

will not be all inclusive). VA is 

maintaining the current graduation rate 

factor but adding other factors of 

graduate employment statistics, 

graduate salary statistics, satisfaction of 

Department of Education (ED) rules 

regarding gainful employment (where 

applicable), other ED metrics (such as 

student loan default rate), student 

complaints, industry endorsements, and 

participation in and compliance with 

the Principles of Excellence program, 

which was established by Executive 

Order 13607 on April 27, 2012 

(published in the Federal Register on 

May 2, 2012), to ensure that student 

Veterans, Service members, and family 

members have information, support, 

and protections while using Federal 

education benefits (where applicable), 

etc. This list is not exhaustive. The 

Director could, on a case-by-case basis, 

consider other factors not listed, which 

provide an indication of the program’s 

general effectiveness. In addition, the 

Director may consider whether the 

educational institution’s aid program 

appears to be consistent with or appears 

to undermine the 85/15 rule’s tuition 

and fee costs market validation 

mechanism. 

Lastly, for educational institutions 

organized on a term, quarter, or 

semester basis, the 85/15 calculations 


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2496 Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Rules and Regulations 

currently must be submitted to VA no 

later than 30 days after the beginning of 

each regular school term (excluding 

summer sessions) or before the 

beginning of the following term, 

whichever occurs first (38 CFR 

21.4201(f)(2)(i)). Educational 

institutions not organized on a standard 

term, quarter, or semester basis also 

must submit their 85/15 calculations to 

VA, however, no later than 30 days after 

the beginning of each calendar quarter 

to which the waiver applies (38 CFR 

21.4201(f)(2)(ii)). Consequently, 

educational institutions with short, nonstandard terms that begin and end more 

frequently than once per calendar 

quarter may have several terms that 

begin before VA is notified of failure to 

comply with the 85/15 rule. To remedy 

this shortcoming, VA is amending 38 

CFR 21.4201(f)(1) and (f)(2)(ii) to require 

that educational institutions with nonstandard terms submit their exemption 

justification reports and 85/15 percent 

calculations to VA no later than 30 days 

after the beginning of each non-standard 

term. This will provide VA with the 

opportunity to review compliance 

reports submitted by educational 

institutions before approving additional 

enrollments that impact compliance 

with the 85/15 rule. This amendment 

will promote accurate and up-to-date 

85/15 calculations, ensure that reporting 

is done on a fair and consistent basis, 

and enable VA to base consideration of 

85/15 waiver requests on relevant 

criteria. 

In summary, the 85/15 rule was 

created to prevent training institutions 

from developing courses solely for GI 

Bill students and then inflating tuition 

charges. The 85/15 rule serves as a 

market validation tool by which the cost 

of the program is validated by 

demonstrating that a sufficient number 

of students (15 percent of the total 

program enrollment) are willing to pay 

the full cost of tuition out of pocket. 

These changes will strengthen the 

existing 85/15 rule by addressing the 

regulatory provisions that, over time, 

have been shown to be ineffective with 

regard to the rule’s intent. 

Public Comments 

56 comments were received in 

response to VA’s NPRM ‘‘85/15 Rule 

Calculations, Waiver Criteria, and 

Reports.’’ Several commenters 

expressed support for the rule, while 

several others expressed concerns. VA 

believes that many of the concerns are 

best answered via further clarification 

both in the responses to the substantive 

comments below and in changes VA is 

making to the proposed language from 

the NPRM, also discussed below. 

Ensuring the Best Schools for Veterans 

Act of 2022 

Some commenters requested that VA 

address Public Law 117–174, the 

‘‘Ensuring the Best Schools for Veterans 

Act of 2022,’’ in the preamble to this 

rulemaking. VA acknowledges that there 

has been some confusion as to the 

content of this rulemaking due to the 

proximity of its NPRM’s publication 

with the enactment of Public Law 117– 

174, which was signed into law on 

August 26, 2022. VA’s NPRM ‘‘85/15 

Rule Calculations, Waiver Criteria, and 

Reports’’ was published in the Federal 

Register (Vol. 87, No. 196) on October 

12, 2022. This did not afford VA enough 

time to address the law in the NPRM or 

this final rule. While VA has effectively 

implemented the law and provided 

guidance to schools on its impacts, VA 

plans to address it specifically in a 

future rulemaking. However, VA also 

will address the law here, as its 

enactment does have major implications 

on the impact this rulemaking will have 

on schools. 

Public Law 117–174 clarifies 

Congressional intent regarding the 

statutory requirements of the 35 percent 

exemption to the 85/15 rule. The law 

provides that an institution that (1) has 

a Veteran population less than 35 

percent of its total student enrollment 

and (2) has most of its programs 

approved under section 3672 or 3675 of 

title 38, U.S.C., is statutorily exempt 

from all 85/15 requirements including 

reporting, computing, monitoring, and 

complying with 85/15 ratios. As one 

commenter noted, ‘‘virtually all public 

and non-profit colleges and universities 

qualify for this exemption: they have 

veteran populations below 35 percent— 

typically well below that threshold and 

often in the single digits—and the 

majority of their programs are typically 

approved under section 3672 or 3675.’’ 

VA agrees with this commenter. Due to 

the changes made by Public Law 117– 

174, presumably a large percentage of GI 

Bill schools will be exempt from the 85/ 

15 rule because they are accredited 

schools with less than 35 percent of 

their student population being Veterans. 

The changes made by this final rule will 

therefore have no functional impact on 

these exempt schools, as the 85/15 rule 

is irrelevant to them. Therefore, while 

this rulemaking does not implement 

Public Law 117–174, any review, 

analysis, and evaluation of the 56 public 

comments must keep in mind the 

inapplicability of the changes made in 

this final rulemaking to a large 

percentage of GI Bill-approved schools 

that are exempt from the 85/15 

requirements due to the law. As of May 

25, 2023, 57 percent of all GI Billapproved schools are exempt from 85/ 

15 under Public Law 117–174 and 

therefore are unaffected by the rules 

contained herein (out of the 9,247 

education training institutions approved 

for GI Bill benefits, there are 5,257 

schools with 35 percent exemptions on 

record with the VA and more are being 

added each day). Thus, this rulemaking 

does take Public Law 117–174 into 

account while not attempting to 

implement that law. 

VA makes no changes to the rule 

based on these comments. 

Implementation of Revised 85/15 Rule 

One commentor expressed concern 

regarding the lack of information 

provided to schools about the 

‘‘timeline’’ of the implementation of the 

proposed rulemaking. 

VA disagrees that insufficient notice 

of a potential change has been provided. 

VA has provided ample information 

concerning the implementation process 

of the proposed rule to the public, 

which includes schools, via the 

rulemaking process. Further, a VA 

communications plan was executed 

following the NPRM’s publication to 

encourage its primary stakeholders, 

schools, to both acquaint themselves 

with and comment on the rulemaking. 

The notification of the 

implementation of a proposed 

rulemaking was conducted pursuant to 

the Administrative Procedure Act’s 

notice and comment process for agency 

rulemaking, found in 5 U.S.C. 553. This 

‘‘notice and comment’’ process requires 

Government agencies to notify the 

public through the Federal Register of 

a proposed new or revised rule, and to 

accept and consider public comments. 

VA’s proposal to revise its educational 

assistance regulations in the rulemaking 

titled ‘‘AR56—85/15 Rule Calculations, 

Waiver Criteria, and Reports’’ was 

submitted to the Federal Register and 

published on October 12, 2022. This 

published ‘‘notice of proposed 

rulemaking’’ announced the proposed 

regulation to the public, provided a 

detailed description of the planned 

regulation and its legal basis, and 

allowed the public the opportunity to 

submit written comments concerning 

the proposed regulation. 

However, as a prudential matter, VA 

believes it is in the best interest of the 

students, schools, and the Federal 

government to provide schools with an 

extended amount of time after 

publication of the final rule to prepare 

for and mitigate any impacts these new 

rules may have. Therefore, VA will 

delay the applicability date to one year 

after the publication of this final rule to 


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Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Rules and Regulations 2497 

1See, e.g., Florida Academy Agrees To Pay 

$512,000 To Resolve Misrepresentation Claims 

Impacting Veterans’ Post-9/11 Tuition Subsidy 

Program (Jan. 27, 2020), https://www.justice.gov/ 

usao-mdfl/pr/florida-academy-agrees-pay-512000- 

resolve-misrepresentation-claims-impactingveterans; Universal Helicopters Inc. and Dodge City 

Community College Agree to Pay $7.5 Million to 

Settle False Claims Act Allegations Related to Post9/11 GI Bill Funding (Aug. 15, 2022), https://

www.justice.gov/opa/pr/universal-helicopters-incand-dodge-city-community-college-agree-pay-75- 

million-settle-false; Justice Department Announces 

Enforcement Action Involving Over $100 Million in 

Losses to Department of Veterans Affairs (Sept. 16, 

2022), https://www.justice.gov/opa/pr/justicedepartment-announces-enforcement-actioninvolving-over-100-million-losses-department. 

2 Veterans Fact Sheet, Postsecondary National 

Policy Institute, available at https://pnpi.org/wpcontent/uploads/2022/11/VeteransFactSheet-Nov2022.pdf. 

ensure both that VA will have adequate 

time to train schools as much as needed 

about the regulatory provisions herein 

and that schools will have enough time 

to implement any necessary changes in 

their policies to comply with these 

provisions. 

Definition of ‘‘Institutional Aid’’ 

One commentor requested that VA 

revise the definition of ‘‘institutional 

aid’’ in 38 CFR 21.4201(e)(2) by 

narrowing it to the receipt of tuition and 

mandatory fees only. 

In response, VA notes that 38 U.S.C. 

3680A(d)(1) explicitly states that ‘‘other 

charges paid to or for [students] by the 

educational institution’’ are to be 

included in the 15 percent calculation; 

therefore, VA is required by law to 

include charges other than tuition and 

mandatory fees in its definition of 

institutional aid. Excluding ‘‘other 

charges’’ would require Congressional 

action to amend the statutory language. 

As such, VA makes no changes to the 

rule based on this comment. 

Definition of ‘‘Supported Students’’ 

Some commenters opposed VA 

making any changes to the definition of 

‘‘supported students,’’ concerned that 

classifying students in receipt of any 

type of institutional aid, regardless of 

monetary amount, as ‘‘supported’’ will 

significantly increase the amount of 

supported students. 

In contrast, one commentor noted 

how the existing language ‘‘seems to 

favor schools’’ by letting them claim 

students in receipt of institutional aid as 

non-supported, which helps them reach 

the required 15 percent, and how it 

‘‘creates space for institutions looking to 

raise tuition prices by disguising 

supported students’’ as non-supported. 

VA agrees that by categorizing 

students in receipt of any institutional 

aid, regardless of monetary amount, as 

‘‘supported,’’ the number of supported 

students, as counted for the 85/15 rule, 

will increase, and in some cases, this 

could result in a significant increase of 

supported students for individual 

institutions and programs. However, VA 

makes no changes based on these 

comments, as this is the unavoidable 

impact of these changes to more closely 

align to the statutory language. 

As stated in the preamble to the 

NPRM, VA is aligning this regulation 

more directly with the language of 38 

U.S.C. 3680A(d)(1), which explicitly 

states that the 85 percent side of the 

ratio (i.e., the supported student count) 

should include all students ‘‘having all 

or part of their tuition, fees, or other 

charges paid to or for them by the 

educational institution or by the 

Department of Veterans Affairs.’’ The 

original language for the exemptions 

was introduced in 1979 with changes 

through the current language, which 

was last updated in 1990. The Secretary 

has the authority to make these 

exceptions under 38 U.S.C. 3680A(d)(2) 

if they are ‘‘in the interest of the eligible 

veteran and the Federal Government.’’ 

Recent enforcement actions by the 

Department of Justice (DOJ) show that 

the loopholes created by the existing 

language are no longer in the interest of 

beneficiaries or the Federal 

Government.1

Additionally, VA believes the impact 

on institutions will be significantly less 

than commenters opposing the 

proposed definition of ‘‘supported’’ may 

believe. VA agrees that the proposed 

definition could be more problematic 

for institutions if it were applicable to 

a large portion of institutions. However, 

a large portion of training facilities are 

exempt from the 85/15 rule because 

they qualify for the 35 percent 

exemption. Furthermore, as discussed 

in the Ensuring the Best Schools for 

Veterans Act of 2022 section of this 

preamble, Public Law 117–174 clarifies 

Congressional intent regarding the 

statutory requirements of the 35 percent 

exemption to the 85/15 rule and 

broadens the exemption. Moreover, any 

educational institution exceeding the 

85/15 threshold has the option to apply 

for a waiver, as provided in 38 U.S.C. 

3680A(d)(2) and 38 CFR 21.4201(h). 

VA makes no changes to the rule 

based on these comments. 

85/15 Calculation/Exception Categories 

A few commentors disagreed with the 

calculation of the 85/15 percent ratio. 

Specifically, commentors were opposed 

to the removal of the exception category 

found in 38 CFR 21.4201(e)(2)(iv), 

which allows students receiving certain 

institutional scholarships to be counted 

as ‘‘non-supported,’’ resulting in these 

students being included on the 15 

percent (non-supported) side of the ratio 

calculation. One commentor stated that 

the elimination of this exception 

category would ‘‘artificially inflate the 

number of students counted on the 85 

percent [supported] side of the 

equation.’’ 

VA disagrees with these comments. 

The exemption in section 

21.4201(e)(2)(iv) has been causing 

supported students to be undercounted 

in 85/15 calculation; therefore, its 

removal will result in a more accurate 

count. Students receiving institutional 

aid always should have been counted as 

‘‘supported.’’ This has been the case 

since the creation of the 85/15 rule. The 

85 percent rule, which can be found at 

38 U.S.C. 3680A, was enacted in 1952 

to combat predatory school abuses 

following implementation of the 

Servicemen’s Readjustment Act of 1944. 

The removal of this exception category 

returns the 85/15 rule to its original 

intent of serving as a market validation 

tool to prevent schools from inflating 

tuition charges for Veterans using VA 

educational assistance. VA finds that 

the exception category in 38 CFR 

21.4201(e)(2)(iv) created loopholes 

which have been exploited by some 

schools—exploitation that has been 

exacerbated under the Post-9/11 GI Bill. 

Closing this loophole is one of the 

primary purposes of this rulemaking. 

Furthermore, removal of the 

exception in 38 CFR 21.4201(e)(2)(iv) 

likely will not significantly increase the 

ratio of ‘‘supported’’ students enrolled 

in a program because Veterans 

statistically make up a small percentage 

of most schools’ overall student 

populations. According to data from the 

Postsecondary National Policy Institute 

(PNPI), as of academic year (AY) 2015– 

16, only 4.9 percent of undergraduate 

students were Veterans—a small portion 

of the population attending schools.2

Also, though some schools with a 

significant population of disadvantaged 

students who are receiving institutional 

aid may result in the educational 

institution exceeding the 85/15 

threshold, the educational institution 

has the option to apply for an 85/15 

waiver, as provided in 38 U.S.C. 

3680A(d) and 38 CFR 21.4201. 

VA makes no changes to the rule 

based on these comments. 

35 Percent Exemption 

Some commenters requested for VA to 

clarify in the final rule that the changes 

proposed by the rulemaking do not 

apply to institutions that qualify for the 

35 percent exemption, in order to 


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provide clarity for School Certifying 

Officials (SCO) and Education Liaison 

Representatives (ELR). 

VA concurs with these comments and 

has explained the impact of the 35 

percent exemption in the preamble. For 

further clarification, please refer to the 

Ensuring the Best Schools for Veterans 

Act of 2022 section above. While 

portions of the newly enacted law and 

this rulemaking do overlap, as stated 

earlier, this rulemaking is not 

implementing the provisions of Public 

Law 117–174, Ensuring the Best Schools 

for Veterans Act of 2022. Additionally, 

VA did not address the 35 percent 

exemption in the NPRM because VA 

was not proposing any changes to the 35 

percent exemption at the time of 

publication. However, to alleviate 

further confusion, VA will address 

comments regarding the 35 percent 

exemption. 

Some commenters requested for VA to 

create an exemption that if the total 

Veteran student ratio is under 35 

percent, then the institution would be 

exempt from having to track the 85/15 

ratios. 

The 35 percent exemption to all 

schools is found in statute. Public Law 

117–174 modified the statutory 

requirements of the 35 percent 

exemption to the 85/15 rule. As the law 

clarifies, if an institution that (1) has a 

Veteran population less than 35 percent 

of its total student enrollment and (2) 

has most of its programs approved 

under section 3672 or 3675 of title 38 

U.S.C., that institution is statutorily 

exempt from all 85/15 requirements 

including reporting, computing, 

monitoring, and complying with 85/15 

ratios. Therefore, this law exempts 

many schools from the requirement of 

tracking the 85/15 ratios. VA will 

address the law more specifically in a 

future rulemaking, to include 

consideration of adding a blanket 

statement of situations in which a 

school is exempt from having to track 

85/15 ratios in VA’s regulations. 

Some commenters stated concerns 

that VA is putting more stock in the 35 

percent waiver to circumvent the 85/15 

reporting and requested that VA find a 

better way to punish bad actors. One 

commenter stated that the 35 percent 

exemption undermines the 85/15 rule 

because there is no market validation 

price checking mechanism for campuses 

that enroll fewer than 35 percent 

Veteran students overall. 

VA notes that the 85/15 ratio and the 

35 percent exemption are statutorily 

mandated. Further, VA did not intend 

this rule as an enforcement action to 

‘‘punish bad actors’’ but rather is 

revising the 85/15 ratio criteria to better 

leverage the 85/15 rule as a market 

validation tool and to better serve the 

interests of benefit recipients and the 

Federal government. 

Some commenters also requested VA 

add new language to 38 CFR 21.4201 for 

further clarification of the 35 percent 

exemption. 

VA will not be adding new language 

regarding the 35 percent exemption at 

this time, as the language for the 

exemption already exists at 38 CFR 

21.4201(c)(4). VA did not address the 35 

percent exemption in this rulemaking 

because this rulemaking does not 

modify said language. However, with 

the enactment of Public Law 117–174, 

Congress modified the language that 

authorizes the 35 percent exemption. 

VA will address these changes in a 

future rulemaking. 

VA makes no changes to the rule 

based on these comments. 

Lack of Student Choice 

Several commentors expressed 

concern that proposed changes to the 

85/15 rule could limit choices of 

undergraduate and graduate Veteran 

and non-Veteran students. The 

commenters stated that removing the 

four exceptions to the 85/15 rule—most 

notably the fourth exception category in 

38 CFR 21.4201(e)(2)(iv), 

‘‘undergraduate and non-college degree 

students receiving any assistance 

provided by the educational 

institution’’—and classifying all 

students in receipt of any type of 

institutional aid as ‘‘supported’’ will 

significantly increase the ratio of 

‘‘supported’’ students enrolled in a 

program. This increase of students 

counted as supported would, according 

to these commentors, lead to program 

suspension due to violation of the 85/ 

15 rule, which would bar new students 

from enrolling in programs that align 

with their interests. 

VA does not disagree with these 

commenters’ assertions that this 

rulemaking could produce new 

violations of the 85/15 rule and possibly 

new suspensions. However, Congress 

intentionally chose to enact a statute 

that limits choices for GI Bill students 

when ‘‘more than 85 percent of the 

students enrolled in the course are 

having all or part of their tuition, fees, 

or other charges paid to or for them by 

the educational institution or by the 

Department of Veterans Affairs.’’ 38 

U.S.C. 3680A(d)(1). As previously stated 

in this preamble and the preamble to the 

NPRM, this rulemaking is realigning 

VA’s regulation with the existing statute 

to close loopholes that VA has 

determined are not in the interest of 

benefit recipients or the Federal 

Government. 

For additional clarification, a school 

exceeding the 85 percent threshold will 

not impact any currently enrolled 

students because the statute explicitly 

states that it applies only to students 

‘‘not already enrolled.’’ However, the 

statute explicitly functions to limit 

available options for students by 

preventing the enrollment of new GI Bill 

students when a school exceeds the 85 

percent threshold. 

Furthermore, VA will not speculate 

on the number of choices that will be 

available after these changes. Some 

schools with a significant population of 

students receiving institutional aid may 

end up exceeding the 85/15 threshold. 

In those cases, the school has the option 

to apply for an 85/15 waiver as provided 

in 38 U.S.C. 3680A(d) and 38 CFR 

21.4201. In addition, a program 

suspended for violating the 85/15 rule 

retains all its current students. Only 

future enrollments are potentially 

affected. Furthermore, Public Law 117– 

174, discussed in the Ensuring the Best 

Schools for Veterans Act of 2022 section 

of this preamble, exempts a large 

portion of training facilities from the 85/ 

15 requirements. 

VA makes no changes to this rule 

based on these comments. 

Removal of Institutional Aid Exemption 

A few commentors were concerned 

that the removal of the fourth exception 

category from being considered 

supported (the exception for 

institutional aid) would negatively 

impact students eligible for grants 

provided by Federal programs, such as 

Federal Work Study (FWS) (34 CFR 

parts 673 and 675), the Federal 

Supplemental Educational Opportunity 

Grants (FSEOG) (34 CFR part 676), and 

the Workforce Innovation and 

Opportunity Act (WIOA) (Pub. L. 113– 

128). FWS and FSEOG are Federal grant 

programs that require the institution to 

contribute a proportion of the funds 

paid to the recipient, meaning that 

when the fourth exception category is 

removed, such grant recipients would 

be considered in receipt of institutional 

aid and therefore counted on the 

‘‘supported’’ side of the 85/15 

calculation. The commenter opined that 

this provision would discourage 

training institutions from participating 

in these federally funded programs, 

which would adversely affect both 

students and the training institution. 

VA acknowledges the validity of these 

comments and recognizes the 

importance of other Federal programs 

that benefit students and schools alike; 

the FWS program provides a source of 


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part-time income for undergraduate and 

graduate students with financial need, 

and the FSEOG program, a Title IV 

campus-based program, provides grants 

to eligible students who demonstrate 

exceptional financial need and 

encourages training institutions to 

provide grants to low-income 

undergraduate students. 

The WIOA was enacted in July 2014 

‘‘to bring about increased coordination 

among Federal workforce development 

and related programs . . . [and] to 

provide a combination of education and 

training services to prepare individuals 

for work and to help them improve their 

prospects in the labor market.’’ 

Congressional Research Service, The 

Workforce Innovation and Opportunity 

Act and the One-Stop Delivery System 

(Sept. 26, 2022), available at https://

crsreports.congress.gov/product/pdf/R/ 

R44252. Titles I and III of the WIOA are 

administered by the Department of 

Labor’s Employment and Training 

Administration (ETA), and Titles II and 

IV of the WIOA are administered by ED. 

The annual Congressional appropriation 

for these programs is a formulaic 

allotment to states administered by ETA 

and ED who, in turn, distribute the 

funding to schools per the WIOA 

program requirements. Importantly, no 

grants are awarded directly to 

individuals, and there are no 

‘‘matching’’ requirements for the states 

or the recipient training institution. 

Even though making changes based 

on these comments will not impact the 

scope of this rulemaking, VA 

understands the confusion to 

stakeholders resulting from the 

proposed removal of language 

previously included in the third 

exception category (‘‘Students in receipt 

of any Federal aid (other than 

Department of Veterans Affairs 

benefits).’’). VA will continue to 

consider Federal aid (other than VA 

benefits) as distinct from ‘‘institutional 

aid.’’ VA considers Federal aid to 

include state and municipal funds, as 

well as institutional matching funds 

pursuant to participation in such 

Federal, state, or municipal grant 

programs. In this final rule, VA is 

adding regulatory text clarifying that 

‘‘institutional aid’’ does not include 

Federal, state, or municipal grant 

funding, nor does it include matching 

funds provided by the educational 

institution pursuant to participation in 

such Federal, state, or municipal grant 

programs. As such, grants to students 

under WIOA and other similar programs 

mentioned by the commentors will be 

counted as ‘‘non-supported,’’ barring 

receipt of other prohibited funding. 

This categorization of other Federal 

funding is being informed by similar 

statutory language concerning 

institutional aid found in the Post-9/11 

GI Bill and at 38 U.S.C. 3313(c)(1)(A)(II). 

These provisions refer to relevant 

financial assistance provided by the 

educational institution to the student as 

including any scholarship, aid, waiver, 

or assistance, but do not include loans 

and funds provided under section 

401(b) of the Higher Education Act of 

1965 or financial assistance from a third 

party. VA believes the additional 

language concerning ‘‘institutional aid’’ 

is consistent with the concepts 

embodied by Congress in section 3313. 

Moreover, while students in receipt of 

Federal financial aid count on the ‘‘nonsupported’’ side of the 85/15 ratio, VA 

reiterates that pursuant to Public Law 

117–174, many, if not most, accredited 

schools are likely to be exempt from the 

85/15 reporting requirements altogether. 

Impact on Low-Income and 

Disadvantaged Students and the 

Schools That Serve Them 

Several commenters indicated that 

this rulemaking would impose a 

hardship on low-income students who 

rely on financial aid to attend an 

educational institution. Specifically, 

those commenting expressed the 

following concerns for low-income 

students who need scholarships and 

other financial assistance or aid to pay 

tuition and fees: (1) institutions will be 

forced to decrease the amount of 

financial assistance provided to lowincome students to comply with the 85/ 

15 rule which is unfair to these students 

because their financial assistance is 

‘‘counted against them’’ when enrolled 

at an educational institution, and (2) 

‘‘under-privileged’’ and ‘‘indigent’’ 

students will not have access to 

educational programs without the use of 

institutional financial aid. One 

commentor stated that institutions will 

be forced to decrease the amount of 

financial assistance provided to lowincome students to stay within the 85/ 

15 rule calculations. Another 

commentor pointed out that students 

needing scholarships and financial aid 

to attend an educational institution 

should not have their financial 

assistance counted against them when 

seeking enrollment at an institution. 

Under this rulemaking, supported 

students are defined as students who 

have all or part of their tuition, fees or 

other charges paid for them by the 

educational institution, or by VA under 

title 38, U.S.C., or under title 10, U.S.C. 

As such, only students receiving ‘‘VA 

aid’’ and ‘‘institutional aid’’ will be 

counted as supported students. Per 

statute, when a school chooses to grant 

institutional aid to a student, the 

student must be counted as supported, 

which is the exact intent of the law. 

Hence, if the school chooses to go over 

the 85 percent threshold in a specific 

program of education, future GI Bill 

students will be impacted. Those 

students receiving Federal financial aid 

other than from VA or the educational 

institution will remain counted as nonsupported students for the 85/15 

calculations. As a result, there will be 

no impact to students who are in receipt 

of non-VA Federal aid such as needbased grants, Federal direct subsidized 

or non-subsidized loans, or noninstitutional financial aid such as thirdparty loans or scholarships. Those 

categories of students already are 

considered non-supported students in 

85/15 calculations and will remain on 

the 15 percent side of the ratio 

calculation. 

Any schools with a significant 

population of disadvantaged students 

who receive institutional aid, which 

might result in the educational 

institution violating the 85 percent 

limitation of ‘‘supported students’’ 

under this rulemaking, may apply for a 

waiver, which, as a result of this 

rulemaking, will be a more 

straightforward process. Specifically, 

under the amendments to 38 CFR 

21.4201(h), VA may grant a waiver of 

the 85 percent limitation when 

favorable consideration is made on the 

educational institution’s performance 

relative to the criteria of ‘‘availability of 

comparable alternative educational 

facilities effectively open to veterans in 

the vicinity of the school requesting a 

waiver’’ and ‘‘the general effectiveness 

of the school’s program in providing 

educational and employment 

opportunities to the veteran population 

it serves.’’ Whereas there currently are 

four criteria that must be addressed in 

order to obtain this waiver, this final 

rule reduces the number of criteria that 

must be addressed. 

Several comments expressed concern 

that by removing the third category 

(‘‘students in receipt of any Federal Aid 

(other than VA benefits)’’) from VA’s 

current regulatory definition of ‘‘nonsupported’’ students at section 

21.4201(e)(2), this rule would negatively 

impact two-year institutions that serve 

low-income or underserved populations 

that need Federal financial aid to attend 

school. One commenter stated that this 

change would force schools to choose 

between the underprivileged and 

Veteran populations. Another 

commentor was concerned that 

programs such as the WIOA would now 

be counted on the supported side of the 


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3 Veterans Fact Sheet, supra note 2. 

4 2020 List of Minority Serving Institutions, U.S. 

Department of Health and Human Services, 

available at https://www.minorityhealth.hhs.gov/ 

assets/PDF/2020_Minority_Serving_Institutions.pdf. 5 Veterans Fact Sheet, supra note 2. 

calculation because of the removal of 

the third category. The commenter 

stated that many programs attractive to 

WIOA beneficiaries would also be 

attractive to Veterans, and therefore may 

cause the schools to lose prospective 

students. 

As stated above, students receiving 

Federal financial aid and/or aid from 

WIOA or similar Federal programs will 

be not considered ‘‘supported’’ for the 

85/15 calculations. As previously stated, 

supported students are only those 

students who are having all or part of 

their tuition, fees or other charges paid 

for them by the educational institution, 

or by VA under title 38, U.S.C., or under 

title 10, U.S.C. According to the PNPI, 

in the AY 2015–16, only 5.1 percent of 

students enrolled at minority-serving 

institutions (MSI) were Veterans.3

Additionally, in 2020, the Department 

of Health and Human Services 

published a list of MSIs that shows the 

majority are public institutions.4

Furthermore, Public Law 117–174, 

discussed in the Ensuring the Best 

Schools for Veterans Act of 2022 section 

of this preamble, exempts a large 

portion of training facilities from the 85/ 

15 requirements. 

One commenter stated that counting 

students receiving institutional aid as 

‘‘supported’’ would discourage schools 

from offering funds to lower income 

students or risk having Veteran students 

locked out of the programs they are 

interested in. 

In response, VA notes students 

receiving institutional aid have been 

classified by statute as ‘‘supported’’ 

since the inception of the statute 

creating the 85/15 rule. The 85 percent 

rule was enacted in 1952 to combat 

predatory school abuses found to occur 

following the implementation of the 

Servicemen’s Readjustment Act of 1944. 

The statutory authority for the 85/15 

rule currently resides in 38 U.S.C. 

3680A, where it was added by Public 

Law 102–568, the ‘‘Veterans Benefits 

Act of 1992.’’ VA has no authority to 

remove ‘‘students receiving institutional 

aid’’ from being counted as 

‘‘supported’’; only Congress does. 

Some commenters expressed concerns 

that the changes to the 85/15 

calculations would negatively impact 

institutional revenue by requiring 

extensive and possibly duplicative 

manhours from SCOs (in addition to VA 

employees) when computing the 85/15 

calculations and the 35 percent 

exemptions. 

VA disagrees with this statement. To 

the extent the commenters’ concern is 

having to revise calculations for prior 

years, VA notes that 85/15 calculations 

are done point forward. Calculations 

that have already been reported for 

completed or in-progress terms need not 

be recalculated. To the extent the 

commenters are concerned about 

duplication of effort, VA notes this 

rulemaking has been designed to 

minimize burdens on both schools and 

the government while still 

accomplishing the objective of 

strengthening the 85/15 rule. By 

removing the exceptions, the calculation 

process will be streamlined and more 

straightforward, enabling SCOs and VA 

employees to calculate and review 

easily. Finally, the NPRM did not 

address the 35 percent exemption, and 

this rulemaking does not make any 

changes to the portions of the regulation 

that address this rule. 

Additionally, Public Law 117–174, 

discussed in the Ensuring the Best 

Schools for Veterans Act of 2022 section 

of this preamble, exempts a large 

portion of training facilities from the 85/ 

15 requirements. As one commenter 

noted, ‘‘virtually all public and nonprofit colleges and universities qualify 

for this exemption: they have veteran 

populations below 35 percent— 

typically well below that threshold and 

often in the single digits—and the 

majority of their programs are typically 

approved under section 3672 or 3675.’’ 

Furthermore, according to the PNPI, 

in 2021, only 6.4 percent of the U.S. 

population aged 18 or over were 

Veterans of the U.S. military. For the AY 

2015–2016, only 4.9 percent of 

undergraduates were Veterans. At forprofit institutions during the same 

period, this figure was slightly higher at 

9.2 percent; however, this percentage is 

still well below the 35 percent mark 

established by statute.5 This means that 

a large portion of those schools 

previously reporting 85/15 ratios will 

not be impacted by this rulemaking, as 

they will be exempt from reporting. 

VA makes no changes to the rule 

based on these comments. 

Administrative Burden 

Many commenters opposed VA’s 85/ 

15 rule, due to the administrative 

burden it poses on a school’s VA 

Certifying Official(s). However, one 

commenter provided a counterpoint, 

stating that ‘‘the removal of these four 

exemptions will provide clarity and 

efficiency to the certification process, 

reducing the workload of administrators 

and minimizing categorization 

mistakes.’’ 

VA acknowledges the administrative 

burden placed on schools that are 

required to submit 85/15 calculations. 

However, this rulemaking is not 

increasing the current burden of having 

to report 85/15 calculations. 

Furthermore, the removal of all four 

current exceptions to the ‘‘nonsupported’’ side of the 85/15 ratio 

simplifies the calculation of the 85/15 

ratio and clarifies requirements for 

schools, thereby making it easier for 

schools to remain in compliance. In 

theory, this should lighten the existing 

administrative burden. Also, the 

administrative burden of having to 

submit 85/15 calculations will be 

reduced due to the implementation of 

‘‘Ensuring the Best Schools for Veterans 

Act of 2022,’’ since this law exempts 

most accredited schools from 85/15 

requirements if their GI Bill student 

enrollment is lower than 35 percent of 

the total student population. 

VA makes no changes to the rule 

based on these comments. 

Waiver Process 

There were several comments 

concerning the amendments to 85/15 

waiver criteria. One commenter 

disagreed with the retention of the 

criterion in 38 CFR 21.4201(h)(1) and 

the elimination of the waiver criterion 

in paragraph (3), stating that for 

paragraph (1), they believed that the 

unavailability of another similar 

program in the vicinity of a noncompliant program would not be an 

indicator of a program’s quality or 

outcome. This commenter stated that 

the criterion in paragraph (3) should be 

retained and its language revised to refer 

to the ‘‘past performance’’ of an 

institution, rather than to past 

compliance. The commenter further 

stated that in the adjudication of waiver 

requests, the consideration of an 

institution’s past performance would 

protect students from predatory schools. 

VA disagrees with the commenter’s 

recommendations. VA maintains that 

the criterion in paragraph (1) (‘‘the 

availability of comparable schools open 

to Veterans in the vicinity of the school 

requesting a waiver’’) is a valid and 

quantifiable criterion to evaluate 

whether an institution should be 

granted a waiver. The availability of 

comparable schools nearby also 

provides effective market validation of 

tuition costs because this factor 

compares the cost-effectiveness of 

programs at comparable schools. 

As to the commenter’s suggestion to 

keep the criterion in paragraph (3) but 

amend the language to state ‘‘past 


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performance’’ instead of the past 

compliance of an institution, VA 

believes that making this distinction is 

not useful or logical. VA and/or SAAs 

often learn of past performance issues 

through their compliance actions. In 

some cases, non-compliance with VA 

law or policy leads to the suspension or 

withdrawal of program approval, giving 

a clear indication of a past performance 

issue. Further, ‘‘performance’’ 

compliance or lack thereof is always 

documented and is a clear measure of 

past performance. Regardless, VA 

concludes that retaining paragraph (3) 

with either the existing or suggested 

revision is not necessary altogether 

since the revision to the criterion in 38 

CFR 21.4201(h)(4) (‘‘general 

effectiveness of the school’s program in 

providing educational and employment 

opportunities to the Veteran population 

it serves’’) adds the factor of an 

educational institution’s participation in 

and compliance with the Principles of 

Excellence program established by 

Executive Order 13607. This added 

factor to the paragraph (4) criterion will 

provide comprehensive performance 

indicators to evaluate an educational 

institution’s general effectiveness and 

protect students from predatory schools 

while using Federal education benefits. 

Another commenter objected to the 

revision of the list of factors to be 

considered in the ‘‘general effectiveness 

of the school’s program’’ criterion in 38 

CFR 21.4201(h)(4), stating that the 

current factors are required to comply 

with Principles of Excellence and, as 

such, should remain in the criteria 

considered in the 85/15 waiver decision 

process. The commenter also opposed 

maintaining the existing graduation rate 

factor in paragraph (4), stating that this 

factor may not accurately measure the 

success of student outcomes since there 

are instances of students attending, but 

not graduating from, community college 

because they attended the community 

college only to prepare for entry into a 

university. 

VA disagrees with these comments. 

The current list of factors contained in 

38 CFR 21.4201(h)(4), including the 

‘‘ratio of educational and general 

expenditures to full-time equivalency 

enrollment,’’ largely is not useful when 

deciding on a waiver and should be 

revised. As stated in the rulemaking, the 

current graduation rate factor will be 

retained and the list expanded to 

include other factors such as graduate 

employment, graduate salary, gainful 

employment, student complaints, and 

industry endorsements, as these factors 

are strong and logical indicators of an 

educational institution’s general 

effectiveness. 

As to the commenter’s opposition to 

retaining the existing graduation rate 

factor, this factor is still both relevant 

and applicable to most waiver request 

determinations. Further, this 

amendment expands the current list of 

factors that may be considered to 

include not only graduate employment 

but graduate salary, gainful 

employment, student complaints, and 

industry endorsements. Additionally, 

under this rulemaking, VA will have 

authority to weigh other unlisted factors 

on a case-by-case basis. Thus, there are 

ample metrics provided by this 

rulemaking to minimize the significance 

of the number of students who transfer 

to, and then graduate from, another 

educational institution. 

Another commenter stated that a 

school seeking a waiver would be 

detrimental to Veterans due to the 

‘‘additional amount of time’’ expended 

to seek a waiver. This commenter 

indicated that a student’s program 

would be suspended pending the waiver 

determination and that Veterans would 

be unable to enroll or attend classes in 

the affected programs. 

VA does not agree with this statement 

since the rulemaking simplifies the 

waiver application process by 

decreasing the number of waiver 

criteria. Therefore, the process of waiver 

application will be simplified for the 

educational training institute and for 

VA to adjudicate. Additionally, as 

previously stated in this preamble, with 

the enactment of Public Law 117–174, it 

is likely that fewer educational training 

institutes will be seeking waivers, as 

many are now exempt from tracking the 

85/15 ratio. 

VA makes no changes to the rule 

based on these comments. 

Executive Orders 12866, 13563 and 

14094 

Executive Order 12866 (Regulatory 

Planning and Review) directs agencies 

to assess the costs and benefits of 

available regulatory alternatives and, 

when regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety effects, and other advantages; 

distributive impacts; and equity). 

Executive Order 13563 (Improving 

Regulation and Regulatory Review) 

emphasizes the importance of 

quantifying both costs and benefits, 

reducing costs, harmonizing rules, and 

promoting flexibility. Executive Order 

14094 (Executive order on Modernizing 

Regulatory Review) supplements and 

reaffirms the principles, structures, and 

definitions governing contemporary 

regulatory review established in 

Executive Order 12866 of September 30, 

1993 (Regulatory Planning and Review), 

and Executive Order 13563 of January 

18, 2011 (Improving Regulation and 

Regulatory Review). The Office of 

Information and Regulatory Affairs has 

determined that this rulemaking is a 

significant regulatory action under 

Executive Order 12866, Section 3(f)(1), 

as amended by Executive Order 14094. 

The Regulatory Impact Analysis 

associated with this rulemaking can be 

found as a supporting document at 

www.regulations.gov. 

Regulatory Flexibility Act 

The Secretary hereby certifies that 

this final rule will not have a significant 

economic impact on a substantial 

number of small entities as they are 

defined in the Regulatory Flexibility Act 

(5 U.S.C. 601–612). Notwithstanding 

data collection limitations regarding the 

number of schools that are classified as 

small entities, VA’s certification is 

based on the fact that students will 

continue to provide revenue to schools 

regardless of whether they are classified 

as supported or non-supported. Should 

a school already at or near the statutory 

85/15 ratio limit find that a 

reclassification of students from ‘‘nonsupported’’ to ‘‘supported’’ will alter its 

ratio to the point where it will fall out 

of compliance with the 85/15 rule, the 

school can recruit additional nonsupported students to restore that ratio. 

While needing to recruit more nonsupported students is an effect on 

schools, it does not qualify as a 

significant economic impact. Therefore, 

pursuant to 5 U.S.C. 605(b), the initial 

and final regulatory flexibility analysis 

requirements of 5 U.S.C. 603 and 604 do 

not apply. Nonetheless, VA 

acknowledges that the provisions in this 

rulemaking may create some uncertainty 

and reactive behavior from both Veteran 

students and personnel within 

institutions of higher learning. 

Unfunded Mandates 

The Unfunded Mandates Reform Act 

of 1995 requires, at 2 U.S.C. 1532, that 

agencies prepare an assessment of 

anticipated costs and benefits before 

issuing any rule that may result in the 

expenditure by State, local, and Tribal 

Governments, in the aggregate, or by the 

private sector, of $100 million or more 

(adjusted annually for inflation) in any 

one year. This final rule will have no 

such effect on State, local, and Tribal 

Governments, or on the private sector. 

Paperwork Reduction Act 

Although this final rule contains 

collections of information under the 

provisions of the Paperwork Reduction 


ddrumheller on DSK120RN23PROD with RULES1
2502 Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Rules and Regulations 

Act of 1995 (44 U.S.C. 3501–3521), there 

are no provisions associated with this 

rulemaking constituting any new 

collection of information or any 

revisions to the existing collections of 

information. The collections of 

information for 38 CFR 21.4201 are 

currently approved by the Office of 

Management and Budget (OMB) and 

have been assigned OMB control 

numbers 2900–0896 and 2900–0897. 

Assistance Listing 

The Assistance Listing numbers and 

titles for the programs affected by this 

document are 64.027, Post-9/11 

Veterans Educational Assistance; 

64.028, Post-9/11 Veterans Educational 

Assistance; 64.032, Montgomery GI Bill 

Selected Reserve; Reserve Educational 

Assistance Program; 64.117, Survivors 

and Dependents Educational Assistance; 

64.120, Post-Vietnam Era Veterans’ 

Educational Assistance; and 64.124, AllVolunteer Force Educational Assistance. 

Congressional Review Act 

Pursuant to Subtitle E of the Small 

Business Regulatory Enforcement 

Fairness Act of 1996 (known as the 

Congressional Review Act) (5 U.S.C. 801 

et seq.), the Office of Information and 

Regulatory Affairs designated this rule 

as not satisfying the criteria under 5 

U.S.C. 804(2). 

List of Subjects in 38 CFR Part 21 

Administrative practice and 

procedure, Armed forces claims, 

Colleges and universities, Education, 

Employment, Reporting and 

recordkeeping requirements, Schools, 

Veterans, Vocational education. 

Signing Authority 

Denis McDonough, Secretary of 

Veterans Affairs, approved and signed 

this document on January 8, 2024, and 

authorized the undersigned to sign and 

submit the document to the Office of the 

Federal Register for publication 

electronically as an official document of 

the Department of Veterans Affairs. 

Luvenia Potts, 

Regulation Development Coordinator, Office 

of Regulation Policy & Management, Office 

of General Counsel, Department of Veterans 

Affairs. 

For the reasons stated in the 

preamble, the Department of Veterans 

Affairs amends 38 CFR part 21 as set 

forth below: 

PART 21—VETERAN READINESS AND 

EMPLOYMENT AND EDUCATION 

Subpart D—Administration of 

Educational Assistance Programs 

■ 1. The authority citation for part 21, 

subpart D continues to read as follows: 

Authority: 10 U.S.C. 2141 note, ch. 1606; 

38 U.S.C. 501(a), chs. 30, 32, 33, 34, 35, 36, 

and as noted in specific sections. 

■ 2. Amend § 21.4201 by revising 

paragraphs (e)(2), the introductory text 

of paragraph (f)(1), and paragraphs 

(f)(2)(ii) and (h) to read as follows: 

§ 21.4201 Restrictions on enrollment; 

percentage of students receiving financial 

support. 

* * * * * 

(e) * * * 

(2) Assigning students to each part of 

the ratio. In accordance with the 

provisions of paragraph (a) of this 

section, non-supported students are 

those students enrolled in the course 

who are having none of their tuition, 

fees or other charges paid for them by 

the educational institution, or by VA 

under title 38, U.S.C., or under title 10, 

U.S.C., while supported students are 

those students enrolled in the course 

who are in receipt of institutional aid or 

VA educational assistance benefits (i.e., 

having all or part of their tuition, fees 

or other charges paid for them by the 

educational institution, or by VA under 

chapter 36, title 38, United States Code, 

or under title 10, United States Code.). 

Institutional aid does not include 

Federal, state, or municipal grant 

funding, nor does it include matching 

funds provided by the educational 

institution through participation in such 

Federal, state, or municipal grant 

programs. Recipients of these funds are 

to be counted as non-supported students 

barring receipt of other institutional aid 

or VA educational assistance benefits. 

* * * * * 

(f) * * * (1) Schools must submit to 

VA all calculations (those needed to 

support the exemption found in 

paragraph (c)(4) of this section as well 

as those made under paragraph (e)(3) of 

this section). If the school is organized 

on a term, quarter, or semester basis, it 

shall make that submission no later than 

30 days after the beginning of the first 

term for which the school wants the 

exemption to apply. If the school is 

organized on a non-standard term basis, 

it shall make its submission no later 

than 30 days after the beginning of the 

first non-standard term for which the 

school wishes the exemption to apply. 

A school having received an exemption 

found in paragraph (c)(4) of this section 

shall not be required to certify that 85 

percent or less of the total student 

enrollment in any course is receiving 

Department of Veterans Affairs 

assistance: 

* * * * * 

(2) * * * 

(ii) If a school is organized on a nonstandard term basis, reports must be 

received by the Department of Veterans 

Affairs no later than 30 days after the 

beginning of each non-standard term. 

* * * * * 

(h) Waivers. Schools which desire a 

waiver of the provisions of paragraph (a) 

of this section for a course where the 

number of full-time equivalent 

supported students receiving VA 

education benefits equals or exceeds 85 

percent of the total full-time equivalent 

enrollment in the course may apply for 

a waiver to the Director, Education 

Service. When applying, a school must 

submit sufficient information to allow 

the Director, Education Service, to judge 

the merits of the request against the 

criteria shown in this paragraph. This 

information and any other pertinent 

information available to VA shall be 

considered in relation to these criteria: 

(1) Availability of comparable 

alternative educational facilities 

effectively open to veterans in the 

vicinity of the school requesting a 

waiver. 

(2) General effectiveness of the 

school’s program in providing 

educational and employment 

opportunities to the particular veteran 

population it serves. Factors to be 

considered should include, but are not 

limited to: percentage of veteranstudents completing the entire course, 

graduate employment statistics, 

graduate salary statistics, satisfaction of 

Department of Education requirements 

regarding gainful employment (where 

applicable), other Department of 

Education metrics (such as student loan 

default rate), student complaints, 

industry endorsements, participation in 

and compliance with the Principles of 

Excellence program, established by 

Executive Order 13607 (where 

applicable), etc. 

(3) Whether the educational 

institution’s aid program appears to be 

consistent with or appears to undermine 

the 85/15 rule’s tuition and fee costs 

market validation mechanism. 

[FR Doc. 2024–00629 Filed 1–12–24; 8:45 am] 

BILLING CODE 8320–01–P 


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