Friday, 

June 18, 2010 

Part II 

Department of 

Education 

34 CFR Parts 600, 602, et al. 

Program Integrity Issues; Proposed Rule 


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34806 Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules 

DEPARTMENT OF EDUCATION 

34 CFR Parts 600, 602, 603, 668, 682, 

685, 686, 690, and 691 

[Docket ID ED–2010–OPE–0004] 

RIN 1840–AD02 

Program Integrity Issues 

AGENCY: Office of Postsecondary 

Education, Department of Education. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Secretary proposes to 

improve integrity in the programs 

authorized under title IV of the Higher 

Education Act of 1965, as amended 

(HEA) by amending the regulations for 

Institutional Eligibility Under the HEA, 

the Secretary’s Recognition of 

Accrediting Agencies, the Secretary’s 

Recognition Procedures for State 

Agencies, the Student Assistance 

General Provisions, the Federal Family 

Education Loan (FFEL) Program, the 

William D. Ford Federal Direct Loan 

Program, the Teacher Education 

Assistance for College and Higher 

Education (TEACH) Grant Program, the 

Federal Pell Grant Program, and the 

Academic Competitiveness Grant (AGC) 

and National Science and Mathematics 

Access to Retain Talent Grant (National 

Smart Grant) Programs. 

DATES: We must receive your comments 

on or before August 2, 2010. 

ADDRESSES: Submit your comments 

through the Federal eRulemaking Portal 

or via postal mail, commercial delivery, 

or hand delivery. We will not accept 

comments by fax or by e-mail. Please 

submit your comments only one time, in 

order to ensure that we do not receive 

duplicate copies. In addition, please 

include the Docket ID at the top of your 

comments. 

• Federal eRulemaking Portal. Go to 

http://www.regulations.gov to submit 

your comments electronically. 

Information on using Regulations.gov, 

including instructions for 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 Jessica 

Finkel, U.S. Department of Education, 

1990 K Street, NW., room 8031, 

Washington, DC 20006–8502. 

Privacy Note: The Department’s policy for 

comments received from members of the 

public (including those comments submitted 

by mail, commercial delivery, or hand 

delivery) is to make these submissions 

available for public viewing in their entirety 

on the Federal eRulemaking Portal at http:// 

www.regulations.gov. Therefore, commenters 

should be careful to include in their 

comments only information that they wish to 

make publicly available on the Internet. 

FOR FURTHER INFORMATION CONTACT: For 

information related to gainful 

employment in a recognized 

occupation, John Kolotos. Telephone: 

(202) 502–7762 or via the Internet at: 

John.Kolotos@ed.gov. 

For information related to the 

provisions related to the definition of 

credit hour, Marianna Deeken or Fred 

Sellers. Telephone: (206) 615–2583 or 

via the Internet at 

Marianna.Deeken@ed.gov. Telephone: 

(202) 502–7502 or via the Internet at: 

Fred.Sellers@ed.gov. 

For information related to provisions 

on State authorization, Fred Sellers. 

Telephone: (202) 502–7502 or via the 

Internet at: Fred.Sellers@ed.gov. 

For information related to the 

provisions on retaking coursework, 

Vanessa Freeman. Telephone: (202) 

502–7523 or via the Internet at: 

Vanessa.Freeman@ed.gov. 

For information related to the 

provisions for written agreements 

between institutions, Carney 

McCullough. Telephone: (202) 502– 

7639 or via the Internet at: 

Carney.McCullough@ed.gov. 

For information on the provisions 

related to incentive compensation, 

Marty Guthrie. Telephone: (202) 219– 

7031 or via the Internet at: 

Marty.Guthrie@ed.gov. 

For information related to the 

provisions on ability to benefit, Dan 

Klock. Telephone: (202) 377–4026 or via 

the Internet at Dan.Klock@ed.gov. 

For information related to the 

provisions on misrepresentation, 

Vanessa Freeman. Telephone: (202) 

502–7523 or via the Internet at: 

Vanessa.Freeman@ed.gov. 

For information related to the 

provisions on satisfactory academic 

progress, Marianna Deeken. Telephone: 

(206) 615–2583 or via the Internet at: 

Marianna.Deeken@ed.gov. 

For information related to the 

provisions on high school diplomas and 

verification of information on the Free 

Application for Federal Student Aid 

(FAFSA), Jacquelyn Butler. Telephone: 

(202) 502–7890, or via the Internet at: 

Jacquelyn.Butler@ed.gov. 

For information related to the return 

of title IV, HEA funds calculation 

provisions for term-based modules or 

taking attendance, Jessica Finkel. 

Telephone: (202) 502–7647, or via the 

Internet at: Jessica.Finkel@ed.gov. 

For information related to the 

provisions on timeliness and method of 

disbursement, John Kolotos. Telephone: 

(202) 502–7762, or via the Internet at: 

John.Kolotos@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 can 

obtain this document in an accessible 

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

audiotape, or computer diskette) on 

request to one of the contact persons 

listed under FOR FURTHER INFORMATION

CONTACT. 

SUPPLEMENTARY INFORMATION: 

Invitation To Comment 

As outlined in the section of this 

notice entitled Negotiated Rulemaking, 

significant public participation, through 

a series of three regional hearings and 

three negotiated rulemaking sessions, 

has occurred in developing this notice 

of proposed rulemaking (NPRM). In 

accordance with the requirements of the 

Administrative Procedure Act, the 

Department invites you to submit 

comments regarding these proposed 

regulations on or before August 2, 2010. 

To ensure that your comments have 

maximum effect in developing the final 

regulations, we urge you to identify 

clearly the specific section or sections of 

the proposed regulations that each of 

your comments addresses and to arrange 

your comments in the same order as the 

proposed regulations. 

We invite you to assist us in 

complying with the specific 

requirements of Executive Order 12866 

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 programs. 

During and after the comment period, 

you may inspect all public comments 

about these proposed regulations by 

accessing Regulations.gov. You may also 

inspect the comments, in person, in 

room 8031, 1990 K Street, NW., 

Washington, DC, between the hours of 

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

Monday through Friday of each week 

except Federal holidays. 

Assistance to Individuals With 

Disabilities in Reviewing the 

Rulemaking Record 

On request, we will supply an 

appropriate aid, such as a reader or 

print magnifier, to an individual with a 

disability who needs assistance to 

review the comments or other 

documents in the public rulemaking 

record for these proposed regulations. If 


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you want to schedule an appointment 

for this type of aid, please contact one 

of the persons listed under FOR FURTHER

INFORMATION CONTACT. 

Negotiated Rulemaking 

Section 492 of the HEA requires the 

Secretary, before publishing 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 the public, 

including individuals and 

representatives of groups involved in 

the Federal student financial assistance 

programs, the Secretary must subject the 

proposed regulations to a negotiated 

rulemaking process. All proposed 

regulations that the Department 

publishes on which the negotiators 

reached consensus must conform to 

final agreements resulting from that 

process unless the Secretary reopens the 

process or provides a written 

explanation to the participants stating 

why the Secretary has decided to depart 

from the agreements. Further 

information on the negotiated 

rulemaking process can be found at: 

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

hea08/index.html. 

On September 9, 2009, the 

Department published a notice in the 

Federal Register (74 FR 46399) 

announcing our intent to establish two 

negotiated rulemaking committees to 

prepare proposed regulations. One 

committee would develop proposed 

regulations governing foreign schools, 

including the implementation of the 

changes made to the HEA by the Higher 

Education Opportunity Act of 2008 

(HEOA), Public Law 110–315, that affect 

foreign schools. The proposed 

regulations governing foreign schools 

will be published in the Federal 

Register at a future date. A second 

committee would develop proposed 

regulations to improve integrity in the 

title IV, HEA programs. The notice 

requested nominations of individuals 

for membership on the committees who 

could represent the interests of key 

stakeholder constituencies on each 

committee. 

Team I—Program Integrity Issues 

(Team I) met to develop proposed 

regulations during the months of 

November 2009 through January 2010. 

The Department developed a list of 

proposed regulatory provisions, 

including provisions based on advice 

and recommendations submitted by 

individuals and organizations as 

testimony to the Department in a series 

of three public hearings held on: 

• June 15, 2009 at Community 

College of Denver in Denver, CO. 

• June 18, 2009 at University of 

Arkansas in Little Rock, AR. 

• June 22, 2009 at Community 

College of Philadelphia in Philadelphia, 

PA. 

In addition, the Department accepted 

written comments on possible 

regulatory provisions submitted directly 

to the Department by interested parties 

and organizations. A summary of all 

comments received orally and in writing 

is posted as background material in the 

docket for this NPRM. Transcripts of the 

regional meetings can be accessed at 

http://www2.ed.gov/policy/highered/ 

reg/hearulemaking/2009/negregsummerfall.html#ph. 

Staff within the Department also 

identified issues for discussion and 

negotiation. 

At its first meeting, Team I reached 

agreement on its protocols. These 

protocols provided that for each 

community identified as having 

interests that were significantly affected 

by the subject matter of the negotiations, 

the non-Federal negotiators would 

represent the organizations listed after 

their names in the protocols in the 

negotiated rulemaking process. 

Team I included the following 

members: 

Rich Williams, U.S. PIRG, and Angela 

Peoples (alternate), United States 

Student Association, representing 

students. 

Margaret Reiter, attorney, and Deanne 

Loonin (alternate), National Consumer 

Law Center, representing consumer 

advocacy organizations. 

Richard Heath, Anne Arundel 

Community College, and Joan Zanders 

(alternate), Northern Virginia 

Community College, representing twoyear public institutions. 

Phil Asbury, University of North 

Carolina, Chapel Hill, and Joe Pettibon 

(alternate), Texas A&M University, 

representing four-year public 

institutions. 

Todd Jones, Association of 

Independent Colleges and Universities 

of Ohio, and Maureen Budetti 

(alternate), National Association of 

Independent Colleges and Universities, 

representing private, non-profit 

institutions. 

Elaine Neely, Kaplan Higher 

Education Corp., and David Rhodes, 

(alternate), School of Visual Arts, 

representing private, for-profit 

institutions. 

Terry Hartle, American Council on 

Education, and Bob Moran (alternate), 

American Association of State Colleges 

and Universities, representing college 

presidents. 

David Hawkins, National Association 

for College Admission Counseling, and 

Amanda Modar (alternate), National 

Association for College Admission 

Counseling, representing admissions 

officers. 

Susan Williams, Bridgeport 

University, and Anne Gross (alternate), 

National Association of College and 

University Business Officers, 

representing business officers. 

Val Meyers, Michigan State 

University, and Joan Berkes (alternate), 

National Association of Student 

Financial Aid Administrators, 

representing financial aid 

administrators. 

Barbara Brittingham, Commission on 

Institutions of Higher Education of the 

New England Association of Schools 

and Colleges, Sharon Tanner (1st 

alternate), National League for Nursing 

Accreditation Commission, and Ralph 

Wolf (2nd alternate), Western 

Association of Schools and Colleges, 

representing regional/programmatic 

accreditors. 

Anthony Mirando, Nation Accrediting 

Commission of Cosmetology Arts and 

Sciences, and Michale McComis 

(alternate), Accrediting Commission of 

Career Schools and Colleges, 

representing national accreditors. 

Jim Simpson, Florida State 

University, and Susan Lehr (alternate), 

Florida State University, representing 

work force development. 

Carol Lindsey, Texas Guaranteed 

Student Loan Corp, and Janet Dodson 

(alternate), National Student Loan 

Program, representing the lending 

community. 

Chris Young, Wonderlic, Inc., and Dr. 

David Waldschmidt (alternate), 

Wonderlic, Inc., representing test 

publishers. 

Dr. Marshall Hill, Nebraska 

Coordinating Commission for 

Postsecondary Education, and Dr. 

Kathryn Dodge (alternate), New 

Hampshire Postsecondary Education 

Commission, representing State higher 

education officials. 

Carney McCullough and Fred Sellers, 

U.S. Department of Education, 

representing the Federal Government. 

These protocols also provided that, 

unless agreed to otherwise, consensus 

on all of the amendments in the 

proposed regulations had to be achieved 

for consensus to be reached on the 

entire NPRM. Consensus means that 

there must be no dissent by any 

member. 

During the meetings, Team I reviewed 

and discussed drafts of proposed 

regulations. At the final meeting in 

January 2010, Team I did not reach 

consensus on the proposed regulations 


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34808 Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules 

in this document. With regard to gainful 

employment in a recognized 

occupation, this document addresses 

technical, reporting, and disclosure 

issues. The remaining issues under 

consideration that address the extent to 

which certain educational programs 

lead to gainful employment and the 

conditions under which those programs 

remain eligible for title IV, HEA 

program funds are not included in this 

NPRM. 

Summary of Proposed Changes 

These proposed regulations would 

address program integrity issues by: 

• Requiring institutions to develop 

and follow procedures to evaluate the 

validity of a student’s high school 

diploma if the institution or the 

Secretary has reason to believe that the 

diploma is not valid or was not obtained 

from an entity that provides secondary 

school education; 

• Expanding eligibility for title IV, 

HEA program assistance to students 

who demonstrate they have the ability 

to benefit by satisfactorily completing 

six credits of college work, or the 

equivalent amounts of coursework, that 

are applicable toward a degree or 

certificate offered by an institution; 

• Amending and adding definitions 

of terms related to ability to benefit 

testing, including ‘‘assessment center,’’ 

‘‘independent test administrator,’’ 

‘‘individual with a disability,’’ ‘‘test,’’ 

‘‘test administrator,’’ and ‘‘test 

publisher’’; 

• Consolidating into a single 

regulatory provision the approval 

processes for ability to benefit tests 

developed by test publishers and States; 

• Establishing requirements under 

which test publishers and States must 

provide descriptions of processes for 

identifying and handling test score 

abnormalities, ensuring the integrity of 

the testing environment, and certifying 

and decertifying test administrators; 

• Requiring test publishers and States 

to describe any accommodations 

available for individuals with 

disabilities, as well as the process a test 

administrator would use to identify and 

report to the test publisher instances in 

which these accommodations were 

used; 

• Revising the test approval 

procedures and criteria for ability to 

benefit tests, including procedures 

related to the approval of tests for 

speakers of foreign languages and 

individuals with disabilities; 

• Revising the definitions and 

provisions that describe the activities 

that constitute substantial 

misrepresentation by an institution of 

the nature of its educational program, its 

financial charges, or the employability 

of its graduates; 

• Removing the ‘‘safe harbor’’ 

provisions related to incentive 

compensation for any person or entity 

engaged in any student recruitment or 

admission activity, including making 

decisions regarding the award of title IV, 

HEA program assistance; 

• Clarifying what is required for an 

institution of higher education, a 

proprietary institution of higher 

education, and a postsecondary 

vocational institution to be considered 

legally authorized by the State; 

• Defining a credit hour and 

establishing procedures that certain 

institutional accrediting agencies must 

have in place to determine whether an 

institution’s assignment of a credit hour 

is acceptable; 

• Modifying provisions to clarify 

whether and when an institution must 

award student financial assistance based 

on clock or credit hours and the 

standards for credit-to-clock-hour 

conversions; 

• Modifying the provisions related to 

written arrangements between two or 

more eligible institutions that are owned 

or controlled by the same person or 

entity so that the percentage of the 

educational program that may be 

provided by the institution that does not 

grant the degree or certificate under the 

arrangement may not exceed 50 percent; 

• Prohibiting written arrangements 

between an eligible institution and an 

ineligible institution that has had its 

certification to participate in title IV, 

HEA programs revoked or its 

application for recertification denied; 

• Expanding provisions related to the 

information that an institution with a 

written arrangement must disclose to a 

student enrolled in a program affected 

by the arrangement, including, for 

example, the portion of the educational 

program that the institution that grants 

the degree or certificate is not providing; 

• Revising the definition of 

unsubsidized student financial aid 

programs to include TEACH Grants, 

Federal PLUS Loans, and Direct PLUS 

Loans; 

• Codifying current policy that an 

institution must complete verification 

before the institution may exercise its 

professional judgment authority; 

• Eliminating the 30 percent 

verification cap; 

• Retaining the ability of institutions 

to select additional applicants for 

verification; 

• Replacing the five verification items 

for all selected applicants with a 

targeted selection from items included 

in an annual Federal Register notice 

published by the Secretary; 

• Allowing interim disbursements 

when changes to an applicant’s FAFSA 

information would not change the 

amount that the student would receive 

under a title IV, HEA program; 

• Codifying the Department’s IRS 

Data Retrieval System Process, which 

allows an applicant to import income 

and other data from the IRS into an 

online FAFSA; 

• Requiring the processing of all 

changes and corrections to an 

applicant’s FAFSA information; 

• Modifying the provisions related to 

institutional satisfactory academic 

progress policies and the impact these 

policies have on a student’s eligibility 

for title IV, HEA program assistance; 

• Expanding the definition of fulltime student to allow, for a term-based 

program, repeated coursework taken in 

the program to count towards a full-time 

workload; 

• Clarifying when a student is 

considered to have withdrawn from a 

payment period of enrollment for the 

purpose of calculating a return of title 

IV, HEA program funds; 

• Clarifying the circumstances under 

which an institution is required to take 

attendance for the purpose of 

calculating a return of title IV, HEA 

program funds; 

• Modifying the provisions for 

disbursing title IV, HEA program funds 

to ensure that certain students can 

obtain or purchase books and supplies 

by the seventh day of a payment period; 

• Updating the definition of the term 

recognized occupation to reflect current 

usage; and 

• Establishing requirements for 

institutions to submit information on 

program completers for programs that 

prepare students for gainful 

employment in recognized occupations. 

Significant Proposed Regulations 

We group major issues according to 

subject, with appropriate sections of the 

proposed regulations referenced in 

parentheses. We discuss other 

substantive issues under the sections of 

the proposed regulations to which they 

pertain. Generally, we do not address 

proposed regulatory provisions that are 

technical or otherwise minor in effect. 

Part 600 Institutional Eligibility Under 

the Higher Education Act of 1965, as 

Amended 

Gainful Employment in a Recognized 

Occupation (§§ 600.2, 600.4, 600.5, 

600.6, 668.6, and 668.8) 

Statute: Sections 102(b) and (c) of the 

HEA define, in part, a proprietary 

institution and a postsecondary 

vocational institution, respectively, as 


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an institution that provides an eligible 

program of training that prepares 

students for gainful employment in a 

recognized occupation. Section 

101(b)(1) of the HEA defines an 

institution of higher education, in part, 

as any institution that provides not less 

than a one-year program of training that 

prepares students for gainful 

employment in a recognized 

occupation. 

One-Year Programs at Institutions of 

Higher Education 

Current Regulations: § 600.4(a)(4)(iii) 

provides that a public or nonprofit 

institution may provide a training 

program of at least one academic year 

that leads to a certificate, degree, or 

other recognized educational credential 

and prepares students for gainful 

employment in a recognized 

occupation. In addition, § 668.8(c)(3) 

provides that an eligible program at an 

institution of higher education may be 

at least a one-academic-year training 

program that leads to a certificate, 

degree, or other recognized credential 

and prepares students for gainful 

employment in a recognized 

occupation. 

Proposed Regulations: The proposed 

regulations would amend 

§§ 600.4(a)(4)(iii) and 668.8(c)(3) by 

removing the reference to degree 

programs. 

Reasons: In keeping with the statute, 

we would clarify in proposed 

§§ 600.4(a)(4)(iii) and 668.8(c)(3) that 

only certificate or credentialed 

nondegree programs of at least one 

academic year, that are offered by a 

public or nonprofit institution of higher 

education, are programs that must 

prepare students for gainful 

employment in a recognized 

occupation. 

Recognized Occupation 

Current Regulations: Section 600.2 

defines a recognized occupation as an 

occupation that is listed in an 

‘‘occupational division’’ of the latest 

edition of the Dictionary of 

Occupational Titles, published by the 

U.S. Department of Labor, or an 

occupation determined to be a 

recognized occupation by the Secretary 

in consultation with the Secretary of 

Labor. 

Proposed Regulations: Proposed 

§ 600.2 would define recognized 

occupation as an occupation identified 

by a Standard Occupational 

Classification (SOC) code established by 

the Office of Management and Budget or 

an Occupational Information Network 

O* NET–SOC code established by the 

Department of Labor and available at 

http://online.onetcenter.org or its 

successor site. 

Reasons: The definition of recognized 

occupation in proposed § 600.2 would 

simply replace an outdated reference to 

the Dictionary of Occupational Titles 

with current references to SOC codes 

established by the Office of Management 

and Budget or the Department of Labor. 

Gainful Employment 

Current Regulations: Sections 

600.4(a)(4)(iii), 600.5(a)(5), and 

600.6(a)(4) mirror the statutory 

provisions, and like the statute, do not 

define or further describe the meaning 

of the phrase ‘‘gainful employment.’’ 

Proposed Regulations: Under 

proposed § 668.6(a), an institution 

would annually submit information 

about students who complete a program 

that leads to gainful employment in a 

recognized occupation. That 

information would include, at a 

minimum, identifying information 

about each student who completed a 

program, the Classification of 

Instructional Program (CIP) code for that 

program, the date the student completed 

the program, and the amounts the 

student received from private 

educational loans and institutional 

financing plans. 

In addition, under proposed 

§ 668.6(b), an institution would be 

required to disclose on its Web site 

information about (1) the occupations 

that its programs prepare students to 

enter, along with links to occupational 

profiles on O*NET, (2) the on-time 

graduation rate of students entering a 

program, (3) the cost of each program, 

including costs for tuition and fees, 

room and board, and other institutional 

costs typically incurred by students 

enrolling in the program, (4) beginning 

no later than June 30, 2013, the 

placement rate for students completing 

each of those programs, as determined 

under § 668.8(g) or a State-sponsored 

workforce data system, and (5) the 

median loan debt incurred by students 

who completed each program in the 

preceding three years, identified 

separately as title IV, HEA loan debt and 

debt from private educational loans and 

institutional financing plans. 

Reasons: The Department plans to use 

this information to continue to assess 

the outcomes of programs that lead to 

gainful employment in a recognized 

occupation. The proposed new 

requirement would enable the 

Department to further evaluate and 

monitor the outcomes of these 

programs. In addition, to better inform 

prospective students, proposed 

§ 668.6(b) would require an institution 

to disclose on its Web site the cost, 

graduation and placement rates, jobrelated information for each of its 

programs, and debt levels of students 

who completed the program during the 

past three years. We seek comment on 

whether the proposed Web-based 

approach is the most appropriate way to 

ensure that prospective students obtain 

this information or whether we should 

consider other approaches. With regard 

to disclosing Federal and non-Federal 

loan debt, based on the information an 

institution would submit under 

proposed § 668.6(a), the Department 

would be able to provide the institution 

with the median title IV, HEA loan debt, 

by program, and the median debt from 

private loans and institutional financing 

plans by program. The institution would 

then disclose these amounts. While we 

believe that § 668.43 already requires an 

institution to disclose program cost 

information, we wish to make it an 

explicit requirement in this part of the 

regulations because our research 

showed that program cost information 

was not disclosed on the Web sites of 

many institutions. 

Definition of a Credit Hour (§§ 600.2, 

602.24, 603.24, and 668.8) 

Statute: Section 481(a)(2) of the HEA 

defines an academic year for an 

undergraduate program, in part, as 

requiring a minimum of 24 semester or 

trimester credit hours or 36 quarter 

credit hours in a course of study that 

measures academic progress in credit 

hours or 900 clock hours in a course of 

study that measures academic progress 

in clock hours. Section 481(b) of the 

HEA defines an eligible program, in 

part, as a program of at least 600 clock 

hours, 16 semester hours, or 24 quarter 

hours or, in certain instances, a program 

of at least 300 clock hours, 8 semester 

hours, or 12 quarter hours. Sections 

428(b)(1), 428B(a)(2), 428H(d)(1), 

455(a)(1), and 484(b)(3) and (4) of the 

HEA specify that a student must be 

carrying at least one-half of the normal 

full-time work load for the student’s 

course of study in order to qualify for 

any loan under parts B and D of title IV 

of the HEA. Section 401 of the HEA 

provides that a student’s Federal Pell 

Grant must be adjusted based on the 

student’s enrollment status and that a 

student must be enrolled at least halftime to be eligible for a second 

consecutive Federal Pell Grant in an 

award year. Section 496(a)(5)(H) of the 

HEA requires that an accrediting agency 

assess an institution’s measure of 

program length. Section 487(c)(4) of the 

HEA requires that the Secretary publish 

a list of State agencies which the 

Secretary determines to be reliable 

authorities as to the quality of public 


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34810 Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules 

postsecondary vocational education in 

their respective States for the purpose of 

determining institutional eligibility for 

Federal student assistance programs. 

Current Regulations: There is no 

definition of a credit hour in any current 

regulations for programs funded under 

the HEA; and the term is not defined in 

the regulations that set out the 

requirements for the Secretary’s 

recognition of accrediting agencies or 

State agencies for the approval of public 

postsecondary vocational education. 

The regulations that address an 

institutional accrediting agency’s, or 

State approval agency’s, reviews and 

evaluations of an institution’s 

assignment of credit hours are set out in 

34 CFR part 602 for an accrediting 

agency and 34 CFR part 603 for a State 

approval agency. 

In current § 668.8(k) and (l), the 

regulations provide the formula that 

certain undergraduate programs must 

use to convert the number of clock 

hours offered to the appropriate number 

of credit hours used for title IV, HEA aid 

calculations and the requirements for 

identifying the undergraduate programs 

subject to using the formula. For these 

programs, each semester or trimester 

hour must include at least 30 clock 

hours of instruction, and each quarter 

hour must include at least 20 hours of 

instruction. An institution must use the 

formula to determine if a program is 

eligible for title IV, HEA purposes 

unless (1) the institution offers an 

undergraduate program in credit hours 

that is at least two academic years in 

length and leads to an associate degree, 

a bachelor’s degree, or a professional 

degree or (2) each course within the 

program is acceptable for full credit 

toward an associate degree, bachelor’s 

degree, or professional degree offered by 

the institution, and the degree offered 

by the institution requires at least two 

academic years of study. 

Proposed Regulations: Definition of a 

Credit Hour 

The Department proposes to add to 

§ 600.2 a definition of a credit hour that 

would measure credit hours in terms of 

the amount of time and work during 

which a student is engaged in academic 

activity using commonly accepted 

academic practice in higher education, 

and further would provide for 

institutionally established equivalencies 

as represented by learning outcomes 

and verified achievement. 

Accrediting Agency Procedures 

The Department proposes to amend 

current § 602.24 by adding a new 

paragraph (f). Proposed § 602.24(f) 

would describe the responsibilities of an 

accrediting agency to review and 

evaluate an institution’s policies and 

procedures for the assignment of credit 

hours and the institution’s application 

of its policies and procedures in 

assigning credit hours to its programs 

and courses. An accrediting agency 

would be required to make a reasonable 

determination of whether the 

institution’s assignment of credit hours 

conforms to commonly accepted 

practice in higher education. The 

proposed regulations in § 602.24(f) also 

would provide that an accrediting 

agency may use sampling or other 

methods in its reviews of programs at 

institutions, must take such actions that 

it deems appropriate to address any 

deficiencies that it identifies, and must 

notify the Secretary promptly of any 

systemic noncompliance with the 

agency’s policies or significant 

noncompliance regarding one or more 

programs at the institution. 

State Approval Agency Procedures 

The Department proposes to amend 

current § 603.24 by redesignating 

paragraph (c) as paragraph (d) and 

adding a new paragraph (c). For State 

agencies for the approval of public 

postsecondary education, proposed 

§ 603.24(c) would provide for the same 

responsibilities as described for 

accrediting agencies regarding the 

review and evaluation of an institution’s 

policies and procedures for the 

assignment of credit hours and the 

institution’s application of its policies 

and procedures in assigning credit 

hours to its programs and courses. 

Clock-to-Credit-Hour Conversion 

Proposed § 668.8(l)(1) would revise 

the method of converting clock hours to 

credit hours to use a ratio of the 

minimum clock hours in an academic 

year to the minimum credit hours in an 

academic year, i.e., 900 clock hours to 

24 semester or trimester hours or 36 

quarter hours. Thus, a semester or 

trimester hour would be based on at 

least 37.5 clock hours, and a quarter 

hour would be based on at least 25 clock 

hours. Proposed § 668.8(l)(2) creates an 

exception to the conversion ratio in 

proposed § 668.8(l)(1) if neither an 

institution’s designated accrediting 

agency nor the relevant State licensing 

authority for participation in the title IV, 

HEA programs determines there are any 

deficiencies in the institution’s policies, 

procedures, and practices for 

establishing the credit hours that the 

institution awards for programs and 

courses, as defined in proposed § 600.2. 

Under the exception provided by 

proposed § 668.8(l)(2), an institution 

may combine students’ work outside of 

class with the clock-hours of instruction 

in order to meet or exceed the numeric 

requirements established in proposed 

§ 668.8(l)(1). However, under proposed 

§ 668.8(l)(2), the institution must use at 

least 30 clock hours for a semester or 

trimester hour or 20 clock hours for a 

quarter hour. 

In determining whether there is 

outside work that a student must 

perform, the analysis must take into 

account differences in coursework and 

educational activities within the 

program. Some portions of a program 

may require student work outside of 

class that justifies the application of 

proposed § 668.8(l)(2). In addition, the 

application of proposed § 668.8(l)(2) 

may vary within a program depending 

on variances in required student work 

outside of class for different portions of 

the program. Other portions of the 

program may not have outside work, 

and proposed § 668.8(l)(1) must be 

applied. Of course, an institution 

applying only proposed § 668.8(l)(1) to 

a program eligible for conversion from 

clock hours to credit hours, without an 

analysis of the program’s coursework, 

would be considered compliant with the 

requirements of proposed § 668.8(l). 

Proposed § 668.8(k)(1)(ii) modifies a 

provision in current regulations to 

provide that a program is not subject to 

the conversion formula in § 668.8(l) 

where each course within the program 

is acceptable for full credit toward a 

degree that is offered by the institution 

and that this degree requires at least two 

academic years of study. Additionally, 

under proposed § 668.8(k)(1)(ii), the 

institution would be required to 

demonstrate that students enroll in, and 

graduate from, the degree program. 

Proposed § 668.8(k)(2)(i) would 

provide that a program is considered to 

be a clock-hour program if the program 

must be measured in clock hours to 

receive Federal or State approval or 

licensure, or if completing clock hours 

is a requirement for graduates to apply 

for licensure or the authorization to 

practice the occupation that the student 

is intending to pursue. Under proposed 

§ 668.8(k)(2)(ii) and (iii), the program is 

also considered to be offered in clock 

hours if the credit hours awarded for the 

program are not in compliance with the 

definition of a credit hour in proposed 

§ 600.2, or if the institution does not 

provide the clock hours that are the 

basis for the credit hours awarded for 

the program or each course in the 

program and, except as provided in 

current § 668.4(e), require attendance in 

the clock hours that are the basis for the 

credit hours awarded. The proposed 

regulations on which tentative 

agreement was reached did not include 


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the provision in proposed 

§ 668.8(k)(2)(iii) that, except as provided 

in current § 668.4(e), an institution must 

require attendance in the clock hours 

that are the basis for the credit hours 

awarded. However, during the 

negotiations we had previously 

proposed to include such a provision. 

Proposed § 668.8(k)(3) would provide 

that proposed § 668.8(k)(2)(i) would not 

apply if a limited portion of the program 

includes a practicum, internship, or 

clinical experience component that 

must include a minimum number of 

clock hours due to a State or Federal 

approval or licensure requirement. 

Reasons: Definition of a Credit Hour 

A credit hour is a unit of measure that 

gives value to the level of instruction, 

academic rigor, and time requirements 

for a course taken at an educational 

institution. At its most basic, a credit 

hour is a proxy measure of a quantity of 

student learning. The credit hour was 

developed as part of a process to 

establish a standard measure of faculty 

workloads, costs of instruction, and 

rates of educational efficiencies as well 

as a measure of student work for transfer 

students. While the credit hour was 

developed to provide some uniform 

measure, it may not consistently relate 

to comparable measures of time or 

workload within institutions or between 

different types of institutions. Most 

postsecondary institutions do not have 

specific policies or criteria to assign 

credit hours to coursework in a uniform 

manner. 

In keeping with the original purpose 

of providing a consistent measure of at 

least a minimum quantity of a student’s 

academic engagement, the proposed 

definition of a credit hour will establish 

a basis for measuring eligibility for 

Federal funding. This standard measure 

will provide increased assurance that a 

credit hour has the necessary 

educational content to support the 

amounts of Federal funds that are 

awarded to participants in Federal 

funding programs and that students at 

different institutions are treated 

equitably in the awarding of those 

funds. 

We recognize, however, that other 

measures of educational content are 

being developed by institutions and do 

not intend to limit the methods by 

which an institution may measure a 

student’s work in his or her educational 

activities. We, therefore, are including 

in paragraph (3) of the proposed 

definition of a credit hour a provision 

that an institution may provide 

institutional equivalencies for the 

amount of work specified in paragraph 

(1) of the proposed definition as 

represented in intended learning 

outcomes and verified by evidence of 

their achievement. Further, the 

institution’s equivalencies must be in 

accordance with any process or 

conditions required by an institution’s 

designated accrediting agency for title 

IV, HEA program participation, because 

these agencies are well positioned to 

provide oversight in this area. 

During the negotiated rulemaking 

sessions, a few of the non-Federal 

negotiators were opposed to any 

proposal to define a credit hour because 

they believed that a definition would 

impinge upon an institution’s ability to 

create innovative courses and teaching 

methods. They also argued that the 

proposed definition was too restrictive 

and inhibited the academic freedom of 

schools. Other non-Federal negotiators 

agreed that a definition was necessary 

and did not believe the Department’s 

proposed definition would adversely 

impact institutions. These other nonFederal negotiators agreed with our 

position that the proposed definition of 

a credit hour would provide sufficient 

flexibilities for institutions and 

supported keeping it in the proposed 

regulations. 

One significant change is proposed in 

the regulations to address a concern 

raised during the negotiated rulemaking 

sessions regarding a definition of a 

credit hour. The change is to recognize 

in paragraph (3) of the proposed 

definition that an institution would be 

able to establish reasonable equivalent 

measures of a credit hour. As is also the 

case with paragraphs (1) and (2) of the 

proposed definition, the measures must 

be reasonable and in accordance with 

the requirements of the institution’s 

designated accrediting agency, or State 

agency for the approval of public 

postsecondary vocational education, for 

title IV, HEA program participation as 

well as for participation in other HEA 

programs. This change further ensures 

that the definition will allow 

institutions to adopt alternative 

measures of student work. 

The proposed definition of a credit 

hour does not change our policy that we 

provide funding based only on credit 

hours that are the direct result of 

postsecondary student work. Thus, we 

do not currently, nor do we propose to, 

provide funding for credits awarded 

based on Advanced Placement (AP) or 

International Baccalaureate (IB) 

programs, tests or testing out, life 

experience, or similar competency 

measures. 

No agreement was reached to amend 

§ 600.2 to include a definition of a credit 

hour due to the belief of some nonFederal negotiators that a definition 

would limit an institution’s ability to 

use alternative measures of student 

work. 

Accrediting Agency Procedures 

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

that, to be recognized by the Secretary, 

an accrediting agency must have 

standards to evaluate an institution’s or 

program’s ‘‘measures of program length 

and the objectives of the degrees or 

credentials offered.’’ Thus, accrediting 

agencies are required to make a 

judgment about program length and the 

amount of credit an institution or 

program grants for course work. 

Accrediting agency standards related to 

program length differ significantly in 

their specificity and these standards 

generally do not define what a credit 

hour is. This lack of specificity in 

standards covering student achievement 

and program length has inherent 

limitations and may result in 

inconsistent treatment of Federal funds. 

We believe that the lack of more 

direct accrediting agency oversight in 

the assignment of credits to coursework 

may result in some institutions not 

being able to demonstrate that there is 

sufficient course content to substantiate 

the credit hours for certain programs. 

Such abuse may be more likely due to 

the expanded availability to a student of 

two Federal Pell Grants in an award 

year. We believe that the potential for 

such abuse and the inconsistent 

treatment of Federal funds would be 

significantly alleviated by establishing 

the proposed definition of credit hour in 

§ 600.2 and providing in proposed 

§ 602.24(f) that accrediting agencies 

must review (1) an institution’s policies 

and procedures for the assignment of 

credit hours in accordance with the 

proposed definition in § 600.2 and (2) 

the institution’s application of its 

policies and procedures in assigning 

credit hours to its programs and courses. 

The negotiators reached tentative 

agreement on adding proposed 

§ 602.24(f). 

State Agency Procedures for the 

Approval of Public Vocational 

Education 

The regulations concerning the 

recognition of State agencies for the 

approval of public vocational education 

were not discussed during the 

negotiations. We believe that § 603.24 

should be amended to make changes 

comparable to the proposed regulations 

for the recognition of accrediting 

agencies. We believe these proposed 

changes are needed for the same reasons 

as we are proposing to amend part 602. 

The changes are also necessary for 

purposes of determining equivalencies 


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34812 Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules 

to a credit hour under paragraph (3) of 

the proposed definition of a credit hour 

in § 600.2 as well as for § 668.8(l) 

regarding credit-to-clock-hour 

conversions. 

Credit-to-Clock-Hour Conversion 

Section 668.8(k) and (l) of the current 

regulations that provide conditions and 

formulas for the conversion of clock 

hours to credit hours for undergraduate 

programs were adopted prior to the 

statutory change in the definition of an 

academic year for clock-hour programs. 

Under section 481(b) of the HEA, an 

academic year for a program must now 

provide for a minimum of 26 weeks of 

instructional time in a clock-hour 

program as opposed to the 30 weeks of 

instructional time required for credithour programs. However, undergraduate 

programs continue to include 900 clock 

hours, 24 semester or trimester hours, or 

36 quarter credits. We are proposing to 

update the formula to reflect the 

statute’s treatment of 900 clock hours 

over 26 weeks of instructional time as 

reflecting no outside student work and 

the 900 clock hours being directly 

proportional to 24 semester hours or 36 

quarter credits. 

As a result, proposed § 668.8(l)(1) 

would revise the minimum general 

standard for converting clock hours to 

credit hours to reflect the ratio of the 

minimum clock hours in an academic 

year to the minimum credit hours in an 

academic year. As some non-Federal 

negotiators noted, portions of some 

clock-hour programs require student 

work outside of class. Proposed 

§ 668.8(l)(2) would, therefore, provide 

an exception to the standard in 

proposed § 668.8(l)(1) for coursework in 

a program that qualifies for a lesser rate 

of conversion based on additional 

student work outside of class. For 

coursework that includes student work 

outside of class in a qualifying program, 

an institution would take into account 

the amount of outside coursework to 

determine the appropriate number of 

clock hours to convert to a credit hour, 

but may not use less than the current 

requirements of 30 clock hours for a 

semester or trimester hour or 20 clock 

hours for a quarter hour. 

We believe that changes are needed to 

the conditions in current § 668.8(k)(1) 

for determining that a program is not 

subject to the conversion formula in 

§ 668.8(l). We have identified potential 

abuses with the provision that an 

institution’s program is not subject to 

the conversion formula in § 668.8(l) if 

each course within the program is 

acceptable for full credit toward a 

degree that is offered by the institution 

and requires at least two academic years 

of study. Some institutions appear to 

have established degree programs in 

which few if any students enroll or 

graduate but which are the basis for 

claiming that all courses of another 

nondegree program are acceptable for 

full credit in the degree program. To 

address this abuse, proposed 

§ 668.8(k)(1)(ii) would require the 

institution to demonstrate that students 

enroll in, and graduate from, the degree 

program. Proposed § 668.8(k)(2)(i) 

would provide that a program must be 

considered a clock-hour program if the 

program must be measured in clock 

hours to receive Federal or State 

approval or licensure or completing 

clock hours is a requirement for 

graduates to apply for licensure or the 

authorization to practice the occupation 

that the student is intending to pursue. 

We believe such requirements show that 

the program is still fundamentally a 

clock-hour program and should not be 

treated as a credit-hour program for 

purposes of title IV, HEA program 

assistance. We also believe it is 

appropriate under proposed 

§ 668.8(k)(2)(ii) and (iii) to require that 

a program must be considered to be 

offered in clock hours if an institution 

is failing either to award the credit 

hours that are in compliance with the 

definition of a credit hour in proposed 

§ 600.2 or to ensure that students are 

attending at least the minimum number 

of clock hours that are the basis for the 

credit hours awarded for the program. A 

program that may qualify for conversion 

to credit hours is still fundamentally a 

clock-hour program that must meet 

additional requirements. If the 

provisions of proposed § 668.8(k)(1) and 

(2) are applicable, a program should not 

qualify for conversion to credit hours 

because the program’s essential nature 

as a clock-hour program requires that it 

be measured in clock hours for other 

purposes or because it fails to be offered 

in a manner that supports the 

conversion. 

In response to some non-Federal 

negotiators’ concerns, proposed 

§ 668.8(k)(3) would clarify the 

requirements in proposed 

§ 668.8(k)(2)(i) by providing that 

proposed § 668.8(k)(2)(i) would not 

apply if a limited portion of a program 

such as a practicum, internship, or 

clinical experience component must be 

measured in clock hours due to a State 

or Federal approval or licensure 

requirement. We agree with the nonFederal negotiators that such a limited 

requirement should not be an 

impediment to the program qualifying 

for a clock-to-credit-hour conversion. 

The negotiators reached tentative 

agreement on proposed § 668.8(l) and 

(k), except for proposed § 668.8(k)(2)(iii) 

which has been changed to provide that 

an institution must require attendance 

in the clock hours that are the basis for 

the credit hours awarded, except as 

provided in current § 668.4(e). We 

believe the change assures that the clock 

hours are being offered and that 

students are attending the clock hours 

that are the basis for the clock-to-credithour conversion. 

State Authorization (§§ 600.4(a)(3), 

600.5(a)(4), 600.6(a)(3), and 600.9) 

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

defines the term ‘‘institution of higher 

education’’ to mean, in part, an 

educational institution in any State that 

is legally authorized within the State to 

provide a program of education beyond 

secondary education. Section 102(a) of 

the HEA provides, by reference to 

section 101(a)(2) of the HEA, that a 

proprietary institution of higher 

education and a postsecondary 

vocational institution must be similarly 

authorized within a State. 

Current Regulations: The regulations 

do not define or describe the statutory 

requirement that an institution must be 

legally authorized in a State. 

Proposed Regulations: Under 

proposed § 600.9, an institution would 

be legally authorized by a State through 

a charter, license, approval, or other 

document issued by a State government 

agency or State entity that affirms or 

conveys the authority to the institution 

to operate educational programs beyond 

secondary education. An institution 

would also be considered legally 

authorized in a State if the institution 

were authorized to offer programs 

beyond secondary education by the 

Federal Government or an Indian Tribe 

as that term is described in 25 U.S.C. 

1802(2) or if it were exempt from State 

authorization as a religious institution 

under the State constitution. 

The Secretary would consider an 

institution to be legally authorized by a 

State if (1) the authorization is given to 

the institution specifically to offer 

programs beyond secondary education, 

(2) the authorization is subject to 

adverse action by the State, and (3) the 

State has a process to review and 

appropriately act on complaints 

concerning an institution and enforces 

applicable State laws. 

References to § 600.9 would be added 

for clarity in §§ 600.4(a)(3), 600.5(a)(4), 

and 600.6(a)(3). 

Reasons: The HEA requires 

institutions to have approval from the 

States where they operate to provide 

postsecondary educational programs. 

State oversight through obtaining 

approval to offer postsecondary 


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Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules 34813 

education and by State regulatory 

agency ongoing activities plays an 

important role in protecting students, 

although there may be a lot of variation 

in how those responsibilities are 

exercised. One indicator of the 

importance of State oversight has been 

seen in the movement of substandard 

institutions and diploma mills from 

State to State in response to changing 

requirements. These entities set up 

operation in States that may initially 

provide very little oversight and operate 

until a State strengthens its oversight of 

those entities in response to complaints 

from the public. In some cases, those 

entities simply move to another State 

that appears to offer little oversight and 

repeats the process. 

The Department historically viewed 

the requirement for State authorization 

for entities to offer postsecondary 

education as minimal, and would deem 

an entity that had been exempted by its 

State from State oversight to have such 

approval so long as it was able to 

operate within the State. Thus, in some 

States an institution was considered to 

be legally authorized to offer 

postsecondary education based on such 

methods as a business license or 

establishment as an eleemosynary 

organization. 

Upon further review, we believe the 

better approach is to view the State 

approval to offer postsecondary 

educational programs as a substantive 

requirement where the State is expected 

to take an active role in approving an 

institution and monitoring complaints 

from the public about its operations and 

responding appropriately. The weakness 

of the historical approach of not 

requiring active State approval and 

oversight may have contributed to the 

recent lapse in the existence of 

California’s Bureau for Private 

Postsecondary and Vocational 

Education. The Bureau served as the 

State’s oversight and regulatory agency 

for private proprietary postsecondary 

institutions until the State legislature 

eliminated the Bureau. We were advised 

that the Bureau was permitted to lapse 

because the State determined that doing 

so would not immediately harm the 

institutions that participate in the title 

IV, HEA programs. During the period 

when there was no State agency 

authorizing private postsecondary 

institutions, these institutions 

continued to participate in the title IV, 

HEA programs under some voluntary 

agreements while the State legislature 

worked on creating a new oversight 

agency. The proposed regulations, had 

they been in effect at that time, would 

have required that the State keep in 

place the prior oversight agency, or to 

designate a different State agency to 

perform the required State functions 

during the transition to a new State 

oversight agency. Otherwise, under the 

provisions of proposed § 600.9(b), the 

affected institutions would have ceased 

to be considered legally authorized by 

the State for Federal purposes when the 

prior agency’s existence lapsed and 

would have ceased to be eligible 

institutions. 

Additionally, we are concerned that 

some States are deferring all, or nearly 

all, of their oversight responsibilities to 

accrediting agencies for approval of 

educational institutions, or are 

providing exemptions for a subset of 

institutions for other reasons. Since 

accrediting agencies generally require 

that an institution be legally operating 

in the State, we are concerned that the 

checks and balances provided by the 

separate processes of accreditation and 

State legal authorization are being 

compromised. 

We initially proposed that State legal 

authorization be based on a charter, 

license, or other document issued by an 

appropriate State government agency 

providing the authority to an institution 

to operate educational programs beyond 

secondary education and grant degrees 

within the jurisdiction of the State or 

other documentation, issued by an 

appropriate State government agency 

that authorizes, licenses, or otherwise 

approves the institution to establish and 

operate within the State nondegree 

programs that provide education and 

training beyond secondary education. 

We also provided that State legal 

authorization could include reciprocal 

agreements between appropriate State 

agencies. In addition, for institutions in 

a State to be legally authorized, the State 

would be expected to monitor (1) 

institutional academic quality, 

potentially relying on accrediting 

agencies recognized by the Secretary; (2) 

an institution’s financial viability; and 

(3) compliance with applicable State 

laws with respect to consumer 

protection and other matters of State 

oversight. 

In response to concerns from the nonFederal negotiators, we clarified in 

proposed § 600.9(a) that legal 

authorization could not only be 

provided by an appropriate State 

agency, but also another State entity, 

e.g., a State legislature or State 

constitution. We removed the references 

to monitoring the quality of educational 

programs and financial responsibility. 

We accepted the position of some of the 

non-Federal negotiators who argued that 

these additional State requirements 

could unnecessarily duplicate Federal 

or accrediting agency actions. Similarly 

we accepted the position of some of the 

non-Federal negotiators that States 

could enter into reciprocal agreements 

on an as needed basis without 

regulations. 

Also, in response to recommendations 

of the non-Federal negotiators, we 

added provisions to clarify that an 

institution would be considered to be 

legally authorized in a State if the 

institution is authorized to offer 

educational programs beyond secondary 

education by the Federal Government 

or, as defined in 25 U.S.C. 1802(2), an 

Indian tribe or if it is exempt from State 

authorization as a religious institution 

under the State constitution. In 

proposed § 600.9(b), we also further 

revised the bases under which we 

would consider an institution to be 

legally authorized by a State. We would 

require that the authorization must be 

specifically to offer programs beyond 

secondary education and may not be 

merely of the type required to do 

business in the State. We believe that 

this provision would remove any 

ambiguity regarding the type of 

authorization acceptable to establish 

institutional eligibility to participate in 

Federal programs. The regulations also 

require an institution’s legal 

authorization to be subject to adverse 

action by the State, and that a State has 

a process to review and appropriately 

act on complaints concerning an 

institution, and to enforce applicable 

State laws. We believe these additional 

conditions are necessary to establish 

minimal State oversight for institutions 

to be considered legally authorized to 

offer postsecondary education for 

purposes of qualifying as an eligible 

institution for Federal programs. 

The committee did not reach 

agreement on this issue. A few 

negotiators objected to allowing States 

to continue to rely on an institution’s 

status with an outside entity, for 

example, accredited status with a 

nationally recognized accrediting 

agency, as a basis for State legal 

authorization and were also concerned 

that the proposed regulations would no 

longer have a requirement that a State 

review an institution’s fiscal viability. 

The regulations do not prohibit a State 

from relying in part upon an accrediting 

agency, but the State is still required to 

perform certain functions itself. For 

example, an institution’s authorization 

must be subject to adverse action by a 

State agency or other State entity, and 

the State must have a process for a State 

agency to review and appropriately act 

on complaints concerning an 

institution. 


srobinson on DSKHWCL6B1PROD with PROPOSALS2
34814 Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules 

Part 668 Student Assistance General 

Provisions Coursework (§ 668.2) 

Statute: None. 

Current regulations: None 

Proposed regulations: The proposed 

regulations would amend the definition 

of ‘‘full-time student’’ in § 668.2 to allow 

repeated coursework to count towards a 

student enrollment status in term-based 

programs. 

Reasons: The current policy provides 

that a student enrolled in a term-based 

program may not be paid for repeating 

a course unless the student will receive 

credit for the coursework in addition to 

any credits previously earned. The nonFederal negotiators were concerned that 

institutions are unable to track this type 

of information without doing a program 

audit of each individual student. We 

agreed and proposed to amend the 

definition of full-time to provide that 

such credits would count toward 

enrollment status and be eligible for 

payment under the title IV, HEA 

programs. 

The negotiators reached tentative 

agreement on this issue. 

Written Arrangements (§§ 668.5 and 

668.43) 

Statute: None. 

Current Regulations: Under current 

§ 668.5(a), an eligible institution may 

enter into a written agreement with 

another eligible institution, or with a 

consortium of eligible institutions, to 

provide all or part of an educational 

program. The educational program is 

considered to be an eligible program if 

it meets the requirements of § 668.8. 

There is no requirement in either 

§ 668.5 or § 668.43 of the current 

regulations that institutions provide 

information on written arrangements to 

enrolled or prospective students. 

Proposed Regulations: The 

Department proposes to amend current 

§ 668.5(a) by revising and redesignating 

paragraph (a) as paragraph (a)(1) and 

adding a new paragraph (a)(2). Proposed 

§ 668.5(a)(1) would be based on the 

language that is in current paragraph (a), 

but it would be modified to make it 

consistent with the definition of an 

‘‘educational program’’ in 34 CFR 600.2. 

Proposed new § 668.5(a)(2) would 

specify that if a written arrangement is 

between two or more eligible 

institutions that are owned or controlled 

by the same individual, partnership, or 

corporation, the institution that grants 

the degree or certificate must provide 

more than 50 percent of the educational 

program. These clarifications are also 

intended to ensure that the institution 

enrolling the student has all necessary 

approvals to offer an educational 

program in the format in which it is 

being provided, such as through 

distance education, when the other 

institution is providing instruction 

under a written agreement using that 

method of delivery. Proposed 

§ 668.5(c)(1) would expand the list of 

conditions that would preclude an 

arrangement between an eligible 

institution and an ineligible institution. 

Proposed §§ 668.5(e) and 668.43 would 

require an institution that enters into a 

written arrangement to provide a 

description of the arrangement to 

enrolled and prospective students. 

Reasons: Under the definition of an 

‘‘educational program’’ in 34 CFR 600.2, 

if an institution does not provide any 

instruction itself, but merely gives credit 

for instruction provided by other 

institutions, it is not considered to 

provide an educational program. The 

change reflected in proposed 

§ 668.5(a)(1) would eliminate the 

inconsistency in these two provisions 

by clarifying that an institution may 

provide part, but not all, of an 

educational program under a written 

arrangement. 

Proposed § 668.5(a)(2) would be 

added to address concerns that may 

arise when two institutions under 

common ownership enter into written 

arrangements with each other. One 

concern, for example, is that such 

written agreements between institutions 

under common ownership could be 

used to circumvent regulations 

governing cohort default rates and ‘‘90– 

10’’ provisions, which limit the 

percentage of revenue for-profit 

institutions may receive from the 

Federal student financial assistance 

programs, by having one institution 

provide substantially all of a program 

while attributing the title IV revenue 

and cohort default rates to the other 

commonly-owned institution. In other 

situations, campus-based institutions 

have been used as ‘‘portals’’ to attract 

students for online institutions under 

common ownership where students may 

not have expected the program to be 

offered by a different institution. 

During the negotiated rulemaking 

sessions, the Department initially 

proposed draft regulations that would 

have required accrediting or State 

agency review of any written 

arrangement between an eligible 

institution and another eligible 

institution or consortium of eligible 

institutions if the portion of the 

educational program provided by the 

other institution under the written 

arrangement were more than 50 percent. 

Under this initial proposal, the 

institution’s accrediting agency, or State 

agency, as applicable, would have been 

required to make a determination that 

the arrangement met the agency’s 

standards for written arrangements. This 

initial proposal was based on discussion 

at the first negotiated rulemaking 

session that suggested most accrediting 

agencies already review a significant 

portion of their institutions’ written 

arrangements, even those between or 

among eligible institutions. 

Subsequently, several non-Federal 

negotiators explained that, contrary to 

the Department’s initial understanding, 

this type of review of written 

arrangements was not common practice. 

Some of the non-Federal negotiators 

expressed concerns that the proposed 

changes would increase workload and 

costs as well as impede the 

development of innovative programs at 

institutions where there is no evidence 

of the problems the Department seeks to 

address. After hearing these concerns, 

the Department reconsidered its initial 

proposal and focused its proposed 

regulatory changes more narrowly on 

the types of institutions and situations 

where problems have been identified. 

The Department subsequently 

proposed regulatory language that 

would limit the portion of an 

educational program that could be 

provided under a written arrangement 

between two eligible for-profit 

institutions under common ownership 

or control to 25 percent. 

While some non-Federal negotiators 

expressed support for the 25 percent 

limitation, a number of them expressed 

concern that the 25 percent limitation 

was too low. For example, one nonFederal negotiator questioned the 

rationale for limiting the percentage of 

an educational program provided by 

two eligible institutions under a written 

arrangement to 25 percent when, under 

certain circumstances, current 

regulations permit an ineligible 

institution to provide up to 50 percent 

of an educational program. Another 

non-Federal negotiator said that an 

institution should be responsible for at 

least 50 percent of the courses in a 

student’s major. During the discussions, 

several non-Federal negotiators 

supported an overall limitation of 50 

percent. One non-Federal negotiator 

expressed the view that non-profit 

institutions want to ‘‘own’’ the degrees 

they confer, and if an institution 

provides less than 50 percent of an 

educational program, it does not own 

the degree. Other non-Federal 

negotiators argued that a limitation of 75 

percent would be more appropriate. 

Non-Federal negotiators also 

expressed concerns that, as proposed, 

this restriction would have an impact on 

students’ academic opportunities and 


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would limit access to students attending 

certain institutions. Specifically, they 

explained that the proposed restrictions 

on the portion of the educational 

program that could be provided by the 

other eligible institution could 

unnecessarily limit the number of 

online courses students could take, or 

make it difficult for students in the 

military who are deployed, and want to 

take their remaining courses at an 

online institution, to finish their 

educational programs. Both Department 

officials and some of the non-Federal 

negotiators pointed out that these 

outcomes are avoidable if the students 

in these situations transferred to the 

institution that was providing the 

preponderance of courses. 

Based on these discussions, the 

Department modified the proposed 

regulatory language to refer to eligible 

institutions that are owned or controlled 

by the same individual, partnership, or 

corporation, because this language 

would be parallel to the language in 

current § 668.5(c)(3)(ii)(B). Some nonFederal negotiators expressed concern 

that the phrase ‘‘owned or controlled by 

the same individual, partnership, or 

corporation’’ could be read to apply to 

Jesuit institutions or other institutions 

under the control of a religious 

organization, or to institutions in a 

public system under the control of a 

board of governors. The Federal 

negotiator explained that it is not the 

Department’s intention for either public 

or private, non-profit institutions to be 

covered by the proposed language 

because these institutions are not owned 

or controlled by other entities, and 

generally act autonomously. 

The proposed additions to 

§ 668.5(c)(1) would make it clear that 

educational programs offered under 

written arrangements between an 

eligible institution and an ineligible 

institution would not be considered 

eligible programs if the ineligible 

institution had had its certification to 

participate in the title IV, HEA programs 

revoked (see proposed § 668.5(c)(1)(iii)), 

its application for re-certification to 

participate in the title IV, HEA programs 

denied (see proposed § 668.5(c)(1)(iv)), 

or its application for certification to 

participate in the title IV, HEA programs 

denied (see proposed § 668.5(c)(1)(v)). 

These additions are consistent with the 

existing reference in the regulations to 

institutions that have been terminated 

from the title IV, HEA programs. 

Finally, there was considerable 

discussion during the negotiated 

rulemaking sessions about the 

Department’s proposal to require that 

institutions make information about 

written arrangements available to 

students. Several non-Federal 

negotiators said that information should 

be made available to prospective 

students, as well as to enrolled students, 

so prospective students could know 

before applying to an educational 

program whether any part of the 

program would be provided under a 

written arrangement. For this reason, 

proposed § 668.5(e) would make clear 

that any eligible institution providing 

educational programs under a written 

arrangement is required to provide the 

information described in proposed 

§ 668.43(a)(12) to both prospective and 

enrolled students. 

The committee also discussed at 

length what content the proposed 

disclosures should include. Several 

non-Federal negotiators requested that 

institutions be required to disclose the 

locations of the other institutions or 

organizations at which a portion of the 

educational program would be 

provided. We agreed with these nonFederal negotiators and incorporated 

this disclosure requirement in proposed 

§ 668.43(a)(12)(ii). 

There was also widespread support 

for requiring the disclosure of any 

additional costs that students might 

incur as a result of enrolling in an 

educational program provided, in part, 

under a written arrangement. There was 

much discussion about which costs 

would need to be disclosed. One nonFederal negotiator requested that 

institutions only be required to provide 

‘‘estimated’’ costs, given that in some 

situations, such as study abroad 

programs, costs might change due to 

variability in living accommodations, 

changes in airfare for programs offered 

at distant locations, etc. We agreed with 

these suggestions and clarified in 

proposed § 668.43(a)(12)(iv) that the 

required disclosures include estimated 

additional costs students may incur as 

the result of enrolling in an educational 

program that is provided, in part, under 

a written arrangement described in 

§ 668.5. 

In proposed § 668.43(a)(12)(iii), we 

would require institutions to disclose 

the method of delivery of the portion of 

the educational program that the 

institution that grants the degree or 

certificate is not providing so potential 

students are given accurate information. 

In response to a question raised at one 

of the negotiated rulemaking sessions, 

the Federal negotiator explained that the 

Department would expect an institution 

to disclose whether the instruction is 

offered on campus or on-line, or offered 

through a combination of methods. 

During the discussions about the 

disclosure requirements in proposed 

§§ 668.5 and 668.43, there were a 

number of questions about what types of 

arrangements would be subject to these 

proposed requirements. The Department 

explained that the proposed disclosure 

requirements would apply to blanket, 

existing arrangements between or 

among institutions. Individual, studentinitiated written arrangements would 

not be subject to the disclosure 

requirements in proposed §§ 668.5 and 

668.43. Not only would such 

disclosures be impractical and 

excessively burdensome, but they 

would also be unnecessary: As a party 

to an individual, student-initiated 

written arrangement, the student would 

already have the information required to 

be disclosed under these proposed 

provisions. In addition, these proposed 

disclosure requirements would not 

apply to internships or externships 

because the Department does not 

consider these arrangements to be 

written arrangements under § 668.5. 

While it is reasonable to expect that 

institutions that offer or require 

internships and externships will 

provide students in affected programs 

with the types of information described 

in proposed § 668.43(a)(12), such 

programs would not be covered under 

this proposed requirement for 

institutional disclosure of written 

arrangements. 

Some non-Federal negotiators 

contended that institutions should be 

required to display the information 

described in proposed § 668.43(a)(12) 

prominently on their Web sites. Other 

non-Federal negotiators did not support 

this idea, pointing out that § 668.43 

contains a long list of disclosures, and 

to single out this one disclosure 

requirement for special treatment would 

suggest that it is more important than all 

the other institutional information 

disclosure requirements. They 

explained that this proposed 

requirement should be considered in the 

context of all the consumer disclosure 

requirements regarding information that 

students need to know when they are 

considering enrolling in an institution, 

and noted that from a practical 

standpoint, it is likely that institutions 

will post the required information on 

their Web sites. One non-Federal 

negotiator expressed the concern that 

there is already too much general 

information provided to students that 

they do not read, and suggested that 

institutions might find it most useful to 

include information on written 

arrangements in the context of 

individual programs of study. 

While the Department wants to make 

sure students receive appropriate 

information so they can make informed 

decisions, the Department agrees with 


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the non-Federal negotiators who urged 

that institutions be given the discretion 

to determine the best way to 

disseminate the required information to 

their students. 

The negotiators reached tentative 

agreement on this issue. 

Incentive Compensation (§ 668.14(b)) 

Statute: Section 487(a)(20) of the HEA 

requires that the title IV, HEA program 

participation agreement prohibit an 

institution from making any 

commission, bonus, or other incentive 

payments based directly or indirectly on 

success in securing enrollments or 

financial aid to any persons or entities 

involved in student recruiting or 

admissions activities, or in making 

decisions about the award of student 

financial assistance. The statute states 

that this prohibition does not apply to 

the recruitment of foreign students 

residing in foreign countries who are 

not eligible to receive Federal financial 

assistance. 

Current Regulations: Current 

§ 668.14(b)(22)(i) incorporates the 

prohibition and exception reflected in 

section 487(a)(20) of the HEA. It 

prohibits an institution from making 

any commission, bonus, or other 

incentive payments based directly or 

indirectly on success in securing 

enrollments or financial aid to any 

persons or entities involved in student 

recruiting or admissions activities, or in 

making decisions about the award of 

student financial assistance. It also 

states that this restriction does not apply 

to the recruitment of foreign students 

living in foreign countries who are not 

eligible to receive Federal student aid. 

Current § 668.14(b)(22)(ii) goes on to 

specify 12 ‘‘safe harbors’’—12 activities 

and arrangements that an institution 

may carry out without violating the 

prohibition against incentive 

compensation reflected in section 

487(a)(20) of the HEA and current 

§ 668.14(b)(22)(i). The first safe harbor 

explains the conditions under which an 

institution may adjust compensation 

without that compensation being 

considered an incentive payment. The 

12 safe harbors describe the conditions 

under which payments that could 

potentially be construed as based upon 

securing enrollments or financial aid are 

nonetheless not prohibited under 

section 487(a)(20) of the HEA and 

current § 668.14(b)(22)(i). 

The payment or compensation plans 

covered by the safe harbors address the 

following subjects: 

1. Adjustments to employee 

compensation (current 

§ 668.14(b)(22)(i)(A)). Under this safe 

harbor, an institution may make up to 

two adjustments (upward or downward) 

to a covered employee’s annual salary or 

fixed hourly wage rate within any 12- 

month period without the adjustment 

being considered an incentive payment, 

provided that no adjustment is based 

solely on the number of students 

recruited, admitted, enrolled, or 

awarded financial aid. This safe harbor 

also permits one cost-of-living increase 

that is paid to all or substantially all of 

the institution’s full-time employees. 

2. Enrollment in programs that are not 

eligible for title IV, HEA program funds 

(current § 668.14(b)(22)(i)(B)). This safe 

harbor permits compensation to 

recruiters based upon enrollment of 

students who enroll in programs that are 

ineligible for title IV, HEA funds. 

3. Contracts with employers to 

provide training (current 

§ 668.14(b)(22)(i)(C)). This safe harbor 

addresses payments to recruiters who 

arrange contracts between an institution 

and an employer, where the employer 

pays the tuition and fees for its 

employees (either directly to the 

institution or by reimbursement to the 

employee). 

4. Profit-sharing bonus plans (current 

§ 668.14(b)(22)(i)(D)). Under this safe 

harbor, profit-sharing and bonus 

payments to all or substantially all of an 

institution’s full-time employees are not 

considered incentive payments based on 

success in securing enrollments or 

awarding financial aid in violation of 

the prohibition in section 487(a)(20) of 

the HEA and current § 668.14(b)(22)(i). 

As long as the profit-sharing or bonus 

payments are substantially the same 

amount or the same percentage of salary 

or wages, and as long as the payments 

are made to all or substantially all of the 

institution’s full-time professional and 

administrative staff, compensation paid 

as part of a profit-sharing or bonus plan 

is not considered a violation of the 

incentive payment prohibition. 

5. Compensation based upon program 

completion (current 

§ 668.14(b)(22)(i)(E)). This safe harbor 

permits compensation based upon 

students successfully completing their 

educational programs or one academic 

year of their educational programs, 

whichever is shorter. 

6. Pre-enrollment activities (current 

§ 668.14(b)(22)(i)(F)). This safe harbor 

states that clerical pre-enrollment 

activities, such as answering telephone 

calls, referring inquiries, or distributing 

institutional materials, are not 

considered recruitment or admission 

activities. Accordingly, under this safe 

harbor, an institution may make 

incentive payments to individuals 

whose responsibilities are limited to 

clerical pre-enrollment activities. 

7. Managerial and supervisory 

employees (current 

§ 668.14(b)(22)(i)(G)). This safe harbor 

states that the incentive payment 

prohibition in section 487(a)(20) of the 

HEA and current § 668.14(b)(22)(i) does 

not apply to managerial and supervisory 

employees who do not directly manage 

or supervise employees who are directly 

involved in recruiting or admissions 

activities, or the awarding of title IV, 

HEA program funds. 

8. Token gifts (current 

§ 668.14(b)(22)(i)(H)). Under this safe 

harbor, an institution may provide a 

token gift not to exceed $100 to an 

alumnus or student provided that the 

gift is not in the form of money and no 

more than one gift is provided annually 

to an individual. 

9. Profit distributions (current 

§ 668.14(b)(22)(i)(I)). This safe harbor 

states that profit distributions to owners 

of the institution are not payments 

based on success in securing 

enrollments or awarding financial aid in 

violation of the prohibition in section 

487(a)(20) of the HEA and current 

§ 668.14(b)(22)(i) as long as the 

distribution represents a proportionate 

share of the profits based upon the 

individual’s ownership interest. 

10. Internet-based activities (current 

§ 668.14(b)(22)(i)(J)). This safe harbor 

permits an institution to award 

incentive compensation for Internetbased recruitment and admission 

activities that provide information about 

the institution to prospective students, 

refer prospective students to the 

institution, or permit prospective 

students to apply for admission online. 

11. Payments to third parties for nonrecruitment activities (current 

§ 668.14(b)(22)(i)(K)). This safe harbor 

states that the incentive compensation 

prohibition does not apply to payments 

to third parties, including tuition 

sharing arrangements, that deliver 

various services to the institution, 

provided that none of the services 

involve recruiting or admission 

activities, or the awarding of title IV, 

HEA program funds. 

12. Payments to third parties for 

recruitment activities (current 

§ 668.14(b)(22)(i)(L)). Under this safe 

harbor, if an institution uses an outside 

entity to perform activities for it, 

including recruitment or admission 

activities, the institution may make 

incentive payments to the third party 

without violating the incentive payment 

prohibition in section 487(a)(20) of the 

HEA and current § 668.14(b)(22)(i) as 

long as the individuals performing the 

recruitment or admission activities are 

not compensated in a way that is 


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prohibited by section 487(a)(20) of the 

HEA and current § 668.14(b)(22)(i). 

Proposed Regulations: The 

Department proposes to revise 

§ 668.14(b)(22) to align it more closely 

with the statutory language from section 

487(a)(20) of the HEA. Specifically, 

proposed § 668.14(b)(22)(i)(A) would 

restate the statutory provision in the 

HEA, which provides that to be eligible 

to participate in the Federal student 

financial aid programs authorized under 

title IV of the HEA, an institution must 

agree that it will not provide any 

commission, bonus, or other incentive 

payment based directly or indirectly on 

success in securing enrollments or 

financial aid to any person or entity 

engaged in any student recruiting or 

admission activities or in making 

decisions regarding the award of student 

financial assistance. Proposed 

§ 668.14(b)(22)(i)(B) would provide that 

the incentive compensation prohibition 

does not apply to the recruitment of 

foreign students residing in foreign 

countries who are not eligible to receive 

Federal student assistance. 

The Department would delete the 12 

safe harbors reflected in current 

§ 668.14(b)(22)(ii). The Department 

would, however, clarify, in proposed 

§ 668.14(b)(22)(ii), that eligible 

institutions and their contractors may 

make merit-based adjustments to 

employee compensation, provided that 

such adjustments are not based directly 

or indirectly upon success in securing 

enrollments or the award of financial 

aid. 

Finally, in proposed 

§ 668.14(b)(22)(iii), the Department 

would define the following key terms 

that would be used in proposed 

§ 668.14(b)(22): Commission, bonus, or 

other incentive payment, securing 

enrollments or the awards of financial 

aid, and enrollment. 

Proposed § 668.14(b)(22)(iii)(A) would 

define commission, bonus, or other 

incentive payment as a sum of money or 

something of value paid or given to a 

person or entity for services rendered. 

Proposed § 668.14(b)(22)(iii)(B) would 

define securing enrollments or the 

awards of financial aid as activities that 

a person or entity engages in for the 

purpose of the admission or 

matriculation of students for any period 

of time or the award of financial aid to 

students. Proposed 

§ 668.14(b)(22)(iii)(B)(1) and 

(b)(22)(iii)(B)(2) would clarify that the 

term securing enrollments or the awards 

of financial aid includes recruitment 

contact in any form and excludes 

making a payment to a third party for 

student contact information for 

prospective students, respectively. 

Proposed § 668.14(b)(22)(iii)(C) would 

define enrollment as the admission or 

matriculation of a student into an 

eligible institution. 

Reasons: Consistent with comments 

made by a majority of the non-Federal 

negotiators, the Department believes 

that the language in section 487(a)(20) of 

the HEA is clear, and that the 

elimination of all of the regulatory safe 

harbors reflected in current 

§ 668.14(b)(22)(ii) would best serve to 

effectuate congressional intent. The 

Department previously explained that it 

was adopting the safe harbors based on 

a ‘‘purposive reading of section 

487(a)(20) of the HEA.’’ 67 FR 51723 

(August 8, 2002). Since that time, 

however, the Department’s experience 

demonstrates that unscrupulous actors 

routinely rely upon these safe harbors to 

circumvent the intent of section 

487(a)(20) of the HEA. As such, rather 

than serving to effectuate the goals 

intended by Congress through its 

adoption of section 487(a)(20) of the 

HEA, the safe harbors have served to 

obstruct those objectives. For example, 

the first safe harbor, which prohibits the 

payment of incentives based solely 

upon success in securing enrollments, 

has led institutions to establish, on 

paper, other factors that are purportedly 

used to evaluate student recruiters other 

than the sheer numbers of students 

enrolled. However, in practice, 

consideration of these factors has been 

minimal at best, or otherwise 

indiscernible. This has led the 

Department to expend vast resources 

evaluating the legitimacy of institutional 

compensation plans, and considerable 

time and effort has been lost by both the 

Department and institutions engaged in 

litigation. Moreover, the Department 

believes that students are frequently the 

victims of compensation plans that 

institutions have adopted within the 

ambit of the first safe harbor. When 

admissions personnel are compensated 

substantially, if not entirely, upon the 

numbers of students enrolled, the 

incentive to deceive or misrepresent the 

manner in which a particular 

educational program meets a student’s 

need increases substantially. As a result, 

the Department believes that the 

existence of the safe harbors is a major 

impediment to ensuring that students 

are enrolled in educational programs 

that are meaningful to them. There was 

considerable discussion on this 

proposed approach during the 

negotiated rulemaking sessions. 

At the outset of the discussions on 

incentive compensation during 

negotiated rulemaking, the Department 

reviewed each of the 12 safe harbors 

reflected in the current regulations and 

stated why the Department views them 

as either inappropriate or unnecessary: 

1. Adjustments to employee 

compensation. The Department 

explained that this safe harbor has led 

to allegations in which institutions 

concede that their compensation 

structures include consideration of the 

number of enrolled students, but aver 

that they are not solely based upon such 

numbers. In some of these instances, the 

substantial weight of the evidence has 

suggested that the other factors 

purportedly analyzed are not truly 

considered, and that, in reality, the 

institution bases salaries exclusively 

upon the number of students enrolled. 

For this reason, the Department 

proposes to delete this safe harbor. After 

careful consideration, the Department 

has determined that removal of the safe 

harbor is preferable to trying to revise 

the safe harbor. For example, changing 

the word solely in this safe harbor to 

some other modifier, such as ‘‘primarily’’ 

or ‘‘substantially,’’ would not correct the 

problem, as the evaluation of any 

alternative arrangement would merely 

shift to whether the compensation was 

‘‘primarily’’ or ‘‘substantially’’ based 

upon enrollments. 

2. Compensation related to 

enrollment in programs that are not 

eligible for title IV, HEA program funds. 

Section 487(a)(20) of the HEA provides 

that compensation may not be based 

upon success in securing enrollments 

whether the students receive title IV, 

HEA funds, or some other form of 

student financial assistance. This safe 

harbor provides an impetus to steer 

students away from title IV, HEA 

programs. The potential also exists for 

manipulation, as students who were 

initially enrolled in non-title IV, HEA 

eligible programs may then be reenrolled in title IV, HEA eligible 

programs. As a result, the Department 

proposes to remove this safe harbor. 

3. Compensation related to contracts 

with employers to provide training. 

Compensation permitted under this safe 

harbor includes compensation that is 

ultimately based upon success in 

securing enrollments, and is thus 

inconsistent with section 487(a)(20) of 

the HEA. 

4. Compensation related to profitsharing bonus plans. There is no 

statutory proscription upon offering 

employees either profit-sharing or a 

bonus; however, if either is based upon 

success in securing enrollments, it is not 

permitted. Therefore, this safe harbor is 

unnecessary. 

5. Compensation based on program 

completion. The Department believes 

that this safe harbor permits 

compensation that is ‘‘indirectly’’ based 


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upon securing enrollments—that is, 

unless the student enrolls, the student 

cannot successfully complete an 

educational program. With the 

proliferation of short-time, accelerated 

programs, the potential exists for shorter 

and shorter programs, and increased 

efforts to rely upon this safe harbor to 

incentivize recruiters. Moreover, this 

safe harbor may lead to lowered or 

misrepresented admissions standards 

and program offerings, lowered 

academic progress standards, altered 

attendance records, and a lack of 

meaningful emphasis on retention. The 

Department has seen schools that have 

devised and operated grading policies 

that all but ensure that students who 

enroll will graduate, regardless of their 

academic performance. For these 

reasons, the Department believes it is 

appropriate to delete this safe harbor. 

6. Compensation related to preenrollment activities. The Department 

does not believe that this safe harbor is 

appropriate. Individuals may not 

receive incentive compensation based 

on their success in soliciting students 

for interviews; soliciting students for 

interviews is a recruitment activity, not 

a pre-enrollment activity. In addition, 

because a recruiter’s job description is 

to recruit, it would be very difficult for 

an institution to document that it was 

paying a bonus to a recruiter solely for 

clerical pre-enrollment activities. Such 

activities certainly contribute 

‘‘indirectly,’’ if not ‘‘directly,’’ to the 

success in securing enrollments, and 

hence compensation based upon them is 

prohibited by the statute. Moreover, 

with the elimination of the safe harbor 

relating to adjustments to employee 

compensation, an unscrupulous actor 

could claim that the activities in which 

its recruiters engaged, and for which 

they were compensated, consisted of 

‘‘clerical’’ or ‘‘pre-enrollment’’ activities, 

regardless of whether a student 

ultimately enrolled. 

7. Compensation related to 

managerial and supervisory employees. 

The Department believes that this safe 

harbor provision is no longer 

appropriate because senior management 

may drive the organizational and 

operational culture at an institution, 

creating pressures for top, and even 

middle, management to secure 

increasing numbers of enrollments from 

their recruiters. As a result, these 

individuals should not be exempt from 

the ban on receiving incentive 

compensation. 

8. Compensation related to token 

gifts. As at least one non-Federal 

negotiator noted, students oft-times do 

things with little reflection if it brings 

an immediate reward, and such things 

as a $100 gift card constitute a 

substantial incentive for many students. 

Further, the fair market value of an item 

might be considerably greater than its 

cost. A high value item for which the 

institution paid a minimal cost could 

not be considered a token gift. As a 

result, even the provision of token gifts 

to students and alumni is fraught with 

the potential for abuse, creating the 

need to remove this safe harbor, as well. 

9. Compensation based on profit 

distributions that are based on an 

individual’s ownership interest. Section 

487(a)(20) of the HEA prohibits 

compensation, including profit 

distributions, that is based upon success 

in securing enrollments and the award 

of financial aid. It does not prohibit 

profit distributions based upon an 

individual’s ownership interest. As a 

result, it is the Department’s view that 

this safe harbor is unnecessary. 

10. Compensation related to Internetbased activities. Technological 

advancements and developments in 

Internet-based activities since this safe 

harbor was adopted, and the frequency 

with which such activities are now 

relied upon, argue against the continued 

provision of this safe harbor. Moreover, 

with the elimination of the first safe 

harbor, it can be anticipated that an 

institution seeking to avoid compliance 

with section 487(a)(20) of the HEA will 

maximize its Internet-based recruitment 

activities. For this reason, the 

Department proposes to remove this safe 

harbor. 

11. Compensation to third parties for 

non-recruitment activities. The 

Department believes that this safe 

harbor is no longer necessary. Proposed 

§ 668.14(b)(22) states that a person or 

entity who is engaged in any student 

recruitment or admission activity, or in 

making decisions regarding the 

awarding of title IV, HEA program funds 

may not be compensated directly or 

indirectly based upon the success in 

securing enrollments. Thus, there is no 

reason to provide any discussion of 

third-party activities as they relate to 

non-recruitment activities as a potential 

safe harbor. 

12. Compensation to third parties for 

recruitment activities. This safe harbor 

expands the scope of the eleventh safe 

harbor to include ‘‘recruiting or 

admission activities,’’ while providing 

the caveat that the compensation cannot 

be offered in an otherwise legally 

impermissible manner. As mentioned in 

regard to the eleventh safe harbor, 

section 487(a)(20) of the HEA expressly 

proscribes payments to ‘‘any persons or 

entities’’ based directly or indirectly on 

success in securing enrollments, so any 

further discussion of third party 

activities as they relate to recruitment 

activities is also unnecessary. 

The Department believes that removal 

of these regulatory safe harbors is 

necessary to ensure that section 

487(a)(20) of the HEA is properly 

applied. The Department has 

determined that these safe harbors do 

substantially more harm than good, and 

believes that institutions should not 

look to safe harbors to determine 

whether a payment complies with 

section 487(a)(20) of the HEA. Rather, 

the Department believes that 

institutions can readily determine if a 

payment or compensation is permissible 

under section 487(a)(20) of the HEA by 

analyzing— 

(1) Whether it is a commission, bonus, 

or other incentive payment, defined as 

an award of a sum of money or 

something of value paid to or given to 

a person or entity for services rendered; 

and 

(2) Whether the commission, bonus, 

or other incentive payment is provided 

to any person based directly or 

indirectly upon success in securing 

enrollments or the award of financial 

aid, which are defined as activities 

engaged in for the purpose of the 

admission or matriculation of students 

for any period of time or the award of 

financial aid. 

If the answer to each of these 

questions is yes, the commission, bonus, 

or incentive payment would not be 

permitted under the statute. Therefore, 

the Department proposes to simplify its 

regulations to better align them with 

section 487(a)(20) of the HEA. 

Most non-Federal negotiators favored 

the Department’s proposal to remove the 

current safe harbors because they 

believe that the regulatory safe harbors 

have led to inappropriate incentive 

compensation practices by institutions 

that are prohibited by the HEA. The 

majority of the non-Federal negotiators 

indicated strong support for the removal 

of these safe harbors, believing that 

doing so would more accurately reflect 

congressional intent and protect 

students from abusive recruitment 

practices that have directly resulted 

when institutions have sought to 

circumvent, if not directly flaunt, 

section 487(a)(20) of the HEA. 

The non-Federal negotiator who 

opposed the Department’s proposed 

removal of the safe harbors and their 

replacement with certain definitions 

argued that the safe harbors are needed 

to explain the scope of the prohibition 

in section 487(a)(20) of the HEA, which 

was perceived as being unclear. Without 

the safe harbors, it was argued, 

institutions would not have a clear 

sense of what practices are permitted 


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and, therefore, would be more likely to 

unintentionally violate the prohibition 

in section 487(a)(20) of the HEA and 

§ 668.14(b)(22). However, any merit to 

this argument is belied by the ease of 

the application of the two-part test the 

Department has offered that will 

demonstrate whether a compensation 

plan or payment complies with the 

statute and its implementing 

regulations. 

A sub-caucus of non-Federal 

negotiators worked between the second 

session of negotiated rulemaking and 

the third session of negotiated 

rulemaking to develop draft regulatory 

language that would retain, but narrow 

the scope of, the safe harbors in the 

current regulations. There was much 

discussion regarding the sub-caucus’ 

proposed draft language, as well as one 

final counter-proposal brought to the 

negotiating table. 

A number of specific concerns were 

raised during these discussions. First 

and foremost, negotiators wanted to 

understand what the likely impact 

would be if the safe harbors were 

removed from the regulations. They 

questioned whether all previously 

permitted actions would now be 

prohibited. The Department explained 

its position: That, going forward, under 

the proposed regulations, institutions 

would need to re-examine their 

practices to ensure that they comply 

with proposed § 668.14(b)(22). To the 

extent that a safe harbor created an 

exception to the statutory prohibition 

found in section 487(a)(20) of the HEA, 

its removal would establish that such an 

exception no longer exists, and that the 

action that had been permitted is now 

prohibited. 

Several negotiators were concerned 

that under the Department’s proposal, 

institutions would be prohibited from 

paying merit-based increases to their 

financial aid or admissions personnel. 

In particular, some negotiators 

supported the inclusion of language that 

would permit an institution to make 

merit-based adjustments based on an 

employee’s performance in relation to 

an institution’s goals, such as those for 

enrollment, completion, or graduation. 

The Department’s proposed 

regulations continue to authorize meritbased compensation for financial aid or 

admissions staff. An institution could 

use a variety of standard evaluative 

factors as the basis for such an increase; 

however, consistent with section 

487(a)(20) of the HEA, under proposed 

§ 668.14(b)(22), it would not be 

permitted to consider the employee’s 

success in securing student enrollments 

or the award of financial aid or 

institutional goals based on that success 

among those factors. Further, an 

increase that is based either directly or 

indirectly on individual student 

numbers would be prohibited. The 

Department believes that the language 

in proposed § 668.14(b)(22)(ii) makes 

this clear. 

One negotiator felt strongly that it was 

critical to use the word ‘‘solely,’’ or some 

other modifier, to limit the prohibition 

in proposed § 668.14(b)(22)(i) (i.e., ‘‘It 

will not provide any commission, 

bonus, or other incentive payment based 

solely upon success * * *’’ rather than 

‘‘It will not provide any commission, 

bonus, or other incentive payment based 

directly or indirectly upon success’’). 

This negotiator said that the use of the 

word solely, or some other modifier, 

would be consistent with the use of that 

term solely in the first safe harbor 

reflected in current § 668.14(b)(22)(ii)(A) 

(i.e., ‘‘ * * * is not based solely on the 

number of students recruited, admitted, 

enrolled, or awarded financial aid’’). As 

discussed earlier in this preamble, given 

the Department’s experience with how 

the first safe harbor in current 

§ 668.14(b)(22) has been abused, the 

Department does not believe that such 

a construction is warranted. It is the 

Department’s view that, consistent with 

section 487(a)(20) of the HEA, incentive 

payments should not be based in any 

part, directly or indirectly, on success in 

securing enrollments or the awards of 

financial aid. 

In addition, some negotiators 

advocated for an institution’s ability to 

pay bonuses on the basis of students 

who complete their programs of 

instruction, as currently provided for in 

the fifth safe harbor. They believed that 

this category of students (i.e., students 

who complete their programs), is 

different from the category of students 

who enroll, for which compensation 

may not be based. The Department does 

not agree. As previously stated, the 

Department believes that the regulations 

must clearly reinforce the statutory 

provision and exclude the possibility of 

basing any portion of a bonus on 

success in securing student enrollments 

or financial aid awards. 

Several negotiators requested that the 

Department define the term ‘‘bonus’’ as 

a way to help institutions understand 

what types of compensation are 

appropriate. Accordingly, in proposed 

§ 668.14(b)(22)(iii)(A), the Department 

proposes to define the term commission, 

bonus, or other incentive payment as a 

sum of money or something of value 

paid to or given to a person or an entity 

for services rendered. Linked to the 

language in proposed 

§ 668.14(b)(22)(i)(A), this definition is 

unambiguous in prohibiting payment of 

any money or item of value on the basis 

of direct or indirect success in securing 

enrollments or the award of financial 

aid. 

Several non-Federal negotiators asked 

for clarification about the extent to 

which supervisors and upper level 

administrators would be covered by 

proposed § 668.14(b)(22). The 

Department’s position is that section 

487(a)(20) of the HEA is clear that the 

incentive compensation prohibition 

applies all the way to the top of an 

institution or organization. Therefore, 

individuals who are engaged in any 

student recruitment or admissions 

activity or in making decisions about 

the award of student financial aid are 

covered by this prohibition. 

One negotiator asked the Department 

to clarify how the prohibition reflected 

in proposed § 668.14(b)(22) would work 

in the case of an institution that partners 

with other institutions or organizations 

to receive shared services, an approach 

that some institutions are turning to for 

economic reasons. As an example, a 

group of institutions might share a 

centralized campus security team 

because doing so could be less 

expensive than having each institution 

set up its own team. If institutions use 

this model of shared services for 

financial aid purposes and the payment 

for the shared services is volume-driven 

(e.g., an institution is billed based on 

the number of student files that are 

processed), the negotiator asked if 

institutions would comply with 

proposed § 668.14(b)(22). The 

Department does not believe that the 

proposed language would automatically 

preclude an institution’s use of this type 

of arrangement, provided that payment 

is not based on success in securing 

enrollments or the awards of financial 

aid. In the normal course, the contractor 

would be paid for services rendered 

without violating the proposed 

regulations. 

Several negotiators were concerned 

about the impact of the proposed 

language on an institution’s Internetbased activities. Negotiators asserted 

that the HEA permits advertising and 

marketing activities by a third party, as 

long as payment to the third party is 

based on those who ‘‘click’’ and is not 

based on the number of individuals who 

enroll. The Department agrees and does 

not believe that the proposed regulatory 

language would prohibit such clickthrough payments. 

The issue of token gifts prompted 

some discussion. Several negotiators 

asked the Department to clarify whether 

an institution that offers some type of 

payment to current students in 

exchange for their contact list would 


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violate proposed § 668.14(b)(22). The 

Department believes that this type of 

activity is permitted as long as the 

student is not paid or given an item of 

value on the basis of the number of 

students who apply or enroll. Most 

negotiators agreed with this position. 

Finally, several non-Federal 

negotiators asked whether the 

Department would offer private letter 

guidance on conduct that may violate 

proposed § 668.14(b)(22). Accordingly, 

the Department believes the proposed 

language is clear and reflective of 

section 487(a)(20) of the HEA. The 

Department believes it will 

appropriately guide institutions as they 

evaluate compensation issues. To the 

extent that ongoing questions arise on a 

particular aspect of the regulations, the 

Department will respond appropriately. 

This response may include a 

clarification in a Department 

publication, such as the Federal Student 

Aid Handbook or a Dear Colleague 

Letter. The Department believes that 

rather than focusing clarifying guidance 

on the situation at a particular 

institution, any illuminating statements 

must be broadly applicable and 

distributed widely to all participating 

institutions. As a result, the Department 

does not intend to provide private 

guidance regarding particular 

compensation structures in the future 

and will enforce the law as written. 

Negotiators did not reach agreement 

on this issue. 

Satisfactory Academic Progress 

(§§ 668.16(e), 668.32(f), 668.34) 

Statute: Section 484(a)(2) of the HEA 

requires that a student make satisfactory 

progress in the student’s course of study 

in order to be eligible to receive title IV, 

HEA program funds. Section 484(c) of 

the HEA provides that a student is 

making satisfactory progress if the 

institution reviews the progress of the 

student at the end of each academic 

year, or its equivalent, and the student 

has a cumulative C average, or its 

equivalent, or academic standing 

consistent with the requirements for 

graduation, as determined by the 

institution, at the end of the student’s 

second academic year. Section 484(c)(2) 

of the HEA provides that a student who 

has failed to maintain satisfactory 

progress and, subsequent to that failure, 

has academic standing consistent with 

the requirements for graduation, as 

determined by the institution, may 

again be determined eligible for 

assistance under title IV, HEA programs. 

Section 484(c)(3) of the HEA allows an 

institution to waive the satisfactory 

progress provisions for undue hardship 

based on the death of a relative of the 

student, the personal injury or illness of 

the student, or special circumstances as 

determined by the institution. 

Current Regulations: Three sections in 

current regulations contain satisfactory 

academic progress requirements. 

Current § 668.16(e) specifies that for an 

institution to be considered 

administratively capable, it must, for the 

purpose of determining student 

eligibility, establish, publish and apply 

reasonable standards for measuring 

whether a student is maintaining 

satisfactory progress in his or her 

educational program. 

Under current § 668.16(e), a 

satisfactory academic progress policy is 

considered reasonable if the standards 

are the same as or stricter than the 

institution’s standards for students 

enrolled in the same educational 

program who are not receiving title IV, 

HEA program funds and contain both 

qualitative (grade-based) and 

quantitative (time-related) standards. 

Under current § 668.16(e)(3), the 

institution must apply the standards 

consistently to all students within each 

category of students, e.g., full-time, parttime, undergraduate, and graduate 

students, and each educational program. 

The policy must provide that the 

institution checks both qualitative and 

quantitative components of the 

standards at the end of each increment, 

which may not be longer than one half 

of the educational program or one 

academic year, whichever is less. 

Current § 668.16(e)(5) and (e)(6) 

require that a satisfactory academic 

policy provide specific procedures 

under which a student may appeal a 

determination that the student is not 

making satisfactory academic progress 

and specific procedures for a student to 

re-establish that the student is making 

satisfactory academic progress. 

Current § 668.32 contains general 

student eligibility requirements. Current 

paragraph (f) of this section specifies 

that to be eligible to receive title IV, 

HEA program assistance, a student must 

maintain satisfactory progress in his or 

her course of study under the 

institution’s published satisfactory 

progress standards. These standards 

must comply with the provisions of 

§ 668.16(e) and, if applicable, § 668.34. 

Current § 668.34 specifies that a 

student who is enrolled in a program of 

study that is longer than two academic 

years must, at the end of the second 

year, have a grade point average (GPA) 

of at least a ‘‘C’’ or its equivalent, or have 

academic standing that is consistent 

with the institution’s graduation 

requirements. Under current § 668.34(c), 

an institution may find that a student is 

making satisfactory academic progress, 

even if the student does not meet these 

requirements, if the student’s failure to 

meet these requirements is based upon 

the death of a relative of the student, an 

injury or illness of the student, or other 

special circumstances. Current 

§ 668.34(e) requires an institution to 

review a student’s academic progress at 

the end of each year, at a minimum. 

Proposed regulations: The proposed 

regulations would restructure the 

satisfactory academic progress 

requirements. Proposed § 668.16(e) 

(Standards of administrative capability) 

would be revised to include only the 

requirement that an institution 

establish, publish, and apply 

satisfactory academic progress standards 

that meet the requirements of § 668.34. 

The remainder of current § 668.16(e) 

would be moved to proposed § 668.34 

such that it, alone, describes all of the 

required elements of a satisfactory 

academic progress policy as well as how 

an institution would implement such a 

policy. The references in paragraph 

§ 668.32(e) would be updated to 

conform the section with the changes 

proposed to §§ 668.16(e) and 668.32. 

Proposed § 668.34(a) would specify 

the elements an institution’s satisfactory 

academic policy must contain to be 

considered a reasonable policy. Under 

the proposed regulations, institutions 

would continue to have flexibility in 

establishing their own policies; 

institutions that choose to measure 

satisfactory academic progress more 

frequently than at the minimum 

required intervals would have 

additional flexibility (see proposed 

§ 668.34(a)(3)). 

All of the policy elements in the 

current regulations under §§ 668.16(e) 

and 668.34 would be combined in 

proposed § 668.34. In addition, 

proposed § 668.34(a)(5) would make 

explicit the requirement that 

institutions specify the pace at which a 

student must progress through his or her 

educational program to ensure that the 

student will complete the program 

within the maximum timeframe, and 

provide for measurement of a student’s 

pace at each evaluation. Under 

proposed § 668.34(a)(6), institutional 

policies would need to describe how a 

student’s GPA and pace of completion 

are affected by transfers of credit from 

other institutions. This provision would 

also require institutions to count credit 

hours from another institution that are 

accepted toward a student’s educational 

program as both attempted and 

completed hours. 

Proposed § 668.34(a)(7) would 

provide that, except as permitted in 

§ 668.34(c) and (d), the policy requires 

that, at the time of each evaluation, if 


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the student is not making satisfactory 

academic progress, the student is no 

longer eligible to receive title IV, HEA 

assistance. 

Proposed § 668.34(a)(8) would require 

institutions that use ‘‘financial aid 

warning’’ and ‘‘financial aid probation’’ 

statuses (concepts that would be defined 

in proposed § 668.34(b)) in connection 

with satisfactory academic progress 

evaluations to describe these statuses 

and how they are used in their 

satisfactory academic progress policies. 

Proposed § 668.34(a)(8)(i) would specify 

that a student on financial aid warning 

may continue to receive assistance 

under the title IV, HEA programs for one 

payment period despite a determination 

that the student is not making 

satisfactory academic progress. 

Financial aid warning status may be 

assigned without an appeal or other 

action by the student. Proposed 

§ 668.34(a)(8)(ii) would make clear that 

an institution with a satisfactory 

academic progress policy that includes 

the use of the financial aid probation 

status could require that a student on 

financial aid probation fulfill specific 

terms and conditions, such as taking a 

reduced course load or enrolling in 

specific courses. 

Proposed § 668.34(a)(9) would require 

an institution that permits a student to 

appeal a determination that the student 

is not making satisfactory academic 

progress to describe the appeal process 

in its policy. The policy would need to 

contain specified elements. Proposed 

§ 668.34(a)(9)(i) would require an 

institution to describe how a student 

may re-establish his or her eligibility to 

receive assistance under the title IV, 

HEA programs. Under proposed 

§ 668.34(a)(9)(ii), a student would be 

permitted to file an appeal based on the 

death of a relative, an injury or illness 

of the student, or other special 

circumstances. Under proposed 

§ 668.34(a)(9)(iii), a student would be 

required to submit, as part of the appeal, 

information regarding why the student 

failed to make satisfactory academic 

progress, and what has changed in the 

student’s situation that would allow the 

student to demonstrate satisfactory 

academic progress at the next 

evaluation. 

Proposed § 668.34(a)(10) would 

require the satisfactory academic 

progress policy of an institution that 

does not permit students to appeal a 

determination that they are not making 

satisfactory academic progress to 

describe how a student may regain 

eligibility for assistance under the title 

IV, HEA programs. 

Proposed § 668.34(a)(11) would 

require that an institution’s policy 

provide for notification to students of 

the results of an evaluation that impacts 

the student’s eligibility for title IV, HEA 

program funds. 

In proposed § 668.34(b), we would 

define several important terms that are 

used in this section: 

We would define the term appeal as 

a process by which a student who is not 

meeting the institution’s standards 

petitions the institution for 

reconsideration of the student’s 

eligibility for title IV, HEA program 

funds. 

The term financial aid probation 

would be defined as a status assigned by 

an institution to a student who fails to 

make satisfactory academic progress and 

who has appealed and has had 

eligibility for aid reinstated. 

The term financial aid warning would 

be defined as a status assigned to a 

student who fails to make satisfactory 

academic progress at an institution that 

evaluates academic progress at the end 

of each payment period. 

We would add a definition of the term 

maximum timeframe, which would be 

based entirely on the description of 

maximum timeframe in current 

§ 668.16(e)(2)(ii). 

Proposed § 668.34(c) and (d) would 

specify that an institution’s policy may 

provide for disbursement of title IV, 

HEA program funds to a student who 

has not met an institution’s satisfactory 

academic standards in certain 

circumstances. 

Proposed § 668.34(c) would permit an 

institution that measures satisfactory 

academic progress at the end of each 

payment period to have a policy that 

would permit a student who is not 

making satisfactory academic progress 

to be placed automatically on financial 

aid warning, a newly defined term. 

Finally, under proposed § 668.34(d), 

at an institution that measures 

satisfactory academic progress annually, 

or less frequently than at the end of each 

payment period, a student who has been 

determined not to be making 

satisfactory academic progress would be 

able to receive title IV, HEA program 

funds only after filing an appeal and 

meeting one of two conditions: (1) The 

institution has determined that the 

student should be able to meet 

satisfactory progress standards after the 

subsequent payment period, or (2) the 

institution develops an academic plan 

with the student that, if followed, will 

ensure that the student is able to meet 

the institution’s satisfactory academic 

progress standards by a specific point in 

time. 

Reasons: Recent questions from 

institutions and reviews of institutional 

satisfactory academic progress policies 

have raised concerns about the 

effectiveness of institutions’ satisfactory 

academic policies, even those that 

comply with the Department’s current 

regulatory criteria. For example, it has 

become evident that the use of 

automatic probationary periods has 

resulted in some students receiving title 

IV, HEA aid for as long as 24 months 

even though they are not meeting the 

institution’s satisfactory academic 

progress standards. Moreover, it is also 

clear that institutions use a variety of 

terms—warning, probation, amnesty—to 

describe situations in which a student is 

not making satisfactory academic 

progress, but nevertheless has been 

determined eligible to receive assistance 

under the title IV, HEA programs. 

Repeated uses of these statuses, or use 

of a combination of these statuses, 

applied sequentially, may lead to 

prolonged periods during which 

students who are not making 

satisfactory academic progress 

nevertheless continue to receive title IV, 

HEA program funds. 

The proposed changes to §§ 668.16(e), 

668.32, and 668.34 are designed to 

implement a more structured, 

comprehensive, and consistent 

approach to the development and 

implementation of institutional 

satisfactory progress policies. 

During the discussions at the 

negotiated rulemaking sessions, the 

Department explained the problems it 

has identified and solicited information 

on current institutional policies and 

recommendations from the non-Federal 

negotiators on ways to amend the 

current regulations that would curtail 

abuses while retaining flexibility for 

institutions. The Department used this 

information in developing the proposed 

regulations. 

In the following paragraphs, we 

describe the Department’s rationale for 

the specific substantive changes 

proposed to the satisfactory academic 

progress regulations. 

First we propose to expand the 

elements required for an institution’s 

satisfactory academic progress policy to 

include a description and specific 

treatment of transfer credits, a 

description of financial aid warning and 

probationary statuses (if applicable), a 

requirement to notify students of the 

results of a satisfactory progress review 

that impacts their eligibility for title IV, 

HEA program assistance, specific 

information required for appeals (if the 

institution permits appeals), and if an 

institution does not permit appeals, how 

students may re-establish eligibility for 

title IV, HEA program funds. Having a 

clear understanding of an institution’s 

satisfactory progress policy will help 


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students understand the institution’s 

academic expectations and will increase 

the likelihood of their academic success. 

We also propose to make changes to 

the regulatory language concerning the 

frequency with which an institution 

measures the satisfactory academic 

progress of its students. During 

negotiated rulemaking, several of the 

non-Federal negotiators stressed the 

importance of early intervention in 

helping students meet their educational 

goals. The Department agrees with this 

approach; however, because section 

484(c) of the HEA requires institutions 

to evaluate a student’s progress at the 

end of each academic year or the 

equivalent, the Department is limited in 

its ability to have institutions evaluate 

students’ progress more frequently (for 

example, at the end of each payment 

period). To encourage institutions to 

evaluate a student’s academic progress 

more frequently, the Department 

proposes regulatory language that would 

offer additional flexibility to institutions 

that measure satisfactory academic 

progress at the end of each payment 

period. Proposed § 668.34(c) would 

permit institutions that review student 

progress at the end of each payment 

period to place students on financial aid 

warning for one payment period, which 

would encourage institutions to provide 

additional support to students in a 

timely manner and would help students 

be successful. 

We would define the term financial 

aid warning (as well as the term 

financial aid probation) in proposed 

§ 668.34(b) to promote consistent 

application of these types of 

designations among institutions that use 

these designations in connection with 

their satisfactory academic progress 

reviews. The term financial aid warning 

would be defined as a status conferred 

automatically and without action by a 

student, while the term financial aid 

probation would be defined as a status 

conferred after a student has submitted 

an appeal that has been granted. The 

financial aid warning designation would 

be available only at an institution that 

measures satisfactory academic progress 

at the end of each payment period. 

Defining each status would help all 

institutions to clearly distinguish when 

a student may continue to receive title 

IV, HEA funds and under what 

conditions. By defining these terms to 

describe the eligibility of the student to 

receive future disbursements, we can 

help ensure that students are treated 

consistently and equitably regardless of 

the institution they attend. 

We also would add some regulatory 

language to ensure that institutional 

satisfactory academic progress policies 

specify the circumstances under which 

a student may appeal a determination 

that the student is not making 

satisfactory academic progress and is 

not eligible to receive title IV, HEA 

funds for the subsequent term. The 

proposed regulations would not require 

institutions to permit students to 

appeal, but they would specify that 

students may appeal only under certain 

circumstances. Several non-Federal 

negotiators asserted that their 

institutions had established the practice 

of granting appeals only to students who 

could explain how the circumstances 

that had caused their academic 

problems had changed. These 

negotiators explained that in their 

experience, if the root problem was not 

addressed successfully, the student was 

just setting himself or herself up for 

failure the next term. These non-Federal 

negotiators made a compelling argument 

for this approach; therefore, we have 

incorporated it in proposed 

§ 668.34(c)(8)(ii) (i.e., the student must 

submit information regarding why the 

student failed to make satisfactory 

academic progress and what has 

changed in the student’s situation that 

will allow the student to demonstrate 

satisfactory academic progress in the 

next evaluation). 

There was also discussion during the 

negotiated rulemaking sessions 

regarding what aspect of failure to meet 

satisfactory academic progress standards 

a student could appeal. The non-Federal 

negotiators generally agreed that failure 

to meet both the qualitative and 

quantitative standards may be appealed 

under current regulations, and that this 

should be true under the proposed 

regulations as well. The Department 

agrees. There was also discussion about 

whether failure to meet the maximum 

timeframe has been subject to appeal in 

the past, and whether it would be 

permitted under the proposed 

regulations. Under the current 

regulations, a student can appeal his or 

her failure to complete his program in 

the maximum timeframe. The 

Department believes a student should 

continue to be able to appeal a 

determination that the student has 

failed or will fail to meet the maximum 

timeframe requirements. We note that 

the proposed regulations provide 

flexibility to institutions to help address 

the needs of a student who is likely to 

exceed the maximum timeframe. An 

institution could work with the student 

to develop an academic plan that would 

require the student to meet the 

institution’s graduation requirements by 

a specific point in time. 

Some non-Federal negotiators asked 

whether the proposed regulations would 

permit institutions to have satisfactory 

academic policies that provide for 

academic amnesty. One of the examples 

given was of an individual who had an 

unsuccessful academic career 10 years 

ago and now wants to reenroll. The 

Department’s position is that in such a 

situation, it would be appropriate for 

the institution to require the individual 

to submit an appeal that explains the 

change in circumstances from when the 

student failed to make satisfactory 

academic progress 10 years ago. Under 

proposed § 668.34(d), an institution’s 

satisfactory academic progress policy 

could provide for such students to 

submit an appeal and develop an 

academic plan with the institution that 

would specify milestones the student 

would be expected to meet. As in other 

situations where a student has had 

academic difficulty and been placed on 

financial aid probation, the institution 

would have the option of placing certain 

restrictions on the student, such as 

limiting the number of hours taken or 

specifying a certain sequence of courses. 

We propose to require institutions 

that do not permit students to appeal a 

determination that they are not making 

satisfactory academic progress to inform 

students how they may re-establish 

eligibility. This regulatory provision 

would be consistent with the language 

in section 484(c)(2) of the HEA, which 

provides that a student who has failed 

to maintain satisfactory progress and, 

subsequent to that failure, has academic 

standing consistent with the 

requirements for graduation, as 

determined by the institution, may 

again be determined eligible for 

assistance under title IV, HEA programs. 

Throughout the discussions during 

the negotiated rulemaking sessions, 

non-Federal negotiators raised questions 

about whether the statutory requirement 

that an institute review a student’s 

academic progress at the end of each 

academic year or its equivalent is tied 

to the student’s academic year, the 

award year, the calendar year, or the 

institution’s defined academic year. It 

became apparent that most institutions 

that review student progress annually, 

review all students at a specific point in 

time, such as at the end of the spring 

term or spring payment period. The 

Department agrees that this is an 

appropriate and reasonable institutional 

policy for an institution that reviews 

academic progress annually. 

Finally, there was some discussion 

during the negotiated rulemaking 

sessions about whether a student’s work 

completed during a summer term is 

subject to evaluation. The Department’s 

position is that any evaluations of 

satisfactory academic progress, 


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Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules 34823 

regardless of the frequency with which 

they are conducted, must include all 

work completed by the student since the 

last review. The Department welcomes 

comments as to the clarity of the 

proposed language in this regard. 

Evaluating the Validity of High School 

Diplomas (§ 668.16(p)) 

Standards of Administrative Capability 

(§ 668.16(p)) 

Statute: None. 

Current Regulations: The current 

regulations do not define the term ‘‘high 

school diploma’’ or otherwise include 

provisions regarding the evaluation of 

the validity of a student’s high school 

diploma. While the term recognized 

equivalent of a high school diploma is 

defined in 34 CFR 600.2 (Definitions), 

the term ‘‘high school diploma’’ is not 

defined anywhere in the HEA or its 

implementing regulations. The current 

regulations do, however, refer to high 

school diplomas in the context of 

determining institutional eligibility as 

well as student eligibility for the title IV, 

HEA programs. 

First, 34 CFR 600.4(a)(2) (Institutions 

of higher education) requires an 

institution of higher education 

participating in the Federal student aid 

programs to admit as regular students 

only individuals who have obtained a 

high school diploma or its recognized 

equivalent, or who are beyond the age 

of compulsory school attendance in the 

State in which the institution is located. 

In order to be eligible to receive title 

IV, HEA aid, current § 668.32(e) 

(Student eligibility) requires a student to 

have a high school diploma or its 

recognized equivalent, have completed 

secondary school in a home school 

setting, or pass an independently 

administered examination approved by 

the Secretary. 

Proposed Regulations: Under 

proposed § 668.16(p), an institution 

would be required to develop and 

follow procedures to evaluate the 

validity of a student’s high school 

completion if the institution or the 

Secretary has reason to believe that the 

high school diploma is not valid or was 

not obtained from an entity that 

provides secondary school education. 

Reasons: We propose adding 

paragraph (p) to § 668.16 to provide that 

it is the institution’s responsibility to 

evaluate the validity of the diploma if 

either the institution or the Secretary 

believes that a closer examination of the 

diploma is warranted. This proposed 

change is designed to ensure that 

students who report having high school 

diplomas and obtain title IV, HEA aid in 

fact have valid high school diplomas. 

The language reflected in this proposed 

provision is also intended to address the 

Government Accountability Office 

recommendation raised in its August 17, 

2009 report that the Secretary should 

provide institutions of higher education 

with information and guidance on 

determining the validity of high school 

diplomas for use in gaining access to 

Federal student aid. 

During the negotiated rulemaking 

sessions, we initially proposed draft 

regulatory language that would have 

required institutions to evaluate the 

credentials of secondary schools for 

purposes of determining whether high 

school diplomas issued from the schools 

were valid. As part of this evaluation, 

institutions would have been required 

to maintain three listings of secondary 

schools (schools that are acceptable, 

schools that are unacceptable, and 

schools that require further evaluation) 

based on regulatory criteria for 

determining the acceptability of their 

credential for title IV, HEA program 

purposes. 

Many non-Federal negotiators 

expressed concern over this proposed 

draft regulatory language. Several nonFederal negotiators stated that K–12 

issues, including defining high school 

diploma, should be handled at the State 

level. Some non-Federal negotiators also 

objected to requiring institutions to 

research the legitimacy of the high 

school diploma a student presents and 

to maintain lists of secondary schools 

based on this research. They argued that 

these activities would be unduly 

burdensome. Instead, many non-Federal 

negotiators argued that the Department 

should assume responsibility for 

maintaining a centralized list of 

secondary schools that institutions 

could use to determine whether a 

student’s high school diploma was 

valid. 

Based on concerns raised by the nonFederal negotiators, the Department 

agreed to establish and maintain a list 

of secondary schools. We believe that 

such a solution moves us appropriately 

toward our goal of uncovering 

questionable high school diplomas, 

while imposing a minimal burden on 

institutions. 

In furtherance of this approach, the 

Department has begun the process of 

adding two questions to the FAFSA for 

the 2011–2012 award year: 

(1) What is the name of the secondary 

school or entity that provided the 

student’s secondary school program of 

study? 

(2) What is the State that awarded the 

student’s high school diploma? 

The Department intends to use the 

information it collects from students in 

response to these questions to help 

identify whether each student has a 

valid high school diploma. If, in 

response to these questions on the 

FAFSA, a student lists a secondary 

school or entity that does not match the 

list of secondary schools maintained by 

the Department, or if the student does 

not provide the name of the secondary 

school or entity or the State that issued 

the diploma, the Department may select 

the student’s FAFSA for further review 

by the institution to determine if the 

student has a valid high school diploma 

before the student can receive any title 

IV, HEA aid. Therefore, in cases where 

the student is selected for review 

because the Secretary questions the 

validity of his or her high school 

diploma, institutions are expected to 

determine the validity of the high 

school diploma. Under proposed 

§ 668.16(p), institutions also would be 

responsible for determining the validity 

of a high school diploma if the 

institution has reason to believe that the 

diploma is invalid or was not obtained 

from an entity that provides secondary 

school education. To determine the 

validity of a student’s high school 

diploma, an institution would need to 

follow the procedures it develops to 

evaluate the validity of diplomas. These 

procedures could include, for example, 

obtaining a copy of the student’s 

diploma. 

We intend to provide more specific 

guidance to institutions on developing 

and following procedures for evaluating 

the validity of high school diplomas 

through the Federal Student Aid 

Handbook or through other means. This 

guidance will address such issues as 

what procedures an institution might 

use to determine the validity of a high 

school diploma. 

A non-Federal negotiator expressed 

concern that the proposed regulations 

do not go far enough to address fraud 

committed at an institution. This 

negotiator suggested that the proposed 

regulations should be further modified 

to indicate that officials at an institution 

should be aware and held accountable 

for fraudulent activities committed at 

the institution. We did not accept this 

suggestion because the Department has 

other avenues to address fraudulent 

activities. We noted that the Department 

has successfully litigated cases where 

institutions are held responsible for 

regulatory violations of its employees. 

We were able to reach tentative 

agreement on this issue. 


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Return of Title IV, HEA Program Funds 

(§§ 668.22(a), 668.22(b), and 668.22(f)) 

Treatment of Title IV, HEA Program 

Funds When a Student Withdraws From 

Term-Based Programs With Modules or 

Compressed Courses (§ 668.22(a) and (f)) 

Statute: None. 

Current Regulations: In accordance 

with § 668.22, when a recipient of title 

IV, HEA aid withdraws from an 

institution, the institution must 

determine the amount of title IV, HEA 

aid that the student earned for the 

period the student attended. For termbased programs, a student is paid aid for 

each term. The regulations address the 

institution’s and the student’s 

responsibilities when a student does not 

finish the term (i.e., withdraws from all 

courses in the term) and specifies how 

to calculate how much aid the student 

earned for attending part of the term 

prior to withdrawing. The regulations 

do not, however, specifically address 

the treatment of term-based programs, in 

which courses are less than the length 

of the term, under the return of title IV 

funds calculation. In Dear Colleague 

Letter GEN–00–24, published in 

December 2000, the Department 

established the policy that a student 

who completes only one module or 

compressed course, within a term in 

which he or she is expected to continue 

attendance in additional coursework, is 

not considered to have withdrawn 

under the return calculation. 

Proposed Regulations: The proposed 

changes to § 668.22(a)(2) would clarify 

when a student is considered to have 

withdrawn from a payment period or 

period of enrollment. In the case of a 

program that is measured in credit 

hours, the student would be considered 

to have withdrawn if he or she does not 

complete all the days in the payment 

period or period of enrollment that the 

student was scheduled to complete 

prior to withdrawing. In the case of a 

program that is measured in clock 

hours, the student would be considered 

to have withdrawn if he or she does not 

complete all of the clock hours in the 

payment period or period of enrollment 

that the student was scheduled to 

complete prior to withdrawing. 

The proposed change to 

§ 668.22(f)(2)(i) would clarify that, for 

credit hour programs, in calculating the 

percentage of the payment period or 

period of enrollment completed, it is 

necessary to take into account the total 

number of calendar days that the 

student was scheduled to complete 

prior to withdrawing without regard to 

any course completed by the student 

that is less than the length of the term. 

These proposed regulations would 

affect all programs with courses that are 

less than the length of a term, including, 

for example, a semester-based program 

that has a summer nonstandard term 

with two consecutive six-week sessions 

within the term. 

Reasons: The Department proposes 

these changes to ensure more equitable 

treatment between students who 

withdraw from programs that are 

measured in credit hours, regardless of 

whether those programs span the full 

length of the term, or are programs with 

modules or compressed courses. 

Under the guidance provided in Dear 

Colleague Letter GEN–00–24, we have 

equated completing one compressed 

course or module with completing one 

course taken over the span of the term. 

Under this guidance, a student who was 

scheduled to take several modules or 

compressed courses in a term but 

dropped out after completing only one 

course (for example, a 5-week course in 

a 15-week term) was not viewed as 

having withdrawn from the term. 

Accordingly, while we required an 

institution to recalculate the student’s 

Federal Pell Grant payment as a result 

of any reduction in enrollment status 

under § 690.80(b)(2)(ii) when the 

student did not begin attendance in 

subsequent classes in the term, we did 

not require the school to perform a 

return calculation under § 668.22. 

Based on this guidance, a student who 

completed only a one- or two-week 

course in a 15-week term and then 

ceased attendance for the term would 

NOT be considered to have withdrawn 

from the term under the return of title 

IV requirements. The institution or 

student or both would keep aid 

intended for a 15-week period of time 

when the student only attended the 

term for as little as one week. 

For a number of reasons, we have 

reconsidered our prior guidance. First, 

this change would provide a more 

equitable treatment of students who are 

attending for comparable periods of 

time during a semester because a 

student’s aid is based on, and intended 

to cover, in whole or in part, not only 

tuition and fees for the term, but the 

student’s living expenses for the term. 

Title IV, HEA aid is provided for the 

entire term, and section 484B of the 

HEA provides that these same amounts 

are earned on a prorata basis for the first 

60 percent of the term. Second, a 

student who only attends one module or 

compressed course and then ceases to 

be enrolled without attending other 

modules or compressed courses he or 

she is scheduled to attend in the term 

is withdrawing before completing the 

term, and the portion of the term 

completed should be considered to 

determine how much of the title IV, 

HEA aid the student earned. Third, the 

prior guidance has resulted in abusive 

cases where institutions have created 

term-based programs with a very short 

initial module or course of as little as 

one week in length so that institutions 

can keep all of the title IV, HEA aid for 

students who withdraw after that point. 

During the negotiations, the nonFederal negotiators raised concerns 

about the proposed approach, believing 

that it would unfairly penalize students. 

The negotiators also raised concerns 

about the possibility of additional 

burden from a significant increase in the 

number of return to title IV funds 

calculations that an institution might 

have to perform, as well as about the 

inability of many institutions to track 

the number of students who are taking 

these types of compressed courses. 

The non-Federal negotiators 

presented three options to address their 

concerns by limiting the applicability of 

the proposed treatment based upon the 

relative amounts of the modules that 

students completed before withdrawing. 

The first option was to exclude students 

who completed the same enrollment 

status for which they were originally 

paid title IV, HEA aid. The second 

option suggested by the non-Federal 

negotiators was to exclude students who 

completed 50 percent of the credits that 

were awarded and 50 percent of the 

projected enrollment time. The third 

option was to only apply the proposed 

regulations to compressed coursework 

that was shorter than a ‘‘to-bedetermined’’ percent of the payment 

period; the non-Federal negotiators did 

not reach agreement as to what the 

appropriate percentage should be. 

We appreciate the concerns of the 

non-Federal negotiators, but we do not 

agree with the proposed alternatives. By 

recognizing that students who are taking 

module classes are expected to earn 

their title IV, HEA aid over time on a 

prorata basis, those students are subject 

to those requirements up to the point 

where they complete more than 60 

percent of the period. We continue to 

believe that the proposed changes are 

necessary to ensure the equitable 

application of these provisions for all 

students, regardless of the academic 

calendar of the programs that students 

are attending. 

Withdrawal Date for a Student Who 

Withdraws From an Institution That Is 

Required To Take Attendance 

(§ 668.22(b)) 

Statute: Section 484B(c)(1) of the HEA 

requires institutions and students to 

return unearned portions of title IV, 


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HEA grant or loan assistance (other than 

funds received under the Federal WorkStudy Program) when a student 

withdraws during a payment period or 

period of enrollment. The statute 

defines the term the ‘‘day the student 

withdrew’’ differently for institutions 

that are required to take attendance and 

for those not required to take 

attendance. For an institution that is 

required to take attendance, the ‘‘day the 

student withdrew’’ is determined by the 

institution from its attendance records. 

For an institution that is not required to 

take attendance, the ‘‘day the student 

withdrew’’ is the date that the 

institution determines that (1) the 

student began the withdrawal process 

prescribed by the institution; (2) the 

student otherwise provided official 

notification to the institution of the 

intent to withdraw; or (3) in the case of 

a student who does not begin the 

withdrawal process or otherwise notify 

the institution of the intent to withdraw, 

the date that is the midpoint of the 

payment period for which title IV, HEA 

program funds were disbursed or a later 

date documented by the institution. 

Current regulations: Section 

668.22(b)(3) provides the requirements 

for determining whether an institution 

is required to take attendance for an 

educational program. Under 

§ 668.22(b)(3), an institution is required 

to take attendance if an outside entity 

(such as the institution’s accrediting 

agency or a State agency) requires that 

the institution take attendance, as 

determined by the entity. In this case, 

the student’s withdrawal date is the last 

date of academic attendance, as 

determined by the institution from its 

attendance records. 

Proposed regulations: The proposed 

revisions to § 668.22(b)(3) would clarify 

the programs for which institutions are 

required to take attendance. An 

institution would be required to take 

attendance if an outside entity or the 

institution itself has a requirement that 

its instructors take attendance, or if the 

institution or an outside entity has a 

requirement that can only be met by 

taking attendance or a comparable 

process, including, but not limited to, 

requiring that students in a program 

demonstrate attendance in the classes of 

that program, or a portion of that 

program. In addition, the proposed 

regulations would remove the 

provisions in § 668.22(b)(3)(i) and (ii) 

that it is the entity that determines 

whether there is a requirement to take 

attendance since the new provision 

looks at the substance of the information 

being collected rather than the 

characterization of that information or 

process by the entity. 

Proposed § 668.22(b)(3)(ii) would 

clarify that if an institution is required 

to take attendance by an outside entity 

or requires its instructors to take 

attendance for only some of its student, 

then it must use its attendance records 

to determine a withdrawal date for those 

students. 

Proposed § 668.22(b)(3)(iii) would 

incorporate in the regulations current 

nonregulatory guidance regarding an 

institution that is required to take 

attendance, or requires that attendance 

be taken, for a limited period of time, 

such as for the first two weeks of 

courses or until a ‘‘census date.’’ These 

proposed provisions would specify that 

an institution must use its attendance 

records to determine a withdrawal date 

for a student who withdraws during that 

limited period. A student in attendance 

at the end of that limited period who 

subsequently stops attending during the 

payment period would be treated as a 

student for whom the institution was 

not required to take attendance. 

Proposed § 668.22(b)(3)(iv) would also 

incorporate in the regulations current 

nonregulatory guidance that if an 

institution is required to take 

attendance, or requires that attendance 

be taken, on a specified date to meet a 

census reporting requirement, the 

institution is not considered to take 

attendance. 

Reasons: These proposed changes 

would provide a more accurate 

determination of how much title IV, 

HEA aid a student earned who 

withdrew from an institution during a 

period when an instructor or other 

institution employee or procedure was 

required to monitor student attendance. 

The non-Federal negotiators had a 

number of concerns with respect to our 

proposals regarding whether an 

institution is required to take attendance 

and regarding the proposed requirement 

that these institutions must use their 

records in determining a student’s 

withdrawal date in a return to title IV 

calculation. The non-Federal negotiators 

pointed out that having to determine a 

more exact date of withdrawal, as 

opposed to assuming a 50 percent point, 

would be more burdensome. They also 

noted that attendance does not 

necessarily accurately reflect academic 

activity, and also stated that they cannot 

ensure that faculty members will keep 

accurate and up-to-date attendance 

records. While we can appreciate these 

concerns, we continue to believe that 

the best date available should be used 

to determine the amount of time that a 

student was in attendance. Using the 

best date available would support the 

fair treatment of students and avoid the 

potential for fraud and abuse of Federal 

funds. 

Proposed § 668.22(b)(3)(iii) would 

address instances where institutions 

take attendance for the period of time 

between the beginning of classes and 

the deadline for adding or dropping 

classes. Where a student withdraws and 

an institution’s records show that the 

student stopped attending during that 

period, that is the best information 

available for determining how much aid 

the student earned. This proposed 

regulation reflects current guidance 

about whether such institutions were 

viewed as being required to take 

attendance for this limited period, and 

this change in the text will help clarify 

that requirement. The non-Federal 

negotiators expressed concern that 

students who appear to have stopped 

attending during a census period may 

have subsequently attended other 

classes before withdrawing. Institutions 

have the option under § 668.22(c)(3) to 

use a student’s participation in an 

academically related activity to show 

that the student continued to be 

enrolled to a point where the institution 

was no longer required to take 

attendance. 

Proposed § 668.22(b)(3)(iv) also would 

incorporate in the regulations our 

current nonregulatory guidance that an 

institution is not required to use 

attendance records for return of title IV, 

HEA aid purposes if it is only required 

to take attendance on a specific date. We 

would welcome comments on whether 

this proposed regulation should be 

further clarified to specify that it applies 

only for one calendar date, or, for one 

class that meets during a small range of 

dates, for example, for one day for any 

class that met during a particular week, 

rather than ‘‘a specific date.’’ 

Verification and Updating of Student 

Aid Application Information (Subpart E 

of Part 668) 

Application Information 

Current subpart E of part 668 governs 

the verification and updating of the 

FAFSA information used to calculate an 

applicant’s Expected Family 

Contribution (EFC) for purposes of 

determining an applicant’s need for 

student financial assistance under title 

IV of the HEA. In general, financial need 

is defined as the difference between the 

applicant’s cost of attendance (COA) 

and EFC (see section 471 of the HEA). 

Based on the need analysis formula 

established in part F of the HEA, the 

EFC is the amount that an applicant and 

the applicant’s family can reasonably be 

expected to contribute toward the 


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34826 Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules 

applicant’s cost of attendance at an 

institution of higher education. 

These proposed regulations would 

implement statutory changes made to 

part F of the HEA by the HEOA and 

further align these regulations with 

enhancements that have been made to 

the Federal Student Aid (FSA) 

application processing system. In the 

following paragraphs we describe the 

substantive changes we propose to make 

to subpart E of part 668 and the reasons 

for the changes. These proposed 

changes include— 

• Revising the subpart E heading to 

reflect that an applicant and an 

institution have updating 

responsibilities in addition to 

completing specific verification 

responsibilities; 

• Removing, redefining, and adding 

definitions; 

• Codifying current policy that an 

institution must complete verification 

before exercising any authority under 

professional judgment; 

• Removing the 30 percent cap on the 

number of applicants selected by the 

Secretary that an institution must verify 

in order to move towards a more 

targeted verification system; 

• Restructuring the exclusions from 

verification section; 

• Requiring any changes to a 

student’s dependency status be updated 

throughout the award year, including 

changes resulting from a change in the 

student’s marital status; 

• Updating the section heading under 

§ 668.56 and replacing the five items 

that an institution currently is required 

to verify for all applicants selected for 

verification with a targeted verification 

process that is specific to each applicant 

selected as described in a Federal 

Register notice published annually by 

the Secretary; 

• Codifying the Department’s Internal 

Revenue Service (IRS) Data Retrieval 

Process, which allows an applicant to 

import income and other data from the 

IRS into an online FAFSA; 

• Updating the IRS deadline granted 

for extension filers; 

• Clarifying when an institution is 

required to reverify the adjusted gross 

income (AGI) and taxes paid by an 

applicant and his or her spouse or 

parents for individuals with an IRS tax 

filing extension; 

• Expanding the information a tax 

preparer must provide on the copy of 

the filer’s return that has been signed by 

the preparer; 

• Describing in an annual Federal 

Register notice other documentation 

that an applicant must provide for the 

information that is selected for 

verification; 

• Allowing interim disbursements 

when changes to an applicant’s FAFSA 

information would not change the 

amount the applicant would receive 

under title IV, HEA; 

• Requiring all corrections to be 

submitted to the Secretary for 

reprocessing; 

• Removing all allowable tolerances; 

• Applying the cash management 

procedures for proceeds received from a 

Subsidized Stafford Loan or Direct 

Subsidized Loan on behalf of an 

applicant; and 

• Describing the liability to an 

institution that disburses title IV, HEA 

aid to an applicant without receiving a 

corrected Student Aid Report (SAR) or 

Institutional Student Information 

Record (ISIR) within an established 

deadline. 

Tentative agreement was reached on 

these proposed regulations during the 

negotiated rulemaking. 

General (§ 668.51) 

Statute: Section 487(a)(5) of the HEA 

provides that an institution may 

participate in a title IV, HEA program if 

the institution enters into a written 

program participation agreement with 

the Secretary. A program participation 

agreement conditions the initial and 

continued participation of an eligible 

institution in any title IV, HEA program 

upon compliance with the provisions of 

part 668, the individual program 

regulations, and any additional 

conditions specified in the program 

participation agreement that the 

Secretary requires the institution to 

meet. 

Current Regulations: Current 

§ 668.51(a) describes the scope and 

purpose of subpart E of part 668. 

Current § 668.51(b) requires that if the 

Secretary or an institution requests 

documents or information from an 

applicant under this subpart, the 

applicant must provide the specified 

documents or information. Under 

current § 668.51(c), institutions 

participating in the Federal Stafford 

Loan Program that are not located in a 

State are exempted from the provisions 

of subpart E of part 668. 

Proposed Regulations: Proposed 

§ 668.51 would remain largely 

unchanged from current § 668.51. We 

propose to revise § 668.51(a) to refer to 

‘‘student financial assistance under the 

subsidized student financial assistance 

programs’’ rather than to ‘‘student 

financial assistance in connection with 

the calculation of their expected family 

contributions (EFC) for the Federal Pell 

Grant, ACG, National SMART Grant, 

campus-based, Federal Stafford Loan, 

Federal Direct Stafford/Ford Loan 

programs.’’ In addition, in paragraph (c) 

of proposed § 668.51, we would refer to 

‘‘participating institutions’’ rather than 

‘‘institutions participating in the Federal 

Stafford Loan Program.’’ 

Reasons: Throughout the proposed 

regulations, including in this proposed 

§ 668.51, we propose to remove all the 

program names and regulatory citations 

for the ACG and National SMART Grant 

programs because the authority to make 

grants under these programs will expire 

at the end of the 2010–2011 award year, 

before these proposed regulations 

become effective. In making this change, 

we also determined that it would be 

appropriate to refer to the title IV, HEA 

programs affected by this subpart more 

generally as ‘‘subsidized student 

financial assistance programs’’ and 

‘‘unsubsidized student financial 

assistance programs,’’ as appropriate. 

We would define these terms in 

proposed § 668.52. 

Definitions (§ 668.52) 

Statute: In 2008, the HEOA amended 

the definition of the term total income 

in section 480(a) of the HEA to provide 

that, when calculating total income, the 

Secretary may use income and other 

data from the second preceding tax year 

to carry out the FAFSA simplification 

efforts used for the estimation and 

determination of financial aid 

eligibility. This provision also allows 

the sharing of data between the IRS and 

the Secretary with the consent of the 

taxpayer as discussed later under 

proposed § 668.57. 

Current Regulations: Current § 668.52 

includes definitions of key terms used 

in this subpart including base year, 

edits, institutional student information 

record, and student aid application. 

Proposed Regulations: Proposed 

§ 668.52 would (1) remove the 

definitions of base year, edits, and 

student aid application; (2) revise the 

definition for institutional student 

information record (ISIR); and (3) add 

definitions for the terms Free 

Application for Federal Student Aid 

(FAFSA), specified year, Student Aid 

Report (SAR), subsidized student 

financial assistance programs, and 

unsubsidized student financial 

assistance programs. 

Reasons: We propose to delete the 

definitions of the terms base year, edits, 

and student aid application because 

these terms would no longer be used in 

these proposed regulations. 

We propose to define the term Free 

Application for Federal Student Aid 

(FAFSA) and to use this term ‘‘FAFSA 

information’’—rather than application— 

throughout subpart E of part 668 in 

order to clarify that the information we 


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seek to verify includes not only the 

information provided in the initial 

FAFSA form submitted by an applicant, 

but also any subsequent transactions 

sent to the Secretary for processing that 

originated from the information 

reported on the initial FAFSA (i.e., 

corrections). 

We propose to revise the definition of 

the term institutional student 

information record (ISIR) to make it 

consistent with the definition of ISIR in 

34 CFR 690.2(c) of the Federal Pell 

Grant Program regulations. By 

establishing this definition in this 

subpart, we would make the term 

generally applicable to all title IV, HEA 

programs that are subject to the 

requirements in subpart E of part 668. 

We propose to define the term 

specified year to assist in the 

implementation of section 480(a) of the 

HEA, which gives the Secretary the 

option of using income and other data 

from the second preceding tax year to 

calculate the statutorily defined EFC 

that determines the applicant’s 

eligibility for, and amount of, Federal 

aid. While the Department does not plan 

to exercise this option for the 2011– 

2012 award year, we believe it is 

appropriate to modify the regulations at 

this time to allow for this flexibility in 

the future. 

Under the current process for 

completing the FAFSA, an applicant, 

the parents of a dependent applicant, or 

the spouse of an applicant are required 

to use base year income and tax 

information to respond to questions 

used to calculate the statutorily defined 

EFC that determines the applicant’s 

eligibility for, and amount of, Federal 

aid i.e., grants, loans and work-study 

assistance. Under the new flexibility 

offered to the Secretary in section 480(a) 

of the HEA, applicants could use 

income and other data from the second 

preceding tax year—rather than only the 

base year. For example, an applicant 

completing the FAFSA for the 2013– 

2014 award year could use income and 

other related data pertaining to January 

1, 2011–December 31, 2011 (the second 

preceding tax year) in addition to the 

data the Secretary currently collects 

from the base year (January 1, 2012– 

December 31, 2012). 

Allowing the use of data from an 

earlier tax year would help with the 

significant calendar difference between 

when an applicant may file a FAFSA 

and when the data is available from the 

filed income tax return. This is because 

the FAFSA application process begins 

on January 1, and it is unlikely that tax 

return information would be available 

for the majority of financial aid 

applicants who complete their FAFSA 

in the weeks, and in some cases months, 

before the general tax-filing deadline of 

April 15. The proposed definition of 

specified year would allow the 

Department to use a single term that, 

depending on the context in which it is 

used, means (1) the base year (i.e., the 

calendar year preceding the first 

calendar year of an award year) or (2) 

the year before the base year. 

We propose to add a definition of the 

term Student Aid Report (SAR) and 

simplify the repeated references to it in 

these proposed regulations. 

We propose to add definitions for the 

terms subsidized student financial 

assistance programs and unsubsidized 

student financial assistance programs to 

group similar title IV, HEA programs 

together (i.e., subsidized programs 

versus unsubsidized programs). By 

doing so, we would simplify the 

repeated references to the numerous 

affected programs in these proposed 

regulations. 

Policies and Procedures—Professional 

Judgment (§ 668.53(c)) 

Statute: Section 479A of the HEA 

specifically gives the financial aid 

administrator the authority to use 

professional judgment to make 

adjustments to the cost of attendance or 

to the values of the items used in 

calculating the EFC to reflect a student’s 

special circumstances. 

Current Regulations: Current § 668.53 

requires institutions to establish and use 

written policies and procedures for 

verifying information contained in the 

FAFSA. Current § 668.53(a)(1) through 

(5) describes the items that must be 

included in the policies and procedures. 

Current § 668.53(b) requires that an 

institution’s procedures provide that the 

institution furnish to each application 

selected for verification an explanation 

of the documentation needed to satisfy 

the verification requirements and the 

applicant’s responsibilities with respect 

to the verification of applicant 

information. 

Proposed Regulations: Except for 

minor technical and conforming 

changes, proposed § 668.53(a) and (b) 

would remain largely unchanged from 

current § 668.53(a) and (b). We propose 

to add paragraph (c) to this section. 

Under proposed § 668.53(c), an 

institution’s written policies and 

procedures for verifying information 

contained in a FAFSA must provide that 

verification for an application selected 

for verification is completed prior to the 

institution exercising professional 

judgment authority as permitted under 

section 479A of the HEA to make 

changes to the applicant’s COA or to the 

value of the data items used to calculate 

the EFC. 

Reasons: Proposed § 668.53(c) would 

codify as a requirement the 

Department’s longstanding policy that 

an institution must complete 

verification before exercising 

professional judgment under section 

479A of the HEA. 

Selection of FAFSA Information for 

Verification (§ 668.54) 

Statute: None. 

Current Regulations: Current 

§ 668.54(a) provides that an institution 

is not required to verify the information 

from more than 30 percent of its 

applicants for title IV, HEA assistance in 

any award year. Under current 

§ 668.54(a)(2)(ii), an institution may 

only include those applicants selected 

for verification by the Secretary in its 

calculation of the 30 percent total 

number of applicants. Under current 

§ 668.54(a)(3), if an institution has 

reason to believe that any information 

on an application used to calculate an 

EFC is inaccurate, it must require the 

applicant to verify the information that 

it has reason to believe is inaccurate. 

Except for information already 

verified under a previous application, if 

an applicant is selected for verification, 

each additional application he or she 

submits for the award year must also be 

verified (see current § 668.54(a)(4)). 

Current § 668.54(a)(5) provides that an 

institution or the Secretary may require 

an applicant to verify any data elements 

that the institution or the Secretary 

specifies. 

Under current § 668.54(b)(1), the 

Secretary excludes an applicant who 

dies during the award year from 

verification. 

In addition, under current 

§ 668.54(b)(2), the Secretary excludes 

the following categories of applicants 

from verification if the institution has 

no reason to believe that the information 

reported by the applicant is incorrect: 

• An applicant or his or her parents 

who are legal residents of the 

Commonwealth of the Northern Mariana 

Islands, Guam, or American Samoa; or 

a citizen of the Republic of the Marshall 

Islands, the Federated States of 

Micronesia, or the Republic of Palau 

(current § 668.54(b)(2)(i)). 

• An applicant who is incarcerated 

(current § 668.54(b)(2)(ii)). 

• A dependent applicant whose 

parents are residing in a country other 

than the United States and cannot be 

contacted by normal means of 

communication (current 

§ 668.54(b)(2)(iii)). 

• An applicant who is a recent 

immigrant (current § 668.54(b)(2)(iv)). 


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• An applicant whose parents’ 

address is unknown and cannot be 

obtained by the applicant (current 

§ 668.54(b)(2)(v)). 

• A dependent applicant, both of 

whose parents are deceased or are 

physically or mentally incapacitated 

(current § 668.54(b)(2)(vi)). 

• An applicant who does not receive 

assistance for reasons other than his or 

her failure to verify the information on 

the application (current 

§ 668.54(b)(2)(vii)). 

• An applicant who previously 

completed verification at another 

institution (current § 668.54(b)(2)(viii)). 

Finally, under current § 668.54(b)(3), 

the Secretary excludes the following 

categories of applicants from 

verification: 

• An applicant whose spouse is 

deceased (current § 668.54(b)(3)(i)). 

• An applicant whose spouse is 

mentally or physically incapacitated 

(current § 668.54(b)(3)(ii)). 

• An applicant whose spouse is 

residing in a country other than the 

United States and cannot be contacted 

by normal means of communication 

(current § 668.54(b)(3)(iii)). 

• An applicant whose spouse cannot 

be located because his or her address is 

unknown and cannot be obtained by the 

applicant (current § 668.54(b)(3)(iv)). 

Proposed Regulations: The 

Department proposes to require an 

institution to verify an applicant’s 

FAFSA information for all applicants 

that are selected for verification by the 

Secretary (see proposed § 668.54(a)). 

Under proposed § 668.56(a), the 

Secretary would publish an annual 

Federal Register notice that would 

describe the information that an 

institution and an applicant may be 

required to verify for those applicants 

selected for verification. In proposed 

§ 668.54(a)(2), we would retain the 

provisions requiring an institution to 

verify the accuracy of FAFSA 

information it has reason to believe is 

inaccurate. In proposed § 668.54(a)(3), 

we would continue to provide 

institutions with the flexibility to verify 

any FAFSA information that an 

institution specifies. 

Under § 668.54(b), we would 

restructure the exclusions from 

verification to make clear the provisions 

that are applicable to all applicants, and 

those that are specific to dependent or 

independent applicants. We also would 

remove the following categories of 

applicants from the list of verification 

exclusions: 

• An applicant or his or her parents 

who are legal residents of the 

Commonwealth of the Northern Mariana 

Islands, Guam, or American Samoa; or 

a citizen of the Republic of the Marshall 

Islands, the Federated States of 

Micronesia, or the Republic of Palau. 

• An applicant who is incarcerated. 

• An applicant who is a recent 

immigrant. 

• A dependent applicant, both of 

whose parents are deceased or are 

physically incapacitated. 

• An independent applicant’s spouse 

who is physically incapacitated. 

Proposed § 668.54(b)(2) and (b)(3) 

would list the circumstances under 

which the parents’ or spouse’s 

information is not subject to verification 

unless the institution has reason to 

believe the parents’ or spouse’s 

information reported by the applicant is 

incorrect. 

Reasons: The proposed changes to 

§ 668.54 are needed to align this section 

of the regulations with modifications 

that the Department proposes to make to 

the verification selection process. 

Specifically, the Department proposes to 

remove the 30 percent limitation of the 

total number of applicants selected for 

verification and target the selection 

criteria based on the most error prone 

data items that are specific to each 

applicant selected. 

Based on years of data analysis 

compiled from random samples of 

FAFSA submissions and the IRS 

Statistical Study and Quality Assurance 

Program analysis, we have made 

improvements to the verification 

process that will better identify and 

select those applicants whose FAFSA 

information is most error prone. For this 

reason, we propose to remove the 30 

percent limitation on the number of 

applicants an institution is required to 

verify. 

During negotiated rulemaking, some 

non-Federal negotiators expressed 

concern that the removal of the 30 

percent limitation on the number of 

applicants an institution is required to 

verify would significantly increase an 

institution’s workload. Other nonFederal negotiators stated that many 

institutions currently verify 100 percent 

of those applicants the Department 

selects for verification. 

Although some institutions may 

experience an increase in the number of 

applicants that are selected for 

verification under the new process, 

institutions would no longer be required 

to verify all five items for each applicant 

selected. Instead the information that an 

institution would be required to verify 

would be specific to each applicant 

selected (see proposed § 668.56(b)). For 

example, one applicant may be required 

to verify the five items required under 

the current regulations (because the 

Secretary includes them in the Federal 

Register notice published under 

§ 668.56(a) and specifies that those 

items must be verified for that one 

applicant) while another applicant may 

only be required to verify AGI and 

household size (because the Secretary 

includes these two items in the Federal 

Register notice published under 

§ 668.56(a) and specifies that these are 

the only items that must be verified for 

this applicant). 

Moreover, we expect information 

obtained through the IRS Data Retrieval 

process to significantly reduce 

institutional burden as discussed later 

under proposed § 668.57. For example, 

if one of the items selected for 

verification for an applicant includes 

data that the applicant imported from 

the IRS, we likely would not require the 

institution to verify that item. 

We are proposing to restructure 

paragraph (b) to clarify under what 

circumstances an institution is not 

required to verify the FAFSA 

information of: (1) the applicant; (2) the 

parents of a dependent applicant; or (3) 

the spouse of an independent applicant. 

In instances where FAFSA information 

from the parents or a spouse is not 

required, we would still expect an 

institution to verify any information that 

would be applicable to the applicant. 

We are also proposing to modify a 

number of exclusions that are included 

in the current regulations. Previously, if 

the parent of a dependent student, or 

the spouse of an independent student, 

could not be located because their 

address was unknown, verification was 

not required. Given the shift to routinely 

contacting people using e-mail and cell 

phone numbers, lack of a physical 

mailing address no longer precludes 

contact and communication. We believe 

it would be more appropriate to provide 

an exclusion from verification only in 

circumstances where the parents or 

spouse cannot be located because their 

contact information is unknown. We are 

also proposing to eliminate the 

provision that a dependent student need 

not provide parental information if both 

parents are deceased or are physically 

incapacitated. If both parents are 

deceased, the student would be an 

independent student, not a dependent 

student. Parents who are physically 

incapacitated, but not mentally 

incapacitated, should be able to provide 

the documentation required for 

verification under most circumstances. 

Updating Information—Changes in 

Dependency Status (§ 668.55(c)) 

Statute: None. 

Current Regulations: Current § 668.55 

describes the information in an 

application that applicants must update 


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when there is a change and when and 

how these changes must be made. 

Under current § 668.55(a)(2), an 

institution need not require an applicant 

to verify information in the applicant’s 

FAFSA if the applicant previously 

submitted a FAFSA for that award year, 

the applicant updated the FAFSA 

information, and no change in the 

information has taken place since the 

last update. 

Current § 668.55(a)(3) requires 

applicants to update their dependency 

status on the FAFSA at any time the 

status changes throughout the award 

year, except when the change in 

dependency status results from a change 

in the student’s marital status. 

Under current § 668.55(b), updating 

the family household size and number 

of family members enrolled in college is 

required for students selected for 

verification and is updated as of the 

time verification is completed. 

Current § 668.55(c) describes an 

institution’s responsibilities when an 

applicant has received Federal financial 

assistance for an award year, the 

applicant submits another application 

for Federal financial assistance, and the 

applicant is required to update 

household size or the number of 

household family members attending 

postsecondary educational institutions 

on the subsequent application. 

Current § 668.55(d) provides that if an 

applicant’s dependency status changes 

after the applicant applies to have his or 

her EFC calculated for an award year, 

the applicant must file a new 

application for that award year 

reflecting the applicant’s new 

dependency status regardless of whether 

the applicant is selected for verification. 

Proposed Regulations: We propose to 

revise § 668.55 to require an applicant to 

update all changes in dependency status 

that occur throughout the award year, 

including changes resulting from a 

change in the applicant’s marital status, 

regardless of whether the applicant is 

selected for verification. With this 

proposed change, which would be 

reflected in proposed paragraph (c) of 

§ 668.55, we would make a number of 

other changes to this section to remove 

language that implements the marital 

status exception in the current 

regulations, including removing current 

§ 668.55(a)(3) and revising § 668.55(b). 

We would remove current § 668.55(c). 

Reasons: We propose to simplify 

§ 668.55 and to make the updating 

requirement for dependency status 

consistent with the other changes we 

propose to make to § 668.58(a)(3)(i) and 

§ 668.59(a). We believe these changes 

would help ensure that the amount of 

assistance received by an applicant is 

based on the best available information. 

During negotiated rulemaking, there 

was much discussion about identifying 

in the regulations a specific time by 

which an institution would need to 

require an applicant to update his or her 

family household size, number of family 

members enrolled in college, and 

dependency status in the applicant’s 

FAFSA. Non-Federal negotiators wanted 

the updating requirements to be date 

specific because of concerns that 

institutions would be continually 

revising an applicant’s aid package 

throughout the award year. To address 

these concerns, we considered a number 

of alternatives: 

• Allow updating up to the beginning 

of the award year (i.e., July 1, 2011 for 

the 2011–2012 award year). We have not 

adopted this alternative in the proposed 

regulations because this date would not 

take into account those applicants who 

apply later in the processing year. 

• Require updating by the later of July 

1 or the date of verification, after which 

updating would become optional. We 

have not adopted this alternative in the 

proposed regulations because it would 

not allow a student who transfers to an 

institution after this deadline to update 

his or her application information to 

reflect his or her current status unless 

the institution selects the student for 

verification. 

• Allow updating until the end of the 

first payment period. We have not 

adopted this alternative in the proposed 

regulations because it would result in 

inconsistent treatment between students 

at institutions that have open 

enrollment with multiple start dates and 

students at institutions whose 

enrollment is based on a traditional 

calendar. 

Other time periods considered 

included allowing updating half way 

through the award year, throughout the 

award year, up to the first day of an 

applicant’s enrollment at an institution, 

through an institution’s academic year, 

or by the end of the calendar year 

similar to the precedent set by the IRS 

for changes to income tax data. After 

considerable discussion, we determined 

that no single date would be ideal for all 

situations. 

Therefore, we propose no substantive 

change to the current requirement, 

reflected in § 668.55(b), that if an 

applicant is selected for verification, the 

applicant must update information as to 

the family household size and the 

number of family members enrolled in 

postsecondary institutions at the time of 

verification. 

We propose to eliminate the marital 

status exception and to require all 

applicants to update changes to 

dependency status that occur 

throughout the award year regardless of 

whether the applicant was selected for 

verification to provide more accurate 

information for determining an 

applicant’s need for assistance. It is 

important to note that the applicant is 

responsible for notifying an institution 

when there is a change that affects his 

or her dependency status and not the 

responsibility of the institution to 

initiate the updating of this data item. 

However, an institution must resolve 

discrepancies in the information that 

the institution receives from different 

sources with respect to a student’s 

application for financial aid under the 

title IV, HEA programs in accordance 

with § 668.16(f). 

Finally, we propose to delete current 

§ 668.55(c) to remove an obsolete 

process that required applicants to 

complete a correction application if his 

or her dependency status changes. 

Information To Be Verified (§ 668.56) 

Statute: None. 

Current Regulations: Under current 

§ 668.56 an institution must require an 

applicant selected for verification to 

submit acceptable documentation to 

verify or update the following items, if 

applicable, used to determine the 

applicant’s EFC: 

• Adjusted gross income (AGI); 

• U.S. income tax paid; 

• Number of family members in the 

household; 

• Number of family members in the 

household enrolled at least half-time in 

postsecondary educational institutions; 

and 

• Untaxed income and benefits. 

Current § 668.56(b) through (e) 

provides a number of exclusions from 

verification of the number of family 

members in the household, the number 

of family members enrolled in college 

and untaxed income and benefits under 

certain circumstances. 

Proposed Regulations: The 

Department proposes to amend the 

section heading for § 668.56 by 

replacing the term ‘‘Items’’ with the term 

‘‘Information’’. 

We also propose to eliminate from the 

regulations the five items that an 

institution currently is required to verify 

for all applicants selected for 

verification. Instead, pursuant to 

proposed § 668.56(a), for each award 

year, the Secretary would specify in a 

Federal Register notice the FAFSA 

information and documentation that an 

institution and an applicant may be 

required to verify. The Department 

would then specify on an individual 

student’s SAR and ISIR what 


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information must be verified for that 

applicant. 

We would also remove current 

§ 668.56(c) through (e). 

Reasons: Due to several statutory 

changes that remove untaxed income 

and benefits items from the FAFSA and 

need analysis formula and with the 

importing of data as part of the IRS Data 

Retrieval process, we believe it is no 

longer necessary to require all selected 

applicants to verify AGI, U.S. taxes 

paid, the number of family members in 

the household size, number of family 

members enrolled in college, and 

untaxed income and benefits. Therefore, 

in § 668.56, we propose to remove the 

list of items to be verified as well as the 

exclusions from verification contained 

in current § 668.56(b) through (e). 

Instead, we propose to target 

verification based on the most error 

prone data items that are specific to 

each applicant selected. 

During negotiated rulemaking, the 

non-Federal negotiators supported this 

targeted approach of selecting specific 

items for verification. In particular, they 

stated that including dependency status 

as a verifiable item would help alleviate 

the difficulties institutions experience 

with inappropriate designations of 

dependency status. 

In implementing this proposed 

section, we expect that the Federal 

Register notice may, at least initially, 

include the five items included for 

verification under current § 668.56 as 

well as other items the Department 

deems necessary to ensure the accuracy 

of the data being reported. With this 

approach, not all applicants selected for 

verification would have to verify all the 

information identified in the notice. For 

each applicant, the Department would 

identify on an applicant’s SAR or ISIR 

the specific FAFSA information that 

requires further review applicable to 

that applicant. 

We intend to publish the Federal 

Register notice described in proposed 

§ 668.56 as early as possible to give 

institutions sufficient time to make any 

system changes that may be necessary to 

verify the information the Secretary may 

require under the notice. (Note that the 

notice referred to under proposed 

§ 668.56 is not the same notice referred 

to under proposed § 668.60(c)(1).) 

Acceptable Documentation 

(§ 668.57(a)(2), (a)(4)(ii)(A), (a)(5), (a)(7), 

and (d)) 

Statute: Section 484(q) of the HEA 

gives the Secretary authority, in 

cooperation with the Secretary of 

Treasury, to obtain from the IRS the 

AGI, Federal income taxes paid, filing 

status, and exemptions reported on the 

Federal income tax return by an 

applicant, or any other individual 

whose financial information is required 

on the FAFSA. Under this provision of 

the HEA, as a condition of a student 

receiving title IV, HEA assistance, the 

Secretary may require an applicant, the 

parents of a dependent applicant, or the 

spouse of an applicant to provide 

consent in order for the IRS to disclose 

the necessary information. 

Current Regulations: Current § 668.57 

specifies the documentation an 

institution must obtain from an 

applicant to verify an applicant’s 

household size, number of family 

members enrolled in college, AGI, U.S. 

income tax paid, and certain untaxed 

income and benefits. 

Current § 668.57(a) describes the 

documentation that an institution must 

require an applicant selected for 

verification to provide to verify the AGI, 

income earned from work, and U.S. 

income tax paid listed on the 

applicant’s FAFSA. 

Under current § 668.57(a)(2), if the 

applicant selected for verification does 

not have a copy of his or her tax return, 

an institution may require an applicant 

to submit a copy of an IRS form which 

lists tax account information. 

As alternate documentation to verify 

an applicant’s AGI, income earned from 

work or taxes paid, the applicant may 

provide the institution with a copy of 

IRS Form 4868 that was filed with the 

IRS for the base year requesting an 

extension to file income tax return, or a 

copy of the extension beyond the 

automatic four-month extension granted 

to the applicant by the IRS (see current 

§ 668.57(a)(4)(ii)(A)). Once the return is 

filed, the applicant must provide the 

institution with a copy of the tax return 

pursuant to current § 668.57(a)(5). When 

the institution receives a copy of the tax 

return that was filed, the institution 

could, but is not required to, re-verify 

the applicant’s AGI and taxes paid. 

Under current § 668.60, if the tax return 

was not collected, the institution and 

the student are liable for any funds 

disbursed. 

Under current § 668.57(a)(7), an 

institution may accept the tax preparer’s 

signature or stamp instead of the filer’s 

signature on the tax return. 

Current § 668.57(b) describes the 

documentation that an institution must 

require an applicant selected for 

verification to provide to verify the 

number of family household members 

that is listed on the applicant’s FAFSA. 

Current § 668.57(c) describes the 

documentation that an institution must 

require an applicant selected for 

verification to provide to verify the 

number of family household members 

enrolled in postsecondary institutions 

that is listed on the applicant’s FAFSA. 

Current § 668.57(d) describes the 

documentation that an institution must 

require an applicant selected for 

verification to provide to verify any 

untaxed income and benefits listed on 

the applicant’s FAFSA. 

Proposed Regulations: We propose to 

make a number of technical and 

conforming changes throughout 

§ 668.57. We also propose to make the 

following substantive changes: 

Proposed § 668.57(a)(2) would allow 

an institution to accept, in lieu of an 

income tax return or an IRS form that 

lists tax account information, the 

electronic importation of data obtained 

from the IRS into an applicant’s online 

FAFSA. 

We also propose to amend 

§ 668.57(a)(4)(ii)(A) to accurately reflect 

that, upon application, the IRS grants a 

six-month extension beyond the April 

15 deadline rather than the four-month 

extension currently stated in the 

regulations. 

Under proposed § 668.57(a)(5), an 

institution may require an applicant 

who has been granted an extension to 

file his or her income tax return to 

provide a copy of that tax return once 

it has been filed. If the institution 

requires the applicant to submit the tax 

return, it must reverify the AGI and 

taxes paid of the applicant and his or 

her spouse or parents when the 

institution receives the return. 

Proposed § 668.57(a)(7) would clarify 

that an applicant’s income tax return 

that is signed by the preparer or 

stamped with the preparer’s name and 

address must also include the preparer’s 

Social Security Number, Employer 

Identification Number or the Preparer 

Tax Identification Number. 

Proposed § 668.57(b) and (c) would 

remain substantively unchanged. 

We would delete current § 668.57(d) 

regarding acceptable documentation for 

untaxed income and benefits and 

replace it with new proposed 

§ 668.57(d). This new section would 

provide that if an applicant is selected 

to verify other information specified in 

an annual Federal Register notice, the 

applicant must provide the 

documentation specified for that 

information in the Federal Register 

notice. 

Reasons: Generally, our proposed 

changes to § 668.57 are intended to 

implement section 484(q) of the HEA, 

update and clarify the language to 

ensure that it accurately reflects the IRS 

documentation and processes to which 

it refers and is consistent with the other 

changes we propose to make to subpart 

E of part 668. 


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Our goal with the implementation of 

the IRS Data Retrieval Process in 

proposed § 668.57(a)(2) is to relieve 

burden on institutions by no longer 

requiring verification of the information 

that is imported from the IRS to 

populate a student’s online FAFSA or 

requiring institutions to collect the 

documentation for those items. For 

instance, an institution would no longer 

be required to verify an applicant’s and 

his or her family’s AGI and taxes paid 

or collect income tax returns for 

students who import that data from the 

IRS. 

Under current § 668.57(a)(5), an 

institution that requires an applicant 

who was granted an extension to file his 

or her income tax return to submit to the 

institution his or her completed return 

once it was filed, has the option of reverifying the AGI and taxes paid by the 

applicant and his or her spouse or 

parents when the institution receives 

the copy of the return. Under these 

proposed regulations, if an institution 

requires an applicant that is granted an 

extension to file his or her income tax 

return to submit a copy of the return 

that was filed, the institution must act 

on the return received by re-verifying 

the AGI and taxes paid by the applicant 

and his or her spouse or parents. 

During the negotiated rulemaking 

sessions, we initially proposed 

removing current § 668.57(a)(7), which 

allows a tax preparer to sign an 

applicant’s income tax return. Some 

non-Federal negotiators indicated that 

administrative burden would be 

reduced if an institution could continue 

to accept a tax preparer’s signature or 

stamp in lieu of the filer’s signature on 

the tax return. Based on concerns raised 

by the non-Federal negotiators, we 

agreed to retain this provision in the 

proposed regulations, but to clarify that 

an applicant’s income tax return must 

include the preparer’s Social Security 

Number, Employer Identification 

Number or the Preparer Tax 

Identification Number in addition to his 

or her signature or a stamp of the 

preparer’s name and address. 

Except for minor technical and 

conforming changes, proposed 

§ 668.57(b) and (c) would remain largely 

unchanged from current § 668.57(b) and 

(c). 

We would delete current § 668.57(d) 

regarding acceptable documentation for 

untaxed income and benefits because 

several statutory changes would 

eliminate any consideration of untaxed 

income and benefits from the need 

analysis formula to determine an 

applicant’s eligibility for assistance 

under the title IV, HEA programs. 

Instead, we would require an applicant 

selected to verify other information 

specified in an annual Federal Register 

notice to provide the documentation 

identified as acceptable in the Federal 

Register notice. We propose to add this 

paragraph to allow the Secretary the 

flexibility to identify in an annual 

Federal Register notice other 

documentation that can be used to 

verify FAFSA information. 

Interim Disbursements (§ 668.58(a)(3)) 

Statute: None. 

Current Regulations: Current § 668.58 

sets out the conditions under which an 

institution may, but is not required to, 

disburse title IV, HEA program funds to 

an applicant before the applicant 

completes verification. 

Under current § 668.58(a)(2)(ii)(A), if 

an institution does not have reason to 

believe that an applicant’s FAFSA 

information is inaccurate, it may choose 

to disburse only one disbursement of 

title IV, HEA program funds to the 

applicant before he or she completes 

verification. 

Proposed Regulations: Proposed 

§ 668.58 would largely reflect the 

substance of current § 668.58 except that 

we would make a number of technical 

and conforming changes throughout the 

section and we would add a new 

paragraph (a)(3). Under proposed 

§ 668.58(a)(3), an institution would be 

allowed to disburse title IV, HEA 

program funds after verification is 

completed but before receiving the 

corrected SAR or ISIR if the changes to 

an applicant’s FAFSA information 

would not change the amount the 

applicant would receive under a title IV, 

HEA program. If an institution chooses 

to make a disbursement before receiving 

the corrected SAR or ISIR, it must 

ensure that all corrections are submitted 

to the Department to avoid any liability 

for a disbursement made without 

receiving a corrected SAR or ISIR within 

the established deadline as discussed 

under proposed § 668.61(c). 

Reasons: During the negotiated 

rulemaking sessions, some non-Federal 

negotiators expressed concern that 

applicants would be harmed if their 

disbursements were delayed until the 

institution received a corrected SAR or 

ISIR. To address these concerns, we 

propose to add paragraph (a)(3) to 

§ 668.58. This new provision would 

permit institutions to make interim 

disbursements of title IV, HEA program 

funds prior to receiving an applicant’s 

corrected SAR or ISIR within the 

established deadline date. By adding 

this provision, we would increase 

institutional flexibility in disbursing 

title IV, HEA program funds. 

Consequences of a Change in an 

Applicant’s FAFSA Information 

(§ 668.59) 

Statute: None. 

Current Regulations: For the Federal 

Pell Grant, Academic Competitiveness 

Grant (ACG) and National Science and 

Mathematics Access to Retain Talent 

Grant (National SMART Grant) 

programs, if the information on an 

application changes as a result of 

verification, the institution must require 

the applicant to resubmit his or her 

application information to the 

Department for corrections (see current 

§ 668.59(a)(1)). 

Under current § 668.59(a)(2), an 

institution is not required to make an 

applicant resubmit his or her 

application information if the errors are 

nondollar items used to calculate the 

applicant’s EFC or the errors in the 

dollar amount are within a $400 

tolerance. 

Current § 668.59(b) provides that if an 

institution does not recalculate an 

applicant’s EFC under the provisions of 

§ 668.59(a), the institution must 

disburse the applicant’s Federal Pell 

Grant, ACG, or National SMART Grant 

award based on the applicant’s original 

EFC. 

If an institution recalculates an 

applicant’s EFC because of a change in 

application information resulting from 

verification, the institution must require 

the applicant to resubmit his or her 

application to the Secretary; recalculate 

the applicant’s Federal Pell Grant, ACG, 

and National SMART Grant award 

based on the EFC on the corrected SAR 

or ISIR and disburse any additional 

funds, if additional funds are payable, 

once the applicant provides the 

institution with the corrected SAR or 

ISIR. 

If an institution determines, after 

verification, that the change in 

application information increases the 

applicant’s award, the institution may 

disburse the applicant’s Federal Pell 

Grant, ACG, and National SMART Grant 

based on the original EFC without 

requiring the applicant to resubmit his 

or her application information and 

disburse any additional funds under the 

increased award reflecting the new EFC 

if the institution receives the corrected 

SAR or ISIR, except as provided under 

current § 668.60(b). 

For the campus-based, Federal 

Stafford Loan and Federal Direct 

Stafford Loan programs, if the 

information on an application changes 

as a result of verification, the institution 

must recalculate the applicant’s EFC, 

and adjust the applicant’s financial aid 

package to reflect the new EFC if the 


srobinson on DSKHWCL6B1PROD with PROPOSALS2
34832 Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules 

new EFC results in an over award of 

campus-based funds or decreases the 

applicant’s recommended loan amount 

(see current § 668.59(c)(1)). Under 

current § 668.59(c)(2), an institution is 

not required to recalculate an 

applicant’s EFC or adjust his or her aid 

package if the errors are nondollar items 

used to calculate the applicant’s EFC; or 

the errors in the dollar amount is within 

a $400 tolerance. 

Under current § 668.59(d), if the 

institution selects an applicant for 

verification for an award year who 

previously received a Subsidized 

Stafford Loan or Direct Subsidized Loan 

for that award year, and as a result of 

verification the loan amount is reduced, 

the institution must eliminate the 

amount in excess of the student’s need 

by returning funds to the lender or by 

reducing or cancelling subsequent 

disbursements. 

An institution must forward the 

applicant’s name, social security 

number, and other relevant information 

to the Department if the applicant 

received funds based on information 

that may be incorrect and the institution 

has made a reasonable effort to resolve 

the alleged discrepancy (see current 

§ 668.59(e)). 

Proposed Regulations: We propose to 

revise § 668.59 by removing all 

allowable tolerances and requiring 

instead that an institution submit to the 

Department all changes to an applicant’s 

FAFSA information resulting from 

verification for those applicants 

receiving assistance under any of the 

subsidized student financial assistance 

programs (see proposed § 668.59(a)). 

Under proposed § 668.59(b), for the 

Federal Pell Grant program, once the 

applicant provides the institution with 

the corrected SAR or ISIR, the 

institution would be required to 

recalculate the applicant’s Federal Pell 

Grant and disburse any additional 

funds, if additional funds are payable. If 

the applicant’s Federal Pell Grant would 

be reduced as a result of verification, the 

institution would be required to 

eliminate any overpayment by adjusting 

subsequent disbursements or 

reimbursing the program account by 

requiring the applicant to return the 

overpayment or making restitution from 

its own funds (see proposed 

§ 668.59(b)(2)(ii)). 

Proposed § 668.59(c) would provide 

that, for the subsidized student financial 

assistance programs, excluding the 

Federal Pell Grant Program, if an 

applicant’s FAFSA information changes 

as a result of verification, the institution 

must recalculate the applicant’s EFC 

and adjust the applicant’s financial aid 

package on the basis of the EFC on the 

corrected SAR or ISIR. 

With the exception of minor technical 

edits, proposed § 668.59(d), which 

describes the consequences of a change 

in an applicant’s FAFSA information, 

would be substantively the same as 

current § 668.59(d). 

Finally, we would remove current 

§ 668.59(e), the provision that requires 

an institution to refer to the Department 

unresolved disputes over the accuracy 

of information provided by the 

applicant if the applicant received funds 

on the basis of that information. 

Reasons: Some non-Federal 

negotiators objected to the Department’s 

proposal to require that all corrections 

to an applicant’s FAFSA information be 

submitted to the Department for 

reprocessing. They argued that this 

approach would increase burden on 

both institutions and applicants with 

minimum impact on an applicant’s EFC 

and the amount of assistance the 

applicant is eligible to receive. They 

recommended that the Department 

require the submission of corrections 

only for applicants receiving a Federal 

Pell Grant or if the corrections would 

change an applicant’s EFC. They did not 

object to removal of the tolerances. 

Negotiators who offered their views 

indicated they did not use the 

tolerances. 

The Department believes that 

allowing any errors in financial and 

nonfinancial information would 

undermine our efforts to make decisions 

based on the best available information. 

We believe that requiring all changes to 

an applicant’s FAFSA data to be 

submitted to the Department will 

enhance particularly our ability to 

identify error-prone applications. We 

removed the tolerances because a 

change in an applicant’s FAFSA 

information could have a major impact 

on an applicant’s EFC, which would 

either reduce or increase an applicant’s 

Federal student aid awards. Taken 

together, the removal of the tolerances 

and the requirement to report any errors 

in FAFSA data would ensure that the 

Department can rely on accurate data for 

applicant selection, EFC calculation, 

cross-year edits, and data analysis and 

would make certain that applicants 

receive the Federal student aid funds for 

which they are eligible. 

Although proposed § 668.59(a) would 

require an institution to submit only 

changes affecting students receiving 

subsidized student financial assistance, 

institutions are encouraged to submit all 

changes in any student’s FAFSA 

information because those changes 

could impact the type of aid for which 

a student qualifies. For example, an 

applicant who was initially eligible only 

for unsubsidized assistance may qualify 

for subsidized assistance based on 

corrected FAFSA information. 

Proposed § 668.59(b) would require 

an institution to recalculate the 

applicant’s Federal Pell Grant award 

based on the EFC on the corrected SAR 

or ISIR and to disburse any additional 

funds only after receiving a corrected 

SAR or ISIR. This requirement would 

ensure that if the amount of the 

applicant’s Federal Pell Grant increases 

as a result of verification, the applicant 

would receive any additional funds only 

after providing the institution with a 

corrected SAR or ISIR. If the Federal 

Pell Grant award decreased as a result 

of verification, the institution would be 

required to apply the procedures 

specified in § 668.61(a) to eliminate any 

overpayment. We are proposing changes 

to the current regulatory requirements to 

ensure that all applicants receive the 

Federal Pell Grant funds for which the 

applicants are eligible and to ensure that 

the Department’s database reflects the 

information upon which any 

disbursements are based. 

Under § 668.59(c), the current 

exceptions to the requirement to 

recalculate an applicant’s EFC and 

adjust subsidized financial aid awards 

other than Pell—for nondollar items and 

tolerance of net income changes under 

$400—would be eliminated to ensure 

that all applicants receive the amounts 

for which they are eligible and that the 

Department’s database reflects the 

information upon which any 

disbursements are based. 

Finally, we propose to remove current 

§ 668.59(e) because it refers to an 

obsolete operational unit in the 

Department that resolved verification 

discrepancies reported by an institution. 

Deadlines for Submitting 

Documentation and the Consequences 

of Failing To Provide Documentation 

(§§ 668.60(b)(1)(ii), (b)(3) (c)(1), and (d)) 

Statute: None. 

Current Regulations: Current § 668.60 

contains the regulatory requirements 

concerning the deadlines for submitting 

documentation when a student is 

selected for verification and the 

consequences of failing to provide 

documentation. 

Current § 668.60(b)(1)(ii) provides that 

if an applicant fails to provide the 

requested documentation within a 

reasonable time period established by 

the institution or the Secretary, the 

institution must return to the lender or 

Secretary, as applicable, any Federal 

Stafford Loan or Direct Subsidized Loan 

proceeds that otherwise would be 

payable to the applicant. 


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Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules 34833 

Current § 668.60(b)(3) provides that 

an institution may not withhold any 

Federal Stafford Loan proceeds from an 

applicant for more than 45 days for an 

applicant that fails to provide the 

requested documents for verification 

within the time period established by 

the institution. Under this provision, if 

the applicant does not complete 

verification within 45 days, the 

institution must return the proceeds to 

the lender. 

Current § 668.60(c)(1) grants an 

extension of the submission deadline for 

students who must resubmit a verified 

SAR or ISIR when the SAR or ISIR must 

be corrected. Under this provision, 

when an extension is granted, the 

student is paid from the original SAR or 

ISIR or the corrected SAR or ISIR 

depending upon which SAR or ISIR 

yields the lower award. 

Current § 668.60(d) provides that the 

Secretary may determine not to process 

any subsequent application for Federal 

Pell Grant, ACG, or National SMART 

Grant program assistance, and an 

institution, if directed by the Secretary, 

may not process any subsequent 

application for campus-based, Federal 

Direct Stafford/Ford Loan, or Federal 

Stafford Loan program assistance of an 

applicant who has been requested to 

provide documentation until the 

applicant provides the documentation 

or the Secretary decides that there is no 

longer a need for the documentation. 

Proposed Regulations: Proposed 

§ 668.60 would largely retain the 

substance of current § 668.60. In 

addition to minor clarifying changes, we 

propose to remove paragraphs (b)(1)(ii) 

and (b)(3) of § 668.60. 

We would replace current 

§ 668.60(b)(3) with a provision that 

would require an institution to follow 

the cash management procedures under 

§ 668.166(a) or § 668.166(b), or under 

§ 668.167(c), (which incorporates the 

provisions of § 668.167(b) by reference), 

if the institution has received proceeds 

from a Subsidized Stafford Loan and 

Direct Subsidized Loan and an 

applicant does not complete verification 

within the time period specified. A 

description of these cash management 

procedures follows. 

Under § 668.166(a), any proceeds 

from a Direct Subsidized Loan that an 

institution has not disbursed to students 

by the end of the third business day 

following the date the institution 

received those funds is considered 

excess cash. Under § 668.166(b), an 

institution is allowed to maintain excess 

cash for seven days in an amount not to 

exceed one percent of the total amount 

of funds it drew down in the previous 

year. In instances where the Department 

finds that an institution maintains 

excess cash for an amount or time 

period greater than that allowed, an 

institution may be subject to adverse 

actions (e.g., reimbursing the Secretary 

the cost incurred for providing the 

excess cash to the institution, or 

providing funds to the institution under 

the reimbursement or cash monitoring 

payment method) (see § 668.166(c)). 

For Subsidized Stafford Loans, 

§ 668.167(b)(1) requires an institution to 

return to a lender loan proceeds if the 

institution does not disburse the funds 

to a student or parent within (a) 10 

business days following the date the 

institution receives the loan funds if the 

institution receives the funds by EFT 

and master check on or after July 1, 

1997 but before July 1, 1999; (b) 3 

business days following the date the 

institution receives the loan funds if the 

institution receives the funds by EFT 

and master check on or after July 1, 

1999; or (c) 30 days after the institution 

receives the loan funds by check. For 

funds that are not disbursed within the 

specified timeframe, § 668.167(b)(2) 

requires the institution to return the 

funds to the lender no later than 10 

business days after the last day those 

funds are required to be disbursed. If the 

borrower establishes eligibility before 

the institution returns the loan funds to 

the lender, the institution may disburse 

those funds to the borrower (see 

§ 668.167(b)(3)). 

In proposed § 668.60(c)(1), we would 

remove the language that requires a 

student to receive the lowest amount of 

a Federal Pell Grant if the student 

submits a valid SAR or valid ISIR after 

verification while the student was no 

longer enrolled. 

Proposed § 668.60(d) and (e) contain 

only editorial changes from the 

corresponding current regulations. 

Reasons: We propose to remove 

paragraph (b)(1)(ii) of § 668.60. This 

paragraph refers to an outdated process 

that prohibits an institution from 

certifying the student’s loan application 

or processing a check, and requires the 

check payable to the student to be 

returned to the lender for any student 

who does not provide the required 

verification information within the 

required reasonable time. 

The proposed changes to 

§ 668.60(b)(3) are needed to update 

these regulations to be consistent with 

the Department’s current cash 

management policy. 

In proposed § 668.60(c)(1), we would 

remove the limit placed on students that 

complete verification while no longer 

enrolled at an institution. We made this 

change because students should be 

permitted to receive the correct amount 

of Federal Pell Grant regardless of when 

they complete verification. 

Recovery of Funds (§ 668.61(c)) 

Statute: None. 

Current Regulations: Current § 668.61 

describes the institution’s obligation to 

recover funds if the institution 

discovers, as a result of the verification 

process, that an applicant received or 

would receive more financial aid than 

the applicant was eligible to receive. 

Proposed Regulations: Proposed 

§ 668.61 would retain the substance 

from current § 668.61, except that we 

would add a paragraph (c) that would 

require an institution to reimburse the 

program account using its own funds if 

it disbursed subsidized student 

financial assistance to an applicant 

without receiving his or her corrected 

SAR or ISIR within the established 

deadlines under § 668.60. 

Reasons: We propose this change to 

§ 668.61 to clarify what would happen 

if institutions did not submit corrections 

and to emphasize the liability an 

institution could face if subsidized 

student financial assistance is disbursed 

under § 668.58(a)(3) (interim 

disbursements) and the institution does 

not receive a corrected SAR or ISIR by 

the deadline date established in the 

notice of deadline dates for receipt of 

applications, reports, and other records 

published annually pursuant to 

§ 668.60. 

Some non-Federal negotiators argued 

that the proposed requirement to make 

institutions liable for funds disbursed in 

accordance with § 668.58(a)(3) is 

unreasonable given that the interim 

disbursement would not result in an 

applicant receiving an overpayment of 

title IV, HEA program funds. 

Section 668.58(a)(3) was added at the 

request of non-Federal negotiators who 

wanted institutions to have the 

flexibility to disburse title IV, HEA 

program funds to students without 

having to wait for a corrected SAR or 

ISIR when a student’s award did not 

change after completing verification. 

Under this provision, the disbursement 

would be allowed if the institution 

ensured that all corrections were 

submitted to the Department for 

reprocessing. 

Therefore, we believe it is appropriate 

to hold institutions liable for disbursing 

aid if corrections are not submitted to 

the Department in a timely manner to 

allow the institution to receive the 

corrected SAR or ISIR within the 

deadlines established in § 668.60. This 

provision would also help in our efforts 

to obtain accurate information for data 

analysis and identification of error 

prone applications. 


srobinson on DSKHWCL6B1PROD with PROPOSALS2
34834 Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules 

Moreover, an institution is not 

required to make an interim 

disbursement of title IV, HEA program 

funds to an applicant. However, if an 

institution exercises this option, it 

assumes liability for the funds 

disbursed. 

Misrepresentation (Subpart F of Part 

668) 

Statute: Section 487 of the HEA 

provides that institutions participating 

in the title IV, HEA programs shall not 

engage in substantial misrepresentation 

of the nature of the institution’s 

educational program, its financial 

charges, or the employability of its 

graduates. 

General 

Current regulations: Current subpart F 

of part 668 sets forth the types of 

consumer information statements and 

communications by an eligible entity 

that constitute misrepresentation. The 

regulations prohibit any substantial 

misrepresentation made by an 

institution regarding the nature of its 

educational program, its financial 

charges, or the employability of its 

graduates. 

Proposed regulations: In the following 

paragraphs, we explain in detail the 

changes we propose to make to subpart 

F of part 668. 

Reasons: We propose to make changes 

to subpart F of part 668 to strengthen 

the Department’s regulatory 

enforcement authority against eligible 

institutions that engage in substantial 

misrepresentations. The Department ofttimes receives complaints from students 

who allege that they were the victims of 

false promises and other forms of 

deception when they were considering 

their postsecondary educational 

opportunities. We believe that helping 

students to make sound decisions 

regarding their educational pursuits is 

essential to maintaining the integrity of 

the title IV, HEA programs. 

For these reasons, we propose to 

revise subpart F of part 668 by making 

changes based on information the 

Department has received and comments 

from participants in the negotiated 

rulemaking meetings. 

Scope and Special Definitions (§ 668.71) 

Current regulations: Current 

§ 668.71(a) describes the scope of 

subpart F of part 668 as establishing the 

standards and rules by which the 

Secretary may initiate a proceeding 

under subpart G of part 688 against an 

otherwise eligible institution for any 

substantial misrepresentation made by 

that institution regarding the nature of 

its educational program, its financial 

charges, or the employability of its 

graduates. 

Current § 668.71(b) provides 

definitions for the terms 

misrepresentation, prospective students, 

and substantial misrepresentation. 

Proposed regulations: We propose to 

restructure § 668.71 so that paragraph 

(a) describes the actions the Secretary 

may take if the Secretary determines 

that an eligible institution has engaged 

in substantial misrepresentation. 

Paragraph (b) of proposed § 668.71 

would— 

• Describe generally what types of 

activities constitute substantial 

misrepresentation; 

• Provide that an eligible institution 

is deemed to have engaged in 

substantial misrepresentation when the 

institution itself, one of its 

representatives, or any ineligible 

institution, organization, or person with 

whom the eligible institution has an 

agreement, makes a substantial 

misrepresentation regarding the eligible 

institution, including about the nature 

of its educational program, its financial 

changes, or the employability of its 

graduates; and 

• Clarify that substantial 

misrepresentations are prohibited in all 

forms. 

Current § 668.71(b) would be 

redesignated as proposed § 668.71(c) 

and we would make a number of 

revisions to the definition of the term 

misrepresentation: 

• We would clarify that a 

misrepresentation is any false, 

erroneous, or misleading statement an 

eligible institution, one of its 

representatives, or any ineligible 

institution, organization, or person with 

whom the eligible institution has an 

agreement makes directly or indirectly 

to a student, prospective student or any 

member of the public, or to an 

accrediting agency, to a State agency, or 

to the Secretary. 

• Within this definition, we would 

also define what we mean by the term 

‘‘misleading statement;’’ we would 

clarify that a misleading statement 

includes any statement (which is any 

communication made in writing, 

visually, orally, or through other means) 

that has the capacity, likelihood, or 

tendency to deceive or confuse. 

• Finally, we would retain the 

express reference in the definition of 

misrepresentation to the dissemination 

of a student endorsement or testimonial 

that a student gives under duress. We 

would expand this language to also refer 

to the dissemination of a student 

endorsement or testimonial that a 

student gives because the institution 

required the student to make such an 

endorsement or testimonial to 

participate in a program. 

Reasons: We propose to restructure 

§ 668.71 to lay out more clearly the 

scope of subpart F of part 668. 

In new paragraph (b) of proposed 

§ 668.71, we would clarify that an 

eligible institution is deemed to have 

engaged in substantial 

misrepresentation when the institution 

itself, one of its representatives, or any 

ineligible institution, organization, or 

person with whom the eligible 

institution has an agreement, makes a 

substantial misrepresentation regarding 

the eligible institution. We believe it is 

appropriate to hold the eligible 

institution accountable in these 

instances because the integrity of the 

title IV, HEA programs requires that 

institutions are responsible for the 

actions of their representatives and 

agents. 

Proposed § 668.71(b) would also state 

that substantial misrepresentations are 

prohibited in all forms, including those 

made in any advertising, promotional 

materials, or in the marketing or sale of 

courses or programs of instruction 

offered by the institution. We propose to 

add this language because of the 

importance of these materials and 

activities in communicating to students 

and prospective students information 

regarding the nature of the institution’s 

educational programs, its financial 

charges, and the employment 

opportunities available to the 

institution’s graduates. 

In the revised definition of the term 

misrepresentation, we would again state 

that a misrepresentation is any false, 

erroneous, or misleading statement 

made not only by the eligible 

institution, but also any false, 

erroneous, or misleading statement 

made by one of its representatives, or 

any ineligible institution, organization, 

or person with whom the eligible 

institution has an agreement. As 

discussed earlier in this preamble, we 

believe that it is appropriate to hold 

eligible institutions accountable for 

misrepresentations made by 

representatives and agents to ensure 

program integrity. 

We propose to broaden the definition 

of misrepresentation to include false, 

erroneous, or misleading statements 

made directly or indirectly to a student, 

prospective student or any member of 

the public, or to an accrediting agency, 

to a State agency, or to the Secretary. We 

propose to broaden the concept of 

misrepresentation to include both direct 

and indirect false, erroneous or 

misleading statements because students, 

prospective students, members of the 

public, and others can be significantly 


srobinson on DSKHWCL6B1PROD with PROPOSALS2
Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules 34835 

harmed by indirect false, erroneous, or 

misleading statements. For example, an 

institution could be deemed to engage 

in misrepresentation if it falsely 

advertised an exceptional placement 

rate. Further, the institution could also 

be deemed to engage in 

misrepresentation if an individual heard 

an advertisement containing the false 

placement rate and relayed the 

information to a potential student. In 

this example, the potential student 

received the information indirectly but 

the information could still have the 

capacity, likelihood, or tendency to 

deceive or confuse. 

In an effort to give the field more 

guidance on what the Department 

means by misrepresentation, we 

propose to provide more detail in the 

definition. Because the definition of 

misrepresentation turns on the meaning 

of the term a ‘‘statement’’, we would 

clarify that a misleading statement 

includes any statement (which is any 

communication made in writing, 

visually, orally, or through other means) 

that has the capacity, likelihood, or 

tendency to deceive or confuse. We 

believe that fleshing out the definition 

of misrepresentation would help 

institutions determine whether 

statements they (or their representatives 

or any ineligible institution, 

organization, or person with whom they 

have an agreement) make constitute a 

misrepresentation under subpart F of 

part 668. Moreover, by providing more 

detail in the definition of 

misrepresentation, we believe that the 

regulations would be clearer as to the 

difference between misrepresentations, 

on the one hand, and substantial 

misrepresentations, on the other. This 

subpart would prohibit substantial 

misrepresentations only and those 

would continue to be defined as any 

misrepresentation on which the person 

to whom it was made could reasonably 

be expected to rely, or has reasonably 

relied, to that person’s detriment. 

Finally, we would add language to the 

definition of misrepresentation 

regarding the dissemination of a student 

endorsement or testimonial that a 

student gives because the institution 

required the student to make such an 

endorsement or testimonial to 

participate in a program. We propose to 

add this language because we are 

concerned about the potential of such 

testimonials to mislead students or 

prospective students. 

Nature of Educational Program 

(§ 668.72) 

Current regulations: Current § 668.72 

describes the types of false, erroneous, 

or misleading statements about an 

institution’s educational program that 

would be prohibited as 

misrepresentations under subpart F of 

part 668. 

Proposed Regulations: Proposed 

§ 668.72 would retain the list of the 

types of misrepresentation regarding the 

nature of an institution’s educational 

program that is included in current 

§ 668.72, but would expand this list. 

First, in proposed § 668.72(a), we would 

expand the types of programmatic false 

statements that would be prohibited as 

misrepresentations under this section. 

Specifically, false, erroneous, or 

misleading statements about 

programmatic and specialized 

accreditation—not only institutional 

accreditation—would be expressly 

covered as misrepresentations. 

Second, in proposed § 668.72(b)(2), 

we propose to add language on the 

conditions under which an institution 

will accept credits earned at another 

institution. 

Third, in proposed § 668.72(c), we 

would revise the language regarding 

misrepresentations about whether 

successful completion of a course of 

instruction qualifies a student to receive 

a local, State, or Federal license or a 

non-governmental certification required 

as a precondition for employment, or to 

perform the functions required of an 

employee in the occupation for which 

the program is represented to prepare 

students. We would broaden this 

language to clarify that a prohibited 

misrepresentation includes false, 

erroneous, or misleading statements 

regarding whether completion of a given 

course of study will qualify a student ‘‘to 

apply to take or to take an examination 

required to receive’’ a needed license or 

certification as a precondition of 

employment in an occupation for which 

the program is represented to prepare its 

students (rather than only qualifying a 

student to receive such a license or 

certification). 

In addition, we would refine the 

language in § 668.72(c)(2) to clarify that 

institutions must not make false, 

erroneous, or misleading statements 

regarding whether completion of a given 

course of study will qualify a student to 

perform certain functions in the State in 

which the program or institution is 

located, or to meet additional conditions 

that the institution knows, or reasonably 

should know, are generally needed to 

secure employment in a recognized 

occupation for which the program is 

represented to prepare students. 

Finally, we would add to the list of 

the types of misrepresentations 

regarding the nature of an institution’s 

educational program, any 

misrepresentation regarding: 

• The requirements for successfully 

completing the course of study or 

program and the circumstances that 

would constitute grounds for 

terminating the student’s enrollment 

(see proposed § 668.72(d)). 

• Whether the institution’s courses 

have been the subject of unsolicited 

testimonials or endorsements by 

vocational counselors, high schools, 

colleges, educational organizations, 

employment agencies, members of a 

particular industry, students, former 

students, or others; or governmental 

officials for governmental employment 

(see proposed § 668.72(e)). 

• The subject matter, content of the 

course of study, or any other fact related 

to the degree, diploma, certificate of 

completion, or any similar document 

that the student is to be, or is, awarded 

upon completion of the course of study 

(see proposed § 668.72(m)). 

• Whether the academic, 

professional, or occupational degree that 

the institution will confer upon 

completion of the course of study has 

been authorized by the appropriate State 

educational agency. This type of 

misrepresentation includes, in the case 

of a degree that has not been authorized 

by the appropriate State educational 

agency, any failure by an eligible 

institution to disclose this fact in any 

advertising or promotional materials 

that reference such degree (see proposed 

§ 668.72(n)). 

Reasons: The Department believes it 

is critical that potential students have a 

clear understanding about any 

educational program in which they may 

enroll. Each institution has a 

responsibility to provide complete and 

accurate information about the programs 

it offers. For this reason, we are 

proposing numerous changes to 

§ 668.72. Many of these proposed 

changes are based on discussions during 

the negotiated rulemaking sessions and 

the concerns raised by non-Federal 

negotiators during those discussions. 

Several non-Federal negotiators 

believed that institutions should make 

potential or current students aware of 

institutional accreditation or any 

specific programs at the institution that 

have accreditation before students 

enroll in the program. Some negotiators 

also argued that an institution’s failure 

to disclose a lack of accreditation 

should constitute misrepresentation 

under § 668.72. The Department agrees 

that students need accurate information 

about the types, sources, nature, and 

extent of institutional, programmatic or 

specialized accreditation an institution 

or program has. Proposed § 668.72(a) 

would expressly prohibit institutions 

from making false, erroneous, or 


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misleading statements concerning these 

matters. 

Some non-Federal negotiators 

expressed concern that students should 

understand the conditions under which 

their transfer credits would count 

towards a degree program before they 

left another program or institution. The 

Department agrees and proposes to add 

§ 668.72(b)(2) to expressly prohibit 

misrepresentations about the conditions 

under which an institution will accept 

credits earned at another institution. 

Some non-Federal negotiators 

expressed concern about the extent of 

information that institutions 

‘‘reasonably’’ should know. For example, 

they argued that it is unrealistic to 

expect institutions to have knowledge 

about each State’s licensure 

requirements. 

The Department agrees. Proposed 

§ 668.72(c)(2), therefore, would 

specifically refer to licensure and 

certification information for the State in 

which the program or institution is 

located, as well as conditions generally 

needed to secure employment in a 

particular occupation. 

We would add proposed § 668.72(d), 

regarding misrepresentations 

concerning the requirements for 

successfully completing the course of 

instruction and the circumstances that 

would constitute grounds for 

terminating the student’s enrollment, 

because potential and current students 

need to be able to make informed 

decisions regarding course completion 

and situations that may lead to their 

inability to complete the program of 

instruction they choose to pursue. 

In proposed § 668.72(e), we would 

expressly include as prohibited any 

misrepresentations regarding whether 

an institution’s courses have been the 

subject of unsolicited testimonials or 

endorsements because potential and 

current students should not be mislead 

into pursuing a particular program of 

instruction based upon purported (but 

not actual) recommendations and 

endorsements. 

We would add proposed § 668.72(m) 

and (n), regarding misrepresentations 

concerning any fact related to the 

degree, diploma, certificate of 

completion, or similar document to be 

awarded to a student upon course 

completion, as well as whether the 

academic, professional, or occupational 

degree that the institution confers upon 

completion has been authorized by the 

appropriate State educational agency. 

We propose adding these provisions 

because potential and current students 

need to know the truth regarding the 

credential they will receive before 

committing to attend a particular 

postsecondary institution. 

Nature of Financial Charges (§ 668.73) 

Current regulations: Current § 668.73 

describes prohibited false, erroneous, or 

misleading statements related to the cost 

of the program and financial aid that is 

available to potential and current 

students. 

Proposed regulations: Proposed 

§ 668.73 would retain the list of the 

types of misrepresentation regarding the 

nature of an institution’s financial 

charges that are in current § 668.73, but 

also would add the following: 

• Misrepresentation regarding the 

cost of the program and the institution’s 

refund policy if the student does not 

complete the program (see proposed 

§ 668.73(c)). 

• Misrepresentation regarding the 

availability or nature of any financial 

assistance offered to students, including 

a student’s loan repayment 

responsibility, regardless of program 

completion or subsequent employment 

(see proposed § 668.73(d)). 

• Misrepresentation regarding a 

student’s right to apply for or reject any 

particular type of financial aid or other 

assistance (see proposed § 668.73(e)). 

Reasons: Several non-Federal 

negotiators expressed concern about 

whether students clearly understand the 

cost of their educational program. Other 

non-Federal negotiators emphasized the 

difficulty of estimating program costs 

and cautioned the Department against 

making the regulations too specific in 

this regard. The Department agrees it is 

a serious problem if students who enroll 

in a program do not have the necessary 

information about the cost of the 

program or the institution’s refund 

policy. For this reason, the Department 

proposes to add proposed § 668.73(c) to 

highlight that misrepresentations about 

the cost of an institution’s program or its 

refund policy are prohibited. 

In addition, some non-Federal 

negotiators pointed out as a significant 

problem the fact that some students do 

not understand the financial aid options 

available to them when they enroll in a 

program. Others expressed concern that 

students may feel pressure to apply for 

credit financing to pay for the cost of 

their educational program. 

The Department strongly believes that 

students, potential students, and parents 

must have relevant information to make 

informed decisions about the type of 

financial aid that is available to the 

student. By prohibiting institutions from 

making misrepresentations regarding 

the availability or nature of the financial 

aid offered to students, as well as a 

student’s right to reject any particular 

type of financial aid (see proposed 

§ 668.73(d) and (e), respectively), the 

Department seeks to ensure that 

students are provided with the accurate 

information they need to make informed 

choices about the type of financial aid 

they use to fund their education. 

Employability of Graduates (§ 668.74) 

Current regulations: Current § 668.74 

lists what constitutes misrepresentation 

by an institution regarding the 

employability of its graduates. 

Proposed regulations: Proposed 

§ 668.74 would retain the list of the 

types of misrepresentation regarding the 

employability of graduates that is in 

current § 668.74. In addition to the types 

of misrepresentations already included 

in the regulations, we would add the 

following: 

• Misrepresentations relating to the 

institution’s knowledge about the 

current or likely future conditions, 

compensation, or employment 

opportunities for its graduates (see 

proposed § 668.74(c)). 

• Misrepresentations relating to 

whether employment is being offered by 

the institution or that a talent hunt or 

contest is being conducted (see 

proposed § 668.74(d)). 

• Misrepresentations relating to other 

requirements that are generally needed 

in order to be employed in certain fields 

(see proposed § 668.74(f)). 

Reasons: During the negotiated 

rulemaking sessions, the non-Federal 

negotiators appeared to be in agreement 

that students should be fully informed 

about their likely employment options 

once they complete a course of study. 

Several non-Federal negotiators, 

however, expressed concern about how 

best to address this issue in the 

regulations. In particular, given the 

uncertainty of the economic climate, 

they were concerned about the 

possibility of having an enforcement 

action brought against them even in 

instances when they provided students 

and the public with the best available 

information about likely employment 

options, which, in retrospect, were 

overly optimistic. The Department 

believes that proposed § 668.74 

appropriately highlights the types of 

information about employability that 

institutions need to monitor carefully 

when advertising or otherwise 

promoting their educational programs. 

Institutions must disclose clear 

information about the employability of 

graduates from a program, including 

likely compensation, and other 

requirements necessary to perform the 

job for which the educational program 

prepares students, to help give students 

the knowledge they need to make 


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informed decisions about potential 

career paths. 

Relationship With the Department of 

Education (§ 668.75) 

Current regulations: Current § 668.75 

describes the Department’s procedures 

for reviewing allegations or complaints 

regarding misrepresentation claims. 

Proposed regulations: We are 

proposing to delete current § 668.75 

(Procedures) and replace it with new 

§ 668.75 (Relationship with the 

Department of Education). Proposed 

§ 668.75 would prohibit an institution, 

its representatives, or any ineligible 

institution, organization, or person with 

whom the eligible institution has an 

agreement from making statements that 

suggest the U.S. Department of 

Education approves or endorses the 

quality of an institution’s educational 

program simply because the institution 

is eligible to participate in the title IV, 

HEA programs. 

Reasons: We propose to remove 

current § 668.75 because these 

procedures have not been used to take 

enforcement actions against institutions 

for making substantial 

misrepresentations. Instead, when the 

Department determines that there has 

been a misrepresentation by an 

institution, its representatives, or any 

ineligible institution, organization, or 

person with whom the eligible 

institution has an agreement, the 

Department has used its other 

administrative remedies to take the 

appropriate actions against the 

institution without relying upon the 

procedures described in current 

§ 668.75. Proposed § 668.71(a) addresses 

the types of actions the Department 

anticipates it may take in response to a 

violation of subpart F of part 668. 

We propose to add new § 668.75 

because the Secretary has been made 

aware of instances where institutions 

have misled the public by mentioning 

the U.S. Department of Education in 

their advertising in a manner that 

implies that the Department endorses 

the quality of these institutions’ 

educational programs. The Department 

does not approve of this behavior and 

considers it to be a misrepresentation. 

For this reason, the proposed 

regulations would expressly forbid this 

type of activity. 

Ability To Benefit (668.32 and Subpart 

J of Part 668) 

Statute: Section 484(d) of the HEA 

describes the circumstances under 

which a student who does not have a 

high school diploma or the equivalent 

may establish eligibility for title IV, 

HEA program funds. Under this 

provision, a student who does not have 

a high school diploma or the equivalent 

may establish eligibility for title IV, 

HEA program funds by: (1) Taking an 

ability to benefit (ATB) test approved by 

the Secretary; (2) being enrolled in an 

institution that participates in an 

approved State process; or (3) by 

completing a secondary school 

education in a home school setting that 

is treated as a home school or private 

school under State law. In 2008, this 

section of the HEA was amended by 

adding section 484(d)(4), which 

provides that a student shall be 

determined by an institution of higher 

education as having the ability to 

benefit from the education or training 

offered by the institution of higher 

education upon satisfactory completion 

of six credit hours or the equivalent 

coursework that are applicable toward a 

degree or certificate offered by the 

institution. 

Student Eligibility (§ 668.32(e)) 

Current Regulations: Paragraph (e) of 

current § 668.32 provides that, in order 

to be eligible for title IV, HEA program 

funds, a student must: (1) Have a high 

school diploma or its recognized 

equivalent; (2) have obtained a passing 

score on an ATB test administered in 

accordance with subpart J of part 668; 

(3) have been enrolled in an eligible 

institution that participates in a State 

process approved by the Secretary 

under subpart J of part 668; or (4) have 

been home-schooled and have obtained 

a secondary school completion 

credential for home school or, if State 

law does not require a home-schooled 

student to obtain such a credential, have 

completed a secondary school education 

in a home school setting that qualifies 

as an exemption from compulsory 

attendance requirements under State 

law. 

Proposed Regulations: We propose to 

revise § 668.32(e) by adding new 

paragraph (e)(4) to provide that a 

student is eligible to receive title IV, 

HEA program assistance if the student 

has been determined by the institution 

to have the ability to benefit from the 

education or training offered by the 

institution based on the satisfactory 

completion of 6 semester hours, 6 

trimester hours, 6 quarter hours, or 225 

clock hours that are applicable toward 

a degree or certificate offered by the 

institution. 

Reasons: We propose to add new 

paragraph (e)(4) to § 668.32 to 

incorporate the new method for 

students to show that they have the 

ability to benefit, which was added to 

the section 484(d) of the HEA in 2008. 

Under this new statutory provision, 

students who satisfactorily complete six 

credits of college work, or the 

equivalent amounts of coursework, that 

are applicable to a degree or certificate 

offered by the school qualify to receive 

title IV, HEA program funds. In 

proposing regulations to implement this 

statutory change, the Department took 

into consideration extensive discussions 

at the negotiated rulemaking sessions. 

The Department explained during 

negotiated rulemaking that its proposal 

was based on the statutory language that 

students would need to earn six credit 

hours or the equivalent. The statute 

does not distinguish among semester, 

trimester or quarter hours, nor does it 

suggest an equivalent number of clock 

hours. Under the proposed regulations 

and the statute, all credit hour students, 

whether earning semester, trimester, or 

quarter hours would need to be enrolled 

for six hours—the number of hours that 

would be equivalent to enrollment on a 

half-time basis for one term. A student 

who completed 6 semester hours, 6 

trimester hours, or 225 clock hours 

would be completing one quarter of an 

academic year. The Federal negotiator 

noted the apparent inconsistency 

between the statutory language 

regarding the new ATB provision, 

which requires satisfactory completion 

of six credit hours or the equivalent 

coursework, and the definition of an 

‘‘academic year’’, which is defined as a 

period of time during which a full-time 

undergraduate student is expected to 

complete 24 semester or trimester hours, 

36 quarter hours, or 900 clock hours. 

Several non-Federal negotiators 

expressed their belief that completion of 

six hours of program leading to a 

certificate or degree was a much better 

indicator of an individual’s ability to 

benefit from a program than passing an 

ATB test. 

Some of the discussion at the 

negotiated rulemaking sessions focused 

on whether a student should be required 

to complete the specified credit hours or 

clock hours in the program in which the 

student planned to enroll and for which 

the student applied to receive title IV, 

HEA program funds. The Department 

noted that the provision was based on 

an experimental site program which 

tested and established the effectiveness 

of permitting students to display the 

ability to benefit based on successful 

completion of six semester hours in any 

program leading to a degree or 

certificate. One non-Federal negotiator 

expressed concern that unless the hours 

completed were in the intended 

program, the coursework might not be 

rigorous enough, and the provision 

would not be effective as a means of 

demonstrating the student’s ability to 


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benefit from the program in which they 

intend to enroll. Several non-Federal 

negotiators voiced their view that the 

statutory language did not impose that 

kind of limitation. They pointed out that 

students often start a program and 

change their mind; therefore, the 

simplest approach to the provision 

would be the best. The Department 

agrees, but expects that the credit hours 

completed would be part of an eligible 

program offered by the institution and 

would show that the student has the 

ability to benefit from the postsecondary 

educational program in which the 

student is enrolled or intends to enroll. 

One non-Federal negotiator expressed 

concern that some institutions might 

reduce or waive tuition for the portion 

of the program required to demonstrate 

the ability to benefit, while not 

requiring the student to complete 

coursework at a sufficiently challenging 

level, thereby nullifying the impact of 

the provision and setting a student up 

for failure. Other non-Federal 

negotiators pointed out that if an 

institution did not waive or reduce 

tuition, a student who did not yet 

qualify for aid might be forced to take 

out a high interest private loan to pay 

for the initial 6 credit hours or 225 clock 

hours needed to establish student 

eligibility. 

In response to a question regarding 

whether the option to demonstrate the 

ability to benefit from the educational or 

training program by passing an 

approved test or successfully 

completing six credit hours or the 

equivalent was at the discretion of the 

student or the institution, the 

Department noted that the provision 

relates to establishing eligibility for 

assistance under the title IV, HEA 

programs. It is a financial aid 

requirement, not an admissions 

requirement. An institution may have a 

policy that it does not admit any 

students who do not have a high school 

diploma or the equivalent. There is no 

requirement that an institution 

determine a student’s eligibility for title 

IV, HEA program funds on the basis of 

either passing an ATB test or 

successfully completing coursework. 

There was considerable discussion 

during the negotiated rulemaking 

sessions regarding whether a student 

who established student eligibility 

under one of the ATB provisions could 

be paid for the payment period in which 

eligibility was established. The 

Department’s position is that a student 

who establishes eligibility for title IV, 

HEA program funds by passing an ATB 

test during a payment period may be 

paid for the entire payment period. 

However, if a student establishes title 

IV, HEA eligibility by completing six 

credit hours, or the equivalent, 

eligibility is not established until after 

the end of the payment period, and the 

student may not be paid for the payment 

period during which the student took 

the requisite coursework. Furthermore, 

to establish eligibility under the new 

ATB provision, a student in a credit 

hour program must earn six credit 

hours; a student who enrolls in six 

credit hours but receives a failing grade 

for one or more of those credits has not 

successfully completed six credit hours. 

Similarly, a student in a clock hour 

program must have attended 225 clock 

hours and been graded on those 225 

clock hours to establish eligibility. 

Scope (§ 668.141) 

Current Regulations: Current 

§ 668.141 describes the scope of subpart 

J of part 668 of the current regulations. 

Current subpart J sets forth: (1) The 

provisions under which a student who 

does not have a high school diploma or 

the equivalent may establish eligibility 

for title IV, HEA program funds either 

by taking an ATB test approved by the 

Secretary or by being enrolled in an 

institution that participates in an 

approved State process; and (2) the 

criteria and procedures for approval of 

ATB tests, the requirements for 

independent administration of approved 

tests, the requirements for maintaining 

the Secretary’s approval of ATB tests, 

and the procedures for the Secretary’s 

approval of alternate State processes. 

Proposed Regulations: Section 

668.141 would be revised to reference 

the new requirements that we propose 

to add to subpart J of part 668. 

Specifically, we would redesignate 

current paragraph (b)(4) of § 668.141 as 

paragraph (b)(6) and add new 

paragraphs (b)(4) and (b)(5). Proposed 

§ 668.141(b)(4) would reference the 

information on test anomaly studies that 

the test publishers and States must 

submit as part of their test submission, 

and proposed § 668.141(b)(5) would 

reference the proposed requirements 

that test publishers and States have a 

process to identify and follow up on test 

score irregularities, take corrective 

action when irregularities have 

occurred, and report the names of 

decertified test administrators to the 

Secretary. 

Reason: These proposed changes to 

§ 668.141 would align the description of 

the subpart’s scope with the substantive 

changes the Department proposes to 

make to this subpart. These proposed 

changes are discussed in more detail in 

the following sections. 

Special Definitions (§ 668.142) 

Definition of Assessment Center 

Current regulations: Current § 668.142 

contains a definition of the term 

assessment center. 

Proposed regulations: The proposed 

definition of assessment center would 

largely track the current definition of 

that term. We propose only to clarify in 

the definition that an assessment center 

uses test administrators who, by 

definition, have been certified by the 

test publisher or State to administer 

ATB tests approved by the Secretary 

under this subpart. 

Reasons: We propose to require, as 

part of this definition, that the 

individuals who administer ATB tests 

in assessment centers be certified by the 

test publisher, or the State, as 

appropriate. Test publishers have 

indicated that they have encountered 

situations at assessment centers where 

there has been high staff turnover, and 

individuals giving tests are not familiar 

with the requirements and procedures. 

The Department solicits comments on 

whether it would be appropriate or 

advisable to permit specified test 

administrators in the assessment center 

to train other individuals at that 

assessment center to administer ATB 

tests. 

Definition of Independent Test 

Administrator 

Current regulations: None. 

Proposed regulations: We propose to 

add a definition of the term independent 

test administrator to § 668.142. Under 

this proposed definition, an 

independent test administrator would 

be a test administrator who administers 

tests at a location other than an 

assessment center and who— 

(1) Has no current or prior financial 

or ownership interest in the institution, 

its affiliates, or its parent corporation, 

other than the interest obtained through 

its agreement to administer the test, and 

has no controlling interest in any other 

institution; 

(2) Is not a current or former 

employee of or consultant to the 

institution, its affiliates, or its parent 

corporation, a person in control of 

another institution, or a member of the 

family of any of these individuals; 

(3) Is not a current or former member 

of the board of directors, a current or 

former employee of or a consultant to a 

member of the board of directors, chief 

executive officer, chief financial officer 

of the institution, its affiliates, or its 

parent corporation or of any other 

institution, or a member of the family of 

any of these individuals; and 


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(4) Is not a current or former student 

of the institution. 

This definition would be based 

largely on the description of prohibited 

relationships of independent test 

administrators contained in current 

§ 668.151(b)(2). 

Reasons: The proposed regulations 

would distinguish between ‘‘test 

administrators,’’ defined in § 668.142, 

and ‘‘independent test administrators.’’ 

For this reason, the Department 

proposes to add a definition of the term 

independent test administrator and, as 

discussed later in this preamble, to 

revise the current definition of test 

administrator. 

The concept of an independent test 

administrator is not new. Current 

§ 668.151(b)(2) describes the 

circumstances under which a test given 

by a test administrator is considered to 

be ‘‘independently administered’’. We 

used much of this language in crafting 

the definition of the term independent 

test administrator. 

During the negotiated rulemaking 

discussions, some of the non-Federal 

negotiators expressed confusion about 

the difference between test 

administrators and independent test 

administrators. They suggested adding 

language to make it clear that an 

independent test administrator is a test 

administrator who ‘‘administers tests at 

a location other than an assessment 

center’’ in addition to meeting the other 

requirements. We agreed with this 

recommendation. Therefore, the 

proposed regulations would specify, as 

part of the definition of independent test 

administrator, that an independent test 

administrator is a test administrator 

who administers tests at a location other 

than at an assessment center. 

Definition of Individual With a 

Disability 

Current regulations: Current § 668.142 

contains a definition of the term 

disabled student. 

Proposed regulations: Proposed 

§ 668.142 would replace the term 

‘‘disabled student’’ with the term 

‘‘individual with a disability.’’ We 

would largely retain the current 

definition, except we would make clear 

that the term refers to a person (not only 

a student) who has a physical or mental 

impairment which substantially limits 

one or more major life activities, has a 

record of such an impairment, or is 

regarded as having such an impairment. 

Reasons: The Department proposes to 

use the term individual with a disability, 

rather than disabled student, because 

that is the term more commonly used in 

the disability community and is 

consistent with the usage of the term by 

other programs administered by the 

Department. In addition, this proposed 

revision would clarify that the defined 

term applies to individuals who are not 

yet students as well as to individuals 

who are already enrolled in institutions 

participating in the title IV, HEA 

programs. 

Definition of Test 

Current regulations: None. 

Proposed regulations: We propose to 

add a definition of the term test to 

§ 668.142. Under this proposed 

definition, a test would be a 

standardized test, assessment or 

instrument that has formal protocols 

regarding the administration of the test 

that include the use of parallel, equated 

forms, testing conditions, time allowed 

for the test, and standardized scoring. 

The definition also would clarify that 

tests are not limited to traditional paper 

and pencil (or computer-administered) 

instruments for which forms are 

constructed prior to administration to 

examinees and that tests may include 

adaptive instruments that use 

computerized algorithms for selecting 

and administering items in real time 

provided that, for such instruments, the 

size of the item pool and the method of 

item selection ensures negligible 

overlap in items across retests. 

Reasons: We propose to add a 

definition of the term test to § 668.142 

because, as one non-Federal negotiator 

pointed out during our discussions, our 

current ATB regulations define the 

terms test item, test administrator and 

test publisher, but do not define the 

term test. The proposed definition is 

based on the definition of test in 34 CFR 

462.4 of the Department’s Measuring 

Educational Gain in the National 

Reporting System for Adult Education 

regulations. 

Definition of Test Administrator 

Current regulations: Current § 668.142 

defines a test administrator as an 

individual who may give tests under 

subpart J of part 668. 

Proposed regulations: We propose to 

revise the definition of the term test 

administrator to mean an individual 

who (1) is certified by the test publisher 

or the State to administer tests approved 

under subpart J of part 668 and to 

protect the test and test results from 

improper disclosure or release, and (2) 

is not compensated on the basis of test 

outcomes. 

Reasons: We propose to revise this 

definition to clarify that a test 

administrator must be certified by the 

test publisher or the State, and that a 

test administrator is responsible for 

keeping both the tests and the test 

results secure from improper disclosure 

or release. The proposed definition 

would also clarify that a test 

administrator may not be compensated 

on the basis of test outcomes. The nonFederal negotiators were generally in 

favor of including this additional clarity 

in the definition. 

Definition of Test Publisher 

Current regulations: Current § 668.142 

defines a test publisher as an individual, 

organization, or agency that owns a 

registered copyright of a test, or is 

licensed by the copyright holder to sell 

or distribute a test. 

Proposed regulations: We propose to 

revise the definition of a test publisher 

by providing that a test publisher may 

be authorized by the copyright holder to 

represent the copyright holder’s interest 

regarding the test, rather than specifying 

that the individual or organization must 

be licensed the right to sell or distribute 

the test by the copyright holder. 

Reasons: One non-Federal negotiator 

recommended making this revision to 

the definition of test publisher. This 

non-Federal negotiator explained that 

this definitional change is appropriate 

because the term test publisher should 

include agencies or organizations that 

may represent the copyright holder’s 

interest in the test, but may not be 

licensed by the copyright holder. The 

Department agrees. 

Approval of State Tests or Assessments 

(§ 668.143) 

Current regulations: Current § 668.143 

describes the procedures for the 

Secretary’s approval of State tests or 

assessments. 

Proposed regulations: We propose to 

move the requirements governing the 

submission of tests by States in current 

§ 668.143 to proposed § 668.144 

(Application for test approval). With 

this change, we would reserve § 668.143 

for future use. 

Reason: We propose to combine the 

requirements from current §§ 668.143 

and 668.144 into a single section 

because the test publisher and State 

submission processes have common 

elements. To the extent we propose to 

make changes to the submission 

requirements for States (and test 

publishers), we discuss those changes in 

the discussion relating to proposed 

§ 668.144. 

Application for Test Approval 

(§ 668.144) 

Current regulations: Current § 668.144 

describes the approval process for tests 

submitted by test publishers. The 

current regulations do not require test 

publishers to describe their process for 


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certifying test administrators, their test 

anomaly analysis, or the types of 

accommodations available for 

individuals with disabilities. In current 

regulations, the requirements for 

approval of State tests or assessments 

are contained in a separate section, 

§ 668.143. 

Proposed regulations: We propose to 

clarify and expand the requirements in 

current §§ 668.143 and 668.144 and 

include all of the requirements for test 

approval in one section, proposed 

§ 668.144. Paragraphs (a) and (b) of 

proposed § 668.144 would describe the 

general requirement for test publishers 

and States to submit to the Secretary 

any test they wish to have approved 

under subpart J of part 668. Paragraph 

(c) of proposed § 668.144 would 

describe the information that a test 

publisher must include with its 

application for approval of a test. 

Paragraph (d) of proposed § 668.144 

would describe the information a State 

must include with its application when 

it submits a test to the Secretary for 

approval. 

In proposed § 668.144(c), we would 

largely retain the test publisher 

application requirements contained in 

current § 668.144(c). In addition to 

making some minor technical changes 

to these requirements, we would revise 

paragraphs (c)(8) and (c)(11)(iv)(B). 

Under proposed paragraph (c)(8), test 

publishers would be required to provide 

documentation of periodic reviews of 

the content and specifications of all 

tests submitted to the Secretary for 

approval (not just tests first published 

five years before submission), to ensure 

that the tests reflect secondary school 

level verbal and quantitative skills. 

Under the revisions reflected in 

proposed § 668.144(c)(11)(iv)(B), a test 

publisher would be required to include, 

in its technical manual, evidence that 

the test was normed using a 

contemporary sample that is 

representative of the population of 

persons who have earned a high school 

diploma in the United States instead of 

a contemporary population 

representative of persons who are 

beyond the usual age of compulsory 

school attendance in the United States. 

We would remove paragraph (c)(14), 

which required a test publisher to 

include, for performance-based tests or 

tests containing performance-based 

sections, a description of the training or 

certification required of test 

administrators and scorers by the test 

publishers. 

We would then redesignate 

paragraphs (c)(15) and (c)(16) of 

§ 668.144 as proposed paragraphs (c)(14) 

and (c)(15) and add new proposed 

paragraphs (c)(16) through (c)(18). 

Proposed § 668.144(c)(16) would require 

test publishers to include in their 

applications a description of their test 

administrator certification process. In 

proposed § 668.144(c)(17), we would 

require test publishers to include in 

their applications a description of the 

test anomaly analysis the test publisher 

will conduct and submit to the 

Secretary. Finally, proposed 

§ 668.144(c)(18) would require test 

publishers to include in their 

applications a description of the types 

of accommodations available for 

individuals with disabilities, including 

a description of the process used to 

identify and report when 

accommodations for individuals with 

disabilities were provided. 

Proposed § 668.144(d) would be 

added to describe what States must 

include in their test submissions to the 

Secretary. While this provision would 

replace the content in current § 668.143, 

its language would be revised to be 

parallel, where appropriate, to the test 

publisher submission requirements in 

current § 668.144. In addition to 

paralleling most of the current 

requirements for test publisher test 

submissions, proposed § 668.144(d) 

would also include the new 

requirements proposed to be added to 

the test publisher submissions. A 

description of those new provisions 

follows: 

Both test publishers and States would 

be required to submit a description of 

their test administrator certification 

process that indicates how the test 

publisher or State, as applicable, will 

determine that a test administrator has 

the necessary training, knowledge, 

skills, and integrity to test students in 

accordance with the test publisher’s 

requirements and how the test publisher 

or the State will determine that the test 

administrator has the ability and 

facilities to keep its test secure against 

disclosure or release (see proposed 

§ 668.144(c)(16) (test publishers) and 

§ 668.144(d)(7) (States)). 

The proposed regulations would 

require both test publishers and States 

to submit a description of the test 

anomaly analysis they will conduct. 

This analysis would need to include a 

description of how they will identify 

potential test irregularities and make a 

determination that test irregularities 

have occurred; an explanation of 

corrective action to be taken in the event 

of test irregularities; and information on 

when and how the Secretary, test 

administrator, and institutions will be 

notified if a test administrator is 

decertified (see proposed 

§ 668.144(c)(17) (test publishers) and 

§ 668.144(d)(8) (States)). 

Under proposed § 668.144(c)(18) and 

(d)(9) respectively, both test publishers 

and States would be required to 

describe any accessible technologies 

that are available to individuals with 

disabilities, and the process for a test 

administrator to identify and report to 

the test publisher when 

accommodations for individuals with 

disabilities were provided. 

Reasons: Because many of the 

requirements for approval of tests, 

whether submitted by test publishers or 

States, are parallel, the non-Federal 

negotiators suggested, and the 

Department agreed, that it would be 

appropriate to combine State 

submission requirements, currently 

addressed in § 668.143, and the test 

publisher submission requirements, 

currently addressed in § 668.144 in a 

single regulatory provision. For this 

reason, we combined and, where 

appropriate, standardized the language 

for the submission requirements for 

both States and test publishers in 

proposed § 668.144. 

We propose to make a number of 

changes to the test publisher submission 

requirements, reflected in § 668.144(c). 

First, we propose to revise 

§ 668.144(c)(8) because we believe it is 

important for test publishers to 

periodically review the content and 

specifications of all tests (not only those 

tests first published five years before 

submission) to ensure that they reflect 

secondary school level verbal and 

quantitative skills. In addition, we 

propose to revise § 668.144(c)(11)(iv)(B) 

to require that a test publisher’s 

technical manual, which must be 

submitted as part of its test submission, 

include evidence demonstrating that the 

test was normed using a sample that is 

representative of the population of 

persons who have earned a high school 

diploma in the United States. We 

propose this change because the 

purpose of this subpart is to implement 

the statutory provisions that provide an 

alternative means for students who do 

not have a high school diploma or the 

equivalent to establish eligibility for the 

title IV, HEA programs. To determine 

the ability of such students to benefit 

from a postsecondary education or 

training program, passing scores on ATB 

tests should be based only on the scores 

of test takers who have a high school 

diploma, not the scores of test takers 

who are beyond the age of compulsory 

attendance but who may not have 

completed high school. 

We also propose to delete the 

requirements relating to performancebased tests or tests containing 


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performance-based sections, reflected in 

current § 668.144(c)(14), because no 

performance-based tests have ever been 

submitted to the Secretary for approval 

and, therefore, we believe the provision 

is unnecessary. 

Finally, we are proposing to add three 

requirements to both the test publisher 

and State test submission requirements. 

First, we propose to include, in 

proposed § 668.144(c)(16) and (d)(7), a 

requirement that test publishers and 

States, respectively, describe their test 

administrator certification process, 

including how they will determine that 

a test administrator has the necessary 

training, knowledge, skills, and integrity 

to test students. We believe that it is 

important for test publishers and States 

to provide this information with their 

test submissions to demonstrate that 

adequate screening procedures are used. 

Throughout the negotiated rulemaking 

discussions on the ATB provisions, one 

of the non-Federal negotiators voiced 

the belief that test publishers should be 

required to determine the ‘‘integrity’’ of 

the test administrators they certify. 

Other non-Federal negotiators 

questioned how test publishers or States 

would evaluate a test administrator’s 

integrity and expressed concern that if 

such a requirement were in the 

regulations, it would be too prescriptive. 

We have included in proposed 

§ 668.144(c)(16)(i) and (d)(7)(i) a 

requirement that test publishers and 

States describe how they will determine 

that a test administrator has the integrity 

necessary to administer tests. The 

Department does not intend to impose 

unnecessary or ill-defined burdens; 

therefore, we are specifically soliciting 

feedback on the proposal to require test 

publishers and States to describe how 

they will determine that test 

administrators have integrity, in 

addition to the training, skills, and 

knowledge necessary to administer 

tests. 

Second, we propose to include, in 

proposed § 668.144(c)(17) and (d)(8), a 

requirement that test publishers and 

States submit a description of the test 

anomaly analysis they will conduct and 

how they will identify potential test 

irregularities and make a determination 

that test irregularities have occurred. We 

propose these requirements to promote 

some transparency in the screening 

process that is being used. 

Third, we propose to include, in 

proposed § 668.144(c)(18) and (d)(9), a 

requirement that test publishers and 

States describe the types of 

accommodations available for 

individuals with disabilities and the 

process for identifying and reporting to 

the test publisher or the State when 

accommodations for individuals with 

disabilities were provided. This 

additional information is necessary for 

scoring and norming purposes. 

Test Approval Procedures (§ 668.145) 

Current regulations: Current § 668.145 

describes both procedures for the review 

of tests submitted by test publishers and 

the circumstances under which the 

Secretary’s approval may be withdrawn. 

Proposed regulations: We propose to 

revise § 668.145 to extend the test 

approval procedures to tests submitted 

by States. We would make a number of 

non-substantive technical changes to 

this section as well. 

Proposed § 668.145(c)(1) would 

specify that the approval of a test begins 

five years from the date the notice of 

approval for the test is published in the 

Federal Register. Under proposed 

§ 668.145(d)(1), test approval could be 

revoked if a test publisher or State 

violated any terms of the agreement 

described in § 668.150 or if the test 

publisher or State substantially changed 

the test and did not resubmit the test, as 

revised, for approval. Proposed 

§ 668.145(d)(2) would provide that 

revocation would become effective 120 

days from the date the notice of 

revocation was published in the Federal 

Register or an earlier date specified by 

the Secretary in a notice published in 

the Federal Register. 

Reasons: Consistent with the changes 

reflected in proposed § 668.144, we 

would amend § 668.145 to make the test 

approval procedures applicable to States 

as well as to test publishers, where 

appropriate. In proposed § 668.144(c)(1), 

we would specify that the approval 

period, not to exceed five years, would 

start on the date the notice of approval 

is published in the Federal Register. We 

propose to provide that the approval 

period commences on this date, rather 

than on the date the Secretary provides 

written notice to the test publisher of 

approval, because the public will be 

able to determine the effective date from 

the notice and that might be relevant 

information for institutions. 

One of the non-Federal negotiators 

suggested expanding the reasons for 

revocation to include substantially 

changing a test without resubmitting it 

to the Department. The Department 

agreed. For this reason, we would add 

language to proposed § 668.145(d)(1) to 

provide that test approval could be 

revoked if a test publisher or State 

substantially changed the test and did 

not resubmit the test, as revised, for 

approval. 

Finally, in proposed § 668.145(d)(2), 

we would provide that a revocation of 

test approval would become effective 

120 days after the date the notice of 

revocation is published in the Federal 

Register or an earlier date specified by 

the Secretary in a notice published in 

the Federal Register. We propose this 

change to ensure that the public has 

access to this information. 

Criteria for Approving Tests (§ 668.146) 

Current regulations: Current § 668.146 

sets forth the criteria the Secretary uses 

to evaluate and approve tests submitted 

under subpart J of part 668. Under this 

provision, in order for a test to be 

approved, a test publisher must provide 

specified information and norm the test 

with groups of sufficient size to produce 

defensible standard errors of the mean, 

with groups not composed 

disproportionately of any race or 

gender, and with a contemporary 

population representative of persons 

who are beyond the usual age of 

compulsory school attendance in the 

United States. 

Proposed regulations: We propose to 

revise § 668.146 to provide that the 

criteria for approving tests apply to tests 

submitted by States as well as test 

publishers. In addition, we propose to 

make a number of small technical and 

conforming changes to this section. 

Finally, in proposed § 668.146(c)(4)(ii), 

we require that States and test 

publishers norm their tests with a 

contemporary sample that is 

representative of the population of 

persons who have earned a high school 

diploma in the United States. 

Reasons: Consistent with the changes 

we propose to make to § 668.144, we 

propose to amend § 668.145 to ensure 

that the criteria for approving tests 

apply to States as well as to test 

publishers, where appropriate. 

We propose to amend 

§ 668.146(c)(4)(ii) to ensure that tests are 

being normed with a contemporary 

sample of persons who have earned a 

high school diploma in the United 

States, rather than persons who are 

beyond the usual age of compulsory 

school attendance in the United States. 

The purpose of this subpart is to 

implement the statutory provisions that 

provide an alternative means for 

students who do not have a high school 

diploma or the equivalent to establish 

eligibility for the title IV, HEA 

programs. Therefore, to determine the 

ability of such students to benefit from 

a postsecondary education or training 

program, pass scores should be based 

only on the scores of test takers who 

have a high school diploma, not the 

scores of test takers who are beyond the 

age of compulsory attendance but who 

may not have completed high school. 


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Passing Scores (§ 668.147) 

Current regulations: Under current 

§ 668.147, the Secretary specifies that 

the passing score on each approved test 

is one standard deviation below the 

mean for students with high school 

diplomas who have taken the test 

within three years before the test was 

submitted for approval. 

Proposed regulations: Proposed 

§ 668.147 would specify that passing 

scores are based on the mean score of 

a sample of individuals who have taken 

the test during the three years before it 

was submitted. The sample would need 

to be representative of the population of 

high school graduates in the United 

States. 

Reasons: The proposed changes to 

§ 668.147 would specify that the passing 

score is based on the mean score of a 

sample of high school graduates who 

have taken the test. This change would 

make it clear that a sample of test takers 

would be used, and that the test takers 

whose scores are used need not be 

students. 

Additional Criteria for the Approval of 

Certain Tests (§ 668.148) 

Current regulations: Current § 668.148 

specifies additional criteria for approval 

of tests that are performance-based, 

developed for non-native speakers of 

English, modified for use for persons 

with disabilities, and computer-based. 

Proposed regulations: Proposed 

§ 668.148 would largely track current 

§ 668.148. In addition to making 

technical updates and conforming 

changes (e.g., updating references to 

documents incorporated by reference 

and updating defined terms to use those 

terms proposed in this document), we 

propose to remove the criteria for 

approval of performance-based tests, 

reflected in current § 668.148(a)(1). We 

also propose to revise the regulatory 

provision relating to tests developed for 

non-native speakers of English who are 

enrolled in a program that is taught in 

their native language to provide that if 

the test is in a language other than 

Spanish, it must be accompanied by a 

recommendation for a provisional 

passing score based upon performance 

of a sample of test takers representative 

of non-English speaking individuals 

who speak a language other than 

Spanish and who have a high school 

diploma. The sample upon which the 

recommended provisional passing score 

would be based would need to be large 

enough to produce stable norms. In 

addition, we would provide, in 

proposed § 668.148(b)(2), that the 

recommended passing scores for tests 

designed solely to measure the English 

language competence of non-native 

speakers of English would need to be 

based on the mean score of test takers 

beyond the age of compulsory school 

attendance who completed (rather than 

entered) specified programs. 

Reasons: We propose to remove the 

regulatory provision related to 

performance-based tests because, as 

mentioned earlier in this preamble 

discussion, no performance-based tests 

have ever been submitted to the 

Secretary for approval. 

The change proposed in the 

regulatory provision relating to tests 

developed for non-native speakers of 

English who are enrolled in a program 

that is taught in their native language 

(other than Spanish) is intended to 

provide that the provisional passing 

scores are based on a sample of test 

takers whose native language is not 

Spanish and who have a high school 

diploma. This is parallel to the 

proposed change in 

§ 668.144(c)(11)(iv)(B). 

Finally, the change reflected in 

proposed § 668.148(b)(2), which would 

require basing recommendations for 

passing scores for tests to measure 

English language competence on scores 

of test takers that have completed, rather 

than entered, specified educational and 

training programs, is designed to be 

consistent with changes throughout 

these proposed regulations. The 

Department specifically seeks input on 

the possible impact of this change due 

to the potential for unintended 

consequences. 

Special Provisions for the Approval of 

Assessment Procedures for Individuals 

With Disabilities (§ 668.149) 

Current regulations: Current § 668.149 

(Special provisions for the approval of 

assessment procedures for special 

populations for whom no tests are 

reasonably available) describes the 

special procedures that apply when 

testing persons with disabilities and 

students whose native language is not 

English and who are not fluent in 

English under subpart J of part 668. 

Proposed regulations: We propose to 

restructure § 668.149 to focus only on 

the special provisions for the approval 

of assessment procedures for 

individuals with disabilities. We would 

remove current § 668.149(b), which 

describes the procedures for automatic 

test approval for tests provided in a 

student’s native language for students 

whose native language is not English. 

Reasons: We propose to revise 

§ 668.149 to make clear the respective 

responsibilities of test publishers (or 

States, where appropriate) and test 

administrators when using special 

assessment procedures for individuals 

with disabilities. 

We expect test administrators who 

administer tests under this section to 

ensure there is documentation of the 

test-taker’s need for a modified test and 

to comply with the provisions of 

§ 668.149(c)(2). We would encourage a 

test administrator to coordinate with the 

institution’s disability support services 

center, or other institutional or State 

staff who have knowledge of an 

individual’s need for a modified test to 

ensure that an appropriate test is given. 

We propose to remove the regulatory 

language concerning the use of foreign 

language tests, because historically there 

have been no submissions of foreign 

language tests for approval. Moreover, 

pursuant to the current regulations, 

because there are no currently approved 

foreign language tests, any foreign 

language test that has not been rejected 

by the Secretary is considered 

automatically to be approved even if it 

has not been submitted to the Secretary 

for approval. Under the current 

regulatory framework, therefore, test 

publishers and States lack an incentive 

to submit tests in foreign languages for 

the Secretary’s approval. Continuing 

under the current regulations in 

§ 668.149(b) would allow test publishers 

and States to circumvent the ATB test 

approval process; therefore, we propose 

its removal. With the removal of 

‘‘Students whose native language is not 

English’’ from § 668.149(b), foreign 

language tests would be required to be 

submitted through the established test 

approval procedures in §§ 668.145 and 

668.148. 

During the negotiated rulemaking 

discussions, some of the non-Federal 

negotiators thought it might be 

advisable to have a transition period 

before removing the special provisions 

in current § 668.149(b). In light of this 

suggestion, the Department is soliciting 

comments on whether a transition 

period is necessary and, if one is 

necessary, how long should it be. 

Agreement Between the Secretary and a 

Test Publisher or a State (§ 668.150) 

Current regulations: The current 

regulations require test publishers to 

enter into an agreement with the 

Secretary before an institution may use 

the test publisher’s test to determine a 

student’s eligibility for title IV, HEA 

program funds. Current § 668.150(b) 

describes the specific provisions that 

must be included in the agreement. 

Current § 668.150(c) contains the 

regulations governing the Secretary’s 

termination of an agreement. 

Proposed regulations: Proposed 

§ 668.150 would provide that States, as 


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well as test publishers, must enter into 

agreements with the Secretary in order 

to have their tests approved. 

We would also revise this section to 

require both test publishers and States 

to comply with a number of new 

requirements that would be added to the 

agreement with the Secretary. These 

requirements would include: 

• Requiring the test administrators 

that they certify to provide them with 

certain information about whether they 

have been decertified (see proposed 

§ 668.150(b)(2)). 

• Certifying only test administrators 

who have not been decertified within 

the last three years (see proposed 

§ 668.150(b)(3)(iii)). 

• Re-evaluating the qualifications of a 

test administrator who has been 

decertified by another test publisher or 

State (see proposed § 668.150(b)(5)). 

• Immediately notifying the test 

administrator, the Secretary, and 

institutions when the test administrator 

is decertified (see proposed 

§ 668.150(b)(6)). 

• Reviewing test results of tests 

administered by a decertified test 

administrator and immediately 

notifying affected institutions and 

students (see proposed § 668.150(b)(7)). 

• Providing copies of test anomaly 

analysis every 18 months instead of 

every 3 years (see proposed 

§ 668.150(b)(13)). 

• Providing access to test records or 

other documents related to an audit, 

investigation, or program review of an 

institution, the test publisher, or a test 

administrator (see proposed 

§ 668.150(b)(14)). 

• Reporting to the Secretary any 

credible information indicating that a 

test has been compromised (see 

proposed § 668.150(b)(15)). 

• Reporting to the Office of Inspector 

General of the Department of Education 

any credible information indicating that 

a test administrator or institution may 

have engaged in fraud or other criminal 

misconduct (see proposed 

§ 668.150(b)(16)). 

• Requiring a test administrator who 

provides a test to an individual with a 

disability who requires an 

accommodation in the test’s 

administration to report to the test 

publisher or the State the nature of the 

disability and the accommodations that 

were provided (see proposed 

§ 668.150(b)(17)). 

Reasons: Many of the requirements 

we propose to add to the required 

provisions in agreements between the 

Secretary and test publishers (and, 

under the proposed regulations, States) 

are based on recommendations the 

Department received from the 

Government Accountability Office 

(GAO). GAO issued a report in August 

2009 that cited the Department for weak 

oversight of the ATB test requirements; 

in its report, GAO provided 

recommendations to the Department to 

strengthen controls over the ATB testing 

process and to amend the ATB 

regulations. Specifically, the GAO 

identified the following problems with 

the current regulations: 

• Current regulations require test 

publishers to conduct test score 

analyses only every three years. This 

means it is possible for test 

administrators who are administering 

tests improperly to go undetected for up 

to three years. 

• While the current regulations 

require that test publishers decertify test 

administrators who fail to administer 

tests properly, they do not require test 

publishers to report to the Department 

on implementation of their 

decertification process. 

• Current regulations do not 

specifically require test publishers to 

follow up on test score irregularities or 

report any corrective actions to the 

Department. Therefore, the Department 

has no way of knowing whether actual 

violations occurred or how the test 

publishers dealt with any violations 

they identified. 

In response to the first problem 

identified by GAO, we propose to 

require, in proposed § 668.150(b)(13), 

that test publishers conduct test score 

analyses every 18 months, instead of 

every 3 years. This change would 

reduce the possibility that test 

administrators who are administering 

tests improperly would go undetected. 

The Department initially proposed that 

test anomaly analysis be submitted 18 

months after test approval, then 

annually thereafter. However, after 

hearing the discussion of the benefits 

and drawbacks of more frequent 

analysis, the Department agrees that 

receiving test score analyses every 18 

months after approval would address its 

concerns. 

The second problem identified by 

GAO was that current regulations do not 

require test publishers to report to the 

Department on implementation of their 

decertification process. The Department 

seeks to address this problem in 

proposed § 668.150(b)(6), which would 

require test publishers and States to 

immediately notify the test 

administrator, the Secretary, and the 

institutions where the test administrator 

previously administered approved tests, 

when the test publisher or the State 

decertifies a test administrator. 

The decertification of test 

administrators and the draft regulatory 

language the Department offered to 

address this problem generated a 

considerable amount of discussion 

during the negotiated rulemaking 

sessions. The Department initially 

proposed draft regulatory language that 

would require test publishers and States 

to review the tests results of the tests 

administered by a decertified test 

administrator and determine which tests 

were invalid. During the discussion at 

negotiated rulemaking, it became clear 

that the focus of the proposed 

regulations should be on a 

determination of whether the tests were 

administered improperly, rather than on 

a determination of whether the tests 

were invalid. For this reason, proposed 

§ 668.150(b)(7)(i) would require test 

publishers and States to review the test 

results of tests administered by 

decertified test administrators to 

determine which tests may have been 

administered improperly. Proposed 

§ 668.150(b)(7)(ii) would require that 

test publishers and States immediately 

notify the affected institutions and 

students when they determine that tests 

were improperly administered. The 

Department is committed to providing 

guidance to test publishers, States, and 

institutions regarding how to handle 

situations where tests have been 

determined to be improperly 

administered and to working with the 

test publishers and the States on 

notification letters to institutions and 

students. 

Some non-Federal negotiators said it 

was important for all students who had 

been given an ATB test by a decertified 

test administrator to be notified. Other 

non-Federal negotiators believed this 

was not necessary. The Department 

solicits comments on whether 

notification to all potentially affected 

institutions, students, or prospective 

students should take place when a test 

administrator is decertified, regardless 

of whether there has been a 

determination that the tests given to 

those students or prospective students 

were improperly administered. 

Some non-Federal negotiators 

expressed the opinion that once a test 

administrator was decertified, he or she 

should not be able to be recertified, and 

that the Department should keep a list 

of decertified test administrators. The 

discussion of this topic at negotiated 

rulemaking caused the Department to 

examine options for the appropriate 

length of time for decertification, the 

impact of a decertification by one test 

publisher or State on the certification of 

that test administrator by other test 

publishers or States, and the extent of 

notifications. 


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The Department’s position is that the 

decertification process should not be 

any more complicated than necessary. 

As there is no provision for a third party 

to appeal a decertification, we do not 

believe it is appropriate for a test 

administrator who is decertified by one 

test publisher to be decertified forever— 

without the ability to be certified by any 

test publisher again. 

Therefore, we propose a number of 

regulatory changes to ensure that States 

and test publishers have rigorous 

certification and decertification 

processes. Specifically, we would 

require, at the front end of the 

certification process, that a test 

publisher (or State) obtain a statement 

from potential test administrators 

indicating that they are not currently 

decertified and agreeing that they will 

notify the test publisher or State if they 

become decertified by another entity 

(see proposed § 668.150(b)(2)). We 

would then provide, under proposed 

§ 668.150(b)(3)(iii), that a decertified test 

administrator would not be able to get 

a new certification again until three 

years after his or her decertification. We 

believe that these provisions would 

address the potential problem of having 

a decertified test administrator obtain 

certification from another test publisher 

and getting certified. 

In the case of a test administrator who 

has been certified by more than one test 

publisher (or State) but then is 

decertified by one test publisher (or 

State), we would not require the 

immediate and automatic decertification 

of the test administrator by other test 

publishers (or States). Instead, as 

reflected in proposed § 668.150(b)(5), 

we would require that other test 

publishers re-evaluate the qualifications 

of the test administrator to determine 

whether it is appropriate to continue the 

test administrator’s certification. 

The Department is proposing this 

approach to avoid the problem of one 

entity’s actions having an inappropriate 

negative impact on another entity. It is 

conceivable that the cause for 

decertification by one test publisher or 

State would be unlikely to arise at a 

different test publisher or State because 

of different procedures. Also, in the 

context of test publishers, this approach 

would avoid the potential for one test 

publisher being able to affect the 

services of a competitor. 

The third problem identified by GAO 

(i.e., the fact that the current regulations 

do not require any follow-up on test 

score irregularities or corrective action) 

is addressed by a number of proposed 

provisions. In addition to proposed 

§ 668.150(b)(7), which we discussed 

earlier, § 668.150(b)(15) would require 

that a test publisher or State 

immediately report to the Secretary any 

credible information indicating that a 

test has been compromised. Proposed 

paragraph (b)(16) of § 668.150 would 

require that test publishers and States 

immediately report to the Department’s 

Office of Inspector General any credible 

information indicating that a test 

administrator or institution may have 

engaged in fraud or other criminal 

misconduct. 

Finally, in proposed § 668.150(b)(17), 

we would require that test 

administrators notify test publishers 

(and States) if they provide any 

accommodations to individuals with 

disabilities. We believe that adding this 

requirement is appropriate because it 

would allow test publishers and States 

to take this information into account 

when norming tests in the future. 

Administration of Tests (§ 668.151) 

Current regulations: Current § 668.151 

requires institutions to select a test 

administrator to give approved tests and 

to use results from an approved test 

publisher or assessment center. This 

provision also describes the conditions 

under which a test is considered to be 

independently administered. 

Proposed regulations: Proposed 

§ 668.151(a) would largely mirror the 

language in current § 668.151(a), except 

that, in paragraph (a)(1), we would 

remove the reference to tests approved 

under § 668.143 and we would refer to 

‘‘test administrator’’, rather than 

‘‘certified test administrator.’’ As 

discussed elsewhere in this preamble, 

we have moved much of the language 

from current § 668.151(b) to the 

definition of the term independent test 

administrator in proposed § 668.142. As 

revised, proposed § 668.151(b)(1) would 

retain the current provision that the 

Secretary considers a test to be 

independently administered if it is 

given at an assessment center by a test 

administrator who is an employee of the 

center. In proposed § 668.151(b)(2), we 

would add language to provide that the 

Secretary also considers a test to be 

independently administered if it is 

given by an independent test 

administrator (defined in § 668.142) 

who maintains tests at a secure location 

and submits the test for scoring by the 

test publisher or the State or, for a 

computer-based test, a record of the test 

scores, within two business days of 

administering the test. 

Proposed § 668.151(c) and (d) would 

largely track current § 668.151(c) and (d) 

except that we would update these 

paragraphs so that they would apply to 

both States and test publishers. In 

addition, we would revise proposed 

§ 668.151(d)(3) to ensure that it is 

consistent with the changes reflected in 

proposed § 668.151(b)(2) and 

§ 668.152(b)(2). We are proposing to 

remove § 668.152(d)(6) because the 

requirement is covered in proposed 

§ 668.150(b)(14). 

Finally, in proposed § 668.151(g)(4), 

we would require institutions to keep a 

record of each individual who took an 

ATB test and the name and address of 

the test administrator who administered 

the test and any identifier assigned to 

the test administrator by the test 

publisher or the State. If the individual 

who took the test has a disability and is 

unable to be evaluated by the use of an 

approved ATB test, or requested or 

required a testing accommodation, the 

institution would be required, under 

proposed § 668.151(g)(5), to maintain 

documentation of the individual’s 

disability and of the testing 

arrangements provided. 

We would also make minor technical 

and conforming changes throughout this 

section. 

Reasons: The minor changes reflected 

in proposed § 668.151(a) would be made 

to make the provision consistent with 

other changes in the proposed 

regulations. Specifically, we remove the 

reference to § 668.143 because we are 

not including that provision in the 

proposed regulations, and we refer to 

‘‘test administrator’’ because, by 

definition, a test administrator must be 

certified (see proposed definition of test 

administrator in § 668.142). 

In proposed § 668.151(b)(2), we would 

add a requirement to address the need 

to maintain tests in a secure location. 

This topic generated a great deal of 

discussion during the negotiated 

rulemaking sessions. After the second 

negotiated rulemaking session, the 

Department proposed draft language 

that would have required test publishers 

to maintain tests at a secure location, 

somewhere other than at the institution 

at which the tests are being 

administered. 

Those non-Federal negotiators who 

had expressed the belief that tests 

should not be kept at an institution, 

unless the institution had an assessment 

center, were supportive of this proposal. 

Some of the other non-Federal 

negotiators identified a number of 

potential problems with this proposal. 

For example, they explained that it is 

common practice for test publishers to 

ship cartons of tests to the institutions 

where the tests will be administered, 

whether the tests are being administered 

at a test assessment center or by an 

independent test administrator. In 

addition, we were informed that many, 

if not most tests approved for ATB are 


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used for placement and other purposes 

and not used solely for the 

determination of individuals’ eligibility 

for title IV, HEA programs. Some nonFederal negotiators noted that, in fact, it 

is also possible that tests may be far 

more secure if they are located at an 

institution where the facilities are 

monitored. Independent test 

administrators may not have access to 

secure locations apart from the 

institutions at which they give tests. For 

this reason, some non-Federal 

negotiators urged the Department not to 

require that tests be maintained in a 

secure location other than the 

institution at which they would be 

administered. 

The language in proposed 

§ 668.151(b)(2) is consistent with the 

Department’s position that all ATB tests 

must be kept at a secure location. 

However, we also understand that if 

some of the tests are used for multiple 

purposes, it is difficult to prohibit the 

delivery of these tests to an institution. 

Therefore, the Department is 

specifically soliciting comments 

regarding proposed § 668.151(b)(2) and 

on other ways the Department can 

ensure that tests can be kept secure. 

Specifically, what does it mean to keep 

tests at a secure location? Does it mean 

a locked facility to which only the test 

administrator has a key? Should the 

focus be on maintaining a chain of 

custody, with adequate safeguards, 

rather than on the location itself? Is 

there a way to maintain inventory that 

would address the test security issue? 

As test publishers have a vested interest 

in keeping their tests secure, the 

Department is particularly interested in 

recommendations regarding how best to 

address the security issue in regulations. 

With regard to the changes reflected 

in proposed § 668.151(g), we would be 

adding to the information that an 

institution must record. The added 

information that the institution would 

be required to maintain for each 

individual who took an ATB test would 

include: (1) the name and address of the 

test administrator who administered the 

test and any identifier assigned to the 

test administrator by the test publisher 

or the State; and (2) if the individual 

who took the test has a disability and is 

unable to be evaluated by the use of an 

approved ATB test or the individual 

requested or required a testing 

accommodation, documentation of the 

individual’s disability and of the testing 

arrangements that is provided in 

accordance with § 668.153(b). This 

proposed provision is intended to 

encompass documentation of 

accommodations provided through the 

use of accessible technologies, as 

described in § 668.144(c)(18) and(d)(9), 

as well as other accommodations 

requested or required by the individual 

with a disability in accordance with 

§ 668.153(b). Requiring the name, 

address and any assigned identifier for 

each test administered would enable the 

test publisher or State to identify all 

tests administered by a test 

administrator and facilitate the 

notification of test takers should the test 

publisher or the State determine that the 

test was improperly administered. 

Requiring documentation of disabilities 

that necessitate testing accommodation, 

and of the testing arrangements 

provided, would provide important 

information for two reasons. First, 

collection of the information would 

help emphasize that testing 

accommodations may be provided only 

to individuals with documentation of a 

disability who require testing 

accommodations. We would encourage 

test administrators to work with an 

institution’s disability support services 

center, or other institutional or State 

staff who have knowledge and 

experience in providing appropriate 

testing accommodations to individuals 

with disabilities to ensure that 

appropriate testing accommodations are 

provided and are appropriately 

documented. Second, providing such 

information to the test publisher or State 

would let those entities know that 

testing accommodations were provided, 

so that entity can make a determination 

regarding whether to include the score 

with scores of other test takers, for 

whom no testing accommodations were 

provided, for evaluative or norming 

purposes in the future. 

Administration of Tests by Assessment 

Centers (§ 668.152) 

Current regulations: Under current 

§ 668.152(a), assessment centers are 

required to follow the requirements for 

administering tests specified in 

§ 668.151(d). If the assessment center 

scores tests, it must send copies of 

completed tests, or a report listing all 

test-takers’ scores, to the test publisher 

on an annual basis (see current 

§ 668.152(b)). 

Proposed regulations: Proposed 

§ 668.152(a) would clarify that 

assessment centers are also required to 

comply with the provisions of § 688.153 

(Administration of tests for individuals 

whose native language is not English or 

for individuals with disabilities), if 

applicable. 

Under proposed § 668.152(b)(2), 

assessment centers that score tests 

would be required to provide copies of 

completed tests or lists of test-takers’ 

scores to the test publisher or the State, 

as applicable, on a weekly basis. Under 

proposed § 668.152(b)(2)(i) and (b)(2)(ii), 

copies of completed tests or reports 

listing test-takers’ scores would be 

required to include the name and 

address of the test administrator who 

administered the test and any identifier 

assigned to the test administrator by the 

test publisher or the State. 

Reasons: In proposed § 668.152(a), we 

would clarify that assessment centers 

are also required to comply with the 

provisions of § 668.153. With respect to 

individuals whose native language is 

not English, the test assessment center 

would be required to use the 

appropriate test, depending on the type 

of program in which an individual plans 

to enroll, and whether the classes are 

conducted in English or in the 

individual’s native language. With 

respect to individuals with disabilities, 

the assessment center would be required 

to maintain documentation of an 

individual’s disability, and would be 

required to ensure that there is 

documentation that an individual with 

a disability requires accommodations, 

such as extra time or a quiet room, for 

taking an approved test. Under current 

regulations, the presumption is that 

assessment centers comply with the 

provisions of § 668.153, but the 

proposed regulations would make the 

requirement explicit so there is no 

misunderstanding. 

In proposed § 668.152(b)(2), we would 

require assessment centers that score 

tests to provide on a weekly basis 

(rather than an annual basis) the test 

publisher, or the State, as applicable, 

with all copies of the completed tests 

and a report listing, among other things, 

all test-takers’ scores and institutions to 

which the scores were sent. We would 

also revise this section to require 

assessment centers to record the name 

and address of the test administrator 

who administered the test and any 

identifier assigned to the test 

administrator by the test publisher and 

to maintain this information in the 

copies of the completed tests or a report 

listing all test-takers’ scores and 

institutions to which the scores were 

sent. These changes would enable the 

test publisher or State to identify all 

tests administered by a test 

administrator and to facilitate the 

notification of test takers should the test 

publisher or the State determine that the 

test was improperly administered. 

We also propose minor technical and 

conforming changes throughout this 

section. 


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Administration of Tests for Individuals 

Whose Native Language Is Not English 

or for Individuals With Disabilities 

(§ 668.153) 

Current regulations: Current § 668.153 

describes the requirements governing 

the administration of tests for students 

whose native language is not English or 

for persons with disabilities. 

Current § 668.153(a) specifies the 

requirements that apply to the tests that 

must be used for students whose native 

language is not English and those 

requirements differ depending on 

whether the student is enrolled in (1) a 

program conducted entirely in his or her 

native language, (2) a program that is 

taught in English with an English as a 

Second Language (ESL) component; or 

(3) a program that is taught in English 

without an ESL component, or the 

student does not enroll in the ESL 

component if the institution offers such 

a component. 

Current § 668.153(b) specifies the 

requirements that apply to the tests that 

must be used for students with a 

documented impairment. Under this 

provision, an institution must use a test 

described in § 668.148(a)(3) or 

§ 668.149(a) for students with a 

documented impairment. The 

institution must document that a 

student is disabled and unable to be 

evaluated by the use of a conventional 

test. 

Proposed regulations: In addition to 

reflecting a number of technical and 

conforming changes, proposed § 668.153 

would clarify that this section applies to 

individuals whose native language is 

not English or individuals with 

disabilities who are enrolled or who 

plan to enroll at an institution (i.e., not 

only students). 

Proposed § 668.153(a)(1) and (a)(3) 

would remain largely unchanged from 

the current regulations. Under proposed 

§ 668.153(a)(2), an individual whose 

native language is not English who is 

enrolled or plans to enroll in a program 

taught in English with an ESL 

component would now be required to 

take an English language proficiency 

assessment approved under § 668.148(b) 

and, before beginning the portion of the 

program taught in English, a test 

approved under § 668.146. 

Proposed § 668.153(b) would be 

revised by removing references to an 

individual’s impairment and, in its 

place, using the term individual with a 

disability, which would be defined in 

proposed § 668.142. The substantive 

changes reflected in paragraph (b) of 

proposed § 668.153 relate to the 

documentation necessary to support the 

determination that an individual has a 

disability and requires accommodations 

for taking an approved test. If an 

individual with a disability requires 

accommodations—such as extra time or 

a quiet room—for taking an approved 

test, or is unable to be evaluated by the 

use of an approved ATB test, the test 

administrator would be required to 

ensure that there is documentation to 

support the alternative arrangements. 

Proposed § 668.153(b)(4), which lists 

potential sources of such 

documentation, would be expanded to 

include a record of the disability from 

a local or State educational agency, or 

other government agency, such as the 

Social Security Administration or a 

vocational rehabilitation agency that 

identifies the disability and may include 

a diagnosis as well as recommended 

testing accommodations. 

Reasons: We propose to refer to 

‘‘individuals who are enrolled, or who 

plan to enroll’’, instead of ‘‘students who 

are enrolled’’, throughout this section 

because it is common for individuals to 

take ATB tests prior to enrollment. 

We propose to make the changes 

reflected in proposed § 668.153(a)(2) to 

address a problem with the current 

regulations, which require non-native 

English speakers who enroll in a 

program that is taught in English and 

that has an ESL component to take 

either an ESL test or an ATB test in the 

student’s native language. Testing such 

an individual in his or her native 

language does not demonstrate that the 

individual has the ability to benefit from 

a program taught in English. Rather, for 

these individuals, it is necessary first to 

determine how proficient they are in 

English. Therefore, proposed 

§ 668.153(a)(2) would require 

individuals who wish to enroll in such 

a program to first take an English 

language proficiency assessment to 

determine appropriate placement in the 

ESL component. Before such students 

could begin a program taught in English, 

they would be required to take a regular 

ATB test in English. 

Finally, we would revise 

§ 668.153(b)(3) to require that test 

administrators ensure that there is 

adequate documentation to support 

determinations that a test-taker is an 

individual with a disability and requires 

accommodations for taking an approved 

test or is unable to be evaluated by the 

use of an approved ATB test. The 

examples of documentation that would 

be added to § 668.153(b)(4) are provided 

to assist institutions in understanding 

what kinds of documentation are 

appropriate for supporting a 

determination that an individual has a 

disability and requires accommodations 

for taking an approved test. 

Institutional Accountability (§ 668.154) 

Current regulations: Current § 668.154 

limits institutional liability for title IV, 

HEA program funds disbursed to a 

student whose eligibility is determined 

under subpart J of part 668 only if the 

institution used a test administrator 

who: (1) was not independent of the 

institution at the time the test was 

given, (2) compromised the testing 

process, or (3) was unable to 

demonstrate that the student received a 

passing score on an approved test. 

Proposed regulations: Proposed 

§ 668.154 would largely track current 

§ 668.154, except that it would provide 

for institutional liability if institutions 

used a test that was not administered 

independently in accordance with 

§ 668.151(b). In addition, in proposed 

§ 668.154(b), we would clarify that an 

institution would be liable if it or an 

employee of the institution 

compromised the test in any way. 

Reasons: We propose to amend 

§ 668.154(a) to provide that an 

institution would be liable if the 

institution used a test that was not 

administered independently, in 

accordance with § 668.151(b). In making 

this change, we would clarify that ATB 

tests must be administered 

independently, whether in an 

assessment center or by an independent 

test administrator in order to preserve 

the integrity of the testing process. 

In addition, we propose to provide 

that an institution would be held 

responsible if either the institution or an 

employee of the institution 

compromises the testing process to 

promote accountability. 

Transitional Rule for the 1996–97 

Award Year (§ 668.155) 

Current regulations: Current § 668.155 

contains a transitional rule for the 1996– 

97 award year. 

Proposed regulations: The proposed 

regulations would remove current 

§ 668.155 and reserve that section for 

future use. 

Reason: We propose to remove the 

transitional rule for 1996–97 because it 

is outdated. 

Approved State Process (§ 668.156) 

Current regulations: Current § 668.156 

provides the requirements for the 

Department’s approval of a State process 

that serves as an alternative to the 

requirement for passage of a test 

approved under subpart J of part 668. 

Proposed regulations: Proposed 

§ 668.156 would remain largely 

unchanged from current § 668.156. The 

one change, in proposed § 668.156(e), 

would specify that an approved State 


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process would become effective on the 

date the Secretary approves the process 

or six months after the State submits the 

process for approval if the Secretary 

neither approves nor disapproves the 

process. 

Reason: The change clarifies that the 

effective date of a State process is the 

date the process has been deemed to be 

approved. We made this change to 

clarify what the effective date of a 

process is when the Secretary 

affirmatively approves it. 

Disbursements (§§ 668.164(i), 

685.102(b), 685.301(e), 686.2(b), and 

686.37(b)) 

Provisions for Books and Supplies 

Statute: Section 401(e) of the HEA 

provides that an institution may credit 

a student’s account with Federal Pell 

Grant funds to pay for the cost of tuition 

and fees, and for institutionally owned 

housing, room, and board. For other 

goods and services provided by the 

institution, the student may elect to 

have his or her account credited with 

Federal Pell Grant funds to pay those 

costs. In all other respects, section 

401(e) provides that payments of 

Federal Pell Grant funds are made in 

accordance with regulations 

promulgated by the Secretary. The HEA 

does not address the issue of crediting 

student accounts for the other title IV, 

HEA programs. 

Current regulations: Section 

668.164(b) provides that an institution 

must disburse title IV, HEA program 

funds (except for FWS funds) on a 

payment period basis. Section 

668.164(d) reflects the statutory 

requirements for crediting a student’s 

account with Federal Pell Grant funds, 

but provides that those requirements 

also apply to ACG, National SMART 

Grant, TEACH Grant, FSEOG, Federal 

Perkins Loan, Direct Loan, and FFEL 

program funds. In addition, 

§§ 686.33(a), 690.76(a), and 691.76(a), 

provide that for each payment period, 

an institution may pay Federal Pell 

Grants, ACGs, National SMART Grants, 

and TEACH Grants to a student in a 

time and manner that best meets the 

student’s needs. 

Proposed regulations: Under 

proposed § 668.164(i), an institution 

would provide a way for a Federal Pell 

Grant eligible student to obtain or 

purchase required books and supplies 

by the seventh day of a payment period 

under certain conditions. An institution 

would have to comply with this 

requirement only if, 10 days before the 

beginning of the payment period, the 

institution could disburse the title IV, 

HEA program funds for which the 

student is eligible, and presuming that 

those funds were disbursed, the student 

would have a credit balance under 

§ 668.164(e). The amount the institution 

would provide to the student for books 

and supplies would be the lesser of the 

presumed credit balance or the amount 

needed by the student, as determined by 

the institution. In determining the 

amount needed by the student, the 

institution may use the actual costs of 

books and supplies or the allowance for 

books and supplies used in the student’s 

cost of attendance for the payment 

period. 

Reasons: Although the current 

regulations permit institutions to 

disburse Federal Pell Grant and other 

title IV, HEA program funds in a manner 

that best meets the needs of students, 

we have identified situations where 

low-cost institutions delay disbursing 

funds for an extended time, or make 

partial disbursements to cover costs for 

only tuition and fees. As a result of 

these practices, students either have to 

pay for books and supplies that would 

otherwise be paid by title IV, HEA 

program funds by obtaining loans, or do 

without the books and supplies needed 

at the beginning of the term or 

enrollment period until the institution 

makes the funds available. The 

proposed regulations would reduce 

these disbursement delays at some 

institutions and enable students to 

obtain their books and supplies in a 

timely manner. 

During the negotiated rulemaking 

sessions, some of the non-Federal 

negotiators stated that many institutions 

advance funds (institutional funds or 

title IV, HEA program funds) or issue 

vouchers, or other credit vehicles, that 

students use to obtain books and 

supplies. The negotiators noted that if a 

student to whom the institution 

provided the advance or voucher does 

not begin classes, the institution risks 

losing the amount advanced. For 

example, if the institution advanced 

Federal Pell Grant funds to a student, 

e.g., made a disbursement directly to the 

student, and the institution could not 

show that the student began attendance 

in the payment period, under 

§ 668.21(a)(1) the institution would be 

liable and would have to return those 

funds. For this reason, some of the nonFederal negotiators argued that in 

exchange for requiring an institution to 

advance funds or issue vouchers early 

in the payment period, and before the 

institution could establish that the 

student began attendance, the student 

should be liable under § 668.21 for 

returning the funds. 

In response to these concerns and 

suggestions, the Department put forward 

draft proposed regulations shifting the 

liability to students, but that draft was 

rejected by other non-Federal 

negotiators for two reasons. First, these 

negotiators believed that a student 

should not be responsible for repaying 

a debt under the title IV, HEA programs 

because a student could be precluded 

from enrolling again at a postsecondary 

institution if the student did not repay 

the debt or make satisfactory 

arrangements to repay it. Second, some 

of the non-Federal negotiators were 

aware of predatory practices at some 

institutions where students were 

promised an advance of funds simply 

for enrolling in programs at those 

institutions, and these negotiators 

believed that shifting the liability to 

students would exacerbate these 

practices. 

Some of the non-Federal negotiators 

noted that some public institutions must 

request funds from a State office (unlike 

other institutions that have direct 

control of funds) and cautioned against 

adopting any regulations that would 

make it administratively difficult, if not 

impossible, for these institutions to 

comply with disbursement timelines. 

These non-Federal negotiators suggested 

that an advance or voucher for books 

and supplies could be issued early in 

the payment period only if the 

institution determined that the student 

was eligible and otherwise qualified for 

title IV, HEA program funds before the 

beginning of the payment period, and 

this suggestion is reflected in the 

proposed regulation. 

The committee agreed to adopt 

proposed § 668.164(i), believing it 

provided an appropriate balance 

between the need for students to be able 

to purchase or obtain books and 

supplies early in the payment period 

and the administrative needs of 

institutions. 

Reporting Disbursements, Adjustments, 

and Cancellations 

Statute: None. 

Current regulations: Sections 

685.301(e) and 686.37(a) require an 

institution to submit a record to the 

Department for the initial disbursement 

of a Direct Loan or TEACH Grant no 

later than 30 days following the date of 

that disbursement. In addition, an 

institution must submit subsequent 

records for disbursements, adjustments, 

and cancellations of these program 

funds no later than 30 days following 

the date of those actions. However, 

§ 690.83(a)(2) of the Federal Pell Grant 

regulations provides that an institution 

submits Payment Data in accordance 

with procedures established by the 


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Secretary through publication in the 

Federal Register. 

Proposed regulations: The proposed 

regulations in §§ 685.301(e) and 

686.37(b) would adopt the current 

Federal Pell Grant reporting 

requirements. Also, the definition of the 

term ‘‘Payment Data’’ would be added to 

the Direct Loan and TEACH Grant 

program regulations in §§ 685.102(b) 

and 686.2(b), respectively. 

Reasons: The proposed regulations 

would harmonize the reporting 

requirements for the Federal Pell Grant, 

TEACH Grant, and Direct Loan 

programs and provide flexibility to the 

Secretary to modify the requirements to 

take advantage of changing technology 

and improved business processes. 

Executive Order 12866 

Regulatory Impact Analysis 

Under Executive Order 12866, the 

Secretary must determine whether the 

regulatory action is ‘‘significant’’ and 

therefore subject to the requirements of 

the Executive Order and subject to 

review by the OMB. Section 3(f) of 

Executive Order 12866 defines a 

‘‘significant regulatory action’’ as an 

action likely to result in a rule that may 

(1) have an annual effect on the 

economy of $100 million or more, or 

adversely affect a sector of the economy, 

productivity, competition, jobs, the 

environment, public health or safety, or 

State, local or tribal governments or 

communities in a material way (also 

referred to as an ‘‘economically 

significant’’ rule); (2) create serious 

inconsistency or otherwise interfere 

with an action taken or planned by 

another agency; (3) materially alter the 

budgetary impacts of entitlement grants, 

user fees, or loan programs or the rights 

and obligations of recipients thereof; or 

(4) raise novel legal or policy issues 

arising out of legal mandates, the 

President’s priorities, or the principles 

set forth in the Executive order. 

Pursuant to the terms of the Executive 

order, we have determined this 

proposed regulatory action will have an 

annual effect on the economy of more 

than $100 million. Therefore, this action 

is ‘‘economically significant’’ and subject 

to OMB review under section 3(f)(1) of 

Executive Order 12866. 

Notwithstanding this determination, we 

have assessed the potential costs and 

benefits—both quantitative and 

qualitative—of this regulatory action 

and have determined that the benefits 

justify the costs. 

Need for Federal Regulatory Action 

These proposed regulations are 

needed to implement provisions of the 

HEA, as amended by the HEOA, 

particularly related to programs that 

prepare students for gainful 

employment, incentive compensation, 

satisfactory academic progress policies, 

and verification of information on 

student aid applications which require 

the development of new or revised 

policies and disclosures for institutions 

participating in Federal student 

assistance programs. These regulations 

also would implement changes made by 

the HEOA to provisions related to 

ability to benefit options. 

Many regulatory provisions were 

included in this NPRM because of the 

length of time since they had been 

updated or the provisions’ relationship 

to significant developments, such as the 

Department’s FAFSA simplification 

initiative. In the following areas, the 

Secretary has exercised limited 

discretion in including topics in these 

proposed regulations: 

Definition of High School Diploma 

(§ 668.16(p)): The proposed regulations 

would require institutions to 

demonstrate the capability to adequately 

administer the program by developing 

and following procedures to evaluate 

the validity of a student’s high school 

completion. A high school diploma is 

an essential factor in determining an 

institution’s participation in or a 

student’s eligibility for assistance under 

the title IV, HEA programs, but the term 

is not defined anywhere in the HEA or 

its implementing regulations. Under 

proposed § 668.16(p), institutions would 

have to verify a student’s high school 

completion if the institution or the 

Secretary has reason to believe a 

student’s diploma is not valid or is not 

from an entity that provides secondary 

school education. This proposed 

provision is not intended to create a 

requirement to collect high school 

diplomas from all students. Rather, it 

allows operational flexibility so 

institutions can choose the best 

approach to make inquiries when 

warranted. To assist in this process, the 

Department is working to implement 

changes in the FAFSA. Specifically, 

beginning in 2011–2012, students will 

be required to list the name of their 

secondary school and the State that 

issued their diploma when completing 

their FAFSA. In addition, the 

Department plans to issue guidance to 

institutions on developing and 

following procedures for evaluating the 

validity of high school diplomas 

through the Federal Student Aid 

Handbook or other means. 

Ability to Benefit (§§ 668.32 and 

668.141 through 668.156): Students 

without a high school diploma or its 

equivalent may become eligible for title 

IV, HEA program funds if they can 

prove their ability to benefit from the 

planned education by taking 

Department-approved ability to benefit 

tests or completing college coursework. 

The current regulations specify the 

criteria and procedures for approval of 

ATB tests, the requirements for 

independent administration of approved 

tests, the requirements for maintaining 

the Secretary’s approval of ATB tests, 

and the procedures for the Secretary’s 

approval of alternate State processes. 

As discussed in the ability to benefit 

section of this NPRM, the proposed 

regulations would update the 

procedures and requirements related to 

the administration and suitability of 

ability to benefit tests to ensure the 

security of the test, perform an analysis 

of test irregularities, take corrective 

action when test irregularities occur, 

report the names of decertified test 

administrators to the Secretary, and to 

handle testing of non-native speakers of 

English and individuals with 

disabilities. Several defined terms 

would be modified or added to clarify 

the regulations, including the terms 

assessment center, independent test 

administrator, test, test administrator, 

and test publisher. 

The proposed regulations related to 

application for test approval would 

consolidate requirements for test 

publishers and States submitting tests 

for approval because the processes have 

common elements. Under the proposed 

regulations, test publishers and States 

would be required to show that their 

tests are normed using a contemporary 

sample that is representative of people 

with a high school diploma instead of 

people beyond the age of compulsory 

school attendance. They would be 

required to submit a description of their 

test administrator certification process 

that indicates how they will determine 

that a test administrator has the 

necessary training, knowledge, skills, 

and integrity to test students in 

accordance with requirements. Finally, 

they would be required to describe how 

they will determine that the test 

administrator has the ability and 

facilities to keep their tests secure 

against disclosure or release. 

In addition, the proposed regulations 

would implement a new ability to 

benefit option added by the HEOA that 

allows students to satisfactorily 

complete six credit hours or 225 clock 

hours of college work applicable to a 

degree or certificate offered by the 

institution to prove ability to benefit. As 

described in the Reasons section related 

to this provision, the Department took 

into consideration extensive discussions 

at the negotiated rulemaking sessions in 


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developing this proposed regulatory 

provision. One issue discussed was 

whether the hours needed to be earned 

need to be within the program in which 

the student planned to enroll and for 

which the student applied to receive 

title IV, HEA program funds. Some 

negotiators believed that, if the 

coursework were not earned in the 

program the student planned to enroll, 

it might not be rigorous enough, and the 

provision would not be effective as a 

means of demonstrating the student’s 

ability to benefit from the program in 

which they intend to enroll. The 

Department agreed with other nonFederal negotiators, who contended that 

the statutory language did not impose 

this kind of limitation and that students 

often change their mind as to the 

specific program of enrollment so the 

simplest approach to the provision 

would be best. The Department also 

noted that the proposed provision 

would be a financial aid requirement, 

not an admissions criterion, and that an 

institution could have a policy that it 

does not admit any students who do not 

have a high school diploma or the 

equivalent. 

Finally, the negotiators questioned 

whether a student who established 

student eligibility under one of the ATB 

provisions could be paid for the 

payment period in which eligibility was 

established. The Department’s position 

is that a student who establishes 

eligibility by passing an ATB test during 

a payment period may be paid for the 

entire payment period, but that a 

student who establishes eligibility 

through coursework may not be paid for 

the payment period during which the 

student took the requisite coursework 

because eligibility would not be 

established until the payment period 

was over. 

Misrepresentation of Information to 

Students and Prospective Students 

(§§ 668.71 through 668.75): The 

Secretary recognizes that choosing a 

college or job training program is an 

increasingly important and high-stakes 

decision for students, and the 

availability of accurate information 

about institutions is crucial. Section 487 

of the HEA and current regulations 

prohibit any substantial 

misrepresentation made by an 

institution regarding the nature of its 

educational program, its financial 

charges, or the employability of its 

graduates. 

The Department proposes to 

strengthen regulatory enforcement 

authority against eligible institutions 

that engage in substantial 

misrepresentations. The proposed 

regulations would restructure § 668.71 

so that paragraph (a) describes the 

actions the Secretary may take if the 

Secretary determines that an eligible 

institution has engaged in substantial 

misrepresentation. These actions would 

include revocation of the participation 

agreement, limitations on title IV, HEA 

participation, denial of participation 

applications, or initiation of 

proceedings against the institution. 

The proposed regulations would 

provide additional guidance to 

institutions to ensure that marketing 

materials and statements are an accurate 

representation of the institution. The 

proposed definition of 

misrepresentation would restate the 

current definition of the term (i.e., that 

misrepresentation is any false, 

erroneous, or misleading statement 

made not only by the eligible 

institution), but it would also clarify 

that the term includes any false, 

erroneous, or misleading statement 

made by one of its representatives, or 

any ineligible institution, organization, 

or person with whom the eligible 

institution has an agreement. Moreover, 

we would clarify in the definition of 

misrepresentation that it may be made 

directly or indirectly to a student or a 

member of the public in written, oral, 

visual, or other form. 

The proposed amendments in subpart 

F of part 668 would add further detail 

to the categories of misrepresentation 

described in the current regulations 

prohibiting misrepresentation. In 

proposed § 668.72, which describe the 

types of false, erroneous, or misleading 

statements about an institution’s 

educational program that would be 

prohibited as misrepresentations, we 

would expand the list of prohibited 

misrepresentations to include false, 

erroneous, or misleading statements 

relating to the following: Institutional, 

programmatic, or specialized 

accreditation; conditions for acceptance 

of transfer credits; whether completion 

of a course of instruction qualifies 

students to take licensing examinations 

or meet other additional conditions 

required for employment in the field for 

which the program is represented to 

prepare students; requirements to 

complete the course of study and 

conditions that would lead to 

termination of enrollment; the 

availability of unsolicited testimonials 

or endorsements; the subject matter, 

content of the course of study, and facts 

about the degree, certificate, or other 

completion document; and whether the 

degree to be given has been authorized 

by the appropriate State educational 

agency. 

Current § 668.73 describes prohibited 

false, erroneous, or misleading 

statements related to the cost of the 

program and financial aid that is 

available to students. Proposed § 668.73 

would expand the categories to include 

the cost of the program and the 

institution’s refund policy if a student 

does not complete the program; the 

availability of any financial assistance 

offered to students, including a 

student’s loan repayment responsibility 

regardless of program completion or 

subsequent employment; and the 

student’s right to apply for or reject any 

particular type of financial aid or other 

assistance. The Department agreed with 

non-Federal negotiators that students 

who enroll in a program should have 

specific knowledge of the cost of the 

program, its refund policy, and financial 

aid options. 

Current § 668.73 describes what 

constitutes misrepresentation related to 

the employability of an institution’s 

graduates and these prohibitions would 

be retained. Proposed § 668.73 would 

prohibit false statements regarding an 

institution’s knowledge of current or 

likely future conditions, compensation, 

or employment opportunities for its 

graduates. Misrepresentations relating to 

whether employment is being offered by 

the institution or that a talent hunt or 

contest is being conducted would also 

be prohibited. In addition, institutions 

would be prohibited from making false 

statements about other requirements 

that are generally needed in order to be 

employed in certain fields. Negotiators 

acknowledged that students need to be 

informed about employment prospects 

when considering postsecondary 

program options, but were concerned 

about the ability to provide accurate 

information given the economic 

environment and timeframes involved. 

Current § 668.75 describes the 

Department’s procedures for reviewing 

allegations or complaints regarding 

misrepresentation claims. The 

Department proposes removing § 668.75 

as these procedures have not been used 

to take enforcement actions against 

institutions for making substantial 

misrepresentations. The Department has 

used its other administrative remedies 

to take the appropriate actions against 

institutions found to have engaged in 

misrepresentation. The proposed 

regulations would create a new § 668.75 

that would prohibit an institution from 

suggesting that its participation in title 

IV, HEA programs represents a 

Departmental endorsement of the 

quality of its educational programs. 

Incentive Compensation (§ 668.14(b)): 

Section 487(a)(20) of the HEA requires 

that the title IV, HEA program 

participation agreement prohibit an 

institution from making any 


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commission, bonus, or other incentive 

payments based directly or indirectly on 

success in securing enrollments or 

financial aid to any persons or entities 

involved in student recruiting or 

admissions activities, or in making 

decisions about the award of student 

financial assistance. This statutory 

prohibition does not apply to the 

recruitment of foreign students residing 

in foreign countries who are not eligible 

to receive Federal financial assistance. 

Current regulations to implement HEA 

Section 487(a)(20) specify twelve types 

of activities and arrangements that do 

not violate the prohibition on incentive 

payments to an institution’s employees 

based on success in securing 

enrollments. The first safe harbor 

explains the conditions under which an 

institution may adjust compensation 

without that compensation being 

considered an incentive payment. The 

twelve safe harbors describe the 

conditions under which payments that 

could potentially be construed as based 

upon securing enrollments or financial 

aid are nonetheless not covered by the 

statutory prohibition. As described in 

greater detail in the Reasons section 

related to this provision, the safe 

harbors under the existing regulations 

dealt with adjustments to employee 

compensation, enrollments in programs 

not eligible for title IV, HEA program 

funds, contracts to provide training, 

profit-sharing bonus plans, 

compensation based upon program 

completion, pre-enrollment activities, 

managerial and supervisory employees, 

token gifts, profit distributions, Internetbased activities, and payments to third 

parties. 

The proposed regulations would 

eliminate these safe harbors in response 

to student and advisor complaints about 

aggressive sales tactics from some 

institutions, institutions’ concerns that a 

lack of clear guidance made it difficult 

to be confident of compliance, and the 

Department’s experience that 

unscrupulous actors routinely rely on 

the safe harbors to circumvent the intent 

of section 487(a)(20) of the HEA. The 

regulations proposed by the Department 

would eliminate the safe harbors and 

prohibit incentive compensation linked 

to enrollments for employees engaged in 

recruitment, admissions, or financial aid 

activities. Institutions would be able to 

make merit-based adjustments that are 

not based on securing enrollments or 

the award of financial aid. The 

clarifying remarks about the current safe 

harbors in the preamble to this NPRM 

describe the potential for non-compliant 

conduct to be protected by the safe 

harbors. The proposed regulations 

would require institutions to focus on 

two questions when evaluating 

employee bonus or incentive payments: 

(1) Whether the payment is based on 

success in securing enrollments; and (2) 

whether the payment is an award of a 

sum of money. If the answer to each 

question is yes, the incentive or bonus 

payment would not be permitted. NonFederal negotiators who agreed with the 

Department supported the elimination 

of the safe harbors as a way to reduce 

non-compliance and to make the 

regulations more consistent with the 

statute. Other non-Federal negotiators 

objected that the safe harbors were 

needed to explain an unclear law and to 

provide boundaries so institutions do 

not unintentionally run afoul of the 

regulations. As discussed in the 

Regulatory Alternatives Considered 

section below, negotiations about 

incentive compensation and safe 

harbors did not lead to agreement. 

State Authorization as a Component 

of Institutional Eligibility (§§ 600.4(a)(3), 

600.5(a)(4), 600.6(a)(3), and 600.9): To 

participate in the title IV, HEA student 

aid programs, an institution must be 

legally authorized to provide a 

postsecondary educational program 

within the State in which it is located. 

Current regulations do not define or 

describe the statutory requirement that 

an institution must be legally authorized 

in a State. State legal authorization can 

be granted through a charter, license, or 

other written document issued by an 

appropriate agency or State official and 

may be provided by a licensing board or 

educational agency. Some States have 

deferred approval of educational 

institutions to accrediting agencies or 

have exempted from State authorization 

requirements a subset of institutions. 

Since accrediting agencies generally 

require that an institution be legally 

operating in the State, the Department 

was concerned that the checks and 

balances provided by the separate 

processes of accreditation and State 

legal authorization were being 

undermined. The different requirements 

for authorization as an educational 

institution allow some institutions to 

move from State to State for less 

oversight. There was also concern over 

the Department’s existing policy that an 

institution was authorized by a State by 

virtue of the State’s decision not to have 

any oversight over the institution. As 

discussed in the Reasons section related 

to this provision, the recent lapse in the 

existence of California’s Bureau for 

Private Postsecondary and Vocational 

Education exemplified the weakness of 

this policy in ensuring appropriate 

oversight of Federal programs. 

The proposed regulations would 

clarify what constitutes State 

authorization for participation in title 

IV, HEA programs. According to the 

Department’s proposal, legal 

authorization is represented by a 

charter, license, or other document from 

a State agency or State entity that 

specifically grants the authority to 

operate postsecondary educational 

programs, including those leading to a 

degree or certificate. The State 

authorization must be subject to adverse 

action by the State and the State must 

have a process to review and act on 

complaints about an institution. An 

institution would also be considered 

legally authorized in a State if the 

institution were authorized to offer 

programs beyond secondary education 

by the Federal Government or an Indian 

Tribe as that term is described in 25 

U.S.C. 1802(2) or if it were exempt from 

State authorization as a religious 

institution under the State constitution. 

The proposed regulations also would 

require a State to notify students of the 

contact information for filing 

complaints with an institution’s 

accreditor and State licensing agency. 

Gainful Employment (§§ 600.2, 600.4, 

600.5, 600.6, 668.6, and 668.8): The 

Department intends to begin collecting 

information on completers of programs 

that, by law, must lead to gainful 

employment in a recognized 

occupation. The proposed new 

requirement would enable the 

Department to further evaluate and 

monitor the outcomes of these 

programs. 

Under proposed § 668.6(a), an 

institution would annually submit 

information about students who 

complete a program that leads to gainful 

employment in a recognized 

occupation. That information would 

include, at a minimum, identifying 

information about each student who 

completed a program, the CIP code for 

that program, the date the student 

completed the program, and the 

amounts the student received from 

private educational loans and 

institutional financing plans. In 

addition, under proposed § 668.6(b), an 

institution would be required to 

disclose on its Web site information 

about (1) the occupations that its 

programs prepare students to enter, 

along with links to occupational profiles 

on O*NET, (2) the on-time graduation 

rate of students entering a program, (3) 

the cost of each program, including 

costs for tuition and fees, room and 

board, and other institutional costs 

typically incurred by students enrolling 

in the program, such as books and 

supplies, (4) beginning no later than 


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June 30, 2013, the placement rate for 

students completing each of those 

programs, as determined under 

§ 668.8(g) or a State-sponsored 

workforce data system; and (5) the 

median loan debt incurred by students 

who completed each program in the 

preceding three years, identified 

separately as title IV, HEA loan debt and 

debt from private educational loans and 

institutional financing plans. 

Definition of a Credit Hour (§§ 600.2, 

602.24, 603.24, and 668.8): Credit hours 

are used to measure degree completion 

and award title IV, HEA aid, but under 

current regulations there is no 

commonly accepted definition of a 

credit hour. The increased availability 

of weekend, evening, and distance 

education programs complicates the 

measurement of credit hours by seat 

time in the definitions and conversion 

formulas existing under current 

regulations. In current § 668.8(k) and (l), 

the regulations provide the formula that 

certain undergraduate programs must 

use to convert the number of clock 

hours offered to the appropriate number 

of credit hours, with each semester or 

trimester hour requiring at least 30 clock 

hours of instruction, and each quarter 

hour requiring at least 20 hours of 

instruction. An institution must use the 

formula to determine if a program is 

eligible for title IV, HEA purposes 

unless (1) the institution offers an 

undergraduate program in credit hours 

that is at least two academic years in 

length and leads to an associate degree, 

a bachelor’s degree, or a professional 

degree or (2) each course within the 

program is acceptable for full credit 

toward an associate degree, bachelor’s 

degree, or professional degree offered by 

the institution, and the degree offered 

by the institution requires at least two 

academic years of study. 

The proposed regulations would add 

a definition of a credit hour, amend 

accrediting agency procedures for 

reviewing the assignment of credit 

hours, and revise the clock-to-credit 

hour conversion formulas. Under the 

proposed regulations, a credit hour is 

defined as a unit measuring the amount 

of work consisting of one hour of 

classroom or direct faculty instruction 

and at least two hours of student work 

outside the classroom over a set period 

of time. The required time period is 

fifteen weeks for a semester or trimester 

credit hour, ten to twelve weeks for a 

quarter hour of credit, and the 

equivalent amount of work for a 

different amount of time. For other 

activities that grant credit such as 

internships, studio work, and laboratory 

work, the institution must require at 

least a comparable amount of work to 

award credit hours. For programs for 

which the provisions above are not 

appropriate, the institution must 

establish reasonable equivalencies as 

represented by learning outcomes for 

the amount of work required in the 

definition of a credit hour. 

The credit hour was developed as part 

of a process to establish a standard 

measure of faculty workloads, costs of 

instruction, and rates of educational 

efficiencies as well as a measure of 

student work for transfer students. A 

standard measure will provide 

increased assurance that a credit hour 

has the necessary educational content to 

support the amounts of Federal funds 

that are awarded to participants in 

Federal funding programs and that 

students at different institutions are 

treated equitably in the awarding of 

those funds. During the negotiated 

rulemaking sessions, a few of the nonFederal negotiators were opposed to any 

proposal to define a credit hour because 

they believed that a definition would 

impinge upon an institution’s ability to 

create innovative courses and teaching 

methods. Other non-Federal negotiators 

agreed with the Department that the 

proposed definition of a credit hour 

would provide sufficient flexibilities for 

institutions and supported keeping it in 

the proposed regulations. In response to 

these concerns, the proposed 

regulations were changed to allow 

institutions to establish reasonable 

equivalent measures of a credit hour in 

accordance with its accrediting agency’s 

requirements and adopt alternative 

measures of student work. The proposed 

definition of a credit hour does not 

change the policy providing funding 

based only on credit hours that are the 

direct result of postsecondary student 

work and not Advanced Placement (AP) 

or International Baccalaureate (IB) 

programs, tests or testing out, life 

experience, or similar competency 

measures. No agreement was reached on 

this issue due to the belief of some nonFederal negotiators that a definition 

would limit an institution’s ability to 

use alternative measures of student 

work. 

In addition, the proposed regulations 

require accrediting agencies to review 

an institution’s assignment of credit 

hours and determine that they comply 

with accepted practice in higher 

education. Accrediting agencies may 

use sampling or other methods in 

reviews of programs at institutions. The 

accrediting agency must take actions to 

address deficiencies identified in such a 

review and must inform the Secretary if 

it finds systemic noncompliance or 

significant noncompliance in one or 

more programs at an institution. 

Finally, the proposed regulations 

would revise the clock-to-credit hour 

conversion process. Proposed 

§ 668.8(l)(1) would modify existing 

clock hour to credit hour conversion 

formulas so a semester or trimester 

credit hour must include at least 37.5 

clock hours of instruction and a quarter 

hour must include at least 25 clock 

hours of instruction. If an institution’s 

process for determining credit hours has 

not been found deficient by the 

accrediting or State licensing agency, 

then the minimum clock hours of 

instruction can be reduced to 30 for 

semester and trimester programs and 20 

for quarter programs as long as the 

combined instruction and work outside 

the class meets the longer requirements 

described above. With respect to the 

definition of an eligible program in 

§ 668.8, the proposed regulations 

require that institutions demonstrate 

that students enroll in and graduate 

from the degree program. The proposed 

regulations also require a program to use 

clock hours when accrediting agencies 

determine that an institution’s policies 

and procedures about credit hours are 

deficient or when completing clock 

hours is required for graduates to apply 

for a license or authorization to practice 

their intended occupation. 

Written Agreements between 

Institutions of Higher Education 

(§§ 668.5 and 668.43): Under current 

regulations, two or more institutions 

may enter into agreements for students 

to continue receiving title IV, HEA 

funds when studying away from their 

‘‘home’’ institution. These agreements fit 

into three categories: (1) consortium 

agreements between eligible 

institutions; (2) contractual agreements 

between an eligible institution and an 

ineligible institution; and (3) study 

abroad arrangements, which may 

involve a consortium or contractual 

agreement between two or more 

institutions. There is no requirement in 

either § 668.5 or 668.43 of the current 

regulations that institutions provide 

information on written arrangements to 

enrolled or prospective students. 

The proposed regulations would 

address issues related to written 

agreements between institutions with 

common ownership, restrict agreements 

with ineligible institutions, and expand 

student notification requirements 

related to written agreements. The 

proposed regulations would redefine the 

home institution from the one that 

enrolls the student to the one that grants 

the degree or certificate. Proposed 

§ 668.5(a)(2) would specify that if the 

institutions involved in a written 

agreement are controlled by the same 

individual, partnership, or corporation, 


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the institution that grants the degree 

must provide more than 50 percent of 

the educational program. This would 

address concerns that such agreements 

could be used to circumvent regulations 

governing cohort default rates and ‘‘90– 

10’’ provisions. For contractual 

agreements between an eligible 

institution and an ineligible institution, 

the proposed regulations would add a 

restriction that the ineligible institution 

has not had its certification to 

participate in title IV, HEA programs 

revoked or had its application for recertification denied. The proposed 

regulations also would limit the portion 

of the education program that the 

ineligible institution could provide to 

less than 50 percent. The proposed 

regulations would also require 

institutions to provide information 

about written agreements to students. 

This information would need to include 

the portion of the program the home 

institution is not providing, estimated 

additional costs that would be incurred, 

the method of delivery for the portion 

of education outside the home 

institution, and the name and locations 

of the other institutions. During 

negotiations, the Department explained 

that the proposed disclosure 

requirements would apply to blanket, 

existing arrangements between or 

among institutions and not to 

individual, student-initiated written 

arrangements, or internships and 

externships. 

Verification of Information Included 

on Student Aid Applications (§§ 668.52 

through 668.61): Under current 

regulations, institutions are required to 

verify the application information of up 

to 30 percent of Federal financial aid 

applicants selected by the Secretary in 

a given award year. Institutions have 

expressed concern that this verification 

process is overly complicated and 

invasive for applicants’ families. 

Current subpart E of part 668 governs 

the verification and updating of the 

FAFSA information used to calculate an 

applicant’s expected family contribution 

(EFC) as part of the determination of an 

applicant’s need for student financial 

assistance. These proposed regulations 

would implement statutory changes to 

Part F of the HEA made by the HEOA 

and further align these regulations with 

enhancements that have been made to 

the application processing system. 

Based on the Department’s review of 

current policies and procedures, the 

changes reflected in these proposed 

regulations would remove obsolete 

definitions, procedures, and references 

to programs and would include: (1) 

Describing institutional and applicant 

responsibilities for updating FAFSA 

information; (2) removing and refining 

definitions related to the FAFSA 

application; (3) codifying current policy 

that an institution must complete 

verification before exercising any 

authority under professional judgment; 

(4) removing the 30 percent cap on the 

number of applicants selected by the 

Secretary that an institution must verify 

in order to move towards a more 

targeted verification system; (5) 

restructuring the exclusions from 

verification section; (6) requiring any 

changes to a student’s dependency 

status be updated throughout the award 

year, including changes in marital 

status; (7) replacing the five items that 

an institution currently verifies with a 

targeted verification process that is 

specific to each applicant selected as 

described in a Federal Register notice 

published annually by the Secretary; (8) 

codifying the Department’s IRS Data 

Retrieval Process, which allows an 

applicant to import income and other 

data from the IRS into an online FAFSA; 

(9) updating the IRS deadline granted 

for extension filers; (10) clarifying when 

an institution is required to reverify the 

AGI and taxes paid by an applicant and 

his or her spouse or parents for 

individuals with an IRS tax filing 

extension; (11) expanding the 

information a tax preparer must provide 

on the copy of the filer’s return that has 

been signed by the preparer; (12) 

describing in an annual Federal 

Register notice other documentation 

that an applicant must provide for the 

information that is selected for 

verification; (13) allowing interim 

disbursements when changes to an 

applicant’s FAFSA information would 

not change the amount the applicant 

would receive under a title IV, HEA; 

(14) requiring all corrections to be 

submitted to the Secretary for 

reprocessing; (15) removing all 

allowable tolerances; (16) applying the 

cash management procedures for 

proceeds received from a Subsidized 

Stafford Loan or Direct Subsidized Loan 

on behalf of an applicant; and (17) 

describing the liability of an institution 

that disburses title IV, HEA aid to an 

applicant without receiving a corrected 

SAR or ISIR within an established 

deadline. 

The proposed verification regulations 

would align the verification process 

with the effort to simplify the FAFSA 

and make it flexible enough to 

accommodate future changes while still 

ensuring that students who receive 

Federal aid funds are eligible. 

Institutions would be required to 

establish procedures that are consistent 

with these provisions. For example, an 

institution would be required to 

complete an applicant’s verification 

before it could exercise its authority to 

change the applicant’s cost of 

attendance or data items to calculate the 

expected family contribution. 

Applicants may be excluded from 

verification if they do not receive aid 

under title IV, HEA programs for 

reasons outside of verification 

questions, only receive unsubsidized 

aid, or transfer from another institution 

where verification was already 

performed as proven by a letter with 

ISIR number from that institution. The 

specific items to be verified under the 

proposed regulations would be 

published by the Secretary in the 

Federal Register for each award year. 

The regulations would also allow for 

information to be verified as having 

come from the IRS instead of requiring 

an applicant’s tax form. 

Satisfactory Academic Progress 

(§§ 668.16(e), 668.32(f), 668.34): To be 

eligible for Federal financial aid under 

title IV of the HEA, students must make 

satisfactory academic progress (‘‘SAP’’) 

and institutions must have a published 

policy to monitor that progress. As 

detailed in the Satisfactory Academic 

Progress section of this preamble, the 

SAP policy must include grade-based 

and time-related standards, must apply 

consistently to students within 

categories, must be as strict for title IV, 

HEA aid recipients as for non-recipients 

in the same educational program, must 

describe the circumstances under which 

a student may appeal a determination 

that the student is not making 

satisfactory academic progress, and 

must require an institution to review a 

student’s academic progress at the end 

of each year, at a minimum. The 

proposed regulations would restructure 

the satisfactory academic progress 

requirements so that § 668.16(e) would 

be revised to include only the 

requirement that an institution 

establish, publish, and apply 

satisfactory academic progress 

standards. The remainder of § 668.16(e) 

would be moved to proposed § 668.34 

so that that provision would contain all 

of the required elements of a satisfactory 

academic progress policy as well as how 

an institution would implement such a 

policy. 

All of the policy elements in the 

current regulations under §§ 668.16(e) 

and 668.34 would be combined in 

proposed § 668.34. The timing 

provisions would maintain the 

maximum timeframe of 150 percent of 

the published length of the educational 

program whether measured in credit 

hours or clock hours (reflected in 

current § 668.16(e)(2)(ii)(A)). SAP 


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policies would need to describe how the 

institution treats withdrawals, course 

repetitions, and transfers from another 

institution. For educational programs 

greater than two academic years, 

students must have a GPA of ‘‘C’’ or its 

equivalent at the end of the second year 

or have academic standing that is 

consistent with the institution’s 

graduation requirements. The proposed 

regulations would not require 

institutions to permit students to 

appeal. An institution that permits 

appeals, however, would be required to 

describe the appeals process in its 

satisfactory academic progress policy. 

Under proposed § 668.34(a)(9)(ii), a 

student would be permitted to file an 

appeal based on the death of a relative, 

an injury or illness of the student, or 

other special circumstances. Under 

proposed § 668.34(a)(9)(iii), a student 

would be required to submit, as part of 

the appeal, information regarding why 

the student failed to make satisfactory 

academic progress, and what has 

changed in the student’s situation that 

would allow the student to demonstrate 

satisfactory academic progress at the 

next evaluation. If an institution does 

not permit appeals, the satisfactory 

academic policy must describe how a 

student may regain eligibility for 

assistance under the title IV, HEA 

programs. Proposed § 668.34(a)(11) 

would require that an institution’s 

policy provide for notification to 

students of the results of an evaluation 

that impacts the student’s eligibility for 

title IV, HEA program funds. 

Proposed § 668.34(a)(8) would require 

institutions that use ‘‘financial aid 

warning’’ and ‘‘financial aid probation’’ 

statuses in connection with satisfactory 

academic progress evaluations to 

describe these statuses and how they are 

used in their satisfactory academic 

progress policies. The term financial aid 

warning would be defined as a status 

conferred automatically and without 

action by a student, while the term 

financial aid probation would be 

defined as a status conferred after a 

student has submitted an appeal that 

has been granted. In order to encourage 

institutions to provide additional 

support to students in a timely manner, 

the proposed regulations would permit 

institutions that review student progress 

at the end of each payment period to 

place students on financial aid warning 

for one payment period. Proposed 

§ 668.34(a)(8)(ii) would make clear that 

an institution with a satisfactory 

academic progress policy that includes 

the use of the financial aid probation 

status could require that a student on 

financial aid probation fulfill specific 

terms and conditions, such as taking a 

reduced course load or enrolling in 

specific courses. 

Recent questions from institutions 

and reviews of institutional satisfactory 

academic progress policies have 

suggested that it is possible for an 

institution to have a policy that meets 

all of the current regulatory criteria, but 

due to use of automatic probationary 

periods, permits students to receive aid 

for as long as 24 months even though 

they are not meeting the institution’s 

satisfactory progress standards. The 

proposed regulations are designed to 

implement a more structured, 

comprehensive, and consistent 

approach to development and 

implementation of institutional 

satisfactory progress policies. 

Retaking Coursework (§ 668.2): The 

proposed regulations would amend the 

definition of ‘‘full-time student’’ in 

§ 668.2 to allow repeated coursework to 

count towards a student’s enrollment 

status in term-based programs. 

Currently, students in term-based credit 

hour programs may get paid for retaking 

courses as long as the credits are in 

addition to and not a replacement for 

previously earned credits, and the 

student meets the institution’s overall 

satisfactory academic progress 

standards. Non-Federal negotiators 

expressed concern that institutions were 

unable to track this information without 

a burdensome program audit of each 

individual student. The Department 

agreed and proposed to amend the 

definition of full-time to allow such 

credits to count toward enrollment 

status and eligibility for payment under 

the title IV, HEA programs. Tentative 

agreement was reached on this issue. 

Return of Title IV, HEA Program 

Funds: Term-based Programs with 

Modules or Compressed Courses 

(§ 668.22(a) and (f)): Current regulations 

related to the return of title IV, HEA 

program funds when a student 

withdraws do not address the issue of 

student withdrawals from programs 

with courses in modules or compressed 

courses. Under current regulations, 

when a student withdraws from an 

institution, the institution must 

determine the amount of title IV, HEA 

aid the student has earned for the period 

the student attended. For term based 

programs with several courses offered 

concurrently for the length of the term, 

the student may remain in one course 

and not be considered as withdrawn. 

Department policy equates the 

completion of one course or module, 

within a term in which a student is 

expected to continue attendance in 

additional coursework, to the 

completion of one traditional course in 

a program with courses taken 

concurrently over the full term. As a 

result of this policy, a student who 

attends a week or two of a fifteen week 

term and completes a module will not 

be determined to have withdrawn, so 

the student or the institution can keep 

aid intended to cover fifteen weeks. 

The proposed regulations offer an 

opportunity to review this policy. Under 

the proposed regulations, students 

would be considered withdrawn as 

follows: In programs measured in credit 

hours, if the student does not complete 

all the days in the payment period or 

period of enrollment that the student 

was scheduled to complete prior to 

withdrawing. For credit hour programs, 

the calculation of the percentage of the 

payment period or period of enrollment 

completed would take into account the 

total number of calendar days that the 

student was scheduled to complete 

prior to withdrawing without regard to 

any course completed by the student 

that is less than the length of the term. 

In the case of a program that is 

measured in clock hours, the student 

would be considered to have withdrawn 

if he or she does not complete all of the 

clock hours in the payment period or 

period of enrollment that the student 

was scheduled to complete prior to 

withdrawing. 

Return of Title IV, HEA Program 

Funds: Taking Attendance (§ 668.22(b)): 

In order to implement provisions related 

to the return of funds when a student 

withdraws, institutions must be able to 

determine the date a student is 

considered to have withdrawn. Current 

regulations specify distinctions between 

institutions required to take attendance 

by an outside agency and those 

institutions that are not required to take 

attendance. For institutions required to 

take attendance, the date of withdrawal 

is determined from attendance records. 

For other institutions, the date of 

withdrawal may be the date the student 

initiated the withdrawal process, the 

date the student provided official notice 

of intent to withdraw, the midpoint of 

the payment period if the student gave 

no notice of withdrawal, or, in lieu of 

the above, the last day of the student’s 

attendance at an academically-related 

activity. The lack of precision for a 

withdrawal date for these institutions 

potentially allows the abuse of Federal 

funds. 

The proposed regulations would 

require that if an institution has 

attendance records, as required by an 

outside entity or the institution itself, 

the attendance records should be used 

for the withdrawal date. Current 

nonregulatory guidance regarding an 

institution that is required to take 


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attendance, or requires that attendance 

be taken, for a limited period of time, 

such as for the first two weeks of 

courses or up until a ‘‘census date’’ 

would be incorporated. These proposed 

provisions would specify that an 

institution must use its attendance 

records to determine a withdrawal date 

for a student who withdraws during that 

limited period, and a student who 

subsequently stops attending during the 

payment period would be treated as a 

student for whom the institution was 

not required to take attendance. The 

proposed regulations would also 

incorporate current guidance that if an 

institution is required to take 

attendance, or requires that attendance 

be taken, on a specified date to meet a 

census reporting requirement, the 

institution is not considered to take 

attendance. 

Non-Federal negotiators pointed out 

that having to determine a more exact 

date of withdrawal, as opposed to 

assuming a 50 percent point, would be 

more burdensome. They also noted that 

attendance does not necessarily 

accurately reflect academic activity, and 

also stated that they cannot ensure that 

faculty members will keep accurate and 

up-to-date attendance records. The 

Department recognizes these concerns, 

but maintains that the best date 

available should be used to determine 

the amount of time that a student was 

in attendance to support the fair 

treatment of students and avoid the 

potential for fraud and abuse of Federal 

funds. 

Disbursements of Title IV, HEA 

Program Funds (§ 668.164(i)): As 

described in the preamble to this NPRM, 

current regulations provide that an 

institution must disburse title IV, HEA 

program funds (except for FWS funds) 

on a payment period basis and establish 

requirements for crediting a student’s 

account with Federal Pell Grant funds. 

Those requirements also apply to ACG, 

National SMART Grant, TEACH Grant, 

FSEOG, Federal Perkins Loan, Direct 

Loan, and FFEL program funds. Current 

regulations permit institutions to 

disburse Pell Grants in a manner that 

best meets the needs of the student, and 

the proposed regulations would add 

provisions to specifically limit delays in 

disbursements. 

Students who do not receive Pell 

Grants in a timely manner may resort to 

taking loans or using personal funds, go 

without needed items such as books, or 

withdraw from school for financial 

reasons. The proposed regulations will 

require institutions to provide a way for 

a Federal Pell Grant eligible student to 

obtain or purchase required books and 

supplies by the seventh day of a 

payment period under certain 

conditions. The proposed regulations 

would limit the required early payment 

of anticipated credit balances to Federal 

Pell Grant-eligible students who have 

met all disbursement requirements 10 

days before the first day of class for the 

payment period, and apply only if the 

student will have a title IV, HEA credit 

balance. The proposed language gives 

institutions the flexibility to determine 

the method by which they provide 

funds to students, which can include a 

book voucher or crediting books to the 

student’s institutional account. The 

proposed regulations would not change 

existing liability if the student never 

begins attendance in any classes, 

leaving it with the institutions and not 

the students. 

The following section addresses the 

alternatives that the Secretary 

considered in developing these 

proposed regulations. These alternatives 

are also discussed in more detail in the 

Reasons sections of this preamble 

related to the specific regulatory 

provisions. 

Regulatory Alternatives Considered 

Definition of High School Diploma 

(§ 668.16(p)): Initially, the Secretary 

proposed regulatory language that that 

would have required institutions to 

maintain three listings of secondary 

schools (schools that are acceptable, 

schools that are unacceptable, and 

schools that require further evaluation) 

based on regulatory criteria for 

determining the acceptability of their 

credential for title IV, HEA program 

purposes. Non-Federal negotiators 

objected that K–12 issues should be 

handled at the State level and that 

requiring institutions to maintain such 

lists was too great an administrative 

burden. Based on these concerns, the 

Department agreed to assume 

responsibility for establishing and 

maintaining a list of valid secondary 

schools, and tentative agreement was 

reached on this provision. 

Incentive Compensation (§ 668.14(b)): 

As discussed in the Incentive 

Compensation section of the preamble, 

non-Federal negotiators proposed and 

counter-proposed draft regulatory 

language related to incentive 

compensation for the Department to 

consider. In turn, the Department 

addressed some of the isues raised in 

the negotiations. For example, the 

Department made clear that any 

individuals who are engaged in any 

student recruitment or admissions 

activity or in making decisions about 

the award of student financial aid— 

including those in supervisory 

positions—would be impacted by these 

proposed provisions. Moreover, the 

Department clarified that the following 

activities would not necessarily be 

prohibited under the proposed 

regulations: the use of volume-driven 

shared services, contracts for financial 

aid services based on a headcount basis, 

third party Internet marketing activities 

paid based on clicks and not 

enrollments, and token gifts for contacts 

not linked to enrollments. 

The Department agreed to include a 

definition of the term commission, 

bonus, or other incentive payment in the 

proposed § 668.14(b)(22)(iii)(A) that is 

unambiguous in prohibiting payment of 

any money or item of value on the basis 

of direct or indirect success in securing 

enrollments or the award of financial 

aid. 

Several negotiators were concerned 

that under the proposed regulations, 

institutions would be prohibited from 

paying merit-based increases to their 

financial aid or admissions personnel. 

The Department contends that an 

institution could use a variety of 

standard evaluative factors as the basis 

for such an increase; however, it would 

not be permitted to consider the 

employee’s success in securing student 

enrollments or the award of financial 

aid or related institutional goals based 

on that success among those factors. 

One negotiator felt strongly that it was 

critical to use the word ‘‘solely,’’ or some 

other modifier, to limit the prohibition 

in proposed § 668.14(b)(22)(i). This 

negotiator said that the use of the word 

solely, or some other modifier, would be 

consistent with the use of that term 

solely in the first safe harbor reflected 

in current § 668.14(b)(22)(ii)(A). As 

discussed earlier in this preamble, given 

the Department’s experience with how 

the first safe harbor in current 

§ 668.14(b)(22) has been abused, the 

Department does not believe that such 

a construction is warranted. In addition, 

some negotiators advocated strongly for 

an institution’s ability to pay bonuses 

on the basis of students who complete 

their program. The Department believes 

that these regulations must clearly 

reinforce the statutory provision and 

exclude the possibility of basing any 

portion of an adjustment on success in 

securing student enrollments or 

financial aid awards. No agreement was 

reached on incentive compensation. 

State Authorization as a Component 

of Institutional Eligibility (§§ 600.4(a)(3), 

600.5(a)(4), 600.6(a)(3), and 600.9): The 

Department clarified aspects of this 

provision in response to concerns 

expressed by non-Federal negotiators. 

Federal or Indian Tribe authorization 

was included, and the ability of State 

entities other than State Agencies such 


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as State legislatures and State 

Constitutions to grant authorization was 

made explicit. Provisions concerning 

monitoring the quality of educational 

programs and financial responsibility 

were removed as unnecessarily 

duplicative of Federal or accrediting 

agency actions. The Reasons section of 

the preamble details the development of 

this provision. Some negotiators 

remained concerned that these proposed 

regulations would allow States to 

continue to rely on an institution’s 

status with an outside entity for State 

legal authorization and that there would 

no longer be a requirement that a State 

review an institution’s fiscal viability. 

No agreement was reached on this 

provision. 

Written Agreements between 

Institutions of Higher Education 

(§§ 668.5 and 668.43): During negotiated 

rulemaking, the Department’s initial 

proposal was to require accrediting or 

State agency review of written 

agreements between institutions of 

higher education if the portion of an 

educational program provided under the 

written arrangement with another 

eligible institution, or with a consortium 

of eligible institutions, were more than 

50 percent. Subsequently, several nonFederal negotiators explained that, 

contrary to the Department’s initial 

understanding, it was not common 

practice for accrediting agencies to 

review a significant portion of written 

arrangements, even those between or 

among eligible institutions. After 

hearing concerns about increased 

workloads and impeded development of 

innovative programs, the Department 

agreed to reconsider its draft regulatory 

language and to focus the proposed 

changes more narrowly on the types of 

institutions and situations where 

problems had been identified. The 

Department subsequently proposed 

limiting the portion of an educational 

program that could be provided under a 

written arrangement between two 

eligible for-profit institutions under 

common ownership or control to 25 

percent. After negotiations about the 

appropriate percentage and the 

institutions to which it should apply, 

the Department agreed to revise the 

proposed language to refer to eligible 

institutions that are owned or controlled 

by the same individual, partnership or 

corporation and to specify that the 

institution that grants the degree or 

certificate must provide 50 percent or 

more of the educational program. When 

presenting this draft regulatory language 

to the negotiated rulemaking committee, 

the Federal negotiator explained that it 

is not the Department’s intention for 

either public or private, non-profit 

institutions to be covered by the 

proposed language as such institutions 

are not owned or controlled by other 

entities and generally act autonomously. 

Return of Title IV, HEA Program 

Funds: Term-based Programs with 

Modules or Compressed Courses 

(§ 668.22(a) and (f)): During the 

negotiation sessions, non-Federal 

negotiators expressed concern that the 

proposed regulations would penalize 

students and burden institutions with a 

significant increase in the number of 

return to title IV, HEA funds 

calculations. The non-Federal 

negotiators presented three options to 

address their concerns. The first option 

was to exclude students who completed 

the same enrollment status for which 

they were originally paid title IV, HEA 

aid. The second option was to exclude 

students who completed 50 percent of 

the credits that were awarded and 50 

percent of the projected enrollment 

time. The third option was to only apply 

the proposed regulations to compressed 

coursework that was shorter than a ‘‘tobe-determined’’ percent of the payment 

period; the non-Federal negotiators did 

not reach agreement as to what the 

appropriate percentage should be. The 

Department appreciates the concerns 

expressed by the non-Federal 

negotiators, but continues to believe that 

the proposed changes are necessary to 

ensure the equitable application of these 

provisions for all students, regardless of 

the academic calendar of the programs 

that students are attending. 

Disbursements of Title IV, HEA 

Program Funds (§ 668.164(i)): Some 

non-Federal negotiators stated that 

many institutions advance funds or 

issue vouchers that students use to 

obtain books and supplies, and that 

under current regulations, the 

institution risks losing the amount 

advanced if the student does not begin 

classes. For this reason, these nonFederal negotiators argued that in 

exchange for requiring an institution to 

advance funds or issue vouchers early 

in the payment period before the 

institution could establish student 

attendance, the student should be liable 

for returning the funds. In response to 

this concern, the Department drafted 

regulatory language to shift liability for 

this debt to students, but the proposal 

was rejected. Other negotiators objected 

that student liability for this debt might 

preclude reenrollment or exacerbate 

predatory practices at some institutions 

where students were promised an 

advance of funds simply for enrolling in 

programs. As a result of these 

negotiations, the proposed regulations 

keep liability at the institutional level. 

Benefits 

Benefits provided in these proposed 

regulations include updated 

administrative procedures for the 

Federal student aid programs; a 

definition and process to determine the 

validity of a student’s high school 

diploma; enhanced reliability and 

security of ATB tests; an additional 

option for students to prove ability to 

benefit by successfully completing 

college coursework; increased clarity 

about incentive compensation for 

employees at institutions of higher 

education; reporting of information on 

program completers for programs 

leading to gainful employment, 

including costs, debt levels, graduation 

rates, and placement rates; the 

establishment of minimum standards for 

credit hours; greater transparency for 

borrowers participating in the programs 

offered under written agreements 

between institutions; greater detail 

about misrepresentation in marketing 

and recruitment materials; a more 

structured and consistent approach to 

the development and implementation of 

satisfactory academic progress policies; 

updated and simplified procedures for 

verifying FAFSA applicant information; 

updated regulations related to the return 

of title IV, HEA funds when a student 

withdraws; harmonization of Direct 

Loan and Teach Grant disbursement 

procedures with other title IV, HEA 

programs; and revised disbursement 

requirements to ensure Federal Pell 

Grant recipients can access funds in a 

timely manner. It is difficult to quantify 

benefits related to the new institutional 

and other third-party requirements, as 

there is little specific data available on 

the effect of the provisions on 

borrowers, institutions, or the Federal 

taxpayer. The Department is interested 

in receiving comments or data that 

would support a more rigorous analysis 

of the impact of these provisions. 

As discussed in greater detail under 

Net Budget Impacts, these proposed 

provisions result in net costs to the 

government of $0.0 million over 2011– 

2015. 

Costs 

Several of the proposed regulations 

would require regulated entities to 

develop new disclosures and other 

materials, as well as accompanying 

dissemination processes. Institutions 

would also be required to update 

existing policies and procedures related 

to satisfactory academic progress. Other 

proposed regulations generally would 

require discrete changes in specific 

parameters associated with existing 

requirements—such as changes to title 


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IV, HEA disbursement procedures, 

updated processes for verification of 

FAFSA application information, clearer 

standards for the return of title IV, HEA 

program funds following a student’s 

withdrawal, and updated definitions 

and processes for confirming the 

validity of a high school diploma 

—rather than wholly new requirements. 

Accordingly, entities wishing to 

continue to participate in the title IV, 

HEA programs have already absorbed 

many of the administrative costs related 

to implementing these proposed 

regulations. Marginal costs over this 

baseline are primarily due to new 

procedures that, while possibly 

significant in some cases, are an 

unavoidable cost of continued program 

participation. 

The Department would welcome 

comment on the analysis presented 

here. We also welcome analyses that 

others have done on this proposal 

which we will consider as we assess the 

impact of the proposed regulation as we 

prepare to publish it in final form later 

this year. 

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. In total, these proposed 

changes are estimated to increase 

burden on entities participating in the 

Federal Student Assistance programs by 

5,756,506 hours. Of this increased 

burden, 3,596,111 hours are associated 

with institutions, 9,454 hours with ATB 

test publishers and ATB test 

administrators. An additional 2,150,941 

hours are associated with borrowers, 

generally reflecting the time required to 

read new disclosures or submit required 

information. 

As detailed in the Paperwork 

Reduction Act of 1995 section of this 

NPRM, the additional paperwork 

burden is attributable to several 

provisions, with the greatest additional 

burden coming from the revised FAFSA 

verification process. Of the 3.6 million 

hours of additional burden associated 

with institutions, 1.8 million relate to 

FAFSA verification. While the average 

number of items to be verified is 

expected to decrease, the growth in the 

number of applicants and the 

requirement to submit all changes to the 

Department is estimated to increase 

overall burden. Other paperwork burden 

increases include 729,725 hours related 

to academic reviews and development 

of academic plans under proposed 

§ 668.34, 425,075 hours related to 

calculation of unearned amounts when 

a student withdraws under proposed 

§ 668.22, 289,005 hours associated with 

updating marital and dependency status 

under proposed § 668.55, 105,377 hours 

related to the gainful employment 

reporting and disclosure provisions in 

proposed § 668.6, 48,391 hours related 

to ATB test administration and 

reporting under proposed §§ 668.151 

and 668.152, 67,870 hours associated 

with disclosure of information about an 

institution’s written agreements in 

proposed § 668.43, 54,337 hours related 

to disbursement of funds to Pell Grant 

recipients for books and supplies under 

proposed § 668.164, 21,982 hours 

related to the development of a high 

school diploma validation process and 

the validation of questionable diplomas 

under proposed § 668.16, and 18,349 

hours related to clock hour to credit 

hour conversion and the inclusion of 

outside work for program eligibility 

under proposed § 668.8. For ATB test 

publishers and administrators, the 

increased burden of 9,454 hours comes 

from the reporting, recordkeeping, test 

anomaly analysis and other 

requirements in proposed §§ 668.144, 

668.150, and 668.151. The increased 

burden on students is concentrated in 

the FAFSA verification and status 

updating processes with 1,604,800 

hours under proposed §§ 668.55, 668.56, 

and 668.59, with additional burden 

associated with the withdrawal process 

under § 668.22 and satisfactory 

academic progress policies under 

§ 668.34. 

Thus, for the specific information 

collections listed in the Paperwork 

Reduction Act section of this notice, the 

total cost estimates are as follows: For 

Information Collection 1845–0041, the 

total cost will be $65,913,938, for 

Information Collection 1845–NEW2, the 

total cost attributable to these regulatory 

changes will be $18,750,120, for 

Information Collection 1845–0022, the 

total cost will be $13,900,328, for 

Information Collection 1845–NEW1, the 

total cost attributable to the regulatory 

changes will be $2,182,885, for 

Information Collection 1845–0049, the 

total cost will be $1,097,588, and for 

Information Collection 1845–NEW3, the 

total cost attributable to these regulatory 

changes will be $1,012,461. 

The monetized cost of this additional 

burden, using wage data developed 

using Bureau of Labor Statistics 

available at http://www.bls.gov/ncs/ect/ 

sp/ecsuphst.pdf, is $102,677,320, of 

which $67.23 million is associated with 

institutions, $0.18 million with ATB test 

publishers and administrators, and 

$35.28 million with borrowers. For 

institutions, test publishers, and test 

administrators, an hourly rate of $18.63 

was used to monetize the burden of 

these provisions. This was a blended 

rate based on wages of $15.51 for office 

and administrative staff and $36.33 for 

managers, assuming that office staff 

would perform 85 percent of the work 

affected by these regulations. For the 

gainful employment provision, an 

hourly rate of $20.71 was used to reflect 

increased management time to establish 

new data collection procedures 

associated with that provision. For 

students, the first quarter 2010 median 

weekly earnings for full-time wage and 

salary workers were used. This was 

weighted to reflect the age profile of the 

student loan portfolio, with half at the 

$457 per week of the 20 to 24 age 

bracket and half at the $691 per week 

of the 25 to 34 year old bracket. This 

resulted in a $16.40 hourly wage rate to 

use in monetizing the burden on 

students. 

Given the limited data available, the 

Department is particularly interested in 

comments and supporting information 

related to possible burden stemming 

from any additional workload expected 

under the proposed regulations. 

Estimates included in this NPRM will 

be reevaluated based on any information 

received during the public comment 

period. 

Net Budget Impacts 

The proposed regulations are 

estimated to have a net budget impact 

of $0.0 million over FY 2011–2015. 

Consistent with the requirements of the 

Credit Reform Act of 1990, budget cost 

estimates for the student loan programs 

reflect the estimated net present value of 

all future non-administrative Federal 

costs associated with a cohort of loans. 

(A cohort reflects all loans originated in 

a given fiscal year.) 

These estimates were developed using 

the Office of Management and Budget’s 

(OMB) Credit Subsidy Calculator. (This 

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

be performed each year beginning in FY 

2009). The OMB calculator takes 

projected future cash flows from the 

Department’s student loan cost 

estimation model and produces 

discounted subsidy rates reflecting the 

net present value of all future Federal 

costs associated with awards made in a 

given fiscal year. Values are calculated 

using a ‘‘basket of zeros’’ methodology 

under which each cash flow is 


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discounted using the interest rate of a 

zero-coupon Treasury bond with the 

same maturity as that cash flow. To 

ensure comparability across programs, 

this methodology is incorporated into 

the calculator and used governmentwide to develop estimates of the Federal 

cost of credit programs. Accordingly, 

the Department believes it is the 

appropriate methodology to use in 

developing estimates for these proposed 

regulations. That said, however, in 

developing the following Accounting 

Statement, the Department consulted 

with OMB on how to integrate our 

discounting methodology with the 

discounting methodology traditionally 

used in developing regulatory impact 

analyses. 

Absent evidence on the impact of 

these proposed regulations on student 

behavior, budget cost estimates were 

based on behavior as reflected in 

various Department data sets and 

longitudinal surveys listed under 

Assumptions, Limitations, and Data 

Sources. Program cost estimates were 

generated by running projected cash 

flows related to each provision through 

the Department’s student loan cost 

estimation model. Student loan cost 

estimates are developed across five risk 

categories: Two-year proprietary 

institutions, two-year public and private 

not-for-profit institutions, freshman and 

sophomores at four-year institutions, 

juniors and seniors at four-year 

institutions, and graduate students. Risk 

categories have separate assumptions 

based on the historical pattern of 

behavior—for example, the likelihood of 

default or the likelihood to use statutory 

deferment or discharge benefits—of 

borrowers in each category. 

The Department estimates no 

budgetary impact for most of the 

proposed regulations included in this 

NPRM as there is no data indicating that 

the provisions will have any impact on 

the volume or composition of Federal 

student aid programs. 

Assumptions, Limitations, and Data 

Sources 

Impact estimates provided in the 

preceding section reflect a baseline in 

which the changes implemented in 

these proposed regulations do not exist. 

Costs have been quantified for five 

years. In general, these estimates should 

be considered preliminary; they will be 

reevaluated in light of any comments or 

information received by the Department 

prior to the publication of the final 

regulations. The final regulations will 

incorporate this information in a revised 

analysis. 

In developing these estimates, a wide 

range of data sources were used, 

including data from the National 

Student Loan Data System; operational 

and financial data from Department of 

Education systems, including especially 

the Fiscal Operations Report and 

Application to Participate (FISAP); and 

data from a range of surveys conducted 

by the National Center for Education 

Statistics such as the 2008 National 

Postsecondary Student Aid Survey, the 

1994 National Education Longitudinal 

Study, and the 1996 Beginning 

Postsecondary Student Survey. Data 

from other sources, such as the U.S. 

Census Bureau, were also used. Data on 

administrative burden at participating 

schools, accreditors, test administrators, 

and third-party servicers are extremely 

limited; accordingly, as noted earlier in 

this discussion, the Department is 

particularly interested in receiving 

comments in this area. 

Elsewhere in this SUPPLEMENTARY

INFORMATION section we identify and 

explain burdens specifically associated 

with information collection 

requirements. See the heading 

Paperwork Reduction Act of 1995. 

Accounting Statement 

As required by OMB Circular A–4 

(available at http:// 

www.Whitehouse.gov/omb/Circulars/ 

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

prepared an accounting statement 

showing the classification of the 

expenditures associated with the 

provisions of these proposed 

regulations. This table provides our best 

estimate of the changes in Federal 

student aid payments as a result of these 

proposed regulations. Expenditures are 

classified as transfers from the Federal 

government to student loan borrowers. 

TABLE 2—ACCOUNTING STATEMENT: 

CLASSIFICATION OF ESTIMATED EXPENDITURES

[In millions] 

Category Transfers 

Annualized Monetized 

Transfers 

$0 

From Whom To 

Whom? 

Federal Government 

to Student Loan 

Borrowers. 

Clarity of the Regulations 

Executive Order 12866 and the 

Presidential memorandum on ‘‘Plain 

Language in Government Writing’’ 

require each agency to write regulations 

that are easy to understand. 

The Secretary invites comments on 

how to make these proposed regulations 

easier to understand, including answers 

to questions such as the following: 

• Are the requirements in the 

proposed regulations clearly stated? 

• Do the proposed regulations contain 

technical terms or other wording that 

interferes with their clarity? 

• Does the format of the proposed 

regulations (grouping and order of 

sections, use of headings, paragraphing, 

etc.) aid or reduce their clarity? 

• Would the proposed regulations be 

easier to understand if we divided them 

into more (but shorter) sections? (A 

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

and a numbered heading; for example, 

§ 601.30.) 

• Could the description of the 

proposed regulations in the 

‘‘Supplementary Information’’ section of 

this preamble be more helpful in 

making the proposed regulations easier 

to understand? If so, how? 

• What else could we do to make the 

proposed regulations easier to 

understand? 

To send any comments that concern 

how the Department could make these 

proposed regulations easier to 

understand, see the instructions in the 

ADDRESSES section of this preamble. 

Regulatory Flexibility Act Certification 

The Secretary certifies that these 

proposed regulations would not have a 

significant economic impact on a 

substantial number of small entities. 

These proposed regulations would affect 

institutions that participate in title IV, 

HEA programs, ATB test publishers, and 

individual students and loan borrowers. 

The U.S. Small Business Administration 

Size Standards define for-profit 

institutions as ‘‘small businesses’’ if they 

are independently owned and operated 

and not dominant in their field of 

operation with total annual revenue 

below $7,000,000, and defines nonprofit institutions as small organizations 

if they are independently owned and 

operated and not dominant in their field 

of operation, or as small entities if they 

are institutions controlled by 

governmental entities with populations 

below 50,000. 

Data from the Integrated 

Postsecondary Education Data System 

(IPEDS) indicate that roughly 4,379 

institutions participating in the Federal 

student assistance programs meet the 

definition of ‘‘small entities.’’ The 

following table provides the distribution 

of institutions and students by revenue 

category and institutional control. 


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34858 Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules 

Revenue category 

Public Private NFP Proprietary Tribal 

No. of schools No. of 

students No. of schools No. of students No. of schools No. of students No. of schools No. of students 

$0 to $500,000 .................. 43 2,124 103 13,208 510 38,774 ........................ ........................

$500,000 to $1 million ....... 44 7,182 81 9,806 438 61,906 1 137 

$1 million to $3 million ...... 98 29,332 243 65,614 745 217,715 3 555 

$3 million to $5 million ...... 75 65,442 138 60,923 303 182,362 ........................ ........................

$5 million to $7 million ...... 49 73,798 99 62,776 224 185,705 5 2,525 

$7 million to $10 million .... 78 129,079 110 84,659 228 235,888 9 4,935 

$10 million and above ....... 1,585 18,480,000 1,067 4,312,010 383 1,793,951 14 18,065 

Total ........................... 1,972 18,786,957 1,841 4,608,996 2,831 2,716,301 32 26,217 

Approximately two-thirds of these 

institutions are for-profit schools subject 

to the disclosure and reporting 

requirements related to programs 

leading to gainful employment 

described in this NPRM. Other affected 

small institutions include small 

community colleges and tribally 

controlled schools. For these 

institutions, the new disclosure and 

administrative requirements imposed 

under the proposed regulations could 

impose some new costs as described 

below. The impact of the proposed 

regulations on individuals is not subject 

to the Regulatory Flexibility Act. 

As discussed in the preamble to this 

NPRM, the proposed program integrity 

regulations are being developed to 

update administrative procedures for 

the Federal student aid programs and to 

ensure that funds are provided to 

students at eligible programs and 

institutions. Many of the provisions 

addressed in this NPRM modify existing 

regulations and requirements. For 

example, the proposed regulations on 

FAFSA verification would change the 

number of items to be verified but 

would not require the creation of a new 

process. The following table 

summarizes the estimated total hours, 

costs, and requirements applicable to 

small entities from these provisions. 

Reg. section OMB Control 

No. Hours Costs 

668.6 1845–NEW1 82,637 1,711,818 

Annual submission of private loan, CIP, and identifying data for 

completers by program .......................................................................... 668.6(a) ........................ 34,999 725,001 

Report CIP codes for all attendees ........................................................... .............................. ........................ 37,138 769,317 

Disclose occupational information, graduation rates, program placement 

rates, and program costs ....................................................................... 668.6(b) ........................ 10,500 217,500 

668.8 1845–0022 12,035 224,250 

Determine if program is affected, evaluate amount of outside student 

work that should be included, and perform credit to clock hour conversion .................................................................................................... .............................. ........................ ........................ ........................

668.16 1845–0022 14,418 268,650 

Develop a high school diploma validity process ....................................... 668.16(p) ........................ 13,106 244,208 

Verify questionable diplomas ..................................................................... 668.16(p) ........................ 1,312 24,443 

668.22 1845–0022 278,807 5,195,005 

Establish withdrawal date and calculate percentage of payment period 

or period of enrollment completed ......................................................... .............................. ........................ ........................ ........................

668.34 1845–NEW2 478,627 8,918,250 

Review proposed regulations and implement changes to ensure compliance ........................................................................................................ 668.34(a) ........................ 11,234 209,316 

Perform academic reviews at the end of each payment period ............... 668.34(c) ........................ 137,282 2,557,972 

Develop academic plan for students who do not achieve satisfactory 

academic progress when reviewed at end of payment period .............. 668.34(c) ........................ 120,123 2,238,249 

Perform academic reviews at institutions that do so annually .................. 668.34(d) ........................ 111,994 2,086,777 

Develop academic plan for students who do not achieve satisfactory 

academic progress when reviewed annually ......................................... 668.34(d) ........................ 97,995 1,825,936 

668.43 1845–NEW2 44,516 829,465 

Disclose information about written agreements ........................................ .............................. ........................ 43,930 818,552 

Make contact information for filing complaints to accreditor and State 

approval or licensing agency available to enrolled and prospective 

students .................................................................................................. 668.43(b) ........................ 586 10,914 

668.55 1845–0041 189,558 3,532,041 

Update household size throughout award year ........................................ .............................. ........................ 170,603 3,178,843 

Update marrital status throughout award year .......................................... .............................. ........................ 18,956 353,198 

668.57 1845–0041 401,411 7,479,487 

Review verification responses for acceptable documentation .................. .............................. ........................ ........................ ........................

668.59 1845–0041 802,822 14,958,975 

Removes tolerances and requires institutions to report all changes to 

applicants’ FAFSA information resulting from verification ..................... .............................. ........................ ........................ ........................

Recalculate applicant’s EFC if information changes from verification ...... .............................. ........................ ........................ ........................

668.151 1845–0049 28,313 527,548 

Keep records of individuals who take ATB tests and details about the 

administrator ........................................................................................... 668.151(g)(4) ........................ 25,279 471,024 

Keep documentation of individual’s disability and testing arrangements 

provided .................................................................................................. 668.151(g)(5) ........................ 3,034 56,524 


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Reg. section OMB Control 

No. Hours Costs 

668.152 1845–0049 3,427 63,857 

Maintain the scored ATB tests and collect and submit copies of completed ATB tests or a listing to the test publisher or State weekly ....... .............................. ........................ ........................ ........................

668.164 1845–NEW3 35,640 664,073 

Provide a way for Pell Grant recipients to obtain or purchase required 

books and supplies by the 7th day of a payment period under certain 

conditions ............................................................................................... .............................. ........................ ........................ ........................

To assess overall burden imposed on 

institutions meeting the definition of 

small entities, the Department 

developed a methodology using IPEDS 

data and the percentage of institutions 

with revenues below $7 million and all 

non-profit institutions, allocating 

approximately 66 percent of the 

paperwork burden to small institutions. 

Using this methodology, the Department 

estimates that the proposed regulations 

would increase total burden hours for 

these schools by 2.37 million, or 

roughly 541 hours per institution. 

Monetized using salary data from the 

Bureau of Labor Statistics, this burden 

is $44.4 million and $10,133, 

respectively. If calculated using the 

distribution of students from 2007–08, 

the share of the burden allocated to 

small institutions would be much lower 

at approximately 21 percent, resulting 

in an estimated burden of 186 hours and 

$3,510 per institution. Even the more 

conservative estimate of $10,133 

represents 1 percent or less of the 

midpoint revenue for all but the lowest 

revenue category, for which it is 4 

percent of midpoint revenue. 

For institutions, an hourly rate of 

$18.63 was used to monetize the burden 

of these provisions. This was a blended 

rate based on wages of $15.51 for office 

and administrative staff and $36.33 for 

managers, assuming that office staff 

would perform 85 percent of the work 

affected by these regulations. For the 

gainful employment provision, an 

hourly rate of $20.71 was used to reflect 

increased management time to establish 

new data collection procedures 

associated with that provision. These 

rates are the same as those used for all 

institutions in the costs section of this 

analysis, reflecting the fact that the 

primary cost of meeting the paperwork 

burden is in additional labor and wages 

at small institutions should not be 

systematically higher than those at all 

institutions. The Department welcomes 

comments from institutions regarding 

the costs of meeting the additional 

burdens described in the Paperwork 

Reduction Act section of this NPRM. 

Where possible, the Department has 

allowed institutions flexibility to 

establish processes to comply that fit the 

institution’s administrative capabilities. 

For example, the requirement to 

distribute funds to Pell Grant recipients 

for books and supplies within 7 days of 

the start of the payment period allows 

institutions to use book vouchers or a 

credit to the student’s account. The 

Department has also tried to allow more 

time to establish procedures for new 

data collections, such as the placement 

rate information required in the data 

collection related to gainful 

employment. While these timing 

provisions are available to all 

institutions, they should help small 

institutions have time for the necessary 

adjustments. Granting such extensions 

to all institutions is simpler to 

administer and provides additional 

certainty to institutions that will not 

have to anticipate if their revenues will 

fall below the small business threshold 

to get more time for compliance. 

Approximately 60 percent of the 

paperwork burden associated with these 

regulations comes in OMB 1845–0041 

from updating FAFSA application 

information and reporting all changes 

resulting from verification. These 

updated requirements will help ensure 

eligible students receive aid. As detailed 

in the Paperwork Reduction Act section 

of this NPRM, the increase in burden 

associated with the FAFSA acceptable 

documentation provision is largely 

driven by the increase in student 

applicants since the burden was last 

calculated. The number of verifications 

is estimated to have increased from 3.0 

million in 2002–03 to 5.1 million in 

2008–09. Without the regulatory change 

estimated to reduce the number of items 

to be verified, the paperwork burden on 

small institutions in OMB 1845–0041 

would increase by an additional 267,607 

hours. Based on these estimates, the 

Department believes the proposed new 

requirements do not impose significant 

new costs on these institutions. 

No alternative provisions were 

considered that would target small 

institutions with exemptions or 

additional time for compliance. 

Additional time or flexibility was 

granted to all institutions based on the 

nature of the provision and the data 

requested. The Secretary invites 

comments from small institutions and 

other affected entities as to whether they 

believe the proposed changes would 

have a significant economic impact on 

them and, if so, requests evidence to 

support that belief. 

Paperwork Reduction Act of 1995 

Sections 668.6, 668.8, 668.16, 668.22, 

668.34, 668.43, 668.55, 668.56, 668.57, 

668.59, 668.144, 668.150, 668.151, 

668.152, and 668.164 contain 

information collection requirements. 

Under the Paperwork Reduction Act of 

1995 (44 U.S.C. 3507(d)), the 

Department has submitted a copy of 

these sections to OMB for its review. 

Section 668.6—Gainful Employment 

The proposed regulations would 

impose new requirements on certain 

programs that by law must, for purposes 

of the title IV, HEA programs, prepare 

students for gainful employment in a 

recognized occupation. For public and 

private nonprofit institutions, a program 

that does not lead to a degree would be 

subject to the eligibility requirement 

that the program lead to gainful 

employment in a recognized 

occupation, while a program leading to 

a degree, including a two-academic-year 

program fully transferrable to a 

baccalaureate degree, would not be 

subject to this eligibility requirement. 

For proprietary institutions, all eligible 

degree and nondegree programs would 

be required to lead to gainful 

employment in a recognized 

occupation, except for a liberal arts 

baccalaureate program under section 

102(b)(1)(A)(ii) of the HEA. 

The institution would be required 

under proposed § 668.6(a) to submit 

annually, information that would 

include, at a minimum, identifying 

information about each student who 

completed a program, the CIP code for 

that program, the date the student 

completed the program, and the 

amounts the student received from 

private educational loans and 

institutional financing plans. We 

estimate that it will take the affected 

2,086 proprietary institutions, on 

average, 10 hours to meet these 

reporting requirements for their 


srobinson on DSKHWCL6B1PROD with PROPOSALS2
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occupational training programs for a 

total estimated increase in burden of 

20,860 hours. We estimate that it will 

take the affected 238 private non-profit 

institutions, on average, 10 hours to 

meet these reporting requirements for 

their occupational training programs for 

a total estimated increase in burden of 

2,380 hours. We estimate that it will 

take the affected 2,139 public 

institutions, on average, 10 hours to 

meet these reporting requirements for 

their occupational training programs for 

a total estimated increase in burden of 

21,390 hours. 

Collectively, we estimate that burden 

for institutions to meet these proposed 

reporting requirements in accordance 

with procedures established by the 

Secretary would increase by 44,630 

hours in OMB Control Number 1845– 

NEW1. 

We estimate that over the first threeyear reporting period that there would 

be 591,966 graduates from these 

occupational training programs. We 

estimate that the proposed reporting for 

an estimated 278,224 graduates from 

proprietary institutions would average 5 

minutes (.08 hours) per graduate, 

increasing burden by 22,258 hours. We 

estimate that the proposed reporting for 

the estimated 29,598 graduates from 

private non-profit institutions would 

average 5 minutes (.08 hours) per 

graduate, increasing burden by 2,368 

hours. We estimate that the proposed 

reporting for 284,144 graduates from 

public institutions would average 5 

minutes (.08 hours) per graduate, 

increasing burden by 22,732 hours. 

Collectively, burden associated with 

the proposed disclosures (including the 

reporting of Department provided 

median loan debt information) for each 

graduate would increase for institutions 

by 47,358 hours in OMB Control 

Number 1845–NEW1. 

Finally, under proposed § 668.6(b) an 

institution would be required to 

disclose on its Web site information 

about (1) the occupations that its 

programs prepare students to enter, 

along with links to occupational profiles 

on O*NET, (2) the on-time graduation 

rate of students entering a program, (3) 

the cost of each program, including 

costs for tuition and fees, room and 

board; other institutional costs typically 

incurred by students enrolling in the 

program, such as books and supplies, (4) 

beginning no later than June 30, 2013, 

the placement rate for students 

completing each of these programs, as 

determined under § 668.8(g) or a Statesponsored workforce data system, and 

(5) the median loan debt incurred by 

students who completed each program 

in the preceding three years, identified 

separately as title IV, HEA loan debt and 

debt from private educational loans and 

institutional financing plans. 

We estimate that, on average, 

institutions would take 3 hours per 

institution to obtain the required 

disclosure information and to provide 

that information on the institution’s 

Web sites. We estimate that 2,086 

proprietary institutions would take 3 

hours per institution to collect and post 

the proposed disclosures which would 

increase burden by 6,258 hours. We 

estimate that 238 private non-profit 

institutions would take 3 hours per 

institution to collect and post the 

proposed disclosures which would 

increase burden by 714 hours. We 

estimate that 2,139 public institutions 

would take 3 hours per institution to 

collect and post the proposed 

disclosures which would increase 

burden by 6,417 hours. 

Collectively, we estimate that these 

proposed disclosures would result in an 

increase in burden to institutions by 

13,389 hours in OMB Control Number 

1845–NEW1. 

In total, the proposed regulatory 

changes reflected in § 668.6 would 

increase burden by a total of 105,377 

hours in OMB Control Number 1845– 

NEW1. 

Section 668.8—Eligible Program 

Under proposed § 668.8(l)(1), we 

would revise the method of converting 

clock hours to credit hours to use a ratio 

of the minimum clock hours in an 

academic year to the minimum credit 

hours in an academic year, i.e., 900 

clock hours to 24 semester or trimester 

hours or 36 quarter hours. Thus, a 

semester or trimester hour would be 

based on at least 37.5 clock hours, and 

a quarter hour would be based on at 

least 25 clock hours. Proposed 

§ 668.8(l)(2) would create an exception 

to the conversion ratio in proposed 

§ 668.8(l)(1) if neither an institution’s 

designated accrediting agency nor the 

relevant State licensing authority for 

participation in the title IV, HEA 

programs determines there are any 

deficiencies in the institution’s policies, 

procedures, and practices for 

establishing the credit hours that the 

institution awards for programs and 

courses, as defined in proposed § 600.2. 

Under the exception provided by 

proposed § 668.8(l)(2), an institution 

would be permitted to combine 

students’ work outside of class with the 

clock-hours of instruction in order to 

meet or exceed the numeric 

requirements established in proposed 

§ 668.8(l)(1). However, under proposed 

§ 668.8(l)(2), the institution would need 

to use at least 30 clock hours for a 

semester or trimester hour or 20 clock 

hours for a quarter hour. 

In determining whether there is 

outside work that a student must 

perform, the analysis would need to 

take into account differences in 

coursework and educational activities 

within the program. Some portions of a 

program may require student work 

outside of class that justifies the 

application of proposed § 668.8(l)(2). In 

addition, the application of proposed 

§ 668.8(l)(2) could vary within a 

program depending on variances in 

required student work outside of class 

for different portions of the program. 

Other portions of the program may not 

have outside work, and proposed 

§ 668.8(l)(1) would need to be applied. 

Of course, an institution applying only 

proposed § 668.8(l)(1) to a program 

eligible for conversion from clock hours 

to credit hours, without an analysis of 

the program’s coursework, would be 

considered compliant with the 

requirements of proposed § 668.8(l). 

Proposed § 668.8(k)(1)(ii) would 

modify a provision in current 

regulations to provide that a program is 

not subject to the conversion formula in 

§ 668.8(l) where each course within the 

program is acceptable for full credit 

toward a degree that is offered by the 

institution and that this degree requires 

at least two academic years of study. 

Additionally, under proposed 

§ 668.8(k)(1)(ii), the institution would be 

required to demonstrate that students 

enroll in, and graduate from, the degree 

program. 

Proposed § 668.8(k)(2)(i) would 

provide that a program is considered to 

be a clock-hour program if the program 

must be measured in clock hours to 

receive Federal or State approval or 

licensure, or if completing clock hours 

is a requirement for graduates to apply 

for licensure or the authorization to 

practice the occupation that the student 

is intending to pursue. Under proposed 

§ 668.8(k)(2)(ii) and (iii), the program 

would also be considered to be offered 

in clock hours if the credit hours 

awarded for the program are not in 

compliance with the definition of a 

credit hour in proposed § 600.2, or if the 

institution does not provide the clock 

hours that are the basis for the credit 

hours awarded for the program or each 

course in the program and, except as 

provided in current § 668.4(e), requires 

attendance in the clock hours that are 

the basis for the credit hours awarded. 

The proposed regulations on which 

tentative agreement was reached would 

not include the provision in proposed 

§ 668.8(k)(2)(iii) that, except as provided 

in current § 668.4(e), an institution must 

require attendance in the clock hours 


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that are the basis for the credit hours 

awarded. 

Proposed § 668.8(k)(3) would provide 

that proposed § 668.8(k)(2)(i) would not 

apply if a limited portion of the program 

includes a practicum, internship, or 

clinical experience component that 

must include a minimum number of 

clock hours due to a State or Federal 

approval or licensure requirement. 

We estimate that on average, for each 

affected program it would take 30 

minutes for an institution to make the 

determination of whether the program is 

an affected program, to evaluate the 

amount of outside student work that 

should be included as proposed and to 

perform the clock hour to credit hour 

conversion. We further estimate that of 

the 4,587 institutions of higher 

education with less than 2-year 

programs, that on average, each 

institution has approximately 8 nondegree programs of study for a total of 

36,696 affected programs. We estimate 

that there are 16,513 affected programs 

at proprietary institutions times .5 hours 

which would increase burden by 8,257 

hours. We estimate that there are 1,835 

affected programs at private non-profit 

institutions times .5 hours which would 

increase burden by 918 hours. We 

estimate that there are 18,348 affected 

programs at public institutions times .5 

hours which would increase burden by 

9,174 hours. 

Collectively, the proposed regulatory 

changes reflected in § 668.8 would 

increase burden by 18,349 hours in 

OMB Control Number 1845–0022. 

Section 668.16—Standards of 

Administrative Capability 

Under the proposed regulations, the 

elements of the institution’s satisfactory 

academic progress plan would be 

moved from current § 668.16(e) to 

proposed § 668.34. We would also 

update these provisions. As a result, the 

estimated burden upon institutions 

associated with measuring academic 

progress currently in OMB Control 

Number 1845–0022 of 21,000 hours 

would be administratively removed 

from this collection and transferred to 

OMB Control Number 1845–NEW2. 

Under proposed § 668.16(p), an 

institution would be required to develop 

and follow procedures to evaluate the 

validity of a student’s high school 

completion if the institution or the 

Secretary has reason to believe that the 

high school diploma is not valid or was 

not obtained from an entity that 

provides secondary school education. 

The burden associated with this 

proposed requirement would be 

mitigated by the fact that many 

institutions already have processes in 

place to collect high school diplomas 

and make determinations about their 

validity. 

We estimate that burden would 

increase for each institution by 3.5 

hours for the development of a high 

school diploma validity process. We 

estimate that 2,086 proprietary 

institutions would on average take 3.5 

hours to develop the proposed 

procedures to evaluate the validity of 

high school completions which would 

increase burden by 7,301 hours. We 

estimate that 1,731 private non-profit 

institutions would on average take 3.5 

hours to develop the proposed 

procedures to evaluate the validity of 

high school completion which would 

increase burden by 6,059 hours. We 

estimate that 1,892 public institutions 

would on average take 3.5 hours to 

develop the proposed procedures to 

evaluate the validity of high school 

completion which would increase 

burden by 6,622 hours. 

Additionally, we estimate that the 

validity of approximately 4,000 high 

school diplomas per year would be 

questioned and, therefore, require 

additional verification that is estimated 

to take .5 hours per questionable 

diploma. We estimate that proprietary 

institutions would have 2,000 

questionable diplomas times .5 hours 

per diploma equals 1,000 hours of 

increased burden. We estimate that 

private non-profit institutions would 

have 600 questionable diplomas times .5 

hours per diploma equals 300 hours of 

increased burden. We estimate that 

public institutions would have 1,400 

questionable diplomas times .5 hours 

per diploma equals 700 hours of 

increased burden. 

Collectively, the proposed regulatory 

changes reflected in § 668.16 would 

increase burden by 21,982 hours in 

OMB Control Number 1845–0022. 

Section 668.22—Treatment of Title IV, 

HEA Program Funds When a Student 

Withdraws 

The proposed changes to 

§ 668.22(a)(2) would clarify when a 

student is considered to have 

withdrawn from a payment period or 

period of enrollment. In the case of a 

program that is measured in credit 

hours, the student would be considered 

to have withdrawn if he or she does not 

complete all the days in the payment 

period or period of enrollment that the 

student was scheduled to complete 

prior to withdrawing. In the case of a 

program that is measured in clock 

hours, the student would be considered 

to have withdrawn if he or she does not 

complete all of the clock hours in the 

payment period or period of enrollment 

that the student was scheduled to 

complete prior to withdrawing. 

The proposed change to 

§ 668.22(f)(2)(i) would clarify that, for 

credit hour programs, in calculating the 

percentage of the payment period or 

period of enrollment completed, it is 

necessary to take into account the total 

number of calendar days that the 

student was scheduled to complete 

prior to withdrawing without regard to 

any course completed by the student 

that is less than the length of the term. 

These proposed regulations would 

affect all programs with courses that are 

less than the length of a term, including, 

for example, a semester-based program 

that has a summer nonstandard term 

with two consecutive six-week sessions 

within the term. 

We estimate that approximately 

425,075 students in term-based 

programs with modules or compressed 

courses will withdraw prior to 

completing more than 60 percent of 

their program of study. We estimate that 

on average, the burden per individual 

student who withdraws prior to the 60 

percent point of their term-based 

program to be 45 minutes (.75 hours) 

per affected individual which would 

increase burden for the estimated 

425,075 students by 318,806 hours in 

OMB Control Number 1845–0022. Of 

these 425,075 withdrawals, we estimate 

that 50 percent of the withdrawals 

(212,538) would occur at proprietary 

institutions and would increase burden 

by 1 hour per withdrawal increasing 

burden by 212,538 hours. We estimate 

that 10 percent of the withdrawals 

(42,508) would occur at private nonprofit institutions and would increase 

burden by 1 hour per withdrawal 

increasing burden by 42,508 hours. We 

estimate that 40 percent of the 

withdrawals (170,029) would occur at 

public institutions and would increase 

burden by 1 hour per withdrawal 

increasing burden by 170,029 hours. 

Collectively, we estimate that burden 

will increase by 743,881 hours in OMB 

Control Number 1845–0022, of which 

318,806 hours is for individuals and 

425,075 hours is for institutions. 

Section 668.34—Satisfactory Progress 

The proposed regulations would 

restructure the satisfactory academic 

progress requirements. Proposed 

§ 668.16(e) (Standards of administrative 

capability) would be revised to include 

only the requirement that an institution 

establish, publish, and apply 

satisfactory academic progress standards 

that meet the requirements of § 668.34. 

The remainder of current § 668.16(e) 

would be moved to proposed § 668.34 

such that it, alone, would describe all of 


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the required elements of a satisfactory 

academic progress policy as well as how 

an institution would implement such a 

policy. The references in paragraph 

§ 668.32(e) would be updated to 

conform the section with the changes 

proposed to §§ 668.16(e) and 668.32. 

Proposed § 668.34(a) would specify 

the elements an institution’s satisfactory 

academic policy must contain to be 

considered a reasonable policy. Under 

the proposed regulations, institutions 

would continue to have flexibility in 

establishing their own policies; 

institutions that choose to measure 

satisfactory academic progress more 

frequently than at the minimum 

required intervals would have 

additional flexibility (see proposed 

§ 668.34(a)(3)). 

All of the policy elements in the 

current regulations under § 668.16(e) 

and § 668.34 would be combined in 

proposed § 668.34. In addition, 

proposed § 668.34(a)(5) would make 

explicit the requirement that 

institutions specify the pace at which a 

student must progress through his or her 

educational program to ensure that the 

student will complete the program 

within the maximum timeframe, and 

provide for measurement of a student’s 

pace at each evaluation. Under 

proposed § 668.34(a)(6), institutional 

policies would need to describe how a 

student’s GPA and pace of completion 

are affected by transfers of credit from 

other institutions. This provision would 

also require institutions to count credit 

hours from another institution that are 

accepted toward a student’s educational 

program as both attempted and 

completed hours. 

Proposed § 668.34(a)(7) would 

provide that, except as permitted in 

§ 668.34(c) and (d), the policy requires 

that, at the time of each evaluation, if 

the student is not making satisfactory 

academic progress, the student is no 

longer eligible to receive the title IV, 

HEA assistance. 

Proposed § 668.34(a)(8) would require 

institutions that use ‘‘financial aid 

warning’’ and ‘‘financial aid probation’’ 

statuses (concepts that would be defined 

in proposed § 668.34(b)) in connection 

with satisfactory academic progress 

evaluations to describe these statuses 

and how they are used in their 

satisfactory academic progress policies. 

Proposed § 668.34(a)(8)(i) would specify 

that a student on financial aid warning 

may continue to receive assistance 

under the title IV, HEA programs for one 

payment period despite a determination 

that the student is not making 

satisfactory academic progress. 

Financial aid warning status may be 

assigned without an appeal or other 

action by the student. Proposed 

§ 668.34(a)(8)(ii) would make clear that 

an institution with a satisfactory 

academic progress policy that includes 

the use of the financial aid probation 

status could require that a student on 

financial aid probation fulfill specific 

terms and conditions, such as taking a 

reduced course load or enrolling in 

specific courses. 

Proposed § 668.34(a)(9) would require 

an institution that permits a student to 

appeal a determination that the student 

is not making satisfactory academic 

progress to describe the appeal process 

in its policy. The policy would need to 

contain specified elements. Proposed 

§ 668.34(a)(9)(i) would require an 

institution to describe how a student 

may re-establish his or her eligibility to 

receive assistance under the title IV, 

HEA programs. Under proposed 

§ 668.34(a)(9)(ii), a student would be 

permitted to file an appeal based on the 

death of a relative, an injury or illness 

of the student, or other special 

circumstances. Under proposed 

§ 668.34(a)(9)(iii), a student would be 

required to submit, as part of the appeal, 

information regarding why the student 

failed to make satisfactory academic 

progress, and what has changed in the 

student’s situation that would allow the 

student to demonstrate satisfactory 

academic progress at the next 

evaluation. 

Proposed § 668.34(a)(10) would 

require the satisfactory academic 

progress policy of an institution that 

does not permit students to appeal a 

determination that they are not making 

satisfactory academic progress to 

describe how a student may regain 

eligibility for assistance under the title 

IV, HEA programs. 

Proposed § 668.34(a)(11) would 

require that an institution’s policy 

provide for notification to students of 

the results of an evaluation that impacts 

the student’s eligibility for title IV, HEA 

program funds. 

We estimate that, on average, 

institutions would take 3 hours per 

institution to review the proposed 

regulations in § 668.34(a) and 

implement any proposed changes to 

insure compliance. We estimate that 

2,086 proprietary institutions would 

take 3 hours per institution to review 

and implement the proposed regulations 

increasing burden by 6,258 hours. We 

estimate that 1,731 private non-profit 

institutions would take 3 hours per 

institution to review and implement the 

proposed regulations increasing burden 

by 5,193 hours. We estimate that 1,892 

public institutions would take 3 hours 

per institution to review and implement 

the proposed regulations increasing 

burden by 5,676 hours. Collectively, the 

proposed regulatory changes reflected in 

§ 668.34(a) would increase burden by 

17,127 hours. 

Proposed § 668.34(c) and (d) would 

specify that an institution’s policy may 

provide for disbursement of title IV, 

HEA program funds to a student who 

has not met an institution’s satisfactory 

academic standards in certain 

circumstances. Of the 17 million 

applicants in 2008–2009, we estimate 

that 90 percent (or 15,300,000 

individuals) would begin attendance. 

We estimate that of the 15,300,000 

individuals that begin attendance, that 

90 percent (or 13,770,000 individuals) 

would persist at least through the end 

of the initial payment period and 

therefore the institution would evaluate 

the student’s satisfactory academic 

progress consistent with the provision 

of proposed § 668.34. We estimate that 

38 percent of the institutions would 

evaluate their students at the end of 

each payment period under proposed 

§ 668.34(c), therefore 13,770,000 

individuals times 38 percent equals 

5,232,600 individuals that would be 

evaluated more than annually. We 

estimate that 62 percent of institutions 

would evaluate their students once per 

academic year under proposed 

§ 668.34(d), therefore, 13,770,000 

individuals times 62 percent equals 

8,537,400 individuals that would be 

evaluated annually. 

Proposed § 668.34(c) would permit an 

institution that measures satisfactory 

academic progress at the end of each 

payment period to have a policy that 

would permit a student who is not 

making satisfactory academic progress 

to be placed automatically on financial 

aid warning, a newly defined term. We 

estimate as a result, the burden 

associated with an academic progress 

measurement at the end of each 

payment period, and when required, 

developing an academic plan for the 

student, would increase burden. We 

estimate that proprietary institutions, 

which comprise 37 percent of the total 

number of institutions of higher 

education, times 5,232,600 individuals 

equals 1,936,062 individuals at 

proprietary institutions that would 

require an academic review more than 

once per academic year. 1,936,062 times 

an average of 2 reviews per academic 

year, equals 3,872,124 satisfactory 

academic progress reviews. Since these 

academic progress reviews are generally 

highly automated, we estimate that, on 

average, each review will take 1.2 

minutes (.02 hours) and will increase 

burden by 77,442 hours. We estimate 

that private non-profit institutions, 

which comprise 30 percent of the total 


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number of institutions of higher 

education, times 5,232,600 individuals 

equals 1,569,780 individuals at private 

non-profit institutions that would 

require an academic review. 1,569,780 

times an average of 2 reviews per 

academic year, equals 3,139,560 

satisfactory academic progress reviews. 

Since these academic progress reviews 

are generally highly automated, we 

estimate that, on average, each review 

will take 1.2 minutes (.02 hours) and 

will increase burden by 62,791 hours. 

We estimate that public institutions, 

which comprise 33 percent of the total 

number of institutions of higher 

education, times 5,232,600 individuals 

equals 1,726,758 individuals at public 

institutions that would require an 

academic review. 1,726,758 times an 

average of 2 reviews per academic year, 

equals 3,453,516 satisfactory academic 

progress reviews. Since these academic 

progress reviews are generally highly 

automated, we estimate that, on average, 

each review will take 1.2 minutes (.02 

hours) and will increase burden by 

69,070 hours. 

Collectively, we estimate that the 

burden for institutions would increase 

by 209,303 hours, in OMB Control 

Number 1845–NEW2. 

As a result of the proposed 

satisfactory academic progress reviews 

conducted by the institutions, we 

estimate that 7 percent of the 5,232,600 

enrolled students (at institutions that 

review academic progress more often 

than annually) or 366,282 would not 

successfully achieve satisfactory 

academic progress and therefore the 

institution would work with each 

student to develop an academic plan 

which would increase burden for the 

individual and the institutions. We 

estimate that under proposed 

§ 668.34(c), that 366,282 students 

would, on average, take 10 minutes (.17 

hours) to establish an academic plan 

and re-evaluate the plan a second time 

within the academic year (2 times per 

academic year), increasing burden to 

individuals by 124,536 hours. 

We estimate that proprietary 

institutions, which comprise 37 percent 

of the total number of institutions of 

higher education, times 5,232,600 

individuals equals 1,936,062 

individuals at proprietary institutions 

that would require the development of 

an academic plan as a result of not 

progressing academically. 1,936,062 

individuals times 7 percent (we estimate 

who would not academically progress), 

equals 135,524 individuals who would 

need to work with their institutions to 

develop an academic plan. We estimate 

that each academic plan would take, on 

average, 15 minutes (.25 hours) of staff 

time at two times within the academic 

year, increasing burden by 67,762 hours. 

We estimate that private non-profit 

institutions, which comprise 30 percent 

of the total number of institutions of 

higher education, times 5,232,600 

individuals equals 1,569,780 

individuals at private non-profit 

institutions that would require the 

development of an academic plan as a 

result of not progressing academically. 

1,569,780 individuals times 7 percent 

(we estimate who would not 

academically progress), equals 109,885 

individuals who would need to work 

with their institutions to develop an 

academic plan. We estimate that each 

academic plan would take, on average, 

15 minutes (.25 hours) of staff time at 

two times within the academic year, 

increasing burden by 54,943 hours. 

We estimate that public institutions, 

which comprise 33 percent of the total 

number of institutions of higher 

education, times 5,232,600 individuals 

equals 1,726,758 individuals at public 

institutions that would require the 

development of an academic plan as a 

result of not progressing academically. 

1,726,758 individuals times 7 percent 

(we estimate who would not 

academically progress), equals 120,873 

individuals who would need to work 

with their institutions to develop an 

academic plan. We estimate that each 

academic plan would take, on average, 

15 minutes (.25 hours) of staff time at 

two times within the academic year, 

increasing burden by 60,437 hours. 

Collectively, we estimate that the 

burden for institutions would increase 

by 183,142 hours, in OMB Control 

Number 1845–NEW2. 

Under proposed § 668.34(d), at an 

institution that measures satisfactory 

academic progress annually, or less 

frequently than at the end of each 

payment period, a student who has been 

determined not to be making 

satisfactory academic progress would be 

able to receive title IV, HEA program 

funds only after filing an appeal and 

meeting one of two conditions: (1) the 

institution has determined that the 

student should be able to meet 

satisfactory progress standards after the 

subsequent payment period, or (2) the 

institution develops an academic plan 

with the student that, if followed, will 

ensure that the student is able to meet 

the institution’s satisfactory academic 

progress standards by a specific point in 

time. 

Because the proposed regulations 

would transfer the elements of an 

institution’s satisfactory academic 

policy from § 668.16(e) to § 668.34, we 

are transferring the current burden 

estimate of 21,000 hours from the 

current OMB Control Number 1845– 

0022 to OMB Control Number 1845– 

NEW2. 

We estimate that proprietary 

institutions, which comprise 37 percent 

of the total number of institutions of 

higher education, times 8,537,400 

individuals equals 3,158,838 

individuals at proprietary institutions 

that would require an academic review. 

Since the academic progress reviews are 

generally highly automated, we estimate 

that, on average, each review will take 

1.2 minutes (.02 hours) and will 

increase burden by 63,177 hours. We 

estimate that private non-profit 

institutions, which comprise 30 percent 

of the total number of institutions of 

higher education, times 8,537,400 

individuals equals 2,561,220 

individuals at private non-profit 

institutions that would require an 

academic review. Since the academic 

progress reviews are generally highly 

automated, we estimate that, on average, 

each review will take 1.2 minutes (.02 

hours) and will increase burden by 

51,224 hours. We estimate that public 

institutions, which comprise 33 percent 

of the total number of institutions of 

higher education, times 8,537,400 

individuals equals 2,817,342 

individuals at public institutions that 

would require an academic review. 

Since the academic progress reviews are 

generally highly automated, we estimate 

that, on average, each review will take 

1.2 minutes (.02 hours) and will 

increase burden by 56,347 hours. 

Collectively, we estimate that the 

burden for institutions would increase 

by 170,748 hours, in OMB Control 

Number 1845–NEW2. 

As a result of the proposed 

satisfactory academic progress reviews 

conducted by the institutions, we 

estimate that 7 percent of the 8,537,400 

enrolled students (at institutions that 

review academic progress annually) or 

597,618 would not successfully achieve 

satisfactory academic progress and 

therefore the institution would work 

with each student to develop an 

academic plan which would increase 

burden for the individual and the 

institutions. We estimate that under 

proposed § 668.34(d), that 597,618 

students would, on average, take 10 

minutes (.17 hours) to establish an 

academic plan, increasing burden to 

individuals by 101,595 hours. 

We estimate that proprietary 

institutions, which comprise 37 percent 

of the total number of institutions of 

higher education, times 8,537,400 

individuals equals 3,158,838 

individuals at proprietary institutions 

that would require the development of 

an academic plan as a result of not 


srobinson on DSKHWCL6B1PROD with PROPOSALS2
34864 Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules 

progressing academically. 3,158,838 

individuals times 7 percent (we estimate 

who would not academically progress), 

equals 211,119 individuals who would 

need to work with their institutions to 

develop an academic plan. We estimate 

that each academic plan would take, on 

average, 15 minutes (.25 hours) of staff 

time, increasing burden by 55,280 

hours. 

We estimate that private non-profit 

institutions, which comprise 30 percent 

of the total number of institutions of 

higher education, times 8,537,400 

individuals equals 2,561,220 

individuals at private non-profit 

institutions that would require the 

development of an academic plan as a 

result of not progressing academically. 

2,561,220 individuals times 7 percent 

(we estimate who would not 

academically progress), equals 179,285 

individuals who would need to work 

with their institutions to develop an 

academic plan. We estimate that each 

academic plan would take, on average, 

15 minutes (.25 hours) of staff time, 

increasing burden by 44,821 hours. 

We estimate that public institutions, 

which comprise 33 percent of the total 

number of institutions of higher 

education, times 8,537,400 individuals 

equals 2,817,342 individuals at public 

institutions that would require the 

development of an academic plan as a 

result of not progressing academically. 

2,817,342 individuals times 7 percent 

(we estimate who would not 

academically progress), equals 197,214 

individuals who would need to work 

with their institutions to develop an 

academic plan. We estimate that each 

academic plan would take, on average, 

15 minutes (.25 hours) of staff time, 

increasing burden by 49,304 hours. 

Collectively, we estimate that the 

burden for institutions would increase 

by 149,405 hours, in OMB Control 

Number 1845–NEW2. 

In total, the proposed regulatory 

changes reflected in § 668.34 would 

increase burden by a total of 955,855 

hours in OMB Control Number 1845– 

NEW2; however when the 21,000 hours 

of burden currently in OMB 1845–0022 

are administratively transferred from 

OMB 1845–0022 to OMB 1845–NEW2, 

the grand total of burden hours under 

this section would increase to 976,855 

in OMB 1845–NEW2. 

Section 668.43—Institutional 

Information 

The Department proposes to revise 

current § 668.5(a) by revising and 

redesignating paragraph (a) as paragraph 

(a)(1) and adding a new paragraph (a)(2). 

Proposed § 668.5(a)(1) would be based 

on the language that is in current 

paragraph (a), but it would be modified 

to make it consistent with the definition 

of an ‘‘educational program’’ in 34 CFR 

600.2. Proposed new § 668.5(a)(2) would 

specify that if a written arrangement is 

between two or more eligible 

institutions that are owned or controlled 

by the same individual, partnership, or 

corporation, the institution that grants 

the degree or certificate must provide 

more than 50 percent of the educational 

program. These clarifications are also 

intended to ensure that the institution 

enrolling the student has all necessary 

approvals to offer an educational 

program in the format in which it is 

being provided, such as through 

distance education when the other 

institution is providing instruction 

under a written agreement using that 

method of delivery. Proposed 

§ 668.5(c)(1) would expand the list of 

conditions that would preclude an 

arrangement between an eligible 

institution and an ineligible institution. 

Proposed §§ 668.5(e) and 668.43 would 

require an institution that enters into a 

written arrangement to provide a 

description of the arrangement to 

enrolled and prospective students. 

We estimate that 104 proprietary 

institutions would enter into an average 

of 1 written arrangement per institution 

and that, on average, the burden 

associated with the proposed collection 

of information about written agreements 

and its disclosure would take 30 

minutes (.5 hours) per arrangement, 

increasing burden by 52 hours. We 

estimate that 1,731 private non-profit 

institutions would enter into an average 

of 50 written arrangements per 

institution and that, on average, the 

burden associated with the proposed 

collection of information about written 

agreements and its disclosure would 

take 30 minutes (.5 hours) per 

arrangement, increasing burden by 

43,275 hours. We estimate that 1,892 

public institutions would enter into an 

average of 25 written arrangements per 

institution and that, on average, the 

burden associated with the proposed 

collection of information about written 

agreements and its disclosure would 

take 30 minutes (.5 hours) per 

arrangement, increasing burden by 

23,650 hours. 

Collectively, we estimate that burden 

would increase for institutions in their 

reporting of the details of written 

agreements by 66,977 hours in OMB 

Control Number 1845–0022. 

Currently, the Department requires 

that an institution must make available 

for review to any enrolled or 

prospective student upon request, a 

copy of the documents describing the 

institution’s accreditation and its State, 

Federal, or tribal approval or licensing. 

The Department proposes in § 668.43(b) 

that the institution must also provide its 

students or prospective students with 

contact information for filing 

complaints with its accreditor and State 

approval or licensing entity. 

We estimate that of the 2,086 

proprietary institutions that 1,919 (or 92 

percent) would have to begin providing 

contact information for filing 

complaints with accreditors, approval or 

licensing agencies. We estimate that the 

other 8 percent are already providing 

this information. We estimate that on 

average, this disclosure would take 10 

minutes (.17 hours) per disclosure and 

increase burden to proprietary 

institutions by 326 hours. We estimate 

that of the 1,731 private non-profit 

institutions that 1,593 (or 92 percent) 

would have to begin providing contact 

information for filing complaints with 

accreditors, approval or licensing 

agencies. We estimate that the other 8 

percent are already providing this 

information. We estimate that on 

average, this disclosure would take 10 

minutes (.17 hours) per disclosure and 

increase burden to private non-profit 

institutions by 271 hours. We estimate 

that of the 1,892 public institutions that 

1,740 (or 92 percent) would have to 

begin providing contact information for 

filing complaints with accreditors, 

approval or licensing agencies. We 

estimate that the other 8 percent are 

already providing this information. We 

estimate that on average, this disclosure 

would take 10 minutes (.17 hours) per 

disclosure and increase burden to 

proprietary institutions by 296 hours. 

Collectively, we estimate that burden 

would increase for institutions in their 

reporting of the contact information for 

filing complaints to accreditors and 

approval or licensing agencies by 893 

hours in OMB Control Number 1845– 

0022. 

In total, the proposed regulatory 

changes reflected in § 668.43 would 

increase burden by 67,870 hours in 

OMB Control Number 1845–0022. 

Section 668.55—Updating Information 

Proposed § 668.55 would require an 

applicant to update all changes in 

dependency status that occur 

throughout the award year, including 

changes in the applicant’s household 

size and the number of those household 

members attending postsecondary 

educational institutions. We estimate 

that 1,530,000 individuals would 

update their household size or the 

number of household members 

attending postsecondary educational 

institutions and that, on average, 

reporting would take 5 minutes (.08 


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hours) per individual, increasing burden 

by 122,400 hours. 

We estimate that proprietary 

institutions would receive updated 

household size or the updated number 

of household members attending 

postsecondary educational institutions 

from 566,100 applicants. We estimate 

that each updated record would take 10 

minutes (.17 hours) to review each 

updated record thereby increasing 

burden by 96,237 hours. We estimate 

that private non-profit institutions 

would receive updated household size 

or the updated number of household 

members attending postsecondary 

educational institutions from 459,000 

applicants. We estimate that each 

updated record would take 10 minutes 

(.17 hours) to review each updated 

record thereby increasing burden by 

78,030 hours. We estimate that public 

institutions would receive updated 

household size or the updated number 

of household members attending 

postsecondary educational institutions 

from 504,900 applicants. We estimate 

that each updated record would take 10 

minutes (.17 hours) to review each 

updated record thereby increasing 

burden by 85,833 hours. 

Collectively, we estimate that burden 

would increase for individuals and 

institutions in their reporting updated 

household size and the updated number 

of household members attending 

postsecondary educational institutions 

by 382,500 hours in OMB Control 

Number 1845–0041, of which 122,400 

hours is for individuals and 260,100 

hours is for institutions. 

The Department also proposes 

changes resulting from a change in the 

applicant’s marital status, regardless of 

whether the applicant is selected for 

verification. We estimate that 170,000 

individuals would update their marital 

status and that on average that reporting 

would take 5 minutes (.08 hours) per 

individual, increasing burden by 13,600 

hours. 

We estimate that proprietary 

institutions would receive updated 

marital status information from 62,900 

applicants. We estimate that each 

updated record would take 10 minutes 

(.17 hours) to review each updated 

record thereby increasing burden by 

10,693 hours. We estimate that private 

non-profit institutions would receive 

updated marital status information from 

51,000 applicants. We estimate that 

each updated record would take 10 

minutes (.17 hours) to review each 

updated record thereby increasing 

burden by 8,670 hours. We estimate that 

public institutions would receive 

updated marital status information from 

56,100 applicants. We estimate that 

each updated record would take 10 

minutes (.17 hours) to review each 

updated record thereby increasing 

burden by 9,537 hours. 

Collectively, we estimate that burden 

would increase for individuals and 

institutions in their reporting updated 

marital status information by 42,500 

hours in OMB Control Number 1845– 

0041. 

Proposed § 668.55 would also include 

a number of other changes to remove 

language that implements the marital 

status exception in the current 

regulations, including removing current 

§ 668.55(a)(3) and revising § 668.55(b). 

In total, the proposed regulatory 

changes reflected in § 668.55 would 

increase burden by 425,005 hours in 

OMB Control Number 1845–0041. 

Section 668.56—Information To Be 

Verified 

The Department proposes to eliminate 

from the regulations the five items that 

an institution currently is required to 

verify for all applicants selected for 

verification. Instead, pursuant to 

proposed § 668.56(a), for each award 

year, the Secretary would specify in a 

Federal Register notice the FAFSA 

information and documentation that an 

institution and an applicant may be 

required to verify. The Department 

would then specify on an individual 

student’s SAR and ISIR what 

information must be verified for that 

applicant. 

Currently under OMB Control 

Number 1845–0041, there are 1,022,384 

hours of burden associated with the 

verification regulations of which 

1,010,072 hours of burden are a result 

of the data gathering and submission by 

each individual applicant selected for 

verification. This estimate was based 

upon the number of applicants in the 

2002–2003 award year. Since then, the 

number of applicants has grown 

significantly to 17.4 million applicants 

for the 2008–2009 award year, of which 

we would project 5.1 million individual 

applicants to be selected for verification. 

The projected number of items to be 

verified under the proposed regulations 

is expected to be reduced from the 

current five required data elements to an 

average of three items per individual. 

This projected reduction in items to be 

verified would result in a reduction of 

burden per individual applicant. Also, 

as a result of collecting information to 

verify applicant data on this smaller 

average number of data elements (three 

items instead of five items), the average 

amount of time for the individual 

applicant to review verification form 

instructions, gather the data, respond on 

a form and submit a form and the 

supporting data would decrease from 

the current average of 12 minutes (.20 

hours) per individual to 7 minutes (.12 

hours), thus further reducing burden on 

the individual applicant. 

For example, when we consider the 

estimated 5.1 million 2008–2009 

applicants selected for verification at an 

average of 12 minutes (.20 hours) to 

collect and submit information, 

including supporting documentation for 

the five required data elements (which 

is the estimated amount of time that is 

associated with the requirements in 

current § 668.56(a)), the requirements in 

that section would yield a total burden 

of 1,020,000 hours added to OMB 

Control Number 1845–0041. However, 

under proposed § 668.56(b), where the 

number of verification data elements 

would be reduced to an average of three, 

the estimated 5.1 million individuals 

selected for verification multiplied by 

the reduced average of 7 minutes (.12 

hours) would yield an increase of 

612,000 hours in burden. Therefore, 

with the proposed changes to this 

section, we would expect the burden to 

be 408,000 hours less than under the 

current regulations. 

As a result, for OMB reporting 

purposes, we estimate that the 

individuals, as a group, would have an 

increase in burden by 612,000 hours in 

OMB Control Number 1845–0041 

(rather than 1,020,000 hours). 

Section 668.57—Acceptable 

Documentation 

We propose to make a number of 

technical and conforming changes 

throughout § 668.57. We also propose to 

make the following substantive changes 

described in this section. 

Proposed § 668.57(a)(2) would allow 

an institution to accept, in lieu of an 

income tax return or an IRS form that 

lists tax account information, the 

electronic importation of data obtained 

from the IRS into an applicant’s online 

FAFSA. 

We also propose to amend 

§ 668.57(a)(4)(ii)(A) to accurately reflect 

that, upon application, the IRS grants a 

six-month extension beyond the April 

15 deadline rather than the four-month 

extension currently stated in the 

regulations. 

Under proposed § 668.57(a)(5), an 

institution may require an applicant 

who has been granted an extension to 

file his or her income tax return to 

provide a copy of that tax return once 

it has been filed. If the institution 

requires the applicant to submit the tax 

return, under this proposed provision, it 

would need to re-verify the AGI and 

taxes paid of the applicant and his or 


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her spouse or parents when the 

institution receives the return. 

Proposed § 668.57(a)(7) would clarify 

that an applicant’s income tax return 

that is signed by the preparer or 

stamped with the preparer’s name and 

address must also include the preparer’s 

Social Security number, Employer 

Identification Number or the Preparer 

Tax Identification Number. 

Proposed § 668.57(b) and (c) would 

remain substantively unchanged. 

We would delete current § 668.57(d) 

regarding acceptable documentation for 

untaxed income and benefits and 

replace it with new proposed 

§ 668.57(d). This new section would 

provide that, if an applicant is selected 

to verify other information specified in 

an annual Federal Register notice, the 

applicant must provide the 

documentation specified for that 

information in the Federal Register 

notice. 

Currently under OMB Control 

Number 1845–0041, there are 1,022,384 

hours of burden associated with the 

verification regulations, of which 12,312 

hours are attributable to institutions of 

higher education to establish their 

verification policies and procedures. 

Under proposed § 668.57, we estimate 

that, on average, institutions will take 7 

minutes (.12 hours) per applicant 

selected for verification to review and 

take appropriate action based upon the 

information provided by the applicant, 

which in some cases may mean 

correcting applicant data or having the 

applicant correct his or her data. Under 

current § 668.57, when we consider the 

significant increase to 17.4 million 

applicants in the 2008–2009 award year, 

of which 5.1 million would be selected 

for verification at an average of 12 

minutes (.20 hours) per verification 

response received from applicants by 

the institutions for review, the total 

increase in burden would have been 

1,020,000 additional hours. However, 

under proposed § 668.57, both the 

average number of items to be verified 

would be reduced from five items to 

three items, as well as the average 

amount of time to review would 

decrease from 12 minutes (.20 hours) to 

7 minutes (.12 hours). Therefore, under 

the proposed regulations, the burden to 

institutions would be 612,000 burden 

hours (that is, 5.1 million multiplied by 

7 minutes (.12 hours))—rather than 

1,020,000 burden hours (i.e., 5.1 million 

applicants multiplied by 12 minutes 

(.20 hours)). Thus, as compared to the 

burden under the current regulations, 

using the number of applicants from 

2008–2009—17.4 million—there would 

be 408,000 fewer burden hours for 

institutions. 

We estimate that for 2,086 proprietary 

institutions times 7 minutes (.12 hours) 

equals 226,440 hours of increased 

burden. We estimate that for 1,731 

private non-profit institutions times 7 

minutes (.12 hours) equals 183,600 

hours of increased burden. We estimate 

that for 1,892 public institutions times 

7 minutes (.12 hours) equals 201,960 

hours of increased burden. 

As a result, for OMB reporting 

purposes, collectively there would be a 

projected increase of 612,000 hours of 

burden for institutions in OMB Control 

Number 1845–0041. 

Section 668.59—Consequences of a 

Change in FAFSA Information 

We propose to amend § 668.59 by 

removing all allowable tolerances and 

requiring instead that an institution 

submit to the Department all changes to 

an applicant’s FAFSA information 

resulting from verification for those 

applicants receiving assistance under 

any of the subsidized student financial 

assistance programs (see proposed 

§ 668.59(a)). 

Under proposed § 668.59(b), for the 

Federal Pell Grant program, once the 

applicant provides the institution with 

the corrected SAR or ISIR, the 

institution would be required to 

recalculate the applicant’s Federal Pell 

Grant and disburse any additional 

funds, if additional funds are payable. If 

the applicant’s Federal Pell Grant would 

be reduced as a result of verification, the 

institution would be required to 

eliminate any overpayment by adjusting 

subsequent disbursements or 

reimbursing the program account by 

requiring the applicant to return the 

overpayment or making restitution from 

its own funds (see proposed 

§ 668.59(b)(2)(ii)). 

Proposed § 668.59(c) would provide 

that, for the subsidized student financial 

assistance programs, excluding the 

Federal Pell Grant Program, if an 

applicant’s FAFSA information changes 

as a result of verification, the institution 

must recalculate the applicant’s EFC 

and adjust the applicant’s financial aid 

package on the basis of the EFC on the 

corrected SAR or ISIR. 

With the exception of minor technical 

edits, proposed § 668.59(d), which 

describes the consequences of a change 

in an applicant’s FAFSA information, 

would be substantively the same as 

current § 668.59(d). 

Finally, we would remove current 

§ 668.59(e), the provision that requires 

an institution to refer to the Department 

unresolved disputes over the accuracy 

of information provided by the 

applicant if the applicant received funds 

on the basis of that information. 

As proposed, both individuals 

(students) and institutions would be 

making corrections to FAFSA 

information as a result of the 

verification process. We estimate that 30 

percent of the 17,000,000 applicants or 

5,100,000 individuals (students) would 

be selected for verification. Of those 

5,100,000 individuals, students would 

submit, on average, 1.4 changes in 

FAFSA information as a result of 

verification for 7,140,000 changes which 

would take an average of 7 minutes (.12 

hours) per change, increasing burden to 

individuals by 856,800 hours. 

We estimate that of the 5,100,000 

individuals selected for verification, 

that institutions would submit, on 

average 2.0 changes per individual in 

FAFSA information as a result of 

verification for 10,200,000 changes. We 

estimate that 3,774,000 changes to 

FAFSA information as a result of 

verification would occur at proprietary 

institutions which would take an 

average of 7 minutes (.12 hours) per 

change, increasing burden by 452,880 

hours. We estimate that 3,060,000 

changes to FAFSA information as a 

result of verification would occur at 

private non-profit institutions which 

would take an average of 7 minutes (.12 

hours) per change, increasing burden by 

367,200 hours. We estimate that 

3,366,000 changes to FAFSA 

information as a result of verification 

would occur at public institutions 

which would take an average of 7 

minutes (.12 hours) per change, 

increasing burden by 403,920 hours. 

Collectively, the proposed regulatory 

changes reflected in § 668.59 would 

increase for individuals and institutions 

by 2,080,800 hours in OMB Control 

Number 1845–0041. 

Section 668.144—Application for Test 

Approval 

We propose to clarify and expand the 

requirements in current §§ 668.143 and 

668.144 and to include all of the 

requirements for test approval in one 

section, proposed § 668.144. Paragraphs 

(a) and (b) of proposed § 668.144 would 

describe the general requirement for test 

publishers and States to submit to the 

Secretary any test they wish to have 

approved under subpart J of part 668. 

Paragraph (c) of proposed § 668.144 

would describe the information that a 

test publisher must include with its 

application for approval of a test. 

Paragraph (d) of proposed § 668.144 

would describe the information a State 

must include with its application when 

it submits a test to the Secretary for 

approval. 

Proposed § 668.144(c)(16) would 

require test publishers to include in 


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their applications a description of their 

test administrator certification process. 

In proposed § 668.144(c)(17), we would 

require test publishers to include in 

their applications, a description of the 

test anomaly analysis the test publisher 

will conduct and submit to the 

Secretary. Finally, proposed 

§ 668.144(c)(18) would require test 

publishers to include in their 

applications a description of the types 

of accommodations available for 

individuals with disabilities, including 

a description of the process used to 

identify and report when 

accommodations for individuals with 

disabilities were provided. 

Proposed § 668.144(d) would be 

added to describe what States must 

include in their test submissions to the 

Secretary. While this provision would 

replace the content in current § 668.143, 

its language would be revised to be 

parallel, where appropriate, to the test 

publisher submission requirements in 

current § 668.144. In addition to 

paralleling most of the current 

requirements for test publisher test 

submissions, proposed § 668.144(d) 

would also include the new 

requirements proposed to be added to 

the test publisher submissions. A 

description of those new provisions 

follows: 

Both test publishers and States would 

be required to submit a description of 

their test administrator certification 

process that indicates how the test 

publisher or State, as applicable, will 

determine that a test administrator has 

the necessary training, knowledge, 

skills, and integrity to test students in 

accordance with requirements and how 

the test publisher or the State will 

determine that the test administrator has 

the ability and facilities to keep its test 

secure against disclosure or release (see 

proposed § 668.144(c)(16) (test 

publishers) and § 668.144(d)(7) (States)). 

We estimate that test publishers and 

States would, on average, take 2.5 hours 

to develop its process to establish that 

a test administrator has the necessary 

training, knowledge, skills and integrity 

to administer ability-to-benefit (ATB) 

tests and report that process to the 

Secretary. We estimate that the burden 

associated with 8 ATB tests would 

increase for the proprietary test 

publishers by 20 hours. 

The proposed regulations would 

require both test publishers and States 

to submit a description of the test 

anomaly analysis they will conduct that 

includes how they will identify 

potential test irregularities and make a 

determination that test irregularities 

have occurred; an explanation of 

corrective action to be taken in the event 

of test irregularities; and information on 

when and how the Secretary, test 

administrator, and institutions will be 

notified if a test administrator is 

decertified (see proposed 

§ 668.144(c)(17) (test publishers) and 

§ 668.144(d)(8) (States)). We estimate 

that test publishers and States would, 

on average, take 75 hours to develop its 

test anomaly process, to establish its test 

anomaly analysis (where it explains its 

test irregularity detection process 

including its decertification of test 

administrator process) and to establish 

its reporting process to the Secretary. 

We estimate that the burden associated 

with 8 ATB tests would increase for the 

proprietary test publishers by 600 hours. 

Under proposed § 668.144(c)(18) and 

(d)(9) respectively, both test publishers 

and States would be required to 

describe the types of accommodations 

available for individuals with 

disabilities, and the process for a test 

administrator to identify and report to 

the test publisher when 

accommodations for individuals with 

disabilities were provided. We estimate 

that test publishers and States would, 

on average, take 1 hour to develop and 

describe to the Secretary the types of 

accommodations available to 

individuals with disabilities, to describe 

the process the test administrator would 

use to support the identification of the 

disability and to develop the process to 

report when accommodations would be 

used. We estimate that the burden 

associated with 8 ATB tests would 

increase for the proprietary test 

publishers by 8 hours. 

Collectively, the proposed regulatory 

changes in § 668.144 would increase 

burden for test publishers by 628 hours 

in OMB 1845–0049. 

Section 668.150—Agreement Between 

the Secretary and a Test-Publisher or a 

State 

Proposed § 668.150 would provide 

that States, as well as test publishers, 

must enter into agreements with the 

Secretary in order to have their tests 

approved. 

We would also revise this section to 

require both test publishers and States 

to comply with a number of new 

requirements that would be added to the 

agreement with the Secretary. These 

requirements would include: 

• Requiring the test administrators 

that they certify to provide them with 

certain information about whether they 

have been decertified (see proposed 

§ 668.150(b)(2)). We estimate that 3,774 

individuals (test administrators) would 

take, on average, 10 minutes (.17 hours) 

to access, read, complete and submit the 

written certification to a test publisher 

or State, which would increase burden 

by 642 hours. 

• We estimate that it would take each 

test publisher or State 1 hour per test 

submission to develop its process to 

obtain a certification statement from 

each prospective test administrator, 

which would increase burden by 8 

hours. We estimate that the review of 

the submitted written certifications by 

the test publishers or States for the 

3,774 test administrators would take, on 

average, 5 minutes (.08 hours) per 

certification form, which would 

increase burden by 302 hours. 

Immediately notifying the test 

administrator, the Secretary, and 

institutions when the test administrator 

is decertified (see proposed 

§ 668.150(b)(6)). We estimate that 1 

percent of the 3,774 test administrators 

would be decertified. We estimate that 

it would take test publishers and States, 

on average, 1 hour per decertification to 

provide all of the proposed 

notifications, which would increase 

burden for proprietary test publishers by 

38 hours. Reviewing test results of tests 

administered by a decertified test 

administrator and immediately 

notifying affected institutions and 

students (see proposed § 668.150(b)(7)). 

We estimate that 481,763 ATB tests 

would be taken for title IV, HEA 

purposes annually. Of the annual total 

of ATB tests provided, we estimate that 

1 percent will be improperly 

administered and that 4,818 individuals 

would be contacted, which would take, 

on average, 15 minutes (.25 hours) per 

individual. We estimate that burden 

would increase by 1,205 hours. We 

estimate that it would take test 

publishers and States, on average, 5 

hours per ATB test submitted, to 

develop the process to determine when 

ATB tests have been improperly 

administered, which for 8 approved 

ATB tests would increase burden by 40 

hours. We estimate that test publishers 

and States would, on average, take 20 

minutes (.33 hours) for each of the 4,818 

estimated improperly administered ATB 

tests to make the proposed notifications 

to institutions, students and prospective 

students, which would increase burden 

by 1,590 hours. Reporting to the 

Secretary if a test publisher or the State 

certifies a previously decertified test 

administrator after the three-year 

decertification period (see proposed 

§ 668.150(b)(8)). We estimate that of the 

3,774 test administrators that 1 percent 

or 38 test administrators would be 

decertified. Of the 38 decertified test 

administrators, we estimate that 2 

percent or 1 previously de-certified test 

administrator would be re-certified after 


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a three-year period and therefore 

reported to the Secretary. We estimate 

the burden for test publishers for this 

reporting would be 1 hour. We project 

that it will be very rare that a decertified 

test administrator will seek recertification after the three-year 

decertification period. 

• Providing copies of test anomaly 

analysis every 18 months instead of 

every 3 years (see proposed 

§ 668.150(b)(13)). We estimate that it 

would take test publishers or States, on 

average, 75 hours to conduct its test 

anomaly analysis and report the results 

to the Secretary every 18 months as 

proposed. We estimate the burden on 

test publishers for the submission of the 

8 test anomaly analysis every 18 months 

would be 600 hours. 

• Reporting to the Secretary any 

credible information indicating that a 

test has been compromised (see 

proposed § 668.150(b)(15)). We estimate 

that 481,763 ATB tests for title IV, HEA 

purposes would be given on an annual 

basis. Of that total number ATB tests 

provided, we estimate that 482 ATB 

tests will be compromised. On average, 

we estimate that test publishers would 

take 1 hour per test to collect the 

credible information to make the 

determination that a test would be 

compromised and report it to the 

Secretary. We estimate that burden 

would increase by 482 hours. Reporting 

to the Office of Inspector General of the 

Department of Education any credible 

information indicating that a test 

administrator or institution may have 

engaged in fraud or other criminal 

misconduct (see proposed 

§ 668.150(b)(16)). We estimate that 

481,763 ATB tests for title IV, HEA 

purposes would be given on an annual 

basis. Of that total number ATB tests 

provided, we estimate that 482 ATB 

tests will be compromised. On average, 

we estimate that test publishers would 

take 1 hour per test to collect the 

credible information to make the 

determination that a test would be 

compromised and report it to the U.S. 

Department of Education’s Office of the 

Inspector General. We estimate that 

burden would increase by 482 hours. 

• Requiring a test administrator who 

provides a test to an individual with a 

disability who requires an 

accommodation in the test’s 

administration to report to the test 

publisher or the State the nature of the 

disability and the accommodations that 

were provided (see proposed 

§ 668.150(b)(17)). Census data indicate 

that 12 percent of the U.S. population is 

severely disabled. We estimate that 12 

percent of the ATB test population 

(481,763 ATB test takers) or 57,812 of 

the ATB test takers would be 

individuals with disabilities that would 

need accommodations for the ATB test. 

We estimate that it would take 5 

minutes (.08 hours) to report the nature 

of the disability and any 

accommodation that the test 

administrator made for the test taker, 

increasing burden by 4,625 hours. 

We estimate that, on average, test 

publishers and States would take 2 

hours per ATB test to develop the 

process for having test administrators 

report the nature of the test taker’s 

disability and any accommodations 

provided, times 8 tests would increase 

burden for proprietary ATB test 

publishers by 16 hours. 

Collectively, the proposed changes 

reflected in § 668.150 would increase 

burden by 10,031 hours in OMB Control 

Number 1845–0049. 

Section 668.151—Administration of 

Tests 

Proposed § 668.151(g)(4), would 

require institutions to keep a record of 

each individual who took an ATB test 

and the name and address of the test 

administrator who administered the test 

and any identifier assigned to the test 

administrator by the test publisher or 

the State. 

We estimate that 481,763 ATB tests 

for title IV, HEA purposes would be 

given on an annual basis. We estimate 

that proprietary institutions would 

provide 36 percent of those ATB tests or 

173,445 tests and that, on average, the 

amount of time to record the test takers 

name and address as well as the test 

administrators identifiers would be 5 

minutes (.08 hours) per test, increasing 

burden by 13,876 hours. We estimate 

that private non-profit institutions 

would provide 31 percent of those ATB 

tests or 149,347 tests and that, on 

average, the amount of time to record 

the test takers name and address as well 

as the test administrators identifiers 

would be 5 minutes (.08 hours) per test, 

increasing burden by 11,948 hours. We 

estimate that public institutions would 

provide 33 percent of those ATB tests or 

158,962 tests and that, on average, the 

amount of time to record the test takers 

name and address as well as the test 

administrators identifiers would be 5 

minutes (.08 hours) per test, increasing 

burden by 12,717 hours. 

• If the individual who took the test 

has a disability and is unable to be 

evaluated by the use of an approved 

ATB test, or the individual requested or 

required a testing accommodation, the 

institution would be required, under 

proposed § 668.151(g)(5), to maintain 

documentation of the individual’s 

disability and of the testing 

arrangements provided. Census data 

indicate that 12 percent of the U.S. 

population is severely disabled. We 

estimate that 12 percent of the ATB test 

population (481,763 ATB test takers) or 

57,812 of the ATB test takers would be 

individuals with disabilities that would 

need accommodations for the ATB test. 

We estimate that it would take 5 

minutes (.08 hours) to collect and 

maintain documentation of the 

individual’s disability and of the testing 

accommodations provided to the test 

taker. We estimate that proprietary 

institutions will provide 36 percent or 

20,812 tests times 5 minutes (.08 hours), 

increasing burden by 1,665 hours. We 

estimate that private non-profit 

institutions will provide 31 percent or 

17,922 tests times 5 minutes (.08 hours), 

increasing burden by 1,434 hours. We 

estimate that public institutions will 

provide 33 percent or 19,078 tests times 

5 minutes (.08 hours), increasing burden 

by 1,526 hours. Collectively, the 

proposed regulatory changes reflected in 

§ 668.151 would increase burden by 

43,166 hours in OMB Control Number 

1845–0049. 

Section 668.152—Administration of 

Tests by Assessment Centers 

Proposed § 668.152(a) would clarify 

that assessment centers are also required 

to comply with the provisions of 

§ 688.153 (Administration of tests for 

individuals whose native language is 

not English or for individuals with 

disabilities), if applicable. 

Under proposed § 668.152(b)(2), 

assessment centers that score tests 

would be required to provide copies of 

completed tests or lists of test-takers’ 

scores to the test publisher or the State, 

as applicable, on a weekly basis. Under 

proposed § 668.152(b)(2)(i) and (b)(2)(ii), 

copies of completed tests or reports 

listing test-takers’ scores would be 

required to include the name and 

address of the test administrator who 

administered the test and any identifier 

assigned to the test administrator by the 

test publisher or the State. 

We estimate that of the 3,774 ATB test 

administrators approximately one-third 

(.3328 times 3,774) or 1,256 of the ATB 

test administrators are at test assessment 

centers. Of the 1,256 test assessment 

centers, we estimate that 18 percent or 

226 test assessment centers are at 

private non-profit institutions and 82 

percent or 1,030 test assessment centers 

are at public institutions. We estimate 

that 92 percent of the ATB tests 

provided at test assessment centers are 

scored by the test administrators and 

therefore, under the proposed 

regulations, the institution would be 

required to maintain the scored ATB 


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tests, to collect and submit copies of the 

completed ATB tests or a listing to the 

test publisher or State on a weekly basis, 

while the other 8 percent will not be 

impacted by these proposed regulations. 

We estimate that, on average, it would 

take 5 minutes (.08 hours) per week for 

the test assessment center (institution) 

to collect and submit the proposed 

information on a weekly basis. For 226 

test assessment centers at private nonprofit institutions times 5 minutes (.08 

hours) times 52 weeks per year equals 

940 hours of increased burden. For the 

1,030 test assessment centers at public 

institutions times 5 minutes (.08 hours) 

times 52 weeks per year equals 4,285 

hours of increased burden. 

Collectively, the proposed regulatory 

changes reflected in § 668.152 would 

increase burden by 5,225 hours in OMB 

Control Number 1845–0049. 

Section 668.164—Disbursing Funds 

Under proposed § 668.164(i), an 

institution would provide a way for a 

Federal Pell Grant eligible student to 

obtain or purchase required books and 

supplies by the seventh day of a 

payment period under certain 

conditions. An institution would have 

to comply with this requirement only if, 

10 days before the beginning of the 

payment period, the institution could 

disburse the title IV, HEA program 

funds for which the student is eligible, 

and presuming that those funds were 

disbursed, the student would have a 

title IV, HEA credit balance under 

§ 668.164(e). The amount the institution 

would provide to the student for books 

and supplies would be the lesser of the 

presumed credit balance or the amount 

needed by the student, as determined by 

the institution. In determining the 

amount needed by the student, the 

institution could use the actual costs of 

books and supplies or the allowance for 

books and supplies used in the student’s 

cost of attendance for the payment 

period. 

We estimate that of the 6,321,678 

Federal Pell Grant recipients in the 

2008–2009 award year, that 

approximately 30 percent or 1,896,503 

would have or did have a title IV, HEA 

credit balance. Of that number of 

Federal Pell Grant recipients, we 

estimate that 25 percent or 474,126 

Federal Pell Grant recipients would 

have a presumed credit balance 10 days 

prior to the beginning of the payment 

period, and as proposed, that the 

institution would have to provide a way 

for those recipients to either obtain or 

purchase their books and supplies 

within 7 days of the beginning of the 

payment period. We estimate that the 

2,063 proprietary institutions 

participating in the Federal Pell Grant 

program would take, on average 3 hours 

per institution to analyze and make 

programming change needed to identify 

these recipients with presumed credit 

balances, increasing burden by 6,189 

hours. Additionally, we estimate that 

proprietary institutions would be 

required to disburse the presumed 

credit balance to 38 percent of the 

474,126 at proprietary institutions 

(180,168 recipients) which on average, 

would take 5 minutes (.08 hours) per 

recipient, increasing burden by 14,414 

hours. We estimate that the 1,523 

private non-profit institutions 

participating in the Federal Pell Grant 

program would take, on average 3 hours 

per institution to analyze and make 

programming change needed to identify 

these recipients with presumed credit 

balances, increasing burden by 4,569 

hours. Additionally, we estimate that 

private non-profit institutions would be 

required to disburse the presumed 

credit balance to 28 percent of the 

474,126 at proprietary institutions 

(132,755 recipients) which on average, 

would take 5 minutes (.08 hours) per 

recipient, increasing burden by 10,620 

hours. We estimate that the 1,883 public 

institutions participating in the Federal 

Pell Grant program would take, on 

average 3 hours per institution to 

analyze and make programming change 

needed to identify these recipients with 

presumed credit balances, increasing 

burden by 5,469 hours. Additionally, we 

estimate that proprietary institutions 

would be required to disburse the 

presumed credit balance to 34 percent 

of the 474,126 at proprietary institutions 

(161,203 recipients) which on average, 

would take 5 minutes (.08 hours) per 

recipient, increasing burden by 12,896 

hours. 

Collectively, the proposed regulatory 

changes reflected in § 668.164 would 

increase burden by 54,337 hours in 

OMB Control Number 1845–NEW3. 

Collection of Information 

Regulatory 

section Information collection Collection 

668.6 ............ This proposed regulatory section would require institutions to submit annually information 

that would include identifying information about each student who completed a program 

that prepares a student for gainful employment, the CIP code for that program, the date 

the student completed the program, and the amounts the student received from private 

educational loans and institutional financing programs. Institutions would have to disclose 

on their Web site information about the occupations that its programs prepare students 

to enter, information from DOL’s O-Net data about the job tasks and expected salaries. 

In addition, the institution would also have to report the costs for tuition and fees, room 

and board, and other associated institutional costs typically incurred by students enrolling 

in these programs; graduation rates; placement rates; and median debt rate information 

about title IV, HEA loans and private loan as provided by the Department to the institution.

OMB 1845–NEW1. This would be 

a new collection. A separate 60- 

day Federal Register notice will 

be published to solicit comment. 

The burden increases by 

105,377 hours. 

668.8 ............ This proposed regulatory section provides for a new conversion ratio when converting clock 

hours to credit hours. As proposed, this section would include an exemption for affected 

institutions if the accrediting agency, or the State approval agency finds that there are no 

deficiencies in the institutions policies and procedures for these conversions. Under the 

exception, the institution would use a lower ratio and could consider student’s outside 

work in the total hours being converted to credit hours. Burden would increase for proprietary, not-for profit and public institutions when they measure whether certain programs 

when converted from clock hours to credit hours have sufficient credit hours to receive 

title VI, HEA funds.

OMB 1845–0022. The burden increases by 18,349 hours. 


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34870 Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules 

Regulatory 

section Information collection Collection 

668.16 .......... This proposed regulatory section would be streamlined by moving most of the elements of 

satisfactory academic progress (SAP) from this section to proposed § 668.34. Under this 

proposal, the required elements of SAP would be expanded to provide greater institutional flexibility Burden would increase for proprietary, not-for profit and public institutions 

to develop a high school diploma validity process and would increase when certain diplomas are verified.

OMB 1845–0022 and OMB 1845– 

NEW2. The burden hours attributable to SAP in OMB 1845– 

0022 would be administratively 

transferred to OMB 1845– 

NEW2. Additionally, the burden 

increases by 21,982 hours in 

OMB 1845–0022. 

668.22 .......... This proposed regulatory section would consider a student to have withdrawn if the student 

does not complete all the days in the payment period or period of enrollment that the 

student was scheduled to complete prior to withdrawing. Burden would increase for individuals, proprietary, not-for profit and public institutions when students in term-based programs with modules or compressed courses withdraw before completing more than 60 

percent of the payment period or period of enrollment for which a calculation would be 

performed to determine the earned and unearned portions of title IV, HEA program assistance.

OMB 1845–0022. The burden increases by 743,881 hours. 

668.34 .......... This proposed regulatory section would restructure and expand the satisfactory academic 

progress requirements by allowing for more frequent measuring of SAP. Burden would 

increase for individuals and proprietary, not-for profit and public institutions for institutions 

to measure academic progress and when academic plans or alternatives would be provided to students who do not meet the institution’s academic standards.

OMB 1845–NEW2. This would be 

a new collection. A separate 60- 

day Federal Register notice will 

be published to solicit comment. 

The burden increases by 

976,855 hours. 

668.43 .......... This proposed regulatory section would require that for institutions that enter into written arrangements with other institutions to provide for a portion of its programs’ training by the 

institution that is not providing the degree or certificate, the institution providing the degree or certificate must provide a variety of disclosures to enrolled and prospective students about the written arrangements. Burden would increase for proprietary, not-for 

profit and public institutions for reporting the details of written arrangements with other institutions offering a portion of a student’s program of study.

OMB 1845–0022. The burden increases by 67,870 hours. 

668.55 .......... This proposed regulatory provision would require that all updated applicant data information 

as a result of verification be reported to the Secretary via the Central Processing System. This also would cover changes made as a result of a dependent student becoming 

married during the award year, such change in status due to marriage had previously 

been prohibited.

OMB 1845–0041. The burden increases by 425,005 hours. 

668.56 .......... This proposed regulation changes from the current five mandatory items included in the 

verification process to a more flexible list of items that will be selected on an individualized basis. For example, there is no need to verify data that can be obtained directly 

from the IRS. Burden would increase for individuals; however, the average number of 

data elements to be verified is expected to be reduced.

OMB 1845–0041. The burden increases by 612,000 hours. 

668.57 .......... This proposed regulatory provision would modify the requirements related to acceptable 

documentation required as a part of the verification process. It would allow for the importation of data obtained directly from the IRS that has been unchanged and would provide 

other flexibilities that would reduce burden; however, due to the large increase in applicants, there would be an overall increase in burden.

OMB 1845–0041. The burden increases by 612,000 hours. 

668.59 .......... This proposed provision would eliminate all allowable tolerances and require an institution 

to submit to the Department all changes to an applicant’s FAFSA as a result of 

verification. Burden would increase for proprietary, not-for profit and public institutions 

that would recalculate title IV, HEA awards as a result of data changes due to verification.

OMB 1845–0041. The burden increases by 2,080,800 hours. 

668.144 ........ This proposed regulatory section would amend and expand the required elements that a 

test publisher or a State must submit to the Secretary for approval.

OMB 1845–0049. The burden increases by 628 hours. 

668.150 ........ This proposed provision would amend and expand the provisions of the agreement between the Secretary and the ability to benefit test (ATB) publishers or a State. The expanded requirements would include requiring test administrators to certify that they have 

not been decertified, notification requirements when a test administrator is decertified, 

and providing test anomaly studies every eighteen months rather than every 36 months. 

Burden would increase for individuals, proprietary, not-for profit and public institutions for 

the collection and maintenance of certifications, for required notifications, and for submission of test anomaly studies.

OMB 1845–0049. The burden increases by 10,031 hours. 

668.151 ........ This proposed provision would require independent test administrators to submit completed 

tests for scoring to the test publisher or the State in no more than two business days following the test. Institutions would be required to maintain a record of each individual who 

takes an ATB test and information about the test administrator. When the test taker has 

a disability, it would be the institution’s responsibility to maintain documentation of the individual’s disability and any accommodation provided the individual.

OMB 1845–0049. The burden increases by 43,166 hours. 

668.152 ........ This proposed provision would require that test assessment centers provide either copies 

of the completed tests or lists of the test takers’ scores, including the test administrator’s 

name, address, and any other test administrator identifier to the test publisher or State, 

as applicable, on a weekly basis.

OMB 1845–0049. The burden increases by 5,225 hours. 


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Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules 34871 

Regulatory 

section Information collection Collection 

668.164 ........ This proposed provision would require that institutions provide a way for Federal Pell Grant 

program recipients to obtain or purchase books and supplies by the seventh day of the 

payment period if certain conditions are met and a credit balance or projected credit balance exists. Burden would increase for proprietary, not-for profit and public institutions to 

identify and notify Pell recipients with a presumed credit balance about ways to obtain or 

purchase books and supplies.

OMB 1845–NEW3. This would be 

a new collection. A separate 60- 

day Federal Register notice will 

be published to solicit comment. 

The burden increases by 54,337 

hours. 

If you want to comment on the 

proposed information collection 

requirements, please send your 

comments to the Office of Information 

and Regulatory Affairs, OMB, Attention: 

Desk Officer for U.S. Department of 

Education. Send these comments by 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 clarify of the information we 

collect; and 

• Minimizing the burden on those 

who must respond. This includes 

exploring the use of appropriate 

automated, electronic, mechanical, or 

other technological collection 

techniques or other forms of information 

technology; e.g., permitting electronic 

submission of responses. 

OMB is required to make a decision 

concerning the collections of 

information contained in these 

proposed regulations between 30 and 60 

days after publication of this document 

in the Federal Register. Therefore, to 

ensure that OMB gives your comments 

full consideration, it is important that 

OMB receives the comments within 30 

days of publication. This does not affect 

the deadline for your comments to us on 

the proposed regulations. 

Intergovernmental Review 

These programs are not subject to 

Executive Order 12372 and the 

regulations in 34 CFR part 79. 

Assessment of Educational Impact 

In accordance with section 411 of the 

General Education Provisions Act, 20 

U.S.C. 1221e–4, the Secretary 

particularly requests comments on 

whether these proposed regulations 

would require transmission of 

information that any other agency or 

authority of the United States gathers or 

makes available. 

Electronic Access to This Document 

You can view this document, as well 

as all other documents of this 

Department published in the Federal 

Register, in text or Adobe Portable 

Document Format (PDF) on the Internet 

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

news/fedregister. To use PDF, you must 

have Adobe Acrobat Reader, which is 

available free at this site. 

Note: The official version of this document 

is the document published in the Federal 

Register. Free Internet access to the official 

edition of the Federal Register and the Code 

of Federal Regulations is available on GPO 

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

index/html. 

(Catalog of Federal Domestic Assistance: 

84.007 FSEOG; 84.032 Federal Family 

Education Loan Program; 84.033 Federal 

Work-Study Program; 84.037 Federal Perkins 

Loan Program; 84.063 Federal Pell Grant 

Program; 84.069 LEAP; 84.268 William D. 

Ford Federal Direct Loan Program; 84.376 

ACG/SMART; 84.379 TEACH Grant Program) 

List of Subjects 

34 CFR Part 600 

Colleges and universities, Foreign 

relations, Grant programs-education, 

Loan programs-education, Reporting 

and recordkeeping requirements, 

Selective Service System, Student aid, 

Vocational education. 

34 CFR Part 602 

Colleges and universities, Reporting 

and recordkeeping requirements. 

34 CFR Part 603 

Colleges and universities, Vocational 

education. 

34 CFR Part 668 

Administrative practice and 

procedure, Aliens, Colleges and 

universities, Consumer protection, 

Grant programs—education, Loan 

programs—education, Reporting and 

recordkeeping requirements, Selective 

Service System, Student aid, Vocational 

education. 

34 CFR Part 682 

Administrative practice and 

procedure, Colleges and universities, 

Loan programs—education, Reporting 

and recordkeeping requirements, 

Student aid, Vocational education. 

34 CFR Part 685 

Administrative practice and 

procedure, Colleges and universities, 

Loan programs—education, Reporting 

and recordkeeping requirements, 

Student aid, Vocational education. 

34 CFR Part 686 

Administrative practice and 

procedure, Colleges and universities, 

Education, Elementary and secondary 

education, Grant programs—education, 

Reporting and recordkeeping 

requirements, Student aid. 

34 CFR Part 690 

Colleges and universities, Education 

of disadvantaged, Grant programs— 

education, Reporting and recordkeeping 

requirements, Student aid. 

34 CFR Part 691 

Colleges and universities, Elementary 

and secondary education, Grant 

programs—education, Student aid. 

Dated: June 8, 2010. 

Arne Duncan, 

Secretary of Education. 

For the reasons discussed in the 

preamble, the Secretary proposes to 

amend parts 600, 602, 603, 668, 682, 

685, 686, 690, and 691 of title 34 of the 

Code of Federal Regulations as 

previously amended in the Federal 

Register on October 27, 2009 (74 FR 

55414) and October 29, 2009 (74 FR 

55902) 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. Adding, in alphabetical order, the 

definition of a Credit hour. 


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34872 Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules 

B. Revising the definition of 

Recognized occupation. 

The addition and revision read as 

follows: 

§ 600.2 Definitions. 

* * * * * 

Credit hour: Except as provided in 34 

CFR 668.8(k) and (l), a credit hour is— 

(1) One hour of classroom or direct 

faculty instruction and a minimum of 

two hours of out of class student work 

each week for approximately fifteen 

weeks for one semester or trimester hour 

of credit, or ten to twelve weeks for one 

quarter hour of credit, or the equivalent 

amount of work over a different amount 

of time; 

(2) At least an equivalent amount of 

work as required in paragraph (1) of this 

definition for other academic activities 

as established by the institution 

including laboratory work, internships, 

practica, studio work, and other 

academic work leading to the award of 

credit hours; or 

(3) Institutionally established 

reasonable equivalencies for the amount 

of work required in paragraph (1) of this 

definition for the credit hours awarded, 

including as represented in intended 

learning outcomes and verified by 

evidence of student achievement. 

* * * * * 

Recognized occupation: An 

occupation that is— 

(1) Identified by a Standard 

Occupational Classification (SOC) code 

established by the Office of Management 

and Budget or an Occupational 

Information Network O* NET–SOC code 

established by the Department of Labor 

and available at http:// 

online.onetcenter.org or its successor 

site; or 

(2) Determined by the Secretary in 

consultation with the Secretary of Labor 

to be a recognized occupation. 

* * * * * 

3. Section 600.4 is amended by: 

A. In paragraph (a)(3), adding the 

words, ‘‘in accordance with § 600.9’’ 

immediately after the word ‘‘located’’. 

B. In paragraph (a)(4)(i)(C), removing 

the word ‘‘and’’ that appears after the 

punctuation ‘‘;’’. 

C. Adding paragraph (a)(4)(iii). 

The addition reads as follows: 

§ 600.4 Institution of higher education. 

(a) * * * 

(4) * * * 

(iii) That is at least a one academic 

year training program that leads to a 

certificate, or other nondegree 

recognized credential, and prepares 

students for gainful employment in a 

recognized occupation; and 

* * * * * 

§ 600.5 [Amended] 

4. Section 600.5(a)(4) is amended by 

adding the words, ‘‘in accordance with 

§ 600.9’’ immediately after the word 

‘‘located’’. 

§ 600.6 [Amended] 

5. Section 600.6(a)(3) is amended by 

adding the words, ‘‘in accordance with 

§ 600.9’’ immediately after the word 

‘‘located’’. 

6. Section 600.9 is added to subpart 

A to read as follows: 

§ 600.9 State authorization. 

(a)(1) An institution described under 

§§ 600.4, 600.5, and 600.6 is legally 

authorized by a State through a charter, 

license, approval, or other document 

issued by an appropriate State 

government agency or State entity that 

affirms or conveys the authority to the 

institution to operate educational 

programs beyond secondary education, 

including programs leading to a degree 

or certificate. 

(2) An institution is considered to 

meet the provisions of paragraph (a)(1) 

of this section if the institution is 

authorized to offer educational 

programs beyond secondary education 

by the Federal Government or, as 

defined in 25 U.S.C. 1802(2), an Indian 

tribe. 

(3) An institution is considered to be 

legally authorized to offer educational 

programs beyond secondary education if 

it is exempt from State authorization as 

a religious institution under the State 

constitution. 

(b) The Secretary considers an 

institution to be legally authorized by a 

State under paragraph (a)(1) of this 

section if— 

(1) The authorization is given to the 

institution specifically to offer programs 

beyond secondary education but not if 

the authorization is merely of the type 

required to do business in the State or 

to operate as an eleemosynary 

organization; 

(2) The authorization provided to the 

institution is subject to adverse action 

by the State; and 

(3) The State has a process to review 

and appropriately act on complaints 

concerning an institution and enforces 

applicable State laws. 

(Authority: 20 U.S.C. 1001 and 1002) 

PART 602—THE SECRETARY’S 

RECOGNITION OF ACCREDITING 

AGENCIES 

7. The authority citation for part 602 

continues to read as follows: 

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

otherwise noted. 

8. Section 602.24 is amended by 

adding a new paragraph (f) to read as 

follows: 

§ 602.24 Additional procedures certain 

institutional accreditors must have. 

* * * * * 

(f) Credit-hour policies. The 

accrediting agency, as part of its review 

of an institution for initial accreditation 

or preaccreditation or renewal of 

accreditation, must conduct an effective 

review and evaluation of the reliability 

and accuracy of the institution’s 

assignment of credit hours. 

(1) The accrediting agency meets this 

requirement if— 

(i) It reviews the institution’s— 

(A) Policies and procedures for 

determining the credit hours, as defined 

in 34 CFR 600.2, that the institution 

awards for courses and programs; and 

(B) The application of the institution’s 

policies and procedures to its programs 

and coursework; and 

(ii) Makes a reasonable determination 

of whether the institution’s assignment 

of credit hours conforms to commonly 

accepted practice in higher education. 

(2) In reviewing and evaluating an 

institution’s policies and procedures for 

determining credit hour assignments, an 

accrediting agency may use sampling or 

other methods in the evaluation, 

sufficient to comply with paragraph 

(f)(1)(i)(B) of this section. 

(3) The accrediting agency must take 

such actions that it deems appropriate 

to address any deficiencies that it 

identifies at an institution as part of its 

reviews and evaluations under 

paragraph (f)(1)(i) and (ii) of this 

section, as it does in relation to other 

deficiencies it may identify, subject to 

the requirements of this part. 

(4) If, following the institutional 

review process under this paragraph (f), 

the agency finds systemic 

noncompliance with the agency’s 

policies or significant noncompliance 

regarding one or more programs at the 

institution, the agency must promptly 

notify the Secretary. 

* * * * * 

PART 603—SECRETARY’S 

RECOGNITION PROCEDURES FOR 

STATE AGENCIES 

9. The authority citation for part 603 

is revised to read as follows: 

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

1094(c)(4); 42 U.S.C. 293a(b), 38 U.S.C. 3675, 

unless otherwise noted. 

10. Section 603.24 is amended by 

redesignating paragraph (c) as paragraph 

(d) and adding a new paragraph (c) to 

read as follows: 


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§ 603.24 Criteria for State agencies. 

* * * * * 

(c) Credit-hour policies. The State 

agency, as part of its review of an 

institution for initial approval or 

renewal of approval, must conduct an 

effective review and evaluation of the 

reliability and accuracy of the 

institution’s assignment of credit hours. 

(1) The State agency meets this 

requirement if— 

(i) It reviews the institution’s— 

(A) Policies and procedures for 

determining the credit hours, as defined 

in 34 CFR 600.2, that the institution 

awards for courses and programs; and 

(B) The application of the institution’s 

policies and procedures to its programs 

and coursework; and 

(ii) Makes a reasonable determination 

of whether the institution’s assignment 

of credit hours conforms to commonly 

accepted practice in higher education. 

(2) In reviewing and evaluating an 

institution’s policies and procedures for 

determining credit hour assignments, a 

State agency may use sampling or other 

methods in the evaluation, sufficient to 

comply with paragraph (c)(1)(i)(B) of 

this section. 

(3) The State agency must take such 

actions that it deems appropriate to 

address any deficiencies that it 

identifies at an institution as part of its 

reviews and evaluations under 

paragraph (c)(1)(i) and (ii) of this 

section, as it does in relation to other 

deficiencies it may identify, subject to 

the requirements of this part. 

(4) If, following the institutional 

review process under this paragraph (c), 

the agency finds systemic 

noncompliance with the agency’s 

policies or significant noncompliance 

regarding one or more programs at the 

institution, the agency must promptly 

notify the Secretary. 

* * * * * 

PART 668—STUDENT ASSISTANCE 

GENERAL PROVISIONS 

11. The authority citation for part 668 

continues to read as follows: 

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

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

and 1099c–1, unless otherwise noted. 

§ 668.2 [Amended] 

12. Section 668.2 is amended by: 

A. In paragraph (a), adding, in 

alphabetical order, the term ‘‘Credit 

hour’’. 

B. In paragraph (b), in the definition 

of Full-time student, adding the words, 

‘‘including for a term-based program, 

repeating any coursework previously 

taken in the program’’ immediately 

before the period in the second 

sentence. 

13. Section 668.5 is amended by: 

A. Revising paragraph (a). 

B. Revising paragraph (c)(1). 

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

words ‘‘offered by the institution that 

grants the degree or certificate’’ after the 

word ‘‘program’’. 

D. In paragraph (c)(3)(i), removing the 

words ‘‘not more than’’ and adding the 

words ‘‘or less’’ after the word ‘‘percent’’. 

E. In paragraph (c)(3)(ii)(A), removing 

the words ‘‘not more’’ and adding, in 

their place, the word ‘‘less’’. 

F. Adding new paragraph (e). 

The addition and revisions read as 

follows: 

§ 668.5 Written arrangements to provide 

educational programs. 

(a) Written arrangements between 

eligible institutions. (1) Except as 

provided in paragraph (a)(2) of this 

section, if an eligible institution enters 

into a written arrangement with another 

eligible institution, or with a consortium 

of eligible institutions, under which the 

other eligible institution or consortium 

provides part of the educational 

program to students enrolled in the first 

institution, the Secretary considers that 

educational program to be an eligible 

program if the educational program 

offered by the institution that grants the 

degree or certificate otherwise satisfies 

the requirements of § 668.8. 

(2) If the written arrangement is 

between two or more eligible 

institutions that are owned or controlled 

by the same individual, partnership, or 

corporation, the Secretary considers the 

educational program to be an eligible 

program if— 

(i) The educational program offered 

by the institution that grants the degree 

or certificate otherwise satisfies the 

requirements of § 668.8; and 

(ii) The institution that grants the 

degree or certificate provides more than 

50 percent of the educational program. 

* * * * * 

(c) * * * 

(1) The ineligible institution or 

organization has not— 

(i) Had its eligibility to participate in 

the title IV, HEA programs terminated 

by the Secretary; 

(ii) Voluntarily withdrawn from 

participation in the title IV, HEA 

programs under a termination, showcause, suspension, or similar type 

proceeding initiated by the institution’s 

State licensing agency, accrediting 

agency, guarantor, or by the Secretary; 

(iii) Had its certification to participate 

in the title IV, HEA programs revoked 

by the Secretary; 

(iv) Had its application for recertification to participate in the title IV, 

HEA programs denied by the Secretary; 

or 

(v) Had its application for certification 

to participate in the title IV, HEA 

programs denied by the Secretary; 

* * * * * 

(e) Information made available to 

students. If an institution enters into a 

written arrangement described in 

paragraph (a), (b), or (c) of this section, 

the institution must provide the 

information described in § 668.43(a)(12) 

to enrolled and prospective students. 

* * * * * 

14. Section 668.6 is added to subpart 

A to read as follows: 

§ 668.6 Reporting and disclosure 

requirements for programs that prepare 

students for gainful employment in a 

recognized occupation. 

(a) Reporting requirements. In 

accordance with procedures established 

by the Secretary, an institution must 

report annually for each student who 

completes a program under § 668.8(c)(3) 

or (d), information that includes— 

(1) Information needed to identify the 

student; 

(2) The Classification of Instructional 

Program (CIP) code of the program the 

student completed; 

(3) The date the student completed 

the program; and 

(4) The amounts the student received 

from private educational loans and 

institutional financing plans. 

(b) Disclosures. For each program 

offered by an institution under this 

section, on its Web site the institution 

must provide prospective students 

with— 

(1) The occupations (by names and 

SOC codes) that the program prepares 

students to enter, along with links to 

occupational profiles on O*NET or its 

successor site; 

(2) The on-time graduation rate for 

students entering the program; 

(3) The cost of the program, including 

tuition and fees, room and board, and 

other institutional costs that a typical 

student would incur for enrolling in the 

program; 

(4) Beginning no later than June 30, 

2013, the placement rate for students 

completing the program, as determined 

under § 668.8(g) or a State-sponsored 

workforce data system; and 

(5) The median loan debt incurred by 

students who completed the program 

during the preceding three years. The 

institution must identify separately the 

median loan debt from title IV, HEA 

program loans, and the median loan 

debt from private educational loans and 

institutional financing plans. 

(Approved by the Office of Management and 

Budget under control number 1845–NEW1) 

(Authority: 20 U.S.C 1001(b), 1002(b) and (c)) 


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15. Section 668.8 is amended by: 

A. Revising paragraph (c)(3). 

B. In paragraph (d)(2)(iii), adding the 

words, ‘‘as provided under § 668.6’’ 

immediately after the word 

‘‘occupation.’’ 

C. In paragraph (d)(3)(iii), adding the 

words, ‘‘as provided under § 668.6’’ 

immediately after the word 

‘‘occupation.’’ 

D. Revising paragraphs (k) and (l). 

The revisions read as follows: 

§ 668.8 Eligible program. 

* * * * * 

(c) * * * 

(3) Be at least a one-academic-year 

training program that leads to a 

certificate, or other nondegree 

recognized credential, and prepares 

students for gainful employment in a 

recognized occupation. 

* * * * * 

(k) Undergraduate educational 

program in credit hours. (1) Except as 

provided in paragraph (k)(2) of this 

section, if an institution offers an 

undergraduate educational program in 

credit hours, the institution must use 

the formula contained in paragraph (l) 

of this section to determine whether that 

program satisfies the requirements 

contained in paragraph (c)(3) or (d) of 

this section, and the number of credit 

hours in that educational program for 

purposes of the title IV, HEA programs, 

unless— 

(i) The program is at least two 

academic years in length and provides 

an associate degree, a bachelor’s degree, 

a professional degree, or an equivalent 

degree as determined by the Secretary; 

or 

(ii) Each course within the program is 

acceptable for full credit toward that 

institution’s associate degree, bachelor’s 

degree, professional degree, or 

equivalent degree as determined by the 

Secretary provided that— 

(A) The institution’s degree requires 

at least two academic years of study; 

and 

(B) The institution demonstrates that 

students enroll in, and graduate from, 

the degree program. 

(2) A program is considered to be a 

clock-hour program for purposes of the 

title IV, HEA programs if— 

(i) Except as provided in paragraph 

(k)(3) of this section, a program is 

required to measure student progress in 

clock hours when— 

(A) Receiving Federal or State 

approval or licensure to offer the 

program; or 

(B) Completing clock hours is a 

requirement for graduates to apply for 

licensure or the authorization to 

practice the occupation that the student 

is intending to pursue; 

(ii) The credit hours awarded for the 

program are not in compliance with the 

definition of a credit hour in 34 CFR 

600.2; or 

(iii) The institution does not provide 

the clock hours that are the basis for the 

credit hours awarded for the program or 

each course in the program and, except 

as provided in § 668.4(e), requires 

attendance in the clock hours that are 

the basis for the credit hours awarded. 

(3) The requirements of paragraph 

(k)(2)(i) of this section do not apply to 

a program if there is a State or Federal 

approval or licensure requirement that a 

limited component of the program must 

include a practicum, internship, or 

clinical experience component of the 

program that must include a minimum 

number of clock hours. 

(l) Formula. (1) Except as provided in 

paragraph (l)(2) of this section, for 

purposes of determining whether a 

program described in paragraph (k) of 

this section satisfies the requirements 

contained in paragraph (c)(3) or (d) of 

this section, and of determining the 

number of credit hours in that 

educational program with regard to the 

title IV, HEA programs— 

(i) A semester hour must include at 

least 37.5 clock hours of instruction; 

(ii) A trimester hour must include at 

least 37.5 clock hours of instruction; 

and 

(iii) A quarter hour must include at 

least 25 clock hours of instruction. 

(2) The institution’s conversions to 

establish a minimum number of clock 

hours of instruction per credit may be 

less than those specified in paragraph 

(l)(1) of this section, if neither the 

institution’s designated accrediting 

agency nor the relevant State licensing 

authority for participation in the title IV, 

HEA programs has identified any 

deficiencies with the institution’s 

policies and procedures, or their 

implementation, for determining the 

credit hours, as defined in 34 CFR 

600.2, that the institution awards for 

programs and courses, in accordance 

with 34 CFR 602.24(f), or, if applicable, 

34 CFR 603.24(c), so long as— 

(i) The institution’s student work 

outside of class combined with the 

clock-hours of instruction meet or 

exceed the numeric requirements in 

paragraph (l)(1) of this section; and 

(ii)(A) A semester hour must include 

at least 30 clock hours of instruction; 

(B) A trimester hour must include at 

least 30 clock hours of instruction; and 

(C) A quarter hour must include at 

least 20 hours of instruction. 

* * * * * 

16. Section 668.14 is amended by 

revising paragraph (b)(22) to read as 

follows: 

§ 668.14 Program participation agreement. 

* * * * * 

(b) * * * 

(22)(i)(A) It will not provide any 

commission, bonus, or other incentive 

payment based directly or indirectly 

upon success in securing enrollments or 

the award of financial aid, to any person 

or entity who is engaged in any student 

recruitment or admission activity, or in 

making decisions regarding the 

awarding of title IV, HEA program 

funds. 

(B) The restrictions in paragraph 

(b)(22) of this section do not apply to 

the recruitment of foreign students 

residing in foreign countries who are 

not eligible to receive Federal student 

assistance. 

(ii) Eligible institutions, organizations 

that are contractors to eligible 

institutions, and other entities may 

make merit-based adjustments to 

employee compensation provided that 

such adjustments are not based directly 

or indirectly upon success in securing 

enrollments or the award of financial 

aid. 

(iii) As used in paragraph (b)(22) of 

this section, 

(A) Commission, bonus, or other 

incentive payment means a sum of 

money or something of value paid to or 

given to a person or an entity for 

services rendered. 

(B) Securing enrollments or the 

awards of financial aid means activities 

that a person or entity engages in for the 

purpose of the admission or 

matriculation of students for any period 

of time or the award of financial aid to 

students. 

(1) These activities include 

recruitment contact in any form with a 

prospective student, such as 

preadmission or advising activities, 

scheduling an appointment to visit the 

enrollment office, attendance at such 

appointment, or signing an enrollment 

agreement or financial aid application. 

(2) These activities do not include 

making a payment to a third party for 

the provision of student contact 

information for prospective students 

provided that such payment is not based 

on the number of students who apply or 

enroll. 

(C) Enrollment means the admission 

or matriculation of a student into an 

eligible institution. 

* * * * * 

17. Section 668.16 is amended by: 

A. Revising paragraph (e). 

B. In paragraph (n) introductory text, 

removing the word ‘‘and’’ that appears 

after the punctuation’’;’’. 

C. In paragraph (o)(2), removing the 

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

the punctuation and word ‘‘; and’’. 


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D. Adding paragraph (p). 

E. Revising the OMB control number 

at the end of the section. 

The revisions and addition read as 

follows: 

§ 668.16 Standards of administrative 

capability. 

* * * * * 

(e) For purposes of determining 

student eligibility for assistance under a 

title IV, HEA program, establishes, 

publishes, and applies reasonable 

standards for measuring whether an 

otherwise eligible student is 

maintaining satisfactory academic 

progress in his or her educational 

program. The Secretary considers an 

institution’s standards to be reasonable 

if the standards are in accordance with 

the provisions specified in § 668.34. 

* * * * * 

(p) Develops and follows procedures 

to evaluate the validity of a student’s 

high school completion if the institution 

or the Secretary has reason to believe 

that the high school diploma is not valid 

or was not obtained from an entity that 

provides secondary school education. 

(Approved by the Office of Management and 

Budget under control number 1845–0022) 

* * * * * 

18. Section 668.22 is amended by: 

A. Redesignating paragraphs (a)(2) 

through (a)(5) as paragraphs (a)(3) 

through (a)(6), respectively. 

B. Adding new paragraph (a)(2). 

C. In newly redesignated paragraph 

(a)(5), removing the citation ‘‘(a)(5)’’ and 

adding, in its place, the citation ‘‘(a)(6)’’. 

D. In newly redesignated paragraph 

(a)(6)(ii)(A)(2), removing the citation 

‘‘(a)(5)(iii)’’ and adding, in its place, the 

citation ‘‘(a)(6)(iii)’’. 

E. In newly redesignated paragraph 

(a)(6)(ii)(B)(2), removing the citation 

‘‘(a)(5)(iii)’’ and adding, in its place, the 

citation ‘‘(a)(6)(iii)’’. 

F. In newly redesignated paragraph 

(a)(6)(ii)(B)(3), removing the citation 

‘‘(a)(5)(iii)’’ and adding, in its place, the 

citation ‘‘(a)(6)(iii)’’. 

G. In newly redesignated paragraph 

(a)(6)(iii)(A)(1), removing the citation 

‘‘(a)(5)(ii)(A)(2)’’ and adding, in its place, 

the citation ‘‘(a)(6)(ii)(A)(2)’’. 

H. In newly redesignated paragraph 

(a)(6)(iii)(A)(5), removing the citation 

‘‘(a)(5)(iii)(C)’’ and adding, in its place, 

the citation ‘‘(a)(6)(iii)(C)’’. 

I. In newly redesignated paragraph 

(a)(6)(iii)(B), removing the citation 

‘‘(a)(5)(iii)(A)’’ and adding, in its place, 

the citation ‘‘(a)(6)(iii)(A)’’. 

J. In newly redesignated paragraph 

(a)(6)(iv), removing the citation 

‘‘(a)(5)(iii)’’ and adding, in its place, the 

citation ‘‘(a)(6)(iii)’’. 

K. Revising paragraph (b)(3). 

L. In paragraph (f)(2)(i), adding the 

words ‘‘that the student, prior to 

withdrawing, was scheduled to 

complete’’ after the words ‘‘within the 

period’’. 

The addition and revision read as 

follows: 

§ 668.22 Treatment of title IV funds when 

a student withdraws. 

* * * * * 

(a) * * * 

(2) A student is considered to have 

withdrawn from a payment period or 

period of enrollment if, prior to 

withdrawing— 

(i) In the case of a program that is 

measured in credit hours, the student 

does not complete all the days in the 

payment period or period of enrollment 

that the student was scheduled to 

complete; and 

(ii) In the case of a program that is 

measured in clock hours, the student 

does not complete all of the clock hours 

in the payment period or period of 

enrollment that the student was 

scheduled to complete. 

* * * * * 

(b) * * * 

(3)(i) An institution is required to take 

attendance if— 

(A) An outside entity (such as the 

institution’s accrediting agency or a 

State agency) has a requirement that the 

institution take attendance; 

(B) The institution itself has a 

requirement that its instructors take 

attendance; or 

(C) The institution or an outside 

entity has a requirement that can only 

be met by taking attendance or a 

comparable process, including, but not 

limited to, requiring that students in a 

program demonstrate attendance in the 

classes of that program, or a portion of 

that program. 

(ii) If, in accordance with paragraph 

(b)(3)(i) of this section, an institution is 

required to take attendance or requires 

that attendance be taken for only some 

students, the institution must use its 

attendance records to determine a 

withdrawal date in accordance with 

paragraph (b)(1) of this section for those 

students. 

(iii)(A) If, in accordance with 

paragraph (b)(3)(i) of this section, an 

institution is required to take 

attendance, or requires that attendance 

be taken, for a limited period, the 

institution must use its attendance 

records to determine a withdrawal date 

in accordance with paragraph (b)(3)(i) of 

this section for that limited period. 

(B) A student in attendance at the end 

of the limited period identified in 

paragraph (b)(3)(iii)(A) of this section 

who subsequently stops attending 

during the payment period will be 

treated as a student for whom the 

institution was not required to take 

attendance. 

(iv) If an institution is required to take 

attendance or requires that attendance 

be taken, on only one specified day to 

meet a census reporting requirement, 

the institution is not considered to take 

attendance. 

* * * * * 

19. Section 668.32 is amended by: 

A. In paragraph (e)(3), removing the 

word ‘‘or’’ that appears after the 

punctuation ‘‘;’’. 

B. In paragraph (e)(4)(ii), removing the 

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

the punctuation and word ‘‘; or’’. 

C. Adding new paragraph (e)(5). 

D. Revising paragraph (f). 

The addition and revision read as 

follows: 

§ 668.32 Student eligibility—general. 

* * * * * 

(e) * * * 

(5) Has been determined by the 

institution to have the ability to benefit 

from the education or training offered 

by the institution based on the 

satisfactory completion of 6 semester 

hours, 6 trimester hours, 6 quarter 

hours, or 225 clock hours that are 

applicable toward a degree or certificate 

offered by the institution. 

(f) Maintains satisfactory academic 

progress in his or her course of study 

according to the institution’s published 

standards of satisfactory academic 

progress that meet the requirements of 

§ 668.34. 

* * * * * 

20. Section 668.34 is revised to read 

as follows: 

§ 668.34 Satisfactory academic progress. 

(a) Satisfactory academic progress 

policy. An institution must establish a 

reasonable satisfactory academic 

progress policy for determining whether 

an otherwise eligible student is making 

satisfactory academic progress in his or 

her educational program and may 

receive assistance under the title IV, 

HEA programs. The Secretary considers 

the institution’s policy to be reasonable 

if— 

(1) The policy is at least as strict as 

the policy the institution applies to a 

student who is not receiving assistance 

under the title IV, HEA programs; 

(2) The policy provides for consistent 

application of standards to all students 

within categories of students, e.g., fulltime, part-time, undergraduate, and 

graduate students, and educational 

programs established by the institution; 


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(3) The policy provides that a 

student’s academic progress is 

evaluated— 

(i) At the end of each payment period 

if the educational program is either one 

academic year in length or shorter than 

an academic year; or 

(ii) At the end of each payment period 

or at least annually for all other 

educational programs; 

(4)(i) The policy specifies the grade 

point average (GPA) that a student must 

achieve at each evaluation, or if a GPA 

is not an appropriate qualitative 

measure, a comparable assessment 

measured against a norm; and 

(ii) If a student is enrolled in an 

educational program of more than two 

academic years, the policy specifies that 

at the end of the second academic year, 

the student must have a GPA of at least 

a ‘‘C’’ or its equivalent, or have academic 

standing consistent with the 

institution’s requirements for 

graduation; 

(5)(i) The policy specifies the pace at 

which a student must progress through 

his or her educational program to ensure 

that the student will complete the 

program within the maximum 

timeframe, as defined in paragraph (b) 

of this section, and provides for 

measurement of the student’s progress 

at each evaluation; and 

(ii) An institution calculates the pace 

at which the student is progressing by 

dividing the cumulative number of 

hours the student has successfully 

completed by the cumulative number of 

hours the student has attempted. In 

making this calculation, the institution 

is not required to include remedial 

courses; 

(6) The policy describes how a 

student’s GPA and pace of completion 

are affected by course incompletes, 

withdrawals, or repetitions, or transfers 

of credit from other institutions. Credit 

hours from another institution that are 

accepted toward the student’s 

educational program must count as both 

attempted and completed hours; 

(7) Except as provided in paragraphs 

(c) and (d) of this section, the policy 

provides that, at the time of each 

evaluation, a student who has not 

achieved the required GPA, or who is 

not successfully completing his or her 

educational program at the required 

pace, is no longer eligible to receive 

assistance under the title IV, HEA 

programs; 

(8) If the institution places students 

on financial aid warning, or on financial 

aid probation, as defined in paragraph 

(b) of this section, the policy describes 

these statuses and that— 

(i) A student on financial aid warning 

may continue to receive assistance 

under the title IV, HEA programs for one 

payment period despite a determination 

that the student is not making 

satisfactory academic progress. 

Financial aid warning status may be 

assigned without an appeal or other 

action by the student; and 

(ii) A student on financial aid 

probation may receive title IV, HEA 

program funds for one payment period. 

While a student is on financial aid 

probation, the institution may require 

the student to fulfill specific terms and 

conditions such as taking a reduced 

course load or enrolling in specific 

courses. At the end of one payment 

period on financial aid probation, the 

student must meet the institution’s 

satisfactory academic progress standards 

or meet the requirements of the 

academic plan developed by the 

institution and the student to qualify for 

further title IV, HEA program funds; 

(9) If the institution permits a student 

to appeal a determination by the 

institution that he or she is not making 

satisfactory academic progress, the 

policy describes— 

(i) How the student may re-establish 

his or her eligibility to receive 

assistance under the title IV, HEA 

programs; 

(ii) The basis on which a student may 

file an appeal: The death of a relative, 

an injury or illness of the student, or 

other special circumstances; and 

(iii) Information the student must 

submit regarding why the student failed 

to make satisfactory academic progress, 

and what has changed in the student’s 

situation that will allow the student to 

demonstrate satisfactory academic 

progress at the next evaluation; 

(10) If the institution does not permit 

a student to appeal a determination by 

the institution that he or she is not 

making satisfactory academic progress, 

the policy must describe how the 

student may re-establish his or her 

eligibility to receive assistance under 

the title IV, HEA programs; and 

(11) The policy provides for 

notification to students of the results of 

an evaluation that impacts the student’s 

eligibility for title IV, HEA program 

funds. 

(b) Definitions. The following 

definitions apply to the terms used in 

this section: 

Appeal. Appeal means a process by 

which a student who is not meeting the 

institution’s satisfactory academic 

progress standards petitions the 

institution for reconsideration of the 

student’s eligibility for title IV, HEA 

program assistance. 

Financial aid probation. Financial aid 

probation means a status assigned by an 

institution to a student who fails to 

make satisfactory academic progress and 

who has appealed and has had 

eligibility for aid reinstated. 

Financial aid warning. Financial aid 

warning means a status assigned to a 

student who fails to make satisfactory 

academic progress at an institution that 

evaluates academic progress at the end 

of each payment period. 

Maximum time frame. Maximum 

timeframe means— 

(1) For an undergraduate program 

measured in credit hours, a period that 

is no longer than 150 percent of the 

published length of the educational 

program, as measured in credit hours; 

(2) For an undergraduate program 

measured in clock hours, a period that 

is no longer than 150 percent of the 

published length of the educational 

program, as measured by the cumulative 

number of clock hours the student is 

required to complete and expressed in 

calendar time; and 

(3) For a graduate program, a period 

defined by the institution that is based 

on the length of the educational 

program. 

(c) Institutions that evaluate 

satisfactory academic progress at the 

end of each payment period. (1) An 

institution that evaluates satisfactory 

academic progress at the end of each 

payment period and determines that a 

student is not making progress under its 

policy may nevertheless disburse title 

IV, HEA program funds to the student 

under the provisions of paragraph (c)(2), 

(c)(3), or (c)(4) of this section. 

(2) For the payment period following 

the payment period in which the 

student did not make satisfactory 

academic progress, the institution 

may— 

(i) Place the student on financial aid 

warning, and disburse title IV, HEA 

program funds to the student; or 

(ii) Place a student directly on 

financial aid probation, following the 

procedures outlined in paragraph (d)(2) 

of this section and disburse title IV, 

HEA program funds to the student. 

(3) For the payment period following 

a payment period during which a 

student was on financial aid warning, 

the institution may place the student on 

financial aid probation, and disburse 

title IV, HEA program funds to the 

student if— 

(i) The institution evaluates the 

student’s progress and determines that 

student did not make satisfactory 

academic progress during the payment 

period the student was on financial aid 

warning; 

(ii) The student appeals the 

determination; and 

(iii)(A) The institution determines 

that the student should be able to meet 


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the institution’s satisfactory academic 

progress standards by the end of the 

subsequent payment period; or 

(B) The institution develops an 

academic plan for the student that, if 

followed, will ensure that the student is 

able to meet the institution’s satisfactory 

academic progress standards by a 

specific point in time. 

(4) A student on financial aid 

probation for a payment period may not 

receive title IV, HEA program funds for 

the subsequent payment period unless 

the student makes satisfactory academic 

progress or the institution determines 

that the student met the requirements 

specified by the institution in the 

academic plan for the student. 

(d) Institutions that evaluate 

satisfactory academic progress annually 

or less frequently than at the end of 

each payment period. (1) An institution 

that evaluates satisfactory academic 

progress annually or less frequently 

than at the end of each payment period 

and determines that a student is not 

making progress under its policy may 

nevertheless disburse title IV, HEA 

program funds to the student under the 

provisions of paragraph (d)(2) or (d)(3) 

of this section. 

(2) The institution may place the 

student on financial aid probation and 

may disburse title IV, HEA program 

funds to the student for the subsequent 

payment period if— 

(i) The institution evaluates the 

student and determines that the student 

is not making satisfactory academic 

progress; 

(ii) The student appeals the 

determination; and 

(iii) (A) The institution determines 

that the student should be able to make 

satisfactory academic progress during 

the subsequent payment period and 

meet the institution’s satisfactory 

academic progress standards at the end 

of that payment period; or 

(B) The institution develops an 

academic plan for the student that, if 

followed, will ensure that the student is 

able to meet the institution’s satisfactory 

academic progress standards by a 

specific point in time. 

(3) A student on financial aid 

probation for a payment period may not 

receive title IV, HEA program funds for 

the subsequent payment period unless 

the student makes satisfactory academic 

progress or the institution determines 

that the student met the requirements 

specified by the institution in the 

academic plan for the student. 

(Authority: 20 U.S.C. 1091(d)) 

21. Section 668.43 is amended by: 

A. In paragraph (a)(10)(ii), removing 

the word ‘‘and’’ that appears after the 

punctuation ‘‘;’’. 

B. In paragraph (a)(11)(ii), removing 

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

place, the punctuation and word ‘‘; and’’. 

C. Adding paragraph (a)(12). 

D. Revising paragraph (b). 

The addition and revision read as 

follows: 

§ 668.43 Institutional information. 

(a) * * * 

(12) A description of written 

arrangements the institution has entered 

into in accordance with § 668.5, 

including, but not limited to, 

information on— 

(i) The portion of the educational 

program that the institution that grants 

the degree or certificate is not providing; 

(ii) The name and location of the 

other institutions or organizations that 

are providing the portion of the 

educational program that the institution 

that grants the degree or certificate is 

not providing; 

(iii) The method of delivery of the 

portion of the educational program that 

the institution that grants the degree or 

certificate is not providing; and 

(iv) Estimated additional costs 

students may incur as the result of 

enrolling in an educational program that 

is provided, in part, under the written 

arrangement. 

(b) The institution must make 

available for review to any enrolled or 

prospective student upon request, a 

copy of the documents describing the 

institution’s accreditation and its State, 

Federal, or tribal approval or licensing. 

The institution must also provide its 

students or prospective students with 

contact information for filing 

complaints with its accreditor and State 

approval or licensing entity. 

* * * * * 

22. Subpart E of part 668 is revised to 

read as follows: 

Subpart E—Verification and Updating of 

Student Aid Application Information 

Sec. 

668.51 General. 

668.52 Definitions. 

668.53 Policies and procedures. 

668.54 Selection of an applicant’s FAFSA 

information for verification. 

668.55 Updating information. 

668.56 Information to be verified. 

668.57 Acceptable documentation. 

668.58 Interim disbursements. 

668.59 Consequences of a change in an 

applicant’s FAFSA information. 

668.60 Deadlines for submitting 

documentation and the consequences of 

failing to provide documentation. 

668.61 Recovery of funds. 

Subpart E—Verification and Updating 

of Student Aid Application Information 

§ 668.51 General. 

(a) Scope and purpose. The 

regulations in this subpart govern the 

verification by institutions of 

information submitted by applicants for 

student financial assistance under the 

subsidized student financial assistance 

programs. 

(b) Applicant responsibility. If the 

Secretary or the institution requests 

documents or information from an 

applicant under this subpart, the 

applicant must provide the specified 

documents or information. 

(c) Foreign schools. The Secretary 

exempts from the provisions of this 

subpart participating institutions that 

are not located in a State. 

(Authority: 20 U.S.C. 1094) 

§ 668.52 Definitions. 

The following definitions apply to 

this subpart: 

Free Application for Federal Student 

Aid (FAFSA): The student aid 

application provided for under section 

483, of the HEA, which is used to 

determine a student’s eligibility for the 

title IV, HEA programs. 

Institutional Student Information 

Record (ISIR): An electronic record the 

Secretary transmits to an institution, for 

purposes of the title IV, HEA programs, 

that includes an applicant’s— 

(1) Personal identification 

information; 

(2) FAFSA information used to 

determine eligibility for title IV, HEA 

program aid; and 

(3) EFC. 

Specified year: (1) The calendar year 

preceding the first calendar year of an 

award year, i.e., the base year; or 

(2) The year preceding the year 

described in paragraph (1) of this 

definition. 

Student Aid Report (SAR): A report 

provided to an applicant by the 

Secretary showing the amount of his or 

her EFC. 

Subsidized student financial 

assistance programs: Title IV, HEA 

programs for which eligibility is 

determined on the basis of a student’s 

EFC. These programs include the 

Federal Pell Grant, Federal 

Supplemental Educational Opportunity 

Grant (FSEOG), Federal Work-Study 

(FWS), Federal Perkins Loan, 

Subsidized Stafford Loan and Direct 

Subsidized Loan programs. 

Unsubsidized student financial 

assistance programs: Title IV, HEA 

programs for which eligibility is not 

based on a student’s EFC. These 

programs include the Teacher Education 


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Assistance for College and Higher 

Education (TEACH) Grant, 

Unsubsidized Stafford Loan, Direct 

Unsubsidized Loan, Federal PLUS Loan, 

and Direct Parent Loan for 

Undergraduate Students (Direct PLUS 

Loan) programs. 

(Authority: 20 U.S.C. 1094) 

§ 668.53 Policies and procedures. 

(a) An institution must establish and 

use written policies and procedures for 

verifying an applicant’s FAFSA 

information in accordance with the 

provisions of this subpart. These 

policies and procedures must include— 

(1) The time period within which an 

applicant must provide any 

documentation requested by the 

institution in accordance with § 668.57; 

(2) The consequences of an 

applicant’s failure to provide the 

requested documentation within the 

specified time period; 

(3) The method by which the 

institution notifies an applicant of the 

results of its verification if, as a result 

of verification, the applicant’s EFC 

changes and results in a change in the 

amount of the applicant’s assistance 

under the title IV, HEA programs; 

(4) The procedures the institution will 

take itself or the procedures the 

institution will require an applicant to 

follow to correct his or her FAFSA 

information determined to be in error; 

and 

(5)(a) The procedures for making 

referrals under § 668.16(g). 

(b) An institution’s procedures must 

provide that it will furnish, in a timely 

manner, to each applicant whose 

FAFSA information is selected for 

verification a clear explanation of— 

(1) The documentation needed to 

satisfy the verification requirements; 

and 

(2) The applicant’s responsibilities 

with respect to the verification of his or 

her FAFSA information, including the 

deadlines for completing any actions 

required under this subpart and the 

consequences of failing to complete any 

required action. 

(c) An institution’s procedures must 

provide that an applicant whose FAFSA 

information is selected for verification 

by the Secretary is required to complete 

verification before the institution 

exercises any authority under section 

479A(a) of the HEA to make changes to 

the applicant’s cost of attendance or to 

the values of the data items required to 

calculate the EFC. 

(Approved by the Office of Management and 

Budget under control number 1845–0041) 

(Authority: 20 U.S.C. 1094) 

§ 668.54 Selection of an applicant’s FAFSA 

information for verification. 

(a) General requirements. (1) Except 

as provided in paragraph (b) of this 

section, an institution must require an 

applicant whose FAFSA information is 

selected for verification by the 

Secretary, to verify the information 

specified by the Secretary pursuant to 

§ 668.56. 

(2) If an institution has reason to 

believe that an applicant’s FAFSA 

information is inaccurate, it must verify 

the accuracy of that information. 

(3) An institution may require an 

applicant to verify any FAFSA 

information that it specifies. 

(b) Exclusions from verification. (1) 

An institution need not verify an 

applicant’s FAFSA information if— 

(i) The applicant dies; 

(ii) The applicant does not receive 

assistance under the title IV, HEA 

programs for reasons other than failure 

to verify his or her FAFSA information; 

(iii) The applicant receives only 

unsubsidized student financial 

assistance; or 

(iv) The applicant who transfers to the 

institution, had previously completed 

verification at the institution from 

which he or she transferred, and applies 

for assistance based on the same FAFSA 

information used at the previous 

institution, if the current institution 

obtains a letter from the previous 

institution— 

(A) Stating that it has verified the 

applicant’s information; and 

(B) Providing the transaction number 

of the applicable ISIR. 

(2) Unless the institution has reason 

to believe that the information reported 

by a dependent applicant is incorrect, it 

need not verify the applicant’s parents’ 

FAFSA information if— 

(i) The parents are residing in a 

country other than the United States 

and cannot be contacted by normal 

means of communication; 

(ii) The parents cannot be located 

because their contact information is 

unknown and cannot be obtained by the 

applicant; or 

(iii) Both of the applicant’s parents are 

mentally incapacitated. 

(3) Unless the institution has reason 

to believe that the information reported 

by an independent applicant is 

incorrect, it need not verify the 

applicant’s spouse’s information if— 

(i) The spouse is deceased; 

(ii) The spouse is mentally 

incapacitated; 

(iii) The spouse is residing in a 

country other than the United States 

and cannot be contacted by normal 

means of communication; or 

(iv) The spouse cannot be located 

because his or her contact information 

is unknown and cannot be obtained by 

the applicant. 

(Approved by the Office of Management and 

Budget under control number 1845–0041) 

(Authority: 20 U.S.C. 1091, 1094) 

§ 668.55 Updating information. 

(a)(1) Unless the provisions of 

paragraph (a)(2) of this section apply, an 

applicant is required to update— 

(i) The number of family members in 

the applicant’s household and the 

number of those household members 

attending postsecondary educational 

institutions, in accordance with 

provisions of paragraph (b) of this 

section; and 

(ii) The applicant’s dependency status 

in accordance with the provisions of 

paragraph (c) of this section. 

(2) An institution need not require an 

applicant to verify the information 

contained in his or her FAFSA for an 

award year if— 

(i) The applicant updated and verified 

the FAFSA information on an earlier 

transaction; and 

(ii) No change in the information to be 

updated has taken place since the last 

update. 

(b) If the number of family members 

in the applicant’s household or the 

number of those household members 

attending postsecondary educational 

institutions changes, an applicant who 

is selected for verification must update 

his or her FAFSA information regarding 

those data items so that the information 

is correct as of the date the applicant 

verifies the information. 

(c) If an applicant’s dependency status 

changes during an award year, the 

applicant must update his or her FAFSA 

information so that the information is 

correct regardless of whether the 

applicant is selected for verification. 

(Approved by the Office of Management and 

Budget under control number 1845–0041) 

(Authority: 20 U.S.C. 1094) 

§ 668.56 Information to be verified. 

(a) For each award year the Secretary 

publishes in the Federal Register notice 

the FAFSA information that an 

institution and an applicant may be 

required to verify. 

(b) For each applicant whose FAFSA 

information is selected for verification 

by the Secretary, the Secretary specifies 

the specific information under 

paragraph (a) of this section that the 

applicant must verify. 

(Approved by the Office of Management and 

Budget under control number 1845–0041) 

(Authority: 20 U.S.C. 1094, 1095) 


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§ 668.57 Acceptable documentation. 

If an applicant is selected to verify 

any of the following information, an 

institution must obtain the specified 

documentation. 

(a) Adjusted Gross Income (AGI), 

income earned from work, or U.S. 

income tax paid. (1) Except as provided 

in paragraphs (a)(2), (a)(3), and (a)(4) of 

this section, an institution must require 

an applicant selected for verification of 

AGI, income earned from work or U.S. 

income tax paid to submit to it— 

(i) A copy of the income tax return or 

an Internal Revenue Service (IRS) form 

which that lists tax account information 

of the applicant, his or her spouse, or 

his or her parents, as applicable. The 

copy of the return must include the 

signature (which need not be an 

original) of the filer of the return or of 

one of the filers of a joint return; 

(ii) For a dependent student, a copy 

of each IRS Form W–2 received by the 

parent whose income is being taken into 

account if— 

(A) The parents filed a joint return; 

and 

(B) The parents are divorced or 

separated or one of the parents has died; 

and 

(iii) For an independent student, a 

copy of each IRS Form W–2 he or she 

received if the independent student— 

(A) Filed a joint return; and 

(B) Is a widow or widower, or is 

divorced or separated. 

(2) An institution may accept, in lieu 

of an income tax return or an IRS form 

that lists tax account information, the 

information reported for an item on the 

applicant’s FAFSA if the Secretary has 

identified that item as having been 

obtained from the IRS. 

(3) An institution must accept, in lieu 

of an income tax return or an IRS form 

that lists tax account information, the 

documentation set forth in paragraph 

(a)(4) of this section if the individual for 

the specified year— 

(i) Has not filed and, under IRS rules, 

or other applicable government agency 

rules, is not required to file an income 

tax return; 

(ii) Is required to file a U.S. tax return 

and has been granted a filing extension 

by the IRS; or 

(iii) Has requested a copy of the tax 

return or an IRS form that lists tax 

account information, and the IRS or a 

government of a U.S. territory or 

commonwealth or a foreign central 

government cannot locate the return or 

provide an IRS form that lists tax 

account information. 

(4) An institution must accept— 

(i) For an individual described in 

paragraph (a)(3)(i) of this section, a 

statement signed by that individual 

certifying that he or she has not filed 

and is not required to file an income tax 

return for the specified year and 

certifying for that year that 

individual’s— 

(A) Sources of income earned from 

work as stated on the FAFSA; and 

(B) Amounts of income from each 

source. In lieu of a certification of these 

amounts of income, the student may 

provide a copy of his or her IRS Form 

W–2 for each source listed under 

paragraph (a)(4)(i)(A) of this section; 

(ii) For an individual described in 

paragraph (a)(3)(ii) of this section— 

(A) A copy of the IRS Form 4868, 

‘‘Application for Automatic Extension of 

Time to File U.S. Individual Income Tax 

Return,’’ that the individual filed with 

the IRS for the specified year, or a copy 

of the IRS’s approval of an extension 

beyond the automatic six-month 

extension if the individual requested an 

additional extension of the filing time; 

and 

(B) A copy of each IRS Form W–2 that 

the individual received for the specified 

year, or for a self-employed individual, 

a statement signed by the individual 

certifying the amount of the AGI for the 

specified year; and 

(iii) For an individual described in 

paragraph (a)(3)(iii) of this section— 

(A) A copy of each IRS Form W–2 that 

the individual received for the specified 

year; or 

(B) For an individual who is selfemployed or has filed an income tax 

return with a government of a U.S. 

territory or commonwealth, or a foreign 

central government, a statement signed 

by the individual certifying the amount 

of AGI for the specified year. 

(5) An institution may require an 

individual described in paragraph 

(a)(3)(ii) of this section to provide to it 

a copy of his or her completed and 

signed income tax return when filed. If 

an institution receives the copy of the 

return, it must reverify the AGI and 

taxes paid by the applicant and his or 

her spouse or parents. 

(6) If an individual who is required to 

submit an IRS Form W–2, under 

paragraph (a) of this section, is unable 

to obtain one in a timely manner, the 

institution may permit that individual 

to set forth, in a statement signed by the 

individual, the amount of income 

earned from work, the source of that 

income, and the reason that the IRS 

Form W–2 is not available in a timely 

manner. 

(7) For the purpose of this section, an 

institution may accept in lieu of a copy 

of an income tax return signed by the 

filer of the return or one of the filers of 

a joint return, a copy of the filer’s return 

that includes the preparer’s Social 

Security Number, Employer 

Identification Number or the Preparer 

Tax Identification Number and has been 

signed by the preparer of the return or 

stamped with the name and address of 

the preparer of the return. 

(b) Number of family members in 

household. An institution must require 

an applicant selected for verification of 

the number of family members in the 

household to submit to it a statement 

signed by both the applicant and one of 

the applicant’s parents if the applicant 

is a dependent student, or only the 

applicant if the applicant is an 

independent student, listing the name 

and age of each family member in the 

household and the relationship of that 

household member to the applicant. 

(c) Number of family household 

members enrolled in eligible 

postsecondary institutions. (1) An 

institution must require an applicant 

selected for verification of the number 

of household members in the 

applicant’s family enrolled on at least a 

half-time basis in eligible postsecondary 

institutions to submit a statement signed 

by both the applicant and one of the 

applicant’s parents, if the applicant is a 

dependent student, or by only the 

applicant if the applicant is an 

independent student, listing— 

(i) The name of each family member 

who is or will be attending an eligible 

postsecondary educational institution as 

at least a half-time student in the award 

year; 

(ii) The age of each student; and 

(iii) The name of the institution that 

each student is or will be attending. 

(2) If the institution has reason to 

believe that an applicant’s FAFSA 

information or the statement provided 

under paragraph (c)(1) of this section 

regarding the number of family 

household members enrolled in eligible 

postsecondary institutions is inaccurate, 

the institution must obtain a statement 

from each institution named by the 

applicant in response to the requirement 

of paragraph (c)(1)(iii) of this section 

that the household member in question 

is or will be attending the institution on 

at least a half-time basis, unless— 

(i) The institution the student is 

attending determines that such a 

statement is not available because the 

household member in question has not 

yet registered at the institution he or she 

plans to attend; or 

(ii) The institution has information 

indicating that the student will be 

attending the same institution as the 

applicant. 

(d) Other information. If an applicant 

is selected to verify other information 

specified in the annual Federal Register 

notice, the applicant must provide the 


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34880 Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules 

documentation specified for that 

information in the Federal Register 

notice. 

(Approved by the Office of Management and 

Budget under control number 1845–0041) 

(Authority: 20 U.S.C. 1094) 

§ 668.58 Interim disbursements. 

(a)(1) If an institution has reason to 

believe that an applicant’s FAFSA 

information is inaccurate, until the 

information is verified and any 

corrections are made, the institution 

may not— 

(i) Disburse any Federal Pell Grant, 

FSEOG, or Federal Perkins Loan 

Program funds to the applicant; 

(ii) Employ or allow an employer to 

employ the applicant in its FWS 

Program; or 

(iii) Certify a Subsidized Stafford 

Loan or originate a Direct Subsidized 

Loan, or disburse any such loan 

proceeds for any previously certified 

Subsidized Stafford Loan or originated 

Direct Subsidized Loan to the applicant. 

(2) If an institution does not have 

reason to believe that an applicant’s 

FAFSA information is inaccurate prior 

to verification, the institution may— 

(i)(A) Withhold payment of Federal 

Pell Grant, Federal Perkins Loan, or 

FSEOG Program funds for the applicant; 

or 

(B) Make one disbursement from each 

of the Federal Pell Grant, Federal 

Perkins Loan, or FSEOG Program funds 

for the applicant’s first payment period 

of the award year; 

(ii) Employ or allow an employer to 

employ that applicant, once he or she is 

an eligible student, under the FWS 

Program for the first 60 consecutive 

days after the student’s enrollment in 

that award year; or 

(iii)(A) Withhold certification of the 

applicant’s Subsidized Stafford Loan 

application or origination of the 

applicant’s Direct Subsidized Loan; or 

(B) Certify the Subsidized Stafford 

Loan application or originate the Direct 

Subsidized Loan provided that the 

institution does not disburse Subsidized 

Stafford Loan or Direct Subsidized Loan 

proceeds. 

(3) If, after verification, an institution 

determines that changes to an 

applicant’s information will not change 

the amount the applicant would receive 

under a title IV, HEA program, the 

institution— 

(i) Must ensure corrections are made; 

and 

(ii) May— 

(A) Make one disbursement from each 

of the Federal Pell Grant, Federal 

Perkins Loan, or FSEOG Program funds 

for the applicant’s first payment period 

of the award year; 

(B) Employ or allow an employer to 

employ the applicant, once he or she is 

an eligible student, under the FWS 

Program for the first 60 consecutive 

days after the student’s enrollment in 

that award year; or 

(C) Certify the Subsidized Stafford 

Loan application or originate the Direct 

Subsidized Loan and disburse the 

Subsidized Stafford Loan or Direct 

Subsidized Loan proceeds for the 

applicant. 

(b) If an institution chooses to make 

a disbursement under paragraph 

(a)(2)(i)(B) or (a)(2)(iii)(B) of this section, 

it is liable for any overpayment 

discovered resulting from verification to 

the extent that the overpayment is not 

recovered through reducing subsequent 

disbursements in the award year. 

(Authority: 20 U.S.C. 1094) 

§ 668.59 Consequences of a change in an 

applicant’s FAFSA information. 

(a) For the subsidized student 

financial assistance programs, if an 

applicant’s FAFSA information changes 

as a result of verification, the applicant 

or the institution must submit the 

changes to the Secretary. 

(b) For the Federal Pell Grant Program 

an institution must— 

(1) Recalculate the applicant’s Federal 

Pell Grant on the basis of the EFC on the 

corrected SAR or ISIR; and 

(2)(i) Disburse any additional funds 

under that award only if the institution 

receives a corrected SAR or ISIR for the 

student and only to the extent that 

additional funds are payable based on 

the recalculation; or 

(ii) Comply with the procedures 

specified in § 668.61(a) if, as a result of 

verification, the Federal Pell Grant 

award is reduced. 

(c) For the subsidized student 

financial assistance programs, excluding 

the Federal Pell Grant Program, if an 

applicant’s FAFSA information changes 

as a result of verification, the institution 

must— 

(1) Recalculate the applicant’s EFC; 

and 

(2) Adjust the applicant’s financial aid 

package on the basis of the EFC on the 

corrected SAR or ISIR. 

(d)(1) If an applicant is selected for 

verification for an award year for which 

the applicant previously received a 

Direct Subsidized Loan, and as a result 

of verification the loan amount is 

reduced, the institution must comply 

with the procedures specified in 

§§ 668.61(b)(2) and 34 CFR 685.303(e). 

(2) If an applicant is selected for 

verification for an award year for which 

the applicant previously received a 

Subsidized Stafford Loan, and as a 

result of verification the loan amount is 

reduced, the institution must comply 

with the procedures for notifying the 

borrower and lender specified in 

§§ 668.61(b)(1) and 34 CFR 682.604(h). 

(Approved by the Office of Management and 

Budget under control number 1845–0041) 

(Authority: 20 U.S.C. 1094) 

§ 668.60 Deadlines for submitting 

documentation and the consequences of 

failing to provide documentation. 

(a) An institution must require an 

applicant selected for verification to 

submit to it, within the period of time 

it or the Secretary specifies, the 

documentation set forth in § 668.57 that 

is requested by the institution. 

(b) For purposes of the subsidized 

student financial assistance programs, 

excluding the Federal Pell Grant 

Program— 

(1) If an applicant fails to provide the 

requested documentation within a 

reasonable time period established by 

the institution— 

(i) The institution may not— 

(A) Disburse any additional Federal 

Perkins Loan or FSEOG Program funds 

to the applicant; 

(B) Employ, continue to employ or 

allow an employer to employ the 

applicant under FWS; or 

(C) Certify the applicant’s Subsidized 

Stafford Loan application or originate 

the applicant’s Direct Subsidized Loan 

or disburse any additional Subsidized 

Stafford Loan or Direct Subsidized Loan 

proceeds for the applicant; and 

(ii) The applicant must repay to the 

institution any Federal Perkins Loan or 

FSEOG received for that award year; 

(2) If the applicant provides the 

requested documentation after the time 

period established by the institution, the 

institution may, at its option, disburse 

aid to the applicant notwithstanding 

paragraph (b)(1) of this section; and 

(3) If an institution has received 

proceeds for a Subsidized Stafford Loan 

or Direct Subsidized Loan on behalf of 

an applicant, the institution must follow 

the cash management procedures 

provided in §§ 668.166(a), (b), or 

668.167(c), respectively, and return the 

proceeds to the lender, or to the 

Secretary, in the case of a Direct 

Subsidized Loan, if the applicant does 

not complete verification within the 

time period specified. 

(c) For purposes of the Federal Pell 

Grant Program— 

(1) An applicant may submit a valid 

SAR to the institution or the institution 

may receive a valid ISIR after the 

applicable deadline specified in 34 CFR 

690.61 but within an established 

additional time period set by the 

Secretary through publication of a 

notice in the Federal Register; and 


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(2) If the applicant does not provide 

to the institution the requested 

documentation and, if necessary, a valid 

SAR or the institution does not receive 

a valid ISIR, within the additional time 

period referenced in paragraph (c)(1) of 

this section, the applicant— 

(i) Forfeits the Federal Pell Grant for 

the award year; and 

(ii) Must return any Federal Pell Grant 

payments previously received for that 

award year. 

(d) The Secretary may determine not 

to process FAFSA information of an 

applicant who has been requested to 

provide documentation until the 

applicant provides the documentation 

or the Secretary decides that there is no 

longer a need for the documentation. 

(e) If an applicant selected for 

verification for an award year dies 

before the deadline for completing 

verification without completing that 

process, the institution may not— 

(1) Make any further disbursements 

on behalf of that applicant; 

(2) Certify that applicant’s Subsidized 

Stafford Loan application, originate that 

applicant’s Direct Subsidized Loan, or 

disburse that applicant’s Subsidized 

Stafford Loan or Direct Subsidized Loan 

proceeds; or 

(3) Consider any funds it disbursed to 

that applicant under § 668.58(a)(2) as an 

overpayment. 

(Authority: 20 U.S.C. 1094) 

§ 668.61 Recovery of funds. 

(a) If an institution discovers, as a 

result of verification, that an applicant 

received more financial aid than the 

applicant was eligible to receive, 

including an interim disbursement 

under § 668.58(a)(2)(ii)(A) and 

(a)(2)(ii)(B), the institution must 

eliminate the overpayment by— 

(1) Adjusting subsequent 

disbursements in the award year in 

which the overpayment occurred; or 

(2) Reimbursing the appropriate 

program account by— 

(i) Requiring the applicant to return 

the overpayment to the institution if the 

institution cannot correct the 

overpayment under paragraph (a)(1) of 

this section; or 

(ii) Making restitution from its own 

funds, by the earlier of the following 

dates, if the applicant does not return 

the overpayment: 

(A) Sixty days after the applicant’s 

last day of attendance. 

(B) The last day of the award year in 

which the institution disbursed Federal 

Pell Grant, Federal Perkins Loan, or 

FSEOG Program funds to the applicant. 

(b)(1) If the institution determines as 

a result of verification that an applicant 

received Subsidized Stafford Loan 

proceeds for an award year in excess of 

the student’s financial need for the loan, 

the institution must withhold and 

promptly return to the lender any 

disbursement not yet delivered to the 

student that exceeds the amount of 

assistance for which the student is 

eligible, taking into account other 

financial aid received by the student. 

However, instead of returning the entire 

undelivered disbursement, the school 

may choose to return promptly to the 

lender only the portion of the 

disbursement for which the student is 

ineligible. In either case, the institution 

must provide the lender with a written 

statement describing the reason for the 

returned loan funds. 

(2) If the institution determines as a 

result of verification that a student 

received Direct Subsidized Loan 

proceeds for an award year in excess of 

the student’s need for the loan, the 

institution must reduce or cancel one or 

more subsequent disbursements to 

eliminate the amount in excess of the 

student’s need. 

(c) If an institution disbursed 

subsidized student financial assistance 

to an applicant under § 668.58(a)(3), and 

did not receive the SAR or ISIR 

reflecting corrections within the 

deadlines established under § 668.60, 

the institution must reimburse the 

program account by making restitution 

from its own funds. 

(Approved by the Office of Management and 

Budget under control number 1845–0041) 

(Authority: 20 U.S.C. 1094) 

23. Subpart F of part 668 is revised to 

read as follows: 

Subpart F—Misrepresentation 

Sec. 

668.71 Scope and special definitions. 

668.72 Nature of educational program. 

668.73 Nature of financial charges. 

668.74 Employability of graduates. 

668.75 Relationship with the Department of 

Education. 

Subpart F—Misrepresentation 

§ 668.71 Scope and special definitions. 

(a) If the Secretary determines that an 

eligible institution has engaged in 

substantial misrepresentation, the 

Secretary may— 

(1) Revoke the eligible institution’s 

program participation agreement; 

(2) Impose limitations on the 

institution’s participation in the title IV, 

HEA programs; 

(3) Deny participation applications 

made on behalf of the institution; or 

(4) Initiate a proceeding against the 

eligible institution under subpart G of 

this part. 

(b) This subpart establishes the types 

of activities that constitute substantial 

misrepresentation by an eligible 

institution. An eligible institution is 

deemed to have engaged in substantial 

misrepresentation when the institution 

itself, one of its representatives, or any 

ineligible institution, organization, or 

person with whom the eligible 

institution has an agreement, makes a 

substantial misrepresentation regarding 

the eligible institution, including about 

the nature of its educational program, its 

financial charges, or the employability 

of its graduates. Substantial 

misrepresentations are prohibited in all 

forms, including those made in any 

advertising, promotional materials, or in 

the marketing or sale of courses or 

programs of instruction offered by the 

institution. 

(c) The following definitions apply to 

this subpart: 

Misrepresentation: Any false, 

erroneous or misleading statement an 

eligible institution, one of its 

representatives, or any ineligible 

institution, organization, or person with 

whom the eligible institution has an 

agreement makes directly or indirectly 

to a student, prospective student or any 

member of the public, or to an 

accrediting agency, to a State agency, or 

to the Secretary. A misleading statement 

includes any statement that has the 

capacity, likelihood or tendency to 

deceive or confuse. A statement is any 

communication made in writing, 

visually, orally, or through other means. 

Misrepresentation includes the 

dissemination of a student endorsement 

or testimonial that a student gives either 

under duress or because the institution 

required the student to make such an 

endorsement or testimonial to 

participate in a program. 

Prospective student: Any individual 

who has contacted an eligible 

institution for the purpose of requesting 

information about enrolling at the 

institution or who has been contacted 

directly by the institution or indirectly 

through advertising about enrolling at 

the institution. 

Substantial misrepresentation: Any 

misrepresentation on which the person 

to whom it was made could reasonably 

be expected to rely, or has reasonably 

relied, to that person’s detriment. 

(Authority: 20 U.S.C. 1094) 

§ 668.72 Nature of educational program. 

Misrepresentation concerning the 

nature of an eligible institution’s 

educational program includes, but is not 

limited to, false, erroneous or 

misleading statements concerning— 

(a) The particular type(s), specific 

source(s), nature and extent of its 

institutional, programmatic, or 

specialized accreditation; 


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(b)(1) Whether a student may transfer 

course credits earned at the institution 

to any other institution; 

(2) Conditions under which the 

institution will accept transfer credits 

earned at another institution; 

(c) Whether successful completion of 

a course of instruction qualifies a 

student— 

(1) For acceptance to a labor union or 

similar organization; or 

(2) To receive, to apply to take or to 

take the examination required to 

receive, a local, State, or Federal license, 

or a non-governmental certification 

required as a precondition for 

employment, or to perform certain 

functions in the State in which the 

program or institution is located, or to 

meet additional conditions that the 

institution knows or reasonably should 

know are generally needed to secure 

employment in a recognized occupation 

for which the program is represented to 

prepare students; 

(d) The requirements for successfully 

completing the course of study or 

program and the circumstances that 

would constitute grounds for 

terminating the student’s enrollment; 

(e) Whether its courses are 

recommended or have been the subject 

of unsolicited testimonials or 

endorsements by— 

(1) Vocational counselors, high 

schools, colleges, educational 

organizations, employment agencies, 

members of a particular industry, 

students, former students, or others; or 

(2) Governmental officials for 

governmental employment; 

(f) Its size, location, facilities, or 

equipment; 

(g) The availability, frequency, and 

appropriateness of its courses and 

programs to the employment objectives 

that it states its programs are designed 

to meet; 

(h) The nature, age, and availability of 

its training devices or equipment and 

their appropriateness to the 

employment objectives that it states its 

programs and courses are designed to 

meet; 

(i) The number, availability, and 

qualifications, including the training 

and experience, of its faculty and other 

personnel; 

(j) The availability of part-time 

employment or other forms of financial 

assistance; 

(k) The nature and availability of any 

tutorial or specialized instruction, 

guidance and counseling, or other 

supplementary assistance it will provide 

its students before, during or after the 

completion of a course; 

(l) The nature or extent of any 

prerequisites established for enrollment 

in any course; 

(m) The subject matter, content of the 

course of study, or any other fact related 

to the degree, diploma, certificate of 

completion, or any similar document 

that the student is to be, or is, awarded 

upon completion of the course of study; 

(n) Whether the academic, 

professional, or occupational degree that 

the institution will confer upon 

completion of the course of study has 

been authorized by the appropriate State 

educational agency. This type of 

misrepresentation includes, in the case 

of a degree that has not been authorized 

by the appropriate State educational 

agency, any failure by an eligible 

institution to disclose this fact in any 

advertising or promotional materials 

that reference such degree; or 

(o) Any matters required to be 

disclosed to prospective students under 

§§ 668.42 and 668.43 of this part. 

(Authority: 20 U.S.C. 1094) 

§ 668.73 Nature of financial charges. 

Misrepresentation concerning the 

nature of an eligible institution’s 

financial charges includes, but is not 

limited to, false, erroneous, or 

misleading statements concerning— 

(a) Offers of scholarships to pay all or 

part of a course charge; 

(b) Whether a particular charge is the 

customary charge at the institution for a 

course; 

(c) The cost of the program and the 

institution’s refund policy if the student 

does not complete the program; 

(d) The availability or nature of any 

financial assistance offered to students, 

including a student’s responsibility to 

repay any loans, regardless of whether 

the student is successful in completing 

the program and obtaining employment; 

or 

(e) The student’s right to reject any 

particular type of financial aid or other 

assistance, or whether the student must 

apply for a particular type of financial 

aid, such as financing offered by the 

institution. 

(Authority: 20 U.S.C. 1094) 

§ 668.74 Employability of graduates. 

Misrepresentation regarding the 

employability of an eligible institution’s 

graduates includes, but is not limited to, 

false, erroneous, or misleading 

statements concerning— 

(a) The institution’s relationship with 

any organization, employment agency, 

or other agency providing authorized 

training leading directly to employment; 

(b) The institution’s plans to maintain 

a placement service for graduates or 

otherwise assist its graduates to obtain 

employment; 

(c) The institution’s knowledge about 

the current or likely future conditions, 

compensation, or employment 

opportunities in the industry or 

occupation for which the students are 

being prepared; 

(d) Whether employment is being 

offered by the institution or that a talent 

hunt or contest is being conducted, 

including, but not limited to, through 

the use of phrases such as ‘‘Men/women 

wanted to train for * * *,’’ ‘‘Help 

Wanted,’’ ‘‘Employment,’’ ‘‘Business 

Opportunities’’; 

(e) Government job market statistics 

in relation to the potential placement of 

its graduates; or 

(f) Other requirements that are 

generally needed to be employed in the 

fields for which the training is provided, 

such as requirements related to 

commercial driving licenses or permits 

to carry firearms, and failing to disclose 

factors that would prevent an applicant 

from qualifying for such requirements, 

such as prior criminal records or preexisting medical conditions. 

(Authority: 20 U.S.C. 1094) 

§ 668.75 Relationship with the Department 

of Education. 

An eligible institution, its 

representatives, or any ineligible 

institution, organization, or person with 

whom the eligible institution has an 

agreement may not describe the eligible 

institution’s participation in the title IV, 

HEA programs in a manner that suggests 

approval or endorsement by the U.S. 

Department of Education of the quality 

of its educational programs. 

(Authority: 20 U.S.C. 1094) 

24. Subpart J of part 668 is revised to 

read as follows: 

Subpart J—Approval of Independently 

Administered Tests; Specification of 

Passing Score; Approval of State 

Process 

Sec. 

668.141 Scope. 

668.142 Special definitions. 

668.143 [Reserved] 

668.144 Application for test approval. 

668.145 Test approval procedures. 

668.146 Criteria for approving tests. 

668.147 Passing scores. 

668.148 Additional criteria for the approval 

of certain tests. 

668.149 Special provisions for the approval 

of assessment procedures for individuals 

with disabilities. 

668.150 Agreement between the Secretary 

and a test publisher or a State. 

668.151 Administration of tests. 

668.152 Administration of tests by 

assessment centers. 


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668.153 Administration of tests for 

individuals whose native language is not 

English or for individuals with 

disabilities. 

668.154 Institutional accountability. 

668.155 [Reserved] 

668.156 Approved State process. 

Subpart J—Approval of Independently 

Administered Tests; Specification of 

Passing Score; Approval of State 

Process 

§ 668.141 Scope. 

(a) This subpart sets forth the 

provisions under which a student who 

has neither a high school diploma nor 

its recognized equivalent may become 

eligible to receive title IV, HEA program 

funds by— 

(1) Achieving a passing score, 

specified by the Secretary, on an 

independently administered test 

approved by the Secretary under this 

subpart; or 

(2) Being enrolled in an eligible 

institution that participates in a State 

process approved by the Secretary 

under this subpart. 

(b) Under this subpart, the Secretary 

sets forth— 

(1) The procedures and criteria the 

Secretary uses to approve tests; 

(2) The basis on which the Secretary 

specifies a passing score on each 

approved test; 

(3) The procedures and conditions 

under which the Secretary determines 

that an approved test is independently 

administered; 

(4) The information that a test 

publisher or a State must submit, as part 

of its test submission, to explain the 

methodology it will use for the test 

anomaly studies as described in 

§ 668.144(c)(17) and (d)(8), as 

appropriate; 

(5) The requirements that a test 

publisher or a State, as appropriate— 

(i) Have a process to identify and 

follow up on test score irregularities; 

(ii) Take corrective action—up to and 

including decertification of test 

administrators—if the test publisher or 

the State determines that test score 

irregularities have occurred; and 

(iii) Report to the Secretary the names 

of any test administrators it decertifies 

and any other action taken as a result of 

test score analyses; and 

(6) The procedures and conditions 

under which the Secretary determines 

that a State process demonstrates that 

students in the process have the ability 

to benefit from the education and 

training being offered to them. 

(Authority: 20 U.S.C. 1091(d)) 

§ 668.142 Special definitions. 

The following definitions apply to 

this subpart: 

Assessment center: A facility that— 

(1) Is located at an eligible institution 

that provides two-year or four-year 

degrees or is a postsecondary vocational 

institution; 

(2) Is responsible for gathering and 

evaluating information about individual 

students for multiple purposes, 

including appropriate course placement; 

(3) Is independent of the admissions 

and financial aid processes at the 

institution at which it is located; 

(4) Is staffed by professionally trained 

personnel; 

(5) Uses test administrators to 

administer tests approved by the 

Secretary under this subpart; and 

(6) Does not have as its primary 

purpose the administration of ability to 

benefit tests. 

Computer-based test: A test taken by 

a student on a computer and scored by 

a computer. 

General learned abilities: Cognitive 

operations, such as deductive reasoning, 

reading comprehension, or translation 

from graphic to numerical 

representation, that may be learned in 

both school and non-school 

environments. 

Independent test administrator: A test 

administrator who administers tests at a 

location other than an assessment center 

and who— 

(1) Has no current or prior financial 

or ownership interest in the institution, 

its affiliates, or its parent corporation, 

other than the interest obtained through 

its agreement to administer the test, and 

has no controlling interest in any other 

institution; 

(2) Is not a current or former 

employee of or consultant to the 

institution, its affiliates, or its parent 

corporation, a person in control of 

another institution, or a member of the 

family of any of these individuals; 

(3) Is not a current or former member 

of the board of directors, a current or 

former employee of or a consultant to a 

member of the board of directors, chief 

executive officer, chief financial officer 

of the institution, its affiliates, or its 

parent corporation or of any other 

institution, or a member of the family of 

any of these individuals; and 

(4) Is not a current or former student 

of the institution. 

Individual with a disability: A person 

who has a physical or mental 

impairment which substantially limits 

one or more major life activities, has a 

record of such an impairment, or is 

regarded as having such an impairment. 

Non-native speaker of English: A 

person whose first language is not 

English and who is not fluent in 

English. 

Secondary school level: As applied to 

‘‘content,’’ ‘‘curricula,’’ or ‘‘basic verbal 

and quantitative skills,’’ the basic 

knowledge or skills generally learned in 

the 9th through 12th grades in United 

States secondary schools. 

Test: A standardized test, assessment 

or instrument that has formal protocols 

on how it is to be administered in order 

to be valid. These protocols include, for 

example, the use of parallel, equated 

forms; testing conditions; time allowed 

for the test; and standardized scoring. 

Tests are not limited to traditional paper 

and pencil (or computer-administered) 

instruments for which forms are 

constructed prior to administration to 

examinees. Tests may also include 

adaptive instruments that use 

computerized algorithms for selecting 

and administering items in real time; 

however, for such instruments, the size 

of the item pool and the method of item 

selection must ensure negligible overlap 

in items across retests. 

Test administrator: An individual 

who is certified by the test publisher (or 

the State, in the case of an approved 

State test or assessment) to administer 

tests approved under this subpart in 

accordance with the instructions 

provided by the test publisher or the 

State, as applicable, which includes 

protecting the test and the test results 

from improper disclosure or release, and 

who is not compensated on the basis of 

test outcomes. 

Test item: A question on a test. 

Test publisher: An individual, 

organization, or agency that owns a 

registered copyright of a test, or has 

been authorized by the copyright holder 

to represent the copyright holder’s 

interests regarding the test. 

(Authority: 20 U.S.C. 1091(d)) 

§ 668.143 [Reserved] 

§ 668.144 Application for test approval. 

(a) The Secretary only reviews tests 

under this subpart that are submitted by 

the publisher of that test or by a State. 

(b) A test publisher or a State that 

wishes to have its test approved by the 

Secretary under this subpart must 

submit an application to the Secretary at 

such time and in such manner as the 

Secretary may prescribe. The 

application must contain all the 

information necessary for the Secretary 

to approve the test under this subpart, 

including but not limited to, the 

information contained in paragraph (c) 

or (d) of this section, as applicable. 

(c) A test publisher must include with 

its application— 


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(1) A summary of the precise editions, 

forms, levels, and (if applicable) subtests for which approval is being sought; 

(2) The name, address, telephone 

number, and e-mail address of a contact 

person to whom the Secretary may 

address inquiries; 

(3) Each edition, form, level, and subtest of the test for which the test 

publisher requests approval; 

(4) The distribution of test scores for 

each edition, form, level, or subtest for 

which approval is sought, that allows 

the Secretary to prescribe the passing 

score for each test in accordance with 

§ 668.147; 

(5) Documentation of test 

development, including a history of the 

test’s use; 

(6) Norming data and other evidence 

used in determining the distribution of 

test scores; 

(7) Material that defines the content 

domains addressed by the test; 

(8) Documentation of periodic reviews 

of the content and specifications of the 

test to ensure that the test reflects 

secondary school level verbal and 

quantitative skills; 

(9) If a test being submitted is a 

revision of the most recent edition 

approved by the Secretary, an analysis 

of the revisions, including the reasons 

for the revisions, the implications of the 

revisions for the comparability of scores 

on the current test to scores on the 

previous test, and data from validity 

studies of the test undertaken 

subsequent to the revisions; 

(10) A description of the manner in 

which test-taking time was determined 

in relation to the content 

representativeness requirements in 

§ 668.146(b)(2), and an analysis of the 

effects of time on performance; 

(11) A technical manual that 

includes— 

(i) An explanation of the methodology 

and procedures for measuring the 

reliability of the test; 

(ii) Evidence that different forms of 

the test, including, if applicable, short 

forms, are comparable in reliability; 

(iii) Other evidence demonstrating 

that the test permits consistent 

assessment of individual skill and 

ability; 

(iv) Evidence that the test was normed 

using— 

(A) Groups that were of sufficient size 

to produce defensible standard errors of 

the mean and were not 

disproportionately composed of any 

race or gender; and 

(B) A contemporary sample that is 

representative of the population of 

persons who have earned a high school 

diploma in the United States; 

(v) Documentation of the level of 

difficulty of the test; 

(vi) Unambiguous scales and scale 

values so that standard errors of 

measurement can be used to determine 

statistically significant differences in 

performance; and 

(vii) Additional guidance on the 

interpretation of scores resulting from 

any modifications of the test for 

individuals with disabilities; 

(12) The manual provided to test 

administrators containing procedures 

and instructions for test security and 

administration, and the forwarding of 

tests to the test publisher; 

(13) An analysis of the item-content of 

each edition, form, level, and (if 

applicable) subtest to demonstrate 

compliance with the required secondary 

school level criterion specified in 

§ 668.146(b); 

(14) A description of retesting 

procedures and the analysis upon which 

the criteria for retesting are based; 

(15) Other evidence establishing the 

test’s compliance with the criteria for 

approval of tests as provided in 

§ 668.146; 

(16) A description of its test 

administrator certification process that 

provides— 

(i) How the test publisher will 

determine that the test administrator has 

the necessary training, knowledge, skill, 

and integrity to test students in 

accordance with the test publisher’s 

requirements; and 

(ii) How the test publisher will 

determine that the test administrator has 

the ability and facilities to keep its test 

secure against disclosure or release; 

(17) A description of the test anomaly 

analysis the test publisher will conduct 

and submit to the Secretary that 

includes— 

(i) An explanation of how the test 

publisher will identify potential test 

irregularities and make a determination 

that test irregularities have occurred; 

(ii) An explanation of the process and 

procedures for corrective action (up to 

and including decertification of a 

certified test administrator) when the 

test publisher determines that test 

irregularities have occurred; and 

(iii) Information on when and how the 

test publisher will notify a test 

administrator, the Secretary, and the 

institutions for which the test 

administrator had previously provided 

testing services for that test publisher, 

that the test administrator has been 

decertified; and 

(18)(i) An explanation of any 

accessible technologies that are 

available to accommodate individuals 

with disabilities, and 

(ii) A description of the process for a 

test administrator to identify and report 

to the test publisher when 

accommodations for individuals with 

disabilities were provided, for scoring 

and norming purposes. 

(d) A State must include with its 

application— 

(1) The information necessary for the 

Secretary to determine that the test the 

State uses measures a student’s skills 

and abilities for the purpose of 

determining whether the student has the 

skills and abilities the State expects of 

a high school graduate in that State; 

(2) The passing scores on that test; 

(3) Any guidance on the interpretation 

of scores resulting from any 

modifications of the test for individuals 

with disabilities; 

(4) A statement regarding how the test 

will be kept secure; 

(5) A description of retesting 

procedures and the analysis upon which 

the criteria for retesting are based; 

(6) Other evidence establishing the 

test’s compliance with the criteria for 

approval of tests as provided in 

§ 668.146; 

(7) A description of its test 

administrator certification process that 

provides— 

(i) How the State will determine that 

the test administrator has the necessary 

training, knowledge, skill, and integrity 

to test students in accordance with the 

State’s requirements; and 

(ii) How the State will determine that 

the test administrator has the ability and 

facilities to keep its test secure against 

disclosure or release; 

(8) A description of the test anomaly 

analysis that the State will conduct and 

submit to the Secretary that includes— 

(i) An explanation of how the State 

will identify potential test irregularities 

and make a determination that test 

irregularities have occurred; 

(ii) An explanation of the process and 

procedures for corrective action (up to 

and including decertification of a test 

administrator) when the State 

determines that test irregularities have 

occurred; and 

(iii) Information on when and how the 

State will notify a test administrator, the 

Secretary, and the institutions for which 

the test administrator had previously 

provided testing services for that State, 

that the test administrator has been 

decertified; 

(9)(i) An explanation of any accessible 

technologies that are available to 

accommodate individuals with 

disabilities; and 

(ii) A description of the process for a 

test administrator to identify and report 

to the test publisher when 

accommodations for individuals with 

disabilities were provided, for scoring 

and norming purposes; and 

(10) The name, address, telephone 

number, and e-mail address of a contact 


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person to whom the Secretary may 

address inquiries. 

(Approved by the Office of Management and 

Budget under control number 1845–0049) 

(Authority: 20 U.S.C. 1091(d)) 

§ 668.145 Test approval procedures. 

(a)(1) When the Secretary receives a 

complete application from a test 

publisher or a State, the Secretary 

selects one or more experts in the field 

of educational testing and assessment, 

who possess appropriate advanced 

degrees and experience in test 

development or psychometric research, 

to determine whether the test meets the 

requirements for test approval contained 

in §§ 668.146, 668.147, 668.148, or 

668.149, as appropriate, and to advise 

the Secretary of their determinations. 

(2) If the test involves a language 

other than English, the Secretary selects 

at least one individual who is fluent in 

the language in which the test is written 

to collaborate with the testing expert or 

experts described in paragraph (a)(1) of 

this section and to advise the Secretary 

on whether the test meets the additional 

criteria, provisions, and conditions for 

test approval contained in §§ 668.148 

and 668.149. 

(3) For test batteries that contain 

multiple subtests measuring content 

domains other than verbal and 

quantitative domains, the Secretary 

reviews only those subtests covering the 

verbal and quantitative domains. 

(b)(1) If the Secretary determines that 

a test satisfies the criteria and 

requirements for test approval, the 

Secretary notifies the test publisher or 

the State, as applicable, of the 

Secretary’s decision, and publishes the 

name of the test and the passing scores 

in the Federal Register. 

(2) If the Secretary determines that a 

test does not satisfy the criteria and 

requirements for test approval, the 

Secretary notifies the test publisher or 

the State, as applicable, of the 

Secretary’s decision, and the reasons 

why the test did not meet those criteria 

and requirements. 

(3) If the Secretary determines that a 

test does not satisfy the criteria and 

requirements for test approval, the test 

publisher or the State that submitted the 

test for approval may request that the 

Secretary reevaluate the Secretary’s 

decision. Such a request must be 

accompanied by— 

(i) Documentation and information 

that address the reasons for the nonapproval of the test; and 

(ii) An analysis of why the 

information and documentation 

submitted meet the criteria and 

requirements for test approval 

notwithstanding the Secretary’s earlier 

decision to the contrary. 

(c)(1) The Secretary approves a test for 

a period not to exceed five years from 

the date the notice of approval of the 

test is published in the Federal Register. 

(2) The Secretary extends the 

approval period of a test to include the 

period of review if the test publisher or 

the State, as applicable, re-submits the 

test for review and approval under 

§ 668.144 at least six months before the 

date on which the test approval is 

scheduled to expire. 

(d)(1) The Secretary’s approval of a 

test may be revoked if the Secretary 

determines that the test publisher or the 

State violated any terms of the 

agreement described in § 668.150, that 

the information the test publisher or the 

State submitted as a basis for approval 

of the test was inaccurate, or that the 

test publisher or the State substantially 

changed the test and did not resubmit 

the test, as revised, for approval. 

(2) If the Secretary revokes approval 

of a previously approved test, the 

Secretary publishes a notice of that 

revocation in the Federal Register. The 

revocation becomes effective— 

(i) One hundred and twenty days from 

the date the notice of revocation is 

published in the Federal Register; or 

(ii) An earlier date specified by the 

Secretary in a notice published in the 

Federal Register. 

(Approved by the Office of Management and 

Budget under control number 1845–0049) 

(Authority: 20 U.S.C. 1091(d)) 

§ 668.146 Criteria for approving tests. 

(a) Except as provided in § 668.148, 

the Secretary approves a test under this 

subpart if— 

(1) The test meets the criteria set forth 

in paragraph (b) of this section; 

(2) The test publisher or the State 

satisfies the requirements set forth in 

paragraph (c) of this section; and 

(3) The Secretary makes a 

determination that the information the 

test publisher or State submitted in 

accordance with § 668.144(c)(17) or 

(d)(8), as applicable, provides adequate 

assurance that the test publisher or State 

will conduct rigorous test anomaly 

analyses and take appropriate action if 

test administrators do not comply with 

testing procedures. 

(b) To be approved under this subpart, 

a test must— 

(1) Assess secondary school level 

basic verbal and quantitative skills and 

general learned abilities; 

(2) Sample the major content domains 

of secondary school level verbal and 

quantitative skills with sufficient 

numbers of questions to— 

(i) Adequately represent each domain; 

and 

(ii) Permit meaningful analyses of 

item-level performance by students who 

are representative of the contemporary 

population beyond the age of 

compulsory school attendance and have 

earned a high school diploma; 

(3) Require appropriate test-taking 

time to permit adequate sampling of the 

major content domains described in 

paragraph (b)(2) of this section; 

(4) Have all forms (including short 

forms) comparable in reliability; 

(5) Have, in the case of a test that is 

revised, new scales, scale values, and 

scores that are demonstrably 

comparable to the old scales, scale 

values, and scores; 

(6) Meet all primary and applicable 

conditional and secondary standards for 

test construction provided in the 1999 

edition of the Standards for Educational 

and Psychological Testing, prepared by 

a joint committee of the American 

Educational Research Association, the 

American Psychological Association, 

and the National Council on 

Measurement in Education incorporated 

by reference in this section. 

Incorporation by reference of this 

document has been approved by the 

Director of the Office of the Federal 

Register pursuant to the Director’s 

authority under 5 U.S.C. 552(a) and 1 

CFR part 51. The incorporated 

document is on file at the Department 

of Education, Federal Student Aid, room 

113E2, 830 First Street, NE., 

Washington, DC 20002 and at the 

National Archives and Records 

Administration (NARA). For 

information on the availability of this 

material at NARA, call 1–866–272– 

6272, or go to: http://www.archives.gov/ 

Federal_register/ 

code_of_Federal_regulations/ 

ibr_locations.html. The document also 

may be obtained from the American 

Educational Research Association at: 

http://www.aera.net; and 

(7) Have the test publisher’s or the 

State’s guidelines for retesting, 

including time between test-taking, be 

based on empirical analyses that are 

part of the studies of test reliability. 

(c) In order for a test to be approved 

under this subpart, a test publisher or a 

State must— 

(1) Include in the test booklet or 

package— 

(i) Clear, specific, and complete 

instructions for test administration, 

including information for test takers on 

the purpose, timing, and scoring of the 

test; and 

(ii) Sample questions representative of 

the content and average difficulty of the 

test; 


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(2) Have two or more secure, equated, 

alternate forms of the test; 

(3) Except as provided in §§ 668.148 

and 668.149, provide tables of 

distributions of test scores which clearly 

indicate the mean score and standard 

deviation for high school graduates who 

have taken the test within three years 

prior to the date that the test is 

submitted to the Secretary for approval 

under § 668.144; 

(4) Norm the test with— 

(i) Groups that are of sufficient size to 

produce defensible standard errors of 

the mean and are not disproportionately 

composed of any race or gender; and 

(ii) A contemporary sample that is 

representative of the population of 

persons who have earned a high school 

diploma in the United States; and 

(5) If test batteries include sub-tests 

assessing different verbal and/or 

quantitative skills, a distribution of test 

scores as described in paragraph (c)(3) 

of this section that allows the Secretary 

to prescribe either— 

(i) A passing score for each sub-test; 

or 

(ii) One composite passing score for 

verbal skills and one composite passing 

score for quantitative skills. 

(Approved by the Office of Management and 

Budget under control number 1845–0049) 

(Authority: 20 U.S.C. 1091(d)) 

§ 668.147 Passing scores. 

Except as provided in §§ 668.144(d), 

668.148, and 668.149, to demonstrate 

that a test taker has the ability to benefit 

from the education and training offered 

by the institution, the Secretary 

specifies that the passing score on each 

approved test is one standard deviation 

below the mean score of a sample of 

individuals who have taken the test 

within the three years before the test is 

submitted to the Secretary for approval. 

The sample must be representative of 

the population of high school graduates 

in the United States. 

(Authority: 20 U.S.C. 1091(d)) 

§ 668.148 Additional criteria for the 

approval of certain tests. 

(a) In addition to satisfying the criteria 

in § 668.146, to be approved by the 

Secretary, a test must meet the following 

criteria, if applicable: 

(1) In the case of a test developed for 

a non-native speaker of English who is 

enrolled in a program that is taught in 

his or her native language, the test must 

be— 

(i) Linguistically accurate and 

culturally sensitive to the population for 

which the test is designed, regardless of 

the language in which the test is 

written; 

(ii) Supported by documentation 

detailing the development of normative 

data; 

(iii) If translated from an English 

version, supported by documentation of 

procedures to determine its reliability 

and validity with reference to the 

population for which the translated test 

was designed; 

(iv) Developed in accordance with 

guidelines provided in the 1999 edition 

of the ‘‘Testing Individuals of Diverse 

Linguistic Backgrounds’’ section of the 

Standards for Educational and 

Psychological Testing prepared by a 

joint committee of the American 

Educational Research Association, the 

American Psychological Association, 

and the National Council on 

Measurement in Education incorporated 

by reference in this section. 

Incorporation by reference of this 

document has been approved by the 

Director of the Office of the Federal 

Register pursuant to the Director’s 

authority under 5 U.S.C. 552(a) and 1 

CFR part 51. The incorporated 

document is on file at the Department 

of Education, Federal Student Aid, room 

113E2, 830 First Street, NE., 

Washington, DC 20002 and at the 

National Archives and Records 

Administration (NARA). For 

information on the availability of this 

material at NARA, call 1–866–272– 

6272, or go to: http://www.archives.gov/ 

Federal_register/ 

code_of_Federal_regulations/ 

ibr_locations.html. The document also 

may be obtained from the American 

Educational Research Association at: 

http://www.aera.net; and 

(v)(A) If the test is in Spanish, 

accompanied by a distribution of test 

scores that clearly indicates the mean 

score and standard deviation for 

Spanish-speaking students with high 

school diplomas who have taken the test 

within five years before the date on 

which the test is submitted to the 

Secretary for approval. 

(B) If the test is in a language other 

than Spanish, accompanied by a 

recommendation for a provisional 

passing score based upon performance 

of a sample of test takers representative 

of non-English speaking individuals 

who speak a language other than 

Spanish and who have a high school 

diploma. The sample upon which the 

recommended provisional passing score 

is based must be large enough to 

produce stable norms. 

(2) In the case of a test that is 

modified for use for individuals with 

disabilities, the test publisher or State 

must— 

(i) Follow guidelines provided in the 

‘‘Testing Individuals With Disabilities’’ 

section of the Standards for Educational 

and Psychological Testing; and 

(ii) Provide documentation of the 

appropriateness and feasibility of the 

modifications relevant to test 

performance. 

(3) In the case of a computer-based 

test, the test publisher or State, as 

applicable, must— 

(i) Provide documentation to the 

Secretary that the test complies with the 

basic principles of test construction and 

standards of reliability and validity as 

promulgated in the Standards for 

Educational and Psychological Testing; 

(ii) Provide test administrators with 

instructions for familiarizing test takers 

with computer hardware prior to testtaking; and 

(iii) Provide two or more parallel, 

equated forms of the test, or, if parallel 

forms are generated from an item pool, 

provide documentation of the methods 

of item selection for alternate forms. 

(b) If a test is designed solely to 

measure the English language 

competence of non-native speakers of 

English— 

(1) The test must meet the criteria set 

forth in § 668.146(b)(6), (c)(1), (c)(2), and 

(c)(4); and 

(2) The test publisher must 

recommend a passing score based on the 

mean score of test takers beyond the age 

of compulsory school attendance who 

completed U.S. high school equivalency 

programs, formal training programs, or 

bilingual vocational programs. 

(Approved by the Office of Management and 

Budget under control number 1845–0049) 

(Authority: 20 U.S.C. 1091(d)) 

§ 668.149 Special provisions for the 

approval of assessment procedures for 

individuals with disabilities. 

If no test is reasonably available for 

individuals with disabilities so that no 

test can be approved under §§ 668.146 

or 668.148 for these individuals, the 

following procedures apply: 

(a) The Secretary considers a modified 

test or testing procedure, or instrument 

that has been scientifically developed 

specifically for the purpose of 

evaluating the ability to benefit from 

postsecondary training or education of 

individuals with disabilities to be an 

approved test for purposes of this 

subpart provided that the testing 

procedure or instrument measures both 

basic verbal and quantitative skills at 

the secondary school level. 

(b) The Secretary considers the 

passing scores for these testing 

procedures or instruments to be those 

recommended by the test publisher or 

State, as applicable. 

(c) The test publisher or State, as 

applicable, must— 


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(1) Maintain appropriate 

documentation, including a description 

of the procedures or instruments, their 

content domains, technical properties, 

and scoring procedures; and 

(2) Require the test administrator to— 

(i) Use the procedures or instruments 

in accordance with instructions 

provided by the test publisher or State, 

as applicable; and 

(ii) Use the passing scores 

recommended by the test publisher or 

State, as applicable. 

(Approved by the Office of Management and 

Budget under control number 1845–0049) 

(Authority: 20 U.S.C. 1091(d)) 

§ 668.150 Agreement between the 

Secretary and a test publisher or a State. 

(a) If the Secretary approves a test 

under this subpart, the test publisher or 

the State that submitted the test must 

enter into an agreement with the 

Secretary that contains the provisions 

set forth in paragraph (b) of this section 

before an institution may use the test to 

determine a student’s eligibility for title 

IV, HEA program funds. 

(b) The agreement between a test 

publisher or a State, as applicable, and 

the Secretary provides that the test 

publisher or the State, as applicable, 

must— 

(1) Allow only test administrators that 

it certifies to give its test; 

(2) Require each test administrator it 

certifies to— 

(i) Provide the test publisher or the 

State, as applicable, with a certification 

statement that indicates he or she is not 

currently decertified; and 

(ii) Notify the test publisher or the 

State, as applicable, immediately if any 

other test publisher or State decertifies 

the test administrator; 

(3) Only certify test administrators 

who— 

(i) Have the necessary training, 

knowledge, and skill to test students in 

accordance with the test publisher’s or 

the State’s testing requirements; 

(ii) Have the ability and facilities to 

keep its test secure against disclosure or 

release; and 

(iii) Have not been decertified within 

the last three years by any test publisher 

or State; 

(4) Decertify a test administrator for a 

period of three years if the test publisher 

or the State finds that the test 

administrator— 

(i) Has failed to give its test in 

accordance with the test publisher’s or 

the State’s instructions; 

(ii) Has not kept the test secure; 

(iii) Has compromised the integrity of 

the testing process; or 

(iv) Has given the test in violation of 

the provisions contained in § 668.151; 

(5) Reevaluate the qualifications of a 

test administrator who has been 

decertified by another test publisher or 

State and determine whether to 

continue the test administrator’s 

certification or to decertify the test 

administrator; 

(6) Immediately notify the test 

administrator, the Secretary, and the 

institutions where the test administrator 

previously administered approved tests 

when the test publisher or the State 

decertifies a test administrator; 

(7)(i) Review the test results of the 

tests administered by a decertified test 

administrator and determine which tests 

may have been improperly 

administered; 

(ii) Immediately notify the affected 

institutions and students or prospective 

students; and 

(iii) Provide a report to the Secretary 

on the results of the review and the 

notifications provided to institutions 

and students or prospective students; 

(8) Report to the Secretary if the test 

publisher or the State certifies a 

previously decertified test administrator 

after the three-year period specified in 

paragraph (b)(4) of this section; 

(9) Score a test answer sheet that it 

receives from a test administrator; 

(10) If a computer-based test is used, 

provide the test administrator with 

software that will— 

(i) Immediately generate a score report 

for each test taker; 

(ii) Allow the test administrator to 

send to the test publisher or the State, 

as applicable, a record of the test taker’s 

performance on each test item and the 

test taker’s test scores using a data 

transfer method that is encrypted and 

secure; and 

(iii) Prohibit any changes in test taker 

responses or test scores; 

(11) Promptly send to the student and 

the institution the student indicated he 

or she is attending or scheduled to 

attend a notice stating the student’s 

score for the test and whether or not the 

student passed the test; 

(12) Keep each test answer sheet or 

electronic record forwarded for scoring 

and all other documents forwarded by 

the test administrator with regard to the 

test for a period of three years from the 

date the analysis of the tests results, 

described in paragraph (b)(13) of this 

section, was sent to the Secretary; 

(13) Analyze the test scores of 

students who take the test to determine 

whether the test scores and data 

produce any irregular pattern that raises 

an inference that the tests were not 

being properly administered, and 

provide the Secretary with a copy of this 

analysis within 18 months after the test 

was approved and every 18 months 

thereafter during the period of test 

approval; 

(14) Upon request, give the Secretary, 

a State agency, an accrediting agency, 

and law enforcement agencies access to 

test records or other documents related 

to an audit, investigation, or program 

review of an institution, the test 

publisher, or a test administrator; 

(15) Immediately report to the 

Secretary if the test publisher or the 

State finds any credible information 

indicating that a test has been 

compromised; 

(16) Immediately report to the Office 

of Inspector General of the Department 

of Education for investigation if the test 

publisher or the State finds any credible 

information indicating that a test 

administrator or institution may have 

engaged in fraud or other criminal 

misconduct; and 

(17) Require a test administrator who 

provides a test to an individual with a 

disability who requires an 

accommodation in the test’s 

administration to report to the test 

publisher or the State within the time 

period specified in § 668.151(b)(2) or 

§ 668.152(b)(2), as applicable, the nature 

of the disability and the 

accommodations that were provided. 

(c)(1) The Secretary may terminate an 

agreement with a test publisher or a 

State, as applicable, if the test publisher 

or the State fails to carry out the terms 

of the agreement described in paragraph 

(b) of this section. 

(2) Before terminating the agreement, 

the Secretary gives the test publisher or 

the State, as applicable, the opportunity 

to show that it has not failed to carry out 

the terms of its agreement. 

(3) If the Secretary terminates an 

agreement with a test publisher or a 

State under this section, the Secretary 

publishes a notice in the Federal 

Register specifying when institutions 

may no longer use the test publisher’s 

or the State’s test(s) for purposes of 

determining a student’s eligibility for 

title IV, HEA program funds. 

(Approved by the Office of Management and 

Budget under control number 1845–0049) 

(Authority: 20 U.S.C. 1091(d)) 

§ 668.151 Administration of tests. 

(a)(1) To establish a student’s 

eligibility for title IV, HEA program 

funds under this subpart, an institution 

must select a test administrator to give 

an approved test. 

(2) An institution may use the results 

of an approved test it received from an 

approved test publisher or assessment 

center to determine a student’s 

eligibility to receive title IV, HEA 

program funds if the test was 


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independently administered and 

properly administered in accordance 

with this subpart. 

(b) The Secretary considers that a test 

is independently administered if the test 

is— 

(1) Given at an assessment center by 

a test administrator who is an employee 

of the center; or 

(2) Given by an independent test 

administrator who maintains the test at 

a secure location and submits the test 

for scoring by the test publisher or the 

State or, for a computer-based test, a 

record of the test scores, within two 

business days of administering the test. 

(c) The Secretary considers that a test 

is not independently administered if an 

institution— 

(1) Compromises test security or 

testing procedures; 

(2) Pays a test administrator a bonus, 

commission, or any other incentive 

based upon the test scores or pass rates 

of its students who take the test; or 

(3) Otherwise interferes with the test 

administrator’s independence or test 

administration. 

(d) The Secretary considers that a test 

is properly administered if the test 

administrator— 

(1) Is certified by the test publisher or 

the State, as applicable, to give the test 

publisher’s or the State’s test; 

(2) Administers the test in accordance 

with instructions provided by the test 

publisher or the State, as applicable, 

and in a manner that ensures the 

integrity and security of the test; 

(3) Makes the test available only to a 

test-taker, and then only during a 

regularly scheduled test; 

(4) Secures the test against disclosure 

or release; and 

(5) Submits the completed test or, for 

a computer-based test, a record of test 

scores, to the test publisher or the State, 

as applicable, within the time period 

specified in § 668.152(b) or paragraph 

(b)(2) of this section, as appropriate, and 

in accordance with the test publisher’s 

or the State’s instructions. 

(e) An independent test administrator 

may not score a test. 

(f) An individual who fails to pass a 

test approved under this subpart may 

not retake the same form of the test for 

the period prescribed by the test 

publisher or the State responsible for 

the test. 

(g) An institution must maintain a 

record for each individual who took a 

test under this subpart. The record must 

include— 

(1) The test taken by the individual; 

(2) The date of the test; 

(3) The individual’s scores as reported 

by the test publisher, an assessment 

center, or the State; 

(4) The name and address of the test 

administrator who administered the test 

and any identifier assigned to the test 

administrator by the test publisher or 

the State; and 

(5) If the individual who took the test 

is an individual with a disability and 

was unable to be evaluated by the use 

of an approved ATB test or the 

individual requested or required testing 

accommodations, documentation of the 

individual’s disability and of the testing 

arrangements provided in accordance 

with § 668.153(b). 

(Approved by the Office of Management and 

Budget under control number 1845–0049) 

(Authority: 20 U.S.C. 1091(d)) 

§ 668.152 Administration of tests by 

assessment centers. 

(a) If a test is given by an assessment 

center, the assessment center must 

properly administer the test as 

described in § 668.151(d), and 

§ 668.153, if applicable. 

(b)(1) Unless an agreement between a 

test publisher or a State, as applicable, 

and an assessment center indicates 

otherwise, an assessment center scores 

the tests it gives and promptly notifies 

the institution and the student of the 

student’s score on the test and whether 

the student passed the test. 

(2) If the assessment center scores the 

test, it must provide weekly to the test 

publisher or the State, as applicable— 

(i) All copies of the completed test, 

including the name and address of the 

test administrator who administered the 

test and any identifier assigned to the 

test administrator by the test publisher 

or the State, as applicable; or 

(ii) A report listing all test-takers’ 

scores and institutions to which the 

scores were sent and the name and 

address of the test administrator who 

administered the test and any identifier 

assigned to the test administrator by the 

test publisher or the State, as applicable. 

(Approved by the Office of Management and 

Budget under control number 1845–0049) 

(Authority: 20 U.S.C. 1091(d)) 

§ 668.153 Administration of tests for 

individuals whose native language is not 

English or for individuals with disabilities. 

(a) Individuals whose native language 

is not English. For an individual whose 

native language is not English and who 

is not fluent in English, the institution 

must use the following tests, as 

applicable: 

(1) If the individual is enrolled or 

plans to enroll in a program conducted 

entirely in his or her native language, 

the individual must take a test approved 

under §§ 668.146 and 668.148(a)(1). 

(2) If the individual is enrolled or 

plans to enroll in a program that is 

taught in English with an ESL 

component, the individual must take an 

English language proficiency assessment 

approved under § 668.148(b) and, before 

beginning the portion of the program 

taught in English, a test approved under 

§ 668.146. 

(3) If the individual is enrolled or 

plans to enroll in a program that is 

taught in English without an ESL 

component, or the individual does not 

enroll in any ESL component offered, 

the individual must take a test in 

English approved under § 668.146. 

(4) If the individual enrolls in an ESL 

program, the individual must take an 

ESL test approved under § 668.148(b). 

(b) Individuals with disabilities. (1) 

For an individual with a disability who 

has neither a high school diploma nor 

its equivalent and who is applying for 

title IV, HEA program funds and seeks 

to show his or her ability to benefit 

through the testing procedures in this 

subpart, an institution must use a test 

described in § 668.148(a)(3) or 

§ 668.149(a). 

(2) The test must reflect the 

individual’s skills and general learned 

abilities. 

(3) The test administrator must ensure 

that there is documentation to support 

the determination that the individual is 

an individual with a disability and 

requires accommodations—such as 

extra time or a quiet room—for taking an 

approved test, or is unable to be 

evaluated by the use of an approved 

ATB test. 

(4) Documentation of an individual’s 

disability may be satisfied by— 

(i) A written determination, including 

a diagnosis and recommended testing 

accommodations, by a licensed 

psychologist or medical physician; or 

(ii) A record of the disability from a 

local or State educational agency, or 

other government agency, such as the 

Social Security Administration or a 

vocational rehabilitation agency, that 

identifies the individual’s disability. 

This record may, but is not required to, 

include a diagnosis and recommended 

testing accommodations. 

(Approved by the Office of Management and 

Budget under control number 1845–0049) 

(Authority: 20 U.S.C. 1091(d)) 

§ 668.154 Institutional accountability. 

An institution is liable for the title IV, 

HEA program funds disbursed to a 

student whose eligibility is determined 

under this subpart only if— 

(a) The institution used a test that was 

not administered independently, in 

accordance with § 668.151(b); 

(b) The institution or an employee of 

the institution compromised the testing 

process in any way; or 


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(c) The institution is unable to 

document that the student received a 

passing score on an approved test. 

(Authority: 20 U.S.C. 1091(d)) 

§ 668.155 [Reserved] 

§ 668.156 Approved State process. 

(a)(1) A State that wishes the 

Secretary to consider its State process as 

an alternative to achieving a passing 

score on an approved, independently 

administered test for the purpose of 

determining a student’s eligibility for 

title IV, HEA program funds must apply 

to the Secretary for approval of that 

process. 

(2) To be an approved State process, 

the State process does not have to 

include all the institutions located in 

that State, but must indicate which 

institutions are included. 

(b) The Secretary approves a State’s 

process if— 

(1) The State administering the 

process can demonstrate that the 

students it admits under that process 

without a high school diploma or its 

equivalent, who enroll in participating 

institutions have a success rate as 

determined under paragraph (h) of this 

section that is within 95 percent of the 

success rate of students with high 

school diplomas; and 

(2) The State’s process satisfies the 

requirements contained in paragraphs 

(c) and (d) of this section. 

(c) A State process must require 

institutions participating in the process 

to provide each student they admit 

without a high school diploma or its 

recognized equivalent with the 

following services: 

(1) Orientation regarding the 

institution’s academic standards and 

requirements, and student rights. 

(2) Assessment of each student’s 

existing capabilities through means 

other than a single standardized test. 

(3) Tutoring in basic verbal and 

quantitative skills, if appropriate. 

(4) Assistance in developing 

educational goals. 

(5) Counseling, including counseling 

regarding the appropriate class level for 

that student given the student’s 

individual’s capabilities. 

(6) Follow-up by teachers and 

counselors regarding the student’s 

classroom performance and satisfactory 

progress toward program completion. 

(d) A State process must— 

(1) Monitor on an annual basis each 

participating institution’s compliance 

with the requirements and standards 

contained in the State’s process; 

(2) Require corrective action if an 

institution is found to be in 

noncompliance with the State process 

requirements; and 

(3) Terminate an institution from the 

State process if the institution refuses or 

fails to comply with the State process 

requirements. 

(e)(1) The Secretary responds to a 

State’s request for approval of its State’s 

process within six months after the 

Secretary’s receipt of that request. If the 

Secretary does not respond by the end 

of six months, the State’s process is 

deemed to be approved. 

(2) An approved State process 

becomes effective for purposes of 

determining student eligibility for title 

IV, HEA program funds under this 

subpart— 

(i) On the date the Secretary approves 

the process; or 

(ii) Six months after the date on 

which the State submits the process to 

the Secretary for approval, if the 

Secretary neither approves nor 

disapproves the process during that six 

month period. 

(f) The Secretary approves a State 

process for a period not to exceed five 

years. 

(g)(1) The Secretary withdraws 

approval of a State process if the 

Secretary determines that the State 

process violated any terms of this 

section or that the information that the 

State submitted as a basis for approval 

of the State process was inaccurate. 

(2) The Secretary provides a State 

with the opportunity to contest a 

finding that the State process violated 

any terms of this section or that the 

information that the State submitted as 

a basis for approval of the State process 

was inaccurate. 

(h) The State must calculate the 

success rates as referenced in paragraph 

(b) of this section by— 

(1) Determining the number of 

students with high school diplomas 

who, during the applicable award year 

described in paragraph (i) of this 

section, enrolled in participating 

institutions and— 

(i) Successfully completed education 

or training programs; 

(ii) Remained enrolled in education or 

training programs at the end of that 

award year; or 

(iii) Successfully transferred to and 

remained enrolled in another institution 

at the end of that award year; 

(2) Determining the number of 

students with high school diplomas 

who enrolled in education or training 

programs in participating institutions 

during that award year; 

(3) Determining the number of 

students calculated in paragraph (h)(2) 

of this section who remained enrolled 

after subtracting the number of students 

who subsequently withdrew or were 

expelled from participating institutions 

and received a 100 percent refund of 

their tuition under the institutions’ 

refund policies; 

(4) Dividing the number of students 

determined in paragraph (h)(1) of this 

section by the number of students 

determined in paragraph (h)(3) of this 

section; 

(5) Making the calculations described 

in paragraphs (h)(1) through (h)(4) of 

this section for students without a high 

school diploma or its recognized 

equivalent who enrolled in participating 

institutions. 

(i) For purposes of paragraph (h) of 

this section, the applicable award year 

is the latest complete award year for 

which information is available that 

immediately precedes the date on which 

the State requests the Secretary to 

approve its State process, except that 

the award year selected must be one of 

the latest two completed award years 

preceding that application date. 

(Approved by the Office of Management and 

Budget under control number 1845–0049) 

(Authority: 20 U.S.C. 1091(d)) 

25. Section 668.164 is amended by 

adding paragraph (i) to read as follows: 

§ 668.164 Disbursing funds. 

* * * * * 

(i) Provisions for books and supplies. 

(1) An institution must provide a way 

for a Federal Pell Grant eligible student 

to obtain or purchase, by the seventh 

day of a payment period, the books and 

supplies required for the payment 

period if, 10 days before the beginning 

of the payment period— 

(i) The institution could disburse the 

title IV, HEA program funds for which 

the student is eligible; and 

(ii) Presuming the funds were 

disbursed, the student would have a 

credit balance under paragraph (e) of 

this section. 

(2) The amount the institution 

provides to the student to obtain or 

purchase books and supplies is the 

lesser of the presumed credit balance 

under this paragraph or the amount 

needed by the student, as determined by 

the institution. 

* * * * * 

PART 682—FEDERAL FAMILY 

EDUCATION LOAN (FFEL) PROGRAM 

26. The authority citation for part 682 

is revised to read as follows: 

Authority: 20 U.S.C. 1071 to 1087–2, 

unless otherwise noted. 

§ 682.200 [Amended] 

27. Section 682.200(a)(2) is amended 

by adding, in alphabetical order, the 

term ‘‘Credit hour’’. 


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PART 685—WILLIAM D. FORD 

FEDERAL DIRECT LOAN PROGRAM 

28. The authority citation for part 685 

continues to read as follows: 

Authority: 20 U.S.C. 1070g, 1087a, et seq., 

unless otherwise noted. 

29. Section 685.102 is amended by: 

A. In paragraph (a)(2), adding, in 

alphabetical order, the term ‘‘Credit 

hour’’. 

B. In paragraph (b), adding, in 

alphabetical order, the definition of 

Payment data to read as follows: 

§ 685.102 Definitions. 

* * * * * 

(b) * * * 

Payment data: An electronic record 

that is provided to the Secretary by an 

institution showing student 

disbursement information. 

* * * * * 

30. Section 685.301 is amended by 

revising paragraph (e)(1) to read as 

follows: 

§ 685.301 Origination of a loan by a Direct 

Loan Program school. 

* * * * * 

(e) * * * 

(1) The Secretary accepts a student’s 

Payment Data that is submitted in 

accordance with procedures established 

through publication in the Federal 

Register, and that contains information 

the Secretary considers to be accurate in 

light of other available information 

including that previously provided by 

the student and the institution. 

* * * * * 

PART 686—TEACHER EDUCATION 

ASSISTANCE FOR COLLEGE AND 

HIGHER EDUCATION (TEACH) GRANT 

PROGRAM 

31. The authority citation for part 686 

continues to read as follows: 

Authority: 20 U.S.C. 1070g, et seq., unless 

otherwise noted. 

32. Section 686.2 is amended by: 

A. In paragraph (a), adding, in 

alphabetical order, the term ‘‘Credit 

hour’’. 

B. In paragraph (d), revising the 

definition of Payment Data to read as 

follows: 

§ 686.2 Definitions. 

* * * * * 

(d) * * * 

Payment Data: An electronic record 

that is provided to the Secretary by an 

institution showing student 

disbursement information. 

* * * * * 

33. Section 686.37 is amended by 

revising paragraph (b) to read as follows: 

§ 686.37 Institutional reporting 

requirements. 

* * * * * 

(b) The Secretary accepts a student’s 

Payment Data that is submitted in 

accordance with procedures established 

through publication in the Federal 

Register, and that contains information 

the Secretary considers to be accurate in 

light of other available information 

including that previously provided by 

the student and the institution. 

* * * * * 

PART 690—FEDERAL PELL GRANT 

PROGRAM 

34. The authority citation for part 690 

continues to read as follows: 

Authority: 20 U.S.C. 1070a, 1070g, unless 

otherwise noted. 

§ 690.2 [Amended] 

35. Section 690.2(a) is amended by 

adding, in alphabetical order, the term 

‘‘Credit hour’’. 

PART 691—ACADEMIC 

COMPETITIVENESS GRANT (ACG) 

AND NATIONAL SCIENCE AND 

MATHEMATICS ACCESS TO RETAIN 

TALENT GRANT (NATIONAL SMART 

GRANT) PROGRAMS 

36. The authority citation for part 691 

continues to read as follows: 

Authority: 20 U.S.C. 1070a–1, unless 

otherwise noted. 

§ 691.2 [Amended] 

37. Section 691.2(a) is amended by 

adding, in alphabetical order, the term 

‘‘Credit hour’’. 

[FR Doc. 2010–14107 Filed 6–17–10; 8:45 am] 

BILLING CODE 4000–01–P 


srobinson on DSKHWCL6B1PROD with PROPOSALS2