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[Federal Register Volume 76, Number 187 (Tuesday, September 27, 2011)]
[Proposed Rules]
[Pages 59864-59877]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-24454]

[[Page 59863]]

Vol. 76

Tuesday,

No. 187

September 27, 2011

Part V

Department of Education

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34 CFR Part 600

Application and Approval Process for New Programs; Proposed Rule

Federal Register / Vol. 76 , No. 187 / Tuesday, September 27, 2011 / 
Proposed Rules

[[Page 59864]]

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DEPARTMENT OF EDUCATION

34 CFR Part 600

RIN 1840-AD10
[Docket ID ED-2011-OPE-0011]

Application and Approval Process for New Programs

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Secretary proposes to amend the regulations for 
Institutional Eligibility under the Higher Education Act of 1965, as 
amended (HEA), to streamline the application and approval process for 
new educational programs that qualify for student financial assistance 
under title IV of the HEA.

DATES: We must receive your comments on or before November 14, 2011.

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. To ensure that we do not receive 
duplicate copies, please submit your comments only one time. 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: John Kolotos, U.S. Department of 
Education, 1990 K Street, NW., room 8018, Washington, DC 20006-8502. 
Telephone: (202) 502-7762 or by e-mail: John.Kolotos@ed.gov.
    If you use a telecommunications device for the deaf (TDD) or a text 
telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-
800-877-8339.

SUPPLEMENTARY INFORMATION:

Invitation To Comment

    We invite you to submit comments regarding these proposed 
regulations. To ensure that your comments have maximum effect in 
developing the final regulations, we urge you to identify clearly the 
specific section or sections of the proposed regulations that each of 
your comments addresses and to arrange your comments in the same order 
as the proposed regulations. Please do not submit comments outside the 
scope of the specific proposals in this notice of proposed rulemaking 
(NPRM). We will not respond to comments that do not specifically relate 
to the proposed regulations.
    We invite you to assist us in complying with the specific 
requirements of Executive Order 12866 and Executive Order 13563 and 
their overall direction to Federal agencies to reduce regulatory burden 
where possible. Please let us know of any further ways we could reduce 
potential costs or increase potential benefits while preserving the 
effective and efficient administration of the Department's student aid 
regulations.
    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., Washington, DC time, Monday through Friday of each week except 
Federal holidays.
    Assistance to Individuals with Disabilities in Reviewing the 
Rulemaking Record: On request, we will provide an appropriate 
accommodation or auxiliary aid to an individual with a disability who 
needs assistance to review the comments or other documents in the 
public rulemaking record for these proposed regulations. If you want to 
schedule an appointment for this type of accommodation or auxiliary 
aid, please contact the person listed under FOR FURTHER INFORMATION 
CONTACT.

Negotiated Rulemaking and Background of These Proposed Regulations

    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://www2.ed.gov/policy/highered/leg/hea08/index.html#neg-reg.
    Between November, 2009 and January, 2010, the Department held three 
negotiated rulemaking sessions aimed at improving integrity in the 
title IV, HEA programs. As a result of these discussions, during which 
consensus was not reached, the Department published two notices of 
proposed rulemaking, one on June 18, 2010 (June 18th NPRM) and one on 
July 26, 2010 (July 26th NPRM). The July 26th NPRM focused specifically 
on the issue of ``gainful employment'' and the June 18th NPRM covered 
the remaining Program Integrity issues. After considering public 
comments on the June 18th NPRM, the Department published final 
regulations on October 29, 2010 (75 FR 66832) (Program Integrity 
Issues), which included requirements for institutions to disclose and 
report information about gainful employment programs. After considering 
comments on the July 26th NPRM related to new programs, the Department 
published final regulations on October 29, 2010 (75 FR 66665) (Gainful 
Employment--New Programs), which included requirements for institutions 
to notify the Department before offering a new educational program that 
provides training leading to gainful employment in a recognized 
occupation (gainful employment program). Through this notification 
process, the Department may advise an institution that it must obtain 
approval to establish the eligibility of an additional gainful 
employment program for purposes of the title IV, HEA programs.
    The Department established the notification requirement out of 
concern that some institutions might attempt to circumvent the proposed 
gainful employment standards in Sec.  668.7(a)(1)

[[Page 59865]]

of the July 26th NPRM by adding new programs before those standards 
could take effect. The Department explained that the notification 
process requirements, referred to as ``interim requirements,'' were 
intended to remain in effect until the final regulations that 
established eligibility measures for gainful employment programs would 
take effect. Specifically, we stated that with regard to approving 
additional programs, ``[w]e intend to establish performance-based 
requirements in subsequent regulations'' and that ``[u]ntil those 
subsequent regulations take effect, institutions must comply with the 
interim requirements in [the Gainful Employment--New Programs final] 
regulations'' (75 FR 66671).
    We published the final regulations establishing the gainful 
employment eligibility measures on June 13, 2011 (76 FR 34386) (Gainful 
Employment--Debt Measures). In those regulations, the Department 
established measures for gainful employment programs that are intended 
to identify the worst performing programs. For gainful employment 
programs that fail those measures, an institution will be required to 
provide warnings to enrolled and prospective students for up to three 
years or until the programs lose eligibility for title IV, HEA funds. 
Under these measures, institutions may also choose to voluntarily 
discontinue a failing program.
    The Gainful Employment--Debt Measures final regulations also place 
restrictions on when an institution may reestablish the eligibility of 
an ineligible program or a failing program that was voluntarily 
discontinued, or establish the eligibility of a new program that is 
substantially similar to an ineligible program. However, we do not 
believe that when these new provisions go into effect on July 1, 2013, 
the notification process for all new gainful employment programs 
established in the Gainful Employment--New Programs final regulations 
will be needed and therefore are seeking input from the public on this 
issue through these proposed regulations.
    In this NPRM, among other changes, we propose to eliminate the 
notification process for new gainful employment programs by amending 
the Gainful Employment--New Programs final regulations to establish a 
smaller group of gainful employment programs for which an institution 
must obtain approval from the Department. We believe that with these 
changes, these proposed regulations will significantly reduce burden on 
institutions and the Department while still ensuring the effectiveness 
of the debt measures established in the Gainful Employment--Debt 
Measures final regulations.
    The Department used the negotiated rulemaking process to discuss 
its proposal to define eligibility for gainful employment programs 
using metrics. Following the completion of the negotiated rulemaking 
sessions, the Department published the July 26th NPRM and received over 
90,000 comments in response to those proposed regulations. These 
proposed regulations arise from those discussions, proposals, and 
comments submitted, and, per the Department's stated goal in the 
Gainful Employment--New Programs final regulations, would establish a 
simplified process for institutions to establish the eligibility of new 
gainful employment programs now that the gainful employment measures 
have been finalized. The discussions about new programs during 
negotiated rulemaking, and the comments received on the July 26th NPRM, 
were focused on the nature of the requirements that would be in place 
at the conclusion of the rulemaking process. For these reasons, the 
Department has determined that it is not necessary to conduct 
additional negotiations to discuss the proposed requirements regarding 
the approval of new gainful employment programs. The Department is 
publishing new proposed regulations and requesting additional public 
comment because the proposed changes will modify the Gainful 
Employment--New Programs final regulations that require institutions to 
provide notice to the Department for all new gainful employment 
programs.

Summary of Proposed Changes

    These proposed regulations would amend the application process for 
new programs by--
     Limiting the new gainful employment programs for which an 
institution must apply to the Department to those programs that are (1) 
the same as, or substantially similar to, failing programs that the 
institution voluntarily discontinued or programs that became ineligible 
under the debt measures for gainful employment programs, and (2) 
programs that are substantially similar to failing programs;
     Specifying that a program is substantially similar if it 
has the same credential level and the same first four digits of the CIP 
code as that of a failing program, a failing program the institution 
voluntarily discontinued, or an ineligible program;
     Clarifying that there are separate application 
requirements for establishing the eligibility of other educational 
programs such as direct assessment programs and comprehensive 
transition and postsecondary programs;
     Providing that if the Secretary notifies an institution, 
the institution must apply for approval of a new educational program;
     Revising the documentation that must be included in an 
institution's application to establish the eligibility of a new gainful 
employment program;
     Specifying that the Secretary may request additional 
information from the institution prior to making an eligibility 
determination for a new gainful employment program;
     Specifying that the Secretary, in making an eligibility 
determination, will take into account whether the processes used and 
determinations made by the institution to offer the program are 
sufficient and will consider the performance of the institution's other 
gainful employment programs; and
     Specifying that if the Secretary denies the eligibility of 
a new gainful employment program, the Secretary will inform an 
institution of the reasons for the denial and the institution may 
request that the Secretary reconsider the determination.

Significant Proposed Regulations

Part 600 Institutional Eligibility Under the Higher Education Act of 
1965, as Amended

    We discuss substantive issues under the sections of the proposed 
regulations to which they pertain. Generally, we do not address 
proposed regulatory changes that are technical or otherwise minor in 
effect.

Classification of Instructional Programs (CIP) Code

    Statute: Section 481 of the HEA (20 U.S.C. 1088) provides 
definitions for the General Provisions Relating to Student Financial 
Assistance Programs. It does not provide a definition of Classification 
of instructional programs or CIP.
    Current regulations: The classification of instructional programs 
(CIP) code is described under current Sec.  600.10(c)(2)(i).
    Proposed regulations: We propose to relocate the current 
description of the CIP to Sec.  600.2, Definitions. Under this section, 
the CIP would be defined as ``a taxonomy of instructional program 
classifications and descriptions developed by the U.S. Department of 
Education's National Center for Education Statistics.''
    Reasons: This is merely a technical change that would include the 
definition of the term Classification of

[[Page 59866]]

instructional programs or CIP among the definitions of other terms used 
in part 600 of the title IV, HEA program regulations.

New Educational Programs

    Statute: With regard to eligibility for funds under title IV of the 
HEA, section 481 of the HEA defines an eligible program (20 U.S.C. 
1088(b)), and section 498 of the HEA provides for the eligibility of 
institutions of higher education (20 U.S.C. 1099c).
    Current regulations: Under current Sec.  600.10(c)(1), an 
institution that intends to add a gainful employment program, as 
provided under 34 CFR 668.8(c)(3) or (d), must notify the Department at 
least 90 days before the first day of class for that program. The 
institution may proceed to offer the program described in its notice to 
the Secretary, unless the Department advises the institution that the 
program must be approved under Sec.  600.20(c)(1)(v). Except for direct 
assessment programs under 34 CFR 668.10, or pursuant to a requirement 
included in an institution's program participation agreement (PPA) 
under 34 CFR 668.14, an institution does not have to apply to the 
Department for approval to add any other type of educational program.
    Under Sec.  600.20(c)(2), an institution that wishes to expand the 
scope of its eligibility by increasing its level of program offerings 
(e.g., adding graduate degree programs when it previously offered only 
baccalaureate degree programs) must apply to the Secretary for approval 
of that expanded scope.
    Under 34 CFR 668.10(b), an institution that offers a direct 
assessment program must apply to the Secretary to establish the 
eligibility of that program for title IV, HEA program funds.
    Under 34 CFR 668.13(c)(4)(ii), the Secretary may condition the 
provisional certification of an institution by specifying compliance 
requirements in the institution's PPA.
    Under 34 CFR 668.14(a), the Secretary may condition an 
institution's participation in the title IV, HEA programs by specifying 
compliance requirements in the institution's PPA. We note that the 
Secretary may specify compliance requirements regardless of whether the 
institution is provisionally certified under 34 CFR 668.13(c).
    Under 34 CFR 668.232, an institution that offers a comprehensive 
transition and postsecondary program must apply to the Secretary to 
establish the eligibility of that program for title IV, HEA program 
funds.
    Proposed regulations: In proposed Sec.  600.10(c)(1), we specify 
that an institution would not have to apply to the Secretary for 
approval of a new educational program unless the institution is 
required to obtain the Secretary's approval under the provisions in 
Sec.  600.20(c)(2), Sec.  600.20(d)(2), 34 CFR 668.10(b), 34 CFR 
668.14(a)(1), or 34 CFR 668.232, or the Secretary notifies the 
institution that it must apply for approval.
    Instead of subjecting all gainful employment programs to a notice 
process or a notice and approval process, we propose in Sec.  
600.10(c)(1), by reference to Sec.  600.20(d)(2), to limit required 
approvals to new gainful employment programs that are the same as or 
substantially similar to programs that performed poorly under the debt 
measures in 34 CFR 668.7(a). As discussed more fully under the heading 
Application requirements, in proposed Sec.  600.20(d) an institution 
would have to obtain the Department's approval only if a gainful 
employment program (1) is the same as, or substantially similar to, a 
failing program that the institution voluntarily discontinued under 34 
CFR 668.7(l)(1) or a program that became ineligible under 34 CFR 
668.7(i), or (2) is substantially similar to a failing program under 34 
CFR 668.7(h).
    Reasons: The changes we are proposing in Sec.  600.10(c)(1)(i), 
would clarify the approval provisions that apply to new programs by 
providing references for existing approval requirements in one 
regulatory provision. We are proposing in Sec.  600.10(c)(1)(ii) that 
institutions must apply for approval of new programs if the Secretary 
notifies them they must do so, in order to ensure that the Secretary 
has sufficient discretion to assess whether a new program would serve 
students effectively. For example, the Secretary would have the 
discretion to notify an institution that it must apply for approval for 
a new program due to material audit or program review deficiencies such 
as late or unmade refunds, verification issues, failure to provide 
timely notices of significant events, or other conditions that 
adversely affect its administrative or financial capability, including 
the performance of its gainful employment programs under the debt 
measures in 34 CFR 668.7.
    Our proposed approach in Sec.  600.10(c)(1) and Sec.  600.20(d)(2) 
is consistent with the approach taken in the Gainful Employment--Debt 
Measures final regulations in that both sets of regulations focus on 
poorly performing gainful employment programs. Moreover, by publishing 
these proposed regulations we are carrying out the commitment made in 
the Gainful Employment--New Programs final regulations (75 FR 66669), 
to establish performance-based standards for approving new programs. 
Compared to the current regulations for new programs, this performance-
based approach would decrease burden for institutions and the 
Department by eliminating the notice and approval process for many new 
gainful employment programs. We believe that this tailored program 
approval process would protect student borrowers while reducing 
institutional costs and burden.
    Application requirements.
    Statute: With regard to eligibility for funds under title IV of the 
HEA, section 481 of the HEA defines an eligible program (20 U.S.C. 
1088(b)), and section 498 of the HEA provides for the eligibility of 
institutions of higher education (20 U.S.C. 1099c).
    Current regulations: Under the current procedures in Sec.  
600.20(d)(1), an institution must notify the Department of its intent 
to offer an additional educational program, or submit an application 
requesting approval to expand the institution's eligibility. The 
institution must provide, in a format prescribed by the Secretary, all 
the information and documentation requested by the Department to make a 
determination of the program's eligibility or institutional 
certification. For a new gainful employment program, an institution 
must notify the Department at least 90 days before the first day of 
class for that program. Unless the Department alerts the institution at 
least 30 days before the first day of class that the program must be 
approved for title IV, HEA program purposes, the institution may 
disburse title IV, HEA program funds to students enrolled in the 
program. However, if an institution does not notify the Department 
before the 90-day period, it must obtain the Department's approval 
before disbursing title IV, HEA program funds to students in the 
program. In any case, whenever a new gainful employment program must be 
approved, the Department treats the institution's notice as an 
application for that program. The Department may approve the 
institution's application or request more information prior to making a 
determination of whether to approve or deny the eligibility of the new 
educational program.
    In reviewing the institution's application, the Department takes 
into account the following factors:
    (1) The institution's demonstrated financial responsibility and

[[Page 59867]]

administrative performance in operating its existing programs.
    (2) Whether the additional program is one of several new programs 
that will replace similar programs currently provided by the 
institution, as opposed to supplementing or expanding the current 
programs provided by the institution.
    (3) Whether the number of additional programs being added is 
inconsistent with the institution's historic program offerings, growth, 
and operations.
    (4) Whether the process and determination by the institution to 
offer the additional program is sufficient.
    If the Department denies an application from an institution to 
offer a new education program, the Department explains how the 
institution failed to demonstrate that the program is likely to lead to 
gainful employment in a recognized occupation. The institution may 
respond to the reasons for the denial, and request that the Department 
reconsider its determination. The Department bases its determination to 
deny an application on factors (2), (3) and (4).
    Under Sec.  600.20(d)(2), whenever an institution notifies the 
Department of its intent to offer an additional gainful employment 
program, the institution must include in its notice:
     A description of how the institution determined the need 
for the program and how the program was designed to meet local market 
needs, or for an online program, regional or national market needs. The 
description must contain any wage analysis the institution may have 
performed, including any consideration of Bureau of Labor Statistics 
(BLS) data related to the program;
     A description of how the program was reviewed or approved 
by, or developed in conjunction with, business advisory committees, 
program integrity boards, public or private oversight or regulatory 
agencies, and businesses that would likely employ graduates of the 
program;
     Documentation that the program has been approved by its 
accrediting agency or is otherwise included in the institution's 
accreditation by its accrediting agency, or comparable documentation if 
the institution is a public postsecondary vocational institution 
approved by a recognized State agency for the approval of public 
postsecondary vocational education in lieu of accreditation; and
     The date of the first day of class of the new program.
    Proposed regulations: In Sec.  600.20(d)(1) we propose to eliminate 
the current notice requirements in favor of a more streamlined approach 
under which an institution would simply apply to establish the 
eligibility of a gainful employment program.
    Under proposed Sec.  600.20(d)(2), an institution that seeks to 
establish the eligibility of a gainful employment program must submit 
an application to the Department only if that program (1) is the same 
as, or substantially similar to, a failing program that was voluntarily 
discontinued by the institution under 34 CFR 668.7(l)(1) or a program 
that became ineligible for title IV, HEA program funds under 34 CFR 
668.7(i), or (2) is substantially similar to a program designated as a 
failing program under 34 CFR 668.7(h) for any one of the two most 
recent fiscal years (FYs). For this purpose, a program is substantially 
similar if it has the same credential level and the same first four 
digits of the CIP code as that of a failing program, a failing program 
the institution voluntarily discontinued, or an ineligible program. In 
proposed Sec.  600.20(d)(3), while we are not proposing to change the 
core requirements under current Sec.  600.20(d)(2)(i), (d)(2)(ii), 
(d)(2)(iii), or (d)(2)(iv), we would augment those requirements by 
having the institution include in its application:
     A wage analysis of the new program performed by or on 
behalf of the institution. This wage analysis would need to include 
supporting documentation based on the best data that is reasonably 
available to the institution;
     Compared to the failing or ineligible program, a 
description of the enhancements or modifications the institution made 
to improve the new program's performance under the gainful employment 
standards in 34 CFR 668.7(a); and
     The CIP code and credential level of the new program, 
along with a description of how the institution determined that CIP 
code.
    We would relocate the approval provisions in current Sec.  
600.20(d)(1)(ii)(E) and (F) to proposed Sec.  600.20(d)(4) and amend 
those provisions. Under this section, the Department would determine 
whether to approve the eligibility of a new program by taking into 
account (1) the institution's demonstrated financial responsibility and 
administrative capability in operating its existing programs, (2) 
whether the processes used and determinations made by the institution 
to offer the new program, as described by the institution in its 
application, are sufficient, and (3) the performance under 34 CFR 668.7 
of the institution's other gainful employment programs. Before making 
that determination, the Department may request additional information 
from the institution. If the Department denies the institution's 
eligibility for a new gainful employment program, we inform the 
institution of the reasons for the denial and the institution may 
request that we reconsider our determination.
    These proposed regulations reflect the approach taken in the 
Gainful Employment--Debt Measures final regulations under which the 
Department identifies failing programs under the debt measures for 
gainful employment programs and uses those measures over time to 
determine if a program becomes ineligible or when it may apply to 
regain eligibility. Thus, we are proposing to require institutions to 
submit applications for approval for new programs that are 
substantially similar to failing programs that they offer and failing 
programs that they voluntarily discontinued. Consequently, in proposed 
Sec.  600.20(d)(2) an institution must apply for approval of a new 
program if it is (1) substantially similar to a program designated as a 
failing program for any one of the two most recent fiscal years, (2) 
the same as or substantially similar to a failing program the 
institution voluntarily discontinued, or, (3) the same or substantially 
similar to an ineligible program that the institution offered. We note 
that under 34 CFR 668.7(l) of the Gainful Employment--Debt Measures 
final regulations, an institution must delay submitting an application 
for two or three years if it seeks to (1) Reestablish the eligibility 
of a program that became ineligible under the debt measures, (2) 
reestablish the eligibility of a failing program that the institution 
voluntarily discontinued, or (3) establish the eligibility of a program 
substantially similar to an ineligible program. For clarity, we are 
restating these requirements in proposed Sec.  600.20(d)(2)(iii). Under 
these proposed regulations, an institution would not have to delay 
submitting an application for a program that is substantially similar 
to a failing program that an institution offers or substantially 
similar to a failing program that the institution voluntarily 
discontinued.
    Reasons: Because we will use the debt measures under 34 CFR 668.7 
to identify the gainful employment programs that are subject to 
approval, it is no longer necessary to screen all potential program 
applications through the current notice process. Therefore, we are 
proposing to revise the application requirements in Sec.  600.20(d)(2). 
We note that the Department will obtain an updated

[[Page 59868]]

listing of all gainful employment programs, including new programs, 
under the annual reporting requirements in 34 CFR 668.6. Using that 
information, the Department will be able to monitor whether an 
institution obtained any needed approvals for new programs.
    With regard to the provision in proposed Sec.  600.20(d)(2)(i)(B), 
that an institution must apply for approval of a program that is 
substantially similar to a program designated as a failing program for 
any one of the two most recent fiscal years, we note that this approach 
parallels the approach for ineligible programs under 34 CFR 668.7(i). 
Under that section, a program becomes ineligible if it fails the debt 
measures under 34 CFR 668.7(a) for three out of the four most recent 
fiscal years. For example, a program becomes ineligible if it fails the 
first and second FYs, passes the third FY, but fails the fourth FY. 
This approach prevents a program that generally fails the debt measures 
from remaining eligible by simply passing the measures in one year. 
Likewise, under the approach proposed in these regulations, an 
institution would have to apply for approval of a program that is 
substantially similar to a program designated as a failing program 
under 34 CFR 668.7(h) for any one of the two most recent fiscal years.
    Our proposal to require a wage analysis in Sec.  600.20(d)(3)(v) 
stems, in part, from comments received on the July 26th NPRM regarding 
the proposal under which an institution would have to submit employer 
affirmations and enrollment projections when obtaining approval of a 
new program. The Department deferred addressing those comments in the 
Gainful Employment--New Programs final regulations. For the benefit of 
the reader, we summarize those comments in the following discussion and 
respond to them to provide context and our reasons for the proposed 
regulations regarding wage analysis.
    Several of the commenters supported the employer affirmation 
requirements as a borrower protection, but suggested that the 
Department should also require (1) Employers to specify the location of 
anticipated job vacancies, (2) employers to identify the number of 
current or expected job vacancies and whether the vacancies are for 
full-time, part-time, or temporary jobs, (3) that affirmations apply to 
time periods related to the length of the program, (4) that employers 
may not provide affirmations to several different institutions if the 
employer does not have jobs for the graduates from all those 
institutions, and (5) a standardized form to ensure that employer 
affirmations are clear and uniform.
    Many other commenters, however, objected to the requirement to 
provide employer affirmations, stating that such a process would be 
costly and cumbersome to implement for both institutions and the 
Department and that the proposal requiring employer affirmations was 
too vague. Some commenters were concerned that employers would not be 
qualified to assess the quality of an institution's curriculum and that 
employers would be unwilling to affirm job openings or expected demand 
because of the liability risks of making such an affirmation and 
uncertainty about future economic conditions. Several commenters 
objected to the requirement that employers cannot be affiliated with 
the institution to which they provide the affirmation. The commenters 
stated that, as a common business practice, many schools work closely 
with employers that hire their students, and that such a prohibition 
would, in many cases, eliminate an institution's ability to offer new 
gainful employment programs. Finally, several commenters suggested that 
the Department rely on BLS data instead of employer affirmations to 
evaluate expected demand because it is readily available and 
institutions can confirm demand before spending substantial sums for 
the development of an additional program.
    With regard to enrollment projections, several commenters asked the 
Department to clarify the enrollment projection requirement in proposed 
Sec.  668.7(g)(1)(ii) of the July 26th NPRM. Specifically, the 
commenters asked how an institution would determine projected 
enrollment, how the Department would use the projections, and whether 
an institution would be able to update its projections. Another 
commenter stated that rather than the Department attempting to control 
the number of individuals entering an occupation by limiting the 
students who enroll in a particular program, students should have the 
option of choosing a program as long as the program satisfies the 
standards of quality established by the institution's accrediting 
agency.
    Although we believe that employer affirmations can be useful in 
evaluating whether a program is designed to meet, or historically met, 
employer and student needs and market demand, in view of the comments 
that the affirmations could be costly or difficult to obtain, or that 
some employers are not qualified to assess the quality of a program's 
curriculum, we are not proposing in these regulations that institutions 
obtain employer affirmations. Instead, we propose that an institution 
must submit a wage analysis whenever it seeks to reestablish the 
eligibility of an ineligible program or a failing program that it 
voluntarily discontinued, or to establish the eligibility of a 
substantially similar program. The wage analysis would need to include 
supporting documentation based on the best data that is reasonably 
available to the institution.
    We believe the following elements should be included in a wage 
analysis based on the best data reasonably available to the 
institution:
    (1) The typical first-year annual earnings of students who would 
complete the program and the typical earnings of those students after a 
few years of employment;
    (2) The short- and long-term market demand for jobs or occupations 
stemming from the training provided by the program;
    (3) A sample of the types and names of the businesses or employers 
most likely to employ the program's graduates; and
    (4) The amount of tuition and fees the institution will charge for 
the program and the typical loan debt a student would incur in 
completing the program.
    Data that may be reasonably available to the institution could 
include BLS data or data provided by businesses or employers consulted 
in developing the program. However, if the institution uses BLS data we 
expect the institution to show how the BLS data correlates to, or 
sufficiently represents, the likely earnings of its program graduates 
and the likely demand for jobs or occupations stemming from the 
program. We invite comments on the proposed wage analysis requirement, 
and are particularly interested in comments on the elements to be 
included in the wage analysis and the types of data that we should 
require to support these elements. We believe that a wage analysis is a 
necessary part of the institution's due diligence in developing or 
revising a previously ineligible or a failing program that it 
voluntarily discontinued, or a substantially similar program, because 
it supports an overall eligibility determination that, due to the 
program improvements, there is a reasonable expectation that the 
program will satisfy the debt measures.
    We also reject the suggestion by some commenters that asking an 
institution to provide enrollment projections for an additional program 
is tantamount to controlling enrollment in that program. This 
information may be useful when evaluating whether a program is supposed 
to replace an existing program

[[Page 59869]]

over time, and provides some measure of the relative impact that 
program would have compared to the size of the institution and other 
programs it offers. Nevertheless, in view of the comments that 
providing estimated enrollment data may be complicated, we are not 
proposing this requirement in these regulations. However, the 
Department may request, as needed, additional information from an 
institution about its enrollment projections on a case-by-case basis.
    With regard to the other application requirements in proposed Sec.  
600.20(d)(3)(vi) and (vii), the Department needs assurance from an 
institution that (1) the enhancements and modifications it made to a 
failing or ineligible program are likely to improve the new program's 
performance under the debt measures in 34 CFR 668.7(a), and (2) it 
assigned the correct CIP code to the new program. We are proposing 
these regulations because we are concerned that an institution may 
attempt to circumvent the two- or three-year ineligibility period for a 
failing program that it voluntarily discontinued by portraying that 
program in its application as a substantially similar program.
    With regard to the eligibility determination provisions in proposed 
Sec.  600.20(d)(4), we note that most of these provisions are the same 
as those in the current regulations under Sec.  600.20(d)(1)(ii)(E) and 
(F). The primary difference is in proposed Sec.  600.20(d)(4)(i)(B), 
under which we would take into account the performance of an 
institution's other gainful employment programs under the debt measures 
in Sec.  668.7(a) in determining whether to approve the institution's 
application for a new program. We believe that it would be useful to 
consider the performance history of the institution's programs, 
particularly since the debt measures under Sec.  668.7(a) will not be 
calculated for the new program for at least three or four years. 
Moreover, we believe that an institution's performance history is an 
important component in determining whether to approve the eligibility 
of a new gainful employment program because it provides an 
understanding of the program in context, and thus, allows for a more 
informed determination.

Executive Orders 12866 and 13563

Regulatory Impact Analysis

    Under Executive Order 12866, the Secretary must determine whether 
the regulatory action is ``significant'' and therefore subject to the 
requirements of the Executive Order and subject to review by the Office 
of Management and Budget (OMB). Section 3(f) of Executive Order 12866 
defines a ``significant regulatory action'' as an action likely to 
result in regulations 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 ``economically significant'' 
regulations); (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.
    It has been determined that this regulatory action is a significant 
regulatory action subject to review by OMB under section 3(f)(4) of 
Executive Order 12866.
    In accordance with the Executive order, the Department has assessed 
the potential costs and benefits of this regulatory action. The 
potential costs associated with this regulatory action are those 
resulting from statutory requirements and those we have determined as 
necessary for administering this program effectively and efficiently. 
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

    In assessing the potential costs and benefits of this regulatory 
action, we have determined that the benefits of the regulatory action 
justify the costs.
    The Department has also reviewed these regulations pursuant to 
Executive Order 13563, published on January 21, 2011 (76 FR 3821). 
Executive Order 13563 is supplemental to and explicitly reaffirms the 
principles, structures, and definitions governing regulatory review 
established in Executive Order 12866. To the extent permitted by law, 
agencies are required by Executive Order 13563 to: (1) Propose or adopt 
regulations only upon a reasoned determination that their benefits 
justify their costs (recognizing that some benefits and costs are 
difficult to quantify); (2) tailor their regulations to impose the 
least burden on society, consistent with obtaining regulatory 
objectives, taking into account, among other things, and to the extent 
practicable, the costs of cumulative regulations; (3) select, in 
choosing among alternative regulatory approaches, those approaches that 
maximize net benefits (including potential economic, environmental, 
public health and safety, and other advantages; distributive impacts; 
and equity); (4) the extent feasible, specify performance objectives, 
rather than specifying the behavior or manner of compliance that 
regulated entities must adopt; and (5) identify and assess available 
alternatives to direct regulation, including providing economic 
incentives to encourage the desired behavior, such as user fees or 
marketable permits, or providing information upon which choices can be 
made by the public.
    We emphasize as well that Executive Order 13563 requires agencies 
``to use the best available techniques to quantify anticipated present 
and future benefits and costs as accurately as possible.'' In its 
February 2, 2011, memorandum (M-11-10) on Executive Order 13563, 
improving regulation and regulatory review, the Office of Information 
and Regulatory Affairs has emphasized that such techniques may include 
``identifying changing future compliance costs that might result from 
technological innovation or anticipated behavioral changes.''
    We are issuing these regulations only after making a reasoned 
determination that their benefits justify their costs and we selected, 
in choosing among alternative regulatory approaches, those approaches 
that maximize net benefits. Based on this analysis and for the 
additional reasons stated in the preamble, the Department believes that 
these final regulations are consistent with the principles in Executive 
Order 13563.

Need for Federal Regulatory Action

    Executive Order 12866 emphasizes that ``Federal agencies should 
promulgate only such regulations as are required by law, are necessary 
to interpret the law, or are made necessary by compelling public need, 
such as material failures of private markets to protect or improve the 
health and safety of the public, the environment, or the well-being of 
the American people.'' When the Gainful Employment--New Programs final 
regulations were published, the final gainful employment debt measures 
had not been established. The Department specified at that time that it 
intended to establish performance-based requirements with regard to 
approving additional programs once regulations for the gainful 
employment debt measures were

[[Page 59870]]

finalized. Those debt measures have now been finalized through the 
Gainful Employment--Debt Measures final regulations. Thus, these 
proposed regulations are necessary to ensure that the procedures for 
establishing new gainful employment programs are aligned with those 
measures and our intent to target the worst-performing programs, while 
allowing innovation and expansion by institutions with a track record 
of establishing successful programs.

Regulatory Alternatives Considered

    As part of an extensive rulemaking process over the last two years, 
the Department considered a number of alternatives to these proposed 
regulations.

July 26th NPRM

    In the July 26th NPRM, the Department proposed a requirement that 
would require an institution to submit employer affirmations and 
enrollment projections in order to demonstrate the need for and value 
of the program to be established. We received a number of comments 
opposing our proposal. These comments noted that the fact that some 
programs prepare students for nationwide opportunities could make it 
difficult for institutions to obtain nonaffiliated employer 
affirmations. The commenters expressed concern that the proposed 
process would hamper the development of innovative programs related to 
emerging fields of employment. Commenters also said that they believed 
that employers would be reluctant to offer affirmations for fear of it 
being construed as a commitment to hire. With regard to enrollment 
projections, several commenters asked the Department to clarify the 
enrollment projection requirement in proposed Sec.  668.7(g)(1)(ii) of 
the July 26th NPRM. Specifically, the commenters asked how an 
institution would determine projected enrollment, how the Department 
would use the projections, and whether an institution would be able to 
update its projections. Another commenter stated that rather than the 
Department attempting to control the number of individuals entering an 
occupation by limiting the students who enroll in a particular program, 
students should have the option of choosing a program as long as the 
program satisfies the standards of quality established by the 
institution's accrediting agency.

Gainful Employment--New Programs

    In the Gainful Employment--New Programs final regulations, we 
established a process for institutions to notify the Department before 
enrolling students in a new gainful employment program. We took this 
action out of concern that some institutions might attempt to 
circumvent the proposed gainful employment standards in the July 26th 
NPRM by adding new programs before those standards could take effect. 
These provisions were intended to serve as interim requirements until 
the final gainful employment debt measures could be finalized. In those 
regulations, we also indicated that we would defer our consideration of 
the comments regarding employer affirmations until we finalized the 
debt measures regulations.
    Under the Gainful Employment--New Programs final regulations, 
institutions must notify the Department within certain time limits 
before starting new gainful employment programs. The notice must 
describe or document: (1) How the institution determined the need for 
the new program and how the program was designed to meet local market 
needs, or for an online program, regional or national market needs by, 
for example, consulting BLS data or State labor data systems or 
consulting with State workforce agencies; (2) how the program was 
reviewed or approved by, or developed in conjunction with, business 
advisory committees, program integrity boards, public or private 
oversight or regulatory agencies, and businesses that would likely 
employ graduates of the program; (3) that the program has been approved 
by its accrediting agency or is otherwise included in the institution's 
accreditation by its accrediting agency, or comparable documentation if 
the institution is a public postsecondary vocational institution 
approved by a recognized State agency for the approval of public 
postsecondary vocational education in lieu of accreditation; (4) how 
the program would be offered in connection with, or in response to, an 
initiative by a governmental entity; and (5) any wage analysis it may 
have performed, including any consideration of BLS wage data that is 
related to the new program.
    With the publication of the Gainful Employment--Debt Measures final 
regulations, and as discussed elsewhere in our discussion of these 
proposed regulations, we no longer believe that the notification 
process is necessary and are therefore proposing a streamlined approval 
process that targets only the worst-performing programs.

Benefits

    We are establishing a process for institutions to apply to the 
Department for approval of new programs that are (1) the same as, or 
substantially similar to, failing programs that the institution 
voluntarily discontinued or programs that became ineligible under the 
debt measures for gainful employment programs, and (2) programs that 
are substantially similar to failing programs, in part, to ensure that 
institutions do not circumvent the debt measures we recently 
established in the Gainful Employment--Debt Measures final regulations. 
These proposed regulations clarify and streamline the review and 
approval process for new gainful employment programs by eliminating the 
requirement that institutions submit information for all new gainful 
employment programs in order to obtain approval, and narrowing the 
scope of new programs for which an institution must submit an 
application for approval. This streamlined process should reduce the 
administrative burden on institutions and the Department and allow 
institutions with a strong track record of establishing programs that 
perform well on the gainful employment debt measures to continue to 
innovate and expand their program offerings without having to notify 
the Department each time they offer a new program.
    We also see as a key benefit of our proposal that institutions 
would have to demonstrate, in applying for approval of a new program, 
how they enhanced or modified the ineligible or failing program to 
improve the program's performance under the debt measures. We believe 
that over time, this should result in increased quality in the pool of 
programs from which students can choose to attend.

Costs

    The main costs of these proposed regulations derive from the 
administrative and paperwork burden associated with applying for 
approval of a new program. Much of the information required to be 
included in an application for new program eligibility would be 
generated as a school reaches its decision to develop a new program. 
Accordingly, many entities wishing to continue to participate in the 
title IV, HEA programs have already absorbed many of the administrative 
costs that would be related to implementing these proposed regulations, 
and additional costs would primarily be due to documenting the program 
development process. Other institutions may have to establish a program 
development process, but the regulations allow flexibility in meeting 
the core requirements.
    In assessing the potential economic impact of these regulations, 
the

[[Page 59871]]

Department recognizes that compliance with the proposed regulations may 
result in an increased workload for some institutions but overall, when 
compared to the burden outlined in the July 26th NPRM and the burden 
outlined in the Gainful Employment--New Programs final regulations, 
there will be a net reduction in burden. Additional costs would 
normally be expected to result from either the hiring of additional 
employees or opportunity costs related to the reassignment of existing 
staff from other activities.
    In the July 26th NPRM, we estimated that the burden to institutions 
of researching and establishing new programs would be 8,450 hours, or 
$175,000 per year. In the Gainful Employment--New Programs final 
regulations, we estimated that the burden on institutions in complying 
with the notification process would be 3,591 hours, or $91,032 per 
year.
    As described in the Paperwork Reduction Act of 1995 section of this 
preamble, following issuance of the Gainful Employment--New Programs 
final regulations, the Department continued to review the estimates of 
new programs that would be subject to the notice requirement in those 
regulations. Based on that analysis and specifically, an increase in 
the estimated number of new program applications, we have revised the 
estimated burden of the Gainful Employment--New Programs final 
regulations from 3,591 hours to 12,343 hours. Based on a wage rate of 
$25.35, this results in a revised estimate of $312,895 for complying 
with the Gainful Employment--New Programs final regulations.
    The changes proposed in this NPRM are expected to reduce burden by 
7,068 hours to an estimated 5,275 hours, primarily by restricting the 
application requirement to programs that are the same as or 
substantially similar to failing programs voluntarily discontinued or 
ineligible programs, or the same as a failing program under 34 CFR 
668.7(h). Thus, the estimated cost is also reduced to $133,721.
    Given the limited data available, the Department is particularly 
interested in comments and supporting information related to possible 
burden stemming from these proposed regulations. Estimates included in 
this notice will be reevaluated based on any information received 
during the public comment period.

Net Budget Impacts

    The proposed regulations are not estimated to have a net budget 
impact as the changes in the process for establishing new programs is 
not expected to change the demand for programs. While the process to 
establish new programs will be easier for institutions with a track 
record of successful programs, it is only in their interest to 
establish new programs if the new programs will pass the gainful 
employment debt measures. Program expansion and contraction occur on a 
regular basis and the change in the process to establish eligibility is 
not expected to affect capacity in a way that would impact the Federal 
student aid programs.

Assumptions, Limitations, and Data Sources

    In developing these estimates, a wide range of data sources was 
used, including data from the National Student Loan Data System 
(NSLDS); operational and financial data from Department of Education 
systems; and data from a range of surveys conducted by the National 
Center for Education Statistics (NCES) such as the 2007-2008 National 
Postsecondary Student Aid Study (NPSAS), the 2008-09 Integrated 
Postsecondary Education Data System (IPEDS), and the 2009 follow-up to 
the 2004 Beginning Postsecondary Students Longitudinal Study (BPS). 
Data from other sources, such as the U.S. Census Bureau and the 
Missouri Department of Higher Education, were also used. The estimates 
for the number of programs affected were derived from the estimates 
described in the Gainful Employment--Debt Measures final regulations. 
Data on administrative burden at participating institutions are 
extremely limited; accordingly, the Department is interested in 
receiving comments in this area. As additional data become available, 
the Department may update these estimates.
    We identify and explain burdens specifically associated with 
information collection requirements in the Paperwork Reduction Act of 
1995 section of the preamble.

Accounting Statement

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/sites/default/files/omb/assets/omb/circulars/a004/a-4.pdf, in Table A as follows, we have prepared an accounting statement 
showing the classification of the expenditures associated with the 
provisions of these regulations. This table provides our best estimate 
of the changes in Federal student aid payments as a result of these 
regulations. Expenditures are classified as transfers from the Federal 
student aid programs to students.

 Table A--Accounting Statement: Classification of Estimated Expenditures
                              [In millions]
------------------------------------------------------------------------
              Category                               Costs
------------------------------------------------------------------------
Reduction in Cost of Paperwork        ($.13).
 Burden.
Category............................  Transfers.
Annualized Monetized Transfers......  $0.
From Whom To Whom?..................  N/A.
------------------------------------------------------------------------

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 ``Sec.  '' and a numbered heading; for example, 
Sec.  600.2 Definitions.)
     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?

[[Page 59872]]

     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 regulations would affect institutions that participate in 
title IV, HEA programs and loan borrowers. The definition of ``small 
entity'' in the Regulatory Flexibility Act encompasses ``small 
businesses,'' ``small organizations,'' and ``small governmental 
jurisdictions.'' The definition of ``small business'' comes from the 
definition of ``small business concern'' under section 3 of the Small 
Business Act as well as regulations issued by the U.S. Small Business 
Administration (SBA). The SBA defines a ``small business concern'' as 
one that is ``organized for profit; has a place of business in the 
U.S.; operates primarily within the U.S. or makes a significant 
contribution to the U.S. economy through payment of taxes or use of 
American products, materials or labor * * *'' ``Small organizations,'' 
are further defined as any ``not-for-profit enterprise that is 
independently owned and operated and not dominant in its field.'' The 
definition of ``small entity'' also includes ``small governmental 
jurisdictions,'' which includes ``school districts with a population 
less than 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.
[GRAPHIC] [TIFF OMITTED] TP27SE11.007

    Approximately two-thirds of these institutions are for-profit 
schools that would be subject to these proposed regulations. Other 
affected small institutions include small community colleges and 
tribally controlled schools. The impact of the regulations on 
individuals is not subject to the Regulatory Flexibility Act.
    We estimated in the Gainful Employment--Debt Measures final 
regulations that approximately 3 percent of programs at small entities 
across all sectors would fail the measures at least once. The changes 
to the process for establishing new gainful employment programs that we 
are proposing in this NPRM would eliminate the notice requirement for 
the vast majority of programs at small entities because most gainful 
employment programs offered at those institutions are expected to pass 
the gainful employment measures. For institutions that choose to pursue 
establishing the title IV, HEA eligibility for a new program associated 
with a program that failed the gainful employment measures, the 
proposed regulations consolidate the notice and application process 
from the Gainful Employment--New Programs regulations and build on 
existing processes for determining if the Department will approve the 
new program.
    As detailed in the Paperwork Reduction Act of 1995 section of this 
preamble, institutions would only have to apply to establish gainful 
employment programs that are the same as or substantially similar to 
programs that are ineligible or that have been voluntarily withdrawn or 
programs that are substantially similar to failing programs. There are 
no explicit growth limitations or employer verification requirements. 
The estimated total hours, costs, and requirements applicable to small 
entities from these provisions on an annual basis are 3,165 hours and 
$80,233, based on a wage rate of $25.35. This represents a decrease 
from the revised estimated burden associated with the Gainful 
Employment--New Programs regulations of 7,406 hours and $187,737.
    The proposed regulations are unlikely to conflict with or duplicate 
existing Federal regulations.

Alternatives Considered

    No alternative provisions were considered that would target small 
institutions with exemptions or additional time for compliance as this 
provision builds on existing industry

[[Page 59873]]

practices. The Secretary invites comments from small institutions and 
other affected entities as to whether they believed the proposed 
changes would have a significant economic impact on them and requests 
evidence to support that belief.

Paperwork Reduction Act of 1995

    As part of its continuing effort to reduce paperwork and respondent 
burden, the Department conducts a preclearance consultation program to 
provide the general public and Federal agencies with an opportunity to 
comment on proposed and continuing collections of information in 
accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 
3506(c)(2)(A)). This helps ensure that the public understands the 
Department's collection instructions; respondents can provide the 
requested data in the desired format; reporting burden (time and 
financial resources) is minimized; collection instruments are clearly 
understood; and the Department can properly assess the impact of 
collection requirements on respondents.
    Proposed Sec.  600.20 contains information collection requirements. 
Under the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), the 
Department has submitted a copy of this section to OMB for its review.
    A Federal agency cannot conduct or sponsor a collection of 
information unless OMB approves the collection under the PRA and the 
corresponding information collection instrument displays a currently 
valid OMB control number. Notwithstanding any other provision of law, 
no person is required to comply with, or is subject to penalty for 
failure to comply with, a collection of information if the collection 
instrument does not display a currently valid OMB control number.
    In the final regulations we will display the control number 
assigned by OMB to any information collection requirement in these 
proposed regulations and adopted in the final regulations.

Estimating the Number of New Gainful Employment Programs

    Since the publication of the Gainful Employment--New Program final 
regulations, we have continued to analyze the number of gainful 
employment programs that have been submitted to the Department for 
approval. We now estimate, based on the following information, that 
institutions will submit a total of 4,527 new gainful employment 
programs to the Department for approval annually.
    With respect to nondegree programs, in 2009, there were 4,852 new 
gainful employment nondegree programs submitted to the Department by 
institutions. In 2010, there were 3,318 new gainful employment 
nondegree programs submitted to the Department for approval. We have 
averaged these two numbers to estimate the annual number of new gainful 
employment nondegree programs established by institutions to be 4,085 
(4,852 plus 3,318 equals 8,170, which we then divided by 2). The total 
number of new gainful employment nondegree programs by institutional 
type is 540 new nondegree programs at proprietary institutions; 433 new 
nondegree programs at private nonprofit institutions; and 3,112 new 
nondegree programs at public institutions.
    With respect to degree programs, we do not currently maintain 
records concerning the number of new gainful employment degree programs 
that are established by institutions on an annual basis. Previously, we 
have only required that institutions report new degree programs 
periodically at the time of recertification. We determined from a 
review of the June 13, 2011 Gainful Employment--Debt Measures final 
regulations (76 FR 34386, June 13, 2011) that 55 percent of the gainful 
employment programs at proprietary institutions are nondegree programs, 
and that 45 percent are degree programs. As described earlier, we 
estimate that proprietary institutions will seek to establish 540 new 
gainful employment nondegree programs on an annual basis. If the 540 
new nondegree programs make up 55 percent of the total number of new 
nondegree programs at proprietary institutions, then the total number 
of new programs established by such institutions would be 982 (540 
divided by 0.55 equals 982). Therefore, we estimate that proprietary 
institutions will seek to establish a total of 442 new gainful 
employment degree programs on an annual basis (982 minus 540 equals 
442).
    The sum of the number of new gainful employment nondegree programs 
established annually (4,085) and new gainful employment degree programs 
established annually (442) is 4,527. Thus, we estimate that 
institutions will be establishing a total of 4,527 new gainful 
employment programs annually.
    Proposed Sec.  600.20--Application procedures for establishing, 
reestablishing, maintaining, or expanding program eligibility and 
institutional eligibility and certification.
    The proposed regulations eliminate the current notice requirements 
in favor of a more streamlined approach under which an institution 
would simply apply to establish the eligibility of certain new gainful 
employment programs rather than all new gainful employment programs. As 
a result, there will be fewer submissions for approval of new programs 
under these proposed regulations, as compared to the current 
notification requirements that apply to all new gainful employment 
programs.

Section 600.20(d)(2)

    In proposed Sec.  600.20(d)(2), an institution that seeks to 
establish the eligibility of a gainful employment program must submit 
an application to the Department, except as provided under Sec.  
600.10(c)(1), only if that program (1) is the same as, or substantially 
similar to, a failing program that was voluntarily discontinued by the 
institution under 34 CFR 668.7(l)(1) or a program that became 
ineligible for title IV, HEA program funds under 34 CFR 668.7(i), or 
(2) is substantially similar to a failing program designated as a 
failing program under 34 CFR 668.7(h) for any one of the two most 
recent fiscal years. For this purpose, a program is substantially 
similar if it has the same credential level and the same first four 
digits of the CIP code as that of a failing program, a failing program 
the institution voluntarily discontinued, or an ineligible program. The 
application and eligibility determination requirements are set forth in 
Sec.  600.20(d)(3) and (d)(4), respectively.

Section 600.20(d)(3)

    Proposed Sec.  600.20(d)(3) specifies the information that an 
institution that seeks to establish the eligibility of a program that 
leads to gainful employment under Sec.  600.20(d)(2) must include in 
its application. In this proposed regulation, we are retaining the core 
requirements for information to be reported about new programs under 
current Sec.  600.20(d)(2)(i), (d)(2)(ii), (d)(2)(iii), and (d)(2)(iv), 
and we propose to augment those requirements by having the institution 
include the following additional information in its application: (1) A 
wage analysis of the new program performed by or on behalf of the 
institution (Sec.  600.20(d)(3)(v)); (2) compared to the failing or 
ineligible program, a description of the enhancements or modifications 
the institution made to improve the new program's performance under the 
gainful employment standards in Sec.  668.7(a) (Sec.  
600.20(d)(3)(vi)); and (3) the CIP code and credential level of the new 
program, along with a description of how the institution determined 
that CIP code (Sec.  600.20(d)(3)(vii)).

[[Page 59874]]

    In the Gainful Employment--New Programs final regulations, we 
estimated that the burden associated with notifying the Department 
about a new gainful employment program would be an average of 2.5 
hours. With respect to the application requirements under the proposed 
regulations, we anticipate a small additional amount of burden 
associated with the collection of a wage analysis of the new program 
under proposed Sec.  600.20(d)(3)(v), a description of the enhancements 
or modifications the institution made to improve the new program's 
performance under proposed Sec.  600.20(d)(3)(vi), and the requirement 
that an application include the CIP code, the credential level, and a 
description of how the institution determined the CIP code under 
proposed Sec.  600.20(d)(3)(vii). As a result of these proposed 
changes, we expect the per unit burden for each submission to increase 
from an average of 2.5 hours to 3 hours per submission.
    We are estimating the application burden for new gainful employment 
programs based upon the type of institution and the type of program. We 
begin this analysis by adjusting the number of programs in each group 
to remove the programs that are exempt from the debt measures under 
Sec.  668.7(d)(2) (i.e., programs with 30 or fewer borrowers or 
completers), because those programs cannot trigger an application 
requirement for an institution (the remaining programs are ones to 
which the debt measures apply). We then determine how many of those 
remaining programs will fail the debt measures at least once. We 
estimate that this is the number of new programs that would need to 
submit an application to the Secretary for approval under proposed 
Sec.  600.20(d)(2).
    We estimate that the number of programs that fail the debt measures 
at least once will be comparable to the number of new programs that are 
the same as or substantially similar to failing programs that an 
institution voluntarily discontinued or ineligible programs, or 
substantially similar to failing programs because we believe schools 
will generally aim to modify or replace programs that fail. We 
understand that some institutions may already have other programs that 
are providing better outcomes under the debt measures and therefore may 
not replace a program that was less successful under those measures. We 
also believe that some institutions may decide to focus on establishing 
new gainful employment programs that are not substantially similar to a 
program that did not perform well on the debt measures. In these cases, 
an institution would not be required to obtain approval of the new 
program under proposed Sec.  600.20. On the other side of this 
equation, however, we also believe that some institutions will seek to 
offer new programs that are the same as or substantially similar to 
failing programs the institution voluntarily discontinued or were 
determined ineligible or substantially similar to failing programs. In 
these cases, an institution would be required to obtain the Secretary's 
approval under proposed Sec.  600.20. On balance, we believe that for 
every gainful employment program that fails the debt measures at least 
once, there will be a new program established that will need to obtain 
approval under the application requirements. We are using this same 
estimate across all types of affected entities (proprietary 
institutions, private nonprofit institutions, and public institutions). 
The amount of burden we are estimating for each of these sectors under 
these proposed regulations follows.
    Nondegree Programs--Proprietary Institutions. Based on the Gainful 
Employment--Debt Measures final regulations analysis in Table 9-A (76 
FR 34386, 34474) (Table 9-A), we estimate that there are 7,213 existing 
gainful employment nondegree programs at proprietary institutions 
(13,114 total gainful employment programs times 55 percent that are 
nondegree programs equals 7,213 nondegree programs). Based upon the 
Gainful Employment--Debt Measures final regulations analysis in Table 1 
(76 FR 34386, 34457) (Table 1), we project that 39.5 percent of 
existing nondegree programs at proprietary institutions will be exempt 
from the debt measures because they have 30 or fewer borrowers or 
completers and that the remaining 60.5 percent of the gainful 
employment nondegree programs will be subject to the debt measures; 
therefore, 4,364 nondegree programs (7,213 times 0.605 equals 4,364) 
will be subject to the debt measures. Table 9-A indicates that 18 
percent of proprietary nondegree programs will fail or become 
ineligible for a total of 786 programs (4,364 times 0.18 equals 786). 
Therefore, for the reasons discussed previously, we estimate that 
proprietary institutions would apply for approval for 786 new gainful 
employment nondegree programs under proposed Sec.  600.20(d). We 
estimate that on average, each application would take 3 hours to 
prepare and submit to the Department; therefore, the total amount of 
burden for proprietary institutions to submit applications for new 
gainful employment nondegree programs would equal 2,358 hours under OMB 
control number 1845-0012.
    Nondegree Programs--Private Nonprofit Institutions.
    Based on the analysis in Table 9-A, we estimate that there are 
2,790 existing gainful employment nondegree programs at private 
nonprofit institutions (5,073 total gainful employment programs times 
55 percent that are nondegree programs equals 2,790 nondegree 
programs). Based upon the analysis in Table 1, we project that 75.6 
percent of these programs will be exempt from the debt measures because 
they have 30 or fewer borrowers or completers and that 24.4 percent of 
these programs will be subject to the debt measures. Therefore, 681 
gainful employment nondegree programs at private nonprofit institutions 
(2,790 times 0.244 equals 681) will be subject to the debt measures. 
Table 9-A indicates that 5 percent of these programs will fail or 
become ineligible for a total of 34 programs (681 times 0.05 equals 
34). Therefore, for the reasons discussed previously, we estimate that 
private nonprofit institutions would apply for approval for 34 new 
gainful employment nondegree programs under proposed Sec.  
600.20(d)(2).
    We estimate that, on average, each application would take 3 hours 
to prepare and submit to the Department; therefore, the total burden 
for private nonprofit institutions to submit applications for new 
gainful employment nondegree would equal 102 hours under OMB control 
1845-0012.
    Nondegree Programs--Public Institutions.
    Based upon the analysis in Table 9-A, we estimate that there are 
20,470 existing gainful employment nondegree programs at public 
institutions (37,218 total gainful employment programs times 55 percent 
that are nondegree programs equals 20,470 nondegree programs). Based 
upon the analysis in Table 1, we project that 68.1 percent of these 
programs will be exempt from the debt measures because they have 30 or 
fewer borrowers or completers and that the remaining 31.9 percent of 
these programs will be subject to the debt measures; therefore, 6,530 
nondegree programs at public institutions (20,470 times 0.319 equals 
6,530) will be subject to the debt measures.
    Table 9-A indicates that 3 percent of gainful employment nondegree 
programs at public institutions will fail or become ineligible for a 
total of 196 programs (6,530 times 0.03 equals 196). Therefore, for the 
reasons discussed previously, we estimate that public

[[Page 59875]]

institutions would apply for approval for 196 gainful employment 
nondegree programs under proposed Sec.  600.20(d)(2). We estimate that, 
on average, each application would take 3 hours to prepare and submit 
to the Department; therefore, the total amount of burden for public 
institutions to submit applications for new gainful employment 
nondegree programs would equal 588 hours under OMB control number 1845-
0012.
    Collectively, we project that the annual burden for the submission 
of applications for new gainful employment nondegree programs under 
proposed Sec.  600.20(d) would be 3,048 hours under OMB 1845-0012.
    Degree Programs.
    Based upon the analysis in Table 9-A, we estimate that there are 
5,901 existing gainful employment degree programs at proprietary 
institutions (13,114 total gainful employment programs at proprietary 
institutions times 45 percent that are degree programs equals 5,901 
degree programs). Based upon the analysis in Table 1, we project that 
39.5 percent will be exempt from the debt measures because they have 30 
or fewer borrowers or completers and that the remaining 60.5 percent of 
these programs will be subject to the debt measures; therefore, 3,570 
degree programs (5,901 times 0.605 equals 3,570) will be subject to the 
debt measures.
    Table 9-A indicates that 18 percent of degree programs at 
proprietary schools will fail or become ineligible for a total of 643 
programs (3,570 times 0.18 equals 643). Therefore, for the reasons 
described previously, we estimate that proprietary institutions would 
apply for approval for 643 new gainful employment degree programs under 
proposed Sec.  600.20(d)(2).
    As indicated previously, given the additional items that an 
institution must include in its application, we have adjusted the 
amount of burden per submission; therefore, we estimate that the 
average amount of time to prepare and submit the application would 
increase from 1.75 hours, as described in the Gainful Employment--New 
Programs final regulations, to 2.25 hours per submission under these 
proposed regulations.
    We estimate that the burden for institutions to submit individual 
applications for 643 new degree programs would be 1,447 hours (643 
individual submissions times 2.25 hours per submission equals 1,447 
hours) under OMB control number 1845-0012. Collectively, we estimate 
that the annual burden on proprietary institutions for gainful 
employment degree program submissions under proposed Sec.  600.20(d) 
would be 1,447 hours under OMB control number 1845-0012.

Section 600.20(d)(4)(ii)

    The proposed regulations in Sec.  600.20(d)(4)(ii) provide that the 
Secretary may request additional information from an institution that 
has submitted an application for approval of a new program before 
making an eligibility determination. Therefore, we have estimated the 
amount of reporting burden associated with providing the additional 
information. As we did with our analysis of the burden under proposed 
Sec.  600.20(d)(3), we provide the following sector-by-sector analysis 
of the burden for nondegree programs under the provisions of Sec.  
600.20(d)(4)(ii).
    Nondegree Programs--Proprietary Institutions.
    As noted previously, we estimate that proprietary institutions 
would apply for approval for 786 new gainful employment nondegree 
programs under proposed Sec.  600.20(d). We further estimate that of 
those 786 new programs, the Secretary will request additional 
information for 24 percent. We estimate that for 10 percent of the 
applications, the request will be for minor clarifications and would 
likely be resolved through a phone call or e-mail to institutional 
staff. The additional increase in burden associated with these minor 
clarifications would average an additional 0.5 hours per contact for a 
total increase of 40 hours under OMB control number 1845-0012 (786 
applications times 0.1 equals 79 requests for minor clarifications, 
times 0.5 hours per request equals 40 hours).
    We estimate that for 14 percent of the applications, an institution 
would have to submit substantive additional information in response to 
the Secretary's request. The additional increase in burden associated 
with responding to a request for additional substantive information 
would average an additional 3 hours per request for a total increase of 
330 hours under OMB control number 1845-0012 (786 applications times 
0.14 equals 110 requests for substantive additional information, times 
3 hours per request equals 330 hours).
    Nondegree programs--Private Nonprofit Institutions.
    As noted previously, we estimate that private nonprofit 
institutions would apply for approval for 34 new gainful employment 
nondegree programs under proposed Sec.  600.20(d)(2). We further 
estimate that of those 34 new programs, the Secretary will request 
additional information for 24 percent. We estimate that for 10 percent 
of the applications, the request will be for minor clarifications and 
would likely be resolved through a phone call or e-mail to 
institutional staff. The additional increase in burden associated with 
these minor clarifications would average an additional 0.5 hours per 
contact for a total increase of 2 hours under OMB control number 1845-
0012 (34 applications times 0.10 equals 3 requests for minor 
clarifications times 0.5 hours per request equals 2 hours).
    We estimate that for 14 percent of the applications, an institution 
would have to submit substantive additional information in response to 
the Secretary's request. The additional increase in burden associated 
with responding to a request for additional substantive information 
would average an additional 3 hours per request for a total increase of 
15 hours under OMB control number 1845-0012 (34 applications times 0.14 
equals 5 requests for substantive additional information, times 3 hours 
per request equals 15 hours).
    Nondegree Programs--Public Institutions.
    As noted previously, we estimate that public institutions would 
apply for approval for 196 new gainful employment nondegree programs 
under proposed Sec.  600.20(d)(2). We further estimate that of those 
196 new programs, the Secretary will request additional information for 
24 percent. We estimate that for 10 percent of the applications, the 
request will be for minor clarifications and would likely be resolved 
through a phone call or e-mail to institutional staff. The additional 
increase in burden associated with these minor clarifications would 
average an additional 0.5 hours per contact for a total increase of 10 
hours under OMB control number 1845-0012 (196 applications times 0.10 
equals 20 requests for minor clarifications, times 0.5 hours per 
request equals 10 hours).
    We estimate that for 14 percent of the applications, an institution 
would have to submit additional substantive information in response to 
the Secretary's request. The additional increase in burden associated 
with responding to a request for additional substantive information 
would average an additional 3 hours per request for a total increase of 
81 hours under OMB control number 1845-0012 (196 applications times 
0.14 equals 27 requests for substantive additional information, times 3 
hours per request equals 81 hours).
    Collectively, we estimate that the annual burden hours associated 
with

[[Page 59876]]

the submission of additional information after being contacted by the 
Department regarding new gainful employment nondegree programs would be 
478 hours under OMB control number 1845-0012.
    Degree Programs.
    As stated previously, we estimate that proprietary institutions 
would apply for approval of 643 new gainful employment degree programs 
under proposed Sec.  600.20(d)(2). We further estimate that of those 
643 new programs, the Secretary will request additional information for 
24 percent. We estimate that for 10 percent of the applications, the 
request will be for minor clarifications and would likely be resolved 
through a phone call or e-mail to institutional staff. The additional 
increase in burden associated with these minor clarifications would 
average an additional 0.5 hours per contact for a total increase of 32 
hours under OMB control number 1845-0012 (643 applications times 0.10 
equals 64 requests for minor clarifications, times 0.5 hours per 
request equals 32 hours). We estimate that for 14 percent of the 
applications, an institution would have to submit substantive 
additional information in response to the Secretary's request. The 
additional increase in burden associated with responding to a request 
for additional substantive information request would average an 
additional 3 hours per request for a total increase of 270 hours under 
OMB control number 1845-0012 (643 applications times 0.14 equals 90 
requests for substantive additional information, times 3 hours per 
request equals 270 hours).
    Collectively, we estimate that the annual burden hours associated 
with the submission of additional information after being contacted by 
the Department regarding new degree programs would be 302 hours under 
OMB control number 1845-0012.
    In total, the proposed regulations in Sec.  600.20(d) would result 
in a reduction in burden under OMB 1845-0012 to 5,275 hours. This is 
because we have revised the currently approved burden of 3,591 hours 
under OMB 1845-0012 to 12,343 hours of burden. To attain this result, 
we multiplied 4,085 nondegree programs by 2.5 hours per program, which 
equals 10,213 hours. To this figure, we added 774 hours of burden (442 
degree programs times 1.75 hours per program) for a sum of 10,987 hours 
of burden. To this sum we added the burden associated with the 
reporting of additional information for 10 percent of the 4,527 new 
programs (452 programs), which we estimated would be 1,356 hours (452 
times 3). This results in 12,343 hours of burden. The revision was due 
to the use of more recent data regarding new gainful employment 
nondegree program applications for 2009 and 2010. Under these proposed 
regulations to streamline and limit the scope of affected programs, the 
burden associated with the application process will decrease by 7,068 
hours under OMB control number 1845-0012.

                        Collection of Information
------------------------------------------------------------------------
                                 Information
    Regulatory section            collection             Collection
------------------------------------------------------------------------
600.20....................  The currently          OMB 1845-0012.
                             approved burden for   The burden has been
                             this section has       revised from 3,591
                             been revised based     hours to 12,343
                             upon newer data        hours based upon new
                             which increases the    nondegree program
                             burden from the        applications
                             currently approved     received in 2009 and
                             3,591 hours to         2010. These proposed
                             12,343 hours. This     regulations would
                             proposed regulatory    result in a decrease
                             section streamlines    in burden to 5,275
                             the application        hours, a decrease of
                             requirement for new    7,068 hours.
                             gainful employment
                             programs and limits
                             the need to submit
                             an application to
                             new programs that
                             are the same as or
                             substantially
                             similar to failing
                             programs that are
                             voluntarily
                             discontinued by the
                             institution or
                             programs that became
                             ineligible, or
                             programs that are
                             substantially
                             similar to a failing
                             program. The
                             proposed regulations
                             also require
                             institutions to
                             provide additional
                             information about a
                             new program when
                             requested by the
                             Secretary.
------------------------------------------------------------------------

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.
    Accessible Format: Individuals with disabilities can obtain this 
document in an accessible format (e.g., braille, large print, 
audiotape, or compact disc) on request to the program contact person 
listed under FOR FURTHER INFORMATION CONTACT.
    Electronic Access to This Document: 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 via the Federal Digital System 
at: http://www.gpo.gov/fdsys. At this site 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). To 
use PDF you must have Adobe Acrobat Reader, which is available free at 
the site.
    You may also access documents of the Department published in the 
Federal Register by using the article search feature at: http://www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department. You may also view this document in text or PDF at 
the following site: http://www2.ed.gov/about/offices/list/ope/policy.html.
    (Catalog of Federal Domestic Assistance Numbers: 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; 84.375 Academic Competitiveness Grant (ACG); 
84.376 National Science and Mathematics Access to Retain Talent 
(National SMART); 84.379 TEACH Grant Program)

List of Subjects in 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.

    Dated: September 20, 2011.
Arne Duncan,
Secretary of Education.
    For the reasons discussed in the preamble, the Secretary proposes 
to amend part 600 of title 34 of the Code of Federal Regulations as 
follows:

PART 600--INSTITUTIONAL ELIGIBILITY UNDER THE HIGHER EDUCATION ACT 
OF 1965, AS AMENDED

    1. The authority citation for part 600 continues to read as 
follows:

[[Page 59877]]

    Authority:  20 U.S.C. 1001, 1002, 1003, 1088, 1091, 1094, 1099b, 
and 1099c, unless otherwise noted.

    2. Section 600.2 is amended by adding, in alphabetical order, the 
definition of ``Classification of instructional programs or CIP'' to 
read as follows:

Sec.  600.2  Definitions.

* * * * *
    Classification of instructional programs or CIP: A taxonomy of 
instructional program classifications and descriptions developed by the 
U.S. Department of Education's National Center for Education 
Statistics.
* * * * *
    3. Section 600.10 is amended by:
    A. Revising paragraph (c)(1).
    B. Removing paragraph (c)(2).
    C. Redesignating paragraph (c)(3) as paragraph (c)(2).
    The revision reads as follows:

Sec.  600.10  Date, extent, duration, and consequence of eligibility.

* * * * *
    (c) New educational programs. (1) An eligible institution that 
seeks to establish the eligibility of an educational program after it 
has been designated as an eligible institution by the Secretary does 
not have to apply to the Secretary to have that program approved 
unless--
    (i) The institution is required to obtain the Secretary's approval 
under the provisions in Sec.  600.20(c)(2), Sec.  600.20(d)(2), 34 CFR 
668.10(b), 34 CFR 668.14(a)(1), or 34 CFR 668.232; or
    (ii) The Secretary notifies the institution that it must apply for 
approval.
* * * * *
    4. Section 600.20 is amended by:
    A. Revising the section heading.
    B. Revising paragraph (d).
    The revisions read as follows:

Sec.  600.20  Application procedures for establishing, reestablishing, 
maintaining, or expanding program eligibility or institutional 
eligibility and certification.

* * * * *
    (d) Application requirements. (1) General. To satisfy the 
requirements of paragraphs (a), (b), and (c) of this section, an 
institution must submit an application to the Secretary in a format 
prescribed by the Secretary for that purpose and provide all the 
information and documentation requested by the Secretary to make a 
determination of its eligibility and certification.
    (2) Gainful employment programs. (i) Except as provided under Sec.  
600.10(c)(1), an institution that seeks to establish the eligibility of 
a program that leads to gainful employment, as described under 34 CFR 
668.7(a)(2)(i), must apply to the Secretary only if the program is--
    (A) The same as, or substantially similar to, a program that--
    (1) Was a failing program that was voluntarily discontinued by the 
institution under 34 CFR 668.7(l)(1); or
    (2) Became ineligible for title IV, HEA program funds under 34 CFR 
668.7(i); or
    (B) Substantially similar to a program designated as a failing 
program under 34 CFR 668.7(h) for any one of the two most recent fiscal 
years.
    (ii) For the purposes of this section, a program is substantially 
similar if it has the same credential level and the same first four 
digits of the CIP code as that of a failing program, a failing program 
the institution voluntarily discontinued, or an ineligible program.
    (iii) An institution that submits an application for a gainful 
employment program must obtain the Secretary's approval before 
providing title IV, HEA program funds to students enrolled in the 
program. However, an institution may not apply to reestablish the 
eligibility of a failing program that was voluntarily discontinued by 
the institution, or a program that is the same as or substantially 
similar to an ineligible program, until the ineligibility period for 
that program has expired, as provided under 34 CFR 668.7(l)(2).
    (3) Application. An institution that seeks to establish the 
eligibility of a program that leads to gainful employment under 
paragraph (d)(2) of this section must include in its application--
    (i) A description of how the institution determined the need for 
the new gainful employment program and how the program was designed to 
meet local market needs, or for an online program, regional or national 
market needs;
    (ii) A description of how the new program was reviewed or approved 
by, or developed in conjunction with, business advisory committees, 
program integrity boards, public or private oversight or regulatory 
agencies, and businesses that would likely employ graduates of the 
program;
    (iii) Documentation that the new program has been approved by its 
accrediting agency or is otherwise included in the institution's 
accreditation by its accrediting agency, or comparable documentation if 
the institution is a public postsecondary vocational institution 
approved by a recognized State agency for the approval of public 
postsecondary vocational education in lieu of accreditation;
    (iv) The date of the first day of class of the new program.
    (v) A wage analysis of the new program performed by or on behalf of 
the institution. The wage analysis must include supporting 
documentation based on the best data that is reasonably available to 
the institution;
    (vi) Compared to the failing or ineligible program, a description 
of the enhancements or modifications the institution made to improve 
the new program's performance under the gainful employment standards in 
34 CFR 668.7(a); and
    (vii) The CIP code and credential level of the new program, along 
with a description of how the institution determined that CIP code.
    (4) Eligibility determination. (i) In determining whether to 
approve the eligibility of a new gainful employment program, the 
Secretary takes into account--
    (A) The institution's demonstrated financial responsibility and 
administrative capability in operating its existing programs;
    (B) Based on the information provided by the institution under 
paragraph (d)(3) of this section, whether the processes used and 
determinations made by the institution to offer the program are 
sufficient; and
    (C) The performance under 34 CFR 668.7 of the institution's other 
gainful employment programs.
    (ii) The Secretary may request additional information from the 
institution before making an eligibility determination.
    (iii) If the Secretary denies the institution's eligibility for a 
new gainful employment program, the Secretary informs the institution 
of the reasons for the denial. The institution may request that the 
Secretary reconsider the determination.
* * * * *
[FR Doc. 2011-24454 Filed 9-26-11; 8:45 am]
BILLING CODE 4000-01-P
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