Source: https://www.law.cornell.edu/uscode/text/20/1094
Timestamp: 2019-05-21 17:08:23
Document Index: 216267133

Matched Legal Cases: ['§ 1094', '§\u202f1094', 'art 4', 'art 1', 'art 1', 'art 3', 'art 1', '§\u202f493', '§\u202f489', 'art 1', '§\u202f489', '§\u202f489', '§\u202f489', '§\u202f489', 'art 1', '§\u202f2', '§\u202f490', 'art 1', '§\u202f490', 'art 1', '§\u202f493', '§\u202f2003', '§\u202f489', 'ART 3485', 'ART 84']

20 U.S. Code § 1094 - Program participation agreements | U.S. Code | US Law | LII / Legal Information Institute
Section 1094. Program participation agreements
20 U.S. Code § 1094. Program participation agreements
(a) Required for programs of assistance; contentsIn order to be an eligible institution for the purposes of any program authorized under this subchapter, an institution must be an institution of higher education or an eligible institution (as that term is defined for the purpose of that program) and shall, except with respect to a program under subpart 4 of part A, enter into a program participation agreement with the Secretary. The agreement shall condition the initial and continuing eligibility of an institution to participate in a program upon compliance with the following requirements:
The institution will use funds received by it for any program under this subchapter and any interest or other earnings thereon solely for the purpose specified in and in accordance with the provision of that program.
The institution shall not charge any student a fee for processing or handling any application, form, or data required to determine the student’s eligibility for assistance under this subchapter or the amount of such assistance.
The institution will submit reports to the Secretary and, in the case of an institution participating in a program under part B or part E, to holders of loans made to the institution’s students under such parts at such times and containing such information as the Secretary may reasonably require to carry out the purpose of this subchapter.
The institution will not provide any student with any statement or certification to any lender under part B that qualifies the student for a loan or loans in excess of the amount that student is eligible to borrow in accordance with sections 1075(a), 1078(a)(2), and 1078(b)(1)(A) and (B) of this title.
In the case of an institution participating in a program under part B or D, the institution will inform all eligible borrowers enrolled in the institution about the availability and eligibility of such borrowers for State grant assistance from the State in which the institution is located, and will inform such borrowers from another State of the source for further information concerning such assistance from that State.
The institution will not deny any form of Federal financial aid to any student who meets the eligibility requirements of this subchapter on the grounds that the student is participating in a program of study abroad approved for credit by the institution.
The institution, in order to participate as an eligible institution under part B or D, will develop a Default Management Plan for approval by the Secretary as part of its initial application for certification as an eligible institution and will implement such Plan for two years thereafter.
Any institution of higher education which changes ownership and any eligible institution which changes its status as a parent or subordinate institution shall, in order to participate as an eligible institution under part B or D, develop a Default Management Plan for approval by the Secretary and implement such Plan for two years after its change of ownership or status.
The institution acknowledges the authority of the Secretary, guaranty agencies, lenders, accrediting agencies, the Secretary of Veterans Affairs, and the State agencies under subpart 1 of part H to share with each other any information pertaining to the institution’s eligibility to participate in programs under this subchapter or any information on fraud and abuse.
The institution will not knowingly employ an individual in a capacity that involves the administration of programs under this subchapter, or the receipt of program funds under this subchapter, who has been convicted of, or has pled nolo contendere or guilty to, a crime involving the acquisition, use, or expenditure of funds under this subchapter, or has been judicially determined to have committed fraud involving funds under this subchapter or contract with an institution or third party servicer that has been terminated under section 1082 of this title involving the acquisition, use, or expenditure of funds under this subchapter, or who has been judicially determined to have committed fraud involving funds under this subchapter.
convicted of, or pled nolo contendere or guilty to, a crime involving the acquisition, use, or expenditure of funds under this subchapter; or
judicially determined to have committed fraud involving funds under this subchapter.
The institution will not impose any penalty, including the assessment of late fees, the denial of access to classes, libraries, or other institutional facilities, or the requirement that the student borrow additional funds, on any student because of the student’s inability to meet his or her financial obligations to the institution as a result of the delayed disbursement of the proceeds of a loan made under this subchapter due to compliance with the provisions of this subchapter, or delays attributable to the institution.
In the case of a proprietary institution of higher education (as defined in section 1002(b) of this title), such institution will derive not less than ten percent of such institution’s revenues from sources other than funds provided under this subchapter, as calculated in accordance with subsection (d)(1), or will be subject to the sanctions described in subsection (d)(2).
In the case of an institution that has entered into a preferred lender arrangement, the institution will at least annually compile, maintain, and make available for students attending the institution, and the families of such students, a list, in print or other medium, of the specific lenders for loans made, insured, or guaranteed under this subchapter or private education loans that the institution recommends, promotes, or endorses in accordance with such preferred lender arrangement. In making such list, the institution shall comply with the requirements of subsection (h).
except as provided in clauses (ii) and (iii), a financial audit of an eligible institution with regard to the financial condition of the institution in its entirety, and a compliance audit of such institution with regard to any funds obtained by it under this subchapter or obtained from a student or a parent who has a loan insured or guaranteed by the Secretary under this subchapter, on at least an annual basis and covering the period since the most recent audit, conducted by a qualified, independent organization or person in accordance with standards established by the Comptroller General for the audit of governmental organizations, programs, and functions, and as prescribed in regulations of the Secretary, the results of which shall be submitted to the Secretary and shall be available to cognizant guaranty agencies, eligible lenders, State agencies, and the appropriate State agency notifying the Secretary under subpart 1 of part H, except that the Secretary may modify the requirements of this clause with respect to institutions of higher education that are foreign institutions, and may waive such requirements with respect to a foreign institution whose students receive less than $500,000 in loans under this subchapter during the award year preceding the audit period;
at the discretion of the Secretary, with regard to an eligible institution (other than an eligible institution described in section 1002(a)(1)(C) of this title) that has obtained less than $200,000 in funds under this subchapter during each of the 2 award years that precede the audit period and submits a letter of credit payable to the Secretary equal to not less than ½ of the annual potential liabilities of such institution as determined by the Secretary, deeming an audit conducted every 3 years to satisfy the requirements of clause (i), except for the award year immediately preceding renewal of the institution’s eligibility under section 1099c(g) of this title;
in matters not governed by specific program provisions, the establishment of reasonable standards of financial responsibility and appropriate institutional capability for the administration by an eligible institution of a program of student financial aid under this subchapter, including any matter the Secretary deems necessary to the sound administration of the financial aid programs, such as the pertinent actions of any owner, shareholder, or person exercising control over an eligible institution;
except as provided in clause (ii), a compliance audit of a third party servicer (other than with respect to the servicer’s functions as a lender if such functions are otherwise audited under this part and such audits meet the requirements of this clause), with regard to any contract with an eligible institution, guaranty agency, or lender for administering or servicing any aspect of the student assistance programs under this subchapter, at least once every year and covering the period since the most recent audit, conducted by a qualified, independent organization or person in accordance with standards established by the Comptroller General for the audit of governmental organizations, programs, and functions, and as prescribed in regulations of the Secretary, the results of which shall be submitted to the Secretary; or
a compliance audit of a secondary market with regard to its transactions involving, and its servicing and collection of, loans made under this subchapter, at least once a year and covering the period since the most recent audit, conducted by a qualified, independent organization or person in accordance with standards established by the Comptroller General for the audit of governmental organizations, programs, and functions, and as prescribed in regulations of the Secretary, the results of which shall be submitted to the Secretary; or
the establishment, by each eligible institution under part B responsible for furnishing to the lender the statement required by section 1078(a)(2)(A)(i) of this title, of policies and procedures by which the latest known address and enrollment status of any student who has had a loan insured under this part and who has either formally terminated his enrollment, or failed to re-enroll on at least a half-time basis, at such institution, shall be furnished either to the holder (or if unknown, the insurer) of the note, not later than 60 days after such termination or failure to re-enroll;
the limitation, suspension, or termination of the participation in any program under this subchapter of an eligible institution, or the imposition of a civil penalty under paragraph (3)(B) whenever the Secretary has determined, after reasonable notice and opportunity for hearing, that such institution has violated or failed to carry out any provision of this subchapter, any regulation prescribed under this subchapter, or any applicable special arrangement, agreement, or limitation, except that no period of suspension under this section shall exceed 60 days unless the institution and the Secretary agree to an extension or unless limitation or termination proceedings are initiated by the Secretary within that period of time;
(G) an emergency action against an institution, under which the Secretary shall, effective on the date on which a notice and statement of the basis of the action is mailed to the institution (by registered mail, return receipt requested), withhold funds from the institution or its students and withdraw the institution’s authority to obligate funds under any program under this subchapter, if the Secretary—
receives information, determined by the Secretary to be reliable, that the institution is violating any provision of this subchapter, any regulation prescribed under this subchapter, or any applicable special arrangement, agreement, or limitation,
the limitation, suspension, or termination of the eligibility of a third party servicer to contract with any institution to administer any aspect of an institution’s student assistance program under this subchapter, or the imposition of a civil penalty under paragraph (3)(B), whenever the Secretary has determined, after reasonable notice and opportunity for a hearing, that such organization, acting on behalf of an institution, has violated or failed to carry out any provision of this subchapter, any regulation prescribed under this subchapter, or any applicable special arrangement, agreement, or limitation, except that no period of suspension under this subparagraph shall exceed 60 days unless the organization and the Secretary agree to an extension, or unless limitation or termination proceedings are initiated by the Secretary against the individual or organization within that period of time; and
(I) an emergency action against a third party servicer that has contracted with an institution to administer any aspect of the institution’s student assistance program under this subchapter, under which the Secretary shall, effective on the date on which a notice and statement of the basis of the action is mailed to such individual or organization (by registered mail, return receipt requested), withhold funds from the individual or organization and withdraw the individual or organization’s authority to act on behalf of an institution under any program under this subchapter, if the Secretary—
receives information, determined by the Secretary to be reliable, that the individual or organization, acting on behalf of an institution, is violating any provision of this subchapter, any regulation prescribed under this subchapter, or any applicable special arrangement, agreement, or limitation,
If an individual who, or entity that, exercises substantial control, as determined by the Secretary in accordance with the definition of substantial control in subpart 3 of part H, over one or more institutions participating in any program under this subchapter, or, for purposes of paragraphs (1)(H) and (I), over one or more organizations that contract with an institution to administer any aspect of the institution’s student assistance program under this subchapter, is determined to have committed one or more violations of the requirements of any program under this subchapter, or has been suspended or debarred in accordance with the regulations of the Secretary, the Secretary may use such determination, suspension, or debarment as the basis for imposing an emergency action on, or limiting, suspending, or terminating, in a single proceeding, the participation of any or all institutions under the substantial control of that individual or entity.
Upon determination, after reasonable notice and opportunity for a hearing, that an eligible institution has engaged in substantial misrepresentation of the nature of its educational program, its financial charges, or the employability of its graduates, the Secretary may suspend or terminate the eligibility status for any or all programs under this subchapter of any otherwise eligible institution, in accordance with procedures specified in paragraph (1)(D) of this subsection, until the Secretary finds that such practices have been corrected.
has violated or failed to carry out any provision of this subchapter or any regulation prescribed under this subchapter; or
The Secretary shall make readily available to appropriate guaranty agencies, eligible lenders, State agencies notifying the Secretary under subpart 1 of part H, and accrediting agencies or associations the results of the audits of eligible institutions conducted pursuant to paragraph (1)(A).
Effective with respect to any audit conducted under this subsection after December 31, 1988, if, in the course of conducting any such audit, the personnel of the Department of Education discover, or are informed of, grants or other assistance provided by an institution in accordance with this subchapter for which the institution has not received funds appropriated under this subchapter (in the amount necessary to provide such assistance), including funds for which reimbursement was not requested prior to such discovery or information, such institution shall be permitted to offset that amount against any sums determined to be owed by the institution pursuant to such audit, or to receive reimbursement for that amount (if the institution does not owe any such sums).
tuition, fees, and other institutional charges for students enrolled in programs eligible for assistance under this subchapter;
(iii)funds paid by a student, or on behalf of a student by a party other than the institution, for an education or training program that is not eligible for funds under this subchapter, if the program—
(C) presume that any funds for a program under this subchapter that are disbursed or delivered to or on behalf of a student will be used to pay the student’s tuition, fees, or other institutional charges, regardless of whether the institution credits those funds to the student’s account or pays those funds directly to the student, except to the extent that the student’s tuition, fees, or other institutional charges are satisfied by—
in the case of each student who receives a loan on or after July 1, 2008, and prior to July 1, 2011, that is authorized under section 1078–8 of this title or that is a Federal Direct Unsubsidized Stafford Loan, treat as revenue received by the institution from sources other than funds received under this subchapter, the amount by which the disbursement of such loan received by the institution exceeds the limit on such loan in effect on the day before May 7, 2008; and
the amount of funds the institution received under part C, unless the institution used those funds to pay a student’s institutional charges;
the amount of funds provided by the institution as matching funds for a program under this subchapter;
the amount of funds provided by the institution for a program under this subchapter that are required to be refunded or returned; and
(B) Additional enforcementIn addition to such other means of enforcing the requirements of this subchapter as may be available to the Secretary, if a proprietary institution of higher education fails to meet a requirement of subsection (a)(24) for any institutional fiscal year, then the institution’s eligibility to participate in the programs authorized by this subchapter becomes provisional for the two institutional fiscal years after the institutional fiscal year in which the institution failed to meet the requirement of subsection (a)(24), except that such provisional eligibility shall terminate—
(4) Report to CongressNot later than July 1, 2009, and July 1 of each succeeding year, the Secretary shall submit to the authorizing committees a report that contains, for each proprietary institution of higher education that receives assistance under this subchapter, as provided in the audited financial statements submitted to the Secretary by each institution pursuant to the requirements of subsection (a)(24)—
the amount and percentage of such institution’s revenues received from sources under this subchapter; and
a lender provides or issues a loan that is made, insured, or guaranteed under this subchapter to students attending the institution or to the families of such students; and
a specified number of loans made, insured, or guaranteed under this subchapter;
In the event the Secretary initiates the limitation, suspension, or termination of the participation of an institution of higher education in any program under this subchapter under the authority of subsection (c)(1)(F) or initiates an emergency action under the authority of subsection (c)(1)(G) and its prescribed regulations, the Secretary shall require that institution to prepare a teach-out plan for submission to the institution’s accrediting agency or association in compliance with section 1099b(c)(3) of this title, the Secretary’s regulations on teach-out plans, and the standards of the institution’s accrediting agency or association.
highly competitive interest rates, or other terms and conditions or provisions of loans under this subchapter or private education loans;
not deny or otherwise impede the borrower’s choice of a lender or cause unnecessary delay in loan certification under this subchapter for those borrowers who choose a lender that is not included on the preferred lender list; and
Subsec. (c)(1)(A)(i). Pub. L. 110–315, § 493(b), inserted before semicolon at end “, except that the Secretary may modify the requirements of this clause with respect to institutions of higher education that are foreign institutions, and may waive such requirements with respect to a foreign institution whose students receives less than $500,000 in loans under this subchapter during the award year preceding the audit period”.
1998—Subsec. (a)(3)(B) to (D). Pub. L. 105–244, § 489(a)(1), redesignated subpars. (C) and (D) as (B) and (C), respectively, and struck out former subpar. (B) which read as follows: “the appropriate State review entity designated under subpart 1 of part H;”.
Subsec. (a)(9). Pub. L. 105–244, § 489(a)(3), substituted “part B or D” for “part B”.
Subsec. (a)(14)(A), (B). Pub. L. 105–244, § 489(a)(4)(A), (B), substituted “part B or D” for “part B”.
Subsec. (a)(21). Pub. L. 105–244, § 489(a)(7), amended par. (21) generally. Prior to amendment, par. (21) read as follows: “The institution will meet the requirements established by the Secretary, State postsecondary review entities, and accrediting agencies pursuant to part H of this subchapter.”
Subsec. (c)(4). Pub. L. 105–244, § 489(c)(2), struck out “, after consultation with each State review entity designated under subpart 1 of part H of this subchapter,” after “shall publish”.
Subsec. (c)(1)(F). Pub. L. 103–208, § 2(h)(43), substituted “participation in any program under this subchapter of an eligible institution,” for “eligibility for any program under this subchapter of any otherwise eligible institution,”.
Subsec. (c)(1)(A)(i). Pub. L. 102–325, § 490(c), substituted “a financial audit of an eligible institution with regard to the financial condition of the institution in its entirety, and a compliance audit of such institution” for “a financial and compliance audit of an eligible institution,” and “on at least an annual basis” for “at least once every 2 years” and inserted “and shall be available to cognizant guaranty agencies, eligible lenders, State agencies, and the State review entities referred to in subpart 1 of part H” after “submitted to the Secretary”.
Pub. L. 102–325, § 490(d)(6), inserted “, after consultation with each State review entity designated under subpart 1 of part H,” after “shall publish”.
Pub. L. 110–315, title IV, § 493(a)(1)(B), Aug. 14, 2008, 122 Stat. 3309, provided that:
“The amendment made by subparagraph (A) [amending this section] with respect to section 487(a)(26) of the Higher Education Act of 1965 [20 U.S.C. 1094(a)(26)] (as added by subparagraph (A)) shall apply with respect to any disciplinary proceeding conducted by an institution on or after the day that is one year after the date of enactment of this Act [Aug. 14, 2008].”
Pub. L. 101–239, title II, § 2003(c)(3), Dec. 19, 1989, 103 Stat. 2114, provided that:
“The amendments made by this subsection [amending this section and section 1078–1 of this title] shall apply with respect to periods of enrollment beginning on or after January 1, 1990.”
Pub. L. 105–244, title IV, § 489(b)(2), Oct. 7, 1998, 112 Stat. 1751, provided that:
“No officer of the executive branch is authorized to instruct the institution in the manner in which the amendment made by this subsection [amending this section] is carried out.”
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34 CFR PART 84 - GOVERNMENTWIDE REQUIREMENTS FOR DRUG-FREE WORKPLACE (FINANCIAL ASSISTANCE)
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