[Federal Register Volume 59, Number 15 (Monday, January 24, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-1459]


[[Page Unknown]]

[Federal Register: January 24, 1994]


_______________________________________________________________________

Part II





Department of Education





_______________________________________________________________________



34 CFR Part 602




Secretary's Procedures and Criteria for Recognition of Accrediting 
Agencies; Proposed Rule
DEPARTMENT OF EDUCATION

34 CFR Part 602

RIN 1840-AB82

 
Secretary's Procedures and Criteria for Recognition of 
Accrediting Agencies

AGENCY: Education.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Secretary proposes to amend the regulations governing the 
Secretary's recognition of accrediting agencies. The proposed 
regulations are needed to implement provisions added to the Higher 
Education Act of 1965 (HEA) by the Higher Education Amendments of 1992. 
The purpose of the Secretary's recognition of accrediting agencies is 
to assure that those agencies are, for HEA and other Federal purposes, 
reliable authorities as to the quality of education or training offered 
by the institutions of higher education or higher education programs 
they accredit.

DATES: Comments must be received on or before March 21, 1994.

ADDRESSES: All comments concerning these proposed regulations should be 
addressed to Karen W. Kershenstein, U.S. Department of Education, 400 
Maryland Avenue, SW., room 3036, ROB-3, Washington, DC 20202-5244.
    A copy of any comments that concern information collection 
requirements should also be sent to the Office of Management and Budget 
at the address listed in the Paperwork Reduction Act section of this 
preamble.
FOR FURTHER INFORMATION CONTACT: Karen W. Kershenstein. Telephone: 
(202) 708-7417. Individuals who use a telecommunications device for the 
deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-
800-877-8339 between 8 a.m. and 8 p.m., Eastern time, Monday through 
Friday.

SUPPLEMENTARY INFORMATION: In order to approve a postsecondary 
education institution to participate in the student financial 
assistance (SFA) programs authorized under Title IV of the HEA and many 
other Federal programs, the Secretary must determine, in part, that the 
institution satisfies the statutory definition of an ``institution of 
higher education.'' Under the HEA and other Federal statutes, one 
element of that definition requires an eligible institution of higher 
education to be accredited or preaccredited by an accrediting agency 
recognized by the Secretary as a reliable authority as to the quality 
of the education or training provided by the institution. Another 
element requires an eligible institution to be legally authorized to 
provide an educational program beyond the secondary level in the State 
in which it is located. Thus, the statutory definition of an 
institution of higher education provides the framework for a shared 
responsibility among accrediting agencies, States, and the Federal 
government to ensure that the ``gate'' to SFA programs is opened to 
only those institutions that provide students with quality education or 
training worth the time, energy, and money they invest in it. The three 
``gatekeepers'' sharing this responsibility have traditionally been 
referred to as ``the triad.'' While the concept of a triad of entities 
responsible for gatekeeping has had a long history, the triad has not 
always worked as effectively as it should to ensure educational 
quality, nor has it served as an effective deterrent to abuse by 
institutions participating in SFA programs.
    For several years, certain institutions participating in SFA 
programs have failed to provide students with education or training of 
an acceptable level of quality; they have also failed to treat students 
fairly. In addition, they have failed to meet acceptable standards of 
financial responsibility and administrative capability and to 
adequately protect the SFA program funds entrusted to them. The 
institutions that have engaged in these abusive practices are not 
restricted to a particular sector of higher education. Rather, the 
abuses have been found in all types of institutions participating in 
SFA programs, including those in the private non-profit and public 
sectors of higher education as well as those in the proprietary sector.
    At the same time, gatekeeping functions have not been carried out 
effectively. For example, some accrediting agencies have not taken 
sufficient care to ensure the quality of the education or training 
provided by the institutions or programs they accredit or to protect 
student interests when they accredit particular institutions or 
programs. Moreover, some States have also not taken sufficient care to 
ensure the quality of the education or training provided by the 
institutions they authorize or license to operate in the State or to 
protect student interests. Finally, the Federal government's management 
of its responsibilities to determine eligibility and to certify 
institutions to participate in SFA programs has not always been 
adequate to prevent abusive practices at institutions that participate 
in SFA programs.
    Consequently, in the Higher Education Amendments of 1992, Public 
Law 102-325, Congress amended the HEA to provide for a new part H of 
Title IV entitled ``Program Integrity Triad.'' Under that part, States 
and accrediting agencies are required to assume major new oversight 
responsibilities, and States, accrediting associations, and the 
Secretary are linked to create a stronger and more coordinated 
evaluation of institutions that participate or wish to participate in 
the SFA programs. The Secretary believes that the most appropriate 
approach to this coordinated evaluation of institutions by the three 
components of the triad is a complementary one with each component 
focusing its evaluation on its obligations within the context of the 
HEA. Thus, the focus for accrediting agencies is the quality of 
education or training provided by the institutions or programs they 
accredit. For States, which already had responsibility for determining 
that institutions have the legal authority to operate within the State, 
the HEA added a new focus: reviewing institutions that meet certain 
statutory review criteria. The focus of the Secretary's evaluation of 
institutions is the administrative and financial capacity of those 
institutions to participate in the SFA programs.
    The statute allocates legal responsibility among the entities that 
compose the program integrity triad. While specific statutory 
responsibilities for the three triad entities may overlap, when viewed 
as a whole the triad brings together in a coordinated fashion three 
different but very important aspects of institutional review. Within 
this statutory scheme, the Secretary has sought to assure that the 
gatekeeping system operates as efficiently as possible, with maximum 
integration among the three triad entities and without unnecessary 
burden on postsecondary institutions. In order to assist the Secretary 
in designing a final regulation that achieves these goals, the 
Secretary specifically requests comment on the following questions:
    (1) In several areas, the statute specifically requires each triad 
entity to evaluate an institution under the same or similar standards. 
For example, a SPRE and an accrediting agency may establish different 
standards for evaluating the financial responsibility of an institution 
or for evaluating the success of an institution's educational program. 
Thus, a reviewed institution would need to satisfy the SPRE's and the 
accrediting agency's standards even though those standards address the 
same areas. How should final regulations be structured to both reduce 
the burden on institutions and enable the triad entities to carry out 
effectively their statutory functions?
    (2) Should the final regulations be more explicit in identifying 
levels, characteristics, or definitions for any of the assessment or 
review criteria that a triad entity is expected to consider in its 
evaluation of an institution?
    Subpart 1 of part H establishes a State Postsecondary Review 
Program under which each State designates a single State postsecondary 
review entity that is responsible for reviewing institutions of higher 
education that the Secretary identifies as meeting certain review 
criteria and for determining whether those institutions should continue 
to participate in the SFA programs. Subpart 3 specifies the procedures 
the Secretary uses to determine whether an institution meets the 
eligibility requirements and has the administrative capacity and 
financial responsibility to administer the SFA programs.
    In subpart 2 of part H, the Secretary is charged with making a 
comprehensive and careful evaluation of an accrediting agency before 
recognizing that agency as a reliable authority as to the quality of 
the education or training offered by institutions or programs that the 
agency accredits. Moreover, as part of this evaluation, the Secretary 
is charged with establishing recognition standards that must include 
``an appropriate measure or measures of student achievement.'' 
Accordingly, the standards that the Secretary proposes in this notice 
of proposed rulemaking require an accrediting agency to make a detailed 
and careful evaluation of the institutions or programs it accredits and 
to include in that evaluation ``appropriate measure or measures of 
student achievement.''
    These proposed regulations were subject to the negotiated 
rulemaking process set forth in section 492 of the HEA. Under that 
process, the Secretary convened four regional meetings in September, 
1992 to obtain public involvement in the development of these proposed 
regulations. The meetings were held in San Francisco, Atlanta, New 
York, and Kansas City. Before convening the meetings, the Secretary 
held a meeting in Washington, DC in August 1992 to invite comments from 
interested parties as to the key issues that should be addressed at the 
regional meetings.
    At the four regional meetings, the Secretary provided attendees 
with a list of issues that needed to be addressed in these proposed 
regulations. A summary of the responses of the attendees is contained 
in Appendix A to these proposed regulations.
    Individuals and groups who attended the regional meetings nominated 
individuals to participate in the negotiated rulemaking process. The 
Secretary selected negotiators from the list of nominees to reflect all 
the groups that are involved in the SFA programs. With regard to these 
proposed regulations, the Secretary chose negotiators who reflected the 
diversity of the accrediting community as well as the interests of 
States, higher education institutions, and students.
    In accordance with section 492(b) of the HEA, the Secretary 
prepared a draft proposed regulation and negotiated the provisions of 
that draft with the negotiators. Two negotiating sessions were held: 
one in January 1993 and one in February 1993. During those sessions, 
consensus was reached on several of the provisions that are included in 
this notice of proposed rulemaking. On the remaining provisions, 
however, the negotiators agreed to disagree. Where agreement was not 
reached on a particular provision, that fact is noted in the discussion 
that follows.
    On several issues that were negotiated, there was general 
discussion on various approaches to take with regard to those issues. 
The Secretary believes those issues are important enough to include in 
this preamble possible alternative approaches in order to give the 
public a fuller understanding of the issues and the available potential 
solutions. Finally, on most issues where consensus was reached, the 
negotiators also reached general agreement on the language of a 
proposed regulatory provision. However, the Secretary wishes to 
reiterate the remarks of the Federal negotiators that the agreed-to 
language with regard to a specific provision would be subject to change 
in the proposed regulations for technical reasons but the substance of 
the provision would remain unchanged, wherever possible. Where a 
substantive change was made in a particular provision, that fact is 
noted in the discussion that follows, and an explanation of the reasons 
for the change is provided.

Significant Changes Proposed by the Regulations

    The following discussion reflects proposed significant changes to 
the existing regulations governing the Secretary's Procedures and 
Criteria for Recognition of Accrediting Agencies. The changes are 
discussed in the order in which they appear in the proposed 
regulations. If a provision applies to more than one section or is 
included in more than one section, it is discussed the first time it 
appears with an appropriate cross-reference to its other appearances. 
The general format for the discussion of each section is to state the 
appropriate statutory provision for that section and to explain any 
provisions that interpret or clarify the statute that the Secretary 
believes are necessary to implement the statutory provision through 
regulation.
    In developing these proposed regulations, the Secretary has 
regulated as little as possible. He has regulated narrowly to the law, 
except where the Secretary deems further interpretation is necessary. 
In these cases, either the proposed regulations include the specific 
language agreed to by negotiators during negotiated rulemaking, if an 
agreement was reached, or the Secretary proposes language where 
agreement was not reached. In both cases, the Secretary solicits 
comments on the clarifications and interpretations included in the 
proposed regulations.

Subpart A--General Provisions

Section 602.1  Purpose
    Current regulations permit the Secretary to recognize any 
accrediting agency the Secretary determines to be a reliable authority 
as to the quality of postsecondary education or training provided by 
the institutions or programs it accredits. However, section 496(m) of 
the HEA now authorizes the Secretary to recognize only those agencies 
that accredit institutions of higher education or higher education 
programs for the purpose of enabling those institutions or programs to 
establish eligibility to participate in programs administered either by 
the Secretary or by other Federal agencies. In Sec. 602.1 of the 
proposed regulations, the Secretary reiterates the statutory provision.
Section 602.2  Definitions
    Most of the definitions included in the proposed regulations are 
self-explanatory. Three, however, warrant additional comment based on 
the discussions that took place during the negotiated rulemaking 
sessions.
    Institution of higher education. In the proposed regulations, the 
Secretary defines an institution of higher education to be an 
educational institution that qualifies or may qualify as an eligible 
institution under 34 CFR part 600, Institutional Eligibility under the 
Higher Education Act of 1965, as amended. Some of the non-Federal 
negotiators, however, pointed out that it is not clear that this 
definition includes certain types of hospitals and health care 
facilities. For this reason, the Secretary wishes to make clear that a 
hospital or health care facility may qualify as an eligible institution 
of higher education if the hospital or facility satisfies any 
definition of that term, i.e., a ``public or nonprofit private 
institution of higher education,'' a ``proprietary institution of 
higher education,'' or a ``postsecondary vocational institution.''
    Prebaccalaureate vocational education programs and vocational 
education programs.
    In Sec. 602.2, the Secretary proposes to define the term 
``vocational education program'' based upon the statutory provision 
included in the definition of various types of eligible institutions of 
higher education. Thus, the Secretary defines a vocational education 
program as a program that ``prepares students for gainful employment in 
a recognized occupation.'' (See, for example, section 481(b)(1) of the 
HEA for a ``proprietary institution of higher education;'' section 
481(c)(1) for a ``postsecondary vocational institution;'' and the 
second sentence of section 1201(a) of the HEA for a ``public and 
private nonprofit institution of higher education.'')
    This definition, if read literally, could be viewed as including 
all postsecondary programs. To avoid this overreaching conclusion, the 
Secretary proposes that the vocational education programs that trigger 
actions under these regulations are prebaccalaureate vocational 
education programs. See, for example, Sec. 602.24(c). This latter term 
is defined as a vocational education program that leads to a 
certificate, degree, or other education credential that is less than a 
bachelor's degree. The Secretary invites comment on these definitions, 
as well as alternative definitions, in light of the fact that the non-
Federal negotiators could not agree among themselves as to the 
acceptability of these definitions.
    One alternative definition for prebaccalaureate vocational 
education that the Secretary is considering is ``undergraduate 
vocational education that leads to a certificate or other educational 
credential but not to a degree.'' The Secretary is considering this 
definition in order to ease the burden on institutions whose vocational 
education programs leading to an associate degree would also trigger 
special action under the proposed regulations.
    If this alternative definition were to be adopted, however, the 
Secretary is concerned that some institutions might try to stretch 
their non-degree programs into associate-degree programs simply to 
avoid the additional requirements that, as a result of these proposed 
regulations, accrediting agencies will have to impose on institutions 
that provide prebaccalaureate vocational education. The Secretary 
invites comments on the alternative definition of prebaccalaureate 
vocational education and suggestions for preventing unwarranted course 
or program stretching, should the alternative definition be adopted. 
The Secretary also wishes to know if commenters believe there are other 
risks associated with adopting the alternative definition that might 
outweigh any benefits derived by the degree-granting sector of the 
higher education community through its adoption.
    The Secretary acknowledges that the definition of ``vocational 
education'' in these proposed regulations differs from the definition 
of ``vocational program'' as that term is defined in the proposed 
regulations for the State Postsecondary Review Program (``an 
educational program below the baccalaureate degree level, that is not 
classified as a professional program, that prepares students for 
gainful employment in a recognized profession''). The Secretary 
requests specific comment on whether the same definition should be used 
in both regulations and, if so, what that definition should be.
Section 602.3  Organization and Membership
    Section 496(a) of the HEA requires accrediting agencies whose 
accreditation enables the institutions they accredit to participate in 
programs authorized under the HEA to be administratively and 
financially separate from and independent of any related, associated, 
or affiliated trade association or membership organization. The term 
``separate and independent'' is defined in section 496(b) of the HEA. 
In Sec. 602.3 (a), (b), and (c) of the proposed regulations, the 
Secretary reiterates the statutory requirement and definition.
    During the negotiated rulemaking sessions, non-Federal negotiators 
expressed concern that the ``separate and independent'' requirement 
would prevent any joint use of personnel, services, equipment, or 
facilities by an accrediting agency and a related, associated, or 
affiliated trade association or membership organization, a practice 
that is fairly common among accrediting agencies and helps reduce the 
cost of accreditation. To address this concern, in Sec. 602.3(d) the 
Secretary proposes conditions that accrediting agencies must meet 
regarding the joint use of personnel, services, equipment, or 
facilities if that use is not to be considered a violation of the 
``separate and independent'' requirement. The Secretary believes this 
approach respects the intent of Congress yet eases the financial burden 
on agencies to implement the new requirement.
    Section 496(a) of the HEA permits the Secretary to waive the 
``separate and independent'' requirement if the agency is one that, for 
purposes of determining eligibility for SFA programs, either conducts 
accreditation through a voluntary membership organization of 
individuals participating in a profession or has as its principal 
purpose the accreditation of programs within institutions that are 
accredited by another agency recognized by the Secretary. In 
Sec. 602.3(e) of the proposed regulations, the Secretary proposes 
conditions under which the Secretary may waive the ``separate and 
independent'' requirement. Specifically, the Secretary proposes to 
grant an agency's request for a waiver if the agency demonstrates to 
the Secretary's satisfaction that the existing relationship between the 
agency and the trade association or membership organization has not 
compromised the independence of its accreditation process.
    In providing comments with regard to this section, the Secretary 
advises commenters that only the type of accrediting agency described 
in Sec. 602.3(b)(4) may seek a waiver of the separate and independent 
requirement under the law. Thus, the Secretary is precluded by statute 
from waiving this requirement for any other type of accrediting agency.
    Finally, the Secretary wishes to note that the language in 
Sec. 602.3(c)(2) specifying that no less than one-seventh of an 
agency's decision-making body must consist of representatives of the 
public is derived from language in the Conference Report stating that 
the House agrees to the requirement in the Senate bill that ``at least 
one out of every seven members of an accreditation association's board 
be members of the general public.''
Section 602.4  Submission of Information to the Secretary by Recognized 
Accrediting Agencies
    Section 496 does not specifically address the type of information 
that a recognized accrediting agency must submit to the Secretary to 
enable the Secretary to evaluate whether the agency continues to comply 
with the requirements for recognition throughout its recognition 
period. In Sec. 602.4 (a),(b), (c), (d), and (f) of the proposed 
regulations, the Secretary proposes various types of information that 
recognized agencies must routinely submit to the Secretary during their 
recognition period. All of the items on the list were agreed to by the 
negotiators, who did not perceive them to be particularly burdensome to 
agencies to provide.
    Of particular note is the requirement in Sec. 602.4(e) that 
accrediting agencies must submit to the Secretary, upon request, 
information to assist the Secretary in resolving problems with any 
institution or program accredited by the agency, provided the 
Secretary's request does not conflict with the agency's policies on 
confidentiality with respect to its records on its institutions or 
programs. This provision reflects the agreement of negotiators. 
However, the Secretary has reconsidered the ``confidentiality'' aspect 
of this provision because of a concern that certain information that 
the Secretary may need to resolve a problem with a particular 
institution or program may not be obtainable from an agency because of 
its confidentiality policies. The Secretary believes this situation is 
untenable because it allows agencies to withhold information that the 
Secretary may need to carry out the Secretary's responsibilities under 
the Act, such as determining whether an institution or program 
accredited by the agency should remain eligible to participate in SFA 
programs. The Secretary seeks suggestions for resolving this dilemma in 
a manner that respects both the agency's need for confidentiality and 
the Secretary's need for information.
    The Secretary also is considering adding to this section a 
requirement that an accrediting agency must refer to the Department's 
Office of Inspector General any fraudulent activities it discovers on 
the part of an institution or program that it accredits, if the 
institution or program participates in Department programs. The 
Secretary invites comments on this possible additional requirement and 
alternative approaches to sharing information among members of the 
triad concerning suspected fraudulent activity by an institution or 
program.

Subpart B--Recognition and Termination Procedures

    Section 496(o) of the HEA requires the Secretary to provide, by 
regulation, the procedures the Secretary uses for recognizing 
accrediting agencies. In the proposed regulations, the Secretary 
proposes to specify procedures for recognizing accrediting agencies in 
far greater detail than in current or previous regulations. The 
Secretary believes this greater detail is necessary to ensure that all 
agencies applying for recognition, as well as other interested parties, 
have a clear understanding of the entire process.
    The Secretary acknowledges that the application for recognition 
constitutes a significant burden on agencies seeking recognition by the 
Secretary. For this reason, the Secretary is considering ways to 
minimize the burden. One approach under consideration is to allow an 
agency to provide a simple statement of assurance, along with 
supporting documentation, that it meets certain requirements for 
recognition. The Secretary estimates that at least two-thirds of the 
requirements in the proposed regulations are amenable to this type of 
approach, and the resultant savings in time, effort, and cost to 
prepare an application for recognition would be significant. The 
Secretary invites comments on this approach and alternative methods for 
minimizing the burden on agencies of the application process without 
adversely affecting the Secretary's ability to conduct a thorough 
evaluation of the agency.
    The recognition process, as described in subpart B of the proposed 
regulations, consists of an application to the Secretary by the agency, 
an analysis of the application by a designated Department official, an 
opportunity for a written response to that analysis by the applicant 
agency, a review of the agency's application by the National Advisory 
Committee on Institutional Quality and Integrity (Advisory Committee), 
a recommendation to the Secretary by the Advisory Committee with regard 
to that application, an opportunity to contest the Advisory Committee's 
recommendation by either the agency or the designated Department 
official, and, finally, a decision on that application by the 
Secretary. The analysis of an agency's application by the designated 
Department official includes publication of a notice of the agency's 
application in the Federal Register inviting comment on the agency's 
compliance with the requirements for recognition and a review by the 
designated Department official of any public comment received. The 
Secretary believes the new procedures for recognition allow an agency a 
full and fair review of its application.
    Additional appeal procedures. The proposed regulations add two key 
new steps to the recognition process. First, in Sec. 602.11(b) the 
Secretary gives an accrediting agency seeking recognition by the 
Secretary an opportunity to respond in writing to the designated 
Department official's analysis of its application for recognition 
before the application is reviewed by the Advisory Committee. Second, 
in Sec. 602.13(b), after the Advisory Committee completes its review of 
the agency's application and makes a recommendation to the Secretary on 
the agency's application, the Secretary gives both the agency and the 
designated Department official an opportunity to contest the Advisory 
Committee's recommendation. The contesting party, however, may not 
submit any evidence to the Secretary that it did not submit to the 
Advisory Committee. This restriction is to ensure that the Advisory 
Committee's authority is not circumvented. The Secretary believes that 
in general the only reasonable grounds for contesting an Advisory 
Committee recommendation would be if the contesting party could 
demonstrate that the Advisory Committee either misunderstood or did not 
take into proper account certain information presented by the 
contesting party.
    The negotiators reached consensus during the negotiated rulemaking 
sessions on the first step. The Secretary added the second step after 
the negotiated rulemaking sessions ended to address the non-Federal 
negotiators' concerns about the lack of sufficient appeal mechanisms 
for agencies prior to the Secretary's final decision. The Secretary 
believes that these two new steps in the proposed recognition process 
provide agencies with sufficient opportunity to present any concerns 
they might have regarding the recommendation of either the designated 
Department official or the Advisory Committee before the Secretary 
reaches a decision on the agency's application.
    Announced and unannounced site visits by the Secretary. Section 
496(n) of the HEA requires the Secretary to conduct an independent 
analysis of an agency's application for recognition, which must include 
a site visit to the accrediting agency and may, at the Secretary's 
discretion, include site visits to representative institutions or 
programs accredited by the agency. Section 496(n) of the HEA also 
provides that the site visits may be unannounced, as appropriate. 
Accordingly, both Sec. 602.10(b) and Sec. 602.11(b) of the proposed 
regulations provide for unannounced site visits. Specifically, the 
Secretary proposes to conduct unannounced site visits only, where 
necessary in the judgment of the Secretary, to obtain information to 
verify the agency's compliance with the requirements for recognition 
and the information would not be forthcoming in an announced site 
visit. The Secretary wishes to make it clear that this Secretarial 
judgment is not subject to challenge by an accrediting agency.
    In Sec. 602.11(b), the Secretary also proposes that the Secretary's 
evaluation of an agency may include a review of information directly 
related to the institutions or programs accredited by the agency, as 
this information relates to the institution's or program's compliance 
with the agency's standards, the effectiveness of those standards, or 
the agency's application of those standards. The Secretary believes 
that the inclusion of this language in the proposed regulations, which 
was agreed to by negotiators, provides the agency, the institutions and 
programs it accredits, and the general public with a clear 
understanding of the scope of the Secretary's evaluation of an agency.
    In sum, to implement section 496(n) of the HEA, the proposed 
regulations make it clear that in evaluating an agency's application 
for recognition, the Secretary may not and does not depend solely on 
written submissions from the accrediting agency or on announced visits 
to the agency or its member institutions or programs. The Secretary 
makes a more thorough and independent evaluation of an agency's 
application for recognition, including, where appropriate, unannounced 
visits to ensure that information available to the designated 
Department official is comprehensive, accurate, and unbiased, and to 
ensure that the agency is actually carrying out its stated policies and 
procedures.
    Scope of recognition requirements. Under Sec. 602.10(b) of the 
current regulations, in order for an accrediting agency to be 
recognized by the Secretary, the agency has to meet each recognition 
criterion taken as a whole unless it can demonstrate to the Secretary's 
satisfaction that one or more criteria should not be applied. In 
Sec. 602.13(c) of the proposed regulations, the Secretary requires an 
agency to meet each of the requirements contained in this part. 
However, in Sec. 602.13(e) the Secretary proposes that the Secretary 
may exercise discretion and grant recognition to an agency that does 
not comply with each requirement if the Secretary determines that the 
agency's effectiveness is not impaired by its noncompliance. Such 
discretion might, for example, be exercised if an accrediting agency is 
unable to conduct an unannounced site visit, as required by 
Sec. 602.24, because the program being evaluated is offered on a 
military installation that requires prior approval before any visitors 
are permitted on the installation. The Secretary believes that 
Secretarial discretion provides the desired flexibility that non-
Federal negotiators sought during the negotiated rulemaking sessions.
    Consensus was reached by negotiators regarding the elements to be 
included in the scope of recognition the Secretary grants to an agency, 
i.e., geographic area, the degrees or certificates awarded, the types 
of courses or programs offered, and the length of the recognition 
period. In the proposed regulations, the Secretary has clarified that 
an agency's scope of recognition does not automatically extend to any 
preaccreditation status it offers. Rather, when an agency formally 
applies for recognition, it must include the types of preaccreditation 
status for which it seeks recognition, and the Secretary grants 
recognition to an agency for each preaccreditation status if the agency 
complies with all the requirements for recognition with regard to that 
preaccreditation status.
Section 602.14   Limitation, Suspension, or Termination of Recognition.
    Section 496(l) of the HEA permits the Secretary to limit, suspend, 
or terminate the Secretary's recognition of an accrediting agency 
before the completion of the agency's recognition period if the 
Secretary determines that the agency has failed to meet any of the 
requirements of part 602. In Sec. 602.14 of the proposed regulations, 
the Secretary establishes the procedures to be followed before the 
Secretary may limit, suspend, or terminate an agency's recognition. The 
proposed procedures allow the agency to request a hearing to contest 
that action.
    The Secretary proposes that, if an agency requests a hearing, the 
hearing will be conducted by the Advisory Committee. However, the 
Secretary further proposes that the hearing may be conducted by a 
subcommittee of the Advisory Committee, consisting of three members of 
the Advisory Committee, if the schedule of the full Advisory Committee 
would not permit a hearing to be held in a timely manner. After 
evaluating the evidence presented before it, the Advisory Committee or 
subcommittee makes a recommendation to the Secretary as to whether the 
sanction proposed by the designated Department official, no sanction, 
or another sanction is warranted. Any hearing held under this section 
is open to the public.
    After the negotiated rulemaking sessions, in response to non-
Federal negotiators' concerns about the lack of sufficient appeal 
mechanisms, the Secretary added to this section a provision that either 
party in a hearing may appeal the Advisory Committee's or 
subcommittee's recommendation to the Secretary.
Section602.15  Requests for Reconsideration of the Secretary's Decision
    Section 496(o) of the HEA requires the Secretary to provide in 
regulation the procedures to be followed by an accrediting agency for 
the appeal of the Secretary's decision regarding its application for 
recognition. Accordingly, in Sec. 602.15 of the proposed regulations, 
the Secretary permits an agency to request reconsideration of a final 
decision of the Secretary regarding either the agency's application for 
recognition or the limitation, suspension, or termination of the 
agency's recognition. However, Sec. 602.15(a)(2) proposes that a 
request for reconsideration may be made only under limited conditions. 
Under these limited conditions, the agency may request reconsideration 
only if it demonstrates that it has new information that could not have 
been presented previously and that the information is likely to result 
in reversal of the Secretary's decision.
    While, as noted by the non-Federal negotiators at the negotiated 
rulemaking sessions, the grounds for reconsideration are narrow, the 
Secretary believes the narrow grounds are appropriate. Adverse 
decisions regarding an agency's application for recognition are made by 
the Advisory Committee and forwarded to the Secretary. Under 
Sec. 602.13, the agency may appeal the Advisory Committee's 
recommendation to the Secretary. Similarly, under Sec. 602.14, the 
agency may appeal an adverse Advisory Committee or subcommittee 
recommendation to the Secretary under a limitation, suspension or 
termination proceeding. Therefore, the Secretary believes that 
reconsideration requests should be narrowly circumscribed. The 
Secretary notes that non-Federal negotiators requested opportunities 
for agencies to request reconsideration in cases where the Secretary 
had not established appeal procedures. Given the provisions for appeal 
that are now in the proposed regulations, the Secretary requests public 
comment on whether reconsideration procedures are necessary.
    The Secretary wishes to make clear that any agency that fails to 
notify the Secretary of its intent to file a written request for 
reconsideration within the 10-day time frame specified in the 
regulations forfeits its right to reconsideration. Additionally, the 
Secretary wishes to reiterate that, in general, any failure to meet a 
required deadline date in any appeal to the Secretary results in a 
forfeiture of that appeal right.
    While consensus was reached during the negotiated rulemaking 
sessions that an agency should have 45 days to submit its written 
request for reconsideration, the Secretary questions whether a shorter 
period--30 days--is sufficient for the agency to prepare an adequate 
request, given the fact that 30 days is the usual time frame specified 
by the Department for other types of appeals to the Secretary. The 
Secretary requests comments on the shorter period.
    Because requests for reconsideration are restricted to instances 
where the Secretary's decision involves denial, limitation, suspension, 
or termination of an agency's recognition, it is anticipated that, due 
to the extensive material that must be reviewed, the Secretary will 
require more than 30 days to reach a final decision on an agency's 
request for reconsideration. Non-Federal negotiators were concerned 
that there be some time limit imposed to bring the issue to closure. 
Accordingly, the Secretary is proposing a 60-day time frame for 
reaching a final decision on an agency's request for reconsideration.
Section 602.16.  Appeals Procedures.
    As mentioned in Sec. 602.15, section 496(o) of the HEA requires the 
Secretary to provide for the appeal of the Secretary's decision 
regarding an accrediting agency's application for recognition. In 
Sec. 602.16 of the proposed regulations, the Secretary provides for an 
appeal to the Federal courts of all final decisions of the Secretary 
regarding an agency's application for recognition. During the 
negotiated rulemaking sessions, non-Federal negotiators urged an 
appeals procedure other than through the courts, as, for example, 
through an administrative law judge. However, the Secretary believes 
that there can be no administrative appeal within the Department of a 
Secretarial decision since the Secretary, as head of the Department of 
Education, makes all final decisions on behalf of the Department. It 
should be noted, however, that in response to the non-Federal 
negotiators' concerns, the Secretary has modified the proposed 
recognition procedures to include an opportunity for an agency to 
appeal an Advisory Committee's recommendation to the Secretary before 
the Secretary reaches a final decision on the agency's application. The 
proposed limitation, suspension, and termination procedures also have 
been modified to provide for an appeal to the Secretary of an Advisory 
Committee or subcommittee recommendation.

Subpart C--Criteria for Secretarial Recognition

Section 602.22  Demonstration of Accreditation Experience
    Section 496(a)(1) of the HEA requires accrediting agencies to 
demonstrate experience in operating as an accrediting agency as a 
condition for recognition. In Sec. 602.22 of the proposed regulations, 
the Secretary defines what a demonstration of accrediting experience 
must include, basically reiterating the requirements for experience set 
forth in Sec. 602.14 of the current regulations. However, Sec. 602.22 
does not contain the requirement set forth in Sec. 602.14(c) of the 
current regulations that agencies must demonstrate that their policies, 
evaluation methods, and decisions are accepted throughout the United 
States by recognized accrediting agencies. The Secretary is aware, as 
argued by the non-Federal negotiators, that this requirement is an 
important indicator of an agency's acceptance. On the other hand, this 
requirement has been subject to criticism by persons and institutions 
interested in forming new accrediting agencies. These individuals and 
agencies have often expressed concern to the Secretary that this 
requirement imposes unfair hurdles for them and unduly stifles 
competition among accrediting agencies. The Secretary proposes to 
eliminate this requirement because the Secretary believes that it is 
inappropriate to require acceptance by recognized agencies as a 
condition for recognition even though evidence of acceptance by 
recognized accrediting agencies provides some measure of an agency's 
reliability.
Section 602.23  Application of Standards
    Current regulations require accrediting agencies to maintain a 
systematic program of review designed to assess the validity and 
reliability of their criteria, procedures, and standards and their 
relevance to the educational and training needs of affected students. 
As this requirement is fundamental to sound accrediting practice, there 
was consensus among negotiators that it should continue to be part of 
any regulations governing the accrediting agency recognition process. 
However, the language of the requirement has been changed in the 
proposed regulations from the language of the current regulations in 
response to the non-Federal negotiators' concerns about various 
technical interpretations of the words ``validity and reliability.'' 
The substance of the requirement, as expressed in Sec. 602.23(b)(5), is 
unchanged. The Secretary wishes to emphasize the importance of this 
requirement, which is fundamental to the establishment of sound 
standards for the accreditation process and the determination of 
educational quality.
Section 602.24  Accreditation Processes
    Section 496(c)(1) of the HEA requires that, in addition to the 
announced on-site review that is part of the regular accreditation 
process, an accrediting agency whose accreditation enables the 
institutions it accredits to participate in programs authorized under 
the HEA must conduct, some time during any accreditation or 
preaccreditation period, at least one unannounced on-site review at 
each institution that provides vocational education or training. 
Accordingly, in Sec. 602.24(c) of the proposed regulations, the 
Secretary requires unannounced site visits by these accrediting 
agencies. However, as noted in the discussion of Sec. 602.2, if the 
term ``vocational education'' is interpreted literally, it could be 
viewed as including all postsecondary education, and, under this 
interpretation, accrediting agencies would have to conduct unannounced 
site visits to all institutions. To avoid this outcome, in 
Sec. 602.24(c) of the proposed regulations, the Secretary limits the 
type of vocational education programs that trigger unannounced visits 
to the prebaccalaureate level. As non-Federal negotiators were divided 
among themselves as to the definition of vocational education, they did 
not reach consensus on this point.
    As mentioned in the discussion under Sec. 602.2, the Secretary is 
considering an alternative definition of prebaccalaureate vocational 
education that would not require unannounced site visits to degree-
granting institutions whose prebaccalaureate vocational programs lead 
to the associate degree. This would minimize the burden of the new 
requirement for unannounced visits, hopefully without any adverse 
consequences. The Secretary invites comments on this approach and 
suggestions for alternative ways of reducing the burden without 
eliminating from review those institutions offering vocational 
education that have abused the Title IV program.
Section 602.25  Additions to or Substantive Changes in Educational 
Programs
    Section 496(a) of the HEA authorizes the Secretary to recognize 
accrediting agencies that are reliable authorities as to the quality of 
the education or training provided by the institutions or programs they 
accredit. Section 496 does not specifically address the manner in which 
accrediting agencies evaluate either new programs begun by institutions 
after their last grant of accreditation or preaccreditation or programs 
that are substantially changed after the institution is accredited or 
preaccredited. However, the Secretary believes that an agency cannot be 
a reliable authority as to the quality of education or training offered 
by an institution if the agency does not assess those new or 
substantively changed programs. Accordingly, in Sec. 602.25 of the 
proposed regulations, the Secretary establishes the framework for a 
policy that accrediting agencies must have to address additions to and 
substantive changes in educational programs. Specifically, in 
Sec. 602.25(a) the Secretary proposes that an accrediting agency may 
include within its previous grant of accreditation or preaccreditation 
an educational program that an institution initially offers or 
substantively changes after that grant of accreditation or 
preaccreditation only if the agency specifically evaluates and approves 
the program. The Secretary proposes this requirement based upon the 
past actions of some accrediting agencies.
    Certain accrediting agencies that accredit institutions offering 
specific prebaccalaureate vocational education programs have, on 
occasion, extended their accreditation to additional programs that 
these institutions offered after being accredited, without evaluating 
the quality of those additional programs, even though the additional 
programs were totally unrelated to the programs initially accredited. 
For example, an accrediting agency that accredited an institution that 
offered cosmetology courses extended its accreditation to additional 
programs that the institution subsequently offered in jet airplane 
mechanics and air conditioning and refrigeration without ever 
evaluating the quality of those additional programs. The Secretary 
believes that this practice violates the purpose of accreditation.
    On the other hand, the Secretary believes that prior approval of 
programs is not necessary in all circumstances, a belief shared by 
negotiators, although no consensus was reached as to the circumstances. 
In Sec. 602.25(b) the Secretary proposes an exception to this 
requirement if the institution notifies the accrediting agency of the 
new or substantially changed program before it is offered, and the new 
or substantially changed program does not provide prebaccalaureate 
vocational education. The Secretary proposes this exception because the 
Secretary believes that new bachelor and higher degree programs are 
thoroughly reviewed by a variety of entities before they may be 
offered. Most institutional accrediting agencies, for example, require 
institutions to have thorough internal reviews of all new degree 
programs by curriculum committees, governing boards, and other 
appropriate units within the institution and to obtain appropriate 
state authorization for those new degree programs before they are 
offered. However, even though an accrediting agency may not be required 
by these proposed regulations to evaluate a new or substantially 
changed program before it is offered under Sec. 602.25(b), accrediting 
agencies are certainly free, and encouraged, to do so under their own 
policies.
    The Secretary acknowledges that the task of deciding which programs 
should require preapproval by accrediting agencies is a difficult one 
and seeks suggestions from commenters. For commenters who suggest that 
preapproval be allowed for prebaccalaureate vocational education 
programs that are ``related'' to a previously accredited program, the 
Secretary requests specific suggestions on how to determine whether the 
new or substantially changed program is ``related'' to the other 
program.
    The Secretary notes that most accrediting agencies already have a 
definition of ``substantive change'' but observes that there is 
considerable variation among agencies as to what this term means. Most 
agencies' definitions generally include the following kinds of changes: 
a substantial change in the length of a program, its content, or both, 
as, for example, when a secretarial program increases from 1200 clock 
hours to 1600 clock hours to provide a 400-hour component in office 
automation; a change from a traditional 15-week semester format to an 
alternate weekend format; and a change from a certificate program to an 
associate degree program. The Secretary seeks to require preapproval 
for these and similar types of changes and proposes that an agency's 
definition of a substantive change in an educational program include, 
at a minimum, a substantial change in the number of clock or credit 
hours, the number of weeks, or the content of a program, a change in 
the type of program offered, a change in the credential awarded for 
completion of the program, and a change in the manner in which the 
institution measures the educational quantity of the program from clock 
hours to credit hours. The Secretary invites comments on this approach 
as well as suggestions for alternative approaches to defining which 
types of programs require preapproval.
    Finally, the Secretary acknowledges that the proposed requirement 
for a substantive change policy may result in increased costs to 
agencies and, in turn, institutions. However, for the reasons noted 
above, the Secretary believes the benefits far outweigh the costs. The 
Secretary also wishes to note that there was general consensus among 
non-Federal negotiators about the appropriateness of including a 
substantive change requirement in the proposed regulations. However, 
not all of the negotiators agreed that the approach proposed by the 
Secretary was appropriate.
Section 602.26  Required Accreditation Standards
    Section 496 of the HEA authorizes the Secretary to recognize 
accrediting agencies that are reliable authorities as to the quality of 
the education or training provided by the institutions or programs only 
if the agencies satisfy standards established by the Secretary. Section 
496(a) specifically requires the Secretary to establish standards and 
requires the standards to include ``an appropriate measure or measures 
of student achievement.''
    Section 496(a)(5) of the HEA provides that the Secretary's 
standards for recognition of accrediting agencies must require that an 
accrediting agency establish accreditation standards that assess 12 
areas pertaining to the institutions or programs it accredits. These 
areas are: (1) Curricula; (2) faculty; (3) facilities, equipment and 
supplies; (4) fiscal and administrative capacity as appropriate to the 
specified scale of operation; (5) student support services; (6) 
recruiting and admissions practices, academic calendars, catalogs, 
publications, grading and advertising; (7) program length and tuition 
and fees in relation to the subject matters taught and the objectives 
of the degrees or credentials offered; (8) measures of program length 
in clock hours or credit hours; (9) success with respect to student 
achievement in relation to the institution's mission; (10) default 
rates in student loan programs under Title IV of the HEA; (11) record 
of student complaints received by, or available to, the accrediting 
agency; and (12) the institution's compliance with its program 
responsibilities under title IV of the HEA. However, under section 
496(a)(5), accrediting agencies that have as their principal purpose 
the accrediting of institutions of higher education or higher education 
programs to enable them to participate in Federal programs not 
authorized under the HEA are exempt from the requirement to have 
standards for the areas listed in (7), (8), (9), (10), and (12).
    The Secretary notes that most accrediting agencies already have 
standards addressing many of these areas. However, to the extent that 
an agency does not have standards for all of them, there is an 
increased cost to that agency to develop and implement the new 
standards. The Secretary believes that the proposed regulations 
minimize the increased cost by allowing agencies maximum flexibility to 
set their standards to best suit their needs and the needs of the 
institutions or programs they accredit.
    If the ultimate purpose of section 496 is to authorize the 
Secretary to recognize accrediting agencies that are reliable 
authorities as to the quality of the education or training provided by 
the institutions or programs they accredit, so that recognized agencies 
only accredit institutions or programs of demonstrated quality, then 
the Secretary believes that each agency's standard for a particular 
area listed in section 496(a)(5) must evaluate the quality of the 
effort the institution or program is making in that area.
    Accordingly, in Sec. 602.26 of the proposed regulations, the 
Secretary requires accrediting agencies to have standards assessing the 
12 areas cited in section 496(a)(5) of the HEA. In Sec. 602.26(a)(3), 
the Secretary exempts accrediting agencies whose accreditation enables 
their institutions or programs to participate only in Federal programs 
not authorized under the HEA from having to establish standards for the 
areas listed under (7), (8), (10), and (12). However, the Secretary 
does not exempt these agencies from the requirement to establish 
standards that assess success with respect to student achievement. The 
Secretary believes that the standards specified in Sec. 602.26(b)(9) 
fulfill the requirement in section 496(a) of the HEA that the Secretary 
recognize accrediting agencies that meet the Secretary's standards, 
which must include ``an appropriate measure or measures of student 
achievement.'' Furthermore, the Secretary believes that any 
determination by an accrediting agency that the program or institution 
it accredits provides quality education or training must be based, in 
part, on an assessment of the achievement of students enrolled in the 
institution or program. The Secretary notes that the exemption provided 
in section 496(a)(5) of the HEA for certain standards was not discussed 
during negotiated rulemaking because it was added as a technical 
legislative amendment after the negotiations took place.
    Each of the 12 required standards is discussed below. The title for 
each standard is based on the statutory language used in section 
496(a)(5) for that standard. Unless otherwise noted, consensus was 
reached among negotiators as to language for each of the standards.
    The proposed regulatory language in Sec. 602.26(b) for standards 
addressing areas (1), (2), (3), and (5) follows the recommendations of 
negotiators and simply restates the law. These four provisions require 
that, to be recognized by the Secretary, an accrediting agency must 
adopt standards under which it evaluates the quality of an 
institution's or program's curricula; faculty; facilities, equipment, 
and supplies; and student support services. The Secretary has 
reexamined the manner in which these four standards are described in 
the proposed regulations and believes that it may be more useful to 
provide guidance as to the manner in which quality may or should be 
discussed under these standards than to simply restate the law. The 
Secretary requests comment on this matter. To assist commenters in this 
regard, for each of the four areas, the Secretary examined the 
standards of several accrediting agencies to determine how these 
agencies addressed quality standards for those areas and presents the 
results of that examination under the appropriate topic. The Secretary 
invites comments on those approaches and additional suggestions for 
focusing on quality assessment.
    Section 602.26(b)(1)  Curricula. The Secretary found that the 
standards most accrediting agencies have adopted to evaluate an 
institution's or program's curricula relate to the overall quality of 
the curricula, its appropriateness in light of an institution's or 
program's educational objectives and the specific degrees or 
certificates awarded, and the mechanisms the institution or program 
uses to evaluate the curricula and make modifications. The Secretary 
considers all of these to be elements of good practice in the 
assessment of an institution's or program's curricula. Accordingly, the 
Secretary requests specific comment as to whether the manner in which 
these agencies handle standards for curricula would be a useful 
addition to these regulations. The Secretary also invites additional 
comments regarding other elements that the Secretary should include in 
the evaluation of accrediting agencies for compliance with this 
requirement.
    Section 602.26(b)(2) Faculty. The Secretary found that the 
standards most accrediting agencies have adopted to evaluate an 
institution's or program's faculty relate to the overall quality of the 
faculty, the extent to which the institution or program relies on part-
time faculty to teach students, and the effectiveness of the teaching 
provided by all faculty. Some agencies also include in their standards 
an assessment of the procedures an institution or program uses for the 
hiring, promotion, evaluation, and professional development of faculty, 
while other agencies merely examine these issues in light of whether 
the institution's or program's policies provide for the fair and 
equitable treatment of faculty. The Secretary considers all of these to 
be elements of good practice in the assessment of an institution's or 
program's faculty. Accordingly, the Secretary requests specific comment 
as to whether the manner in which these agencies handle standards for 
faculty would be a useful addition to these regulations. The Secretary 
also invites additional comments regarding other elements that the 
Secretary should include in the evaluation of accrediting agencies for 
compliance with this requirement.
    Section 602.26(b)(3)  Facilities, equipment, and supplies. The 
Secretary found that the standards most accrediting agencies have 
adopted to evaluate an institution's or program's facilities, 
equipment, and supplies relate to the overall quality of these support 
areas. Specifically, the Secretary found that most accrediting agencies 
assess, in light of an institution's or program's educational 
objectives, the adequacy and appropriateness of: libraries, learning 
resource centers, and other academic and instructional support 
facilities; the equipment and supplies that support the instructional 
program; and any other physical resources the institution or program 
uses to achieve its educational objectives. The Secretary considers all 
of these elements to be good practices for the assessment of 
facilities, equipment, and supplies. Accordingly, the Secretary 
requests specific comment as to whether the manner in which these 
agencies handle standards for this area would be a useful addition to 
these regulations. The Secretary also invites additional comments 
regarding other elements that the Secretary should include in the 
evaluation of accrediting agencies for compliance with this 
requirement.
    Section 602.26(b)(4)  Fiscal and administrative capacity as 
appropriate to the specified scale of operations. Section 496(a)(5)(D) 
requires an accrediting agency to have standards that address the 
fiscal and administrative capacity of an institution or program in 
relation to its scale of operation. It is the Secretary's view that the 
purpose of this requirement is to enable the agency to determine 
whether the institution or program is fiscally and administratively 
sound and will likely remain so for a future period. Because the 
financial condition of an institution is subject to change, the 
Secretary proposes that an agency must make this determination each 
time it grants accreditation, preaccreditation, or reaccreditation. The 
Secretary also proposes that an agency must examine each institution's 
financial capacity in sufficient depth on an annual basis to determine 
if the financial capacity of the institution threatens the ability of 
the institution or program to continue to meet the agency's standards 
and, if so, to take appropriate follow-up action. The Secretary invites 
comments as to whether this follow-up action should include notifying 
the Secretary of the institution's financial condition.
    The Secretary believes that the enhanced financial monitoring by 
accrediting agencies that is required by these proposed regulations 
will provide increased protection to students with regard to problems 
arising from an institution's financial instability.
    Section 602.26(b)(5)  Student support services. The Secretary found 
that the standards most accrediting agencies have adopted to evaluate 
an institution's or program's student support services relate to the 
overall quality and extent of the services provided and their 
appropriateness in light of the institution's or program's mission and 
the types of students it admits. The Secretary considers all of these 
elements to be good practices for the assessment of student support 
services. Accordingly, the Secretary requests specific comment as to 
whether the manner in which these agencies handle standards for this 
area would be a useful addition to these regulations. The Secretary 
also invites additional comments regarding other elements that the 
Secretary should include in the evaluation of accrediting agencies for 
compliance with this requirement.
    Section 602.26(b)(6)  Recruiting and admission practices; and 
academic calendars, catalogs, publications, grading, and advertising. 
Section 496(a)(5)(F) requires an accrediting agency to have standards 
that address an institution's or program's recruiting and admissions 
practices, as well as its academic calendars, catalogs, publications, 
grading, and advertising. The Secretary believes this statutory 
provision contains two different standards. One standard relates to the 
appropriateness of the institution's or program's recruiting and 
admission practices. Under this standard, the agency must determine 
whether an institution's practices are reasonable in light of the 
institution's or program's educational mission.
    The other standard relates to the institution's academic calendars, 
catalogs, publications, grading, and advertising. Under that standard, 
which is in the nature of consumer protection, the agency must evaluate 
whether those items are accurate, complete, and consistent with the 
institution's actual practice.
    Section 602.26(b)(7)  Program length and tuition and fees in 
relation to the subject matters taught and the objectives of the 
degrees or credentials offered. Section 496(a)(5)(G) requires an 
accrediting agency to have standards that address program length and 
tuition and fees in relation to the subject matters taught and the 
objectives of the degree or credential offered. It is the Secretary's 
view that one of the purposes of this requirement is to eliminate 
certain abuses that have been discovered at institutions participating 
in Title IV, HEA programs.
    These abusive practices fall into three main categories. One 
category involves accredited institutions that offer prebaccalaureate 
vocational programs and charge an excessive amount of tuition and fees 
for programs that lead to dead end or very low-paying jobs. In some 
cases, the tuition and fees for a short-term program to prepare 
students for a particular job exceeded the annual income that a person 
employed in that job could expect to earn.
    Another category involves accredited institutions that offer 
prebaccalaureate vocational education programs and inflate either the 
clock or credit hours for the program or the length of the program 
without educational justification, simply to increase the amount of SFA 
funds these institutions may receive. The third category involves 
accredited institutions that offer prebaccalaureate vocational 
education that are simply too short to be able to provide training that 
has any value in the workplace.
    The Secretary proposes to address the statutory requirement for 
standards related to program length and tuition and fees by requiring 
an accrediting agency to establish minimum and maximum program lengths 
for prebaccalaureate vocational programs. In this context, program 
length means both the number of clock hours or credit hours in a 
program and the number of weeks that a program is offered. The 
Secretary invites specific comments with regard to this requirement. 
The topic of standards for establishing minimum and maximum program 
lengths was not discussed during the negotiated rulemaking sessions, 
and the Secretary invites comments on this topic as well.
    During the negotiated rulemaking sessions, consensus was reached on 
various factors that should be considered when an agency establishes 
its standard for program length in relation to tuition and fees. These 
factors are listed under Sec. 602.26(b)(7) (i), (ii), (iii), and (iv). 
The Secretary has reconsidered this matter and now proposes two 
additional factors. The first concerns any applicable Federal statutes 
and regulations. The Secretary does not believe the addition of a 
requirement for agencies to take into account applicable statutes and 
regulations when developing their standards goes beyond the intent of 
the HEA because it does not require agencies to adopt the Federal 
policies but simply to take them into account. The second factor 
concerns the relationship between tuition and fees for a 
prebaccalaureate vocational program and the remuneration that a 
graduate of that program can reasonably be expected to receive. The 
Secretary is concerned about this issue for this type of program 
because the very purpose of a prebaccalaureate vocational program is to 
prepare a student for gainful employment in a recognized occupation. 
Moreover, the Secretary is concerned that tuition and fees being 
charged for prebaccalaureate vocational programs may be excessive given 
the type of job for which a graduate of the program qualifies. 
Accordingly, the Secretary requests specific comment regarding 
standards that address tuition and fee charges for a prebaccalaureate 
vocational program vis-a-vis the remuneration that graduates of a 
program may receive.
    The Secretary requests comments on the various factors proposed for 
standards that assess program length and tuition and fees. In calling 
for comments with regard to this standard, the Secretary wishes to 
remind commenters that a violation of a standard does not necessarily 
preclude an agency from accrediting an institution or program. The 
violation would, however, at least require the institution to justify 
its tuition and fee charges to the agency.
    The Secretary acknowledges that the development of standards for 
this area involves very complex issues. For the purpose of stimulating 
discussion in this area, the Secretary offers the following possible 
approaches to the development of standards. Under one approach, the 
standard might require that annualized tuition and fees for a program 
not exceed a percentage of the annualized minimum wage. Under another 
approach, the standard might require that annualized tuition and fees 
for a program not exceed a percentage of the program's graduates' 
average earnings for their first year of employment. Under still 
another approach, annualized tuition and fees for a program could not 
exceed a percentage of the average annualized wages, as reported by the 
U.S. Bureau of Labor Statistics, in occupations for which the program 
prepares students. In suggesting possible approaches to the 
establishment of standards for this area, the Secretary reminds 
commenters of the difficulty in obtaining employment information, 
including salaries and wages, from graduates of an institution for 
periods beyond the first year after graduation.
    The Secretary is considering establishing in other regulations 
requirements governing program length and tuition and fees for programs 
that are eligible to participate in the SFA programs. Accordingly, if 
those regulatory requirements are established, the Secretary would 
consider requiring an accrediting agency to notify the Secretary if it 
knows that an institution's program is too long or too short under that 
requirement, or if it knows that an institution's tuition and fee 
charges violate that other requirement. The Secretary invites comments 
about the feasibility of adding this notification requirement or any 
alternative method of obtaining this information.
    Finally, the Secretary notes that the requirement to establish a 
standard for program length and tuition and fees applies only to those 
accrediting agencies whose accreditation enables the institutions they 
accredit to participate in programs authorized under the HEA.
    Section 602.26(b)(8) Measures of program length in clock hours or 
credit hours. Section 496(a)(5)(H) requires an accrediting agency to 
have standards that address measures of program length in clock or 
credit hours. It is the Secretary's view that the purpose of this 
requirement is to enable the agency to determine if an institution take 
into proper account, as appropriate, factors such as program objectives 
and content, the types and locations of instructional delivery, and the 
knowledge and skills necessary for students to reach competence in the 
field being taught when determining the length of its programs in clock 
or credit hours. General agreement was reached by negotiators with 
regard to the substance of this standard. However, the Secretary has 
reconsidered this matter and now proposes an additional factor: any 
applicable Federal statutes and regulations. The Secretary does not 
believe the addition of a requirement for agencies to take into account 
applicable statutes and regulations when developing their standards 
goes beyond the HEA because it does not require agencies to adopt the 
Federal policies but simply to take them into account. The Secretary 
invites comments on this proposed addition.
    To the extent that the Secretary regulates this area in other 
regulations governing the SFA programs, these regulations may need to 
be modified. Moreover, as indicated with regard to Sec. 602.26(b)(7), 
if those other regulations are established, the Secretary may consider 
requiring an accrediting agency to notify the Secretary if it knows 
that an institution's measure of the number of credits hours in its 
programs does not satisfy that other regulatory requirement. The 
Secretary invites comments about the feasibility of adding this 
notification requirement or on alternative methods of obtaining this 
information.
    The Secretary notes that the requirement to establish a standard 
for measures of program length in clock or credit hours applies only to 
those accrediting agencies whose accreditation enables the institutions 
they accredit to participate in programs authorized under the HEA.
    Section 602.26(b)(9) Success with respect to student achievement in 
relation to mission. Section 496(a)(5)(I) of the HEA requires an 
accrediting agency to have standards that address success with respect 
to student achievement in relation to mission, including, as 
appropriate, consideration of course completion rates, pass rates on 
State licensing examinations, and job placement rates. It is the 
Secretary's view that standards for student achievement are the most 
important of all accreditation standards because the true success of an 
institution or program is measured by the success of its students. For 
institutions that offer prebaccalaureate vocational programs, the 
Secretary proposes to require agencies to establish minimum 
quantitative standards for completion rates, job placement rates, and 
pass rates on State licensing examinations for those programs, since 
gainful employment is the purpose of those programs. The Secretary 
proposes this additional requirement for institutions offering 
prebaccalaureate vocational education programs because, as noted in the 
discussion under Sec. 602.26(b)(7), these institutions have often 
engaged in abusive practices. The Secretary notes that the concept of 
minimum quantitative standards, even when restricted to 
prebaccalaureate vocational education, was not supported by non-Federal 
negotiators.
    The Secretary acknowledges that there are many possible approaches 
to the establishment of the standards for measuring success in 
prebaccalaureate vocational programs, both in terms of the information 
collected and the minimum standard selected. For example, if an 
institution's students are mainly first-time, full-time students in 
short-term programs, agencies could use data collected by institutions 
under the Student Right-to-Know and Campus Security Act of 1990 for 
calculating completion rates. Minimum job placement rate standards 
might be developed using three-year moving averages, adjusted for 
regional unemployment rates as computed by the Bureau of Labor 
Statistics of the U.S. Department of Labor. Further, a job placement 
rate could be calculated only for those jobs in the areas for which 
training was offered, all jobs obtained by graduates, or a combination 
of the two.
    The Secretary specifically invites suggestions for standards in 
this area. Further, the Secretary understands that developing 
appropriate standards in these areas is not easy and requests 
suggestions with regard to specific rates for the standards in these 
areas. The Secretary suggests as a reference point for completion and 
placement rates the statutory requirement, contained in section 
481(e)(2) of the HEA, that, to be an eligible short-term vocational 
program under the SFA programs, a program must have a 70 percent 
completion and a 70 percent placement rate.
    Section 602.26(b)(10)  Default rates in the student loan programs 
established under Title IV of the HEA. Section 496(a)(5)(J) of the HEA 
requires an accrediting agency to have standards that address an 
institution's default rates in the student loan programs established 
under Title IV of the HEA. It is the Secretary's view that the purpose 
of this requirement is to enable the agency to determine if an 
institution is out of compliance with its accrediting standards when 
the institution's latest cohort default rate under the Federal Family 
Education Loan (FFEL) programs exceeds a certain threshold or has 
increased significantly over its previous rate. The Secretary proposes 
to require an agency to conduct a review if an institution's latest 
cohort default rate equals or exceeds 25 percent. The Secretary 
establishes this rate as the trigger for review because that is the 
rate, beginning in fiscal year 1994, i.e. October 1, 1993, at which an 
institution will be disqualified from participating in the FFEL 
programs. An accrediting agency is free, of course, to set its trigger 
for review at a default rate below 25 percent.
    The Secretary also is concerned that a significant change in an 
institution's default rate could be an indication of other serious 
problems that may affect the institution's compliance with an agency's 
standards. For this reason, the Secretary proposes to require an agency 
to conduct a review when the institution's latest cohort default rate 
increases significantly over its rate the previous year. The Secretary 
does not propose to define the term ``significant increase'' in the 
proposed regulations but invites comments on an appropriate definition. 
One possibility that the Secretary is considering is to require an 
agency to conduct a review when the institution's default rate 
increases by more than 50 percent from its previous rate, provided that 
previous rate exceeds 10 percent. The Secretary believes that a cohort 
default rate below 10 percent is not necessarily an indication that the 
institution may be in violation of its accrediting agency's standards. 
Therefore, this provision would apply only if the institution's latest 
cohort default rate exceeds 15 percent and has increased by more than 
50 percent from its previous rate. The Secretary invites comments on 
this approach and other approaches that will provide guidance to 
agencies on what constitutes a significant increase in default rate.
    The Secretary notes that the requirement to establish a standard 
for this area applies only to those accrediting agencies whose 
accreditation permits the institutions they accredit to participate in 
programs authorized under the HEA.
    Section 602.26(b)(11)  Record of student complaints received by, or 
available to, an agency. Section 496(a)(5)(K) of the HEA requires an 
accrediting agency to have standards that address the record of student 
complaints received by, or available to, an agency concerning an 
institution or program it accredits. It is the Secretary's view that 
the purpose of this requirement is to enable an agency to focus its 
evaluation of the institution or program on the matters that gave rise 
to the student complaints when the agency undertakes its next 
evaluation of the institution or program.
    Section 602.26(b)(12)  Compliance with an institution's program 
responsibilities under Title IV of the Act. Section 496(a)(5)(L) of the 
HEA requires an accrediting agency to have standards that address an 
institution's compliance with its program responsibilities under Title 
IV of the Act. It is the Secretary's view that an institution's failure 
to comply with its Title IV responsibilities should be a factor in an 
accrediting agency's determination as to whether that institution 
should continue to be accredited by the agency. The Secretary 
recognizes that accrediting agencies do not have the responsibility, 
expertise, personnel, or time to evaluate, on a routine basis, whether 
the institutions they accredit are in compliance with their Title IV 
responsibilities. On the other hand, agencies may not ignore 
information provided to them regarding the lack of compliance of those 
institutions. Accordingly, the Secretary proposes that, in assessing an 
institution's compliance under this standard, the agency relies on 
documentation forwarded to it by the Secretary. The Secretary wishes to 
make it clear that this section of the proposed regulations does not 
require accrediting agencies to review an institution to determine 
whether the institution is fulfilling its responsibilities under the 
SFA programs, as, for example, by verifying that an institution is 
calculating Pell distributions properly. Rather, the Secretary expects 
agencies to use the information provided by the Secretary on the 
institution to trigger a review of the institution for compliance with 
agency standards if the documentation provided by the Secretary 
indicates a problem that is related to one or more of the agency's 
standards.
    The Secretary notes that the requirement to establish standards for 
this area applies only to those accrediting agencies whose 
accreditation enables the institutions they accredit to participate in 
programs authorized under the HEA.
    Section 602.26(b)(13)  The institution's practice of making refunds 
to students. Under section 484B of the HEA, an institution 
participating in the SFA programs must have a fair and equitable refund 
policy. An institution's refund policy is judged to be fair and 
equitable if it provides a refund in an amount of at least the largest 
of the amounts provided under ``(1) the requirements of applicable 
State law; (2) the specific refund requirements established by the 
institution's nationally recognized accrediting agency and approved by 
the Secretary; or (3) the pro rata refund calculation'' described 
elsewhere in section 484B. To permit an institution to satisfy the fair 
and equitable refund requirement using this criterion, the Secretary 
proposes not to recognize an accrediting agency unless the agency has a 
refund policy that provides for a fair and equitable refund to a 
student of tuition, fees, and other institutional charges. Thus, the 
Secretary's recognition of an agency means that the Secretary has 
approved that agency's refund policy. Non-Federal negotiators objected 
to the inclusion of this requirement in the proposed regulations on the 
grounds that section 496(g) of the HEA explicitly states that the 
Secretary may not establish standards for accrediting agencies that are 
not required by section 496. The Secretary believes, however, that the 
inclusion of a requirement for a standard addressing an institution's 
refund policy in the proposed regulations is necessary to comply with 
section 484B of the HEA.
    Section 602.26(c)  Time limit on correcting deficiencies. In 
Sec. 602.26(c), the Secretary proposes that, when an institution or 
program fails to meet an agency standard, the agency may permit the 
institution or program a period, which may not exceed 18 months, during 
which time it must take corrective action to bring itself back into 
compliance with the standard. The agency is free to set the time frame 
for coming into compliance at less than 18 months. If the institution 
or program fails to bring itself into compliance during the specified 
period, the agency must take adverse action, unless it finds that the 
time frame for achieving compliance should be extended for cause. Of 
course, the agency may take adverse action against an institution or 
program, either immediately or in less than 18 months, without offering 
the institution or program the opportunity to take corrective action if 
the agency believes that the adverse action is necessary.
    The Secretary believes that the 18-month time frame is necessary to 
ensure that institutions and programs make serious efforts to improve 
the quality of their offerings and to ensure that accrediting agencies 
take adverse actions when institutions fail to make those efforts. 
Accordingly, the Secretary anticipates that extensions beyond 18 months 
for cause will not be routinely granted. Additionally, the Secretary 
anticipates that for violations that are easily correctable, the 
appropriate period will be significantly less than 18 months.
    The Secretary is considering adding to this section a requirement 
that an accrediting agency must take action not only if it determines 
that an institution or program is not in compliance with a standard but 
also if it determines that an institution or program may currently meet 
the standard but is unlikely to be able to continue to meet the 
standard. The Secretary invites comments on this possible addition to 
the section.
Section 602.27  Required Operating Procedures
    Section 496(c) of the HEA requires accrediting agencies whose 
accreditation enables institutions to participate in Title IV, HEA 
programs to take special action whenever institutions establish new 
branch campuses or undergo changes in ownership that result in changes 
in control. Accordingly, in Sec. 602.27 of the proposed regulations, 
the Secretary reiterates the requirement for special action set forth 
in that section. For purposes of this section, the Secretary notes that 
the term ``branch campus'' includes any ``additional location,'' which 
the Secretary defines to be a location that is geographically apart 
from the main campus, that has its own separate administrative 
structure, services, and facilities, and at which the institution plans 
to offer a complete educational program. The Secretary believes the 
inclusion of additional locations in this requirement is consistent 
with the intent of Congress. The close scrutiny of branch campuses and 
additional locations includes the requirement contained in sections 
496(c)((2) and (3) to approve a business plan for a branch prior to its 
opening; to extend accreditation to the branch only after determining 
that it has sufficient educational, financial, operations, management, 
and physical resources to provide education or training consistent with 
the accreditation standards; and to conduct on-site reviews within six 
months for all new branches and all institutions that change ownership 
that results in a change in control.
    Another requirement of section 496(c) of the HEA is that any 
institution participating in Title IV, HEA programs that enters into a 
teach-out agreement with another institution must agree to submit to 
its accrediting agency for approval a teach-out agreement that is 
consistent with applicable standards and regulations. In Sec. 602.27(b) 
of the proposed regulations, the Secretary reiterates this requirement.
Section 602.28  Due Process for Institutions and Programs
    Section 496(a)(6) of the HEA requires an accrediting agency seeking 
recognition by the Secretary to use procedures throughout its 
accreditation process that satisfy due process requirements. 
Accordingly, in Sec. 602.28 of the proposed regulations, the Secretary 
sets out this due process requirement. Specifically, in Sec. 602.28 the 
Secretary requires an agency to set forth in writing all of its 
procedures governing its accreditation and preaccreditation processes, 
including its processes for the appeal of an adverse action it takes 
against an institution or program, to notify an institution or program 
in writing of any adverse action the agency takes against it, and to 
afford the institution or program the opportunity to appeal the adverse 
action. In accordance with section 496(a)(6)(D) of the HEA, in 
Sec. 602.28(b)(5) the Secretary specifically requires that an agency 
permit an institution or program the right to representation by counsel 
during an appeal of an adverse action.
    The Secretary acknowledges that the cost to an agency when an 
institution or program appeals an adverse action can be substantial. To 
minimize this cost, the Secretary has included in Sec. 602.28(b)(5) a 
provision, suggested by non-Federal negotiators, that agencies be given 
the discretion to determine when an appeal may be made only in writing.
Section 602.29  Notification of Accrediting Decisions
    Section 496(a)(7) of the HEA requires accrediting agencies to 
notify the Secretary, the appropriate State postsecondary review 
entities, and the public of any final adverse accrediting action 
regarding an institution or program. Accordingly, in Sec. 602.29(a) of 
the proposed regulations, the Secretary establishes this notification 
requirement. The Secretary proposes an additional requirement in 
Sec. 602.29(a) that is not specified in the law: that accrediting 
agencies notify other appropriate accrediting agencies of all final 
adverse actions. The Secretary believes this additional notification 
requirement, which was suggested after the negotiated rulemaking 
sessions by one of the non-Federal negotiators, is necessary because of 
the requirement, implied in section 496(l)(2) of the HEA, that an 
accrediting agency must take into account the adverse accrediting 
actions of other accrediting agencies in making its own accrediting 
decisions.
    Section 496(a)(8) of the HEA requires accrediting agencies to make 
available to the Secretary, the appropriate State postsecondary review 
entity and, upon request, the public a brief statement supporting any 
decision to deny, withdraw, suspend, or terminate the accreditation or 
preaccreditation of an institution or program, together with the 
comments of the affected institution or program concerning that 
decision. Accordingly, in Sec. 602.29 of the proposed regulations, the 
Secretary establishes this requirement. To ensure that the statement is 
made available in a timely fashion, the Secretary proposes to require 
that the statement be made available within 60 days of an agency's 
final decision.
    The Secretary is considering adding to this section a requirement 
that agencies notify the Secretary prior to taking final adverse action 
against an institution when the information that caused the agency to 
take the adverse action may relate to the institution's continued 
participation in Title IV, HEA programs, as, for example, in the case 
of fraud or gross mismanagement of Federal funds. The Secretary is 
considering this additional notification requirement because of the 
length of time it often takes agencies to reach a final adverse 
decision, due to an institution's rights under due process, even when 
circumstances indicate a gross violation of agency standards. The 
Secretary invites comments on this additional requirement and 
alternative approaches to notifying the Secretary when an agency has 
such serious concerns about an institution that it initiates an adverse 
action.
    Finally, the Secretary is considering adding to this section a 
requirement that an accrediting agency must notify the Secretary and 
the appropriate State postsecondary review entity of any final adverse 
accrediting action at the same time the agency notifies the institution 
of this action. The Secretary believes this addition would prevent 
excessive draw-down of SFA funds by an institution after it loses 
accreditation. The Secretary notes that, while this topic was not 
discussed during negotiated rulemaking, many negotiators have told 
Department staff that this additional requirement would not present an 
undue hardship to their agencies. The Secretary invites comments on 
this proposed additional requirement and suggestions for alternative 
approaches to prevent unwarranted expenditure of SFA funds by 
institutions that have lost accreditation.
Section 602.30  Regard for Decisions of States and Other Accrediting 
Agencies
    Section 496(l)(2) of the HEA implies that accrediting agencies are 
responsible for knowing what actions other recognized accrediting 
agencies have taken against an institution. The Secretary addresses 
this issue in Sec. 602.30 by proposing that all agencies, including 
those that accredit only programs, take into account the decisions of 
States and other accrediting agencies when making any accreditation or 
preaccreditation decision involving an institution or program. The 
Secretary believes the inclusion of programmatic accrediting agencies 
in this requirement is essential to ensure that the problems that 
caused a programmatic accrediting agency to take adverse action against 
a program within an institution are promptly reviewed by the 
institutional accrediting agency that accredits the institution to 
determine if the institution is still in compliance with the latter 
agency's standards.
    In Sec. 602.30(a)(3) of the proposed regulations, the Secretary 
requires that agencies routinely share with other appropriate 
recognized accrediting agencies and State agencies information about 
any actions they have taken regarding an institution's or programs's 
accreditation or preaccreditation. The Secretary is considering adding 
to this section a requirement that agencies share information about 
actions they are taking or are about to take regarding an institution's 
or program's accreditation or preaccreditation. The Secretary invites 
comments on this additional requirement and alternative approaches to 
sharing information with the other members of the triad regarding 
actions either under way or planned by the agency with respect to an 
institution or program.
    Finally, in Sec. 602.30(b) the Secretary proposes that agencies are 
subject to the requirements in Sec. 602.30(a) if they ``knew, or should 
have known,'' of the actions being taken by another recognized 
accrediting agency or State agency. The Secretary believes that it is 
reasonable to expect an agency to have known of these actions if there 
is evidence that the other agencies have sent information concerning 
these actions to the agency.

Other Issues

    The following discussion addresses other issues either discussed by 
negotiators or raised by the Secretary after the negotiations. None of 
the issues, however, involves a significant change from the current 
policies and procedures governing the accrediting agency recognition 
process, and thus none warrants inclusion in the previous section.
Section 602.2  Definitions
    Accrediting agency. While the definition in the proposed 
regulations eliminates the language in the current regulations 
describing the type of entity that may comprise an agency, the 
Secretary wishes to make clear that the legal entity that is an 
accrediting agency may be an association, council, commission, or 
corporation.
    Designated Department official. While this term is not used in the 
current regulations, the Secretary proposes to use it in subpart B on 
recognition and termination procedures to describe much of what has, in 
fact, been the Department's practice with respect to the accrediting 
agency recognition process. For example, the Assistant Secretary for 
Postsecondary Education has, on occasion, presented the summary of the 
preliminary analysis of an accrediting agency to the Advisory 
Committee; on other occasions, the Assistant Secretary has delegated 
that responsibility to a member of the Assistant Secretary's staff. 
After the Advisory Committee meeting, the Assistant Secretary has 
routinely forwarded to the Secretary the Advisory Committee's 
recommendation on an agency's application for recognition, along with 
the Assistant Secretary's recommendation. Finally, the Assistant 
Secretary has routinely advised the Secretary on issues related to the 
recognition of agencies. The Secretary believes that the inclusion of 
the term ``designated Department official'' and its use throughout 
subpart B clarifies the longstanding involvement of individuals other 
than the Secretary in the accrediting agency recognition process.
    Representative of the public. The Secretary wishes to make clear 
that under an agency's policy on conflicts of interest, a 
representative of the public may not participate in any accrediting 
decisions pertaining to an institution or program with which he or she 
may have any direct or indirect affiliation.
Section 602.21  Administrative and Fiscal Responsibility
    Consensus was reached by negotiators regarding the provisions 
specified in this section for demonstrating that an accrediting agency 
has the necessary administrative and fiscal resources to carry out its 
accrediting responsibilities. However, the Secretary is concerned that 
the provisions contained in this section do not adequately address 
whether an agency's personnel and fiscal resources will continue to be 
adequate during any recognition period granted. The Secretary invites 
suggestions on how to address this concern.

Executive Order 12866

    These proposed regulations have been reviewed in accordance with 
Executive Order 12866. An assessment of the potential costs and 
benefits of the various requirements contained in the proposed 
regulations has been incorporated into the relevant sections of this 
preamble. The Secretary notes that, as these proposed regulations were 
subject to negotiated rulemaking, the costs and benefits of the various 
requirements were discussed thoroughly by negotiators. The resultant 
consensus reached on a particular requirement reflected agreement on 
the best possible approach to that requirement in terms of cost and 
benefit.

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. The small number of entities that would be affected by these 
proposed regulations are accrediting agencies that apply for 
recognition by the Secretary. The regulations would not have a 
significant economic impact on the institutions affected because the 
regulations would not impose excessive regulatory burdens or require 
unnecessary Federal supervision. The regulations would impose the 
minimum requirements needed to ensure the proper implementation of the 
Secretary's statutory mandate to recognize accrediting agencies.

Paperwork Reduction Act of 1980

    Sections 602.4, 602.10, 602.26, and 602.27 contain information 
collection requirements. In addition, section 602.21(b)(7) contains 
specific record retention requirements. As required by the Paperwork 
Reduction Act of 1980, the Department of Education will submit a copy 
of these sections to the Office of Management and Budget for its 
review. (44 U.S.C. 3504(h))
    These proposed regulations contain substantial information 
collection requirements for accrediting agencies applying for 
recognition by the Secretary, as well as additional requirements for 
recognized agencies during their recognition period. The Department 
needs and uses the information collected to determine whether an agency 
seeking recognition by the Secretary meets the requirements for 
recognition and whether, if the agency is recognized, it continues to 
operate in compliance with the requirements for recognition throughout 
its recognition period.
    Organizations and individuals desiring to submit comments on the 
information collection requirements should direct them to the Office of 
Information and Regulatory Affairs, OMB, room 3002, New Executive 
Office Building, Washington, DC 20503; Attention: Daniel J. Chenok.

Invitation to Comment

    Interested persons are invited to submit comments and 
recommendations regarding these proposed regulations.
    All comments submitted in response to these proposed regulations 
will be available for public inspection, during and after the comment 
period, in room 3069, ROB-3, 7th & D Streets, SW., Washington, DC, 
between the hours of 8:30 a.m. and 4 p.m., Monday through Friday of 
each week except Federal holidays.
    To assist the Department in complying with the specific 
requirements of Executive Order 12866, the Secretary invites comments 
on whether there may be further opportunities to reduce any potential 
costs or increase potential benefits resulting from these proposed 
regulations without impeding the effective and efficient administration 
of the accrediting agency recognition process.

Assessment of Educational Impact

    The Secretary particularly requests comments on whether the 
proposed regulations in this document would require transmission of 
information that is being gathered by or is available from any other 
agency or authority of the United States.

List of Subjects in 34 CFR Part 602

    Colleges and universities, Education, Reporting and recordkeeping 
requirements.


[Catalog of Federal Domestic Assistance Number does not apply.]

    Dated: January 14, 1994.
Richard W. Riley,
Secretary of Education.

    The Secretary proposes to amend title 34 of the Code of Federal 
Regulations by revising part 602 to read as follows:

PART 602--SECRETARY'S PROCEDURES AND CRITERIA FOR THE RECOGNITION 
OF ACCREDITING AGENCIES

Subpart A--General Provisions

Sec.
602.1  Purpose.
602.2  Definitions.
602.3  Organization and membership.
602.4  Submission of information to the Secretary by recognized 
accrediting agencies.

Subpart B--Recognition and Termination Procedures

602.10  Application for recognition.
602.11  Preliminary review by the Secretary.
602.12  Review by the National Advisory Committee on Institutional 
Quality and Integrity.
602.13  Review and decision by the Secretary.
602.14  Limitation, suspension, or termination of recognition.
602.15  Requests for reconsideration of the Secretary's decisions.
602.16  Appeals procedures.
602.17  Publication of list of recognized agencies.

Subpart C--Criteria for Secretarial Recognition

602.20  Geographic scope of accrediting activities.
602.21  Administrative and fiscal responsibility.
602.22  Accreditation experience.
602.23  Application of standards.
602.24  Accreditation processes.
602.25  Additions to or substantive changes in educational programs.
602.26  Required accreditation standards.
602.27  Additional required operating procedures.
602.28  Due process for institutions and programs.
602.29  Notification of accrediting agency decisions.
602.30  Regard for decisions of States and other accrediting 
agencies.

    Authority: 20 U.S.C. 1058, 1061, 1085, 1088, 1099b, 1141, 1401, 
2471, and 3381, unless otherwise noted.

Subpart A--General Provisions


Sec. 602.1  Purpose.

    (a)(1) This part establishes procedures and criteria for the 
Secretary's recognition of accrediting agencies. The purpose of the 
Secretary's recognition of agencies is to assure that these agencies 
are, for the purposes of the Higher Education Act of 1965, as amended 
(HEA), or for other Federal purposes, reliable authorities as to the 
quality of education or training offered by the institutions of higher 
education or the higher education programs they accredit.
    (2) The Secretary's recognition of an accrediting agency is based 
on the Secretary's determination that the agency satisfies the 
requirements of this part.
    (b) The Secretary grants recognition only to those agencies that--
    (1) Accredit institutions of higher education for the purpose of 
enabling them to establish eligibility to participate in HEA programs; 
or
    (2) Accredit institutions of higher education or higher education 
programs for the purpose of enabling them to establish eligibility to 
participate in other programs administered by the Department or by 
other Federal agencies.


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


Sec. 602.2  Definitions.

    The following definitions apply to terms used in this part:
    Accreditation means the status of public recognition that an 
accrediting agency grants to an educational institution or program that 
meets the agency's established qualifications and standards.
    Accrediting agency or agency means a legal entity, or that part of 
a legal entity, that conducts accrediting activities through voluntary, 
non-Federal peer evaluations and makes decisions concerning the 
accreditation or preaccreditation status of institutions, programs, or 
both.
    Act means the Higher Education Act of 1965, as amended.
    Adverse accrediting action means the denial, withdrawal, 
suspension, or termination of accreditation or preaccreditation, or any 
comparable accrediting action an agency may take against an institution 
or program, except that placing an institution or program on probation 
or issuing a show cause order against an institution or program is not 
an adverse accrediting action unless it is so defined by the 
accrediting agency.
    Advisory Committee means the National Advisory Committee on 
Institutional Quality and Integrity.
    Branch campus means a location of an institution of higher 
education that is geographically apart from and independent of the main 
campus of the institution. The Secretary considers a location of an 
institution to be independent of the main campus if the location (1) is 
permanent in nature; (2) offers courses in educational programs leading 
to a degree, certificate, or other recognized educational credential; 
(3) has its own faculty and administrative or supervisory organization; 
and (4) has its own budgetary and hiring authority.
    Designated Department official means the official in the Department 
of Education to whom the Secretary has delegated the responsibilities 
indicated in this part.
    Institution of higher education or institution means an educational 
institution that qualifies or may qualify as an eligible institution 
under 34 CFR part 600.
    Institutional accrediting agency means an agency that accredits 
institutions of higher education.
    Nationally recognized accrediting agency, nationally recognized 
agency, or recognized agency means an accrediting agency that is 
recognized by the Secretary under this part.
    Part means part 602 of title 34 of the Code of Federal Regulations 
governing the Secretary's procedures and criteria for the recognition 
of accrediting agencies.
    Preaccreditation means the status of public recognition that an 
accrediting agency grants to an institution or program for a limited 
period of time that signifies that the agency has determined that the 
institution or program is progressing towards accreditation and is 
likely to attain accreditation within a reasonable period of time.
    Prebaccalaureate vocational education means vocational education 
that leads to a certificate, degree, or other credential that is less 
than a bachelor's degree.
    Program means a postsecondary educational program offered by an 
institution that leads to an academic or professional degree, 
vocational certificate, or other recognized educational credential.
    Programmatic accrediting agency means an agency that accredits 
specific educational programs that prepare students for entry into a 
profession, occupation, or vocation.
    Representative of the public means a person who is not (1) an 
employee, member of the governing board, owner, or shareholder of, or 
consultant to, an institution or program that either is accredited by 
the agency or has applied for accreditation; or (2) a member of any 
trade association or membership organization related to, affiliated 
with, or associated with the accrediting agency.
    Secretary means the Secretary of the U.S. Department of Education 
or any official or employee of the Department acting for the Secretary 
under a delegation of authority.
    State means a State of the Union, American Samoa, the Commonwealth 
of Puerto Rico, the District of Columbia, Guam, the Trust Territory of 
the Pacific Islands, the Virgin Islands, and the Commonwealth of the 
Northern Mariana Islands.
    Teach-out agreement means a written agreement between accredited 
institutions that provides for the equitable treatment of students if 
one of those institutions stops offering an educational program before 
all students enrolled in that program complete the program.
    Title IV, HEA program means any of the programs set forth in 34 CFR 
668.1(c).
    Vocational education means education or training that prepares 
students for gainful employment in a recognized occupation.


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


Sec. 602.3  Organization and membership.

    (a) The Secretary recognizes only the accrediting agencies 
described in paragraph (b) of this section that--
    (1) Accredit institutions of higher education or higher education 
programs for the purpose described in Sec. 601.1(b); and
    (2) Satisfy the criteria for Secretarial recognition contained in 
subpart C of this part.
    (b) The accrediting agencies referred to in paragraph (a) of this 
section are--
    (1) A State agency that--
    (i) Has as a principal purpose the accrediting of institutions of 
higher education, higher education programs, or both; and
    (ii) Has been listed by the Secretary as a nationally recognized 
accrediting agency on or before October 1, 1991;
    (2) An accrediting agency that--
    (i) Has a voluntary membership of institutions of higher education;
    (ii) Has as a principal purpose the accrediting of institutions of 
higher education to enable them to participate in programs authorized 
under this Act; and
    (iii) Satisfies the ``separate and independent'' requirements 
contained in paragraph (c) of this section;
    (3) An accrediting agency that--
    (i) Has a voluntary membership; and
    (ii) Has as its principal purpose the accrediting of higher 
education programs, or higher education programs and institutions of 
higher education to enable them to participate in Federal programs not 
authorized under this Act; and
    (4) An accrediting agency that, for purposes of determining 
eligibility for Title IV, HEA programs--
    (i)(A) Has a voluntary membership of individuals participating in a 
profession; or
    (B) Has as its principal purpose the accrediting of programs within 
institutions that are accredited by another nationally recognized 
accrediting agency; and
    (ii)(A) Satisfies the ``separate and independent'' requirements 
contained in paragraph (c) of this section; or
    (B) Obtains a waiver from the Secretary under paragraph (e) of this 
section of the ``separate and independent'' requirements contained in 
paragraph (c) of this section.
    (c) For purposes of this section, ``separate and independent'' 
means that--
    (1) The members of the agency's decision-making body--who make its 
accrediting decisions, establish its accreditation policies, or both--
are not elected or selected by the board or chief executive officer of 
any related, associated, or affiliated trade association or membership 
organization;
    (2) At least one member of the agency's decision-making body is a 
representative of the public, with no less than one-seventh of the body 
consisting of representatives of the public;
    (3) The agency has established and implemented guidelines for each 
member of the decision-making body to avoid conflicts of interest in 
making decisions;
    (4) The agency's dues are paid separately from any dues paid to any 
related, associated, or affiliated trade association or membership 
organization; and
    (5) The agency's budget is developed and determined by the agency 
without review by or consultation with any other entity or 
organization.
    (d) The Secretary considers that any joint use of personnel, 
services, equipment, or facilities by an accrediting agency and a 
related, associated, or affiliated trade association or membership 
organization does not violate the provisions of paragraph (c) of this 
section if--
    (1) The agency pays the fair market value for its proportionate 
share of the joint use; and
    (2) The joint use does not compromise the independence and 
confidentiality of the accreditation process.
    (e)(1) Upon request of an accrediting agency described in paragraph 
(b)(4) of this section, the Secretary waives the ``separate and 
independent'' requirements of this section if the agency demonstrates 
that--
    (i) The agency has been listed by the Secretary as a nationally 
recognized agency on or before October 1, 1991; and
    (ii) The existing relationship between the agency and the related, 
associated, or affiliated trade association or membership organization 
does not compromise the independence of the accreditation process.
    (2) To demonstrate that the existing relationship between the 
agency and the related, associated, or affiliated trade association or 
membership organization does not compromise the independence of the 
accreditation process, the agency must show that--
    (i) The related, associated, or affiliated trade association or 
membership organization plays no role in making or ratifying the 
accreditation decisions of the agency;
    (ii) The agency has sufficient budget and administrative autonomy 
to carry out its accrediting functions; and
    (iii) The agency provides to the related, associated, or affiliated 
trade association or membership organization only information it makes 
available to the public.

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


Sec. 602.4  Submission of information to the Secretary by recognized 
accrediting agencies.

    Each accrediting agency recognized by the Secretary shall submit to 
the Secretary--
    (a) Reports of final accrediting actions taken by the agency with 
respect to the institutions and programs it accredits;
    (b) A copy of any annual report prepared by the agency;
    (c) A copy, updated annually, of the agency's directory of 
accredited institutions and programs;
    (d) A summary of the agency's major accrediting activities during 
the previous year (an annual data summary), if so requested by the 
Secretary to carry out the Secretary's responsibilities related to this 
part;
    (e) Upon request, information to assist the Secretary in resolving 
problems with any institution or program accredited by the agency, 
provided that the request does not conflict with the agency's policies 
on confidentiality with respect to its records on those institutions or 
programs; and
    (f) Any proposed change that might alter the agency's--
    (1) Scope of recognition; or
    (2) Compliance with the requirements of this part.


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

Subpart B--Recognition and Termination Procedures


Sec. 602.10  Application for recognition.

    (a) An accrediting agency seeking initial or renewed recognition by 
the Secretary as a nationally recognized accrediting agency submits a 
written application to the Secretary. The application for recognition 
consists of--
    (1) A statement of the agency's requested scope of recognition;
    (2) An analysis of the agency's compliance with the criteria for 
recognition set forth in this part; and
    (3) Supporting documentation.
    (b)(1) An accrediting agency's application for recognition 
constitutes a grant of authority to the Secretary to conduct site 
visits and to gain access to agency records, personnel, and facilities 
on an announced or unannounced basis.
    (2) The Secretary conducts an unannounced site visit only, where 
necessary in the judgment of the Secretary, to obtain information to 
verify that the agency is in compliance with the requirements of this 
part and the information cannot be obtained or substantiated in an 
announced site visit.
    (c) The Secretary does not make available to the public any 
confidential agency materials examined by Department personnel or the 
Secretary as part of the evaluation of an accrediting agency's 
application for recognition.


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


Sec. 602.11  Preliminary review by the Secretary.

    (a) Upon receipt of an accrediting agency's application for 
recognition, the Secretary--
    (1) Establishes a schedule for the review of the agency by the 
designated Department official, the National Advisory Committee on 
Institutional Quality and Integrity, and the Secretary; and
    (2) Publishes a notice of the agency's application in the Federal 
Register inviting public comment on the agency's compliance with the 
requirements for recognition.
    (b)(1) The designated Department official analyzes the accrediting 
agency's application to determine whether the agency satisfies the 
requirements of this part, taking into account all available relevant 
information concerning the compliance of the agency with the 
requirements for recognition. The analysis includes--
    (i) Site visits, on an announced or unannounced basis, to the 
agency and, at the Secretary's discretion, representative institutions 
or programs it accredits;
    (ii) Review of public comment and other third-party information 
solicited by the Secretary, as well as any other information provided 
to the Secretary, concerning the performance of the agency in relation 
to the requirements of this part; and
    (iii) Review of complaints or legal actions involving the agency.
    (2) The designated Department official's evaluation may also 
include a review of information directly related to institutions or 
programs accredited or preaccredited by the agency, relative to their 
compliance with the accrediting agency's standards, the effectiveness 
of the agency's standards, or the agency's application of those 
standards.
    (c) The designated Department official--
    (1) Prepares a written analysis of the accrediting agency;
    (2) Sends the analysis and all supporting documentation, including 
all third-party comments received by the Secretary, to the agency in 
advance of the Advisory Committee meeting; and
    (3) Specifies a time period before the Advisory Committee meeting 
during which the agency may provide the designated Department official 
with any written comments on the analysis.
    (d) The accrediting agency provides any written comments it chooses 
to make to the designated Department official before the expiration of 
the time period specified in paragraph (c)(3) of this section.
    (e) The designated Department official provides the Advisory 
Committee with the accrediting agency's application and supporting 
documentation, the designated Department official's analysis of the 
application, all information relied upon in developing the analysis, 
any response by the agency to the analysis, any Department rebuttal to 
the agency's response, and any third-party information the Secretary 
receives regarding the agency.
    (f) The designated Department official provides the agency with a 
copy of any Department rebuttal provided to the Advisory Committee 
under paragraph (e) of this section.

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


Sec. 602.12  Review by the National Advisory Committee on Institutional 
Quality and Integrity.

    (a)(1) The Advisory Committee considers an accrediting agency's 
application at a public meeting and invites the designated Department 
official, the agency, and other interested parties to make oral 
presentations at the meeting.
    (2) The designated Department official arranges for a transcript to 
be made of the Advisory Committee meeting.
    (b) At the conclusion of the meeting, the Advisory Committee 
recommends that the Secretary approve or deny recognition of the 
accrediting agency or defer a decision on the agency's application.
    (c)(1) If the Advisory Committee recommends recognition, the 
Advisory Committee also recommends the scope of recognition for the 
agency and a recognition period.
    (2) If the Advisory Committee recommends recognition despite 
finding that the agency failed to comply with each of the requirements 
of this part, the Advisory Committee provides the Secretary with a 
detailed explanation as to why it believes the agency's failure to 
comply with the particular requirement(s) does not require denial or 
deferral.
    (3) If the Advisory Committee recommends denial of recognition, the 
Advisory Committee specifies the reasons for the recommendation and the 
requirements of this part that the agency failed to meet.
    (4) If the Advisory Committee recommends deferral of a decision on 
the agency's application, the Advisory Committee specifies the reasons 
for the recommendation, the requirements of this part that it believes 
the agency has not met, and a recommended deferral period.
    (d) After the meeting, the Advisory Committee forwards its written 
recommendations concerning recognition to the Secretary.

(Authority: 20 U.S.C. 1099b, 1145)


Sec. 602.13  Review and decision by the Secretary.

    (a) The Secretary determines whether to grant national recognition 
to an applicant accrediting agency based on the Advisory Committee's 
recommendation and the full record of the agency's application, 
including all oral and written presentations to the Advisory Committee 
by the agency, the designated Department official, and interested third 
parties.
    (b)(1) Before making a final decision, the Secretary affords both 
the designated Department official and the accrediting agency an 
opportunity to contest, in writing, the Advisory Committee's 
recommendation. If either the agency or the designated Department 
official wishes to contest the recommendation, that party shall notify 
the Secretary and the other party no later than 10 days after the 
Advisory Committee meeting.
    (2) If the party contesting the Advisory Committee's recommendation 
wishes to make a written submission to the Secretary, the Secretary 
must receive that submission no later than 30 days after the Advisory 
Committee meeting. However, the contesting party may not submit any 
evidence to the Secretary that it did not submit to the Advisory 
Committee. The contesting party shall simultaneously provide a copy of 
its submission to the other party.
    (3) If the noncontesting party wishes to respond in writing to the 
Secretary, the Secretary must receive that submission no later than 30 
days after the noncontesting party receives the contesting party's 
submission. However, the noncontesting party may not submit any 
evidence to the Secretary that it did not submit to the Advisory 
Committee. The noncontesting party shall simultaneously provide a copy 
of its response to the contesting party.
    (4) If the Advisory Committee's recommendation is contested, the 
Secretary renders a final decision after taking into account the two 
parties' written submissions, if any.
    (c) The Secretary approves the accrediting agency for national 
recognition if the Secretary determines that the agency satisfies each 
of the requirements contained in this part.
    (d) The Secretary approves the accrediting agency for national 
recognition even if the agency does not satisfy each of the 
requirements contained in this part if the Secretary determines that 
the agency's effectiveness is not impaired by the noncompliance.
    (e) If the Secretary approves the accrediting agency for national 
recognition, the Secretary defines-
    (1) The scope of recognition, which may include the--
    (i) Geographic area;
    (ii) Degrees and certificates awarded;
    (iii) Types of institutions the agency may accredit;
    (iv) Types of programs the agency may accredit; and
    (v) Preaccreditation status(es), if any, that the Secretary 
approves for recognition; and
    (2) The recognition period, which does not exceed five years.
    (f)(1) If the Secretary denies recognition to the accrediting 
agency or grants recognition for a scope narrower than that requested 
by the agency, the Secretary indicates in writing the reasons for that 
decision.
    (2) The agency described in paragraph (f)(1) of this section may 
request that the Secretary reconsider the decision under the provisions 
of Sec. 602.15.
    (g) If the Secretary defers a decision on the accrediting agency's 
application, the Secretary--
    (1) Indicates in writing the reasons for the deferral and the 
deferral period; and
    (2) Automatically extends any previously granted recognition period 
until the Secretary reaches a decision on the renewal application.
    (h) If the Secretary does not reach a final decision on an 
accrediting agency's application for renewal of recognition before the 
expiration of the agency's recognition period, the Secretary 
automatically extends the previously granted recognition period until 
the Secretary reaches a decision on the renewal application.

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


Sec. 602.14  Limitation, suspension, or termination of recognition.

    (a)(1) The Secretary may limit, suspend, or terminate the 
recognition of an accrediting agency before completion of its 
previously granted recognition period if the Secretary determines, 
after notice and opportunity for a hearing, that the agency fails or 
has failed to satisfy any of the requirements of this part.
    (2) If the agency requests a hearing--
    (i) The hearing is conducted by the Advisory Committee or by a 
subcommittee of three members of the Advisory Committee, appointed by 
the Secretary, if the Secretary determines that a more timely hearing 
is necessary than can be accommodated by the schedule of the full 
Advisory Committee; and
    (ii) The designated Department official arranges for a transcript 
to be made of the hearing.
    (b) The designated Department official begins a limitation, 
suspension, or termination proceeding against an accrediting agency by 
sending the agency a notice that--
    (1) Informs the agency of the Secretary's intent to limit, suspend, 
or terminate its recognition;
    (2) Identifies the alleged violations of the governing regulations 
that constitute the basis for the action;
    (3) Describes the limits to be imposed if the Secretary seeks to 
limit the accrediting agency;
    (4) Specifies the effective date of the limitation, suspension, or 
termination; and
    (5) Informs the agency that it may--
    (i) Submit to the designated Department official a written response 
to the notice no later than 30 days after it receives the notice; and
    (ii) Request a hearing, which shall take place in Washington, DC, 
before the Advisory Committee or subcommittee if the agency submits a 
hearing request to the designated Department official no later than 30 
days after it receives the notice.
    (c)(1) As part of its response to the limitation, suspension, or 
termination notice or its hearing request, if any, the accrediting 
agency shall identify the issues and facts in dispute and its position 
with regard to those issues and facts.
    (2) After receipt of the agency's response and hearing request, if 
any, the designated Department official--
    (i) Transmits the limitation, suspension, or termination notice and 
the agency's response, if any, to that notice to the Advisory Committee 
or subcommittee; and
    (ii) Establishes the date and time of any hearing before the 
Advisory Committee or subcommittee.
    (d)(1) Except as provided in paragraph (d)(2) of this section, if a 
hearing is held, the Advisory Committee or subcommittee shall allow the 
designated Department official, the accrediting agency, and any 
interested party to make an oral or written presentation. That 
presentation may include the introduction of written and oral evidence.
    (2) If the designated Department official and the accrediting 
agency each agree, the Advisory Committee or subcommittee review shall 
be based solely on the written materials submitted to it under 
paragraph (c)(2)(i) of this section.
    (e)(1) After the Advisory Committee or subcommittee reviews the 
presentations, it shall issue an opinion in which it--
    (i) Makes findings of fact based upon the evidence presented;
    (ii) Recommends whether a limitation, suspension, or termination of 
the agency's recognition is warranted; and
    (iii) Provides the reasons for that recommendation.
    (2) The Advisory Committee or subcommittee shall--
    (i) Transmit its written opinion to the Secretary; and
    (ii) Provide a copy of its opinion to the designated Department 
official and the accrediting agency.
    (f)(1) After receiving the Advisory Committee's recommendation, the 
Secretary issues a decision on whether to limit, suspend, or terminate 
the agency's recognition, based upon the recommendation of the Advisory 
Committee and the full record before the Advisory Committee.
    (2) Either the accrediting agency or the designated Department 
official may appeal the Advisory Committee's recommendation by filing a 
notice of appeal with the Secretary within 10 days of receipt of the 
Advisory Committee's or subcommittee's recommendation. If either party 
files an appeal with the Secretary, that party shall simultaneously 
provide a copy of the notice of appeal to the other party.
    (3) The party appealing the Advisory Committee's or subcommittee's 
recommendation has 30 days after its receipt of the recommendation to 
make a written submission to the Secretary challenging the 
recommendation. However, the appealing party may not submit any 
evidence that was not submitted to the Advisory Committee or 
subcommittee. The appealing party shall simultaneously provide a copy 
of the submission to the other party.
    (4) The nonappealing party has 30 days from the date it receives 
the appealing party's submission to file a written response to the 
Secretary regarding the submissions of the appealing party and shall 
simultaneously provide the appealing party with a copy of its response. 
The nonappealing party may not submit any evidence that was not 
submitted to the Advisory Committee or subcommittee.
    (5) If the Advisory Committee's or subcommittee's recommendation is 
appealed, the Secretary renders a final decision after taking into 
account that recommendation and the parties' written submissions on 
appeal.
    (g) If the Secretary limits, suspends, or terminates an accrediting 
agency's recognition during its recognition period, the agency may 
request that the Secretary reconsider this decision under Sec. 602.15.

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


Sec. 602.15  Requests for reconsideration of the Secretary's decisions.

    (a)(1) An accrediting agency may request a reconsideration of a 
Secretarial decision if the Secretary--
    (i) Denies its application for recognition;
    (ii) Does not grant its requested scope of recognition; or
    (iii) Limits, suspends, or terminates the agency's recognition 
during its recognition period.
    (2) The agency may request reconsideration only if the agency 
demonstrates that--
    (i) It has new information that could not have been presented 
previously; and
    (ii) The new information is likely to result in reversal of the 
Secretary's decision.
    (b) To request a reconsideration, the accrediting agency shall--
    (1) Notify the Secretary of its intent no later than 10 days after 
its receipt of the Secretary's decision; and
    (2) Submit its written request for reconsideration and the reasons 
for that request no later than 45 days after receipt of the Secretary's 
decision.
    (c)(1) Within 60 days after receipt of the accrediting agency's 
written request for reconsideration, the Secretary renders a final 
decision based on the information contained in the agency's request and 
the entire record before both the Advisory Committee or subcommittee 
and the Secretary.
    (2) The Secretary may request the opinion of the designated 
Department official, the Advisory Committee, or the subcommittee before 
rendering a final decision.

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


Sec. 602.16  Appeals procedures.

    An accrediting agency may appeal the Secretary's final decision 
under this part regarding the agency's recognition to the Federal 
courts as a final decision in accordance with applicable Federal law.

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


Sec. 602.17  Publication of list of recognized agencies.

    (a) The Secretary periodically publishes in the Federal Register a 
list of recognized accrediting agencies and each agency's scope of 
recognition.
    (b) If the Secretary denies recognition to a previously recognized 
accrediting agency, or limits, suspends, or terminates its recognition 
during a previously granted recognition period, the Secretary publishes 
a notice of that action in the Federal Register and makes available to 
the public, upon request, the Secretary's determination.


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

Subpart C--Criteria for Secretarial Recognition


Sec. 602.20  Geographic scope of accrediting activities.

    To be listed by the Secretary as a nationally recognized 
accrediting agency, an accrediting agency must demonstrate to the 
Secretary that the geographical scope of its accrediting activities 
covers--
    (a) A State, if the agency is a component of a State government;
    (b) A region of the United States that includes at least three 
States that are contiguous or in close geographical proximity to one 
another; or
    (c) The United States.

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


Sec. 602.21  Administrative and fiscal responsibility.

    (a) To be listed by the Secretary as a nationally recognized 
accrediting agency, an accrediting agency must demonstrate to the 
Secretary that it has the administrative and fiscal capability to carry 
out its accreditation activities in light of its requested scope of 
recognition.
    (b) The Secretary considers that an accrediting agency meets the 
requirements of paragraph (a) of this section if it has, and will 
likely continue to have--
    (1) Adequate administrative staff to--
    (i) Carry out its accrediting responsibilities effectively; and
    (ii) Manage its finances effectively;
    (2) Competent and knowledgeable individuals, qualified by 
experience and training, responsible for on-site evaluation, policy-
making, and decision-making regarding accreditation and 
preaccreditation status;
    (3) Representation on its evaluation, policy, and decision-making 
bodies of--
    (i) For an institutional accrediting agency, both academic and 
administrative personnel; and
    (ii) For a programmatic accrediting agency, both educators and 
practitioners;
    (4) Representation of the public on all decision-making bodies;
    (5) Clear and effective controls against conflicts of interest or 
the appearance of conflicts of interest by the agency's board members, 
commissioners, evaluation team members, consultants, administrative 
staff, and other agency representatives;
    (6) Adequate financial resources to carry out its accrediting 
responsibilities, taking into account the funds required to conduct the 
range of accrediting activities specified in the requested scope of 
recognition and the income necessary to meet the anticipated costs of 
its activities in the future; and
    (7) Complete and accurate records of--
    (i) Its last two full accreditation or preaccreditation reviews of 
each institution or program, including self-study reports, on-site 
evaluation team reports, institution or program responses to on-site 
reports, periodic review reports, and any reports of special review 
conducted by the agency between regular reviews; and
    (ii) Its decisions with respect to all preaccreditation and 
accreditation actions, including all adverse actions.

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


Sec. 602.22  Accreditation experience.

    (a) To be listed by the Secretary as a nationally recognized 
accrediting agency, an accrediting agency must demonstrate to the 
Secretary that it has adequate experience in accrediting institutions, 
programs, or both.
    (b) The Secretary considers that an accrediting agency satisfies 
the requirements of paragraph (a) of this section if it has--
    (1) Granted accreditation or preaccreditation status to 
institutions or programs in the geographical area for which it seeks 
recognition;
    (2) Conducted accreditation activities covering the range of the 
specific degrees, certificates, and programs for which it seeks 
recognition, including--
    (i) Granting accreditation or preaccreditation status; and
    (ii) Providing technical assistance related to accreditation to 
institutions, programs, or both; and
    (3) Policies, evaluative criteria, and procedures, and has made 
evaluative decisions, that are accepted throughout the United States 
by--
    (i) Educators and educational institutions; and
    (ii) Licensing bodies, practitioners, and employers in the 
professional or vocational fields for which the educational 
institutions or programs within the agency's jurisdiction prepare their 
students.

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


Sec. 602.23  Application of standards.

    (a) To be listed by the Secretary as a nationally recognized 
accrediting agency, an accrediting agency must demonstrate to the 
Secretary that it consistently applies and enforces written standards 
that ensure that the education or training offered by an institution or 
program is of sufficient quality to achieve, for the duration of any 
accreditation period granted by the agency, the stated objective for 
which it is offered.
    (b) The Secretary considers that an accrediting agency meets the 
requirements of paragraph (a) of this section if--
    (1) The agency's written standards and procedures for accreditation 
and preaccreditation, if that latter status is offered, comply with the 
requirements of this part;
    (2) The agency's preaccreditation standards, if offered, are 
appropriately related to the agency's accreditation standards, with a 
limit on preaccreditation status of no more than five years for any 
institution or program;
    (3) The agency's organizations, functions, and procedures include 
effective controls against the inconsistent application of its criteria 
and standards;
    (4) The agency bases its decisions regarding accreditation or 
preaccreditation on its published criteria; and
    (5) The agency maintains a systematic program of review designed to 
ensure that its criteria and standards are appropriate and sufficiently 
comprehensive to evaluate the quality of the education or training 
provided by the institutions or programs it accredits and are relevant 
to the education or training needs of affected students.

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


Sec. 602.24  Accreditation processes.

    (a)(1) To be listed by the Secretary as a nationally recognized 
accrediting agency, an accrediting agency must demonstrate to the 
Secretary that it has effective mechanisms for evaluating compliance 
with its standards and those mechanisms cover the full range of an 
institution's or program's offerings, including those offerings 
conducted at branch campuses and additional locations.
    (2) The Secretary considers that an accrediting agency meets the 
requirements of paragraph (a) of this section if it meets the 
requirements contained in paragraphs (b) through (f) of this section.
    (b)(1) In determining whether to grant initial or renewed 
accreditation, the accrediting agency evaluates whether an institution 
or program--
    (i) Maintains clearly specified educational objectives consistent 
with its mission and appropriate in light of the degrees or 
certificates it awards;
    (ii) Is successful in achieving its stated objectives;
    (iii) Maintains degree and certificate requirements that at least 
conform to commonly accepted standards; and
    (iv) Complies with the agency's criteria.
    (2) In reaching its determination to grant initial or renewed 
accreditation, the accrediting agency--
    (i) Requires an in-depth self-study by each institution or program 
in accordance with guidance provided by the agency, with particular 
focus on the assessment of educational quality and the continuing 
improvement of educational quality;
    (ii) Conducts at least one on-site review of the institution or 
program at which the agency obtains sufficient information to enable it 
to determine if the institution or program complies with the agency's 
criteria;
    (iii) Conducts its own analyses and evaluations of the self-study 
and supporting documentation furnished by the institution or program, 
and any other appropriate information from other sources, to determine 
whether the institution or program complies with the agency's 
standards; and
    (iv) Provides to the institution or program a detailed written 
report on its review assessing--
    (A) The institution's or program's compliance with the agency's 
standards, including areas needing improvement; and
    (B) The institution's or program's performance with respect to 
student achievement.
    (c) In addition to the on-site visit described in paragraph 
(b)(2)(ii) of this section, an institutional accrediting agency whose 
accreditation enables the institutions it accredits to seek eligibility 
to participate in Title IV, HEA programs conducts--during the interval 
between the agency's award of accreditation or preaccreditation to the 
institution or program and the expiration of the accreditation or 
preaccreditation period--at least one unannounced on-site review at 
each institution that provides prebaccalaureate vocational education or 
training for the purpose of determining the institution's or program's 
continued compliance with the agency's standards.
    (d) The accrediting agency--
    (1) Monitors institutions or programs throughout the accreditation 
or preaccreditation period to ensure continuing compliance with the 
agency's standards or criteria; and
    (2) Conducts special evaluations, site visits, or both, as 
necessary.
    (e) The accrediting agency regularly reevaluates institutions or 
programs that have been granted accreditation or preaccreditation.

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


Sec. 602.25  Additions to or substantive changes in educational 
programs.

    (a) To be listed by the Secretary as a nationally recognized 
accrediting agency, an accrediting agency must demonstrate to the 
Secretary that, except as provided in paragraph (b) of this section, it 
includes within its previous grant of accreditation or preaccreditation 
to an institution an educational program that an institution initially 
offers, or substantively changes after that grant of accreditation or 
preaccreditation, only after--
    (1) The institution notifies the accrediting agency of the addition 
of the new program or the substantive change in the existing program; 
and
    (2) The accrediting agency evaluates the new or substantively 
changed program and determines that it does not adversely affect the 
institution's capacity to meet the agency's standards.
    (b) An accrediting agency may extend accreditation to an 
educational program that an institution initially offers or 
substantively changes after it received the agency's last grant of 
accreditation or preaccreditation without specifically evaluating and 
approving that program if--
    (1) The institution notifies the agency of that program; and
    (2) The program does not provide prebaccalaureate vocational 
education.
    (c) For purposes of this section, an accrediting agency defines a 
substantive change in an educational program, but the definition must 
include--
    (1) A substantial change in the number of clock or credit hours, 
the number of weeks, and the content of that program;
    (2) A change in the type of program offered;
    (3) A change in the credential awarded for the successful 
completion of the program; and
    (4) A change from clock hours to credit hours or vice versa.

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


Sec. 602.26  Required accreditation standards.

    (a)(1) To be listed by the Secretary as a nationally recognized 
accrediting agency, an accrediting agency must demonstrate to the 
Secretary that its accreditation or preaccreditation standards, or 
both, are sufficiently rigorous to ensure that the agency is a reliable 
authority as to the quality of the education or training provided by 
the institutions or programs it accredits.
    (2) For a programmatic accrediting agency that does not serve as an 
institutional accrediting agency for any of the programs it accredits, 
the standards must address the areas contained in paragraph (b) of this 
section in terms of the type and level of the program rather than in 
terms of the institution.
    (3) If none of the institutions an agency accredits participates in 
any Title IV, HEA program, or if the agency only accredits programs 
within institutions accredited by an accrediting agency recognized by 
the Secretary, the accrediting agency is not required to have the 
standards described in paragraphs (b)(7), (b)(8), (b)(10), (b)(12), and 
(b)(13) of this section.
    (b) In order to assure that an accrediting agency is a reliable 
authority as to the quality of the education or training provided by an 
institution or program it accredits, the agency must have standards 
that effectively address the quality of an institution or program in 
the following areas:
    (1) Curricula.
    (2) Faculty.
    (3) Facilities, equipment, and supplies.
    (4) Fiscal and administrative capacity as appropriate to the 
specified scale of operations. The agency shall--
    (i) Have standards addressing the institution's or program's 
finances and management that enable it to assess an institution's or 
program's fiscal and administrative capacity, as appropriate to its 
scale of operations, for the purpose of determining whether--
    (A) The institution or program appears able to continue to be an 
ongoing, economically viable entity; and
    (B) The finances of the institution or program appear to be 
sufficient for it to continue to meet the agency's standards;
    (ii) Make a determination under this standard--
    (A) When it initially evaluates an institution or program for 
accreditation or preaccreditation; and
    (B) When it periodically reevaluates the institution or program for 
accreditation or preaccreditation;
    (iii) Require an institution or program to submit on an annual 
basis sufficient financial information, which may include the annual 
audited financial statement the institution or program submits to the 
Secretary under the Title IV, HEA programs, to enable the agency to 
determine if the financial capacity of the institution threatens the 
ability of the institution or program to continue to meet the agency's 
standards; and
    (iv) Review, as appropriate on an annual basis, the information 
obtained under paragraph (b)(4)(iii) of this section to determine if 
there is reason to take any follow-up action based on a reduced 
financial capacity.
    (5) Student support services.
    (6) Recruiting and admissions practices, academic calendars, 
catalogs, publications, grading, and advertising. The agency shall have 
standards that enable it to assess an institution's or program's 
recruiting and admissions practices, academic calendars, catalogs, 
publications, grading, and advertising in terms of--
    (i) Whether the institution's or program's academic calendar, 
catalogs, publications, and advertising are accurate, complete, and 
consistent with actual practice and agency standards, particularly with 
respect to costs, financial obligations, refunds, graduation rates, 
employment prospects, and other statements regarding educational 
effectiveness; and
    (ii) Whether the institution's or program's admissions policies and 
standards are reasonable in light of the institution's or program's 
educational mission.
    (7) Program length and tuition and fees in relation to the subject 
matters taught and the objectives of the degrees or credentials 
offered. The agency shall have standards that establish minimum and 
maximum program lengths for prebaccalaureate vocational education 
programs and have other standards to enable the agency to assess an 
institution's or program's length of program and tuition and fee 
charges. In developing these standards, the agency shall take into 
account such factors as--
    (i) Program objectives and content;
    (ii) The types and locations of instructional delivery;
    (iii) The knowledge and skills necessary for students to reach 
competence in the field being taught;
    (iv) Generally accepted practices in higher education;
    (v) Any applicable Federal statutes or regulations; and
    (vi) For any prebaccalaureate vocational education program, 
consideration of the remuneration that can reasonably be expected by 
students who complete the program.
    (8) Measures of program length in clock hours or credit hours. The 
agency shall have standards that enable it to assess an institution's 
or program's measurement of program length. In developing these 
standards, the agency shall take into account such factors as--
    (i) Program goals, objectives, and content;
    (ii) The types and combinations of instructional methodologies and 
delivery systems, including outside preparation as appropriate;
    (iii) The knowledge and skills necessary for students to reach 
competence in the field being taught;
    (iv) Generally accepted practices in higher education; and
    (v) Any applicable Federal statutes or regulations.
    (9) Success with respect to student achievement in relation to 
mission. The agency shall have standards that enable it to assess an 
institution's or program's success with respect to student achievement. 
Under these standards, the agency shall--
    (i) Require the institution or program to document and assess the 
educational achievement of students in verifiable and consistent ways, 
such as--
    (A) Student grades, grade point averages, theses, or portfolios;
    (B) Results of admissions tests for graduate or professional school 
or other standardized tests;
    (C) Transfer rates to institutions offering higher level programs; 
and
    (D) Job placement rates, completion rates, results of licensing 
examinations, evaluations by employers, follow-up studies of alumni, 
and other recognized measures of educational outcomes;
    (ii) Require the institution or program to use effectively the 
information obtained under paragraph (b)(9)(i) of this section to 
improve student achievement with respect to the degrees or certificates 
offered;
    (iii) Systematically monitor institutional or program performance 
with respect to student achievement to determine if performance is 
consistent with both the institution's or program's mission and 
objectives and the agency's objective measures of performance of 
student achievement; and
    (iv) For any prebaccalaureate vocational education program 
accredited by the agency or provided by an institution the agency 
accredits, establish minimum quantitative standards for--
    (A) Completion rates;
    (B) Job placement rates; and
    (C) Pass rates on State licensing examinations or other appropriate 
measures of occupational competency.
    (10) Default rates in the student loan programs established under 
Title IV of the Act, based on the most recent data provided by the 
Secretary. The agency shall have standards that require it to evaluate 
an institution to determine whether the institution is out of 
compliance with its accrediting standards if the institution's latest 
cohort default rate under the Federal Stafford Loan or Federal 
Supplemental Loans for Students program--
    (i) Equals or exceeds 25 percent; or
    (ii) Has increased significantly in relation to its rate in the 
previous year.
    (11) Record of student complaints received by, or available to, the 
agency. The agency shall have standards that enable it to assess an 
institution's or program's record of student complaints received by or 
made available to the agency. Under these standards, the agency shall--
    (i) Review student complaints that relate to the agency's 
standards;
    (ii) Take appropriate follow-up action with regard to those 
complaints;
    (iii) If considered necessary by the agency, refer complainants to 
appropriate Federal, State, and other agencies if the complaints do not 
relate to the agency's standards; and
    (iv) Require institutions or programs to make available to students 
the agency's mailing address or telephone number for complaints.
    (12) Compliance with the institution's program responsibilities 
under Title IV of the Act. The agency shall have standards that require 
institutions to be in compliance with their responsibilities under the 
Title IV, HEA programs. The agency's assessment under these standards 
shall be based on program reviews, financial and compliance audits, 
audited financial statements, and any other information that the 
Secretary provides.
    (13) The institution's practice of making refunds to students. The 
agency shall have--
    (i) A refund policy, that must be approved by the Secretary, that 
provides for a fair and equitable refund to a student of tuition, fees, 
and other institutional charges; and
    (ii) Standards that enable it to assess whether an institution 
complies with its refund policy.
    (c)(1) An accrediting agency shall take appropriate action if its 
review of an institution or program under any standard indicates that 
the institution or program is not in compliance with that standard.
    (2) If the agency believes that the institution or program is not 
in compliance with the standards, the agency shall--
    (i) Take prompt adverse action against the institution or program; 
or
    (ii) Require the institution or program to take appropriate action 
to bring itself into compliance, or to ensure its continued compliance, 
with the agency's standards within a time frame specified by the 
agency.
    (3) The accrediting agency has sole discretion to determine the 
time frame specified in paragraph (c)(2)(ii) of this section for the 
institution or program to bring itself into compliance with agency 
standards. However, except as indicated in paragraph (c)(4) of this 
section, the specified period may not exceed 18 months.
    (4) If the institution or program does not bring itself into 
compliance within the specified period, the agency must take adverse 
action unless the agency extends the period for achieving compliance 
for good cause.
    (d) An accrediting agency shall have a reasonable basis for 
determining that the information it relies on for making the 
assessments described in paragraphs (b) and (c) of this section is 
accurate.
    (e) An accrediting agency that has established and applies the 
standards in paragraph (b) of this section may establish any additional 
accreditation standards as it deems appropriate.

(Authority: 20 U.S.C. 1091, 1099b)


Sec. 602.27  Additional required operating procedures.

    (a) To be listed by the Secretary as a nationally recognized 
accrediting agency, an accrediting agency must demonstrate to the 
Secretary that it satisfies the procedural requirements contained in 
other provisions of this part and the additional requirements contained 
in paragraphs (b) through (h) of this section.
    (b) If the accrediting agency accredits institutions and that 
accreditation enables those institutions to seek eligibility to 
participate in Title IV, HEA programs--
    (1) The agency requires the institution to--
    (i) Notify the agency if the institution plans to establish a 
branch campus or an additional location; and
    (ii) Submit a business plan described in paragraph (b)(2) of this 
section if the institution plans to operate a branch campus or 
additional location--
    (A) That is geographically apart from the main campus;
    (B) That has its own separate administrative structure, services, 
and facilities, and
    (C) At which the institution plans to offer a complete educational 
program;
    (2) The business plan that an institution submits under paragraph 
(b)(1)(ii) of this section must contain a description of--
    (i) The educational program to be offered at the branch campus or 
location;
    (ii) The projected revenues and expenditures and cash flow at the 
branch campus or location; and
    (iii) The operation, management, and physical resources at the 
branch campus or location;
    (3) The agency extends accreditation to the branch campus or 
additional location only after evaluating the business plan and taking 
other necessary actions to permit the agency to determine that the 
branch campus or additional location has sufficient educational, 
financial, operational, management, and physical resources to satisfy 
the accrediting agency's standards for accreditation;
    (4) The agency undertakes a site visit of the branch campus or 
additional location as soon as practicable, but no later than six 
months after the establishment of that branch campus or additional 
location;
    (5) The agency undertakes a site visit of an institution that has 
undergone a change of ownership that resulted in a change of control as 
soon as practicable, but no later than six months after the change of 
ownership; and
    (6) The agency requires any institution it accredits that enters 
into a teach-out agreement with another institution to submit to the 
accrediting agency for approval a teach-out agreement that is 
consistent with applicable standards and regulations.
    (c) The accrediting agency maintains and makes publicly available 
written materials describing--
    (1) Each type of accreditation and preaccreditation granted by the 
agency;
    (2) Its procedures for applying for accreditation or 
preaccreditation;
    (3) The criteria and procedures used by the agency for determining 
whether to grant, reaffirm, reinstate, deny, restrict, revoke, or take 
any other action related to each type of accreditation and 
preaccreditation that the agency grants;
    (4) The names, academic and professional qualifications, and 
relevant employment and organizational affiliations of the members of 
the agency's policy and decisionmaking bodies as well as the agency's 
principal administrative staff; and
    (5) The institutions or programs that the agency currently 
accredits or preaccredits and the date when the agency will review or 
reconsider the accreditation or preaccreditation of each institution or 
program.
    (d) In accordance with agency policy, the accrediting agency 
publishes the year when an institution or program subject to its 
jurisdiction is being considered for accreditation or preaccreditation 
and provides an opportunity for public comment concerning the 
institution's or program's qualifications for accreditation or 
preaccreditation.
    (e) The accrediting agency provides advance public notice of 
proposed new or revised criteria, giving interested parties adequate 
opportunity to comment on these proposals prior to their adoption.
    (f) The accrediting agency--
    (1) Reviews any complaint against an accredited institution or 
program, or the agency itself, that is related to the agency's 
standards, criteria, or procedures; and
    (2) Resolves the complaint in a timely, fair, and equitable manner.
    (g) The accrediting agency ensures that if an institution or 
program elects to make a public disclosure of its accreditation or 
preaccreditation status granted by the agency, the institution or 
program discloses that status accurately, including the specific 
academic or instructional programs covered by that status.
    (h) The accrediting agency provides for the public correction of 
incorrect or misleading information about--
    (1) The accreditation status of an accredited or preaccredited 
institution or program;
    (2) The contents of reports of site team visitors; and
    (3) The agency's accrediting actions.

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


Sec. 602.28  Due process for institutions and programs.

    (a) To be listed by the Secretary as a nationally recognized 
accrediting agency, an accrediting agency must demonstrate to the 
Secretary that the procedures it uses throughout the accrediting 
process satisfy due process requirements.
    (b) The Secretary considers that an accrediting agency's procedures 
satisfy due process requirements if--
    (1) The agency sets forth in writing its procedures governing its 
accreditation or preaccreditation processes;
    (2) The agency's procedures afford an institution or program a 
reasonable period of time to comply with agency requests for 
information and documents;
    (3) The agency notifies the institution or program in writing of 
any adverse accrediting action;
    (4) The agency's notice describes with particularity the basis for 
any adverse accrediting action;
    (5) The agency permits the institution or program the opportunity 
to appeal an adverse accrediting action, and the right to 
representation by counsel during an appeal, except that the agency, at 
its sole discretion, may limit the appeal to a written appeal; and
    (6) The agency notifies the applicant in writing of the result of 
the appeal and the basis for that result.

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


Sec. 602.29  Notification of accrediting agency decisions.

    (a) To be listed by the Secretary as a nationally recognized 
accrediting agency, an accrediting agency must demonstrate to the 
Secretary that its written policies, procedures, and practices require 
it to notify the Secretary, the appropriate State postsecondary review 
entity, the appropriate accrediting agencies, and the public of the 
following types of decisions, no later than 30 days after a decision is 
made:
    (1) A decision by the agency to award initial accreditation or 
preaccreditation to an institution or program.
    (2) A final decision by the agency to--
    (i) Deny, withdraw, suspend, or terminate the accreditation or 
preaccreditation of an institution or program; or
    (ii) Take other adverse action against an institution or program.
    (3) A decision by the agency to place an institution or program on 
probation.
    (4) A decision by an accredited institution or program to withdraw 
voluntarily from accreditation or formal preaccreditation status.
    (5) A decision by an accredited institution or program to let its 
accreditation or preaccreditation lapse.
    (b) No later than 60 days after a final decision, the accrediting 
agency makes available to the Secretary, the appropriate State 
postsecondary review entity, and the public upon request, a brief 
statement supporting the agency's determination to deny, withdraw, 
suspend, or terminate the accreditation or preaccreditation of an 
institution or program and the comments of the affected institution or 
program with regard to that decision.

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


Sec. 602.30  Regard for decisions of States and other accrediting 
agencies.

    (a) To be listed by the Secretary as a nationally recognized 
accrediting agency, an accrediting agency must demonstrate to the 
Secretary that--
    (1) If the accrediting agency accredits institutions--
    (i) The agency accredits only those institutions that are legally 
authorized under applicable State law to provide a program of education 
beyond the secondary level;
    (ii) The agency does not renew, under the conditions described in 
paragraph (b) of this section, the accreditation or preaccreditation of 
an institution during a period in which the institution--
    (A) Is the subject of an interim action by a recognized 
institutional accrediting agency potentially leading to the suspension, 
revocation, or termination of accreditation or preaccreditation or by a 
State agency potentially leading to the suspension, revocation, or 
termination of the institution's legal authority to provide 
postsecondary education; or
    (B) Has been notified of the loss of accreditation, or the 
suspension, revocation, or termination by the State of the 
institution's legal authority to provide postsecondary education, and 
the due process procedures required by the action have not been 
completed;
    (iii) In considering whether to grant initial accreditation or 
preaccreditation to an institution, the agency takes into account 
actions by--
    (A) Recognized institutional accrediting agencies that have denied 
accreditation or preaccreditation to the institution, placed the 
institution on public probationary status, or revoked the accreditation 
or preaccreditation of the institution; and
    (B) A State agency that has suspended, revoked, or terminated the 
institution's legal authority to provide postsecondary education; and
    (iv) If the agency grants accreditation or preaccreditation to an 
institution notwithstanding the actions described in paragraph 
(a)(1)(ii) or (a)(1)(iii) of this section, the agency shall provide to 
the Secretary a thorough explanation, consistent with its accreditation 
standards, why the previous action by a recognized institutional 
accrediting agency or the State does not preclude the agency's grant of 
accreditation or preaccreditation; and
    (v) If a recognized institutional accrediting agency takes an 
adverse action with respect to a dually-accredited institution or 
places the institution on public probationary status, or if a 
programmatic accrediting agency takes an adverse action with respect to 
a program offered by the institution or places the program on public 
probation for reasons associated with the overall institution rather 
than the specific program, the agency shall promptly review its 
accreditation or preaccreditation of the institution to determine if it 
should also take adverse action against the institution.
    (2) If the accrediting agency accredits programs--
    (i) The agency does not renew, under the conditions described in 
paragraph (b) of this section, the accreditation or preaccreditation 
status of a program during any period in which the institution offering 
the program--
    (A) Is the subject of an interim action by a recognized 
institutional accrediting agency potentially leading to the suspension, 
revocation, or termination of accreditation or preaccreditation or by a 
State agency potentially leading to the suspension, revocation, or 
termination of the institution's legal authority to provide 
postsecondary education; or
    (B) Has been notified of the loss of accreditation, or the 
suspension, revocation, or termination by the State of the 
institution's legal authority to provide postsecondary education, and 
the due process procedures required by the action have not been 
completed;
    (ii) In considering whether to grant initial accreditation or 
preaccreditation to a program, the agency takes into account actions 
by--
    (A) Recognized institutional accrediting agencies that have denied 
accreditation or preaccreditation to the institution offering the 
program, placed the institution on public probationary status, or 
revoked the accreditation or preaccreditation of the institution; and
    (B) A State agency that has suspended, revoked, or terminated the 
institution's legal authority to provide postsecondary education;
    (iii) If the agency grants accreditation or preaccreditation to a 
program notwithstanding the actions described in paragraph (a)(2)(ii) 
of this section, the agency provides to the Secretary a thorough 
explanation, consistent with its accreditation standards, why the 
previous action by a recognized institutional accrediting agency or the 
State does not preclude the agency's grant of accreditation or 
preaccreditation; and
    (iv) If a recognized institutional accrediting agency takes adverse 
action with respect to the institution offering the program or places 
the institution on public probationary status, the agency promptly 
reviews its accreditation or preaccreditation of the program to 
determine if it should take adverse action against the program.
    (3) The agency routinely shares information with other appropriate 
recognized accrediting agencies and State agencies information about 
the accreditation or preaccreditation status of an institution or 
program and any actions it has taken regarding the institution's or 
program's accreditation or preaccreditation.
    (b) An accrediting agency is subject to the requirements contained 
in paragraph (a) of this section if the accrediting agency knew, or 
should have known, of the actions being taken by another recognized 
accrediting agency or State agency.

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

    Note: This appendix will not appear in the Code of Federal 
Regulations.

Appendix A to Preamble--Major Issues Discussed at the Regional 
Meetings

    The Department convened four regional meetings in September 1992 to 
obtain public involvement in the development of regulations to 
implement Title IV, part H, subpart 2 of the Higher Education Act of 
1965, as amended by the Higher Education Amendments of 1992, Public Law 
102-325. This subpart describes the procedures and criteria to be used 
for the Secretary's recognition of accrediting agencies.
    The Department invited individuals and representatives of groups 
involved in student financial assistance programs to the four regional 
meetings. At each meeting, the Department provided for a comprehensive 
discussion and exchange of information regarding the implementation of 
subpart 2 by providing participants with an issue paper that raised 
issues and questions with regard to the statutory provisions included 
in subpart 2. The following is a summary of the information provided to 
the Department by participants at the regional meetings. The section of 
the proposed regulations that is the subject of the information is 
provided as a reference.
    Separate and independent requirement--Sec. 602.3. Participants in 
the regional meetings suggested that, in order for an accrediting 
agency to obtain a waiver of the requirement that it be separate from 
and independent of, both administratively and financially, any related, 
associated, affiliated, trade association or membership organization, 
an agency should have to demonstrate that (a) its parent body has no 
role in making or ratifying its accrediting decisions, (b) it has 
sufficient budget and administrative autonomy to carry out its required 
accrediting responsibilities, and (c) information obtained in the 
course of its accrediting process is not made available to the parent 
body unless it is public information.
    Unannounced visits by the Secretary--Sec. 602.10. Participants 
discussed the conditions under which an unannounced visit to either an 
accrediting agency or an institution or program that it accredits, as 
part of the Secretary's comprehensive review and evaluation of the 
agency, was appropriate and suggested that such a visit would be 
appropriate only if (a) the Secretary had evidence of the agency's non-
compliance with the statute or Departmental regulations and (b) an 
unannounced site visit would assist in investigating the non-
compliance.
    Review by the National Advisory Committee on Institutional Quality 
and Integrity--Sec. 602.12. Participants discussed the role of the 
National Advisory Committee on Institutional Quality and Integrity in 
reviewing the applications of accrediting agencies seeking recognition 
by the Secretary and suggested that an agency should have an 
opportunity to appeal the Advisory Committee's recommendation before 
the Secretary reaches a final decision.
    Limitation, suspension, or termination of recognition--Sec. 602.14. 
Participants discussed the process the Secretary should use in 
determining whether to limit, suspend, or terminate an accrediting 
agency's recognition if the Secretary determines, after notice and 
opportunity for a hearing, that the agency has failed to satisfy one or 
more of the requirements for recognition. They suggested that the 
proposed regulations should afford the agency due process by providing 
(a) written notice to the agency, (b) opportunity for the agency to 
respond in writing, (c) public review by the Advisory Committee, (d) a 
written decision by the Advisory Committee, and (e) an appeal to the 
Secretary.
    Ability and experience--Sec. 602.21-Sec. 602.22. Participants 
discussed what standards the Secretary should use to determine whether 
an accrediting agency demonstrates sufficient ability and experience in 
operating as an accrediting agency. Most favored retention of the 
language contained in the current regulations on these issues, but a 
minority expressed concern that these requirements placed undue burden 
on new agencies seeking initial recognition.
    Unannounced site visits by accrediting agencies--Sec. 602.24. 
Participants discussed whether the proposed regulations should contain 
specific guidance on how and when accrediting agencies were to conduct 
unannounced site visits to institutions that offer vocational education 
and training and also what institutions were to be visited. They were 
in agreement that the agency should have discretion to decide how and 
when the visits took place; they were divided on the definition of 
institutions that offer vocational education, so they were divided on 
what institutions should be visited.
    Required accreditation standards--Sec. 602.26. Participants 
discussed the standards that accrediting agencies must have for 13 
specific areas. They felt that programmatic accrediting agencies and 
those agencies that do not accredit for purposes of Title IV should be 
exempt from the standards that address default rates, institutional 
compliance with its program responsibilities under Title IV, and refund 
policies. Their comments on specific standards were as follows:
    Program length and tuition and fees--Sec. 602.26(b)(7). 
Participants felt that accrediting agencies should assess these in 
relation to the subject matter taught and the objectives of the degrees 
or credentials offered. They also felt that the proposed regulations 
should protect agencies against lawsuits alleging violation of anti-
trust laws.
    Measures of program length in clock hours or credit hours--
Sec. 602.26(b)(8). Participants felt that accrediting agencies should 
be expected to evaluate program length at non-degree granting 
institutions for consistency with the time required to develop the 
knowledge base and skills necessary for entry level to the vocation for 
which the students are being prepared. In the case of degree-granting 
institutions, participants felt that agencies should evaluate program 
length for consistency with usual practice in higher education.
    Success with respect to student achievement--Sec. 602.26(b)(9). 
Participants felt that accrediting agencies should be required to 
consider completion rates, job placement rates, and State licensing 
examination pass rates for institutions or programs that purport to 
train individuals for occupations, vocations, or professions. Most 
participants felt that agencies should be given the flexibility to 
establish standards for these areas, but a minority felt that the 
proposed regulations should contain specific requirements.
    Default rates--Sec. 602.26(b)(10). Most participants felt that 
accrediting agencies should review schools for compliance with agency 
standards if their default rate exceeded a certain rate, but some felt 
that agencies should have to remove accreditation if the default rate 
exceeded a certain value.
    Due process for institutions and programs--Sec. 602.28. 
Participants felt that accrediting agencies should be expected to 
adhere to principles of fundamental procedural fairness in dealing with 
institutions or programs. They also felt that any opportunity for a 
hearing that an agency might provide did not necessarily imply a 
personal appearance by representatives of the institution or program.
    Implementation of the regulations. Participants felt that 
accrediting agencies should have 8-12 months from the effective date of 
the regulations to come into compliance.
    Preamble. Participants felt that a preamble should be included to 
establish the context for the interpretation of the regulations.

[FR Doc. 94-1459 Filed 1-21-94; 10:00 am]
BILLING CODE 4000-01-P