[Federal Register Volume 59, Number 82 (Friday, April 29, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10147]


[[Page Unknown]]

[Federal Register: April 29, 1994]


_______________________________________________________________________

Part III





Department of Education





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34 CFR Part 602




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

34 CFR Part 602

RIN 1840-AB82

 
Secretary's Procedures and Criteria for Recognition of 
Accrediting Agencies

AGENCY: Department of Education.

ACTION: Final regulations.

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

SUMMARY: The Secretary amends the regulations governing the Secretary's 
recognition of accrediting agencies in order to implement provisions 
added to the Higher Education Act of 1965 (HEA) by the Higher Education 
Amendments of 1992, and the Higher Education Technical Amendments of 
1993. 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.

EFFECTIVE DATE: These regulations take effect on July 1, 1994, with the 
exception of Secs. 602.4, 602.10, and 602.27. These sections will 
become effective after the information collection requirements 
contained therein have been submitted by the Department of Education 
and approved by the Office of Management and Budget under the Paperwork 
Reduction Act of 1980. If you want to know the effective date of these 
regulations, call or write the Department of Education contact person. 
A document announcing the effective date will be published in the 
Federal Register.

FOR FURTHER INFORMATION CONTACT: Karen W. Kershenstein, U.S. Department 
of Education, 400 Maryland Avenue, SW., room 3036, ROB-3, Washington, 
DC 20202-5244. 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 programs authorized under Title IV of the HEA (referred to 
as ``Title IV, HEA programs'') 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 many 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 education program 
beyond the secondary level in the State in which it is located. In 
addition, to participate in the Title IV, HEA programs, the institution 
must be certified by the Secretary as administratively capable and 
financially responsible. Thus, the HEA provides the framework for a 
shared responsibility among accrediting agencies, States, and the 
Federal government to ensure that the ``gate'' to Title IV, HEA 
programs is opened only to 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, originating in 1952, the Higher 
Education Amendments of 1992, Public Law 102-325, significantly 
increased the gatekeeping responsibilities of each member of the triad. 
Specifically, Congress amended the HEA to provide for a new part H of 
Title IV entitled ``Program Integrity Triad.'' Under the new part H, 
the requirements that accrediting bodies must meet if they are to be 
recognized by the Secretary as ``gatekeepers'' for Title IV or other 
Federal purposes are specified in detail. Part H also provides a new 
oversight responsibility for States: The State Postsecondary Review 
Program. Altogether, part H establishes a set of responsibilities for 
accrediting agencies, States, and the Secretary that creates a stronger 
and more coordinated evaluation of institutions that participate, or 
wish to participate, in the Title IV, HEA programs.
    The Secretary recognizes that the approach to significantly 
increased gatekeeping activity outlined in the statute for the three 
members of the triad is a new one. This approach will require 
leadership in both implementation and evaluation if it is to achieve 
the effectiveness that Congress intended. The Secretary will take steps 
to assure that the various responsibilities of the triad members are 
carried out in a manner that, in fact, results in the identification of 
institutions that should not be eligible to participate in the Title 
IV, HEA programs, on the basis of either the quality of education they 
offer or their inability to handle program funds. At the same time, the 
Secretary is committed to carrying out the responsibility for 
coordinating the activities of the triad members that are inherent in 
the statute in a manner that causes the least burden to institutions 
participating in the Title IV, HEA programs.
    To these ends, the Secretary is committed to effective management 
of the gatekeeping function. The Secretary will review carefully the 
applications of accrediting bodies and the standards and operating 
plans proposed by State Postsecondary Review Entities (SPREs) under the 
State Postsecondary Review Program to insure that they meet the 
requirements of the statute and these regulations and will enable these 
triad agencies to fulfill their statutory purposes. The Secretary will 
also place a priority on the completion of the ``Postsecondary 
Education Participation System,'' the Department's new integrated data 
base, which will contain the information that the Secretary generates 
in the course of the Secretary's oversight of institutions 
participating in Title IV, HEA programs. The Secretary will use the 
data base to inform accrediting bodies and SPREs of actions taken by 
the Secretary so that they may in turn carry out their 
responsibilities. This expanded data base is also critical to the 
Secretary's effective selection of institutions for program review.
    Monitoring the results of the gatekeeping process is a very 
important key to effective management. The Secretary will evaluate the 
activities of accrediting agencies, SPREs, and the Department to 
determine their effectiveness in improving the integrity of 
institutions participating in Title IV programs and will take such 
steps as may be indicated to improve the results. Finally, as provided 
in the statute, the Secretary will seek the advice and counsel of the 
National Advisory Committee on Institutional Quality and Integrity in 
evaluating the effectiveness of the triad.
    The Secretary believes that the approach best suited to achieving 
the objectives of the statute is a complementary one, with each member 
of the triad 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. States, in addition to providing the legal 
authority to operate within the state required for participation in the 
Title IV, HEA programs, will review institutions that meet certain 
statutory review criteria related to institutional performance in the 
Title IV, HEA programs. The focus of the Secretary's evaluation of 
institutions is on the administrative and financial capacity of those 
institutions to participate in the Title IV, HEA programs.
    While the functions and responsibilities of each of the triad 
members are generally different, the statute does require, in some 
instances, that all members of the triad evaluate similar areas. For 
the most part, the principle of complementary functions will lead to 
the members evaluating those same areas from different perspectives for 
different purposes. For example, all three of the triad members are 
required to examine the finances of an institution. If each looks at 
financial strength from a perspective complementary to that of the 
others, accrediting agencies would focus principally on the capacity of 
the institution to continue to offer programs at a level of quality 
sufficient to meet accrediting agency standards and to fulfill the 
institution's mission over a 5-10 year period of accreditation. The 
emphasis of a review by a SPRE would be on whether or not the 
institution possesses the full range of resources needed to serve 
students currently attending the institution. The Secretary's 
responsibilities focus on the institution's finances in light of its 
ability to provide the services described in its official publications 
and statements, to provide the administrative resources necessary to 
comply with its Title IV, HEA program responsibilities, and to meet all 
of its financial obligations, including, but not limited to, refunds of 
institutional charges and repayments to the Secretary for liabilities 
and debts incurred in programs administered by the Secretary.
    Despite the Secretary's efforts to encourage complementary 
functions for each of the triad members, it is theoretically possible 
that, in some instances, an institution could be subject to three 
different standards regulating the same area of operation. For this 
reason, where a Title IV standard has been promulgated at the Federal 
level, the Secretary expects accrediting agencies and States to take 
this into account in establishing their own standards to insure that 
varying standards do not pose an unnecessary burden on institutions. It 
is also important that accrediting agencies and States not impose any 
standard that is weaker than a comparable Title IV, HEA program 
standard. The Secretary believes coordination of this is a federal 
responsibility.
    In view of the complementary approach to the functions of the triad 
members, the Secretary believes, for example, that institutions should 
not have to develop different methodologies to provide data that the 
three members of the triad may require. The Secretary also believes 
that, to the extent feasible, any other requests for data about the 
institution, its students, or its graduates should rely on information 
already in the institution's possession. To that end, the Secretary 
expects accrediting agencies and States either to accept student data 
based on the methodology that will be specified in the regulations 
governing ``Student Right to Know,'' also mandated by the Higher 
Education Amendments of 1992, or, where the institution may have other 
methodologies for calculating data, such as a system designed to 
provide data to a State higher education commission or other State 
agency, to accept data in the format already being used by the 
institution. Similarly, the Secretary expects accrediting agencies and 
SPREs to use the audited financial statements institutions are now 
required to provide to the Secretary on an annual basis to the extent 
those statements are compatible with the nature of the reviews 
conducted under their respective standards.
    The Secretary also recognizes that other Federal agencies, such as 
the Department of Labor and the Veterans Administration, also regulate 
institutions in some areas that are similar to those included in part 
H. The suggestion has been made that the Secretary should promulgate 
Federal standards in the areas of overlap so that institutions would 
not be subject to varying standards developed by other Federal agencies 
and the triad members. However, the Secretary interprets part H as 
permitting States and accrediting agencies to establish their own 
standards, as opposed to using a Federal standard, and also believes 
that this is the most effective approach. In addition, it is not clear 
how the requirements of the different agencies are compatible with the 
requirements of part H. The purposes of these programs administered by 
other agencies may be very different. As a result, the Secretary has 
not pursued this alternative. The Secretary does believe that it would 
be useful to explore how the varying requirements of other Federal 
agencies that are similar to those of part H might be coordinated to 
reduce any burden on institutions and will initiate such exploration.
    The Secretary believes that, where possible, data developed at the 
national level should be made available to institutions, as well as to 
States and accrediting agencies to assist them in carrying out their 
responsibilities under part H. In particular, data concerning labor 
markets and compensation for specific fields and information concerning 
graduation and withdrawal rates at various types of institutions may be 
helpful to both triad members and institutions. The Secretary will 
facilitate the development of this type of information and, where 
possible under the auspices of the Department, will coordinate the 
development of data that will be helpful to institutions and the triad.
    Finally, as part of the commitment to providing leadership to the 
triad, the Secretary will convene representatives of the triad members 
and institutions to exchange information about the gatekeeping process 
and to discuss how the triad is functioning, both in identifying 
institutions whose performance is questionable and in reporting 
requirements that have proven to be unreasonably burdensome. The 
Secretary invites comments concerning the functioning of the triad, as 
it is implemented through these and other regulations governed by part 
H. The Secretary will seek improvement, where possible, within existing 
regulations and will propose modifications to regulations and to the 
statute itself if experience indicates those changes are both necessary 
to achieve effective gatekeeping, with minimal burden, and compatible 
with the need to maintain, and assure the public of, the integrity of 
the Title IV, HEA programs.
    On January 24, 1994, the Secretary published a notice of proposed 
rulemaking (NPRM) for part 602 in the Federal Register (59 FR 3578). 
The NPRM included, on pages 3578-3601, a thorough discussion of the 
major issues addressed by the proposed regulations. The following is a 
brief summary of the major proposed changes to the Secretary's 
Procedures and Criteria for Recognition of Accrediting Agencies that 
were contained in the NPRM.
    1. As required by section 496(m) of the HEA, the proposed 
regulations authorized the Secretary to recognize only those 
accrediting 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.
    2. As required by section 496(a) of the HEA, the proposed 
regulations required 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. In accordance with the statute, the 
proposed regulations allowed the Secretary to waive this requirement 
under certain conditions.
    3. The proposed regulations added two new steps to the process by 
which accrediting agencies are recognized by the Secretary. First, the 
Secretary proposed to give an agency seeking recognition the 
opportunity to respond in writing to the designated Department 
official's analysis of its application for recognition before the 
application was reviewed by the National Advisory Committee on 
Institutional Quality and Integrity. Second, after the Advisory 
Committee's review of the agency's application and recommendation to 
the Secretary, the Secretary proposed to give both the agency and the 
designated Department official an opportunity to contest the Advisory 
Committee's recommendation.
    4. In accordance with section 496(n) of the HEA, the proposed 
regulations permitted the Department, at the Secretary's discretion, to 
conduct unannounced site visits to an accrediting agency or its member 
institutions or programs as part of the Department's analysis of the 
agency's application for recognition or its compliance with the 
requirements for recognition.
    5. In accordance with section 496(l) of the HEA, the proposed 
regulations allowed the Secretary to limit, suspend, or terminate an 
agency's recognition if the Secretary determined that the agency failed 
to meet the requirements for recognition.
    6. The proposed regulations eliminated the provision contained in 
previous regulations that, in order to demonstrate experience in 
accreditation, an agency had to demonstrate that its policies, 
evaluation methods, and decisions were accepted throughout the United 
States by recognized accrediting agencies.
    7. As required by section 496(c)(1) of the HEA, the proposed 
regulations required an accrediting agency whose accreditation enables 
the institutions it accredits to participate in programs authorized 
under the HEA to conduct, in addition to its regular announced on-site 
review of an institution, at least one unannounced on-site review of 
each institution that provides prebaccalaureate vocational education or 
training.
    8. The proposed regulations required accrediting agencies to assess 
any new or substantively changed program before including it in the 
agency's previous grant of accreditation.
    9. As required by section 496(a)(5) of the HEA, the proposed 
regulations required accrediting agencies to have standards that assess 
curricula; faculty; facilities, equipment and supplies; fiscal and 
administrative capacity as appropriate to the specified scale of 
operation; student support services; recruiting and admissions 
practices, academic calendars, catalogs, publications, grading and 
advertising; program length and tuition and fees in relation to the 
subject matters taught and the objectives of the degrees or credentials 
offered; measures of program length in clock hours or credit hours; 
success with respect to student achievement in relation to the 
institution's mission; default rates in student loan programs under 
Title IV of the HEA; record of student complaints received by, or 
available to, the accrediting agency; and the institution's compliance 
with its program responsibilities under Title IV of the HEA.
    10. As required by section 484B of the HEA, the proposed 
regulations required accrediting agencies to have a standard that 
assesses an institution's practice of making refunds to students.
    11. The proposed regulations required an accrediting agency to take 
adverse action against an institution or program that failed to bring 
itself into compliance with agency standards within a time frame 
established by the agency. The proposed regulations permitted this time 
frame to exceed 18 months only for cause.
    12. As required by section 496(c) of the HEA, the proposed 
regulations required accrediting agencies whose accreditation enables 
institutions to participate in Title IV, HEA programs to take special 
action whenever institutions establish new branch campuses. 
Specifically, agencies must approve a business plan for the branch 
before its opening and conduct an on-site review within six months.
    13. As required by section 496(c) of the HEA, the proposed 
regulations required accrediting agencies to conduct an on-site review 
within six months at any institution that undergoes a change in 
ownership that results in a change in control.
    14. As required by section 496(c) of the HEA, the proposed 
regulations required that any institution 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.

Changes Resulting From Public Comment

    As a result of the comments received concerning the NPRM, and as 
discussed in detail in the appendix, the Secretary has made the 
following significant changes in the final regulations.
    1. The term ``prebaccalaureate vocational education'' has been 
deleted from these final regulations. The term ``vocational education'' 
has been redefined to be ``an instructional program, below the 
bachelor's level, designed to prepare individuals with the skills and 
training required for employment in a specific trade, occupation, or 
profession related to the instructional program.'' This definition is 
consistent with that used for the term ``vocational program'' in the 
final regulations governing the State Postsecondary Review Program. 
This definition was chosen because it is basically the same as the 
Integrated Postsecondary Education Data System (IPEDS) glossary 
definition of an ``occupationally specific program,'' and institutions 
already use this term in reporting enrollment data for various types of 
vocational education. The advantage in using this definition is that 
the IPEDS inventory of occupationally specific programs provides a list 
of instructional programs which, if offered by an institution, subject 
the institution to an unannounced inspection by its accrediting agency.
    2. A new section, Sec. 602.5--Notice to accrediting agencies of 
Federal actions, has been added that provides for the Secretary to 
notify an accrediting agency if the Secretary takes an action against 
an institution or program accredited by the agency, if the Secretary 
learns of an action taken by another Federal agency against the 
institution or program, or if the institution is referred for review 
under the State Postsecondary Review Program.
    3. Time frames have been added for the designated Department 
official to provide an accrediting agency with the staff analysis of 
its application for recognition and for the agency to respond to that 
analysis, if it so desires.
    4. The provision that an accrediting agency may request that the 
Secretary reconsider a decision to deny recognition or to limit, 
suspend, or terminate the agency's recognition during the recognition 
period has been deleted.
    5. The requirement that institutional accrediting agencies must 
conduct unannounced site visits to institutions that offer 
prebaccalaureate vocational education has been replaced with a 
requirement that those agencies must conduct unannounced inspections at 
each institution that offers vocational education for the purpose of 
determining whether, at a minimum, the institution has the personnel, 
facilities, and resources it claimed to have either during its most 
recent on-site review by the accrediting agency or in subsequent 
reports to the agency. Accrediting agencies are free to determine the 
procedures for conducting the unannounced inspections. An unannounced 
inspection does not have to be as comprehensive as an agency's full 
accreditation or preaccreditation review of an institution or program 
unless the agency wishes it to be.
    6. The substantive change requirement has been revised to clarify 
the types of changes that require prior approval by an accrediting 
agency before they can be included in the institution's accreditation. 
The substantive change requirement applies only to institutional 
accrediting agencies.
    7. The specific language included in the NPRM for each of the 12 
required accreditation standards has been deleted. The section now 
simply repeats the statutory language for each required standard.
    8. The requirement that accrediting agencies must have a standard 
that assesses an institution's practice of making refunds to students 
has been eliminated.
    9. The time limit for institutions or programs to come into 
compliance with agency standards has been changed. For programs of less 
than one year in length, the time limit is now 12 months. For programs 
that are at least one year in length but less than two years, the time 
limit is 18 months. For programs that are at least two years in length, 
the time limit is 24 months.
    10. A requirement has been added that accrediting agencies must 
notify the Secretary at the same time they notify an institution or 
program of a final adverse accrediting action.

Analysis of Comments and Changes

    In response to the Secretary's invitation in the NPRM, more than 
1800 parties submitted comments on the proposed regulations. An 
analysis of the comments and of the changes in the regulations since 
publication of the NPRM is published as an appendix to these final 
regulations. Included in this analysis are comments received during 
several public hearings and other meetings held by the Department 
throughout the United States for purposes of obtaining comment on the 
proposed regulations.

Executive Order 12866

    These final regulations have been reviewed in accordance with 
Executive Order 12866. Under the terms of the order, the Secretary has 
assessed the potential costs and benefits of this regulatory action.
    The potential costs associated with the final regulations are those 
resulting from statutory requirements and those determined by the 
Secretary to be necessary for effective and efficient administration.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of these regulations, the Secretary has determined 
that the benefits of the regulations justify the costs.

Paperwork Reduction Act of 1980

    Sections 602.4, 602.10, and 602.27 of these regulations contain 
information collection requirements. In addition, Sec. 602.21(b)(7) 
contains specific record retention requirements. As required by the 
Paperwork Reduction Act of 1980, the Department of Education has 
submitted a copy of these sections to the Office of Management and 
Budget for its review. (44 U.S.C. 3504(h))
    The annual reporting burden for this collection of information is 
estimated to be 47 hours per respondent, including the time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. This annual reporting estimate takes into 
account the fact that the average recognition period granted to 
accrediting agencies is five years. The total annual reporting burden 
for the estimated 96 respondents is 4,512 hours.
    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. 
Comments must be received by May 31, 1994.

Assessment of Educational Impact

    In the NPRM, the Secretary requested comments on whether the 
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. Based on the response to the proposed 
regulations and on the Department's own review, the Secretary has 
determined that these regulations do not require the transmission of 
information concerning accrediting agencies that is being gathered by 
or is available from any other agency or authority of the United 
States. Where specific provisions of these regulations require the 
transmission of information concerning institutions or programs that is 
similar to that being collected by the Department for other purposes, 
such as for the State Postsecondary Review Program or the Department's 
review of institutions seeking to become certified to participate in 
the Title IV, HEA programs, these regulations have been modified to 
minimize the burden on institutions. A detailed discussion of the 
changes to the regulations is provided in the appendix to these 
regulations.

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: April 20, 1994.
Richard W. Riley,
Secretary of Education.
    The Secretary amends 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.
602.5 Notice to accrediting agencies of Federal actions.

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 Appeals procedures.
602.16 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 Substantive change.
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. 1099b, 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 ensure 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 only grants recognition to those accrediting 
agencies that--
    (1) Accredit--
    (i) Institutions of higher education, provided that accreditation 
by the agency is a required element in enabling those institutions to 
establish eligibility to participate in HEA programs; or
    (ii) Institutions of higher education or higher education programs, 
provided that accreditation by the agency is a required element in 
enabling those institutions or programs to establish eligibility to 
participate in other programs administered by the Department or by 
other Federal agencies;
    (2) Meet the organization and membership requirements specified in 
Sec. 602.3;
    (3) For agencies already recognized by the Secretary, comply with 
the information sharing requirements specified in Sec. 602.4; and
    (4) Satisfy the criteria for Secretarial recognition specified in 
Subpart C of this part.

(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 standards and requirements.
    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
    (1) A location of an institution of higher education that meets the 
definition of this term in 34 CFR 600.2, and
    (2) Any location of an institution, other than the main campus, at 
which the institution offers at least 50 percent of an educational 
program.
    Designated Department official means the official in the Department 
of Education to whom the Secretary has delegated the responsibilities 
indicated in this part.
    Final accrediting action means a final determination by an 
accrediting agency regarding the accreditation or preaccreditation 
status of an institution or program that is not subject to any further 
appeal within the agency.
    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.
    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 before the expiration of that limited 
period of time.
    Program means a postsecondary educational program offered by an 
institution of higher education that leads to an academic or 
professional degree, 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;
    (2) A member of any trade association or membership organization 
related to, affiliated with, or associated with the accrediting agency; 
or
    (3) A spouse, parent, child, or sibling of an individual identified 
in paragraph (1) or (2) of this definition.
    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.
    Vocational education means an instructional program, below the 
bachelor's level, designed to prepare individuals with the skills and 
training required for employment in a specific trade, occupation, or 
profession related to the instructional program.

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


Sec. 602.3  Organization and membership.

    (a) The Secretary recognizes only the following categories of 
accrediting agencies:
    (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 and that accreditation is a required element in 
enabling those institutions to participate in programs authorized under 
this Act; and
    (iii) Satisfies the ``separate and independent'' requirements 
contained in paragraph (b) 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, and that accreditation is a required element in 
enabling those institutions or programs, or both, 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 (b) of this section; or
    (B) Obtains a waiver from the Secretary under paragraph (d) of this 
section of the ``separate and independent'' requirements contained in 
paragraph (b) of this section.
    (b) 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.
    (c) 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 (b) 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.
    (d)(1) Upon request of an accrediting agency described in paragraph 
(a)(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 budgetary 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.
    (3) An agency seeking a waiver of the ``separate and independent'' 
requirements contained in this section must apply for the waiver each 
time it seeks recognition or renewal of recognition by the Secretary.

(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) Notice 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 of the Secretary, information regarding an 
accredited or preaccredited institution's compliance with its Title IV, 
HEA program responsibilities, including its eligibility to participate 
in Title IV, HEA programs, for the purpose of assisting the Secretary 
in resolving problems with the institution's participation in these 
programs;
    (f) The name of any institution or program accredited by the agency 
that the agency has reason to believe is failing to meet its Title IV, 
HEA program responsibilities or is engaged in fraud or abuse and the 
reason for the agency's concern; and
    (g) Any proposed change in the agency's policies, procedures, or 
accreditation standards 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)


Sec. 602.5  Notice to accrediting agencies of Federal actions.

    (a) If the Secretary takes an action against an institution or 
program, the Secretary notifies the appropriate accrediting agency or 
agencies no later than 10 days after taking that action.
    (b) If the Secretary is informed that another Federal agency is 
taking an action against an institution or program, the Secretary 
notifies the appropriate accrediting agency or agencies as soon as 
possible but no later than 10 days after learning of that action.
    (c) If an institution is referred for review under the State 
Postsecondary Review Program, the Secretary notifies the institution's 
accrediting agency or agencies at the same time the Secretary notifies 
the State Postsecondary Review Entity.

(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) Evidence of the agency's compliance with the criteria for 
recognition set forth in this part; and
    (3) Supporting documentation.
    (b) 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.
    (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 Secretary's evaluation of either an 
accrediting agency's application for recognition or its compliance with 
the requirements 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 initial 
or renewed 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;
    (2) Publishes notice of the agency's application in the Federal 
Register, inviting public comment on the agency's compliance with the 
requirements for recognition and stipulating a deadline for receipt of 
public comment; and
    (3) Provides State Postsecondary Review Entities and other 
appropriate organizations with copies of the notice described in 
paragraph (a)(2) of this section.
    (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, institutions or programs it 
accredits;
    (ii) Review of public comment and other third-party information 
received or 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, and 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 no 
later than 45 days before the Advisory Committee meeting; and
    (3) Specifies a time period, which will be no later than 14 days 
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 by the designated Department 
official in developing the analysis, any response by the agency to the 
analysis or third-party comment, any Department concurrence with or 
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.
    (g) If the designated Department official fails to provide the 
agency with the materials described in paragraph (c)(2) of this section 
within the 45-day time frame specified in that section, the agency may 
request that the Advisory Committee defer action on its application 
until the next meeting of the Advisory Committee.
    (h) At least 30 days before the Advisory Committee meeting, the 
Secretary publishes a notice of the meeting in the Federal Register and 
invites interested parties, including those who submitted third-party 
comments concerning an agency's compliance with the requirements for 
recognition, to make oral presentations before the Advisory Committee.

(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) Except as provided in paragraph (c)(2) of this section, the 
Advisory Committee recommends recognition of an agency if the agency 
complies with each of the requirements of this part.
    (2) The Advisory Committee may recommend recognition despite 
finding that the agency failed to comply with each of the requirements 
of this part if 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 recognition, the Advisory 
Committee also recommends the scope of recognition for the agency and a 
recognition period.
    (4) 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.
    (5) 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' timely 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 the agency's recognition for Federal purposes, 
which shall include the--
    (i) Geographic area;
    (ii) Degrees and certificates awarded;
    (iii) Types of institutions, programs, or both that the agency may 
accredit; and
    (iv) Preaccreditation status(es), if any, that the Secretary 
approves for recognition; and
    (2) The recognition period, which does not exceed five years.
    (f) 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.
    (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)(i) If the agency requests a hearing, the hearing is conducted 
by the Advisory Committee or by a subcommittee of five members of the 
Advisory Committee, selected 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.
    (ii) If the Secretary selects a subcommittee of the Advisory 
Committee instead of the full Advisory Committee, the agency may 
challenge the membership of the subcommittee on grounds of conflict of 
interest on the part of one or more of the members of the subcommittee, 
and the Secretary replaces the member(s) if the agency's challenge is 
successful.
    (iii) 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) Unless the Advisory Committee's or subcommittee's 
recommendation is appealed, after receiving the recommendation, the 
Secretary issues a decision on whether to limit, suspend, or terminate 
the agency's recognition, based upon the Advisory Committee's or 
subcommittee's recommendation and the full record before the Advisory 
Committee or subcommittee.
    (2) Either the accrediting agency or the designated Department 
official may appeal the Advisory Committee's or subcommittee'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.

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


Sec. 602.15  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. 602.16  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 on-site evaluation team reports, 
institution or program responses to on-site reports, periodic review 
reports, any reports of special reviews conducted by the agency between 
regular reviews, and the institution's or program's most recent self-
study report; and
    (ii) All preaccreditation and accreditation decisions, 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) Established policies, evaluative criteria, and procedures, and 
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 valid and reliable 
indicators of 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.
    (6) The agency demonstrates to the Secretary that, as a result of 
its program of review under paragraph (b)(5) of this section, each of 
its standards provides--
    (i) A valid measure of the aspects of educational quality it is 
intended to measure; and
    (ii) A consistent basis for determining the educational quality of 
different institutions and programs.

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


Sec. 602.24  Accreditation processes.

    (a) 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 that those mechanisms cover the full range of an 
institution's or program's offerings, including those offerings 
conducted at branch campuses and additional locations.
    (b) The Secretary considers that an accrediting agency meets the 
requirements of paragraph (a) of this section if--
    (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, that includes the 
assessment of educational quality and the institution's or program's 
continuing efforts to improve 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;
    (3) 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 inspection at 
each institution that provides vocational education or training for the 
purpose of determining whether the institution has the personnel, 
facilities, and resources it claimed to have either during its previous 
on-site review or in subsequent reports to the accrediting agency;
    (4) The accrediting agency--
    (i) Monitors institutions or programs throughout the accreditation 
or preaccreditation period to ensure continuing compliance with the 
agency's standards or criteria; and
    (ii) Conducts special evaluations, site visits, or both, as 
necessary; and
    (5) The accrediting agency regularly reevaluates institutions or 
programs that have been granted accreditation or preaccreditation.

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


Sec. 602.25  Substantive change.

    (a) To be listed by the Secretary as a nationally recognized 
accrediting agency, an institutional accrediting agency must 
demonstrate to the Secretary that it maintains adequate substantive 
change policies that ensure that any substantive change to the 
educational mission or program(s) of an institution after the agency 
has granted accreditation or preaccreditation to the institution does 
not adversely affect the capacity of the institution to continue to 
meet the agency's standards.
    (b) The Secretary considers that an accrediting agency meets the 
requirements of paragraph (a) of this section if--
    (1) The agency requires prior approval of the substantive change by 
the agency before the change is included in the agency's previous grant 
of accreditation or preaccreditation to the institution; and
    (2) The agency's definition of substantive change includes, but is 
not limited to, the following types of change:
    (i) Any change in the established mission or objectives of the 
institution;
    (ii) Any change in the legal status or form of control of the 
institution;
    (iii) The addition of courses or programs that represent a 
significant departure, in terms of either in the content or method of 
delivery, from those that were offered when the agency most recently 
evaluated the institution;
    (iv) The addition of courses or programs at a degree or credential 
level above that included in the institution's current accreditation or 
preaccreditation;
    (v) A change from clock hours to credit hours or vice versa; and
    (vi) A substantial increase in--
    (A) The number of clock or credit hours awarded for successful 
completion of a program; or
    (B) The length of a program.
    (c) The agency has discretion to determine the procedures it will 
use to grant prior approval of the substantive change, which may, but 
need not, require an on-site evaluation before approval is granted.

(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 institutional 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), and 
(b)(12) 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.
    (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 
mission, including, as appropriate, consideration of course completion, 
State licensing examination, and job placement rates.
    (10) Default rates in the student loan programs under Title IV of 
the Act, based on the most recent data provided by the Secretary.
    (11) Record of student complaints received by, or available to, the 
agency.
    (12) Compliance with the institution's program responsibilities 
under Title IV of the Act, including any results of financial or 
compliance audits, program reviews, and such other information as the 
Secretary may provide to the agency.
    (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 with the agency's standards within a 
time frame specified by the agency.
    (3) The accrediting agency has sole discretion to determine the 
course of action it chooses under paragraph (c)(2) of this section and, 
if it selects the option specified in paragraph (c)(2)(ii) of this 
section, the time frame 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--
    (i) Twelve months, if the program is less than one year in length;
    (ii) Eighteen months, if the program is at least one year, but less 
than two years, in length; or
    (iii) Two years, if the program is at least two years in length.
    (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; and
    (ii) Submit a business plan described in paragraph (b)(2) of this 
section for the branch campus;
    (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;
    (ii) The projected revenues and expenditures and cash flow at the 
branch campus; and
    (iii) The operation, management, and physical resources at the 
branch campus;
    (3) The agency extends accreditation to the branch campus only 
after evaluating the business plan and taking other necessary actions 
to permit the agency to determine that the branch campus 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 as soon 
as practicable, but no later than six months after the establishment of 
that branch campus;
    (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 that 
teach-out agreement to the agency for approval and approves the teach-
out agreement if the agreement--
    (i) Is consistent with applicable standards and regulations; and
    (ii) Provides for the equitable treatment of students by ensuring 
that--
    (A) Students are provided, without additional charge, all of the 
instruction promised by the closed institution prior to its closure but 
not provided to the students because of the closure; and
    (B) The teach-out institution is geographically proximate to the 
closed institution and can demonstrate compatibility of its program 
structure and scheduling to that of the closed institution.
    (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 decision-making 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 third-party comment, either in writing 
or at a public hearing, at the agency's discretion, 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 it receives 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 and the name, 
address, and telephone number of the accrediting agency.
    (h) The accrediting agency provides for the public correction of 
incorrect or misleading information released by an accredited or 
preaccredited institution or program about--
    (1) The accreditation status of the institution or program;
    (2) The contents of reports of site team visitors; and
    (3) The agency's accrediting actions with respect to the 
institution or program.

(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 details 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 appellant 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, except as provided in paragraph (b) of this 
section, 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) If the agency's final decision is to deny, withdraw, suspend, 
or terminate the accreditation or preaccreditation of an institution or 
program or to take other adverse action against an institution or 
program, the agency must notify the Secretary of that decision at the 
same time it notifies the institution or program.
    (c) 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 summarizing the reasons for the agency's determination to 
deny, withdraw, suspend, or terminate the accreditation or 
preaccreditation of an institution or program, and the comments, if 
any, that the affected institution or program may wish to make with 
regard to that decision.
    (d)(1) For purposes of the decisions described in paragraph (a)(4) 
of this section, the date of the decision is the date on which the 
accrediting agency receives notification by the institution or program 
that it is voluntarily withdrawing from accreditation or 
preaccreditation.
    (2) For purposes of the decisions described in paragraph (a)(5) of 
this section, the date of the decision is the date on which 
accreditation or preaccreditation lapses.

(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;
    (B) Is the subject of an interim action by a State agency 
potentially leading to the suspension, revocation, or termination of 
the institution's legal authority to provide postsecondary education;
    (C) Has been notified of a threatened loss of accreditation, and 
the due process procedures required by the action have not been 
completed; or
    (D) Has been notified of a threatened 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;
    (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 provides 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 
recognized programmatic accrediting agency takes an adverse action for 
reasons associated with the overall institution rather than the 
specific program against a program offered by an institution or places 
the program on public probation, the agency promptly reviews 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;
    (B) Is the subject of an interim action by a State agency 
potentially leading to the suspension, revocation, or termination of 
the institution's legal authority to provide postsecondary education;
    (C) Has been notified of a threatened loss of accreditation, and 
the due process procedures required by the action have not been 
completed;
    (D) Has been notified of a threatened 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 with other appropriate recognized 
accrediting agencies and State agencies information about the 
accreditation or preaccreditation status of an institution or program 
and any adverse actions it has taken against an accredited or 
preaccredited institution or program.
    (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)

Appendix

Analysis of Comments and Changes

    (Note: This appendix will not be codified in the Code of Federal 
Regulations.)

    An analysis of the comments and the changes to the regulations 
follows. General comments that refer to broad issues rather than a 
specific section or sections of the proposed regulations are discussed 
first, followed by a discussion of other issues in the order in which 
they appeared in the NPRM.
    It should be noted that not all comments are discussed in this 
appendix. There are several reasons for this. First, many of the 
concerns expressed by commenters were directed to the statute, not the 
proposed regulations. In some instances, those comments are mentioned 
in the discussion that follows because of the importance of the issues 
that were raised. In most instances, however, they are not mentioned 
because the Secretary is not legally authorized to make the changes 
suggested by commenters. Second, many commenters made excellent 
suggestions for editorial and technical changes, as well as other minor 
changes, that, in the Secretary's opinion, strengthened the 
regulations; the Secretary has merely incorporated these suggestions 
without comment. For example, in Sec. 602.11(b)(1)(ii) the Secretary 
received a comment that it was better to include third-party 
information received by the Secretary, in addition to that solicited by 
the Secretary. Third, some comments appeared to be based on 
misunderstandings of what was actually in the NPRM. For example, a few 
commenters expressed concern about the absence of a particular 
provision that was, in fact, included in the NPRM. Fourth, several 
comments appeared to be directed toward specific practices of currently 
recognized accrediting agencies that commenters believed violated 
either the proposed regulations or what the commenters believed to be 
established accrediting practices. In general, these comments are not 
discussed here, but Department staff will investigate these complaints 
as part of the Department's ongoing monitoring of agencies.

General Comments

    The Secretary received numerous comments about the overall impact 
of the proposed regulations. In general, commenters opposed to the 
proposed regulations believed that the NPRM did not achieve the 
coordinated balance of responsibilities among the triad members that it 
sought to achieve, and that it provided for extensive and duplicative 
data collection and reporting requirements that created a costly and 
unnecessary burden on the entire higher education community. Further, 
they believed that the regulations did not regulate ``narrowly to the 
law,'' as they purported to do. In general, these commenters suggested 
that the Secretary should review each requirement in the proposed 
regulations to determine if it was required by the statute and should 
further ensure that all requirements that meet this test and are 
included in the final regulations are implemented in the most 
reasonable and cost effective manner. This, they believed, would ensure 
the Department's compliance with Executive Order 12866.
    The more specific concerns of commenters opposed to the proposed 
regulations may be summarized as follows:
    (1) The proposed regulations are overly prescriptive and excessive 
in detail and either exceed the statutory authority of the Secretary or 
significantly expand the statute beyond Congressional intent.
    (2) The proposed regulations will force institutions to engage in 
excessive and duplicative information gathering and reporting, at 
considerable cost, with no net increase in the quantity or quality of 
information available to the public, and will result in the diversion 
of institutions' already scarce resources away from their primary 
mission of providing a quality education.
    (3) The proposed regulations compromise the integrity of 
accreditation as a voluntary system of peer review and institutional 
improvement; they dilute the focus and purpose of accreditation by 
requiring accrediting agencies to assume responsibilities that are more 
appropriate to the State or Federal government.
    (4) The proposed regulations will create undue, duplicative, and 
costly burdens on accrediting agencies for which they will receive no 
reimbursement from the Federal government.
    (5) The proposed regulations give the Secretary approval authority 
over accrediting agencies' standards, which commenters believe is 
expressly forbidden by the statute.
    (6) The proposed regulations threaten the diversity of American 
higher education and fail to focus oversight properly on vocational 
institutions.
    In addition to receiving comments in opposition to the proposed 
regulations, the Secretary received many comments supportive of the 
NPRM. Some commenters, for example, believed the accreditation process 
needed a major overhaul, that accrediting agencies were far too 
secretive in their actions, and there was genuine need for 
substantially increased accountability of accrediting agencies to 
students and the general public.
    Finally, the Secretary received suggestions from several commenters 
that the Department should strongly encourage all triad members to work 
together and adopt the same or similar language for the various 
standards, should collect the necessary data through a common source 
such as readily available public information or IPEDS, and should use 
common methodologies for various calculations such as completion or 
withdrawal rates.
    Discussion: As suggested by several commenters, the Secretary has 
carefully reviewed each requirement in the proposed regulations in 
light of statutory intent. The Secretary has also carefully considered 
both the burden of the proposed regulations on institutions and 
accrediting agencies, in terms of cost, duplication of effort, and the 
added recordkeeping and reporting requirements. Similarly, the 
Secretary has considered the benefits of the proposed regulations, not 
just to institutions and accrediting agencies but to students and the 
general public as well. A particular concern of the Secretary has been 
how to ensure that the regulations hold the three members of the triad 
accountable for the manner in which they fulfill their responsibilities 
under the HEA yet still provide each member of the triad the 
flexibility to determine the appropriate means to carry out those 
responsibilities.
    In general, the Secretary has responded to the concerns of 
commenters by eliminating much of what was perceived as excessive 
detail in the NPRM, thus providing accrediting agencies more 
flexibility to meet a particular requirement in the manner that best 
suits their needs and the needs and individual circumstances of the 
institutions or programs they accredit. At the same time, however, the 
Secretary has increased the accountability of agencies, as, for 
example, by strengthening the requirements that accrediting agencies 
must have effective standards and must monitor institutions or programs 
carefully for continued compliance with those standards. The final 
regulations make it quite clear that the Secretary regards accrediting 
agencies as having primary responsibility for educational quality, but 
they also make it clear that the Secretary holds accrediting agencies 
accountable for the quality of the institutions or programs they 
accredit.
    The Secretary has also responded to the concerns of commenters by 
eliminating a number of the specific reporting and recordkeeping 
requirements the proposed regulations would have imposed on both 
accrediting agencies and institutions and by allowing agencies and 
institutions to work together to determine realistic requirements for 
reporting and recordkeeping. At the same time, the Secretary holds 
agencies accountable for the effectiveness of those requirements.
    The Secretary believes this overall approach retains the principal 
strength of the current accrediting system--a system of peer review 
that focuses on the unique mission of each institution or program and 
that fosters educational improvement consistent with that mission--but 
effectively addresses the concerns with the current system that 
Congress raised when it created the Program Integrity Triad to 
strengthen institutional oversight.
    To illustrate the effect of this overall strategy, the Secretary 
offers as an example the changes to Sec. 602.26, Required accreditation 
standards. This section now contains only the statutory language for 
the 12 required standards. In this ``minimalist'' approach, the 
regulations achieve the objectives of Executive Order 12866. By no 
longer requiring institutions to provide annual audits to accrediting 
agencies, the regulations reduce the paperwork burden on both 
accrediting agencies and institutions at the same time they remove a 
major source of costly duplication of effort by accrediting agencies 
and the Department. By allowing agencies flexibility in establishing 
standards for the 12 required areas, the regulations minimize any added 
costs to institutions necessitated by the new requirements. Accrediting 
agencies are no longer required to establish and maintain costly and 
duplicative systems for collecting and maintaining specific information 
about the institutions or programs they accredit. Now agencies may 
tailor their systems to the mission, needs, and circumstances of those 
institutions or programs and the students they serve. The overall 
effect of the changes to this one section of the regulations is to 
reduce cost, reduce burden, reduce paperwork, reduce duplication of 
effort, and free accrediting agencies and institutions to focus on the 
quality of education in all its manifestations.
    The Secretary acknowledges that there is a potential risk with this 
strategy, however. By giving accrediting agencies maximum flexibility 
in these regulations, by giving SPREs corresponding flexibility in the 
regulations for the State Postsecondary Review Program, and by 
retaining authority for the Secretary to set specific requirements 
implementing the certification process, the danger exists that 
institutions will be burdened with reporting requirements that are 
similar, but not identical, thus increasing not only the reporting 
requirement but the recordkeeping requirement and cost as well. For 
this reason, the Secretary strongly urges a coordinated approach to any 
reporting requirement that may be imposed on institutions by the 
regulations implementing the Program Integrity Triad. Specifically with 
respect to accrediting agencies, the Secretary urges agencies to impose 
reporting requirements on the institutions or programs they accredit 
only after they carefully examine any publicly available information 
related to those requirements, any similar reporting requirements 
imposed on institutions by either the Department or the State 
Postsecondary Review Entities under the State Postsecondary Review 
Program, and any methodologies currently used, or mandated for use, by 
institutions in calculating the required information. The Secretary 
hopes that by bringing this potential risk of increased burden on 
institutions to the attention of the entire higher education 
community--without specifically addressing it in regulation--the 
community can work together to prevent undue burden at the same time it 
ensures proper accountability. The Secretary expects to take a 
leadership role in implementing a coordinated strategy to manage the 
triad, with the goal of maximizing effectiveness while minimizing 
burden, duplication, and inconsistencies among accrediting agencies, 
SPREs, and the Department.
    As several commenters raised the issue of Secretarial approval 
authority over an accrediting agency's standards, the Secretary 
believes it is necessary to respond. It is the Secretary's belief that 
section 496(a) of the HEA statute gives the Secretary explicit approval 
authority over an agency's standards in the context of the Secretary's 
overall responsibility for determining whether the agency is a reliable 
authority as to the quality of education or training offered by the 
institutions and programs it accredits.
    Finally, with regard to the issue of whether the regulations 
properly focus on vocational institutions, the Secretary wishes to note 
that Congress found abuses in all sectors of higher education, not just 
the vocational sector. For this reason, the regulations apply to all 
institutions, with the exception of the requirement of unannounced 
inspections to institutions that provide vocational education.
    Changes: The specific changes to the regulations are discussed 
below.

Subpart A--General Provisions

Section 602.1  Purpose.
    Comments: The Secretary received several comments about the 
requirement that Secretarial recognition is now limited to those 
accrediting 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 general, commenters expressed concern that the requirement 
would cause many of the currently recognized specialized or 
programmatic accrediting agencies to lose recognition. Commenters 
believed that failure to include these agencies on the list of 
nationally recognized accrediting agencies was counter to the purpose 
of the list, which they believed was to inform the public of those 
accrediting agencies that the Secretary determined to be reliable 
authorities as to the quality of education or training provided by the 
institutions or programs they accredit. Commenters also believed that, 
in general, institutional accrediting agencies did not examine in depth 
the individual programs offered by an institution and that the only 
assurance of the quality of these programs was provided by the 
programmatic agencies that accredited them. It was suggested by some 
commenters that the Federal purpose would be better served if the 
specialized or programmatic accrediting agencies and the institutional 
accrediting agencies worked together to assess the quality of 
education.
    One commenter urged a broad interpretation of the phrase ``for 
other Federal purposes'' in section 496(a) of HEA to include a whole 
range of benefits that accrue to the Federal Government by virtue of 
the Secretary's recognition of an accrediting agency, including the use 
of an individual's graduation from a program accredited by a nationally 
recognized accrediting agency for entry-level qualifications for 
Federal employment.
    Some commenters expressed concern that the language in 
Sec. 602.1(b)(1) and (2) was misleading because the purpose of 
accreditation was not to enable institutions or programs to establish 
eligibility to participate in Federal programs. A number of these 
commenters provided specific suggestions for amending the language to 
address this concern.
    Finally, the Secretary received a suggestion to reorganize this 
paragraph so that it, rather than Sec. 602.3, provided a summary of the 
recognition requirements an accrediting agency must meet in order to be 
recognized by the Secretary.
    Discussion: The Secretary acknowledges that the many fine 
programmatic accrediting agencies currently on the list of nationally 
recognized accrediting agencies provide an excellent measure of quality 
assurance in their respective fields of specialization. However, 
section 496(m) of the HEA makes it clear that the Secretary may 
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.
    The Secretary does not believe that the broader interpretation of 
the phrase ``for other Federal purposes'' in section 496(a) suggested 
by the one commenter is legally supportable because section 496(m) 
clearly defines the purpose an agency's accreditation must serve it if 
is to be recognized by the Secretary, namely the agency's accreditation 
must enable the institutions or programs it accredits to establish 
eligibility to participate in Federal programs.
    The Secretary understands that the purpose of accreditation is not 
to enable institutions or programs to establish eligibility to 
participate in Federal programs but rather to publicly recognize those 
institutions or programs that meet an accrediting agency's standards 
for educational quality. The Secretary appreciates the various 
suggestions for clarifying this in the regulations and has changed 
these regulations accordingly.
    Finally, the Secretary appreciates the suggestion for reorganizing 
this paragraph to summarize the recognition requirements and believes 
it is helpful.
    Change: The language in Sec. 602.1(b) has been modified to clarify 
that an agency's accreditation of an institution or program must be a 
required element in enabling the institution or program to establish 
eligibility to participate in Federal programs. The section has been 
reorganized to clarify the recognition requirements accrediting 
agencies must meet if they wish to be recognized by the Secretary.
Section 602.2  Definitions

Accreditation

    Comments: Several commenters noted that the word ``qualifications'' 
was either misleading or redundant and that the word ``policies'' or 
``procedural requirements'' would be more appropriate.
    Discussion: The word ``qualifications'' in the definition, which is 
the same definition as that used in previous regulations, does not 
refer to either policies or procedural requirements. Rather, it refers 
in general to the various requirements for accreditation that an 
accrediting agency might have. For example, an institution located in 
New York might meet all of the accreditation standards of the New 
England Association of Schools and Colleges (NEASC), but it is 
ineligible for accreditation by NEASC because it is not located in New 
England.
    Change: The term ``qualifications'' has been replaced by the term 
``requirements.''

Adverse Accrediting Action

    Comments: One commenter felt the definition could be strengthened 
to ensure that agencies had a variety of useful sanctions, the 
application of which were not automatically appealable under 
Sec. 602.28(a)(5). Another felt that the term should be uniformly 
defined by all accrediting agencies to reduce the possibility of 
misunderstanding arising from the use of different definitions.
    Discussion: For purposes of these regulations, the Secretary has 
defined the term ``adverse accrediting action'' to include, as a 
minimum, those actions initiated by an accrediting agency that result 
in an institution or program losing its accreditation. However, the 
Secretary believes accrediting agencies should be free both to define 
other actions they consider to be adverse accrediting actions and to 
establish other sanctions that are not automatically appealable by the 
institution or program.
    Change: None.

Branch Campus

    Comments: In general, commenters expressed concern that the 
definition of ``branch campus'' was inconsistent with its use in 
Sec. 602.27 and that there was no statutory basis for including 
``additional locations'' in the requirement for special actions by 
accrediting agencies when an institution opened a branch campus.
    Discussion: Under 498(j) of the HEA, the Secretary is charged with 
defining the term ``branch campus'' for purposes of Title IV of the 
HEA. Generally, when the Secretary defines a term, the term is defined 
in the same manner for any and every Title IV, HEA purpose. 
Accordingly, the Secretary adopted the definition of the term ``branch 
campus'' that was proposed in the Institutional Eligibility 
regulations, 34 CFR Part 600, in the proposed accreditation 
regulations. However, the Secretary realized that particular definition 
was too narrow to carry out the purposes of sections 496(c) (2) and (3) 
of the HEA, under which an institution that establishes a branch campus 
must file a business plan with its accrediting agency and the agency 
must conduct a site visit at the branch campus within six months of its 
establishment. Therefore, in Sec. 602.27 of the NPRM, the Secretary 
imposed the requirements relating to branch campus on ``additional 
locations'' as well.
    For program and administrative reasons, the Secretary has 
determined to keep the narrow definition of the term ``branch campus'' 
in the Institutional Eligibility regulations. However, the Secretary 
has adopted a different definition of ``branch campus'' for these 
regulations because that different definition is more in keeping with 
the statutory requirements of section 496(c). The Secretary believes 
this different definition is preferable because it provides assurances 
to students who enroll at any location of an institution that offers a 
substantial portion of an educational program that the location has the 
resources to operate, and is operating, in compliance with accrediting 
agency standards.
    Change: The definition has been revised to include locations that 
meet the definition of this term in 34 CFR 600.2, which is basically 
the same definition as in the NPRM, and any other locations at which an 
institution offers at least 50 percent of an educational program. 
Section 602.27 has been revised to eliminate any reference to 
``additional location.''

Prebaccalaureate Vocational Education

    Comments: The Secretary received numerous comments on the 
definition of this term and the corresponding term, ``vocational 
education.'' Many commenters believed there was no statutory basis for 
the distinctions in the NPRM and that the use of the term improperly 
targeted a particular segment of higher education for burdensome and 
unwarranted sanctions. Among commenters who expressed an opinion on the 
various definitions under consideration, responses were divided. Some 
preferred a definition that excluded any type of vocational education 
that led to a degree, while others felt the definition should include 
all prebaccalaureate vocational education regardless of the credential 
awarded.
    Discussion: See discussion below under ``vocational education.''
    Change: The term ``prebaccalaureate vocational education'' has been 
deleted from the regulations.

Representative of the Public

    Comments: The Secretary received two suggestions for changing this 
definition. One was to allow members of the governing board of 
affiliated nonprofit institutions to represent the public. The other 
was to exclude close relatives of students or employees at affiliated 
institutions.
    Discussion: The Secretary believes that members of the governing 
board of affiliated non-profit institutions can make valuable 
contributions to an accrediting agency but should not do so in the 
capacity of a representative of the public. The Secretary also believes 
the exclusion of spouses, parents, children, and siblings of employees 
of affiliated institutions is appropriate and that the exclusion ought 
to extend to close relatives of other individuals listed in the 
definition. On the other hand, the Secretary believes students, who are 
the consumers in this instance, and their families can serve a useful 
role as representatives of the public.
    Change: The definition has been revised to exclude close relatives 
of individuals listed in the definition from serving as representatives 
of the public.

Teach-out Agreement

    Comments: The Secretary received a suggestion to include in the 
definition specific criteria for what constitutes the ``equitable 
treatment of students.'' The Secretary also received a suggestion to 
delete the definition because the Department's previous teach-out 
regulations, issued January 1993, were rescinded.
    Discussion: The requirement that accrediting agencies have 
standards for teach-out agreements is specified in section 496(c)(4) of 
the HEA and is independent of any Department regulation that may or may 
not be in effect regarding teach-out agreements. The Secretary believes 
the inclusion of provisions for what constitutes equitable treatment of 
students under a teach-out agreement is a useful addition to the 
regulations but believes these provisions should be included in 
Sec. 602.27(b)(6), where the requirement for teach-out agreements is 
described, rather than in the definition section.
    Change: None. However, the specific criteria for what constitutes 
equitable treatment of students have been added to Sec. 602.27(b)(6).

Vocational Education

    Comments: The Secretary received numerous comments on the 
definition of this term and the corresponding term, ``prebaccalaureate 
vocational education.'' Many commenters preferred a broad definition 
that treated all institutions offering any type of vocational education 
the same way. Others preferred a definition that excluded programs 
leading to any type of degree. Some commenters suggested a definition 
similar to that in the Carl D. Perkins Vocational and Applied 
Technology Education Act. Others suggested different approaches to the 
issue, including the use of the term ``nonacademic education program,'' 
which they defined to be the opposite of an academic education program, 
as they believed that term was defined in the Department's clock hour/
credit hour regulations. Still others preferred a definition that 
restricted the term to institutions whose predominant offerings were 
vocational, with ``predominant'' defined to mean more than 75 percent 
of an institution's offerings. Almost all commenters preferred that the 
same definition be used in both the accreditation and SPRE regulations.
    Discussion: The Secretary has carefully considered all comments 
received on this issue, as well as those on the broader issue of the 
burden these regulations would impose on institutions and accrediting 
agencies. While the Secretary agrees that it would be best if these 
regulations and those for the State Postsecondary Review Program used 
both the same term and the same definition of that term, the Secretary 
is aware that the statute uses the term ``vocational education'' for 
accreditation and ``vocational program'' for the State Postsecondary 
Review Program. Consequently, the Secretary believes the appropriate 
term for the accreditation regulations is ``vocational education'' and 
for the SPRE regulations ``vocational program.'' However, despite the 
difference in the specific term used, the Secretary believes that the 
definition of both terms should be the same.
    The Secretary has examined all of the proposed definitions for the 
accreditation and SPRE regulations and believes that the IPEDS glossary 
definition of an ``occupationally specific program'' most closely meets 
the needs of both regulations. The Secretary has modified this 
definition slightly, however, to meet the specific needs of 
accreditation and the State Postsecondary Review Program. Thus, in the 
accreditation regulations, the term ``vocational education'' is defined 
to be an instructional program, below the bachelor's level, designed to 
prepare individuals with the skills and training required in a specific 
trade, occupation, or profession related to the instructional program. 
The identical definition is used in the SPRE regulations for a 
``vocational program.'' While the definition differs slightly from the 
exact wording in the IPEDS definition, the Secretary wishes to make 
clear that the list of occupationally specific programs provided by 
IPEDS defines the instructional programs that, if offered by an 
institution, cause the institution to be subject to unannounced 
inspections by the institution's accrediting agency, as specified in 
Sec. 602.24.
    Change: The term ``vocational education'' has been redefined as 
indicated above under the Discussion section.
Section 602.3  Organization and Membership
    Comments: A few commenters expressed concern about the requirement 
in section 496(a) of the HEA that accrediting agencies whose 
accreditation enables the institutions they accredit to participate in 
programs authorized under the HEA must be administratively and 
financially separate from and independent of any related, associated, 
or affiliated trade association or membership organization. These 
commenters believed that this requirement would force many agencies to 
undergo a major restructuring simply to come into technical compliance 
with this provision despite the fact that there was no evidence their 
present structure in any way compromised the integrity of their 
accrediting decisions.
    The Secretary also received some comments about the provisions for 
a waiver of the ``separate and independent'' requirements. Most of 
these were directed to specific circumstances that exist, or might 
exist, in the case of a particular accrediting agency seeking a waiver. 
The Secretary also received a suggestion that accrediting agencies 
should have to seek the waiver each time they applied for recognition, 
or renewal of recognition, by the Secretary.
    Discussion: The general concern about the new organization and 
membership requirements is directed to the law, not the regulations. As 
the language in Sec. 602.3 merely restates the requirements of the law, 
it cannot be changed.
    With regard to the waiver of the ``separate and independent'' 
requirements, the Secretary believes the specific circumstances 
described by various commenters about a particular accrediting agency 
should be addressed in the context of that agency's application for the 
waiver, not through regulation. The Secretary accepts the suggestion to 
stipulate in regulation that an agency must seek a waiver each time it 
applies for recognition or renewal of recognition.
    Change: A requirement has been added that accrediting agencies must 
seek a waiver of the ``separate and independent'' requirement each time 
they apply for recognition or renewal of recognition.
Section 602.4  Submission of Information to the Secretary by Recognized 
Accrediting Agencies
    Comments: The Secretary received numerous comments that the 
proposed requirement in Sec. 602.4(e)--that an accrediting agency had 
to submit to the Secretary, upon request, information to assist the 
Secretary in resolving problems with any institution or program 
accredited by the agency--exceeded the statute and failed to 
distinguish adequately between public and private information 
maintained by accrediting agencies. Commenters generally believed that 
this requirement put accrediting agencies in the position of being 
required to do the Secretary's work and threatened to compromise the 
inherent value of the peer review system on which accreditation is 
based. Some of these commenters believed that Sec. 602.4(e) should be 
deleted in its entirety, while others suggested that the information to 
be provided by accrediting agencies should be restricted either to the 
accreditation status of an institution or program or to the minimum 
information needed to fulfill the intent of the law.
    Not all commenters were opposed to Sec. 602.4(e), however. Some 
supported it as written. Some stated their opinion that the less 
confidential information accrediting agencies kept the better. Several 
of these commenters suggested that a protocol be developed for the 
sharing of information and that there should be a single office within 
the Department that served as contact with accrediting agencies for the 
purpose of information sharing. One commenter suggested that 
accrediting agencies be given time to negotiate a new understanding of 
the information sharing concept with institutions because, as important 
as the concept was, it was generally in conflict with most agencies' 
policies on confidentiality. One commenter, while expressing general 
support for information sharing, cautioned against requiring 
information to be shared before it was confirmed in fact, the 
institution had received due process, and any applicable appeals were 
complete. Many commenters suggested that a possible solution that would 
allow the Secretary access to the information the Secretary needed 
without placing agencies in the position of doing the Secretary's work 
was the use of an administrative subpoena by the Department.
    Of general concern to all commenters on the issue of information 
sharing was the kind of information shared by an accrediting agency 
about an accredited institution or program that would be obtainable by 
anyone under the Freedom of Information Act (FOIA).
    With regard to the comment in the NPRM that the Secretary was 
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 it accredits, provided that institution or program participates 
in Title IV, HEA programs, the Secretary received strong support for 
the general concept but some concern about agencies' liabilities should 
the institution or program be subsequently found not to have engaged in 
fraud. Commenters also urged the Secretary to substitute for the term 
``fraud,'' which has a very precise legal definition, something more 
general like ``substantial wrongdoing'' or ``serious abuse.''
    Finally, several commenters noted that there was no provision in 
the proposed regulations that paralleled the proposed requirement in 34 
CFR part 667 that the Secretary notify the State postsecondary review 
entity of Federal actions against an institution. Commenters also 
suggested that the State postsecondary review entity should be required 
to notify an accrediting agency of the outcome of any review of an 
institution accredited by the agency that it makes under the State 
Postsecondary Review Program.
    Discussion: The Secretary is aware that most accrediting agencies 
currently have confidentiality policies that prevent them from 
releasing information about an accredited institution or program to a 
third party without the prior approval of the institution. The 
Secretary is also aware that confidentiality is an important aspect of 
the peer review system on which accreditation is based.
    However, the Secretary notes that under section 487(a)(15) of the 
HEA, by entering into a Title IV, HEA program participation agreement, 
an institution acknowledges the authority of the Secretary, accrediting 
agencies, State postsecondary review entities, and others to share with 
each other information pertaining to the institution's eligibility to 
participate in Title IV, HEA programs and any information on fraud or 
abuse by the institution. Therefore, institutions can have no genuine 
expectation that information they provide to their accrediting agencies 
pertaining to their Title IV, HEA program responsibilities, fraud, or 
abuse will be kept confidential from the Secretary or these other 
entities. Accordingly, the Secretary has revised Sec. 602.4(e) to 
reflect that statutory provision. Thus, the information the Secretary 
may request from an accrediting agency under Sec. 602.4(e) is limited 
to information concerning an accredited or preaccredited institution's 
compliance with its Title IV, HEA program responsibilities, including 
its eligibility to participate in Title IV, HEA programs. As a result, 
an agency does not have to provide the Secretary with copies of an 
institution's self-study report, reports of on-site evaluations of the 
institution by the accrediting agency, or other documents maintained by 
the agency about the institution for the purpose of determining the 
institution's compliance with the agency's standards. However, the 
agency must provide any information contained in those documents that 
is relevant to the institution's compliance with its Title IV, HEA 
program responsibilities. The Secretary notes that, as discussed in 
connection with Sec. 602.10, an accrediting agency must provide any 
document the Secretary requests relating to whether the agency is 
complying with the requirements of this part.
    The Secretary appreciates the suggestion to develop a protocol for 
information sharing. As this suggestion relates to the Secretary's 
management of a regulatory provision, however, it does not need to be 
addressed in regulation. The Secretary intends to work with agencies to 
develop an appropriate protocol for information sharing, which will 
address the concerns raised about both the types of information 
releasable under a FOIA request and a central point of contact within 
the Department for the exchange of information.
    The Secretary acknowledges the difficulties in requiring 
accrediting agencies to report ``fraud'' or ``suspected fraud.'' As the 
statutory provision for information sharing specifically refers to 
fraud and abuse, however, the Secretary has added a provision to 
Sec. 602.4 that requires agencies to notify the Secretary if they have 
reason to believe that an institution may be engaged in fraud or abuse. 
The Secretary has also added a provision requiring agencies to notify 
the Secretary if they have reason to believe an institution or program 
is not meeting its Title IV, HEA program responsibilities.
    The Secretary acknowledges the importance of sharing with 
accrediting agencies information about Federal actions against 
accredited institutions but believes that information sharing goes 
beyond the cases identified by commenters to include notification to 
agencies when an accredited institution is referred for review under 
the State Postsecondary Review Program. The Secretary also acknowledges 
the importance of having the State postsecondary review entity notify 
accrediting agencies of the results of its reviews but believes this 
requirement is more appropriately placed in 34 CFR Part 667 rather than 
34 CFR Part 602. The Secretary notes that an accrediting agency's 
responsibility for notifying State postsecondary review entities about 
its decisions is discussed in Sec. 602.29 of these regulations. 
Changes: Section 602.4(e) has been revised to indicate that any agency 
must comply with the Secretary's request for information that is 
related to the institution's or program's compliance with its Title IV, 
HEA program responsibilities, including its eligibility to participate 
in Title IV, HEA programs. The Secretary has removed the limitation on 
an agency's duty to share information only in those situations where it 
does not conflict with accrediting agencies' policies on 
confidentiality. A requirement has been added that an accrediting 
agency must notify the Secretary if the agency has reason to believe an 
institution or program is not meeting its Title IV, HEA program 
responsibilities or is engaged in fraud and abuse. A new section 
(Sec. 602.5) has been added outlining the Secretary's responsibilities 
for notifying accrediting agencies of Federal actions against 
accredited institutions or programs or referral of institutions to 
States under the State Postsecondary Review Program.

Subpart B--Recognition and Termination Procedures

Section 602.10  Application for Recognition.
    Comments: The Secretary received many comments that the statute 
only allows the Secretary access to an accrediting agency's records, 
personnel, and facilities, on an announced or unannounced basis, during 
the application and review process, not during the entire recognition 
period. Some commenters described the Secretary's access as so broad 
that it constituted unwarranted search and seizure without probable 
cause. Some commenters were especially concerned about the possible 
release under a FOIA request of an agency's confidential materials that 
Department personnel examined as part of the Secretary's evaluation of 
an agency's application for recognition. With regard to the provision 
for unannounced visits by the Secretary, the Secretary received 
suggestions both to limit and not limit the use of these visits.
    The Secretary received a number of comments that the application 
process and related recordkeeping requirements were particularly 
burdensome on accrediting agencies and that the burden reported in the 
Federal Register grossly underestimated the burden imposed by the 
regulations. Other commenters, however, believed that the application 
and recordkeeping requirements were not in any way burdensome and that 
the Secretary was requesting only the minimum amount of information 
needed to determine whether an agency was a reliable authority as to 
the quality of education or training provided by the institutions or 
programs it accredited.
    With regard to the suggestion in the NPRM that the Secretary was 
considering allowing agencies to provide a simple statement of 
assurance that they complied with the requirements for recognition so 
as to reduce the burden on agencies applying for recognition, there was 
mixed reaction. Some commenters welcomed the simplification as a 
reduction in burden, but others thought it invited abuse and provided 
no protection of the public interest. Still others felt that the first 
review of an agency under the new regulations should be extremely 
thorough, but thereafter the simple assurance approach was reasonable.
    Finally, the Secretary received a request to include in the 
regulations the provision contained in the statute that the Secretary 
shall give priority for review to those agencies whose institutions 
participate most extensively in Title IV, HEA programs and those 
agencies that are subject to the most complaints or legal actions.
    Discussion: The Secretary believes that the statute requires the 
Secretary to ensure that recognized accrediting agencies stay in 
compliance with the requirements for recognition throughout the 
recognition period. Consequently, the Secretary believes the statute 
authorizes the Secretary to have access to an accrediting agency's 
records, personnel, and facilities not only during the application and 
review process but throughout the recognition period as well.
    Regarding concerns about possible release of confidential agency 
materials under a FOIA request, the Secretary wishes to assure agencies 
that there are provisions under FOIA that protect most of the types of 
information the Secretary expects to obtain from agencies for purposes 
of Sec. 602.10(b). For example, if the Secretary determined that an 
accrediting agency's actions with respect to three institutions clearly 
demonstrated the agency's failure to comply with the recognition 
requirements, the Secretary would not be required to release the names 
of the three institutions under a FOIA request. The Secretary would, of 
course, identify the institutions to the accrediting agency so that the 
agency would have a clear understanding of the basis on which the 
Secretary reached the determination that it failed to meet the criteria 
for recognition. While the Secretary will protect confidential agency 
materials to the full extent allowed under FOIA, the Secretary wishes 
to make it clear that this does not prevent the Secretary from using 
those materials against an agency should the Secretary determine that 
the agency is in violation of the criteria for recognition.
    Regarding unannounced visits by the Secretary, which are authorized 
by the statute, the Secretary believes the use of such visits is a 
managerial decision and need not be regulated.
    With regard to the overall burden reported in the Federal Register, 
the Secretary wishes to note that the estimate was based in part on 
information provided to the Secretary by various accrediting agencies 
as to the time required to complete an application and to meet other 
requirements contained in the NPRM. It was also based on the assumption 
that the Secretary would adopt the simple assurance approach described 
in the NPRM.
    Finally, with regard to both the use of a simple assurance 
statement to simplify the application process and the inclusion of a 
set of review priorities, the Secretary believes these relate to the 
management of the recognition process and do not need to be addressed 
in regulation. The Secretary wishes to make it clear, however, that it 
is the Secretary's intent to minimize the overall burden to agencies 
through a simplification of the entire application process.
    Change: The section that detailed the conditions under which the 
Secretary uses unannounced visits to determine an agency's compliance 
with the recognition requirements has been deleted. The phrase 
``analysis of'' in Sec. 602.10(a)(2) has been replaced with ``evidence 
of'' to conform to the simple assurance approach.
Section 602.11  Preliminary Review by the Secretary
    Comments: Section 602.11(b)(2) of the proposed regulations provided 
that the Secretary's evaluation of an agency should 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 received a number of comments that supported this provision. 
In general, these commenters felt that it was important for the 
Secretary to monitor the extent to which individual agencies continued 
to accredit institutions that engage in fraud or abuse, particularly 
abuse of the Title IV, HEA programs. The Secretary received many more 
comments, however, that this provision was inappropriate and also 
redundant, given the provisions contained in Sec. 602.11(b)(1)(i-iii). 
These commenters also believed the provision gave the Secretary 
approval authority over an agency's accreditation standards, which, in 
their opinion, was contrary to the statute.
    The Secretary also received some comments related to the sharing of 
information used by the designated Department official to reach 
conclusions regarding an agency's compliance with the requirements for 
recognition. In general, these commenters wanted the regulations to 
specify time frames for an agency's written response to the Department 
staff analysis concerning its application for recognition, to require 
the designated Department official to share with the agency all 
information used in reaching a decision about the agency's application, 
to require the Department to forward to an agency written reports on 
any announced or unannounced site visits, file reviews, or other 
reviews of the agency, and to allow the agency the opportunity for 
response to all these reports.
    Finally, a number of commenters suggested that the regulations 
should include a requirement that the Secretary must publish a notice 
in the Federal Register when an accrediting agency is being considered 
for recognition and must also notify the State postsecondary review 
entities.
    Discussion: The Secretary believes that the designated Department 
official's review of information directly related to institutions or 
programs accredited by an agency is central to the issue of whether the 
agency is a reliable authority as to the quality of the institutions of 
programs it accredits. Therefore, this provision must be retained. The 
Secretary notes that any information provided by the agency in 
accordance with Sec. 602.4(e) of these regulations may also be reviewed 
by the designated Department official during any evaluation of the 
agency for compliance with the requirements for recognition.
    With regard to the suggestion for including various time frames in 
this section, the Secretary appreciates the concerns that led 
commenters to request time frames and, consequently, agrees to include 
them in this section. The Secretary does not believe that agencies 
should have the right to receive a written report after every 
monitoring activity conducted by the designated Department official as 
these activities are conducted for the general purpose of gathering 
information about an agency's compliance with the requirements for 
recognition and, in that sense, are ``predecisional.''
    Finally, it is already a requirement, under the Federal Advisory 
Committee Act, that the Secretary must publish an announcement of each 
Advisory Committee meeting, including those at which accrediting 
agencies are considered for recognition, but the Secretary acknowledges 
the importance of making that practice clear in these regulations. The 
Secretary also acknowledges the importance of notifying the State 
postsecondary review entities whenever an agency is being considered 
for recognition.
    Changes: Time frames have been added for providing analyses and 
supporting documentation to an accrediting agency before the Advisory 
Committee meets on that agency's application for recognition. A 
provision for notifying State postsecondary review entities and other 
appropriate organizations of an agency's application for recognition 
has also been added. Finally, a provision has been added requiring the 
Secretary to publish a notice of the Advisory Committee meeting in the 
Federal Register and to invite interested parties to make presentations 
before the Advisory Committee.
Section 602.13  Review and Decision by the Secretary
    Comments: Some commenters objected to the provision that the 
Secretary could decide to recognize an agency even if it did not meet 
all of the requirements for recognition, provided the Secretary 
determined that the noncompliance did not impair the agency's 
effectiveness. These commenters were particularly concerned that an 
accrediting agency that failed to meet a particular requirement might 
be recognized even though the reasons it failed to meet that 
requirement were within its control to correct. Other commenters, 
however, commended the Secretary's willingness to determine the 
appropriateness of a waiver when an agency's noncompliance with one or 
more requirements for recognition did not limit the effectiveness of 
the agency. To these commenters, the Secretary's flexibility was a 
demonstration that the Secretary sought a working partnership with 
accrediting agencies that was based on performance and trust.
    With regard to an appeal of an Advisory Committee recommendation, 
some commenters felt that the 30-day time frame was too short. Other 
commenters requested that, in addition to the designated Department 
official and the agency, third parties be allowed to contest an 
Advisory Committee's recommendation concerning the recognition of an 
agency.
    Finally, several commenters felt that the regulations should 
contain a time frame for the Secretary to make a decision regarding an 
agency's application for recognition.
    Discussion: While the Secretary appreciates the concern of the 
commenters about granting recognition to an agency that does not meet 
all of the requirements for recognition, the Secretary believes that 
some flexibility is needed so that the Secretary may grant recognition 
to an agency that fails to meet all of the requirements, even if the 
circumstances are within the agency's ability to control.
    The Secretary understands the concerns raised about the 30-day time 
frame for appealing an Advisory Committee recommendation. However, the 
Secretary wishes to note that an agency already has two opportunities 
prior to the Advisory Committee's recommendation during which it may 
state its case as to why a negative recommendation concerning its 
application for recognition is unwarranted. First, the agency may 
respond in writing to a negative recommendation by the designated 
Department official before that recommendation is forwarded to the 
Advisory Committee. Second, agency representatives have an opportunity 
to appear in person before the Advisory Committee to argue against a 
negative recommendation. Because of these two opportunities, the 
Secretary does not believe the 30-day time frame after the Advisory 
Committee makes its formal recommendation is unrealistic.
    With regard to third parties appealing an Advisory Committee 
recommendation, the Secretary believes that the appropriate place for 
third-party comment is before the Advisory Committee reaches its 
decision on a recommendation, not after. With regard to a time frame 
for the Secretary's decision, the Secretary believes that this is 
appropriately a management issue and does not need to be specified in 
regulation.
    Change: None.
Section 602.14  Limitation, Suspension, or Termination of Recognition
    Comments: The Secretary received a suggestion from several 
commenters that any agency subject to the limitation, suspension, or 
termination of its recognition should be allowed to challenge the 
membership of the subcommittee that conducts a hearing on its case if, 
in fact, a subcommittee, rather than the full Advisory Committee, hears 
the case. Commenters believed a challenge should be allowed on the 
grounds of either conflict of interest or lack of expertise in either 
the type of agency subject to the action or its scope of accrediting 
activity. The Secretary also received a suggestion that the 
subcommittee should consist of five, rather than three, members and 
another suggestion that all negative actions recommended by the 
subcommittee should be discussed and acted upon by the full Advisory 
Committee. One commenter suggested that an agency, rather than the 
Secretary, should be allowed to select members of the subcommittee.
    Finally, the Secretary received several comments that the 30-day 
frame for an agency to respond to the designated Department official's 
notice of intent to limit, suspend, or terminate the agency's 
recognition was too short.
    Discussion: Given the seriousness of the situation that would 
prompt the use of a subcommittee rather than the full Advisory 
Committee, the Secretary accepts the suggestion to expand its size. 
However, the Secretary believes the same seriousness that necessitates 
the use of a subcommittee demands prompt resolution by the 
subcommittee. Similarly, the Secretary does not accept the suggestion 
that the agency should be allowed to choose members of the 
subcommittee. Regarding an agency's right to challenge the composition 
of the subcommittee, it is the Secretary's intent to appoint to the 
subcommittee individuals who have no known conflict of interest. 
However, the Secretary acknowledges that there may be instances unknown 
to the Secretary in which a conflict of interest may exist with a 
subcommittee member. For this reason, the Secretary believes a 
challenge to the membership of the subcommittee on grounds of conflict 
of interest is warranted. The Secretary does not believe that a 
challenge on the basis of lack of expertise is justified because the 
members of the Advisory Committee from which the membership of the 
subcommittee is chosen have general expertise in the areas that come 
under the purview of the committee.
    With regard to the 30-day time frame for responding to a notice of 
intent to limit, suspend, or terminate recognition, the Secretary 
believes that the seriousness of the situation that prompts such a 
notice demands equally prompt resolution to protect the public 
interest.
    Changes: The size of the subcommittee has been increased from three 
to five members. Agencies are now allowed to challenge the composition 
of the subcommittee on grounds of conflict of interest.
Section 602.15  Requests for Reconsideration of the Secretary's 
Decision
    Comments: In response to the Secretary's question in the NPRM as to 
whether this provision should be retained, given the additional appeal 
opportunities for an agency before the Secretary decides on its 
application, the Secretary received mixed responses. Several commenters 
felt the provision was superfluous. Those who did not had various 
suggestions for changing the procedures, from changing the time frames 
to clarifying the grounds for reconsideration.
    Discussion: The Secretary concurs with the assessment of the 
commenters who believed that the provision for reconsideration was 
superfluous in light of the additional appeals procedures provided to 
agencies before the Secretary reaches a decision.
    Change: The section has been deleted.
Section 602.16.  Appeals Procedures
    Comments: One commenter felt that this section was unnecessary 
because agencies can always appeal to the courts. Other commenters 
expressed concern that the NPRM did not provide for a meaningful appeal 
of adverse recognition decisions, as required by the statute. These 
commenters generally suggested using an intermediate administrative 
appellate body, such as an administrative law judge, to hear appeals. 
Other commenters supported the provision as written, fearing that an 
alternative administrative process within the Department would deplete 
the Department's resources inappropriately.
    Discussion: The Secretary continues to believe, as described in the 
NPRM, that there can be no administrative appeal within the Department 
of a Secretarial decision since the Secretary, as head of the 
Department, makes all final decisions on behalf of the Department. The 
only appeal is through the courts. The Secretary wishes to note, 
however, that an agency for which the Advisory Committee recommends 
denial of recognition is afforded an opportunity to contest that 
recommendation before the Secretary reaches a final decision. To delay 
the Secretary's final decision by adding still another layer of appeal 
is, in the Secretary's opinion, unwarranted.
    Change: None.

Subpart C--Criteria for Secretarial Recognition

Section 602.20  Geographic Scope of Recognition
    Comments: The Secretary received one comment on this section from 
an individual who was concerned that the regulations might be construed 
to preclude a State from accrediting foreign and out-of-state 
institutions.
    Discussion: Any accrediting agency, including a State, is free to 
define the geographic area for which it seeks recognition. In granting 
recognition, the Secretary defines the geographic area included in the 
agency's scope of recognition, which may or may not be the full 
geographic area requested by the agency. The Secretary bases the 
decision regarding the agency's geographical area of recognition on 
whether the agency is a reliable authority regarding the quality of 
education provided by the institutions it accredits throughout its 
geographic region.
    Change: None.
Section 602.21  Administrative and Fiscal Responsibility
    Comments: A number of commenters described the recordkeeping burden 
imposed by the proposed regulations as unduly onerous and in violation 
of Office of Management and Budget (OMB) guidelines that limit record 
retention requirements to three years. Several commenters indicated 
that the requirement to keep self-study reports for two complete 
accreditation or preaccreditation cycles was especially burdensome 
because of the large volume of materials typically included with these 
reports.
    On other issues related to this section, one commenter felt that, 
to avoid conflicts of interest, members of the agency's decision making 
body should not also be members of the agency's governing board. 
Another believed that the Secretary should not have authority to 
determine whether an agency's staff is adequate, knowledgeable, and 
competent.
    Discussion: With regard to the record retention requirement, the 
Secretary wishes to note that the requirement to keep records for two 
complete accreditation or preaccreditation cycles first appeared in the 
1988 regulations governing the recognition of accrediting agencies. The 
NPRM for those regulations had initially included a provision for the 
indefinite retention of records. This was subsequently reduced to the 
current two-cycle requirement as a result of public comment on the 
recordkeeping burden.
    The Secretary also wishes to note that the specific comment about 
the burden of keeping self-study reports for two full cycles was made 
by negotiators during the negotiated rulemaking sessions for these 
regulations. As a result, the Secretary carefully monitored the review 
of self-study reports by Department staff members conducting file 
reviews at agencies' headquarters during the past year and has 
determined that only the most recent self-study reports are 
particularly useful to staff. Consequently, the recordkeeping 
requirement for self-study reports has been reduced to the most recent 
report only.
    With regard to the potential conflict of interest when the same 
individuals serve as members of both the decision making body and the 
governing board of an agency, the Secretary appreciates the concern but 
believes that agencies should be allowed the flexibility to determine 
the composition of these bodies that best suits their needs. Further, 
as all agencies are required to have adequate policies dealing with 
conflicts of interest, the Secretary believes there is adequate 
protection of the public interest.
    Concerning the issue of the Secretary's review of an agency's 
staff, the Secretary believes that the adequacy, knowledge, and 
capability of an accrediting agency's staff are appropriate factors to 
be considered in making a determination regarding whether the agency 
has the administrative responsibility to carry out its accrediting 
activities.
    Change: Agencies must keep only the most recent self-study report.
Section 602.22  Demonstration of Accreditation Experience
    Comments: Several commenters requested that accrediting agencies be 
required to demonstrate that their policies, evaluation methods, and 
decisions are accepted throughout the United States by recognized 
accrediting agencies. Their rationale was that acceptance by recognized 
agencies provided an important measure of an agency's reliability.
    Discussion: The commenters' rationale was presented to the 
Department by the non-Federal negotiators during negotiated rulemaking, 
and the Secretary acknowledges that demonstration of acceptance by 
recognized accrediting agencies can be an important factor to consider 
when evaluating an agency seeking recognition, particularly one seeking 
initial recognition. On the other hand, those interested in forming new 
accrediting agencies have expressed concern that this requirement 
imposes unfair hurdles for them and unduly stifles competition among 
accrediting agencies. The Secretary believes that agencies should not 
be required to demonstrate acceptance by recognized accrediting 
agencies but may certainly do so in their application for recognition, 
if they wish.
    Change: None.
Section 602.23  Application of Standards
    Comments: The Secretary received several suggestions for changes to 
this section. For example, one suggestion was to change the wording in 
Sec. 602.23(a) from ``[the agency] consistently applies and enforces 
written standards that ensure that the quality of education or training 
offered is of sufficient quality to achieve * * * the stated objective 
for which it is offered'' to ``[the agency] has written standards that 
it consistently applies to ensure that the education or training 
offered * * *.'' Another was to change the wording in Sec. 602.23(b)(5) 
from ``to ensure that its criteria and standards are appropriate and 
sufficiently comprehensive to evaluate the quality of the education of 
training provided * * * and are relevant to the education or training 
needs of affected students'' to ``to ensure that its criteria and 
standards are comprehensive and appropriate to the agency's objective 
of ensuring the quality of the institutions or programs it accredits.''
    The Secretary also received a number of comments directed to the 
requirement that agencies must have a systematic program of review to 
ensure what in previous regulations was described as the ``validity and 
reliability'' of its standards. Some commenters believed the wording in 
the NPRM was preferable to the phrase ``validity and reliability'' 
because of the various technical interpretations often given to those 
words. Others, however, found the wording in the NPRM vague and 
generally not as strong as the original wording. All commenters, 
regardless of their concerns about the specific wording, agreed that 
the requirement was exceedingly important in assessing whether the 
agency is a reliable authority as to educational quality.
    Finally, several commenters requested that the limit on 
preaccreditation status be extended from five to six years to 
accommodate some agencies' practice of granting preaccreditation for 
six years and then reviewing the preaccredited institution or program 
every two years during the six-year period.
    Discussion: The Secretary believes that the various wording changes 
suggested by commenters for Sec. 602.23, of which two are described 
above, substantially reduce the effectiveness of the section by 
shifting the emphasis away from agencies' overall responsibility to 
have effective standards that ensure educational quality. With regard 
to the request that the maximum preaccreditation period be lengthened 
to six years, the Secretary understands the rationale presented by 
those agencies that conduct very thorough, and in some cases on-site, 
reviews of preaccredited institutions or programs throughout the 
preaccreditation period. However, the Secretary notes that not all 
agencies follow this practice of conducting thorough on-site reviews 
throughout the preaccreditation period. In these instances, the 
Secretary believes that the addition of another year of 
preaccreditation is not justified. For this reason, the Secretary does 
not accept the suggestion to extend the maximum preaccreditation period 
to six years.
    With respect to the ``validity and reliability'' issue, the 
Secretary has carefully considered all of the comments, especially 
those directed to the level of technical and statistical precision that 
is often associated with the words. However, in light of the 
Secretary's decision to list the twelve required accreditation 
standards in Sec. 602.26 as they appear in the law, with no 
elaboration, the Secretary believes the strongest possible language is 
necessary in this section to make very clear the importance of this 
requirement in establishing sound accreditation standards. For the same 
reason, the Secretary believes it is necessary to add to this section a 
requirement that an agency must demonstrate that each of its standards 
provides both a consistent basis for determining the educational 
quality of different institutions and programs and a valid measure of 
the aspects of educational quality that it is intended to measure.
    Changes: The requirement in Sec. 602.23(b)(5) has been revised to 
incorporate the ``validity and reliability'' language. A requirement 
has been added that an agency must demonstrate that each of its 
standards is effective in determining educational quality.
Section 602.24  Accreditation Processes
    Comments: The Secretary received numerous comments about the 
provision pertaining to unannounced site visits, most of which were 
directly related to the definitions of ``prebaccalaureate vocation 
education'' and ``vocational education.'' Many commenters preferred 
that unannounced visits be restricted to those institutions offering 
non-degree vocational education, while others felt that all 
institutions offering vocational education, regardless of the 
credential awarded, should be subject to the requirement. Many 
commenters suggested that the term ``institution that offers vocational 
education'' should be restricted to those institutions whose 
predominant offerings are vocational. The word ``predominant'' was 
defined by these commenters to mean more than 75 percent of an 
institution's course offerings.
    Several commenters also believed that the purpose of the 
unannounced site visit as stated in the NPRM--to determine whether or 
not the institution or program continued to be in compliance with the 
agency's standards--was inappropriate. One commenter wanted the 
regulations to require accrediting agencies to publish clear guidelines 
for when and how an agency will conduct an unannounced visit.
    Discussion: The Secretary has carefully considered all comments 
received on this issue, as well as those on the broader issue of the 
burden these regulations would impose on institutions and accrediting 
agencies. The Secretary has also reexamined the House-Senate Conference 
Report regarding the requirement for unannounced inspections of 
institutions that offer vocational education. This report describes the 
House language as requiring unannounced inspections of institutions 
that are predominately vocational in nature, while the Senate language 
speaks more generally of requiring these inspections for all 
institutions that offer vocational education. As this report also notes 
that the House deferred to the Senate on this issue, the Secretary 
believes it is the clear intent of Congress to require accrediting 
agencies to conduct unannounced inspections at all institutions that 
offer vocational education or training. The Secretary also believes 
that Congress' use of the term ``inspection'' rather than ``review'' or 
``evaluation'' is evidence that the purpose of the unannounced visit is 
not necessarily to conduct a full review of the institution but to 
determine whether, at a minimum, the institution actually has the 
personnel, facilities, and resources it claimed to have, or appeared to 
have, either during its last evaluation by the accrediting agency or in 
subsequent reports to the agency. The Secretary wishes to point out 
that an accrediting agency has the flexibility to determine how best to 
carry out these unannounced inspections in a manner that achieves the 
purpose of these inspections but minimizes the cost to institutions and 
the burden to accrediting agencies. The agency also has the flexibility 
to examine, during the unannounced inspection, other aspects of an 
institution, such as whether it maintains adequate records or whether 
it actually provides the programs and support services it advertises. 
As agencies are responsible for monitoring institutions throughout 
their accreditation period, as described in Sec. 602.24(b)(4), the 
Secretary wishes to point out that these unannounced inspections can 
and should serve a useful purpose in helping agencies meet this 
responsibility.
    Changes: The term ``unannounced site visit'' has been replaced with 
``unannounced inspection,'' and the purpose of the unannounced 
inspection has been defined as indicated in the Discussion section.
Section 602.25  Additions to or Substantive Changes in Educational 
Programs
    Comments: The Secretary received numerous comments regarding this 
section. Many commenters felt that there was no substantive change 
requirement in the statute so the requirement should be eliminated from 
the regulations. Other commenters, however, cited a different reason 
why the requirement should be eliminated: most accrediting agencies 
already have substantive change policies so there is no need for the 
Department to regulate the content of those policies. A host of 
commenters observed that, as worded, the requirement placed an undue 
reporting requirement on both accrediting agencies and institutions and 
an unnecessary burden on agencies by requiring them to grant prior 
approval to even the most insignificant of program changes or 
additions. Many also noted that the prior approval process would 
severely inhibit institutions' ability to respond in a timely manner to 
changing needs, as, for example, in health-related fields. Finally, 
commenters noted that many programs, such as those in community 
colleges, were routinely reviewed and approved by various State review 
boards before they could be offered, so requiring additional prior 
approval by accrediting agencies would only increase costs without any 
added benefit.
    Discussion: The Secretary firmly 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 have a substantive change 
policy that requires prior approval by the accrediting agency before a 
substantive change can be included in the agency's grant of 
accreditation to an institution. At the same time, the Secretary 
acknowledges the burden the requirement proposed in the NPRM imposed on 
institutions and accrediting agencies. While the least burdensome 
approach would be to allow agencies simply to use their existing 
substantive change policies to meet this requirement, the Secretary 
believes this is unworkable and does not adequately protect the public 
interest because there is considerable variation among agencies as to 
what constitutes substantive change. Furthermore, as the NPRM 
documents, there have been several significant abuses in this area 
because of an agency's unwillingness to evaluate an institution's 
substantive change before including that change in the institution's 
grant of accreditation. Consequently, the Secretary believes that the 
Federal interest, as well as the interest of the general public, is 
best protected if a common core of changes that must be considered 
substantive is defined in regulation. To determine what should 
constitute this common core, the Secretary examined the topics 
institutional accrediting agencies typically include in their list of 
substantive changes that require prior approval and has included in 
this section only those that reflect the Secretary's principal concerns 
regarding institutions that undergo substantive change. The Secretary 
believes that the revised substantive change policy, which now applies 
only to institutional accrediting agencies, considerably reduces the 
burden on both accrediting agencies and institutions at the same time 
it provides adequate protection to the public.
    The Secretary recognizes that there are many variables that must be 
taken into account in determining the type of review that an agency 
conducts before granting prior approval to an institution's substantive 
change. For this reason, the Secretary has decided to give accrediting 
agencies the flexibility to determine the procedures they will use in 
granting prior approval to an institution's substantive change. In some 
instances, this may involve a full-scale on-site evaluation of the 
entire institution. In others, it may involve a focused visit to 
examine the particular circumstances surrounding the change. In still 
others, it may involve simply a thorough review by agency staff of the 
institution's report on its ability to implement the substantive change 
without adversely affecting the institution's ability to continue to 
meet the agency's standards.
    Changes: The substantive change requirement has been modified to 
limit the types of changes that must be given prior approval by an 
accrediting agency. The requirement now applies to institutional 
accrediting agencies only.
Section 602.26  Required Accreditation Standards
    Comments: The Secretary received numerous comments about the 
required accreditation standards. Most commenters felt that the Federal 
government should not mandate how accrediting agencies defined their 
standards. They also felt that the proposed regulations intruded on the 
autonomy of accrediting agencies, exceeded the statute, and were 
contrary to Executive Order 12866. In their opinion, the Secretary 
overreached his authority by specifying anything in this section that 
went beyond a mere restatement of the law on the required standards. 
These same commenters applauded the removal of the language on 
curricula, faculty, facilities, equipment and supplies, and student 
support services that had appeared in early drafts of the proposed 
regulations and urged the Secretary to do the same for the other eight 
standards specified in the law.
    Several commenters argued that many of the specific 
responsibilities assigned to accrediting agencies by the various 
standards would force agencies into becoming government regulators. 
They also argued that these new requirements would require accrediting 
agencies to duplicate the efforts of the Department and the States and 
would substantially increase the paperwork burden on institutions and 
accrediting agencies. In their opinion, these requirements would be so 
burdensome to accrediting agencies in terms of time and personnel that 
they would shift the focus of accreditors away from their primary 
function--that of reviewing educational quality--to a role in which 
they served merely as investigative and enforcement agencies for the 
Federal government.
    While the opinions expressed above were shared by the majority of 
commenters on this issue, they were by no means unanimous. Some 
commenters from the proprietary sector, for example, had no serious 
objection with the standards, noting that most of what was contained in 
the standards was already being examined to the degree of specificity 
contained in the proposed regulations by either their accrediting 
agencies, the State, or both. Others commenters felt that the 
standards, as written, protected students as well as Federal dollars. 
One commenter thought the introductory paragraph to the required 
standards section should be strengthened by requiring agencies to have 
quantitatively validated standards that were based on a rigorous 
assessment of the value added by the education or training.
    Finally, one commenter expressed concern that the Secretary was 
exceeding the statute by requiring institutional accrediting agencies 
whose accreditation does not serve Title IV, HEA purposes to meet the 
student outcomes requirements of Sec. 602.26(b)(9).
    Discussion: The Secretary has given very careful thought to all the 
concerns raised with regard to this section. Of particular concern to 
the Secretary is how best to achieve an appropriate balance between the 
need for agencies to have rigorous standards in order to protect 
students' interests and the need for agencies to have flexibility in 
addressing these standards in order to reduce cost and burden to both 
agencies and institutions. Another important factor, in the Secretary's 
opinion, is the need to build a partnership among triad members that is 
based on mutual trust and allows each member the flexibility to 
determine the appropriate means to carry out its responsibilities under 
the HEA.
    After considering all of these factors, the Secretary has decided 
to eliminate all but the statutory language for each of the 12 required 
standards. This approach eliminates many requirements that commenters 
found especially burdensome, such as that in Sec. 602.26(b)(4) 
concerning annual financial audits. In addition, it allows accrediting 
agencies that already have rigorous standards in these areas to 
continue operating as they have, thus eliminating the need for 
additional cost to agencies and institutions to comply with the 
requirements of this section.
    While the Secretary believes it is appropriate not to prescribe 
specific minimum regulatory standards elaborating on the standards in 
the statute, the Secretary also believes that the standards contained 
in the NPRM provide a sound framework for a thorough assessment of 
these areas. For this reason, the Secretary summarizes below the major 
provisions contained in the NPRM concerning the statutory standards. 
The Secretary believes these provisions are appropriate for agencies to 
address in their own standards for these areas. In addition, the 
Secretary believes that, in addressing the development of their own 
standards, accrediting agencies should consider any comparable Title 
IV, HEA program standards and any relevant and applicable State 
standards developed under the State Postsecondary Review Program. 
However, the Secretary wishes to make it clear that this does not 
prevent an accrediting agency whose standards do not include all of 
these provisions from being recognized by the Secretary, provided the 
agency can justify the appropriateness of its standards as reasonable 
applications of the statutory standards in light of its needs, the 
needs and circumstances of the institutions or programs it accredits, 
and the students they serve. Finally, the Secretary wishes to emphasize 
the importance of accrediting agencies' developing their standards in 
such a way that they minimize burden, overlap, and duplication at the 
same time they ensure overall educational quality.
    The Secretary notes that for most of the standards discussed below 
there are comparable, or very similar, standards in section 494 and 
some in 498 of the HEA. The Secretary expects to take a leadership role 
in working with accrediting agencies and SPREs to ensure that the 
standards for all three members of the triad are complementary, rather 
than redundant.
    Fiscal and administrative capacity as appropriate to the specified 
scale of operations. An accrediting agency's standard for assessing 
this area should generally address the overall quality of an 
institution's or program's fiscal and administrative capacity. The 
assessment should examine in particular whether the institution's or 
program's finances are sufficiently strong to enable it to meet, and 
appear likely to continue to meet for the foreseeable future, all of 
the agency's standards for accreditation. The assessment should also 
include some provision for the ongoing monitoring of an institution's 
or program's finances throughout any period of accreditation or 
preaccreditation granted by the agency.
    The Secretary notes that section 494(d)(5) of the HEA contains a 
comparable SPRE review standard and sections 498 (c) and (d) of the HEA 
contain comparable Department standards.
    Recruiting and admissions practices, academic calendars, catalogs, 
publications, grading, and advertising. An accrediting agency's 
standard for assessing these areas should generally address whether 
they are reasonable in light of an institution's or program's 
educational mission, reflect good practice, and accurately reflect 
actual practice.
    The Secretary notes that sections 494(d) (1), (2), and (12) of the 
HEA contain comparable SPRE review standards.
    Program length and tuition and fees in relation to the subject 
matters taught and the objectives of the degrees or credentials 
offered. An accrediting agency's standard for assessing this area 
should generally address the appropriateness of an institution's 
program length and tuition and fees, taking into account such factors 
as program objectives and content, the types and locations of 
instructional delivery, the knowledge and skills necessary for students 
to reach competence in the field being taught, and generally accepted 
practices in higher education.
    The Secretary notes that section 494(d)(7) of the HEA contains a 
comparable SPRE review standard.
    Measures of program length in clock hours or credit hours. An 
accrediting agency's standard for assessing this area should generally 
address the appropriateness of an institution's or program's 
measurement of program length, taking into account such factors as 
program objectives and content, the types and combinations of 
instructional methodologies and delivery systems (including outside 
preparation as appropriate), the knowledge and skills necessary for 
students to reach competence in the field being taught, and generally 
accepted practices in higher education.
    The Secretary notes that section 494(d)(9) of the HEA contains a 
comparable SPRE review standard.
    Success with respect to student achievement in relation to mission, 
including, as appropriate, consideration of course completion, State 
licensing examination, and job placement rates. An accrediting agency's 
standard for assessing this area should generally address the success 
of an institution or program in meeting its educational objectives, as 
measured by the achievement of its students. Typically under this 
standard, an agency should require the institution or program to 
document and assess the educational achievement of students in 
verifiable and consistent ways, such as student grades, grade point 
averages, theses or portfolios, the results of admissions tests for 
graduate or professional school or other standardized tests, transfer 
rates to institutions offering higher level programs, job placement 
rates, completion rates, results of licensing examinations, evaluations 
by employers, follow-up studies of alumni, and other recognized 
measures of educational outcomes. The agency should also typically 
require the institution or program to use effectively the information 
obtained in this manner to improve student achievement with respect to 
the degrees or certificates offered. Finally, the agency should 
typically monitor in a systematic way the institution's or program's 
performance with respect to student achievement, including, as 
appropriate, completion rates, job placement rates, and pass rates on 
State licensing examinations, or other appropriate measures of 
occupational competency, to determine if performance is consistent with 
both the institution's or program's mission and objectives and any 
measures the agency may have for institutions' or programs' performance 
with respect to student achievement. For programs that provide 
vocational education, agencies should establish quantitative standards 
for completion rates, job placement rates, and pass rates on State 
licensing examinations.
    The Secretary notes that section 494(d)(14) of the HEA contains a 
comparable SPRE review standard.
    Default rates in the student loan programs established under Title 
IV of the Act, based on the most recent data provided by the Secretary. 
An accrediting agency's standard for assessing this area should 
generally address an institution's default rates in relation to the 
institution's overall ability to meet the agency's standards. 
Typically, an agency might 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 equals or 
exceeds 25 percent or if it has increased significantly in relation to 
its rate the previous year. Under this standard, an agency is not 
expected to do the work of the Federal government with respect to 
institutional default rates. Rather, the agency is expected to review 
the default rate information provided by the Secretary, determine if 
that information calls into question the institution's compliance with 
agency standards, and take follow-up action as appropriate.
    Record of student complaints received by, or available to, the 
agency. An accrediting agency's standard for assessing this area should 
generally address an institution's or program's record of student 
complaints received by or made available to the agency. Under this 
standard, the agency should typically review student complaints that 
relate to the agency's standards and take appropriate follow-up action 
with regard to those complaints. If necessary, the agency would refer 
complainants to appropriate Federal, State, and other agencies if the 
complaints do not relate to the agency's standards. Finally, it would 
require institutions or programs to make available to students the 
agency's mailing address or telephone number for complaints.
    The Secretary notes that section 494(d)(11) of the HEA contains a 
comparable SPRE review standard.
    Compliance with the institution's program responsibilities under 
Title IV of the Act. An accrediting agency's standard for assessing 
this area should generally address an institution's compliance with its 
Title IV, HEA program responsibilities in relation to the institution's 
overall ability to meet the agency's standards. The agency's assessment 
under this standard is based on program reviews, financial and 
compliance audits, audited financial statements, and any other 
information that the Secretary provides. Under this standard, the 
agency is not expected to do the work of the Federal government in 
reviewing institutions for compliance with their Title IV, HEA program 
responsibilities. Rather, the agency is expected to review the 
information provided by the Secretary, determine if that information 
calls into question the institution's compliance with agency standards, 
and take follow-up action as appropriate.
    With regard to the concern raised by one commenter about the need 
for quantitatively validated standards, the Secretary notes that 
Sec. 602.23(b)(5) requires agencies to have in place a program for the 
systematic evaluation of the validity and reliability of its standards. 
In light of the Secretary's decision to eliminate all but the statutory 
language for the required standards, this ``validity and reliability'' 
provision takes on added importance, as described in the discussion of 
the changes to Sec. 602.23.
    Finally, with regard to the concern about extending the requirement 
to have a standard assessing student achievement to institutions whose 
accreditation does not serve Title IV, HEA program purposes, the 
Secretary wishes to note that the overriding concern of the statute, as 
expressed in section 496(a) of the HEA, is that accrediting agency 
standards must contain a measure or measures of student achievement. 
Therefore, it is the Secretary's belief that extending the requirement 
to all agencies, not just those whose accreditation serves Title IV, 
HEA purposes, is warranted.
    Changes: Paragraph 602.26(b) contains only the statutory language 
for the 12 required standards. Other changes to Sec. 602.26 are 
discussed below.
Section 602.26(b)(13) The Institution's Practice of Making Refunds to 
Students
    Comments: Many commenters objected to the inclusion of this 
requirement in the 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. This point was argued by non-Federal negotiators during negotiated 
rulemaking as well.
    Discussion: The Secretary has carefully reviewed the statutory 
provision on which this requirement was based and has also reexamined 
the requirement in light of refund policies established in the Student 
Assistance General Provisions, 34 CFR part 668. It is the Secretary's 
belief that the regulatory language contained in 34 CFR part 668 is 
sufficient by itself to ensure that an institution's refund policy 
meets the requirements of the statute. Thus, there is no need for a 
requirement that accrediting agencies must have a standard that 
assesses institutions' refund policies.
    Changes: The section has been deleted.
Section 602.26(c) Time Limit on Correcting Deficiencies
    Comments: Many commenters expressed concern about the proposed 18-
month time limit for institutions to come into compliance with an 
accrediting agency's standards. Some argued that in many instances, 
such as when an institution's financial situation is cause for concern, 
it takes considerably longer for an institution to come into 
compliance. Others argued that, for some programs, 18 months was too 
long.
    Many commenters expressed concern about the requirement under 
consideration that accrediting agencies would have to take adverse 
action if they determined that an institution was unlikely to continue 
to be able to meet agency standards for the foreseeable future. This 
requirement, they argued, was totally unrealistic because agencies 
would have no objective basis on which to make such a determination. 
According to these commenters, the requirement would result in a 
determination that was pure conjecture on the part of accrediting 
agencies and would leave agencies vulnerable to lawsuits. Several 
commenters expressed an opposing view about this requirement, however, 
stating it was necessary to protect students who attended institutions 
whose ability to continue to provide a quality education was clearly 
questionable.
    Discussion: The Secretary believes that some definitive 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. However, the Secretary also recognizes that, 
because of differing lengths of programs, the 18-month time frame is 
unrealistic for all types of institutions.
    With regard to the provision that agencies should be required to 
take action if it appears that an institution or program will be 
unlikely to continue to meet an agency standard, the Secretary 
understands the concerns of commenters who opposed the requirement. 
However, because there is potential for serious harm to students 
enrolled in an institution or program the quality of whose education or 
training appears to be declining, the Secretary remains concerned about 
a marginal institution or program that might be accredited by an agency 
despite the agency's very serious concerns about its enrollment or 
financial trends. While the Secretary has not added to these 
regulations the specific requirement under consideration in the NPRM, 
the Secretary wishes to impress upon agencies the importance of the 
requirement, contained in Sec. 602.24(b)(4) of these regulations, that 
they monitor institutions and programs throughout any accreditation or 
preaccreditation period to ensure that they give prompt and serious 
attention to any degradation in an institution's or program's ability 
to provide a quality education.
    Changes: Different time frames for corrective action have been 
incorporated for different lengths of programs.
Section 602.27  Required Operating Procedures
    Comments: The Secretary received many comments about the special 
actions accrediting agencies are required to take whenever institutions 
establish new branch campuses. Of particular concern to most commenters 
was the apparent inconsistency between the definition of ``branch 
campus'' in Sec. 602.2 and the use of that term in this section. Also 
of concern to many commenters was the added requirement that 
accrediting agencies must visit ``additional locations,'' which many 
felt went beyond the statute. One commenter felt that the required 
submission of a business plan for a new branch campus was unwarranted, 
burdensome and costly and had no intrinsic value.
    The Secretary also received a number of comments about the 
requirement that accrediting agencies provide an opportunity for public 
comment about an institution's or program's qualifications for 
accreditation. Many felt this would subvert the accreditation process 
by evoking unjustified complaints. Others felt it required the agency 
to hold a public hearing every time an institution or program was 
evaluated for accreditation or reaccreditation. One commenter held an 
opposing view, however, preferring that agencies be required to hold 
public hearings for all accrediting decisions.
    Finally, the Secretary received a number of suggestions for 
strengthening the various public disclosure requirements contained in 
this section, although a few commenters questioned the statutory 
authority for these requirements.
    Discussion: The branch campus-additional location issue has already 
been discussed under the definition of ``branch campus.''
    The Secretary notes that the additional information collection 
requirement related to the establishment of branch campuses--the 
submission of a business plan--is a statutory requirement and cannot be 
eliminated.
    With regard to the issue of public comment when an institution or 
program is being considered for accreditation, the Secretary believes 
there should be opportunity for such comment but that there need not be 
a public hearing to obtain it. The Secretary believes further that an 
agency should be free to determine both the manner in which it 
publicizes that an institution is scheduled for review and the method 
it uses to obtain public comment.
    With regard to the other public disclosure issues in this section, 
the Secretary believes that the more open an accrediting agency is with 
regard to its policies and practices, as well as the individuals 
involved in its accrediting activities, the better it is for the 
consumer. However, the Secretary believes it is best left up to the 
agency to determine its actual practice in this regard.
    Changes: The term ``branch campus'' has been redefined, and the 
phrase ``additional location'' has been deleted from this section. The 
public disclosure requirements have been modified to clarify that a 
public hearing is not required to obtain public comment on an 
institution's or program's application for accreditation.
Section 602.28  Due Process for Institutions and Programs
    Comments: One commenter expressed concern that the proposed 
regulations allowed an accrediting agency to deny an institution or 
program the right to appeal in person any adverse accrediting action. 
Another commenter noted that the regulations did not address the 
provision in section 496(e) of the HEA that prohibits the Secretary 
from recognizing the accreditation of an institution unless the 
institution agrees to submit any dispute involving the final denial, 
withdrawal, or termination of the institution's accreditation to 
initial arbitration prior to any other legal action. This same 
commenter felt that accrediting agencies should be required to adopt an 
initial arbitration procedure for handling disputes involving the loss 
of accreditation.
    Discussion: With regard to the commenter's concern that 
institutions have the right to appeal an adverse action in person, the 
Secretary believes it is best to give agencies the flexibility to 
determine the appropriate procedures for appealing adverse actions. As 
the cost to an agency when an institution or program appeals an adverse 
action is generally substantial, the Secretary believes this approach 
minimizes the cost without causing undue harm to institutions that are 
subject to an adverse action.
    With respect to the issue of arbitration, the Secretary recognizes 
that the statute does not specifically require an accrediting agency to 
agree to binding arbitration. However, the Secretary anticipates that 
many accrediting agencies will agree to arbitration since it 
significantly limits the cost and length of appeals of their final 
decisions. Moreover, if an accrediting agency does not agree to binding 
arbitration, an institution will be free to appeal a final adverse 
decision by the agency in the federal courts.
    Change: None.
Section 602.29  Notification of Accrediting Decisions
    Comments: The Secretary received several comments endorsing the 
addition of 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 or program. On another issue, most commenters believed 
it was inappropriate to require an accrediting agency to notify the 
Secretary and others prior to making a final decision that involved the 
denial or termination of accreditation, although some supported this 
provision. Some commenters believed that the time frame for requiring 
accrediting agencies to make available to the public the comments of an 
institution that loses its accreditation was unrealistic. Finally, one 
commenter requested clarification as to which agencies should be 
included in the phrase ``the appropriate accrediting agencies'' that an 
agency must notify of its decisions.
    Discussion: As mentioned in the NPRM, the Secretary believes that 
accrediting agencies should be required to notify the Secretary and 
others at the same time they notify an institution or program of a 
final adverse action in order to prevent excessive draw-down of Federal 
funds by the institution or program. The Secretary appreciates the 
comments received in support of this position. With regard to the issue 
of notification before an adverse action is final, the Secretary shares 
the concerns of those who support the inclusion of a requirement to 
this effect but agrees with those commenters who expressed the concern 
that notification prior to final action could cause serious harm to 
institutions that subsequently had the adverse action reversed.
    With regard to the 60-day time frame for obtaining the comments of 
an institution or program that is subject to a final adverse action, 
the Secretary believes it is in the best interest of the public to 
publish as soon as possible the reasons why the agency has denied, 
withdrawn, suspended, or terminated the accreditation of the 
institution or program. If the institution or program chooses not to 
make its comments about that action available to the accrediting agency 
within 60 days, then the accrediting agency is free to publish its 
statement of reasons without the accompanying statement of the 
institution or program.
    With regard to ``appropriate accrediting agencies,'' the Secretary 
believes that accrediting agencies should be free to determine which 
agencies should be notified but that, at a minimum, an agency should 
notify all recognized agencies that accredit an institution, or a 
program offered by the institution, if the agency takes an adverse 
action against the institution or one of its programs.
    Changes: A requirement has been added that accrediting agencies 
must notify the Secretary and others at the same time they notify the 
institution or program of a final adverse accrediting action.
Section 602.30  Regard for Decisions of States and Other Accrediting 
Agencies
    Comments: The Secretary received many comments opposing the 
requirement that institutional accrediting agencies must review their 
accreditation or preaccreditation of an institution if a programmatic 
accrediting agency takes adverse action against a program offered by 
the institution. Some commenters also expressed opposition to the 
requirement that programmatic accrediting agencies had to review an 
accredited program at an institution if the institutional accrediting 
agency took adverse action against the institution. Many commenters 
objected to the phrase ``or should have known'' in Sec. 602.30(b).
    Discussion: The Secretary believes that all agencies, including 
those that accredit only programs, should be required to 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 also believes that there may be 
occasions when a programmatic agency is the first agency to discover a 
serious problem that threatens the overall ability of the institution 
to provide a quality education. For this reason, the Secretary believes 
it is important for an institutional accreditor to review an 
institution for compliance with its accreditation standards if a 
programmatic agency takes adverse action against a program offered by 
the institution. The Secretary allows the institutional accrediting 
agency the flexibility to determine what an appropriate ``review'' is, 
however. It does not have to be a full on-site review of the 
institution.
    With regard to agencies being accountable for actions about which 
they ``should have known,'' the Secretary understands the concerns of 
commenters that agencies could be held accountable for knowing about 
the actions of another agency that failed to inform other agencies of 
its adverse actions. However, there are instances where information 
about an agency's adverse action against an institution or program 
becomes a matter of public record, and the Secretary believes that in 
these instances accrediting agencies should not be absolved from their 
responsibility to review the institution simply because another entity 
failed to notify them.
    Changes: None.

[FR Doc. 94-10147 Filed 4-28-94; 8:45 am]
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