[Federal Register Volume 59, Number 157 (Tuesday, August 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-20138]


[[Page Unknown]]

[Federal Register: August 16, 1994]


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Part IV





Department of Education





_______________________________________________________________________



34 CFR Part 668




Student Assistance General Provisions; Proposed Rule
DEPARTMENT OF EDUCATION

34 CFR Part 668

RIN 1840-AB84

 
Student Assistance General Provisions

AGENCY: Department of Education.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: The Secretary proposes to amend the Student Assistance General 
Provisions regulations by revising Subpart A and adding a new Subpart 
J. The proposed regulations govern the approval and administration of 
tests that may be used to determine a student's eligibility for 
assistance under the student financial assistance programs authorized 
under Title IV of the Higher Education Act of 1965, as amended (Title 
IV, HEA programs), if that student does not have a high school diploma 
or its recognized equivalent. The regulations also propose a passing 
score for each approved test. The proposed regulations implement 
changes made to section 484(d) of the Higher Education Act of 1965, as 
amended (HEA) by the Higher Education Amendments of 1992.

DATES: Comments must be received on or before October 17, 1994.

ADDRESSES: All comments concerning these proposed regulations should be 
addressed to Lorraine Kennedy or Adara Walton, 400 Maryland Avenue SW. 
(Regional Office Building 3, Room 4318), Washington, DC 20202-5343.
    A copy of any comments that concern information collection 
requirements should also be sent to the Office of Management and Budget 
at the address listed in the Paperwork Reduction Act section of this 
preamble.

FOR FURTHER INFORMATION CONTACT: Lorraine Kennedy or Adara Walton, 
Telephone: (202) 708-7888. Individuals that 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: These proposed regulations implement amended 
section 484(d) of the HEA, Public Law 102-325. As amended, section 
484(d) provides that a student who does not have a high school diploma 
or its recognized equivalent is eligible for Title IV, HEA program 
funds only if--
     The student takes an independently administered 
examination and achieves a score specified by the Secretary, 
demonstrating that the student has the ability to benefit from the 
education or training being offered; or
     The student is determined to have the ability to benefit 
from the education or training being offered in accordance with a 
``process'' prescribed by the State in which the institution the 
student is attending is located and that has been approved by the 
Secretary.
    These proposed regulations were subject to a regulatory negotiation 
process set forth in section 492 of the HEA. Under that process, the 
Secretary convened four regional meetings to obtain public involvement 
in the development of these proposed regulations. These meetings were 
held in San Francisco, Atlanta, New York, and Kansas City. At these 
meetings, the Secretary provided attendees with a list of issues that 
needed to be addressed in these proposed regulations. A summary of the 
responses of the attendees is contained in Appendix A to these proposed 
regulations.
    Groups that attended the regional meetings nominated individuals to 
participate in regulatory negotiations. The Secretary selected 
regulation negotiators from the names nominated and chose negotiators 
to reflect all the groups that participate in the Title IV, HEA 
programs, such as students, student financial aid administrators, and 
various types of eligible institutions.
    In accordance with section 492(b) of the HEA, the Secretary 
prepared draft proposed regulations and negotiated provisions of the 
draft with the negotiators. Two negotiating sessions were held: one in 
April 1993 and one in June 1993. Generally, consensus was not reached 
on any issues in these regulations, consensus being defined as 
unanimity among all negotiators.
    The provision of postsecondary education and training programs to 
students who have neither a high school diploma nor its recognized 
equivalent has broader dimensions than those covered under section 
484(d) of the HEA and this proposed regulation. Within the systemic 
education reforms of the Goals 2000 initiative and current efforts to 
build an effective school-to-work transition system, the Secretary is 
investigating long-term strategies to address problems of opportunity 
and quality education for this population, and invites public comment 
and suggestions concerning those strategies.
    The Secretary also invites comment on an alternative approach to 
implementing the changes in section 484(d) of the HEA under the 1992 
Amendments (PL 102-325) that would link the ability-to-benefit (ATB) 
testing system to State education practice and policy under the ``Goals 
2000: Educate America Act'' (PL 103-227). If adopted by the Secretary, 
under this alternative, the Secretary would publish in the final rule a 
procedure with the following components:

--By a date to be specified, each State would be asked to inform the 
Secretary of the test (or tests) which the State has determined best 
reflect the education goals and standards for high school graduates in 
its public education system. By the same specified date, each State 
would also set the passing score or scores on those tests, and provide 
the Secretary with a justification for the passing score in light of 
the goals and standards for its public high school graduates. These 
tests and passing scores would then become the only allowable ATB tests 
and passing scores for all postsecondary institutions located and 
licensed in the State.
--The Secretary could not disapprove the State's determination except 
in circumstances in which the selection of tests and determination of 
passing scores was documented as inappropriate. The State could replace 
a disapproved test or reset a passing score under the same terms as 
above.
--By the same specified date, each State would also submit to the 
Secretary a plan to ensure independent, fair and secure administration 
of the selected tests within its borders, including any provisions the 
State may deem appropriate for testing students with disabilities and 
students of limited English proficiency.
--The State would inform all institutions licensed by the State and 
certified and made eligible for Title IV funds by the Secretary of the 
approved tests, passing scores, administrative procedures, and special 
provisions, and indicate how it intends to enforce its decisions.
--Any State that, by the date specified, chooses not to select tests, 
determine passing scores, and submit plans for the other aspects of 
ensuring independent, fair and secure administration of its ability to 
benefit testing program, must notify the Secretary of that choice. By 
not participating, the State would thereby be determining that students 
applying for Title IV (HEA) financial aid to attend a school within the 
State (1) would have to pass a test determined by the Secretary, 
according to the procedures specified in this NPRM, or (2) participate 
in an approved ``State process'' as specified in PL 102-325 and as 
described in this NPRM.

    The Secretary recognizes that students from many States may apply 
to attend a single school within one State, and that standards (hence, 
selection of tests and determination of passing scores) in the States 
in which the students live may be different from standards in the State 
in which the school is located. However, the State in which the school 
is located is responsible for licensing that school, and thus should be 
able to determine under what educational standards an individual 
without a high school diploma or GED should be permitted to use Federal 
funds at that school.
    The following discussion reflects proposed significant changes to 
the Student Assistance General Provisions regulations. Proposed changes 
are discussed in the order in which they appear in the proposed 
regulations text. If a provision applies to more than one section or is 
included in more than one section, it is discussed the first time it 
appears with an appropriate reference to its other appearances.
    This NPRM proposes to make changes in the following areas:

Student Assistance General Provisions

Subpart A--General

    Section 668.7  Eligible student. The Secretary has revised 
Sec. 668.7(a)(3) to implement amended section 484(d) of the HEA. Under 
current regulations, a student does not have to document that he or she 
has a high school diploma or its recognized equivalent. It is currently 
sufficient for a student to certify that he or she has such a 
credential. The Secretary proposes in Sec. 668.7(a)(3)(i) to require a 
student to document that he or she has such a credential.
    The Secretary has proposed special provisions for a student who--
    (1) Attended high school in the United States and is unable to 
obtain a copy of his or her high school diploma or transcript because 
the high school from which the student graduated closed and the records 
are not available through any state or local education agency; or
    (2) Attended high school or its equivalent in a foreign country and 
is unable to obtain a copy of his or her high school diploma or 
transcript.
    The special procedures for students in the latter category were 
suggested by one of the negotiators and are an adaptation of procedures 
that are currently being used in New York State. The Secretary is 
requesting public comment on the procedures for students in the latter 
category.
    The Secretary has also proposed that, if a student transfers from 
one institution to another, a statement from the first institution on 
an academic or financial aid transcript that it has a copy of the 
transfer student's diploma or equivalent certificate would satisfy the 
documentation requirement for the second institution.
    It is the Secretary's view that the thrust of the amended section 
484(d) of the HEA would be thwarted by continuing the current practice 
of allowing institutions to accept a student's word that he or she has 
a high school diploma. Moreover, the Secretary believes that this basic 
element of student eligibility should be documented.
    During the regulation negotiation sessions, the majority of the 
negotiators agreed to this proposed requirement. The Secretary is 
requesting public comment on the burden associated with obtaining a 
copy of a student's high school diploma for all students receiving 
Title IV aid. The Secretary also requests comment on the burden of the 
proposed requirement that foreign students who cannot obtain a copy of 
their diploma submit a written statement, indicating why their diploma 
cannot be provided, in both English and their native language.

Subpart J--Approval of Independently Administered Tests; Specification 
of Passing Score; Approval of State Process

    In this subpart, the Secretary is proposing procedures and 
standards that govern the Secretary's approval of tests, the passing 
score of each test, the independent administration of those tests, and 
the approval of State ``processes.'' These proposed procedures differ 
significantly from current procedures governing test approval, passing 
scores, and test administration because the Secretary believes that the 
current procedures do not adequately evaluate whether students without 
a high school diploma or its equivalent should be eligible to receive 
Title IV, HEA program funds. The Secretary intends that these new 
procedures will significantly strengthen that evaluation.

Procedures and Standards That Govern the Approval of Tests

    Section 668.142  Special definitions. The Secretary has proposed to 
define special terms that are used throughout Subpart J. The proposed 
definitions are based on definitions commonly used in other Federal 
regulations or that are commonly used in the psychometric field.
    Section 668.143  Application for test approval. A test publisher 
that wishes the Secretary to approve its test for use under section 
484(d) of the HEA must provide sufficient information to enable the 
Secretary to determine that the test instrument satisfies standards 
used by the education testing industry, and that the test results are 
scientifically valid. In this section, the Secretary proposes 
requirements to meet those twin goals. Standards used by the testing 
industry include but are not limited to documentation of test 
development, evidence of reliability, unambiguous scales, and 
provisions for test security.
    Section 668.144  Test approval procedures. The Secretary has 
proposed procedures for approving tests. Under these procedures, the 
Secretary will use experts in the field of educational testing and 
assessment to initially evaluate tests and advise the Secretary as to 
whether the test meets all the requirements for test approval set forth 
in Subpart J. If the test submitted for approval is in a foreign 
language, to the extent possible, the Secretary will select at least 
one expert who is also fluent in the language in which the test is 
written.
    If the test does not meet the requirements for test approval, the 
Secretary will notify the test publisher and provide to that test 
publisher the reasons why the test was not approved. The test publisher 
may request the Secretary to re-evaluate that test. The test publisher 
may accompany that re-evaluation request with documents that address 
the reasons for the non-approval of the test, or an analysis of why the 
test met test approval requirements, notwithstanding the Secretary's 
decision. The Secretary is requesting public comment on the 
resubmission process used to evaluate test for approval, and on what 
information could be updated to reflect changes rather than resubmitted 
in full.
    If the Secretary approves a test, the Secretary proposes that the 
approval period generally would be five years. If the test publisher 
wishes to have that test re-approved after five years without 
interruption, the Secretary proposes that the test publisher submit the 
test for re-approval at least six months before its initial approval is 
scheduled to lapse.
    These procedures are designed to ensure that the tests are reviewed 
objectively and that the test publishers would have a fair opportunity 
to appeal the Secretary's decision if necessary.
    Section 668.145  Criteria for approving tests. To be approved, the 
Secretary proposes that a test must meet all the conditions for test 
construction provided in the 1985 edition of the Standards for 
Educational and Psychological Testing prepared by the joint committee 
of the American Educational Research Association, the American 
Psychological Association, and the National Council on Measurement in 
Education. With the exception of tests designed for students in English 
as a Second Language (ESL) programs, the Secretary proposes that an 
approved test assess secondary school level basic verbal and 
quantitative skills, knowledge, and/or general learned verbal and 
quantitative abilities. Therefore, the content of a test must be able 
to assess those skills, knowledge, and abilities. The test must sample 
the major content ``domains'' of secondary school level verbal and 
quantitative skills with a sufficient number of questions to fully 
represent each domain. The test questions must also permit meaningful 
analysis of the performance of students who are representative of the 
contemporary population who are beyond the age of compulsory school 
attendance and either have or do not have a high school diploma or its 
equivalent. The proposed standards are generally accepted in the 
psychometric community.
    In establishing the level of education to be assessed, the 
Secretary considered whether to establish that level at a particular 
grade of secondary schools, such as a tenth grade, eleventh grade, or 
twelfth grade level. However, because of the tremendous differences in 
the United States in the grade level at which subjects are taught in 
secondary schools, the Secretary determined that it would not be 
possible to establish such a grade level. Thus, as a general guideline, 
test questions have to be understood and should be answerable by 
students in the ninth grade through twelfth grade. An approved test 
would use test items (questions) that are drawn from the general 
content of secondary school level basic verbal and quantitative skills, 
and would adequately sample that content.
    The Secretary does not consider a test to be adequate if it 
assesses only an individual's personality, general level of 
intelligence, interest related to vocational preferences, or a single 
special-aptitude, such as manual dexterity. The Secretary believes that 
there is a significant difference between ability to benefit from 
instruction in an education or training program and the demonstrable 
skills necessary to enter an occupation. The Secretary believes that 
the ability to process verbal, symbolic, and numerical information is 
necessary to benefit from instruction from any education or training 
program.
    Section 668.146  Passing score. The Secretary proposes to require 
test publishers to determine a passing score for each test submitted 
for approval. The Secretary proposes that the passing score for each 
test will be one standard deviation below the mean for students with 
high school diplomas who have taken the test within three years before 
the date on which the test is submitted to the Secretary for approval.
    The Secretary has proposed this passing score to establish a sense 
of comparability among the three categories of students who are 
eligible to receive Title IV, HEA program funds. These categories 
include students who have a high school diploma, students who have the 
equivalent of that diploma, in most cases a GED, and students who have 
neither but can pass a test approved by the Secretary.
    The Secretary believes that earning a high school diploma or GED 
certificate should be the primary basis for qualifying to receive Title 
IV, HEA program assistance. The Secretary further believes that 
students who do not have those credentials and qualify to receive such 
assistance by taking a test should demonstrate through that test a 
level of verbal and quantitative skills at least comparable to the 
typical range of performance of students in those other two categories.
    To demonstrate this comparability, the Secretary proposes to 
establish as the passing score for each approved test one standard 
deviation below the mean (average) score achieved by students with high 
school diplomas who have taken the test within three years before the 
date on which the test was submitted to the Secretary for approval. (In 
very broad terms, the standard deviation describes the typical range of 
performance around the mean scores on a test.)
    The Secretary acknowledges that during negotiated rulemaking, the 
Secretary had proposed that the passing score would be the mean score 
of high school graduates who have taken the test within three years of 
the test being submitted for approval. Many of the regulatory 
negotiators had indicated that this passing score was too high for 
comparability purposes. Accordingly, in view of these comments, for the 
purpose of this proposed rule, the Secretary has proposed a lower 
passing score. The Secretary welcomes specific comments on the 
appropriate passing score that should be included in this regulation.
    Section 668.147  Additional criteria for the approval of 
performance based tests, tests for non-native speakers of English, 
modified tests for persons with disabilities, and computer-based tests; 
Section 668.148  Special provisions for the approval of assessment 
procedures for special populations for whom no tests are reasonably 
available; and Section 668.153  Administration of tests for students 
whose native language is not English or for persons with disabilities. 
The Secretary believes that special provisions should be made for both 
persons with documented disabilities and students whose native 
languages are not English. Therefore, the Secretary is proposing that, 
under certain circumstances, special testing procedures or instruments 
can be used for testing persons with disabilities and for testing 
students whose native languages are not English. These tests, of 
course, would have to be independently administered.

Independent Administration of Tests

    In general, the Secretary has proposed a scheme under which 
approved tests are administered independent of the institutions that 
use the tests and test results to establish the eligibility of their 
students for Title IV, HEA program assistance. The Secretary has 
proposed an interlocking network of agreements between test publishers, 
test administrators, and institutions to achieve this result. The 
Secretary proposes that the test publishers will have primary 
responsibility for ensuring that their tests are independently 
administered.
    Under the proposed scheme, a test publisher will give its test 
directly or offer it through test administrators that it certifies. The 
test publisher will certify a test administrator when it determines the 
test administrator has the necessary training, knowledge, and skills to 
give its test and the ability and capacity to keep the test secure from 
release or disclosure. The test publisher will not provide its test to 
institutions or allow test administrators to provide its test to 
institutions. The test administrator may give a test only to a student 
who is attending, or is scheduled to attend, an institution that is 
independent of the test administrator.
    The test publisher will score the test and provide the student and 
the student's institution with a notice indicating whether the student 
has passed the test and the student's test score. The institution will 
be able to use the notice from the test publisher to determine whether 
the student qualifies as an eligible student for Title IV, HEA program 
assistance.
    Section 668.149  Agreement between the Secretary and a test 
publisher. The Secretary is proposing that if a publisher's test is 
approved, the test publisher would be required to enter into an 
agreement with the Secretary before an institution would be able to use 
the test to determine the eligibility of a student for Title IV, HEA 
program funds. The agreement between the Secretary and the test 
publisher would articulate the responsibilities of the test publisher 
with respect to ensuring the integrity and proper administration of the 
test.
    The agreement would provide that the test approved by the Secretary 
could be given to students only by those test administrators who are 
certified by the test publisher. Under the agreement, the test 
publisher would directly administer its test or would enter into 
agreements for test administration with test administrators who it 
determines are properly trained and possess the knowledge and skills 
necessary to test students in accordance with the test publisher's 
procedures and instructions. The test publisher would agree to score 
the test and maintain and make available for the Secretary's review the 
records of tests given by the test administrators it certifies. In 
addition, the test publisher would agree to provide the Secretary with 
an analysis of the test scores of tests given by test administrators 
for the purpose of determining whether the test scores produced any 
irregular pattern indicating that the test may not have been properly 
administered.
    If the test publisher finds, through an analysis of the test scores 
or by other means, that a test administrator did not properly give the 
test to students or failed to secure the test, the test publisher would 
be required to decertify the test administrator. Similarly, the 
Secretary would terminate the agreement with the test publisher if the 
test publisher failed to carry out the terms of the agreement.
    Section 668.150  Agreement between a test publisher and a test 
administrator. Except in the case of test administrators at a testing 
assessment center, the Secretary is proposing that a test publisher 
must enter into an agreement with each test administrator it certifies 
to give its test. Initial and continuing approval by the Secretary of a 
publisher's test is subject to this requirement. The agreement would 
require the test administrator to be independent from the institution 
that a student taking the test is attending or is planning to attend. 
In addition, the agreement would require the test administrator to give 
the test in accordance with the test publisher's instructions, to 
secure the test properly against disclosure or release, and to submit 
the original test answer sheet promptly to the test publisher for 
grading. The test publisher would have to terminate the agreement with 
a test administrator if the test publisher finds that the test 
administrator violated the provisions of the agreement.
    Section 668.151  Agreement between the institution and a certified 
test administrator. The Secretary proposes that if an institution 
wishes to award Title IV, HEA program funds to a student without a high 
school diploma or its recognized equivalent, the institution must enter 
into a written agreement with a test administrator who has been 
certified by a test publisher. The Secretary does not consider that a 
test administrator has an ownership interest in an institution if that 
ownership interest is derived from ownership of a mutual fund whose 
portfolio included the stock of the institution or the corporation that 
owns the institution. In the agreement, the institution would agree not 
to interfere with or compromise the independence of the test 
administrator.
    The Secretary is requesting public comment on the use of the three 
separate agreements described in Secs. 668.149, 668.150 and 668.151. In 
commenting on this matter, the Secretary is interested in alternative 
procedures that would accomplish the same purpose, independence of test 
administration, but would require only one or two agreements.
    Section 668.152  Administration of tests. This section summarizes 
the rules regarding the administration of tests under this subpart. In 
addition, the Secretary proposes that if a student fails a test, the 
student may not retake the same form of that test for the period 
specified by the test publisher in the publisher's application that was 
approved by the Secretary.
    Section 668.154  Institutional accountability. Under the 
Secretary's proposed scheme, institutions will not be part of the 
process of determining whether students pass approved tests. Therefore, 
if an institution receives a notice from an approved test publisher 
that one of its students received a passing score on an approved test, 
the institution will not be liable to repay any student financial 
assistance funds the student receives if the student, in actuality, did 
not pass that test. An institution will be liable only if it used a 
test administrator that was not independent of the institution, it 
violated its agreement with a test administrator, it compromised in any 
way the testing process, or it was unable to document that the student 
received a passing score on an approved test. These rules are intended 
to ensure that an institution will not compromise the administration of 
a test.

Approval of State ``processes.''

    Section 668.155  Approved State process. Under section 484(d) of 
the HEA, a student without a high school diploma or its recognized 
equivalent may be eligible to receive Title IV, HEA program funds 
without passing an independent examination approved by the Secretary if 
the student is determined to have the ability to benefit from education 
or training under a State ``process'' approved by the Secretary for 
that purpose. The State process provision was included in the Higher 
Education Amendments of 1992 as a result of the action taken by the 
House of Representatives. The activities the Secretary has proposed for 
the State process were based upon the description of the State process 
that was contained in the House Committee Report of the Committee on 
Education and Labor which accompanied the House version of what was to 
become the Higher Education Amendments of 1992. The Secretary proposes 
to approve a State process based upon (1) activities that are included 
in the process and (2) student outcomes. The proposed rules are 
designed to ensure that a State process is approved only if the process 
is effective in enabling students to benefit from the instruction 
offered by institutions using the process.
    In calculating the passing score on approved tests, the Secretary 
has proposed to base that passing score on one standard deviation below 
the mean for students with high school diplomas who have taken the test 
within three years before the date on which the test is submitted to 
the Secretary for approval. In this way, the Secretary has proposed 
that recipients of Title IV, HEA program funds without high school 
diplomas have a rough comparability with recipients with high school 
diplomas. To maintain that comparability under the State process 
method, the Secretary proposes to approve state processes if the 
success rates of students it admits under the State process are within 
95 percent of the success rates of high school graduates who are 
enrolled in the same educational programs at the institutions that 
participate in the State process. A ``success rate'' is a simple 
measure of the rate at which students complete their programs or are 
making progress toward that completion. For this purpose, the Secretary 
considers that students are making progress toward the completion of 
their programs if they are still enrolled in an institution at the end 
of an award year.

Executive Order 12866

    These proposed 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 proposed regulations are 
those resulting from statutory requirements and those determined by the 
Secretary to be necessary for administering this program effectively 
and efficiently. Burdens specifically associated with information 
collection requirements, if any, are identified and explained elsewhere 
in this preamble under the heading Paperwork Reduction Act of 1980.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of these proposed regulations, the Secretary has 
determined that the benefits of the proposed regulations justify the 
costs.
    The Secretary has also determined that this regulatory action does 
not unduly interfere with State, local, and tribal governments in the 
exercise of their governmental functions.
    To assist the Department in complying with the specific 
requirements of Executive Order 12866, the Secretary invites comment on 
whether there may be further opportunities to reduce any potential 
costs or increase potential benefits resulting from these proposed 
regulations without impeding the effective and efficient administration 
of the program.

Regulatory Flexibility Act Certification

    The Secretary certifies that these proposed regulations would not 
have a significant economic impact on a substantial number of small 
entities. The small entities that would be affected by these proposed 
regulations are small institutions of postsecondary education and test 
publishers. These regulations would safeguard Federal funds and reduce 
potential abuse in the Title IV, HEA programs. These changes will not 
significantly increase institutions' workloads or costs associated with 
administering the Title IV, HEA programs. In the case of test 
publishers, these businesses are compensated for any services they 
provide. Therefore, these regulations will not have a significant 
economic impact on a substantial number of small entities.

Paperwork Reduction Act of 1980

    Sections 668.143, 668.144, 668.145, 668.147, 668.148, 668.149, 
668.151, 668.152, 668.153, and 668.155 contain information collection 
requirements. As required by the Paperwork Reduction Act of 1980, the 
Department of Education will submit a copy of these sections to the 
Office of Management and Budget (OMB) for its review. (44 U.S.C. 
3504(h)).
    This NPRM contains records that would affect test publishers, 
postsecondary institutions, and students that do not have high school 
diplomas or recognized equivalents and that wish to apply for Title IV, 
HEA programs. The information used by test publishers for annual 
reporting and recordkeeping is readily available in publishers records. 
An estimate of the total annual reporting and recordkeeping burden that 
will result from the collection of the information is 98,375 hours for 
196,750 responses.
    The collection activity associated with the State process is 
incorporated in various sections through the regulations. All other 
burden associated with the maintenance of records of the student's 
ability-to-benefit is already cleared under the individual programs of 
Federal financial assistance for which these students may be applying 
under regulations governing institutions administering these programs.
    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, D.C. 20503; Attention: Daniel J. Chenok.

Invitation To Comment

    Interested persons are invited to submit comments and 
recommendations regarding these proposed regulations.
    All comments submitted in response to these proposed regulations 
will be available for public inspection, during and after the comment 
period, in Room 4318, Regional Office Building 3, 7th and D Streets, 
S.W., Washington, D.C., between the hours of 8:30 a.m. and 4 p.m., 
Monday through Friday of each week except Federal holidays.

Assessment of Educational Impact

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

List of Subjects

34 CFR Part 600

    Administrative practice and procedure, Colleges and universities, 
Education, Reporting and recordkeeping requirements.

34 CFR Part 668

    Administrative practice and procedure, Colleges and universities, 
Consumer protection, Education, Grant programs-education, Loan 
programs-education, Reporting and recordkeeping requirements, Student 
aid.

    Dated: August 9, 1994.
Richard W. Riley,
Secretary of Education.

(Catalog of Federal Domestic Assistance Number: 84.007 Federal 
Supplemental Educational Opportunity Grant Program; 84.032 Federal 
Family Educational Loan Program; 84.032 Federal PLUS Program; 84.032 
Federal Supplemental Loans for Students Program; 84.033 Federal 
Work-Study Program; 84.038 Federal Perkins Loan Program; 84.063 
Federal Pell Grant Program; 84.069 Federal State Student Incentive 
Grant Program.)

    The Secretary proposes to amend Part 668 of Title 34 of the Code of 
Federal Regulations as follows:

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

    1. The authority citation for Part 668 continues to read as 
follows:

    Authority: 20 U.S.C. 1085, 1088, 1091, 1092, 1094, and 1141, 
unless otherwise noted.

    2. Section 668.7 is amended by removing paragraph (b); 
redesignating paragraphs (c) through (k) as paragraphs (b) through (j); 
and revising paragraph (a)(3) to read as follows:


Sec. 668.7  Eligible student.

    (a) * * *
    (3)(i) Has a high school diploma or its recognized equivalent, as 
demonstrated by the institution's receipt of--
    (A) A copy of the student's high school diploma;
    (B) A copy of the student's high school transcript that indicates 
that the student completed a high school program;
    (C) A copy of the student's GED;
    (D) A copy of the student's State certificate that the State 
recognizes as the equivalent of a high school diploma;
    (E) For a student who attended high school in the United States and 
who is unable to obtain a copy of his or her high school diploma or 
transcript because the high school from which the student graduated 
closed and the records are not available through any state or local 
education agency, a written statement from the student indicating that 
the student graduated from high school, was unable to secure a copy of 
his or her high school diploma or transcript, and the reason for that 
inability;
    (F) For a student who attended high school or its equivalent in a 
foreign country and who is unable to obtain a copy of his or her high 
school diploma or transcript, a written statement by the student in 
English and in the student's native language that indicates that the 
student was unable to obtain his or her diploma or transcript, and the 
reasons for that inability; or
    (G) In the case of a student who transferred from one eligible 
institution to another, a statement on the academic or financial aid 
transcript the institution from which the student transferred from that 
indicates that it has documentation for the student described in 
paragraphs (a)(3)(i)(A)-(a)(3)(i)(F) of this section; or
    (ii) (A) Has obtained within 12 months before the date the student 
initially receives Title IV HEA program funds, a passing score 
specified by the Secretary on an approved, independently administered 
test, in accordance with the provisions contained in Subpart J of this 
part; or
    (B) Is enrolled in an eligible institution that participates in a 
State process approved by the Secretary under Subpart J of this part.
* * * * *
    3. Subpart J is added to Part 668 to read as follows:
Subpart J--Approval of Independently Administered Tests; Specification 
of Passing Score; Approval of State Process
Sec.
668.141  Scope.
668.142  Special definitions.
668.143  Application for test approval.
668.144  Test approval procedures.
668.145  Criteria for approving tests.
668.146  Passing score.
668.147  Additional criteria for the approval of performance--based 
tests, tests for non-native speakers of English, modified tests for 
persons with disabilities, and computer-based tests and test for ESL 
programs.
668.148  Special provisions for the approval of assessment 
procedures for special populations for whom no tests are reasonably 
available.
668.149  Agreement between the Secretary and a test publisher.
668.150  Agreement between a test publisher and a test 
administrator.
668.151  Agreement between the institution and a certified test 
administrator.
668.152  Administration of tests.
668.153  Administration of tests for students whose native language 
is not English or for persons with disabilities.
668.154  Institutional accountability.
668.155  Approved State process.

Subpart J--Approval of Independently Administered Tests; 
Specification of Passing Score; Approval of State Process


Sec. 668.141  Scope.

    (a) This subpart sets forth the provisions under which a student 
who has neither a high school diploma nor its recognized equivalent may 
become eligible to receive Title IV, HEA program funds, except for FSLS 
Program funds, by--
    (1) Achieving a passing score, specified by the Secretary, on an 
independently administered test approved by the Secretary under this 
subpart; or
    (2) Being enrolled in an eligible institution that participates in 
a State process approved by the Secretary under this subpart.
    (b) Under this subpart, the Secretary sets forth--
    (1) The procedures and criteria the Secretary uses to approve 
tests;
    (2) The basis on which the Secretary specifies a passing score on 
each approved test;
    (3) The procedures and conditions under which the Secretary 
determines that an approved test is independently administered; and
    (4) The procedures and conditions under which the Secretary 
determines that a State process demonstrates that students in the 
process have the ability to benefit from the education and training 
being offered to them.

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


Sec. 668.142  Special definitions.

    The following definitions apply to this subpart:
    Assessment center: A center--
    (1) Is located at an eligible institution that--
    (i) Offers two-year or four-year degrees; or
    (ii) Qualifies as an eligible public vocational institution;
    (2) Is responsible for gathering and evaluating information about 
individual students for multiple purposes, including appropriate course 
placement;
    (3) Does not have as its primary purpose the administration of 
ability-to-benefit tests;
    (4) Is independent of the admissions process at the institution at 
which it is located; and
    (5) Is staffed by professionally trained personnel.
    Computer-based test: A test administered and scored by a computer.
    Disabled student: A student who--
    (1) Has a physical or mental impairment which substantially limits 
one or more major life activities;
    (2) Has a record of such an impairment; or
    (3) Is regarded as having such an impairment.
    General learned abilities: Cognitive operations, such as deductive 
reasoning, reading comprehension, or translation from graphic to 
numerical representation, that may be learned in both school and non-
school environments.
    Non-native speaker of English: A person whose first language is not 
English and who is not fluent in English.
    Secondary school level: As applied to ``content,'' ``curricula,'' 
or ``basic verbal and quantitative skills,'' refers to basic knowledge 
or skills generally learned in the 9th through 12th grades in United 
States secondary schools.
    Test administrator: An individual who may give tests under this 
subpart.
    Test item: A question on a test.
    Test publisher: An individual, organization, or agency that owns a 
registered copyright of a test, or is licensed by the copyright holder 
to sell or distribute a test.

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


Sec. 668.143  Application for test approval.

    (a) The Secretary only reviews tests under this subpart that are 
submitted by the publisher of that test.
    (b) A test publisher that wishes to have its test approved by the 
Secretary under this subpart must submit an application to the 
Secretary, at such time and in such manner, as the Secretary may 
prescribe. The application shall contain all the information necessary 
for the Secretary to approve the test under this subpart, including but 
not limited to, the information contained in this section.
    (c) A test publisher shall include with its application--
    (1) A summary of the precise editions, forms, levels, and (if 
applicable) sub-tests and abbreviated tests for which approval is being 
sought;
    (2) The name, address, and telephone number of a contact person to 
whom the Secretary may address inquiries;
    (3) Each edition and form of the test for which the publisher 
requests approval;
    (4) The proposed passing score for each test;
    (5) Documentation of the development of the test, including a 
history of the test's use;
    (6) Norming data and other evidence used in determining the passing 
score;
    (7) Material that defines the content domains addressed by the 
test;
    (8) For tests first published five years or more before the date 
submitted to the Secretary for review and approval, documentation of 
periodic reviews of the content and specifications of the test to 
ensure that the test continues to reflect secondary school level 
curricula;
    (9) If a test has been revised from its most recent edition, an 
analysis of the revisions, including the reasons for the revisions, the 
implications of the revisions for the comparability of scores on the 
current test to scores on the previous test, and data from validity 
studies of the test undertaken subsequent to the revisions;
    (10) A description of the manner in which test-taking time was 
determined in relation to the content representativeness requirements 
in Sec. 668.145(b)(2), and an analysis of the effects of time on 
performance;
    (11) A technical manual that includes--
    (i) An explanation of the methodology and procedures for measuring 
the reliability of the test;
    (ii) Evidence that different forms of the test, including, if 
applicable, short forms, are comparable in reliability;
    (iii) Other evidence demonstrating that the test permits consistent 
assessment of individual skill, ability, or knowledge;
    (iv) Evidence that the test was validated using--
    (A) Groups that were of sufficient size to produce defensible 
standard errors of the mean and that were not disproportionately 
composed of any race or gender; and
    (B) A contemporary population representative of persons who are 
beyond the usual age of compulsory school attendance in the United 
States;
    (v) Documentation of the level of difficulty of the test;
    (vi) Unambiguous scales and scale values so that standard errors of 
measurement can be used to determine statistically significant 
differences in performance; and
    (vii) Additional guidance on the interpretation of scores resulting 
from any modifications of the tests for persons with documented 
disabilities;
    (12) The manual provided to test administrators containing 
procedures and instructions for the security and administration of the 
test and the forwarding of the test scoring data;
    (13) An analysis of the item-content of each edition, form, level, 
and (if applicable) sub-test to demonstrate compliance with the 
required secondary school level criterion specified in Sec. 668.145(b);
    (14) Recommended passing scores for each edition, form, level, and 
(if applicable) sub-test or partial battery for which approval is being 
sought, in accordance with Sec. 668.146;
    (15) For performance-based tests or tests containing performance-
based sections, a description of the training or certification required 
of test administrators and scorers by the test publisher;
    (16) A description of retesting procedures; and
    (17) Other evidence establishing the test's compliance with the 
criteria for approval of tests as provided in Sec. 668.145.

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


Sec. 668.144  Test approval procedures.

    (a)(1) When the Secretary receives a complete application from a 
test publisher, the Secretary selects experts in the field of 
educational testing and assessment to determine whether the test meets 
the requirements for test approval contained in Secs. 668.145, 668.146, 
668.147, or 668.148, as appropriate, and to advise the Secretary of 
their determinations.
    (2) If the test involves a language other than English, the 
Secretary selects at least one individual described in paragraph (a)(1) 
of this section who is fluent in the language in which the test is 
written to advise the Secretary on whether the test meets the 
additional criteria, provisions, and conditions for test approval 
contained in Secs. 668.147 and 668.148.
    (b) The Secretary determines whether the test publisher's test 
meets the criteria and requirements for approval after taking the 
advice of the experts into account.
    (c)(1) If the Secretary determines that a test does not satisfy the 
criteria and requirements for test approval, the Secretary notifies the 
test publisher of the Secretary's decision, and the reasons why the 
test did not meet those criteria and requirements.
    (2) The test publisher may request that the Secretary reevaluate 
the Secretary's decision. Such a request must be accompanied by--
    (i) Documentation and information that addresses the reasons for 
the non-approval of the test; and
    (ii) An analysis of why the information and documentation submitted 
meets the criteria and requirements for test approval notwithstanding 
the Secretary's decision to the contrary.
    (d) The Secretary approves a test for a period not to exceed five 
years from the date of the Secretary's written notice to the test 
publisher. At least six months before the date on which the test 
approval is scheduled to lapse, the test publisher may re-submit the 
test for review and approval according to the procedures set forth in 
Sec. 668.143.
    (e) The approval of a test may be withdrawn if the Secretary 
determines that the publisher violated any terms of the agreement 
described in Sec. 668.149, or that the information the publisher 
submitted as a basis for approval of the test was inaccurate.
    (f) If the Secretary revokes approval of a previously approved 
test, the revocation is effective 120 days from the date the notice of 
revocation is published in the Federal Register.
    (g) For test batteries that contain multiple subtests measuring 
content domains other than verbal and quantitative domains, the 
Secretary reviews only those subtests covering verbal and quantitative 
domains.

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


Sec. 668.145  Criteria for approving tests.

    (a) Except as provided in Sec. 668.148, the Secretary approves a 
test under this subpart if the test meets the criteria set forth in 
paragraph (b) of this section and the test publisher satisfies the 
requirements set forth in paragraph (c) of this section.
    (b) To be approved under this subpart, a test shall--
    (1) Assess secondary school level basic verbal and quantitative 
skills and knowledge, and general learned abilities;
    (2) Sample the major content domains of secondary school level 
verbal and quantitative skills with sufficient numbers of questions 
to--
    (i) Adequately represent each domain; and
    (ii) Permit meaningful analyses of item-level performance by 
students who are representative of the contemporary population beyond 
the age of compulsory school attendance and have earned a high school 
diploma;
    (3) Require appropriate test-taking time to permit adequate 
sampling of the major content domains described in paragraph (a)(2) of 
this section;
    (4) Have all forms (including short forms) comparable in 
reliability;
    (5) If the test is revised, have new scales, scale values, and 
scores that are demonstrably comparable to the old scales, scale values 
and scores; and
    (6) Meet all primary, secondary, and applicable conditional 
standards for test construction provided in the 1985 edition of the 
Standards for Educational and Psychological Testing prepared by a joint 
committee of the American Educational Research Association, the 
American Psychological Association, and the National Council on 
Measurement in Education. (A copy of these standards may be obtained 
from the American Psychological Association, Inc., 1200 17th Street, 
N.W., Washington, D.C. 20036.)
    (c) In order for a test to be approved under this subpart, a test 
publisher shall--
    (1) Include in the test booklet or package--
    (i) Clear, specific, and complete instructions for test 
administration, including information for test takers on the purpose, 
timing, and scoring of the test; and
    (ii) Sample questions representative of the content and average 
difficulty of the test;
    (2) Have two or more secure, equated, alternate forms of the test;
    (3) Except as provided in Sec. 668.146, establish a passing score 
that is the mean score for high school graduates who have taken the 
test within three years before the date on which the test is submitted 
to the Secretary for approval;
    (4) Validate the test with--
    (i) Groups that were of sufficient size to produce defensible 
standard errors of the mean and were not disproportionately composed of 
any race or gender; and
    (ii) A contemporary population representative of persons who are 
beyond the usual age of compulsory school attendance in the United 
States; and
    (5) If test batteries include sub-tests assessing different verbal 
and/or quantitative skills, have only one composite passing score for 
verbal skills, and only one composite passing score for quantitative 
skills.

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


Sec. 668.146  Passing score.

    Except as provided in Secs. 668.147 and 668.148, to demonstrate 
that a test taker has the ability to benefit from the training offered, 
the Secretary specifies that the passing score on each approved test is 
one standard deviation below the mean for students with high school 
diplomas who have taken the test within three years before the date on 
which the test is submitted to the Secretary for approval.

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


Sec. 668.147  Additional criteria for the approval of performance-based 
tests, tests for non-native speakers of English, modified tests for 
persons with disabilities, and computer-based tests and tests for ESL 
programs.

    (a) In addition to satisfying the criteria in Sec. 668.145, to be 
approved by the Secretary, a test or a test publisher must meet the 
following criteria, if applicable:
    (1) In the case of a test that is performance-based, or includes 
performance-based sections, for measuring writing, speaking, listening, 
or quantitative problem-solving skills, the test publisher must 
provide--
    (i) A minimum of four parallel forms of the test; and
    (ii) A description of the training provided to test administrators, 
and the criteria under which trained individuals are certified to 
administer and score the test.
    (2) In the case of a test developed for a non-native speaker of 
English who is enrolled in a program that is taught in his or her 
native language, the test must be--
    (i) Linguistically accurate and culturally sensitive to the 
population for which the test is designed, regardless of the language 
in which the test is written;
    (ii) Supported by documentation detailing the development of 
normative data;
    (iii) If translated from an English version, supported by 
documentation of procedures to determine its reliability and validity 
with reference to the population for which the translated test was 
designed;
    (iv) Developed in accordance with guidelines provided in the 
``Testing Linguistic Minorities'' section of the Standards for 
Educational and Psychological Testing; and
    (v)(A) If the test is in Spanish, accompanied by a recommendation 
for a passing score based on one standard deviation below the mean for 
Spanish-speaking students with high school diplomas who have taken the 
test within three years before the date on which the test is submitted 
to the Secretary for approval; and
    (B) If the test is in a language other than Spanish, accompanied by 
a recommendation for a provisional passing score based upon performance 
of a sample of test takers representative of the intended population 
and large enough to produce stable norms.
    (3) In the case of a test that is modified for use for persons with 
disabilities, the test publisher must--
    (i) Follow guidelines provided in the ``Testing People Who Have 
Handicapping Conditions'' section of the Standards for Educational and 
Psychological Testing;
    (ii) Provide documentation of the appropriateness and feasibility 
of the modifications relevant to test performance; and
    (iii) Recommend passing score(s) based on the performance of test-
takers.
    (4) In the case of a computer-based test, the test publisher must--
    (i) Provide documentation to the Secretary that the test complies 
with the basic principles of test construction and standards of 
reliability and validity as promulgated in the Standards for 
Educational and Psychological Testing, as well as specific guidelines 
set forth in the American Psychological Association's Guidelines for 
Computer-based Tests and Interpretations (1986) (Copies of these 
standards and guidelines may be obtained from the American 
Psychological Association, Inc., 1200 17th Street, N.W., Washington, 
D.C. 20036);
    (ii) Provide test administrators with instructions for 
familiarizing test-takers with computer hardware prior to test-taking; 
and
    (iii) Provide two or more parallel, equated forms of the test, or, 
if parallel forms are generated from an item pool, provide 
documentation of the methods of item selection for alternate forms.
    (b) If a test is designed solely to measure the English language 
competence of non-native speakers of English--
    (1) The test must meet the criteria set forth in 
Sec. 668.145(b)(6), and Sec. 668.145(c)(1), (c)(2), and (c)(4); and
    (2) The test publisher must recommend a passing score based on the 
mean score of those test takers beyond the age of compulsory school 
attendance who entered U.S. high school equivalency programs over the 
previous five years.
(Authority: 20 U.S.C. 1091(d))


Sec. 668.148    Special provisions for the approval of assessment 
procedures for special populations for whom no tests are reasonably 
available.

    If no test is reasonably available for persons with disabilities or 
students whose native language is not English and who are not fluent in 
English, so that no test can be approved under Secs. 668.145, 668.146, 
and 668.147 for these students, the following procedures apply:
    (a) Persons with disabilities. (1) The Secretary considers a 
modified test or testing procedure, or instrument that has been 
scientifically developed specifically for the purpose of evaluating the 
ability to benefit from postsecondary training or education of disabled 
student to be an approved test for purposes of this subpart provided 
that the testing procedure or instrument measures both basic verbal and 
quantitative skills at the secondary school level.
    (2) The Secretary considers the passing scores for these testing 
procedures or instruments to be those recommended by the test developer 
provided that the test administrator, using such procedures or 
instruments, maintains appropriate documentation, including a 
description of the procedures or instruments, their content domains and 
technical properties, scoring procedures, and recommended passing 
scores.
    (b) Students whose native language is not English. The Secretary 
considers a test in a student's native language for a student whose 
native language is not English to be an approved test under this 
subpart if--
    (1) The Secretary has not approved any test in that native 
language;
    (2) The test was not previously rejected for approval by the 
Secretary;
    (3) The test measures both basic verbal and quantitative skills at 
the secondary school level; and
    (4) The passing scores and the methods for determining the passing 
scores are fully documented.

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


Sec. 668.149  Agreement between the Secretary and a test publisher.

    (a) If the Secretary approves a test under this subpart, the test 
publisher must enter into an agreement with the Secretary containing 
the provisions in paragraph (b) of this section before an institution 
may use the test to determine the eligibility of a student for Title 
IV, HEA program funds.
    (b) The agreement between a test publisher and the Secretary shall 
provide that the test publisher shall--
    (1) Allow only test administrators that it certifies to give its 
test;
    (2) Certify test administrators who have--
    (i) The necessary training, knowledge, and skill to test students 
in accordance with the test publisher's testing requirements; and
    (ii) The ability and facilities to keep its test secure against 
disclosure or release;
    (3) Enter into an agreement with each test administrator that it 
certifies;
    (4) Decertify a test administrator if it finds that the test 
administrator--
    (i) Has repeatedly failed to give its test in accordance with the 
publisher's instructions;
    (ii) Has not kept the test secure; or
    (iii) Has otherwise violated the provisions of the agreement 
entered into under Sec. 668.150;
    (5) Score the test answer sheet that it receives from a test 
administrator;
    (6) If a computer-based test, provide the test administrator with 
software that will:
    (i) Immediately generate a score report for each test taker;
    (ii) Allow the test administrator to send to the test publisher a 
secure write-protected diskette copy of the test taker's performance on 
each test item and the test taker's test scores; and
    (iii) Prohibit any changes in test taker responses or test scores;
    (7) Promptly send to the student and the institution the student 
indicated he or she is attending or scheduled to attend a notice 
stating the student's score for the test and whether or not the student 
passed the test;
    (8) Keep, for a period of at least five years, each test answer 
sheet or electronic record forwarded for scoring and all other 
documents forwarded by the test administrator with regard to the test;
    (9) Every two years after the date the Secretary approves the test, 
analyze the test scores of students to determine whether the test 
scores produce any irregular pattern that raises an inference that the 
tests were not being properly administered, and provide the Secretary 
with a copy of this analysis; and
    (10) Upon request, give the Secretary, guaranty agency, accrediting 
agency, and State Postsecondary Review Entity (SPRE) access to test 
records or other documents related to an audit, investigation, or 
program review of the institution, test publisher, or test 
administrator.
    (c)(1) The Secretary may terminate an agreement with a test 
publisher if the test publisher fails to carry out the terms of the 
agreement described in paragraph (b) of this section.
    (2) Before terminating the agreement, the Secretary will give the 
test publisher the opportunity to show that it has not failed to carry 
out the terms of its agreement.
    (3) If the Secretary terminates an agreement with a test publisher 
under this section, the Secretary notifies institutions through 
publication in the Federal Register when they may no longer use the 
publisher's test for purposes of determining a student's eligibility 
for Title IV, HEA program funds.

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


Sec. 668.150 Agreement between a test publisher and a test 
administrator.

    (a) Except in the case of a test administrator at a testing 
assessment center, a test publisher whose test was approved by the 
Secretary under this subpart must enter into an agreement with each 
test administrator that it certifies to give its test to determine a 
student's eligibility for Title IV, HEA program assistance.
    (b) The agreement between a test publisher and a test administrator 
shall provide that the test administrator will--
    (1) Give a test to a student only if the test administrator is 
independent of the institution the student is attending or scheduled to 
attend;
    (2) Give the test in accordance with the test publisher's 
instructions;
    (3) Make the test available only to a test taker, and then only 
during a regularly scheduled test, and will collect the test from the 
test taker after the test is given;
    (4) Secure the test against disclosure or release; and
    (5) Submit to the test publisher within two business days after 
test administration, a copy of the test takers' performance and test 
scores by either mailing a write-protected diskette copy of the scores 
or electronically transmitting the scores through a memo.
    (c) The test publisher shall terminate its agreement with a test 
administrator immediately if the test publisher finds that the test 
administrator--
    (1) Has violated any of the provisions in paragraphs (b)(1) through 
(b)(4) of this section; or
    (2) Has consistently violated the provisions of paragraphs (b)(5) 
of this section.

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


Sec. 668.151  Agreement between the institution and a certified test 
administrator.

    (a) To establish a student's eligibility for Title IV, HEA program 
assistance under this subpart, an institution must use an approved test 
and must enter into a written agreement with a test administrator who 
has been certified by the test publisher of that test to give that test 
and is independent of the institution.
    (b) Under the agreement--
    (1) The institution shall agree not to--
    (i) Compromise test security or testing procedures;
    (ii) Pay test administrators bonuses or commissions or any other 
incentives based upon test scores or pass rates; and
    (iii) Interfere with the test administrator's independence or test 
administration; and
    (2) The test administrator shall agree to--
    (i) Administer the test in accordance with instructions provided by 
the test publisher;
    (ii) Administer the tests in a manner that ensures his or her 
independence and the integrity and security of the test; and
    (iii) Upon request, give the Secretary, guaranty agency, licensing 
agency, SPRE, accrediting agency, and law enforcement agencies access 
to test records or other documents related to an audit, investigation, 
or program review of the institution, or test publisher.
    (c) Except as provided in paragraph (d) of this section, the 
Secretary considers a test administrator to be independent of an 
institution if the test administrator--
    (1) Has no current or prior financial interest in the institution, 
its affiliates, or its parent corporation, other than the interest 
obtained through its agreement to administer the test and has no 
controlling interest in any other educational institution;
    (2) Has no current or prior ownership interest in the institution, 
its affiliates, or its parent corporation;
    (3) Is not a current or former employee of or consultant to the 
institution, its affiliates, or its parent corporation or is not a 
person in control of another institution, or a member of the family of 
any of these individuals;
    (4) Is not a current or former member of the board of directors, a 
current or former employee of or a consultant to a member of the board 
of directors, chief executive officer, chief financial officer of the 
institution or its parent corporation or at any other institution, or a 
member of the family of any of the above individuals; and
    (5) Is not a current or former student of the institution.
    (d)(1) The Secretary considers that a test administrator at an 
assessment center is independent of an institution.
    (2) For purposes of this section, an approved test administered at 
a testing or assessment center at a degree-granting public institution 
or a public vocational institution is considered to be independently 
administered.
    (e) The institution shall terminate its relationship with a test 
administrator immediately if the institution learns that the test 
administrator violated any provisions of this subpart.

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


Sec. 668.152  Administration of tests.

    (a) In order for test results of an approved test to be considered 
in determining a student's eligibility under the Title IV, HEA 
programs, the test must have been properly administered.
    (b) The Secretary considers an approved test to be properly 
administered with regard to a student if it is
    --(1) Given by a certified test administrator who--
    (i) Has an agreement with the test publisher and the institution 
the student is attending or planning to attend who satisfies the 
requirements of this subpart; and
    (ii) Is independent of the institution that student is attending or 
planning to attend;
    (2) Administered in accordance with the test publisher's 
requirements and the requirements of this subpart; and
    (3) Scored by the test publisher except that a test administrator 
at an assessment center may score a test.
    (c) Students must receive passing scores on both verbal and 
quantitative tests or sub-tests as approved by the Secretary.
    (d) A student who fails to pass an independently administered test 
approved by the Secretary may not retake that same form of the test for 
the period prescribed by the test publisher of that test.
    (e) The institution will maintain a record for each affected 
student, indicating the test taken by the student, the date of the 
test, and the student's scores as reported by the test publisher.

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


Sec. 668.153  Administration of tests for students whose native 
language is not English or for persons with disabilities.

    (a) Students whose native language is not English. For a student 
whose native language is not English and who is not fluent in English, 
the institution shall use the following tests, as applicable:
    (1) If the student is enrolled program conducted entirely in his or 
her native language, the student must take a test approved under 
Secs. 668.145 and 668.147(a)(2), or 668.148(b).
    (2) If the student is enrolled in a program that is taught in 
English with an ESL component, and the student is enrolled in that 
program and the ESL component, the student must take either an ESL test 
approved under Sec. 668.147(b), or a test in the student's native 
language approved under Sec. 668.145, 668.147 or 668.148.
    (3) If the student is enrolled in a program that is taught in 
English without an ESL component, or the student does not enroll in the 
ESL component if the institution offers such a component, the student 
must take a test in English approved under Sec. 668.145.
    (4) If the student enrolls in an ESL program, the student must take 
an ESL test approved under Sec. 668.147(b).
    (b) Persons with disabilities. (1) An institution shall use a test 
described in Secs. 668.147(a)(3) or 668.148(a) for a student with a 
documented impairment who has neither a high school diploma nor its 
equivalent and who is applying for Title IV, HEA program funds.
    (2) The test must reflect the student's skills, knowledge, and 
general learned abilities rather than reflect the student's impairment.
    (3) The institution shall document that a student is disabled and 
unable to be evaluated by the use of a conventional test from the list 
of tests approved by the Secretary.
    (4) Documentation of a student's impairment may be satisfied by--
    (i) A written determination including a diagnosis and recommended 
testing accommodations by a licensed psychologist or medical physician; 
or
    (ii) A record of such a determination by an elementary or secondary 
school or a vocational rehabilitation agency including a diagnosis and 
recommended testing accommodations.

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


Sec. 668.154  Institutional accountability.

    An institution shall be liable for the Title IV, HEA program funds 
disbursed to a student whose eligibility is determined under this 
subpart if the institution--
    (a) Used a test administrator who is not independent of the 
institution;
    (b) Violates its agreement with a test administrator;
    (c) In any way compromises the testing process; or
    (d) Is unable to document that the student received a passing score 
on an approved test as specified under Sec. 668.149(b)(7).

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


Sec. 668.155  Approved State process.

    (a)(1) A State that wishes the Secretary to consider its State 
process as an alternative to achieving a passing score on an approved, 
independently administered test for the purpose of determining a 
student's eligibility for Title IV, HEA program funds must apply to the 
Secretary for approval of that process.
    (2) To be an approved State process, the State process does not 
have to include all the institutions located in that State.
    (b) The Secretary approves a State's process if--
    (1) The State administering the process can demonstrate that the 
students it admits under that process without a high school diploma or 
its equivalent, who enroll in participating institutions have a success 
rate as determined under paragraph (h) of this section, that is within 
95 percent of the success rate of students with high school diplomas; 
and
    (2) The State's process satisfies the requirements contained in 
paragraphs (c) and (d) of this section.
    (c) A State process must require institutions participating in the 
process to provide each student they admit without a high school 
diploma or its recognized equivalent with the following services--
    (1) Orientation regarding the institution's academic standards and 
requirements, and student rights;
    (2) Assessment of each student's existing capabilities through 
means other than a single standardized test;
    (3) Tutoring in basic verbal and quantitative skills, if 
appropriate;
    (4) Assistance in developing educational goals;
    (5) Counseling, including counseling regarding the appropriate 
class level for that student given the student's individual's 
capabilities; and
    (6) Follow-up by teachers and counselors regarding the student's 
classroom performance and satisfactory progress toward program 
completion.
    (d) A State process must--
    (1) Monitor on an annual basis each participating institution's 
compliance with the requirements and standards contained in the State's 
process;
    (2) Require corrective action if an institution is found to be in 
noncompliance with the State process requirements; and
    (3) Terminate an institution from the State process if the 
institution refuses or fails to comply with the State process 
requirements.
    (e)(1) The Secretary responds to a State's request for approval of 
its State's process within six months after the Secretary's receipt of 
that request. If the Secretary does not respond by the end of six 
months, the State's process becomes effective.
    (2) An approved State process shall become an effective alternative 
to determine a student's eligibility for Title IV, HEA program funds 
under this subpart six months after the date on which the State submits 
the process to the Secretary for approval, if the Secretary approves 
the process.
    (f) The Secretary approves a State process for a period not to 
exceed five years.
    (g)(1) The Secretary withdraws approval of a State process if the 
Secretary determines that the State process violated any terms of this 
section or that the information that the State submitted as a basis for 
approval of the State process was inaccurate.
    (2) The Secretary provides a State with the opportunity to contest 
a finding that the State process violated any terms of this section or 
that the information that the State submitted as a basis for approval 
of the State process was inaccurate.
    (h) The State shall calculate the success rates as referenced in 
paragraph (b) of this section by--
    (1) Determining the number of students with high school diplomas 
who, during the applicable award year described in paragraph (i) of 
this section, enrolled in participating institutions and--
    (i) Successfully completed education or training programs; or
    (ii) Remained enrolled in education or training programs at the end 
of that award year;
    (2) Determining the number of students with high school diplomas 
who enrolled in education or training programs in participating 
institutions during that award year;
    (3) Determining the number of students calculated in paragraph 
(h)(2) of this section who remained enrolled after subtracting the 
number of students who subsequently withdrew or were expelled from 
participating institutions and received a 100 percent refund of their 
tuition under the institutions' refund policies;
    (4) Dividing the number of students determined in paragraph (h)(1) 
of this section by the number of students determined in paragraph 
(h)(3) of this section;
    (5) Making the calculations described in paragraphs (h)(1) through 
(h)(4) of this section for students without a high school diploma or 
its recognized equivalent who enrolled in participating institutions.
    (i) For purposes of paragraph (h) of this section, the applicable 
award year is the latest complete award year for which information is 
available that immediately precedes the date on which the State 
requests the Secretary to approve its State process, except that the 
award year selected must be one of the latest two completed award years 
preceding that application date.

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

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

Appendix A to Preamble

Ability-to-Benefit (ATB)--Summary of Discussions at Regional 
Meetings

    1. (a) How should the Secretary specify a passing score?
    At three of the regional meetings, it was recommended that tests 
be normed by different populations for students in different 
educational programs. At two of the regional meetings, it was 
recommended that test scores be those recommended by test 
publishers. At one of the regional meetings, it was recommended that 
test scores should be based on persistence data.
    (b) How should ATB test validity for schools with testing 
centers located on campus be addressed?
    This issue was not addressed at any of the regional meetings.
    (c) What criteria should be adopted to determine whether an ATB 
test is independently administered?
    This provision was only addressed at one of the regional 
meetings where the consensus was that the current provisions as 
outlined in the December 12, 1989 Federal Register notice are 
sufficient.
    2. (a) How should the Secretary determine whether a test is 
independently administered?
    The consensus at all four of the regional meetings was that the 
Secretary should (1) continue to require the test examiner to 
certify that the test was independently administered, and (2) 
continue to permit testing centers at a school to administer tests 
provided that the testing center is separate from the admissions and 
financial aid process.
    (b) What standards should be established for the development, 
administration, and scoring of examinations?
    This issue was only addressed at two of the regional meetings. 
The consensus at one of the regional meetings was that a test should 
determine both a student's quantitative and verbal skill levels. The 
consensus at the other regional meeting was that tests should be 
reviewed for test biases, such as ethnicity, native language, and 
disability.
    3. How often must a state submit ATB plans?
    At three of the regional meetings, the consensus was that a 
state should only have to submit a plan once and then be required to 
resubmit it if the process changed. The consensus at the other 
regional meeting was that a state should have to submit its plan 
every 5 years at a minimum.
    4. What factors should the Secretary use to evaluate the 
effectiveness of a state plan?
    The consensus in all of the regional meetings was that the 
Secretary should consider such factors as retention, graduation and 
placement rates, and other relevant measures in evaluating the 
effectiveness of a state plan.

[FR Doc. 94-20138 Filed 8-15-94; 8:45 am]
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