[Federal Register Volume 60, Number 231 (Friday, December 1, 1995)]
[Rules and Regulations]
[Pages 61830-61844]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29125]




[[Page 61829]]

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Part IX





Department of Education





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34 CFR Part 668



Student Assistance General Provisions; Final Rule

  Federal Register / Vol. 60, No. 231 / Friday, December 1, 1995 / 
Rules and Regulations   

[[Page 61830]]


DEPARTMENT OF EDUCATION

34 CFR Part 668

RIN 1840-AB84


Student Assistance General Provisions

AGENCY: Department of Education.

ACTION: Final regulations.

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

SUMMARY: The Secretary amends the Student Assistance General Provisions 
regulations by adding a new Subpart J. These 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 provide for a passing score for each approved test. 
The regulations implement changes made to section 484(d) of the Higher 
Education Act of 1965 (HEA), as amended by the Higher Education 
Amendments of 1992, Public Law 102-325.

EFFECTIVE DATE: These regulations take effect on July 1, 1996 and apply 
to the 1996-97 and subsequent award years. However, affected parties do 
not have to comply with the information collection requirements in 
Secs. 668.143, 668.144, 668.145, 668.146, 668.147, 668.148, 668.149, 
668.150, 668.151, 668.152, 668.153, and 668.155 until the Department of 
Education publishes in the Federal Register the control numbers 
assigned by the Office of Management and Budget (OMB) to these 
information collection requirements. Publication of the control numbers 
notifies the public that OMB has approved these information collection 
requirements under the Paperwork Reduction Act of 1995. The 
incorporation by reference of the publication listed in the regulations 
is approved by the Director of the Federal Register as of July 1, 1996.

FOR FURTHER INFORMATION CONTACT: Lorraine Kennedy, U.S. Department of 
Education, 600 Independence Avenue, S.W., Regional Office Building 3, 
Room 3045, Washington, DC 20202-5451. 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 regulations implement section 484(d) 
of the HEA which provides that a student who does not have a high 
school diploma or its recognized equivalent is eligible to receive 
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 or plans on attending is located and that has been 
approved by the Secretary.
    The Secretary estimates that each year there are approximately 
150,000 individuals without a high school diploma or its recognized 
equivalent who take ability to benefit tests under section 484(d) of 
the HEA in order to become eligible to receive Title IV, HEA Program 
funds. There are also approximately another 150,000 individuals without 
a high school diploma or its recognized equivalent who enroll in 
postsecondary educational institutions who do not apply for Title IV, 
HEA Program funds or who enroll in educational programs that do not 
qualify as eligible programs under the Title IV, HEA programs. (In 
addition, there are many other people who take basic skills tests for 
reasons other than seeking Title IV, HEA program assistance.) However, 
these regulations apply only to the first group.
    The Secretary published a notice of proposed rulemaking in the 
Federal Register on August 16, 1994, 52 FR 42134-42144. The NPRM 
included a discussion of the major issues involving the proposed 
regulations that will not be repeated here. The following list 
summarizes those issues and identifies the pages in the preamble to the 
NPRM on which a discussion of those issues can be found.
    The Secretary proposed that students had to provide documentation 
to institutions that they had high school diplomas or the recognized 
equivalent (52 FR 42134-5);
    The Secretary proposed that approved tests assess secondary school 
level basic verbal and quantitative skills and general learned 
abilities (52 FR 42136);
    The Secretary proposed that students without a high school diploma 
or a GED should be eligible for Title IV, HEA program funds because 
they demonstrate on that test secondary school level basic verbal and 
quantitative skills and general learned abilities comparable to the 
range of scores of students who have a high school diploma or GED (52 
FR 42136);
    The Secretary proposed that the passing score on a test 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 was submitted for approval (52 FR 42136);
    The Secretary proposed a scheme for test administration that 
provided for tests being administered independent of the institutions 
that use the test (52 FR 42136-42137); and
    The Secretary proposed to approve a State ``process'' based upon 
the ``success rate'' of students enrolled in that State process as 
compared to the success rate of high school graduates. (page 42137).

Substantive Changes to the NPRM

    The following discussion reflects substantive changes made to the 
NPRM in the final regulations. The provisions are discussed in the 
order in which they appeared in the proposed rule.

Section 668.7  Eligible Student

    In response to public comments, the Secretary has withdrawn the 
proposed requirement that institutions document that their students 
have high school diplomas or GEDs. Moreover, the Secretary is 
recodifying the provisions of Sec. 668.7 in Subpart C of part 668 in 
another regulations package.

Section 668.143  Approval of State Tests or Assessments (No Comparable 
Provision in NPRM)

    In response to public comments and the Secretary's proposal in the 
preamble, the Secretary has included an additional type of approved 
tests. Those approved tests are tests that have been developed by 
States to measure a student's skills and abilities for the purpose of 
determining whether the student has the skills and abilities the State 
expects of a high school graduate in that State. These tests will 
supplement rather than substitute for the other type tests discussed in 
this regulation.

Section 668.146  Criteria for Approving Tests (Section 668.145 in NPRM)

    In response to public comment, the Secretary will approve tests 
that consist of a series of subtests. If a test publisher does not 
provide for a composite passing score for a series of basic verbal 
tests and a composite passing score for a series of basic quantitative 
tests, the test publisher must present evidence that allows the 
Secretary to prescribe a cut score for each subtest. To pass that test, 
a student must score at or above the cut score for each of the 
subtests.

[[Page 61831]]


Agreement Between the Secretary and a Test Publisher, and Agreement 
Between an Institution and a Certified Test Administrator (Sections 
668.150 and 668.151 in NPRM)

    In response to public comment, the Secretary eliminated the 
requirements that a test publisher enter into an agreement with a 
certified test administrator and that the certified test administrator 
also enter into an agreement with an institution whose students are to 
be tested. The sections that contained those requirements in the NPRM, 
Secs. 668.150 and 668.151 were also eliminated.
    The important aspects of those sections that related to the 
integrity and independence of test administration were incorporated 
into Sec. 668.151 Test administration.

Section 668.152  Administration of Tests by Assessment Centers (No 
Comparable Provision in NPRM)

    In response to public comment, a new section dealing with test 
administration at assessment centers was added.

Section 668.155  Transitional Rule for the 1996-97 Award Year (No 
Comparable Provision in NPRM)

    The Secretary has added a rule to facilitate the transition from 
the old to the new system.
    These regulations go into effect on July 1, 1996 and govern the 
determination of student eligibility for Title IV, HEA programs under 
section 484(d) of the HEA starting with the 1996-97 award year. The 
Secretary strongly encourages test publishers that wish to have their 
tests approved for use in the 1996-97 award year to submit an 
application that satisfies the requirements of this subpart as soon as 
possible. Upon receipt of such an application, the Secretary will 
evaluate it to determine if it meets the requirements of this subpart.
    If the test meets the requirements of this subpart, the Secretary 
will notify the test publisher. The Secretary will also publish in the 
Federal Register the name of the test, the passing score for that test, 
and the name of the test publisher.
    To allow for a smooth transition from the current practice to the 
new regulatory practice, the Secretary will permit institutions to 
continue to use the current system for making an ability-to-benefit 
determination for a student until 60 days after the Secretary publishes 
in the Federal Register the first approved test and passing score that 
is appropriate for that student. Therefore, an institution may continue 
to use a test and test score that was an approved test and test score 
as of June 30, 1996, the day before the new regulatory provisions go 
into effect, until 60 days after the Secretary publishes in the Federal 
Register the first test and passing score for each general category of 
test approved under these regulations. For example, if the Secretary 
approves a test in Spanish on August 1, 1996, an institution may 
continue to use a test in Spanish that was approved as of June 30, 1996 
until October 1, 1996.
    If an institution properly based a student eligibility 
determination under the current system, it does not have to redetermine 
the student's eligibility under the new system.

Analysis of Comments and Changes

    In response to the Secretary's invitation in the NPRM, 142 parties 
submitted comments on the proposed regulations. An analysis of the 
comments and any changes made in the regulations in response to those 
comments follows.
    Substantive issues are discussed under the regulations to which 
they pertain. If comments apply to more than one regulatory provision, 
they will be discussed under the first mentioned provision. Technical 
and other minor changes--and suggested changes that the Secretary is 
not legally authorized to make under the applicable statutory 
authority--are not addressed.

General Comments

    Comments: In the preamble to the NPRM, 59 FR 42134-42135, the 
Secretary solicited comments with regard to an alternative method of 
implementing section 484(d) of the HEA. This alternative method would 
link the ability-to-benefit (ATB) testing system to State educational 
practices under the Goals 2000: Educate America Act. The Secretary 
invited public comment on these alternatives. Three comments were 
received in support of this alternative approach.
    Discussion: The Secretary agrees with these commenters that there 
is merit to an approach that links an ability-to-benefit testing system 
under section 484(d) of the HEA with State educational practices under 
the Goals 2000: Educate America Act and other State education reform 
initiatives. The Secretary believes, however, that such an approach 
should supplement rather than replace the testing system described in 
the NPRM.
    Therefore, in developing the criteria for approved examinations and 
the passing scores for those examinations, the Secretary took 
cognizance of the focus and purpose of the Goals 2000: Educate America 
Act in raising the educational standards of the country. Accordingly, 
to the extent that States have developed educational standards that 
reflect the skills and abilities expected of a high school graduate in 
that State, and have developed tests or other assessments to measure 
whether a student meets those standards, the Secretary will approve 
those tests and assessments for purposes of the provisions of section 
484(d) of the HEA as well as the passing scores on those tests and 
assessments.
    Because each State is responsible for determining the educational 
standards that reflect the skills and abilities expected of a high 
school graduate in that State, State standards may differ. Moreover, 
States also may choose different tests or assessments to measure 
whether students meet those standards, and may also differ on the 
passing scores on those tests and assessments. Therefore, if the 
Secretary approves a State's tests and assessments and passing scores, 
that test or assessment, and the passing score on that test or 
assessment, may be used for purposes of section 484(d) of the HEA only 
for students who attend eligible institutions located in that State. In 
this way, the Secretary will not impose one State's standards on 
another State.
    If the Secretary approves a State's tests or assessments and the 
passing scores for those tests or assessments, a student must obtain a 
passing score on each required test or assessment in order to qualify 
for Title IV, HEA program funds under section 484(d) of the HEA.
    Moreover, the educational standards that a State develops, and the 
tests or assessments that a State establishes to measure those 
standards, apply to all students in the State. Therefore, the tests 
that the Secretary approves to measure whether a student meets those 
standards for Title IV, HEA programs purposes do not include tests that 
are used solely for admission to a State public postsecondary 
institution or for admission to an institution that is part of a State 
system of public postsecondary institutions.
    Changes: Sections 668.143 to 668.149 were redesignated as 
Secs. 668.144 to 668.150, respectively, and a new section, 
Sec. 668.143, was added. That new section provides for the approval of 
State tests or other assessments submitted by a State that the State 
uses to determine whether a student has the skills and abilities the 
State expects of a high school graduate in that State. The new section 
also provides for the approval of the State's passing scores on 

[[Page 61832]]
the State tests, and further provides that an approved State test may 
be used as an ability-to-benefit test for Title IV, HEA program 
purposes only by institutions located in that State.
    Comments: In their introduction to comments on specific sections of 
the proposed rule, roughly one-third of the commenters stated that in 
their opinion the statutory phrase ``benefit from the education or 
training offered'' refers to specific educational or training programs 
and the relative cognitive demands of those programs. The commenters 
concluded that ability-to-benefit is dependent on existing cognitive 
demands of occupations, and must be measured and judged individually 
for each of the hundreds of occupation-specific training programs in 
postsecondary education, even if the current cognitive demands of an 
occupation are not ``postsecondary.''
    Discussion: The Secretary disagrees with the commenters. The 
Secretary believes that there is a basic minimum competency that a 
student must achieve to benefit from any postsecondary education 
program. That basic competency is appropriately measured in terms of 
secondary school level basic skills and general learned abilities. 
Therefore, the Secretary requires approved tests to measure those 
skills and abilities. Further, as indicated in the preamble to the 
NPRM, 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 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 and general learned abilities at least 
comparable to those other categories of students.
    Moreover, the Secretary objects to the position expressed by the 
commenters on the grounds that it is an approach that accustoms people 
to the lowest level of functioning in an occupation. It excuses 
institutions from critical aspects of instruction that will enable 
individuals to advance in their jobs or to change careers, and it 
falsely assumes that the nature of specific occupations will never 
change. The approach thus does not advance the quality of the nation's 
workforce. When the expenditure of Federal funds for education and 
training is at issue, the Secretary wishes to encourage more than a 
minimalist approach that only reinforces social and labor market 
stratification. The Secretary has encouraged generic academic 
competence in the School-to-Work transition programs, and is taking a 
consistent position here.
    Changes: None.
    Comments: Nearly half the commenters contended that the receipt of 
a high school diploma is no guarantee that a student possesses minimum 
basic skills necessary to pursue postsecondary education, and that the 
regulations make an assumption about achievement associated with a 
secondary school credential that is unfounded.
    Discussion: The Secretary agrees with the commenters that a high 
school diploma may not necessarily indicate that the holder of that 
diploma has sufficient skills to successfully pursue postsecondary 
education. However, students with a high school diploma or its 
recognized equivalent are statutorily eligible to receive Title IV, HEA 
Program funds. The Secretary interprets section 484(d) of the HEA as 
requiring students who do not have a high school diploma or its 
equivalent to be comparable to those that do in order to be eligible to 
receive Title IV, HEA program funds. Therefore, the Secretary 
established the passing score on ATB tests to reflect the scores 
received by high school graduates.
    Changes: None.

Section 668.7  Eligible Student

    Comments: Many commenters argued that the paperwork requirement to 
document receipt of a high school diploma was onerous, particularly at 
institutions to which students apply while they are still in high 
school and at open door institutions that, under state law, are 
required to admit anyone. Two other commenters pointed to the 
difficulty older students sometimes have in obtaining copies of 
records, and two commenters asked why students who had attended 
secondary school in another country were required to provide affidavits 
in both their native language and English. With few exceptions, 
commenters questioned whether there was sufficient evidence that 
students improperly claimed to have a high school diploma or its 
equivalent to warrant a rule affecting all students in postsecondary 
education.
    One commenter asserted that the requirements weaken current federal 
standards and advocated stricter provisions for documenting evidence of 
receipt of a high school diploma or its equivalent. Another commenter, 
indirectly concurring with this position, suggested that, if an 
applicant for Title IV, HEA Program funds graduated from a secondary 
school in the United States but was unable to secure a copy of his or 
her diploma or transcript, a statement from the state or local 
education agency confirming that the records were unavailable should be 
required.
    Discussion: The Secretary is persuaded by the commenters that the 
added burden of documenting a student's declaration that he or she has 
a high school diploma or its recognized equivalent outweighs the 
benefit of requiring institutions to document that claim and has, 
therefore, decided not to require documentation of a high school 
diploma at this time. However, the Secretary will continue to 
investigate any alleged abuses in this area and, after consulting with 
the postsecondary education community and others, may pursue 
alternative means of ensuring that this student eligibility requirement 
is being enforced.
    Changes: The Secretary has deleted the requirements relating to the 
documentation of a student's claim that he or she has a high school 
diploma. Moreover, the Secretary is recodifying the provisions of 
Sec. 668.7 in Subpart C of part 668 in another regulations package.
    Comments: Two commenters took opposite positions on the requirement 
that a student could use a passing score on an approved ATB test for 12 
months. One commenter recommended a shorter period on the grounds that 
the most current score is the most valid measure. The other commenter 
recommended that a passing score should be used indefinitely since a 
test score on a valid ATB test reflects a permanent level of verbal and 
quantitative skills. Another commenter asserted that the NPRM fails to 
incorporate changes made to the definition of a ``recognized equivalent 
of a high school diploma'' in Sec. 600.2 of the Institutional 
Eligibility regulations, 34 CFR 600.2.
    Discussion: The Secretary believes that a passing score should not 
be used indefinitely because psychometric research demonstrates that 
the ``current status'' of knowledge is a more reliable predictor of 
imminent performance than previous status of such knowledge. However, 
such research also indicates that a period shorter than a year does not 
measurably increase the predictive power of a test.
    The commenter is correct in the observation that proposed 
Sec. 668.7 did not take into account the change in the definition of 
``recognized equivalent of a high school diploma'' in Sec. 600.2 of the 
Institutional Eligibility regulations, 34 CFR 600.2. However, since the 
Secretary is deleting the requirements for documenting a student's 
claim to have a high school diploma or its equivalent, the Secretary is 
not amending Sec. 668.7 in this regulation package. 

[[Page 61833]]

    Changes: Changes to Sec. 668.7 have been deleted from these final 
regulations.

Section 668.142  Special Definitions

    Comments: One commenter suggested that the definition of the term 
``assessment center'' be changed so that the location of an assessment 
center be at a neutral site rather than at an educational site. Another 
commenter suggested that ``assessment centers'' be located only at 
public institutions because public governing authorities would serve as 
an additional guarantee of integrity.
    Discussion: The Secretary's definition of the term ``assessment 
center'' describes an organizational unit at an eligible institution 
that offers two-year or four-year degrees or qualifies as an eligible 
public vocational institution, i.e. a postsecondary vocational 
institution. The Secretary believes that the integrity of tests given 
at assessment centers will not be compromised by the geographical 
location of the center, or if they are given at private institutions 
that offer a two year or four year degree, given the long-term nature 
of those programs.
    Changes: None.

Section 668.144  Application for Test Approval (Section 668.143 in 
NPRM)

    Comments: Some commenters requested the Secretary's approval of 
placement examinations already used by their institutions. One 
commenter requested that the requirements for the populations 
participating in norming studies explicitly exclude students from 
schools at which the test publisher has received notice that improper 
test administrations have taken place.
    Discussion: The Secretary will approve placement examinations used 
by an institution if the institution using that test submits an 
acceptable application and the examination satisfies all the regulatory 
requirements for test approval. In such a case, the institution would 
be considered the test publisher.
    The Secretary believes that test publishers will be careful when 
selecting a norming sample to avoid invalidating the results of that 
sample. Therefore, the Secretary believes that the commenter's 
suggestion is not needed to obtain valid norming studies.
    Changes: None.
    Comments: One commenter requested that the Secretary clarify the 
requirement that an approved test be ``validated,'' and pointed out 
that a test is validated with respect to a criterion, not a population.
    Discussion: The Secretary acknowledges a confusion in the grouping 
of requirements listed under the ``application for test approval,'' and 
has changed the verb, ``validated'' to ``normed'' in describing the 
contents of the technical manual in Sec. 668.144(c)(11)(iv). In a 
narrow sense, validation is the process of determining the accuracy of 
inferences made from a test score, e.g., if a student scores above a 
given percentage, the more likely he or she is to complete a subsequent 
course. In a broader sense, validation is the process of determining 
the soundness of all interpretations made of the test. The Secretary 
notes that there are many kinds of validity, and all of them are at 
stake in the review of tests submitted under Sec. 668.144.
    Changes: Section 668.144(c)(11)(iv) is amended to change 
``validated'' to ``normed.''

Section 668.145  Test Approval Procedures (Section 668.144 in NPRM)

    Comments: One commenter suggested that when the Secretary chooses 
experts to evaluate tests, the Secretary only choose experts who have 
substantial experience in psychometrics, familiarity with the Standards 
for Educational and Psychological Testing (Standards) prepared by a 
joint committee of the American Educational Research Association, the 
American Psychological Association, and the National Council on 
Measurement in Education, and membership in one of those three 
organizations. This commenter also recommended that if a test did not 
satisfy the criteria for test approval and the test publisher appealed 
that decision, the test publisher would have to submit only those 
sections of a test subject to question and that a different group of 
experts be assembled to judge the appeal. The commenter further 
suggested that any appeal by a test publisher of the disapproval of a 
test be subject to the provisions of the Administrative Procedure Act.
    Discussion: The Secretary agrees that professional credentials and 
experience are important criteria in selecting reviewers of tests, and 
will select experts who have substantial experience in psychometrics 
and familiarity with the Standards. The Secretary assumes that anyone 
who holds a graduate degree in psychometrics or evidences substantial 
experience in test development is familiar with the Standards. The 
Secretary believes that membership in a specific organization should 
not be a prerequisite to being selected as a test evaluator.
    If a test is disapproved for specific discrete reasons applicable 
to a particular portion of a test and the test publisher appeals that 
result, the appeal would be based on the portion of the test that 
caused the disapproval. Therefore, the test publisher would presumably 
limit its appeal to that portion of its test, and if the appeal was 
successful the entire test would be approved without the need for 
reapplication.
    The Secretary believes that the review of a test and any appeal of 
that review should not be conducted, and is not required to be 
conducted, in an adversarial, formal, or legalistic setting. Therefore, 
the Secretary will not subject those processes to the provisions of the 
Administrative Procedure Act. Moreover, the Secretary believes it is 
unnecessary to select another panel of experts to advise the Secretary 
when a test publisher appeals an adverse decision regarding its test. 
The Secretary makes a decision in response to an appeal, and wishes to 
retain the discretion to seek the advice of experts the Secretary 
considers appropriate to analyze the test publisher's arguments on 
appeal.
    In most instances, the Secretary will seek the advice of the 
original panel of experts regarding those arguments. In reviewing over 
100 tests since January 1991, the Secretary has found that when the 
original panel of experts reviewed an appeal, they focused on only 
those issues that were not satisfactorily addressed in the original 
submission and provided fair and valuable advice with regard to those 
issues.
    Changes: None.

Section 668.146  Criteria for Approving Tests (Section 668.145 in NPRM)

    Comments: Many commenters from community colleges objected that 
approved tests must measure ``knowledge of high school curricula,'' 
claiming that this was inappropriate.
    Discussion: The Secretary disagrees with the commenters' 
interpretation of the questioned regulatory provision. The provision 
does not state that approved tests are based on ``knowledge of high 
school curricula.'' Rather, the provision states that the tests will 
assess basic verbal and quantitative skills and general learned 
abilities at the secondary school level. These skills and general 
learned abilities can be acquired anywhere. The tests will not be 
equivalent to final exams in specific high school subject areas, such 
as Algebra 1, Chemistry, or Civics.
    Changes: The term knowledge has been deleted as redundant. 

[[Page 61834]]

    Comments: Some test publishers asked whether a reading test would 
suffice to cover the assessment of secondary school level verbal 
skills, or whether tests of usage and, particularly, writing samples 
must also be included. Some of the publishers of tests that provide 
subtest scores, but not composite scores, objected to the use of a 
single composite score for verbal skills and quantitative skills.
    A few commenters addressed the point of reference of the passing 
score, namely, the performance of high school graduates on a specific 
test, and pointed out that the educational background of test-takers is 
not always known, particularly in norming studies that may have been 
conducted prior to changes in the law. One commenter expressed a 
similar concern with respect to ESL test-takers since the normed 
students must be ESL test-takers who have entered high school 
equivalency programs. The commenter pointed out that this latter group 
was very small, and the mean scores for them would not be very 
reliable.
    Discussion: Verbal skills, such as usage, mechanics, and 
comprehension, must be assessed. If, however, a test measured only one 
language skill, such as punctuation or word recognition, that test 
would not be appropriate. A reading test is appropriate because it is 
highly correlated with other verbal skills and is a fundamental 
measurement of verbal ability. Writing is highly related to reading 
comprehension and to other verbal skills, and would, therefore, be 
redundant for this purpose. Therefore, an approved test does not have 
to have a writing sample.
    The Secretary will approve a test that consists of a series of 
subtests. However, if the test publisher does not establish a composite 
verbal score and a composite quantitative score, the test publisher 
must present evidence that allows the Secretary to prescribe a cut 
score for each subtest. To pass that test, a student must score at or 
above the cut score for each of the subtests.
    Based on existing evidence from a number of major testing programs, 
the Secretary believes that all test publishers can gather information 
on the educational background of test-takers in the ordinary course of 
test administration, e.g., on the cover sheet of an examination. More 
critically, for data necessary for setting a passing score, the 
educational background of participants in a norming sample can easily 
be ascertained, and in the case of tests requiring new norming studies, 
there has been ample time since the law was passed to conduct such 
studies.
    The Secretary is persuaded by data on ESL test-takers to enlarge 
the reference group beyond those who have entered high school 
equivalency programs, but believes that entrance into some kind of 
formal education or training program is an important criterion with 
which to define this group for purposes of setting a passing score.
    Changes: Section 668.146(c)(5) has been changed. The Secretary will 
continue to approve a test that consists of a series of subtests. 
However, if the test publisher does not establish a composite verbal 
score and a composite quantitative score, the test publisher must 
present evidence that allows the Secretary to prescribe a cut score for 
each subtest.
    The Secretary has also amended Sec. 668.148(b)(2) to enlarge the 
reference population for setting the passing score on ESL tests by 
including not only ESL test-takers who have entered high school 
equivalency programs, but also ESL test-takers who have entered other 
education or training programs, including bilingual vocational 
programs.
    The Secretary has also modified the wording of 
Sec. 668.148(a)(2)(v)(A) so that, in cases where the test is in 
Spanish, the test publisher provides tables of distributions of test 
scores with a clear indication of the mean score and standard deviation 
for Spanish-speaking students with high school diplomas so that the 
Secretary will be able to indicate the passing score. The reference to 
the most recent three-year period is changed to a five-year period to 
allow a sample of sufficient size.
    Comments: Several commenters expressed confusion with regard to the 
establishment of a passing score in proposed Sec. 668.145(c)(3).
    Discussion: The Secretary acknowledges a misprint, hence an 
understandable confusion, in the proposed Sec. 668.145(c)(3). This 
section should have read, and is corrected in Sec. 668.146(c)(3) of the 
final regulation to read, as follows:

    Except as indicated in Secs. 668.148 and 668.149, provide tables 
of distributions of test scores that clearly indicate the mean score 
and standard deviation 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;

    The misprint led to a more general confusion as to who has the 
responsibility for designating the passing score on tests used for 
ability-to-benefit determinations and communicating those scores to the 
public. For the general population of test-takers for whom Sec. 668.147 
is applicable, the Secretary determines the passing score for which the 
publisher has provided the data. For special populations and special 
types of administration such as those described in Secs. 668.148 and 
668.149, the Secretary requests the publisher to ``recommend'' a 
passing score based on the publisher's experience with the special 
population and/or type of administration. The Secretary reviews the 
recommendation, and either certifies it or, if necessary, requests 
clarifications prior to certification. The Secretary recognizes that 
this procedure needs to be modified in the case of tests given in 
Spanish.
    The Secretary will publish the approved passing scores in the 
Federal Register.
    Changes: Section 668.145(c)(1) has been amended to indicate that 
the Secretary will publish in the Federal Register the names of 
approved tests and the passing scores on those tests.

Section 668.147  Passing Score (Section 668.146 in NPRM)

    Comments: The majority of comments received from commenters on the 
passing score formula took five positions. The first position was that 
the proposed score was too low and inconsistent with the standards 
included in Title IV of the Goals 2000: Educate America Act and in the 
School-to-Work Opportunities Act. The second position was that the 
proposed score was too high. The third was that the proposed score was 
right. The fourth position was that the proposed score should vary by 
program of study. The fifth position was that the proposed score should 
be determined by predictive validity studies using program completion 
as a criterion.
    Two commenters also advocated using the performance of students 
with GEDs as the reference point for the passing score on the grounds 
that these people have passed a de facto national high school 
equivalency examination. Their performance is thus more public than 
that of high school graduates, hence it offers a more reliable point of 
comparison. And one commenter presented a plan for a ``documented 
qualification process'' that would allow institutional variations on 
passing scores.
    Discussion: As noted earlier, the Secretary believes that there is 
a basic minimum competency that a student must achieve to benefit from 
any postsecondary education program. That basic competency is measured 
in terms of secondary school level basic skills and general learned 
abilities. Further, the Secretary believes that under section 484(d) of 
the HEA, in order for a person without a high school diploma or its 

[[Page 61835]]
recognized equivalent to receive Title IV, HEA Program funds, that 
person should enter postsecondary education with roughly the same 
comparable secondary school level basic skills and general learned 
abilities as those of the typical range of high school graduates.
    The Secretary established the passing score on approved tests as 
the score that represents one standard deviation below the mean for 
students with high school diplomas who took the test. The score means 
theoretically that 84 percent of the high school graduates who took the 
test passed the test. The Secretary established this score based upon a 
recognition that the secondary school level basic skills and general 
learned abilities of high school graduates in the United States vary 
widely.
    As noted earlier in the general comments, the Secretary disagrees 
with the commenters who contended that passing scores should be 
established on a program-by-program basis. The Secretary also disagrees 
with those commenters who contended that the passing score was either 
too high or too low, or was inconsistent with the Goals 2000: Educate 
America Act and the School-to-Work Opportunity Act. The Secretary 
believes it is difficult to make definitive judgments regarding whether 
a passing score is too high or too low until tests are approved and 
test-takers take the test. Moreover, until performance standards are 
set for ``Certificate of Initial Mastery'' under school-to-work models, 
it is premature to contend that the Secretary's passing score is 
inconsistent with those standards. When that information is 
forthcoming, the Secretary may revisit the question of the appropriate 
passing score for these ATB tests.
    The Secretary acknowledges the commenters' point that there is a 
logic to using the performance of students with GEDs as the reference 
point for the passing score. However, the Secretary chose not to use 
that group as a reference because the GED population that subsequently 
takes the types of examinations used for ability-to-benefit 
determinations is small and not representative of the general 
postsecondary school population in the United States. As for the 
suggestion to adopt institutional variations on the passing score for 
institutions that provide sufficient remediation and instructional 
resources for ATB students, the Secretary suggests that this approach 
is better suited for the ``state process'' as described in 
Sec. 668.156.
    Finally, the Secretary agrees that the fifth position, basing the 
passing score on predictive validity studies using program completion 
as the criterion, is theoretically the best approach to take in 
establishing a passing score. However, the Secretary chose not to use 
that approach because it was impossible to administer, given the small 
size of the ATB population, the cost of predictive validity studies, 
and the additional time that would be necessary to review and approve 
that approach. Moreover, adopting that suggestion would further delay 
the publication of these regulations implementing section 484(d) of the 
HEA.
    Changes: None.

Section 668.148  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 (Section 668.47 in NPRM)

    Comments: One commenter suggested that performance assessments, as 
described in proposed Sec. 668.147, not be included in the potential 
pool of approved tests, because the commenter asserted that these tests 
``are still in a developmental stage, with substantial false negative 
and false positive reports.'' Another commenter recommended additional 
security measures, including the requirement that a student show a 
photo identification for computer-based tests.
    Discussion: The validity and reliability of any assessment tests 
will be based upon the evidence provided by the test publisher, and the 
Secretary will not rule, a priori, that any category of tests is 
inappropriate. The Secretary will rely on the security requirements of 
test publishers with regard to the use of photo identification for 
computer-based tests.
    Changes: None.

Section 668.150  Agreement Between the Secretary and a Test Publisher 
(Section 668.149 in NPRM)

    Comments: Two commenters saw no necessity for this or any of the 
agreements specified in proposed Secs. 668.149, 668.150, and 668.151 on 
the grounds that the practices specified in these agreements and the 
abuses they are designed to address are already accounted for in normal 
industry practice.
    Discussion: In the Secretary's opinion, test publishers are key to 
the integrity of the ability-to-benefit testing process, and the 
agreement between the Secretary and the test publisher is designed to 
assure that the tests are being independently administered in a proper 
and impartial manner. Past practice has indicated that integrity in the 
administration of ability-to-benefit tests is not uniform throughout 
the industry, and that this agreement is necessary to protect both 
students and the public interest.
    However, the Secretary agrees with the commenters that formal 
agreements between a test publisher and a test administrator and 
between a test administrator and an institution are not necessary to 
the integrity of test administration. Therefore, the Secretary has 
eliminated those two agreements although key provisions in those 
agreements have been incorporated in the section dealing with test 
administration, Sec. 668.151.
    Changes: The Secretary has deleted the requirement that a test 
publisher enter into an agreement with a test administrator and that 
the test administrator also enter into an agreement with an 
institution. In fact, the Secretary has deleted the proposed regulatory 
sections in which those requirements were contained, proposed 
Secs. 668.150 and 668.151.
    Comments: One commenter asked that language be added to ensure that 
test publishers exercise equal employment opportunity principles in 
certifying test administrators. Another commenter suggested language be 
inserted to require the publisher to decertify a test administrator if 
he or she is found to have compromised the integrity of the testing 
process. Another commenter asked whether decertified test 
administrators could appeal and whether they could subsequently be 
recertified.
    Discussion: The Secretary believes that it would be inappropriate 
to include a provision in the agreement regarding the test publisher's 
employment practices because it is not within his legal jurisdiction to 
do so.
    The proposed rule included a provision for decertifying a test 
administrator for violating the integrity of the test. The Secretary 
has revised this provision to indicate that the decertification would 
coincide with the period for which the test publisher's test was 
approved. During this period, the test administrator could not be 
recertified. No appeal is provided for a test publisher's decision to 
decertify a test administrator.
    Changes: Section 668.150(b)(3) is revised to provide that if a test 
publisher decertifies a test administrator, the decertification 
coincide with the period for which the test publisher's test was 
approved.
    Comments: Half the commenters suggested that institutions should be 
allowed to score the ATB test at the educational location, rather than 
send the test to the publisher for scoring. 

[[Page 61836]]
These commenters cited the extra time and costs associated with test-
publisher scoring.
    Discussion: The purpose of the regulatory scheme regarding test 
administration is to remove institutions from giving or scoring tests. 
In return, the Secretary will not hold institutions financially 
responsible if they award Title IV, HEA Program funds to an ability-to-
benefit students who present evidence that they passed approved tests 
as long as the institutions did not interfere with the independence of 
the testing process and were not involved in the testing process. 
Therefore, the Secretary strongly disagrees with the commenter's 
suggestion that an institution should be able to score a test. 
Moreover, the Secretary anticipates that there will be little delay 
between the time a student takes a test and the time the institution 
and the student receive the test results.
    Changes: None.
    Comments: Test publishers objected to the Secretary's requirement 
that an analysis of scoring patterns be performed every two years to 
determine irregularities. One commenter asked that the agreement 
between the Secretary and a test publisher explicitly forbid the 
publisher from requiring institutions to administer instruments in 
addition to those required and approved by the Secretary.
    Discussion: The Secretary believes that quality control is a 
critical aspect of test administration, and an analysis of scoring 
patterns of tests is useful tool for that purpose. However, to reduce 
burden, the Secretary is requiring that an analysis of scoring patterns 
of tests be performed every three years.
    The Secretary is not including in the agreement between the 
Secretary and a test publisher a provision that precludes the publisher 
from requiring institutions to administer tests in addition to those 
approved by the Secretary because he believes that such a provision is 
beyond the scope of his authority. Moreover, the Secretary notes that 
when faced with such a test publisher, an institution can simply choose 
another test and another test publisher.
    Changes: The Secretary is requiring that an analysis of scoring 
patterns of tests be performed every three years.

Proposed Section 668.150  Agreement Between a Test Publisher and a Test 
Administrator

    Comments: One commenter recommended that test publishers, and not 
educational institutions, retain the power to hire and dismiss on-site 
test administrators. The commenter also suggested that test publishers 
be responsible for training test administrators. Another commenter 
suggested that the test publisher make an agreement with the 
institution and independent test administrators under which the 
institution would agree to respect the security and integrity of test 
administration by selling the administrators an annual license. The 
commenter believes that the purchase of a license will ensure proper 
administration of the test.
    Discussion: The Secretary believes that an institution should have 
the option of selecting a test administrator that has been certified by 
a test publisher to give its students an approved ATB test. Therefore, 
the Secretary disagrees with the suggestion made by the first 
commenter.
    Since a test publisher certifies test administrators to give its 
tests, a test publisher would presumably provide whatever training it 
felt necessary to obtain a sufficient number of certified test 
administrators for its test.
    Finally, the Secretary does not see the need to have test 
publishers sell licenses to test administrators.
    Changes: The Secretary has deleted this section, but the provisions 
discussed by the commenters have been incorporated into Sec. 668.151(a) 
dealing with test administration.
    Comments: Many commenters expressed confusion about the role of an 
assessment center in the test administration process. Commenters 
requested clarification regarding the rights and responsibilities of 
assessment centers. At least one commenter representing a test 
publisher requested the right to enter into agreements with an 
assessment center as a condition for the assessment center to give its 
test.
    Discussion: The Secretary agrees with the commenters that the role 
of an assessment center was not sharply defined in the proposed 
regulations. The Secretary envisions that an assessment center may give 
tests to ATB students without threatening the integrity and 
independence of the test. An assessment center may give an approved 
test to students without necessarily entering into an agreement with 
the test publisher. However, the Secretary agrees with the suggestion 
of the commenter that the test publisher should have the right to 
control the use of its test by allowing an assessment center to give 
its test only if the assessment center enters into an agreement with 
the test publisher.
    If a student takes a test at an assessment center, the test 
administrator must be certified by the test publisher whose test is 
being given. The test administrator must also give the test only in 
accordance with the test publisher's instructions, must make the test 
available only to a test taker during a regularly scheduled test, must 
collect the test from the test taker after the test is given, and must 
secure the test against disclosure or release.
    An assessment center may, however, score the test and notify the 
institution and the test taker of the test results instead of 
forwarding the test to the publisher for scoring and notification. If 
the assessment center scores tests, it must provide a copy of the test 
takers' performances and test scores to the test publisher on at least 
an annual basis.
    Changes: A new section, Sec. 668.152, has been added to describe 
the role and responsibilities of an assessment center.

Proposed Sec. 668.151 Agreement Between the Institution and a Certified 
Test Administrator

    Comments: One commenter recommended that, as part of this 
agreement, the institution must keep complete records of all testing 
activity conducted by a test administrator on its behalf, including 
situations in which testing was not completed.
    Discussion: The purpose of the regulatory scheme regarding test 
administration is to remove institutions from giving or scoring tests. 
Therefore, the Secretary disagrees with the commenter's recommendation.
    Changes: The agreement between an institution and a test 
administrator in Sec. 668.151 has been deleted, as has the section 
dealing with this relationship. However, the important aspects of this 
section relating to the integrity and independence of test 
administration were incorporated into Sec. 668.151 Test administration.

Section 668.151  Administration of Tests (Section 668.152 in the NPRM)

    Comments: A number of commenters objected to the proposed 
procedures for scoring tests by the test publishers in those cases in 
which ``assessment centers'' are not available. Those who objected 
claimed that the process was inequitable and would result in 
considerable delays in determining student eligibility. One commenter 
objected to the policy that allows repeated taking of tests on the 
grounds that repetition compromises the validity of the tests. Two 
commenters requested clarification about the roles of assessment 
centers with respect to recordkeeping, reporting of scores and 
background information on test takers to test publishers, and whether 
agreements between assessment centers and institutions that wish to use 
their services are required. 

[[Page 61837]]

    Discussion: The Secretary believes that it is not inequitable to 
require test publishers to score tests and that considerable delays 
will not be the result of such a requirement. A test administrator must 
send the test publisher the test taker's examination within two days of 
administration of the test, and the test publisher must ``immediately'' 
generate a test score and ``promptly'' notify the test taker and the 
institution of the test results. If the test is a computer-based test, 
the test taker and the institution will receive the test results even 
more quickly. With regard to the retaking of tests, the Secretary 
points out that many people retake major national examinations and 
licensing examinations every year without compromising the validity of 
those tests. However, the Secretary recognizes that the practice of 
retesting can be abused, and that the criteria for test approval in 
proposed Sec. 668.145 were not explicit in the matter of acceptable 
retesting procedures.
    Changes: The Secretary has modified Sec. 668.146(b) to add the 
requirement that the publishers have guidelines for retesting, 
including time between test-taking, and that such guidelines be based 
on empirical analyses.

Section 668.154  Institutional Accountability

    Comments: One commenter suggested that those professionals who 
abuse the system be accountable for their actions, and institutions 
without a history of abuse should be permitted to continue their 
practices of local administration and scoring of ATB tests. Another 
commenter felt that the institutional accountability section was too 
lenient, and suggested strengthening the language so that students 
would not be liable for repayment of fraudulently disbursed funds 
unless the student knowingly caused the erroneous determination.
    Discussion: As indicated earlier, the Secretary has developed a 
regulatory scheme that eliminates institutions from test 
administration. In return, the Secretary will not make institutions 
financially responsible if an institution awards Title IV, HEA Program 
funds to a student who presents evidence that he or she passed an 
approved test, if the institution does not interfere with the 
independence of the testing process. Therefore, the Secretary strongly 
disagrees with the commenters' suggestion that an institution should be 
able to administer and score a test.
    Changes: None.

Section 668.156  Approved State Process (Section 668.155 in NPRM)

    Comments: All commenters from community colleges and several other 
commenters objected to the 95% ``success rate'' criterion as both 
arbitrary and too high and suggested that the Secretary use an 85% 
``success rate'' as an alternative. Some commenters added that this 
requirement does not reflect the statutory mandate that the judgment of 
success take into account the diversity of the populations served by 
participating institutions. Nearly all commenters from community 
colleges requested consistency of calculation of ``success rate'' with 
that of the Student Right-to-Know Act. A few commenters also 
interpreted the ``State process'' provisions as excluding students at 
for-profit institutions. One commenter pointed out that the data 
required for such a calculation were not immediately available, and 
that State agencies submitting applications for approval of a ``State 
process'' should be allowed three years to assemble the data necessary 
to support their case.
    Discussion: In the NPRM provisions governing the ``State process'' 
alternative to ATB testing, the Secretary proposed that the ``success 
rate'' for students without a high school diploma or its equivalent 
must, in effect, be equal to the success rate for students who possess 
a high school diploma. ``Success'' was defined as the sum of program 
completion and continued enrollment, although this definition was not 
explicit in including successful transfers in the category of continued 
enrollment. The 95% rate was chosen since it represents an equivalency 
minus a theoretical standard error of measurement. The Secretary wishes 
to make sure that institutions participating in a State process are 
truly serious and not casual in their execution of responsibilities to 
ATB students. If a special State process for students without high 
school diplomas is truly effective, the success rate of the students it 
services should at least equal the success rate of students with high 
school diplomas who did not receive the special services under the 
process. To account for variances in the measurement of this outcome, 
the Secretary chose a standard rule of chance that 1 out of 20 results 
might be attributable to faulty measurement. One out of 20 is 5%. An 
equivalency minus 5% is 95%.
    The commenters who objected to the 95 percent rate claimed that 
such a rate was too high and arbitrary and suggested that the rate be 
reduced to 85%. However, those commenters provided no justification for 
that lower percentage.
    The Secretary disagrees with the commenters who contended that the 
regulation does not take into account the diversity of the population 
served by institutions included in the State process. The regulations 
give States maximum flexibility to design their processes under which 
States are free to choose how to respond to the needs of the diverse 
group of students served by the process. The Secretary measures whether 
the process is successful in satisfying the needs of these students by 
evaluating whether the success rate of these students, and all the 
others in the State process, are equal to the success rate of high 
school graduates.
    As for the calculation of the ``success rate'' in terms similar to 
those required under the Student Right-to-Know Act, the Secretary 
proposed a simple ``success rate'' to avoid the complexities 
necessitated by implementing that Act.
    The Secretary is not requiring any condition or limitation with 
regard to the type of institutions that may or must participate in a 
State process. Therefore, the type of institutions that may or must 
participate will be determined by the State.
    Finally, the Secretary believes that a State does not need three 
years to collect data to support the approval of its State process. The 
Secretary believes that when this regulation goes into effect on July 
1, 1996, the States will have had adequate lead-time to assemble data 
to support the approval of their State processes. States may, of 
course, wait a longer period of time before applying to the Secretary 
for approval of their State process.
    Changes: The Secretary amends Sec. 668.157(h)(1) to provide that 
the transfer of a student who remains enrolled in another institution 
at the end of that award year can be included in the ``success rate'' 
for the institution from which the student transferred.

Executive Order 12866

    These 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 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 

[[Page 61838]]
elsewhere in this preamble under the heading

Paperwork Reduction Act of 1995

    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.
    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.

Summary of Potential Costs and Benefits

    The potential costs and benefits of these final regulations are 
discussed elsewhere in this preamble under the following heading: 
Analysis of Comments and Changes.

Paperwork Reduction Act of 1995

    Sections 668.143, 668.144, 668.145, 668.146, 668.147, 668.148, 
668.149, 668.150, 668.151, 668.152, 668.153, and 668,155 contain 
information collection requirements.
    Collection of information: Student Assistance General Provisions--
    These regulations contain 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 collection activity associated with the State Process is 
incorporated in various sections throughout these final 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.
    Institutions are to collect this information annually. An estimate 
of the total annual reporting and recordkeeping burden that will result 
from the collection of the information is 0.5 hours per response for 
158,180 respondents, including time for reviewing instructions, 
searching existing data sources, gathering and maintaining the data 
needed, and completing and reviewing the collection of information. The 
total annual recordkeeping and reporting burden equals 79,090 hours.
    The Department considers comments by the public on these proposed 
collections of information in--
     Evaluating whether the proposed collections of information 
are necessary for the proper performance of the functions of the 
Department, including whether the information will have a practical 
use;
     Evaluating the accuracy of the Department's estimate of 
the burden of the proposed collections of information, including the 
validity of the methodology and assumptions used;
     Enhancing the quality, usefulness, and clarity of the 
information to be collected; and
     Minimizing the burden of collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology; e.g., permitting 
electronic submission of responses.
    The Department request comments concerning the collection of 
information contained in these final regulations by January 30, 1996.
    Organizations and individuals desiring to submit comments on the 
information collection requirements should direct them to Patrick 
Sherrill, U.S. Department of Education, 600 Independence Avenue, S.W., 
Room 5624, ROB-3, Washington, D.C. 20202.

Assessment of Educational Impact

    In the notice of proposed rulemaking, the Secretary requested 
comments on whether the proposed regulations 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 rules and on its own review, 
the Department has determined that the regulations in this document do 
not require transmission of information that is being gathered by or is 
available from any other agency or authority of the United States.

List of Subjects in 34 CFR Part 668

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

(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.)

    Dated: November 24, 1995.
Richard W. Riley,
Secretary of Education.

    The Secretary amends 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, 1099c, and 
1141, unless otherwise noted.

    2. Part 668 is amended by adding a new Subpart J 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  Approval of State tests or assessments.
668.144  Application for test approval.
668.145  Test approval procedures.
668.146  Criteria for approving tests.
668.147  Passing score.
668.148  Additional criteria for the approval of certain tests.
668.149  Special provisions for the approval of assessment 
procedures for special populations for whom no tests are reasonably 
available.
668.150  Agreement between the Secretary and a test publisher.
668.151  Administration of tests.
668.152  Administration of tests by assessment centers.
668.153  Administration of tests for students whose native language 
is not English or for persons with disabilities.
668.154  Institutional accountability.
668.155  Transitional rule for the 1996-97 award year.
668.156  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 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--

[[Page 61839]]

    (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 that--
    (1) Is located at an eligible institution that provides two-year or 
four-year degrees, or qualifies as an eligible public vocational 
institution, i.e. a ``postsecondary vocational institution;''
    (2) Is responsible for gathering and evaluating information about 
individual students for multiple purposes, including appropriate course 
placement;
    (3) Is independent of the admissions and financial aid processes at 
the institution at which it is located;
    (4) Is staffed by professionally trained personnel; and
    (5) Does not have as its primary purpose the administration of 
ability-to-benefit tests.
    Computer-based test: A test taken by a student on a computer and 
scored by a computer.
    Disabled student: A student who has a physical or mental impairment 
that substantially limits one or more major life activities, has a 
record of such an impairment, or 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.  Approval of State tests or assessments.

    (a) The Secretary approves tests or other assessments submitted by 
a State that the State uses to measure a student's skills and abilities 
for the purpose of determining whether the student has the skills and 
abilities the State expects of a high school graduate in that State.
    (b) The Secretary approves passing scores or other methods of 
evaluation established by the State for each test or assessment 
described in paragraph (a) of this section.
    (c) If the Secretary approves a State's tests and assessments and 
the passing scores on those tests and assessments under paragraphs (a) 
and (b) of this section, that test or assessment may be used, for 
purposes of section 484(d) of the HEA, only for students who attend 
eligible institutions located in that State.
    (d) If a State wishes to have the Secretary approve its tests or 
assessments under this section, the State shall--
    (1) Submit to the Secretary those tests and assessments, its 
passing scores on those tests and assessments, and the educational 
standards those tests and assessments measure at such time and in such 
manner as the Secretary may prescribe;
    (2) Provide the Secretary with an explanation of how the tests, 
assessments, and passing scores are appropriate in light of the State's 
educational standards; and
    (3) Provide the Secretary with an assurance that the tests and 
assessments will be administered in an independent, fair, and secure 
manner.

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


Sec. 668.144  Application for test approval.

    Except as provided in Sec. 668.143--
    (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; and
    (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 distribution of test scores for each edition, form, level, 
sub-test, or partial battery, for which approval is sought, that allows 
the Secretary to prescribe the passing score for each test in 
accordance with Sec. 668.147;
    (5) Documentation of test development, including a history of the 
test's use;
    (6) Norming data and other evidence used in determining the 
distribution of test scores;
    (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 verbal 
and quantitative skills;
    (9) If a test has been revised from the most recent edition 
approved by the Secretary, 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. 668.146(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 and ability;
    (iv) Evidence that the test was normed using--
    (A) 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
    (B) A contemporary population representative of persons who are 
beyond the usual age of compulsory school attendance in the United 
States; 

[[Page 61840]]

    (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 test security and administration, and 
the forwarding of tests to the test publisher;
    (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. 668.146(b);
    (14) 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;
    (15) A description of retesting procedures and the analysis upon 
which the criteria for retesting are based; and
    (16) Other evidence establishing the test's compliance with the 
criteria for approval of tests as provided in Sec. 668.146.

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


Sec. 668.145  Test approval procedures.

    Except as provided in Sec. 668.143--
    (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, who possess appropriate advanced 
degrees and experience in test development or psychometric research, to 
determine whether the test meets the requirements for test approval 
contained in Secs. 668.146, 668.147, 668.148, or 668.149, 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. 668.148 and 668.149;
    (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 satisfies the 
criteria and requirements for test approval, the Secretary notifies the 
test publisher of the Secretary's decision, and publishes the name of 
the test and the passing scores in the Federal Register.
    (2) 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.
    (3) 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 address the reasons for the 
non-approval of the test; and
    (ii) An analysis of why the information and documentation submitted 
meet the criteria and requirements for test approval notwithstanding 
the Secretary's earlier decision to the contrary.
    (d)(1) 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.
    (2) The Secretary extends the approval period of a test to include 
the period of review if the test publisher re-submits the test for 
review and approval under Sec. 668.144 at least six months before the 
date on which the test approval is scheduled to expire;
    (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. 668.150, 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 Secretary publishes a notice of that revocation in the 
Federal Register. The revocation becomes effective 120 days from the 
date the notice of revocation is published in the Federal Register; and
    (g) For test batteries that contain multiple sub-tests 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. 668.146  Criteria for approving tests.

    Except as provided in Sec. 668.143--
    (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 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 and applicable conditional and secondary 
standards for test construction provided in the 1985 edition of the 
Standards for Educational and Psychological Testing, with amendments 
dated June 2, 1989, prepared by a joint committee of the American 
Educational Research Association, the American Psychological 
Association, and the National Council on Measurement in Education 
incorporated by reference in this section. Incorporation by reference 
of this document has been approved by the Director of the Office of the 
Federal Register pursuant to the Director's authority under 5 U.S.C. 
552(a) and 1 CFR part 51. The incorporated document is on file at the 
Department of Education, Office of Postsecondary Education, Room 4318, 
ROB-3, 600 Independence Avenue, S.W., Washington, D.C. 20202 and at the 
Office of the Federal Register, 800 North Capitol Street, N.W., Suite 
700, Washington, DC. The standards may be obtained from the American 
Psychological Association, Inc., 750 First Street, N.W., Washington, DC 
20026.
    (7) Have publisher's guidelines for retesting, including time 
between test-taking, be based on empirical analyses that are part of 
the studies of test reliability; and
    (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 

[[Page 61841]]
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 Secs. 668.148 and 668.149, provide tables 
of distributions of test scores which clearly indicate the mean score 
and standard deviation for high school graduates who have taken the 
test within three years prior to the date on that the test is submitted 
to the Secretary for approval under Sec. 668.144;
    (4) Norm 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, a distribution of test scores as described 
in paragraph (c)(3) of this section that allows the Secretary to 
prescribe either--
    (i) A passing score for each sub-test; or
    (ii) One composite passing score for verbal skills and one 
composite passing score for quantitative skills.

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


Sec. 668.147  Passing scores.

    Except as provided in Secs. 668.143, 668.148 and 668.149, to 
demonstrate that a test taker has the ability to benefit from the 
education and 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. 668.148  Additional criteria for the approval of certain tests.

    Except as provided in Sec. 668.143--
    (a) In addition to satisfying the criteria in Sec. 668.146, 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 1985 
edition of the ``Testing Linguistic Minorities'' section of the 
Standards for Educational and Psychological Testing, with amendments 
dated June 2, 1989, prepared by a joint committee of the American 
Educational Research Association, the American Psychological 
Association, and the National Council on Measurement in Education 
incorporated by reference in this section. Incorporation by reference 
of this document has been approved by the Director of the Office of the 
Federal Register pursuant to the Director's authority under 5 U.S.C. 
552(a) and 1 CFR part 51. The incorporated document is on file at the 
Department of Education, Office of Postsecondary Education, Room 4318, 
ROB-3, 600 Independence Avenue, S.W., Washington, D.C. 20202 and at the 
Office of the Federal Register, 800 North Capitol Street, N.W., Suite 
700, Washington, DC. The standards may be obtained from the American 
Psychological Association, Inc., 750 First Street, N.W., Washington, DC 
20026; and
    (v)(A) If the test is in Spanish, accompanied by a distribution of 
test scores that clearly indicates the mean score and standard 
deviation for Spanish-speaking students with high school diplomas who 
have taken the test within 5 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 previous 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);
    (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; and
    (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. 668.146(b)(6), and Sec. 668.146 (c)(1), (c)(2), and (c)(4); and
    (2) The test publisher must recommend a passing score based on the 
mean score of test takers beyond the age of compulsory school 
attendance who entered U.S. high school equivalency programs, formal 
training programs, or bilingual vocational programs.

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


Sec. 668.149  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. 668.146 or 668.148 
for these students, the following procedures apply:
    (a) Persons with disabilities. (1) The Secretary considers a 
modified test or testing procedure, or instrument that 

[[Page 61842]]
has been scientifically developed specifically for the purpose of 
evaluating the ability to benefit from postsecondary training or 
education of disabled students 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--
    (i) Uses those procedures or instruments;
    (ii) Maintains appropriate documentation, including a description 
of the procedures or instruments, their content domains, technical 
properties, and scoring procedures; and
    (iii) Observes 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. 668.150  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 that contains 
the provisions set forth in paragraph (b) of this section before an 
institution may use the test to determine a student's eligibility for 
Title IV, HEA program funds.
    (b) The agreement between a test publisher and the Secretary 
provides 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) Decertify a test administrator for a period that coincides with 
the period for which the publisher's test is approved if the test 
publisher 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;
    (iii) Has compromised the integrity of the testing process; or
    (iv) Has given the test in violation of the provisions contained in 
Sec. 668.151;
    (4) Score a test answer sheet that it receives from a test 
administrator;
    (5) 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.
    (6) 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;
    (7) Keep for a period of three 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;
    (8) Three years after the date the Secretary approves the test and 
for each subsequent three-year period, 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
    (9) Upon request, give the Secretary, a guaranty agency, or an 
accrediting agency 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 gives 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(s) for purposes of determining a student's eligibility 
for Title IV, HEA program funds.

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


Sec. 668.151  Administration of tests.

    (a)(1) To establish a student's eligibility for Title IV, HEA 
program funds under this subpart, if a student has not passed an 
approved state test, under Sec. 668.143, an institution must select a 
certified test administrator to give an approved test.
    (2) An institution may use the results of an approved test to 
determine a student's eligibility to receive Title IV, HEA programs 
funds if the test was independently administered and properly 
administered.
    (b) The Secretary considers that a test is independently 
administered if the test is--
    (1) Given at an assessment center by a test administrator who is an 
employee of the center; or
    (2) Given by a test administrator who--
    (i) Has no current or prior financial or ownership 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;
    (ii) Is not a current or former employee of or consultant to the 
institution, its affiliates, or its parent corporation, a person in 
control of another institution, or a member of the family of any of 
these individuals;
    (iii) 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
    (iv) Is not a current or former student of the institution.
    (c) The Secretary considers that a test is not independently 
administered if an institution--
    (1) Compromises test security or testing procedures;
    (2) Pays a test administrator a bonus, commission, or any other 
incentive based upon the test scores or pass rates of its students who 
take the test;
    (3) Otherwise interferes with the test administrator's independence 
or test administration.
    (d) The Secretary considers that a test is properly administered if 
the test administrator--
    (1) Is certified by the test publisher to give the publisher's 
test;
    (2) Administers the test in accordance with instructions provided 
by the test publisher, and in a manner that ensures the integrity and 
security of the test;

[[Page 61843]]

    (3) Makes the test available only to a test-taker, and then only 
during a regularly scheduled test;
    (4) Secures the test against disclosure or release;
    (5) Submits the completed test to the test publisher within two 
business days after test administration in accordance with the test 
publisher's instructions; and
    (6) Upon request, gives the Secretary, guaranty agency, licensing 
agency, 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.
    (e) Except as provided in Sec. 668.152, a certified test 
administrator may not score a test.
    (f) A student who fails to pass a test approved under this subpart 
may not retake the same form of the test for the period prescribed by 
the test's publisher.
    (g) An institution shall maintain a record for each student who 
took a test under this subpart of--
    (1) The test taken by the student;
    (2) The date of the test; and
    (3) The student's scores as reported by the test publisher, 
assessment center, or State.

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


Sec. 668.152  Administration of tests by assessment centers.

    (a)(1) If a test is given by an assessment center, the assessment 
center shall properly administer the test as described in 
Sec. 668.151(d).
    (b)(1) Unless an agreement between a test publisher and an 
assessment center indicates otherwise, an assessment center scores the 
tests it gives and promptly notifies the institution and the student of 
the student's score on the test and whether the student passed the 
test.
    (2) If the assessment center scores the test, it must provide 
annually to the test publisher--
    (i) All copies of completed tests; or
    (ii) A report listing all test-takers' scores and institutions to 
which the scores were sent.

(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.

    Except as provided in Sec. 668.143--
    (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 in a program conducted entirely in 
his or her native language, the student must take a test approved under 
Secs. 668.146 and 668.148(a)(2), or 668.149(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. 668.148(b), or a test in the student's native 
language approved under Secs. 668.146, 668.148 or 668.149.
    (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. 668.146.
    (4) If the student enrolls in an ESL program, the student must take 
an ESL test approved under Sec. 668.148(b); and
    (b) Persons with disabilities. (1) An institution shall use a test 
described in Sec. 668.148(a)(3) or 668.149(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 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 only if the institution--
    (a) Used a test administrator who was not independent of the 
institution at the time the test was given;
    (b) Compromises the testing process in any way; or
    (c) Is unable to document that the student received a passing score 
on an approved test.

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


Sec. 668.155  Transitional rule for the 1996-97 award year.

    (a) Notwithstanding any other provision of this part, an 
institution may continue to base an eligibility determination under 
section 484(d) of the HEA for a student on a test that was an approved 
test as of June 30, 1996, and the passing score on that test, until 60 
days after the Secretary publishes in the Federal Register the name of 
an approved test and the passing score on that test that is appropriate 
for that student.
    (b) If an institution properly based a student's eligibility 
determination for purposes of section 484(d) of the HEA on a test and 
passing score that was in effect on June 30, 1996, the institution does 
not have to redetermine the student's eligibility based upon a test and 
passing score that was approved under Secs. 668.143 through 668.149.

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


Sec. 668.156  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, but must 
indicate which institutions are included.
    (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; 

[[Page 61844]]

    (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 becomes effective for purposes of 
determining student 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, or 
does not disapprove, the process during that six month period.
    (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;
    (ii) Remained enrolled in education or training programs at the end 
of that award year; or
    (iii) Successfully transferred to and remained enrolled in another 
institution 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))

[FR Doc. 95-29125 Filed 11-30-95; 8:45 am]
BILLING CODE 4000-01-P