[Federal Register Volume 84, Number 212 (Friday, November 1, 2019)]
[Rules and Regulations]
[Pages 58834-58933]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-23129]



[[Page 58833]]

Vol. 84

Friday,

No. 212

November 1, 2019

Part II





Department of Education





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





34 CFR Parts 600, 602, 603, et al.





Student Assistance General Provisions, The Secretary's Recognition of 
Accrediting Agencies, The Secretary's Recognition Procedures for State 
Agencies; Final Rule

  Federal Register / Vol. 84 , No. 212 / Friday, November 1, 2019 / 
Rules and Regulations  

[[Page 58834]]


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

DEPARTMENT OF EDUCATION

34 CFR Parts 600, 602, 603, 654, 668, and 674

RIN 1840-AD36, 1840-AD37
[Docket ID ED-2018-OPE-0076]


Student Assistance General Provisions, The Secretary's 
Recognition of Accrediting Agencies, The Secretary's Recognition 
Procedures for State Agencies

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Final regulations.

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

SUMMARY: The Secretary amends the regulations governing the recognition 
of accrediting agencies, certain student assistance general provisions, 
and institutional eligibility, as well as makes various technical 
corrections.

DATES: These regulations are effective July 1, 2020.
    Implementation date: For the implementation dates of the included 
regulatory provisions, see the Implementation Date of These Regulations 
section of this document.

FOR FURTHER INFORMATION CONTACT: For further information related to 
recognition of accrediting agencies, Herman Bounds at 
[email protected] or (202) 453-7615 or Elizabeth Daggett at 
[email protected] or (202) 453-6190. For further information 
related to State authorization, Scott Filter at [email protected] or 
(202) 453-7249 or Sophia McArdle at [email protected] or (202) 453-
6318. For all other information related to this document, Barbara 
Hoblitzell at [email protected] or (202) 453-7583 or Annmarie 
Weisman at [email protected] or (202) 453-6712. If you use a 
telecommunications device for the deaf (TDD) or a text telephone (TTY), 
call the Federal Relay Service (FRS), toll-free, at (800) 877-8339.

SUPPLEMENTARY INFORMATION: 

Executive Summary

    Purpose of This Regulatory Action: Through this regulatory action, 
the Department of Education (Department or we): (1) Strengthens the 
regulatory triad by more clearly defining the roles and 
responsibilities of accrediting agencies, States, and the Department in 
oversight of institutions participating in the Federal Student Aid 
programs authorized under title IV of the Higher Education Act of 1965, 
as amended (title IV, HEA programs); (2) establishes ``substantial 
compliance'' with regard to recognition criteria as the standard for 
agency recognition; (3) increases academic and career mobility for 
students by eliminating artificial regulatory barriers to work in a 
profession; (4) provides greater flexibility for institutions to engage 
in innovative educational practices more expeditiously and meet local 
and national workforce needs; (5) protects institutional autonomy, 
honors individual campus missions, and affords institutions the 
opportunity to build campus communities based upon shared values; (6) 
modifies ``substantive change'' requirements to provide greater 
flexibility to institutions to innovate and respond to the needs of 
students and employers, while maintaining strict agency oversight in 
instances of more complicated or higher risk changes in institutional 
mission, program mix, or level of credential offered; (7) clarifies the 
Department's accrediting agency recognition process, including accurate 
recognition of the geographic area within which an agency conducts 
business; (8) encourages and enables accrediting agencies to support 
innovative practices, and provides support to accrediting agencies when 
they take adverse actions; and (9) modifies the requirements for State 
authorization to clarify the responsibilities of institutions and 
States regarding students enrolled in distance education programs and 
students enrolled in programs that lead to licensure and certification.

Summary of the Major Provisions of This Regulatory Action

    These regulations--
     Revise the requirements for accrediting agencies in their 
oversight of member institutions and programs to be less prescriptive 
and provide greater autonomy and flexibility to facilitate agility and 
responsiveness and promote innovation;
     Revise the criteria used by the Secretary to recognize 
accrediting agencies to focus on education quality and allow 
competition;
     Revise the Department's process for recognition and review 
of accrediting agencies;
     Clarify the core oversight responsibilities among each 
entity in the regulatory triad--accrediting agencies, States, and the 
Department--to hold institutions accountable;
     Establish the roles and responsibilities of institutions 
and accrediting agencies in the teach-out process;
     Establish that the Department recognizes an institution's 
legal authorization to operate postsecondary educational programs when 
it is exempt from State authorization under the State constitution or 
by State law as a religious institution with a religious mission;
     Revise the State authorization requirements for 
institutions offering distance education or correspondence courses; and
     Remove the regulations related to the Robert C. Byrd 
Honors Scholarship Program, which has not received funding in many 
years.
    Authority for this Regulatory Action: Section 410 of the General 
Education Provisions Act provides the Secretary with authority to make, 
promulgate, issue, rescind, and amend rules and regulations governing 
the manner of operations of, and governing the applicable programs 
administered by, the Department. 20 U.S.C. 1221e-3. Furthermore, under 
section 414 of the Department of Education Organization Act, the 
Secretary is authorized to prescribe such rules and regulations as the 
Secretary determines necessary or appropriate to administer and manage 
the functions of the Secretary or the Department. 20 U.S.C. 3474. These 
authorities, together with the provisions in the HEA, permit the 
Secretary to disclose information about title IV, HEA programs to 
students, prospective students, and their families, the public, 
taxpayers, the Government, and institutions. Further, section 431 of 
the Department of Education Organization Act provides authority to the 
Secretary, in relevant part, to inform the public about federally 
supported education programs and collect data and information on 
applicable programs for the purpose of obtaining objective measurements 
of the effectiveness of such programs in achieving their intended 
purposes. 20 U.S.C. 1231a.
    Costs and Benefits: As further detailed in the Regulatory Impact 
Analysis, the benefits of these regulations include increasing 
transparency and improving institutional access for students, honoring 
the autonomy and independence of agencies and institutions, restoring 
focus and clarity to the Department's agency recognition process, 
integrating risk-based review into the recognition process, improving 
teach-outs for students at closed or closing institutions, allowing 
accrediting agencies to focus greater attention on student learning and 
the student experience, and restoring public trust in the rigor of the 
accreditation process and the value of postsecondary education. These 
regulations reduce regulatory burden on institutions that wish to 
develop and implement innovative programs and on accrediting agencies 
because of greater flexibility to

[[Page 58835]]

make low-risk decisions at the staff level. In addition, these 
regulations significantly reduce the regulatory burden associated with 
preparing and submitting accrediting agency petitions for recognition 
or renewal of recognition since some of this review will now occur 
through a site visit, thereby eliminating the need to upload perhaps 
thousands of pages of documents.
    The potential costs associated with the regulations include some 
burden associated with required disclosures and the need for 
accrediting agencies to develop new polices for accreditation decision-
making, enforcement of standards, and substantive change reporting 
requirements. While not the anticipated or desired outcome, it is also 
possible that agencies would avail themselves of reduced regulatory 
burden without redeploying resources towards greater oversight of 
program quality, student learning, and the student experience at 
institutions and programs; or some agencies could lower their 
standards. It is, therefore, incumbent on the Department and National 
Advisory Committee on Institutional Quality and Integrity (NACIQI or 
Advisory Committee) to use new accountability and oversight tools 
provided for in these regulations to properly mitigate these risks and 
monitor agencies to ensure they are upholding their mission-based 
standards for educational quality.
    Implementation Date of These Regulations: Section 482(c) of the HEA 
requires that we publish regulations affecting programs under title IV 
of the HEA in final form by November 1, prior to the start of the award 
year (July 1) to which they apply. However, that section also permits 
the Secretary to designate any regulation as one that an entity subject 
to the regulations may choose to implement earlier and the conditions 
for early implementation.
    The Secretary is exercising her authority under section 482(c) of 
the HEA to designate the following new regulations at title 34 of the 
Code of Federal Regulations included in this document for early 
implementation beginning on November 1, 2019, at the discretion of each 
institution, or each agency, as appropriate:
    (1) Section 600.2.
    (2) Section 600.9.
    (3) Section 668.43.
    (4) Section 668.50.
    The final regulations included in this document are effective July 
1, 2020.
    Public Comments: In response to our invitation in the notice of 
proposed rulemaking (NPRM) published in the Federal Register on June 
12, 2019 (84 FR 27404), we received 195 comments on the proposed 
regulations. We do not discuss comments or recommendations that are 
beyond the scope of this regulatory action or that would require 
statutory change.

Analysis of Comments and Changes

    We developed these regulations through negotiated rulemaking. 
Section 492 of the HEA requires that, before publishing any proposed 
regulations to implement programs under title IV of the HEA, the 
Secretary must obtain public involvement in the development of the 
proposed regulations. After obtaining advice and recommendations, the 
Secretary must conduct a negotiated rulemaking process to develop the 
proposed regulations. The negotiated rulemaking committee reached 
consensus on the proposed regulations that we published on June 12, 
2019. The Secretary invited comments on the proposed regulations by 
July 12, 2019, and 195 parties submitted comments. An analysis of the 
comments and of the changes in the regulations since publication of the 
NPRM follows.
    We group major issues according to subject, with appropriate 
sections of the regulations referenced in parentheses. We discuss other 
substantive issues under the sections of the regulations to which they 
pertain. Generally, we do not address minor, non-substantive changes, 
recommended changes that the law does not authorize the Secretary to 
make, or comments pertaining to operational processes. We also do not 
address comments pertaining to issues that were not within the scope of 
the NPRM.

General Comments

    Comments: Several commenters supported the Department's proposals 
to amend the regulations governing the recognition of accrediting 
agencies, certain student assistance general provisions, and 
institutional eligibility. Specific support was conveyed regarding 
regulations that advance innovation, strengthen student protections 
through enhanced disclosures and teach-out requirements, preserve State 
reciprocity agreements, and mitigate the unjustified stigma that has 
been associated with attending nationally accredited institutions and 
the impact that has had on the transferability of credits students 
earned at these institutions. One commenter opined that trade schools, 
community colleges, apprenticeships, and other programs that are 
significantly shorter and less costly than a traditional bachelor's 
degree are alternative pathways for students' financial stability and 
success. The commenter stated that these programs deserve the same 
respect as programs at prestigious institutions, and that the proposed 
regulations would make dramatic steps forward for this often-overlooked 
form of higher education.
    Discussion: We appreciate the commenters' support.
    Changes: None.
    Comments: Many commenters expressed general opposition to the 
proposed regulations, suggesting that the Department was weakening both 
its oversight of accrediting agencies and the accrediting agencies' 
oversight of institutions, reducing transparency, and putting students 
and taxpayers at risk. Others stated that we should withdraw the 
proposed regulations. The commenters were concerned that the proposed 
changes would erode the value of accreditation, make it difficult for 
prospective students to assess the quality of an institution of higher 
education, render postsecondary credentials and degrees meaningless, 
and negatively impact the competitiveness of the United States in the 
global economy.
    Discussion: In response to the commenters requesting that the 
proposed regulations be strengthened, completely revised, or withdrawn, 
we believe these final regulations strike the right balance between our 
goals of encouraging innovation and ensuring accountability, 
transparency, clarity, and ease of administration, while providing 
sufficient oversight of accrediting agencies and institutions and, at 
the same time, protecting students, the Federal government, and 
taxpayers. These regulations enable accrediting agencies and 
institutions to be nimbler and more responsive to changing economic 
conditions and workforce demands, and they permit agencies to convey 
their intention to take negative action earlier by providing a period 
of time during which an institution may remain accredited and still 
participate in title IV programs in order to graduate students near the 
end of their programs or help students transfer to new institutions. 
The changes to the criteria used by the Secretary to recognize 
accrediting agencies by placing increased focus on education quality 
strengthen the value and effectiveness of accreditation. Additional 
tools available to accrediting agencies to hold institutions and 
programs accountable will also increase the value of accreditation. We 
believe that the regulations are in the best interest of students, 
consumers, and taxpayers, and will improve the quality of the education 
offered at institutions by ensuring that all institutions and

[[Page 58836]]

programs meet a threshold of quality. Finally, we have taken heed of 
the Academy of Arts and Sciences recommendation in The Future of 
Undergraduate Education, that ``while the most vigorous critique of 
regulation has focused on federal rules, state agencies and accrediting 
bodies should also engage in a thoughtful review to identify 
regulations and other policy barriers that may impede the spread of 
innovation across colleges and universities. We should review and roll 
back, where possible, regulations that do not contribute to protecting 
students by insisting that providers meet rigorous quality standards. 
Conversely, we should direct greater regulatory attention and 
compliance at institutions that are chronically poor performers. A 
better relationship between important regulatory protections and the 
promotion of innovation can be achieved through thoughtful action at 
the State, Federal, accreditation, and institutional level.'' \1\ This 
sentiment is endorsed by the Task Force on Federal Regulation of Higher 
Education, a group of college and university presidents and 
chancellors, created by a bipartisan group of U.S. Senators, who 
recently released an analysis recommending that regulation not related 
directly to institutional quality and improvement be identified and, 
where possible, eliminated.\2\
---------------------------------------------------------------------------

    \1\ amacad.org/sites/default/files/academy/multimedia/pdfs/publications/researchpapersmonographs/CFUE_Final-Report/Future-of-Undergraduate-Education.pdf.
    \2\ acenet.edu/news-room/Documents/Higher-Education-Regulations-Task-Force-Report.pdf.
---------------------------------------------------------------------------

    Changes: None.
    Comments: Several commenters stated that the negotiated rulemaking 
process, by which we developed the proposed regulations, was flawed. 
Many commenters opined that condensing an expansive agenda with over a 
dozen topics into a single negotiated rulemaking provided inadequate 
time for the full negotiated rulemaking committee to meaningfully 
discuss the complete scope of regulatory changes. Some commenters 
objected to the Department's decision to use subcommittees, with some 
objecting specifically to the use of a subcommittee to develop 
definitions that informed the proposed changes to the accreditation 
regulations. Others objected to the simultaneous scheduling of 
subcommittee meetings, asserting that this made it impossible for 
negotiators to physically attend all meetings, and opined that the 
subcommittee meetings were not open to the public, as required by the 
HEA. Another commenter wrote in support of the Department's use of 
subcommittees, noting that they served to provide a foundation on the 
issues for which the negotiating committee was able to thoughtfully 
consider and develop the language found in the proposed regulations.
    Discussion: We disagree with the commenters who said that the 
Department's rulemaking process was flawed. It is not uncommon for the 
Department to address multiple topics with a single negotiated 
rulemaking committee,\3\ nor was this the first time that the 
Department utilized non-voting subcommittees to delve more deeply into 
a specific topic and provide recommendations to the main committee. The 
recommendations of the subcommittees were not binding on the members of 
the main committee who were free to discuss the issues in as much 
detail as they required to come to agreement. For example, the members 
of the main committee discussed in detail and made edits to the 
recommended definitions of terms provided to them by the subcommittee 
before reaching consensus.
---------------------------------------------------------------------------

    \3\ www.federalregister.gov/documents/2013/11/20/2013-27850/negotiated-rulemaking-committee-negotiator-nominations-and-schedule-of-committee-meetings-title-iv and www.federalregister.gov/documents/2014/12/19/2014-29734/negotiated-rulemaking-committee-negotiator-nominations-and-schedule-of-committee-meetings-william-d.
---------------------------------------------------------------------------

    Although the subcommittee meetings were scheduled simultaneously, 
the negotiators and the public were provided both live-streamed and 
recorded access to the subcommittees' deliberations, fulfilling the 
legal requirements of HEA section 492. Finally, we believe that there 
was enough time for the full negotiated rulemaking committee to 
meaningfully discuss the complete scope of regulatory changes. 
Specifically, the committee voted to extend the meeting times of each 
of the four days in the third session by two hours. The committee also 
voted to extend negotiations to include a fourth session of four 
additional days, which also included extended hours.
    Changes: None.
    Comments: Some commenters expressed concern that States lacked 
adequate representation on the negotiating committee, noting that a 
representative from the State Higher Education Executive Officers 
(SHEEO) was added following self-nomination, and that the Department 
cast the sole dissenting vote on the self-nomination of a 
representative of State attorneys general (AGs), suggesting that a 
critical consumer protection and State enforcement voice was omitted 
from the discussion. A group of commenters echoed this complaint, 
adding that the omission of State AGs prevented a critical voice for 
protecting students from being heard. Other commenters asserted that 
the interests of students, student veterans, and consumers were not 
adequately represented. Another commenter stated that no single member 
of the committee had expertise on all topics under consideration, 
asserting that section 492 of the HEA, 20 U.S.C. 1098a(b)(1), requires 
negotiators to have expertise in all subjects under negotiation.
    Discussion: The negotiated rulemaking process ensures that we 
consider a broad range of interests in the development of regulations. 
Specifically, negotiated rulemaking is designed to enhance the 
rulemaking process through the involvement of all parties significantly 
affected by the topics for which we will develop the regulations. 
Accordingly, section 492(b)(1) of the HEA, 20 U.S.C. 1098a(b)(1), 
requires that the Department choose negotiators from groups 
representing many different constituencies. The Department selects 
individuals with demonstrated expertise or experience in the relevant 
subjects under negotiation, reflecting the diversity of higher 
education interests and stakeholder groups, large and small, national, 
State, and local. In addition, the Department selects negotiators with 
the goal of providing adequate representation for the affected parties 
while keeping the size of the committee manageable.
    Students, student veterans, and consumers were all ably represented 
by non-Federal negotiators on the negotiating committee with primary 
and alternate representatives for each of these constituencies, as well 
as in the subcommittees.
    The Department's decision to not include a representative of State 
AGs on the main committee was predicated on the fact that the topics 
for negotiation did not include issues that are specifically related to 
their work. In addition, several negotiators commented that adding a 
State AG to the full committee would have created conflicts and perhaps 
even silenced discussion, since some negotiators were the subject of 
one or more State AG inquiries or investigations. In fact, there were 
multiple members of the committee who rejected the idea of adding a 
State AG to the committee during the first two attempts to vote on the 
self-nomination of a State AG. In some prior rulemakings, the 
Department has determined that State AGs were an affected constituency. 
In those cases, the Department has included them as

[[Page 58837]]

negotiators. However, the Department did not believe that State AGs 
were a particularly relevant constituency group for this rulemaking 
effort and determined that SHEEOs were the more appropriate 
representative of State interests, especially with regard to the topics 
negotiated. However, at the request of an AG who nominated himself and 
an additional AG, the committee voted to add a representative of State 
AGs to the Distance Education and Innovation subcommittee and provided 
the opportunity for that representative to contribute to the 
deliberations that informed the main committee's work.
    It would be highly unusual for any individual negotiator to have 
expertise on all the topics under consideration in any negotiated 
rulemaking. The Department relies upon the collective expertise of the 
non-Federal negotiators to inform the discussions and deliberations, 
recognizing that some members of the committee will be more 
knowledgeable about certain topics or elements of topics than others 
based on their area of expertise and the constituency they represent. 
The HEA does not require the Department to select specific entities or 
individuals to be on the committee, nor does it require non-Federal 
negotiators be an expert in all areas under discussion, but rather, 
that they are ``individuals with demonstrated expertise or experience 
in the relevant subjects under negotiation, reflecting the diversity in 
the industry, representing both large and small participants, as well 
as individuals serving local areas and national markets.'' \4\ Non-
Federal negotiators representing students, student veterans, and 
consumers, for example, provide important perspectives on this and 
other negotiated rulemaking committees, but are unlikely to have the 
same kind of expertise as financial aid administrators. The Department 
agrees that it overlooked an important member of the triad by 
inadvertently neglecting to include a representative of the SHEEOs as 
one of the categories of negotiators required for this rulemaking. The 
Department appreciates the nomination of a representative of this 
constituency and the support of the other negotiators to include him as 
a non-Federal negotiator.
---------------------------------------------------------------------------

    \4\ HEA section 492, 20 U.S.C. 1098a(b)(1).
---------------------------------------------------------------------------

    Changes: None.
    Comments: A group of commenters stated that the negotiated 
rulemaking process failed to provide students and consumers with enough 
opportunity to be heard.
    Discussion: We believe that the negotiated rulemaking process 
provided students and consumers with sufficient opportunity to be 
heard. The negotiated rulemaking committee included primary and 
alternate negotiators representing students, student veterans, and 
consumer advocates. Moreover, the Department conducted three public 
hearings before the negotiated rulemaking began and provided time for 
public comment on each of the 12 days the main committee met.
    Changes: None.
    Comments: Several commenters asserted that the Department failed to 
provide evidence to support the need for the proposed regulatory 
changes during the negotiated rulemaking. Several commenters objected 
to the proposed changes that affect religious institutions of higher 
education, asserting that the Department had failed to adequately 
substantiate the need for such changes. Another commenter stated that 
the Department failed to present enough evidence that accreditation is 
a barrier to innovation. One commenter petitioned for correction and 
disclosure under the Information Quality Act (IQA), arguing that the 
Department failed to disclose underlying sources or methodologies to 
support our policy proposals.
    Discussion: We disagree with the commenters who stated that the 
Department failed to provide data or evidence to support the need for 
the proposed regulatory changes during the negotiated rulemaking. We 
acknowledge that the Department was unable to fulfill several of the 
specific data requests made by negotiators because they sought 
information that is not available. The changes to the regulations are 
based on many factors, including feedback we received from the public, 
studies conducted by higher education associations, and emerging trends 
in postsecondary education. Specifically, the Department developed a 
list of proposed regulatory provisions based on advice and 
recommendations submitted by individuals and organizations as testimony 
in a series of three public hearings in September of 2018, as well as 
written comments submitted directly to the Department. Department staff 
also identified topics for discussion and negotiation. We developed the 
proposed regulations that we negotiated during negotiated rulemaking 
with specific objectives for improvement, including updating the 
requirements for accrediting agencies in their oversight of member 
institutions or programs; establishing requirements for accrediting 
agencies to honor institutional mission; revising the criteria used by 
the Secretary to recognize accrediting agencies, emphasizing criteria 
that focus on educational quality; encouraging accrediting agencies and 
States that collect job placement data to do so using publicly 
available administrative datasets to increase their reliability and 
comparability; simplifying the Department's process for recognition and 
review of accrediting agencies; and promoting greater access for 
students to high-quality, innovative programs.
    Changes: None.
    Comments: An association and other commenters asserted that the 
decision to publish three separate NPRMs, rather than a single NPRM 
encompassing the entirety of the consensus language, made it impossible 
to submit informed comments on the partial provisions included because 
the public is unaware of other changes the Department intends to 
propose to related provisions on the agenda from this rulemaking. 
Another commenter asserted that there is no guarantee that the 
Department will propose the remaining regulations from the 
negotiation's consensus, suggesting that this would prevent the 
proposed regulations from functioning coherently.
    Discussion: It is possible for members of the public to submit 
informed comments on the provisions that we included in the NPRM. We 
discussed and negotiated the topics in the proposed regulations 
included in the NPRM in their entirety during negotiated rulemaking. As 
the rulemaking sessions considered numerous topics, we separated the 
subject matter into groups. We included one set of topics in the first 
NPRM and plan to publish two additional NPRMs including the remaining 
topics within the next few months. Moreover, because the negotiated 
rulemaking committee reached consensus, the totality of the proposed 
regulatory changes was available to the public at the conclusion of the 
negotiations.
    We appreciate commenters' concerns about how these regulations 
would function without the other regulatory pieces moving forward. 
However, since we achieved consensus on all topics included in 
negotiated rulemaking, we anticipate that the other regulations that 
were part of this rulemaking effort will similarly become final 
regulations soon.
    The preparation of the NPRM included a review of other regulations 
in the consensus language that were dependent on the accreditation 
regulations, and those sections of the amended regulations were 
included in this regulatory package. These included any regulatory 
changes to definitions and regulations pertaining to State

[[Page 58838]]

authorization of institutions and programs.
    Changes: None.
    Comments: One commenter noted that the final vote occurred with 
little time left to negotiate, rushing a consensus vote.
    Discussion: The final vote in negotiated rulemaking frequently 
occurs at the end of the last day of negotiations. Negotiators who are 
not satisfied with the proposed regulations when the final vote occurs 
may vote against consensus or withhold their support.
    Changes: None.
    Comments: Some commenters alleged that negotiators who opposed the 
Department's proposed regulations were coerced into reaching consensus 
by other negotiators who suggested that, absent consensus, the 
Department would propose regulations that were less reflective of the 
negotiators' interests.
    Discussion: The Department acknowledges that negotiated rulemaking 
can be a stressful endeavor, as each member of the committee works hard 
to represent the best interests of their constituency, and, by virtue 
of its design, consensus requires a give-and-take from all parties. 
However, primary committee members have independent authority to vote 
and should do so in keeping with their assessment of the proposed 
regulatory changes. Although it is true that, absent consensus, the 
Department may propose regulations that differ from the language 
developed by the negotiating committee, those proposed regulations 
would still be subject to public comment and could change based on that 
input.
    Changes: None.
    Comments: Some commenters opined that the public comment period was 
too short and did not permit a meaningful opportunity to comment, 
noting that when a proposed regulation--such as this one--is classified 
as ``economically significant'' and ``major'' by the Office of 
Information and Regulatory Affairs, section 6(a) of Executive Order 
12866 requires the Department to ``afford the meaningful opportunity to 
comment on any proposed regulation, which in most cases should include 
a comment period of not less than 60 days.'' These commenters noted 
that the comment period included a Federal holiday and eight weekend 
days.
    Discussion: We believe that the 30-day public comment period was an 
adequate time period for interested parties to submit comments. Because 
we reached consensus during negotiated rulemaking, the proposed 
regulatory language was available to the public at the conclusion of 
the final negotiating session, which afforded interested parties 
additional time to begin formulating their comments.
    Prior to issuing the proposed regulations, the Department conducted 
two public hearings and four negotiated rulemaking sessions, where 
stakeholders and members of the public had an opportunity to weigh in 
on the development of much of the language reflected in the proposed 
regulations. In addition, we believe that the 30-day public comment 
period was necessary to allow us to meet the HEA's master calendar 
requirements. Under those requirements, the Department must publish 
final regulations by November 1, 2019, for them to be effective on July 
1, 2020. The recognition process for accrediting agencies is lengthy 
and the changes to these regulations will require significant planning 
and coordination on the part of agencies and Department staff. Delaying 
the effective date of these regulations would unnecessarily delay the 
realization of the benefits associated with these changes.
    Changes: None.

Institutional Eligibility

Definitions (Sec.  600.2)

    Comments: Several commenters expressed support for the Department's 
proposed addition of a definition of ``additional location'' and its 
proposed revision of the term ``branch campus,'' indicating that the 
clarifications provided in those definitions resolved confusion 
regarding the two terms.
    Several other commenters expressed support for the student 
protections included in the proposed definitions of ``teach-out'' and 
``teach-out agreement,'' including prohibitions on misrepresentation of 
the nature of teach-out plans, teach-out agreements, and transfer of 
credit. The commenters also supported the proposed stipulation in the 
definition of ``teach-out'' that we should always permit a student to 
access a closed school discharge if the student chooses not to pursue 
the teach-out option.
    Discussion: The Department thanks the commenters for their support. 
After further review, the Department is making minor clarifications to 
the definition of ``teach-out'' in Sec.  600.2. First, we are 
clarifying that a teach-out is a process rather than a time period. 
Because teach-outs can continue for years to allow every enrolled 
student the opportunity to complete his or her program, it is important 
to clarify that it is the set of activities that define a teach-out, 
not necessarily the period of time.
    We are also removing from the definition language that asserts that 
a student who chooses at the time of the teach-out announcement to 
leave the school and pursue a closed school loan discharge is able to 
do so, as this is not a definitional issue. Students who withdraw from 
a closing school may still be eligible for a closed school loan 
discharge when the formal teach-out is not completed until well after 
the 180 days generally associated with closed school loan forgiveness. 
Section 685.214(c) affirms that a borrower may be eligible for a closed 
school loan discharge when the borrower's school closes and the 
borrower does not complete the program of study or a comparable program 
through a teach-out at another school or by transferring academic 
credits or hours earned at the closed school to another school.
    While not a change, we are emphasizing in Sec.  668.26(e)(2) that 
an institution is prohibited from misrepresenting the nature of its 
teach-out plans, teach-out agreements, and transfer of credit, and that 
any such misrepresentation may provide the basis for a borrower's claim 
of defense to repayment.
    Changes: We have modified the wording of the definition of ``teach-
out'' in Sec.  600.2 to clarify that it is an activity, rather than a 
period of time. The teach-out activity may be conducted by the closing 
institution in order to provide an opportunity to enrolled students to 
complete their programs or may be conducted by other institutions who 
permit students from the closing or closed institution to complete 
their programs at their institution.
    Comments: Several commenters requested additional clarification 
regarding the definition of ``additional location,'' indicating that 
confusion remained regarding how to apply the definition to an urban 
campus where buildings are located close together, but not directly 
adjacent to one another. One commenter noted as an example that some 
buildings on an urban campus might be on the same city block, others 
might be nearby, while still others could be a 30-minute drive or more. 
The commenter offered another example of a location that was in a 
different State than the main campus yet separated from the main campus 
by only a few miles. The commenter stated that it was unclear whether 
the Department would consider any of those locations a ``facility that 
is geographically apart'' from the main campus.
    Another commenter noted that the regulations did not require State 
authorizing agencies to adopt similar definitions of the terms ``branch

[[Page 58839]]

campus'' and ``additional location'' and noted that any such 
requirements could have significant impacts on States' authorizing and 
approval processes.
    Discussion: The Department relies upon the reasonable judgment of 
the institution and its accrediting agency to determine whether a 
facility is ``geographically apart'' from the institution's main 
campus. The Department agrees that its regulations do not require State 
authorizing agencies to define ``branch campus'' or ``additional 
location'' the same way the defines Department defines those terms. The 
Department does not have the authority to impose its definitions for 
these terms on States but encourages States to adopt conforming 
definitions to reduce confusion.
    Changes: None.
    Comments: One commenter requested that the Department explain the 
connection between an institution's main campus and a ``branch 
campus.'' The commenter noted that the definition contains many 
requirements that are characteristic of an independent institution, 
including an independent fundraising and corporate structure, and 
stated that it was therefore unclear what relationship such a campus 
should have with its parent institution.
    Discussion: A ``branch campus'' is a type of additional location 
that meets specific criteria, including retaining permanence and 
autonomy with respect to faculty, administration, and budgetary and 
hiring authority. The Department does not require any specific type of 
connection between a main campus and a branch campus except that both 
campuses must be accredited as a single entity and both must share the 
fiduciary responsibility for administration of the title IV, HEA 
programs. We consider a campus that is separately accredited to be a 
standalone institution for purposes of eligibility for the title IV, 
HEA programs. Coordination between a main campus and a branch campus 
remains at the institution's discretion and is subject to any 
applicable standards set by its accrediting agency or State authorizing 
agency.
    Changes: None.
    Comments: One commenter objected to the proposed definitions of 
``additional location'' and ``branch campus'' on the grounds that the 
Department has failed to provide any examples of ``occasional 
inconsistent usage,'' or any data about the problems caused by such 
usage that would warrant making these revisions to current regulations.
    Discussion: As explained in the preamble to the NPRM (page 27411), 
the Department's reason for adding a definition of ``additional 
location'' and revising the definition of ``branch campus'' was to 
avoid confusion caused by inconsistent usage among the Department, 
States, and various accrediting agencies. Clear definitions of 
``additional location'' and ``branch campus'' will promote consistency, 
improve the efficiency of Department, State, and accrediting agency 
review of applications to add additional locations or branch campuses, 
and ensure fair and equitable treatment of those applications.
    Regarding the commenter's assertion that the Department should 
provide examples of where inconsistencies in the review of additional 
locations or branch campuses occurred, as well as other unspecified 
data, the Department does not characterize specific eligibility 
decisions related to additional locations and branch campuses as 
``inconsistencies'' for inclusion on a database (or other list) that we 
could query for this purpose. However, we are aware of accrediting 
agencies that use the term ``branch campus'' for campuses that the 
Department considers to be additional locations, though we are not sure 
how many campuses this impacts. Notwithstanding the absence of such 
data, we do not believe a report such as the one requested by the 
commenter is necessary to justify these proposed revisions, which will 
codify long-established Department practices. We further seek to 
promote consistency in terminology, as accrediting agency use of these 
terms varies.
    Changes: None.
    Comments: One commenter recommended we revise the proposed 
definition of ``teach-out'' to limit access to a closed school 
discharge, as provided in Sec.  685.214, to eligible borrowers who are 
not afforded the opportunity or are unable to avail themselves of 
teach-out options to complete their programs. The commenter argued that 
it is important for the Department to clarify that the best policy 
course when closing an institution is for the institution's leadership 
to take all appropriate steps to provide a student with a soft landing 
and clear path to completion. In the commenter's opinion, permitting 
borrowers who attended an institution that offered a proper teach-out 
to seek a closed school discharge disincentivizes institutions from 
offering teach-outs.
    Discussion: We agree with the commenter that it is in the best 
interest of students for a closing institution to provide a well-
designed teach-out structured to offer a clear path to program 
completion. However, while those borrowers who accept a teach-out are 
not then eligible for a closed school discharge under the provisions of 
Sec.  685.214, the mere availability of a teach-out, however robust, is 
not a disqualifying factor for such a discharge. Although the 
Department is firmly committed to the concept of teach-outs as the best 
option for students affected by an impending school closure to complete 
their programs of study, we believe it is appropriate that the choice 
to accept a teach-out in lieu of a closed school discharge rest with 
each student and that our regulations make clear the availability of 
that choice. However, we also agree that when an institution commits 
the time and expense required to conduct an orderly teach-out, a 
student who chooses to participate in that teach-out is not also 
eligible for a closed school loan discharge unless the institution 
fails to provide a teach-out that is materially consistent with what is 
described in the teach-out plan.
    Changes: None.
    Comments: One commenter asserted that the Department has failed to 
explain the reasoning associated with proposed revisions to the 
definition of ``teach-out plan'' and ``teach-out agreement.''
    Citing as an example in the current Sec.  668.14(b)(31), requiring 
an institution to submit a ``teach-out plan'' to an accrediting agency 
in compliance with Sec.  602.24(c) upon the occurrence of certain 
events, the commenter further contended that the Department has failed 
to explain how the modified definition of ``teach-out plan'' will 
impact other regulations that presently use that term. Finally, the 
commenter questioned whether the Department has considered the 
ramifications of amending the definition of ``teach-out plan,'' 
including whether it will have a positive, negative, or neutral impact 
on students and suggests that, taken together, this has deprived the 
public of a meaningful opportunity to comment on the Department's 
proposals.
    Discussion: We disagree that the Department has failed to explain 
its proposal to revise the definitions of ``teach-out plan'' and 
``teach-out agreements.'' In the preamble to the June 12, 2019 NPRM 
(page 27411) the Department explained its proposal to revise the 
definition of ``teach-out plan'' to clearly distinguish a teach-out 
plan from a teach-out agreement and to clarify that teach-outs can be 
conducted by the closing institution as well as another continuing 
institution. A teach-out agreement is a written contract between two or 
more institutions; a teach-out plan is developed by an

[[Page 58840]]

institution and may or may not include agreements with other 
institutions. The Department also believes that the definition of 
``teach-out plan'' should include plans for teaching-out students 
during orderly closures in which an institution plans to cease 
operating but has not yet closed.
    We are uncertain of the commenter's point in suggesting that the 
Department has failed to explain how the modified definition of 
``teach-out plan'' will impact other regulations that presently use 
that term. In the example cited by the commenter, per Sec.  
668.14(b)(31), where an institution must submit a ``teach-out plan'' to 
an accrediting agency in compliance with Sec.  602.24(c) upon the 
occurrence of certain events, the teach-out plan submitted by the 
institution must, upon the effective date of these final regulations, 
meet the revised definition of ``teach-out plan.'' The same logic 
applies throughout the regulations wherever we reference the term 
``teach-out plan.'' With regard to whether the Department considered 
the ramifications of amending the definition of ``teach-out plan,'' we 
carefully considered the potential ramifications, including the impact 
on students, and this was in the forefront both in the development 
stage of the proposed regulations and during negotiated rulemaking. We 
believe that students are best served when their institution engages in 
an orderly closure that permits students who are close to completing 
their programs an opportunity to do so. Students who are close to 
completing their programs may find it particularly challenging to 
transfer all of their credits to another institution because receiving 
institutions may require that a student completes a minimum number of 
credits at the institution awarding the credential. We also believe an 
orderly teach-out provides more opportunities for students to complete 
the term in which the teach-out announcement is made and receive 
assistance from the institution, the State, or the Department to find a 
new institution to attend.
    Finally, we disagree with the commenter's conclusion that we failed 
to justify proposed revisions to the definitions in Sec.  600.2 and, 
accordingly, deprived the public of a meaningful opportunity to comment 
on the Department's proposals. We have provided our rationale in the 
NPRM for all changes the Department proposed to part 600 of the current 
regulations.
    Changes: None.
    Comments: One commenter stated that the Department has failed to 
explain why it proposes to move the definitions of ``teach-out 
agreement'' and ``preaccreditation'' from the accreditation regulations 
in part 602 to Sec.  600.2 rather than inserting a cross-reference to 
those definitions in parts 600 and 668. The commenter further noted 
that the Department failed to propose changes to the current cross-
references to those definitions in part 602.
    Discussion: The Department explained its proposal to move the 
definitions of ``teach-out agreement'' and ``preaccreditation'' to 
Sec.  600.2 in the June 12, 2019 NPRM (page 27411) where we stated, 
``The Department proposes to move the definitions of ``teach-out 
agreement'' and ``preaccreditation'' from the accreditation regulations 
in Sec.  602.3 to the institutional eligibility regulations in Sec.  
600.2 for consistency, and because the use of those terms extends to 
regulations in Sec. Sec.  600 and 668.''
    With respect to the commenter's assertion that the Department 
failed to propose changes to the current cross-references in part 602, 
we note that the amendatory text in Sec.  602.3 states, ``The following 
definitions are contained in the regulations for Institutional 
Eligibility under the Higher Education Act of 1965, as amended, 34 CFR 
part 600.'' ``Teach-out agreement'' and ``preaccreditation'' are 
included among the definitions listed in this section.
    Changes: None.
    Comments: Several commenters stated that the definition of 
``religious mission'' is overly broad and would prohibit accrediting 
agencies from enforcing any provisions, including well-established 
standards and nondiscrimination protections, against religious 
institutions. Commenters indicated that the definition, in combination 
with other provisions in the regulations, would allow an institution to 
overcome barriers to accreditation by including a reference to religion 
in its mission statement. One commenter indicated that religious 
missions are no more important than secular missions and that we should 
not elevated them to a higher status under the law. Another commenter 
indicated that this definition will undermine the separation of 
religion and government. Several commenters speculated that these 
regulations will encourage secular institutions to adopt religious 
missions and for religious institutions to expand the religious 
components of their missions to avoid scrutiny by accrediting agencies. 
Commenters also indicated that institutions will be allowed to adopt 
discriminatory practices and policies, especially towards LGBTQ 
students and women, which are justified by the institution's religious 
mission, even if their accrediting agencies have standards barring such 
practices. Commenters noted that the Department failed to provide 
evidence of an institution denied accreditation because of its 
adherence to its religious mission, and that there is therefore no 
legitimate reason to include the proposed definition.
    Discussion: In light of the United States Supreme Court decision in 
Trinity Lutheran Church of Columbia, Inc. v. Comer, and the United 
States Attorney General's October 7, 2017 Memorandum on Federal Law 
Protections for Religious Liberty pursuant to Executive Order 13798, 
the Department believes that it should provide protection for faith-
based institutions in situations in which their ability to participate 
in Federal student aid programs may be curtailed due to their religious 
mission or policies, practices, and curricular decisions that enact or 
are consistent with the tenets of the faith. Allowing accrediting 
agencies to make negative decisions because of the institution's 
exercise of religion could violate the Free Exercise Clause of the 
United States Constitution. In addition, under the Religious Freedom 
Restoration Act of 1993 (RFRA) the government may only substantially 
burden a person's exercise of religion if the application of that 
burden to the person is the least restrictive means of furthering a 
compelling governmental interest. If access to Federal student aid 
depends upon accreditation decisions that do not respect the religious 
mission of an institution, the religious institution's exercise of 
religion could be substantially burdened, and removing Federal aid may 
not be the least restrictive means of furthering a compelling 
governmental interest. Thus, both the Constitution and RFRA protect 
religious activities in ways that they do not protect other 
institutional missions. Based on recent Supreme Court decisions, the 
Department believes that protections such as the ones in these 
regulations are advisable given the Free Exercise Clause and RFRA and 
that the Establishment Clause of the Constitution does not prohibit 
them. Institutions will continue to be subject to anti-discrimination 
laws, unless they are otherwise exempt. While we do not believe that 
institutions will change their missions to evade oversight by 
accrediting agencies, we believe that it would raise constitutional 
concerns if the Federal government were to decide whether a religious 
mission is legitimate or whether the reason that an institution

[[Page 58841]]

decides to exercise its religious rights is appropriate.
    Changes: None.
State Authorization Reciprocity Agreement (Sec.  600.2)
    Comments: Commenters generally supported the Department's proposal 
to maintain the definition of a ``State authorization reciprocity 
agreement'' as promulgated in the Program Integrity and Improvement 
regulations published in the Federal Register on December 19, 2016 (81 
FR 92232). However, commenters had differing views regarding the part 
of the definition that requires reciprocity agreements to permit a 
member State to enforce its own statutes and regulations, whether 
general or specifically directed at all or a subgroup of educational 
institutions. Some commenters felt that this language supports the 
States' consumer protection role in the triad and enables States to 
provide the same protections to online students in their States as they 
provide to students attending brick-and-mortar institutions. Commenters 
noted that allowing for reciprocity agreements that do not protect the 
State's authority would undermine the regulatory triad and create a 
race to the bottom in consumer protections and that the Department 
should stress that online institutions are subject to a State's 
consumer protection laws. Other commenters were concerned that the 
language undermines reciprocity agreements by allowing a State to 
enforce additional requirements regardless of an agreed-upon set of 
requirements established in a reciprocity agreement and that we should 
not allow States to override a reciprocity agreement's regulations. 
Some of these commenters recommended that the regulations provide that 
a State authorization reciprocity agreement may require a State to meet 
requirements and terms of that agreement so that the State could 
participate in that agreement. A couple of commenters stated that if 
the concern about a State authorization reciprocity agreement is that 
it could be interpreted to supplant all of a State's laws, then the 
most direct way to prevent this from happening would be to revise the 
definition of ``State authorization reciprocity agreement'' to provide 
that the agreement cannot prohibit any member State of the agreement 
from enforcing its own general-purpose State laws and regulations 
outside of the State authorization of distance education. Commenters 
suggested that their proposed definition of ``State authorization 
reciprocity agreement'' referencing ``general-purpose State laws and 
regulations'' should replace the language in the current definition 
that maintains a member State's authority to enforce its own statutes 
and regulations, whether general or specifically directed at all or a 
subgroup of educational institutions, while still maintaining a State's 
authority to enforce its other, non-State authorization related, 
statutes and regulations. The commenters stated that failure to 
streamline the definition in this way would continue to cause confusion 
about the definition, and since the Department has recognized State 
authorization reciprocity agreements as a method by which State 
authorization distance education requirements can be met, adjusting the 
definition in their proposed way is a needed clarification. In 
addition, the commenters said that, with respect to the concern that 
the scope of a State reciprocity agreement could be interpreted to 
extend beyond the scope of State authorization of distance education 
and impact a State's exercise of its other general oversight 
activities, by clarifying that States could continue to enforce their 
general purpose laws--those that do not relate to the State 
authorization of distance education programs--in addition to the 
reciprocity agreement, those concerns should be alleviated.
    One commenter stated that there needs to be an appropriate due 
process in place when a State authorization reciprocity organization 
acts against an institution and this should be a factor that the 
Department considers regarding the acceptance of reciprocity 
agreements.
    Discussion: The Department appreciates the comments in support of 
the proposal to maintain the definition of ``State authorization 
reciprocity agreement.'' However, we are persuaded by the commenters 
who suggested that we modify the definition to clarify that such an 
agreement cannot prohibit any member State of the agreement from 
enforcing its own general-purpose State laws and regulations outside of 
the State authorization of distance education. A reciprocity agreement 
may supersede a State's own requirements related to State authorization 
of distance education and may prohibit a State voluntarily 
participating in that agreement from adding additional requirements on 
institutions that also participate in the agreement. It would not be 
acceptable, for example, for a State to participate in a reciprocity 
agreement in order to advantage its own public institutions and yet 
apply additional or alternate requirements related to State 
authorization of distance education to institutions that participate in 
the reciprocity agreement but may be located in a different State. 
Adopting this suggestion will alleviate confusion about the definition, 
clarify that the scope of a State authorization reciprocity agreement 
cannot be interpreted to extend beyond the scope of State authorization 
of distance education or to impact a State's exercise of its other 
general oversight activities, and permit a member State of the 
agreement to enforce its own general-purpose State laws and regulations 
outside of the State authorization of distance education, while 
replacing the confusing and potentially conflicting language in the 
current definition that maintains a member State's authority to enforce 
its own statutes and regulations, whether general or specifically 
directed at all or a subgroup of educational institutions.
    We decline the recommendation regarding due process when a State 
authorization reciprocity organization acts against an institution, as 
we believe that this is a function of the reciprocity agreement, and 
thus, the members of the reciprocity agreement should address it.
    In addition, we note that the definition of ``State authorization 
reciprocity agreement'' was unintentionally omitted from the NPRM. At 
the time, this definition had not been added to the U.S. Code of 
Federal Regulations due to the delayed implementation of the 
Department's 2016 State Authorization regulations. However, the 2016 
definition of a State reciprocity agreement was published in the 
Federal Register on July 29, 2019 (84 FR 36471) and was discussed 
during the negotiated rulemaking that led to this final regulation. The 
comments we received on this definition indicate that the public was 
aware of the proposed definition based on the consensus language made 
available to the public on the Department's website.
    In the proposed regulations, as part of the amendments to the State 
authorization regulations under Sec.  600.9(c), we removed the concept 
of a student's ``residence'' and replaced it with ``location'' (see 
discussion under State authorization in the preamble to the NPRM and 
under Sec.  600.9(c) below). To ensure consistency between these 
amendments to Sec.  600.9(c) and the definition of ``State 
authorization reciprocity agreement,'' which also refers to students 
``residing'' in other States, we are making a conforming change to the 
``State authorization reciprocity agreement'' definition and replacing 
the word ``residing'' with ``located.''
    Changes: We revised the definition of ``State authorization 
reciprocity

[[Page 58842]]

agreement'' in Sec.  600.2 to define a State authorization reciprocity 
agreement to be an agreement between two or more States that authorizes 
an institution located and legally authorized in a State covered by the 
agreement to provide postsecondary education through distance education 
or correspondence courses to students located in other States covered 
by the agreement. We further revised this definition to provide that it 
does not prohibit any member State of the agreement from enforcing its 
own general-purpose State laws and regulations outside of the State 
authorization of distance education. Finally, we have replaced the word 
``residing'' with the word ``located.''

Institution of Higher Education, Proprietary Institution of Higher 
Education, and Postsecondary Vocational Institution (Sec. Sec.  600.4, 
600.5, and 600.6)

    Comments: One commenter supported the Department's proposed 
clarification of initial arbitration requirements but stipulated that, 
in the interest of transparency, arbitration proceedings should be 
public.
    Discussion: We appreciate the support of the commenter. However, we 
do not agree that the Department should require that arbitration take 
place in public and such a requirement is not contained in HEA section 
496(e), 20 U.S.C. 1099b(e), the statutory section to which this 
regulatory provision is closely tied. As we explained in the NPRM, 
although arbitration hearings are less transparent than court 
proceedings, the Department believes that existing and proposed 
requirements for notice to students and the public in Sec. Sec.  602.26 
and 668.43 will ensure both are timely made aware of accreditation 
disputes and their resolutions.
    Changes: None.
    Comments: Two commenters expressed opposition to proposed changes 
regarding initial arbitration. One of those commenters asserted that by 
relying on arbitration, the Department potentially ``extends the 
clock'' for a problem institution, because that arbitration may be 
followed by a likely costly lawsuit, and suggested that the Department 
has failed to show evidence either that institutions have routinely not 
followed the statutory requirement of initial arbitration prior to 
initiating any other legal action, or that initial arbitration, when 
used, has resulted in fewer lawsuits. The commenter expressed the 
opinion that it is incumbent upon the Department to present evidence 
based on data acquired from agencies on the frequency of arbitration in 
the event of adverse actions, the percentage of lawsuits that have 
occurred without first going through arbitration, the percentage of 
lawsuits that have occurred after arbitration, and the relative costs 
of both arbitration and lawsuits to agencies. Additionally, the 
commenter requested that the Department explain how the final rule will 
ensure that institutions and agencies are meeting the requirements 
under this section. Finally, the commenter asked that the Department 
protect students by placing restrictions on enrollment or receipt of 
Federal financial aid in the event of arbitration proceedings, since 
the accrediting agency has already ruled the institution should not be 
accredited at all.
    Another commenter asserted that current initial arbitration 
requirements do not adequately account for issues and concerns raised 
by the United Negro College Fund (UNCF) about the fairness of the 
accreditation review process in a May 9, 2019 white paper (Biases in 
Quality Assurance: A Position Paper on Historically Black Colleges and 
Universities and SACSCOC).\5\ Specifically, they noted the lack of 
black peer reviewers, the lack of transparent or unambiguous financial 
standards, a faulty peer reviewer selection process, and problems with 
inter-reviewer reliability and bias among peer reviewers. Arguing that 
proposed changes to Sec. Sec.  600.4, 600.5, and 600.6 would exclude 
the litigation option as the only means of redress available to 
Historically Black Colleges and Universities (HBCUs) in the face of the 
bias inherent in the accreditation review process, the commenter asked 
that these changes not be made until such time as the issues identified 
in the UNCF white paper can be addressed.
---------------------------------------------------------------------------

    \5\ uncf.org/wp-content/uploads/Biases-in-Quality-Assurance_UNCF-Accreditation-White-Paper-Updated.pdf.
---------------------------------------------------------------------------

    Discussion: HEA section 496(e) provides that the Secretary may not 
recognize the accreditation of any institution of higher education 
unless it agrees to submit any dispute involving the final denial, 
withdrawal, or termination of accreditation to initial arbitration 
prior to any other legal action. As a result, the proposed changes need 
not be substantiated with data from accreditation agencies indicating 
the exact number of initial arbitration proceedings or the number of 
adverse actions that resulted in litigation without recourse to initial 
arbitration. We made these changes to align with statutory 
requirements. Current regulations in Sec. Sec.  600.4(c), 600.5(d), and 
600.6(d), consistent with the HEA, already require institutions to 
submit to initial arbitration before initiating any other legal action. 
The proposed regulations establish no additional requirements with 
respect to initial arbitration. As we explained in the NPRM, the 
statutory requirement has not changed; however, the Department's 
regulations heretofore have neglected to fully implement the statutory 
requirement, which we are correcting with these final regulations. 
Through the final regulations, the Department seeks to highlight the 
initial arbitration requirement to raise awareness of it and to clarify 
the current regulations.
    Concerning the question of what additional measures the Department 
might take to ensure that institutions and agencies comply with the 
requirements of this section, the Department does not intend to 
establish a new compliance or enforcement protocol. As previously 
noted, the statute and current regulations already require institutions 
to enter initial arbitration with their accrediting agencies before 
taking additional legal action. We expect institutions and agencies to 
comply with those requirements. Certainly, when we know an institution 
or accrediting agency ignored or refused to comply with applicable 
statutory and regulatory guidelines relevant to initial arbitration, 
the Department will act under its current authority. We do not believe 
that restricting student enrollment at an institution involved in 
initial arbitration or limiting an institution's access to title IV, 
HEA funds is either appropriate or beneficial to students. Such 
measures would constitute an adverse action against the institution 
before it has had the benefit of due process with respect to the 
potential revocation of its accreditation.
    In response to the commenter who expressed concerns over the 
fairness of the accreditation review process as it has been applied to 
HBCUs, the Department does not, in any way, dismiss the issues raised 
in the UNCF white paper on this matter cited by the commenter. We 
believe that where bias is shown to have been a factor in any aspect of 
the accreditation process, including initial arbitration, it should be 
brought to the Department's attention. Moreover, the use of arbitration 
could prove to be a lower-cost and quicker way for an institution that 
believes it was treated unfairly by its accrediting agency to seek and 
achieve resolution. However, the breadth of what the UNCF white paper 
addressed far exceeds the largely procedural issue of initial 
arbitration discussed among negotiators

[[Page 58843]]

and clarified in these regulations. Finally, it is not the case, as 
suggested by the commenter, that the regulations would restrict or 
foreclose any of the legal options available to institutions in 
opposing adverse actions taken by an accrediting agency.
    Changes: None.
    Comments: Regarding the proposed changes to the definition of a 
``program leading to a baccalaureate degree in liberal arts'' in Sec.  
600.5(e), one commenter expressed concern that the definition would 
allow the Department to bypass accrediting agencies, making it possible 
for institutions to designate as ``liberal arts programs'' those 
composed partially of courses that are not taught by faculty. 
Specifically, the commenter cited a Bachelor of General Studies program 
offered at a public four-year university, the requirements of which 
permit students to earn credits by passing College Level Examination 
(CLEP) or similar exams in lieu of attending classes taught by faculty. 
Another commenter contended that the Department has not offered 
adequate explanation or justification for the proposed changes, in 
violation of the Administrative Procedure Act (APA). The commenter 
elaborated that the Department proposes to substitute its own judgment, 
as well as remove a descriptive list of the categories of ``general 
instructional program[s]'' that typically qualify, including programs 
in the ``liberal arts subjects, the humanities disciplines, or the 
general curriculum.''
    Discussion: One commenter may have misinterpreted the context and 
applicability of Sec.  600.5(e). The commenter opposed the proposed 
changes to the definition of a ``program leading to a baccalaureate 
degree in liberal arts,'' based on concerns that the revised definition 
will facilitate the introduction of liberal arts programs at the 
baccalaureate level that permit alternative means of earning credits 
(including successful completion of a test). This definition applies 
only to the extent that a liberal arts program offered by a proprietary 
institution of higher education may potentially be an exception to the 
general requirement that all programs offered by this type of 
institution lead to gainful employment in a recognized occupation. The 
change does not expand the ability of proprietary institutions to offer 
liberal arts programs; rather, it more clearly defines the breadth of 
programs that a proprietary institution could not offer without first 
qualifying for the statutory exception. A program leading to a degree 
at a public or private not for profit institution, such as the one 
cited by the commenter, would not be subject to the definition of a 
``program leading to a baccalaureate degree'' in current or proposed 
Sec.  600.5(e). The applicability of Sec.  600.5(e) notwithstanding, 
whether a student may earn credits through testing, life experience, or 
some other alternative means, or how many, is not subject to regulation 
by the Department.
    We disagree with the commenter who believed the Department has 
violated the APA by failing to provide an adequate justification for 
proposing changes to Sec.  600.5(e). As explained in the NPRM, in Sec.  
600.5(e), we propose to clarify the definition of ``program leading to 
a baccalaureate degree in liberal arts'' to establish the Department's 
responsibility for determining what types of programs qualify, and to 
tighten up the regulatory definition of the term, while maintaining and 
respecting the grandfathering requirements in the statute. The proposed 
changes meet this stated objective.
    We further disagree with the commenter that in establishing its 
responsibility for determining what types of programs qualify, the 
Department is substituting its judgment for what is in the current 
regulations. The proposed regulations merely eliminate in this section 
the redundant requirement that an institution's accrediting agency 
determine a liberal arts program to fall within the generally accepted 
instructional categories. Contrary to the assertions of the commenter, 
we retained this requirement in proposed Sec. Sec.  600.5(e)(1) through 
(4).
    Changes: None.

State Authorization (Sec.  600.9)

State Authorization--Religious Institution (Sec.  600.9(b))
    Comments: Some commenters agreed with the proposed changes to the 
definition of ``religious institution'' used for purposes of Sec.  
600.9(b). Others opined that the Department did not provide sufficient 
justification for removing the current definition. Commenters expressed 
concern that removing the Federal definition of ``religious 
institution'' would create an inconsistent standard and would leave 
each State to define the term independently, thus allowing institutions 
with very little religious connection to qualify for favored treatment 
under one State's definition while institutions in other States could 
be held to a stricter definition under which they might not qualify as 
a ``religious institution.'' In another vein, commenters expressed 
concern that classification as a religious institution in a State could 
allow the institution to evade consumer protection requirements. Other 
commenters believed that the Department should not eliminate the 
current regulations because they are limited enough in scope to 
safeguard the separation of church and State (First Amendment 
Establishment Clause), as well as prevent abuse of exemptions while 
protecting students.
    Discussion: The Department appreciates all comments in support of 
the proposed regulations. We disagree, however, that we should maintain 
the current definition. With respect to concerns expressed by 
commenters who contended we should keep the current definition, the 
current Federal definition of a religious institution for State 
authorization purposes may conflict with a State's definition for the 
same, which is troubling because State authorization is the mechanism 
by which States oversee institutions and perform their role within the 
triad. This disconnect has further required such institutions to seek 
an alternative way to meet State authorization requirements. The 
Department believes that, if the institution is physically located in 
or operating in a given State, the State has the authority to 
determine, for the purpose of State authorization, how that institution 
will be authorized by the State. Furthermore, to meet State 
authorization requirements and be legally authorized by a State, a 
religious institution is subject to the requirements under 34 CFR 
600.9(a)(1) that require the State to have a process to review and 
appropriately act on complaints concerning the institution, which would 
provide consumer protection. As States define ``religious institution'' 
in varied ways, we believe that the most effective approach to ensure 
our State authorization regulations are aligned with the First 
Amendment is to require States to meet the requirements based on their 
existing definitions, rather than create a new one. We believe that, 
for the purpose of State authorization, States have the right to make 
their own decisions regarding whether an institution is a religious 
institution or not. States continue to have an incentive to protect 
their students, and students will have access to a State complaint 
process.
    Changes: None.
State Authorization (Sec.  600.9(c))
Student Location and Determinations of a Student's Location
    Comments: Most commenters generally supported the proposed change 
that specifies that institutions

[[Page 58844]]

should determine which State's authorization laws are applicable to an 
institution based on a student's location and not a student's 
residence. Commenters noted that using a student's location rather than 
residency was more appropriate because this framework matches the 
approach that States take. While residency requirements vary by State, 
a State's authorization jurisdiction is based upon the location of the 
educational activity. Commenters also felt that this change would allow 
students who have not established a legal or permanent residency in a 
State to benefit from State requirements for an institution to offer 
distance education in that State. Some commenters noted, however, that 
there is a risk that, because institutions already have to do more than 
the proposed regulations would require to meet State or National 
Council for State Authorization Reciprocity Agreements (NC-SARA) 
reporting requirements, an institution would solely follow the Federal 
standard, believing this standard supersedes State requirements, and 
could thus be found to be out of compliance in a State or with NC-SARA. 
On the other hand, other commenters felt that their existing process 
and procedures allow them to comply with State and NC-SARA reporting 
requirements.
    Commenters generally supported the proposal to require institutions 
to have policies or procedures to make determinations about the States 
in which its students are located. Many commenters also agreed with 
having policies and procedures that set how the institution will 
determine a student's location at the time of initial enrollment, as 
well as for updating its records if a student's location changes, in 
order to ensure that the correct State authorization is obtained. 
Commenters believed the proposed requirements would reduce confusion 
about where the student is located for State authorization distance 
education purposes. Many commenters noted their appreciation that the 
proposed regulations allow institutions to develop the process for 
determining location that is best suited to their organization and the 
student population they serve. One commenter was concerned that the 
Department's proposal would grant institutions the authority to 
determine a student's location based on undefined policies or 
procedures, and that since there is no mechanism for students or States 
to learn how institutions determine which State laws apply, this could 
result in institutions minimizing their regulatory burdens. The 
commenter believed that the States alone should determine which State 
laws apply, rather than rely on institutions to do so. Another 
commenter believed that, instead of leaving it up to an institution's 
discretion, there should be a definition for the concept of 
``location'' but did not propose what the definition should be. Yet 
another commenter felt the Department should require an institution to 
determine a location for all enrolled students not less than annually 
and that the institution update its determination of a student's 
location when the institution should reasonably know about the change.
    Many commenters believed that the proposed regulations simplify the 
institutional processes needed to establish and document a student's 
location at the time of initial enrollment and later through a formal 
notification process for student change of address. Some commenters 
sought clarification on how to determine ``time of enrollment'' for 
determining a student's location because there could be a time lag 
between when a student enrolls at a location and where the student is 
located once the course begins. Other commenters also asked for 
clarification on what constitutes a ``formal receipt of information.'' 
One commenter asked for clarification about whether the Department 
would expect that institutions use a uniform location-reporting 
procedure in all instances across all individual units within a single 
institution.
    Discussion: The Department appreciates the comments in support of 
the proposed regulations. Regarding the concern that, because 
institutions already have to do more than the proposed regulations 
would require to meet State or NC-SARA reporting requirements, an 
institution would solely follow the Federal standard, believing this 
standard supersedes State requirements, and could thus be found to be 
out of compliance in a State or with NC-SARA, these final regulations 
do not absolve institutions from complying with State laws nor do they 
require participation in reciprocity agreements or override the 
requirements of such agreements. Furthermore, we disagree with the 
comment that the States should determine which State laws apply rather 
than institutions. It is an institution's responsibility to determine 
in which State a student is located at the time of initial enrollment, 
and based on this information, the institution determines which State's 
authorization requirements apply.
    We also disagree that an institution determines a student's 
location completely at its discretion. The institution determines the 
student's location at the time of initial enrollment based on the 
information provided by the student, and upon receipt of information 
from the student that their location has changed, in accordance with 
the institution's procedures. Institutions may, however, develop 
procedures for determining student location that are best suited to 
their organization and the student population they serve. For instance, 
institutions may make different determinations for different groups of 
students, such as undergraduate versus graduate students. We also do 
not believe it is necessary to determine location for all enrolled 
students annually, but rather believe that determination at the time of 
a student's initial enrollment and upon a formal notification by the 
student of his or her change of address to another State, in accordance 
with the institution's procedures, is sufficient to ensure that 
students will receive information they need while not being overly 
burdensome or costly to institutions. As discussed in the preamble to 
the NPRM, we believe that we should avoid subjecting an institution to 
unrealistic and burdensome expectations of investigating and acting 
upon any information about a student's whereabouts that might come into 
its possession. It is in the interest of both institutions and students 
to have understandable, explicit policies that pertain to the 
maintenance of student location determinations.
    With respect to determining ``time of enrollment'' for determining 
a student's location, we specify in the NPRM that the location is 
determined at the time of a student's initial enrollment in a program 
(as opposed to the time of a student's initial application to the 
institution). We did not attach any further conditions to this 
determination. We also provided that, with respect to a ``formal 
receipt of information'' regarding change of location, this information 
would come from the student to the institution in accordance with the 
institution's procedures for changing their location to another State. 
The institution would need to establish or maintain and document the 
change of address process. Finally, as we discuss in the preamble to 
the NPRM, we expect institutions to consistently apply their policies 
and procedures regarding student location to all students, including 
students enrolled in ``brick-and-mortar'' programs.
    Changes: None.

[[Page 58845]]

State Requirements
    Comments: Many commenters supported the requirement that distance 
education programs should be required to meet any State authorization 
requirements in States where they do not maintain a physical presence 
but enroll students. Some commenters asked that the Department define 
what an institution must do to meet the requirement in Sec.  
600.9(c)(1)(i) that an institution must meet any of that State's 
requirements for it to be legally offering postsecondary distance 
education or correspondence courses in that State, as well as what 
documentation is required. A couple of commenters were concerned about 
the impact on the reciprocity agreement of the proposed requirement in 
Sec.  600.9(c)(1)(ii), under which an institution would be ``subject to 
any limitations in that agreement and to any additional requirements of 
the State'' because, if States are able to require institutions to meet 
State requirements outside of the reciprocity agreement, these 
requirements could contradict or go beyond the scope of existing NC-
SARA provisions and institutions would have to engage in research and 
fulfill any additional requirements, which would undermine a key 
purpose of the reciprocity agreement. One commenter felt that the 
Department should recognize a State's prerogative to establish 
exemptions from formal approval and to consider exempt institutions as 
authorized to offer distance education.
    Discussion: The Department appreciates the comments in support of 
the proposed regulations. Institutions are required to know what State 
requirements exist for an educational program to be offered to a 
student in a particular State, and the required approvals that 
constitute what is needed for the program to be authorized by that 
State. Documentation should reflect that the institution has met these 
applicable State requirements, which could include evidence that a 
State waives direct authorization of the particular institution or 
institutions of its type. These requirements would not have any bearing 
on reciprocity agreements. As we stated in the preamble of the December 
19, 2016, final regulations (81 FR 92232), each State in which an 
institution is offering distance education remains the ultimate 
authority for determining whether an institution is operating lawfully 
in that State, regardless of whether a non-State entity administers the 
agreement, including whether an institution in a reciprocity agreement 
is operating in that State outside the limitations of that agreement. 
The regulations further provide that an institution offering distance 
education in a State in which the institution is not physically located 
or in which the institution is otherwise subject to a State's 
jurisdiction, as determined by the State, must meet any of that State's 
requirements to be legally offering distance education in that State. 
However, even if the State does not have any specific approval 
requirements for an institution to be offering distance education in 
that State, Sec.  600.9(a)(1) requires that, for an institution that 
has physical presence in a State, that State must offer a process to 
review and appropriately act on complaints concerning the institution, 
including enforcing applicable State laws, for the institution to meet 
the State authorization requirements. We agree with commenters that it 
is important to revise Sec.  600.9(c)(1)(ii) for consistency with the 
revised definition of the term ``State authorization reciprocity 
agreement,'' in which we provide that a reciprocity agreement does not 
prohibit any member State of the agreement from enforcing its own 
general-purpose State laws and regulations outside of the State 
authorization of distance education. Accordingly, we have revised the 
provision to provide that, in the case of an institution covered by a 
reciprocity agreement, the institution is considered to meet State 
requirements for it to be legally offering postsecondary distance 
education or correspondence courses in the State, subject to any 
limitations in that agreement and to any additional requirements of the 
State not relating to authorization of distance education.
    Changes: We have revised Sec.  600.9(c)(1)(ii) to provide that, for 
an institution covered by a reciprocity agreement, the institution is 
considered to meet State requirements for it to be legally offering 
postsecondary distance education or correspondence courses in the 
State, subject to any limitations in that agreement and to any 
additional requirements of the State not relating to authorization of 
distance education.
State Complaint Process
    Comments: Some commenters supported eliminating the State complaint 
process requirement to protect the eligibility of students who are 
located in States that do not offer a complaint process to receive 
title IV, HEA assistance to attend distance education programs, 
agreeing that Sec.  600.9(a)(1) already addresses the State complaint 
process and that the State complaint process requirement under Sec.  
600.9(c)(2) is duplicative of the requirements under Sec.  668.43(b). 
Other commenters believed that the State complaint process requirement 
is not redundant because, even though the Department states that 
eliminating the requirement would allow students to receive Federal 
student aid even if the State they are located in does not have a State 
complaint process, this change would conflict with the definition of 
``State authorization'' under Sec.  600.9(a)(1), which provides that 
State authorization requirements include that the State have ``a 
process to review and appropriately act on complaints concerning the 
institution, including enforcing applicable State laws.'' Since the 
only entity that can enforce a specific State's laws is that State, 
institutions would not be able to comply with the State authorization 
requirements if there is not a complaint process available to students 
in their own States. The commenter argued that the final regulations 
should reflect a State's authority to accept, investigate, and act on 
complaints both from students located in that State and from students 
enrolled at institutions physically located in that State. In a similar 
vein, another commenter opined that nothing in Sec.  668.43(b) requires 
that, as a condition of State authorization, an institution only be 
permitted to operate in a jurisdiction in which there is a complaint 
process. The commenter also indicated that States should collect 
complaint records and make these publicly available in a central 
database. Another commenter recommended that the Department require 
States in which an institution is located to share a copy of complaints 
with other States whose residents are enrolled in that institution.
    Discussion: The Department appreciates the comments in support of 
the proposed regulations. With respect to the other comments, nothing 
in the regulations prevents a State from providing a State complaint 
process that an institution offering distance education would have to 
comply with in order to operate in that State, unless the State and 
institution have joined a reciprocity agreement that provides an 
alternate means for addressing student complaints. Furthermore, with 
respect to the disclosures under Sec.  668.43(b), it follows that for 
an institution to provide a student or a prospective student with 
contact information for filing complaints with its State approval or 
licensing entity and any other relevant State official or agency that 
would appropriately handle a student's complaint, the institution would 
need to have such information to provide or it would be out of 
compliance with the regulations. Regarding the suggestion that States 
collect complaint records

[[Page 58846]]

and house them in a publicly available central database and that States 
in which an institution is located share a copy of complaints with 
other States whose residents are enrolled in that institution, we 
decline this suggestion. Such complaints generally fall under the 
jurisdiction of the States and the accrediting agencies. Additionally, 
the Federal Trade Commission maintains a database of consumer 
complaints. While the Department declines to take these 
recommendations, nothing in these regulations prevents States from 
taking these actions if they wish to do so.
    The Department clarifies that the contact information provided may 
be for whichever entity or entities the State designates to receive and 
act upon student complaints. Contact information is not necessarily 
required for each of the following: A State approval entity, a State 
licensing entity, and another relevant State official or agency. If the 
State has only designated one of these types of entities, contact 
information for that one entity is sufficient.
    Changes: We have included an amendatory instruction to remove the 
text of current Sec.  600.9(c)(2). We also have redesignated proposed 
Sec.  600.9(c)(1)(ii)(A), (B), and (C) as Sec.  600.9(c)(2)(i), (ii), 
and (iii).

Special Rules Regarding Institutional Accreditation or Preaccreditation 
(Sec.  600.11)

    Comments: One commenter expressed concern that the proposed changes 
to the regulations would permit institutions to more easily switch to a 
new accrediting agency or maintain a back-up agency, enabling them to 
skirt enforcement. The commenter opined that this change is 
inconsistent with the statutory requirement in HEA section 496(h), 20 
U.S.C. 1099b(h), that the Secretary not recognize the accreditation of 
an institution seeking to change accrediting agencies, unless the 
institution can demonstrate reasonable cause and submits all relevant 
materials; as well as the statutory requirement in HEA section 496(i), 
20 U.S.C. 1099b(i), that the Secretary not recognize the accreditation 
of an institution that maintains accreditation from more than one 
agency unless the institution demonstrates reasonable cause and submits 
all relevant materials, and designates one agency as its accrediting 
agency for title IV purposes.
    Discussion: We disagree with the commenter that the changes to 
Sec.  600.11 are inconsistent with the statutory requirements of HEA 
section 496(h) and (i).
    HEA section 496(h) provides that ``The Secretary shall not 
recognize the accreditation of any otherwise eligible institution of 
higher education if the institution is in the process of changing its 
accrediting agency or association, unless the eligible institution 
submits to the Secretary all materials relating to the prior 
accreditation, including material demonstrating reasonable cause for 
changing the accrediting agency or association.'' The new regulations 
in Sec.  600.11(a) continue to require an eligible institution to 
submit to the Secretary all materials related to its prior 
accreditation or preaccreditation. Moreover, the new regulations 
require additional documentation, including substantiation of 
reasonable cause for the change.
    The ``dual accreditation rule'' provision in HEA section 496(i) 
states that ``The Secretary shall not recognize the accreditation of 
any otherwise eligible institution of higher education if the 
institution of higher education is accredited, as an institution, by 
more than one accrediting agency or association, unless the institution 
submits to each such agency and association and to the Secretary the 
reasons for accreditation by more than one such agency or association 
and demonstrates to the Secretary reasonable cause for its 
accreditation by more than one agency or association. If the 
institution is accredited, as an institution, by more than one 
accrediting agency or association, the institution shall designate 
which agency's accreditation shall be utilized in determining the 
institution's eligibility for programs under this chapter.'' The new 
regulations in Sec.  600.11(b) continue to require the eligible 
institution to submit to the Secretary all materials related to its 
prior accreditation or preaccreditation, and clarify the conditions 
under which the Secretary would not determine the institution's cause 
for multiple accreditation to be reasonable, including when the 
institution has had its accreditation withdrawn, revoked, or otherwise 
terminated in the prior two-year period and when the institution has 
been subject to a probation or equivalent, show cause order, or 
suspension. The new regulation does provide that the Secretary may 
consider an institution's interest in obtaining multiple accreditation 
to be reasonable if it is based on geographic area, program-area focus, 
or mission, but the institution must provide evidence to explain or 
substantiate its request.
    Changes: None.
    Comments: Two commenters objected to the provisions in this 
section, arguing that they create a loophole in violation of the HEA 
and are contrary to law and in excess of the Department's statutory 
jurisdiction within the meaning of section 706 of the APA. The 
commenters note that under HEA section 496(j), an institution ``may not 
be certified or recertified'' for purposes of title IV if the 
institution has had its ``accreditation withdrawn, revoked, or 
otherwise terminated for cause,'' unless such action has been 
``rescinded by the same accrediting agency.'' One commenter opined that 
the Department failed to provide sufficient evidence to support this 
change. One commenter suggested that, in the event an institution seeks 
multiple accreditations and has been subject to any kind of action, the 
Department should require that a problem raised by one agency should 
trigger automatic review by the other agency with a higher evidentiary 
bar to show why a similar sanction should not be applied.
    Discussion: We disagree with commenters that Sec.  600.11 creates a 
loophole that would violate the HEA and is contrary to law and in 
excess of the Department's statutory jurisdiction within the meaning of 
section 706 of the APA. As discussed above, the new provisions are 
consistent with HEA section 496(h) and (i). HEA section 496(j) 
addresses the impact on an institution from the loss of accreditation. 
Again, as described above, we continue to hold institutions to the 
limitations imposed when accreditation has been withdrawn, revoked, or 
otherwise terminated for cause during the preceding 24 months pursuant 
to Sec.  600.11(a)(1)(ii)(B).
    We further disagree with the commenter who asserted that the 
Department has failed to provide enough evidence to support this 
change. As explained in the NPRM (84 FR 27414), the proposed regulation 
seeks to maintain guardrails to ensure that struggling institutions 
cannot avoid the consequences of failing to meet their current 
accrediting agency's standards by attaining accreditation from another 
agency, while maintaining recourse for institutions that have been 
treated unfairly or have legitimate reasons for seeking multiple 
accreditation unrelated to findings or allegations of noncompliance 
with the quality standards of its current accrediting agency. The 
potential for an institution to face loss of its accreditation without 
being afforded its due process rights as defined in Sec.  602.25, or as 
the result of an agency's failure to respect the institution's stated 
mission, supports the need for this change.
    Regarding the suggestion from a commenter that, where an 
institution seeking multiple accreditations has been

[[Page 58847]]

subject to any kind of action, the Department should require the 
problem raised by one to trigger an automatic review by the other 
agency to show why a similar sanction should not be applied, we believe 
such a requirement would be superfluous. The applicable amendatory 
language as proposed already stipulates that the Secretary will not 
determine the cause for seeking accreditation from a different or 
second accrediting agency to be reasonable if the institution has had 
its accreditation withdrawn, revoked, or otherwise terminated for cause 
during the preceding 24 months or has been subject to a probation or 
equivalent, show cause order, or suspension order during the preceding 
24 months. Any action initiated by the institution's current agency 
would necessarily be reviewed by the Department and, unless found to be 
related lack of due process, inconsistently applied standards or 
criteria, or failure to respect the institution's stated mission not 
considered reasonable cause to seek additional accreditation. At that 
point, we would not recognize the additional accreditation.
    We also disagree with the commenters who stated that the Department 
failed to provide data or evidence to support the need for the proposed 
regulatory changes during the negotiated rulemaking. As we stated 
previously in this preamble, the changes to the regulations are based 
on many factors, including feedback we received from the public, 
studies conducted by higher education associations, and emerging trends 
in postsecondary education. For example, concerns have been raised 
about the lack of innovation in accreditation, the challenges that new 
agencies have in gaining recognition, and the difficulties that new 
institutions have in becoming accredited and gaining access to title IV 
funds.\6\ One challenge new accrediting agencies face in gaining 
recognition is the need to serve as a Federal gatekeeper for at least 
one institution or program. Accredited institutions or programs are 
unlikely to leave a well-established accrediting agency, thereby 
risking their access to title IV funds, even if a new agency may be 
more appropriate to the mission of the institution, support educational 
innovation at lower cost, have higher standards for academic 
excellence, or enable an institution to meet the needs of its students. 
This regulatory change to permit dual accreditation will allow 
institutions to have greater choice in selecting an accrediting agency 
that best aligns with the institution's mission, demonstrates 
educational excellence to potential students, peer institutions, or 
employers, and supports innovative pedagogical approaches. In addition, 
in order for new accrediting agencies to have the ability to become 
recognized, they need to be able to attract respected institutions to 
their membership, which is unlikely if an institution is required to 
abandon its current agency first. Finally, as we eliminated geography 
from an accrediting agency's scope, it is important to permit dual 
accreditation during the period in which an institution is undergoing 
review to change its agency.
---------------------------------------------------------------------------

    \6\ https://www.educationnext.org/college-accreditation-explained-ednext-guide-how-it-works-whos-responsible/.
---------------------------------------------------------------------------

    Furthermore, the Department developed a list of proposed regulatory 
provisions based on advice and recommendations submitted by individuals 
and organizations as testimony in a series of three public hearings in 
September of 2018, as well as written comments submitted directly to 
the Department. Department staff also identified issues for discussion 
and negotiation. We developed the proposed regulations that we 
negotiated during negotiated rulemaking with specific objectives for 
improvement, including addressing the requirements for accrediting 
agencies in their oversight of member institutions or programs; 
establishing requirements for accrediting agencies to honor 
institutional mission; revising the criteria used by the Secretary to 
recognize accrediting agencies, emphasizing criteria that focus on 
educational quality; developing a single definition for purposes of 
measuring and reporting job placement rates; simplifying the 
Department's process for recognition and review of accrediting 
agencies; and promoting greater access for students to high-quality, 
innovative programs. We believe the changes to the regulations in this 
section align with these objectives.
    We do not think it is appropriate for the Department to require 
that an action taken by one agency should trigger automatic review by 
another agency, with a higher evidentiary standard, to show why a 
similar sanction should not be applied, since our current regulations 
do not require this and an institution could be compliant with the 
standards of one agency even if not compliant with the standards of 
another. Currently, Sec.  602.28 requires an agency to investigate an 
institution if another accrediting agency subjects it to any adverse 
action or places it on probation. A higher evidentiary standard is not 
appropriate.
    Changes: None.
    Comments: One commenter suggested that a provision be added to this 
section to permit an accrediting agency to prohibit its recognized 
institutions from maintaining accreditation by more than one recognized 
agency.
    Discussion: We disagree with the commenter's suggestion to permit 
an accrediting agency to prohibit its recognized institutions from 
maintaining accreditation by more than one recognized agency as it 
could have an anticompetitive impact and prevent innovative changes in 
higher education delivery. We will serve institutions and students 
better when accrediting agency standards align with the institution's 
educational objectives and stated mission. In some cases, this may 
require an institution to seek accreditation from more than one 
accrediting agency or to change accrediting agencies.
    Changes: None.

Special Rules Regarding Institutional Accreditation or Preaccreditation 
(Sec.  600.11)

Multiple Accreditation (Sec.  600.11(b))
    Comments: One commenter opined that the changes to Sec.  600.11(b) 
provide too much discretion to determine that an accrediting agency 
acted improperly and allows an institution to seek alternate 
accreditation when the institution does not meet its original 
accrediting agency's standards. The commenter agreed that we should 
permit an institution to select a comprehensive institutional 
accrediting agency as its title IV gatekeeper and seek mission-based 
institutional accreditation as well.
    Discussion: We disagree with the commenter that the changes to 
Sec.  600.11(b) provide too much discretion for the Department to 
determine that an accrediting agency acted improperly or to allow an 
institution to seek a new accrediting agency when the institution does 
not meet its original accrediting agency's standards. The institution 
seeking a change of accrediting agencies or multiple accreditation must 
demonstrate to the Secretary a good reason for seeking accreditation by 
a different or additional agency in order for that request to be 
approved. Moreover, the regulations limit the ability of institutions 
that have been subject to a probation or equivalent, show cause order, 
or suspension order or that have had their accreditation withdrawn, 
revoked, or otherwise terminated for cause during the preceding 24 
months, from making such a change.
    We thank the commenter for support of the provision that enables an

[[Page 58848]]

institution to select a comprehensive institutional accrediting agency 
as its title IV gatekeeper and seek accreditation from a mission-based 
institutional accrediting agency.
    Changes: None.
    Comments: Two commenters objected to the provisions of Sec.  
600.11(b)(2)(i)(B) that enable the Secretary to determine an 
institution's justification for seeking multiple accreditation or 
preaccreditation to be reasonable if the institution's primary interest 
in seeking multiple accreditation is based on its mission. The 
commenters asserted that this grants exemptions for institutions with a 
``religious mission'' from rules preventing agency-shopping if the 
institution claims an accrediting agency was not respecting its 
religious mission.
    Discussion: The proposed regulations provide latitude to the 
Secretary to determine that an institution's interest in seeking 
multiple accreditation is reasonable if it seeks accreditation by more 
than one accrediting agency as a result of its mission, geographic 
area, pedagogical focus, or program area focus. The Secretary will not 
be required to make such a determination. An institution seeking 
multiple accreditation would need to convince the Secretary of the 
reasonableness of its request. If an institution appears to be avoiding 
compliance with its current accrediting agency's standards by seeking 
accreditation from a new or additional accrediting agency, the 
Secretary could determine that the agency's request is not reasonable 
and deny that request.
    Changes: None.

Severability (Sec.  600.12)

    Comments: None.
    Discussion: We have added Sec.  600.12 to clarify that if a court 
holds any part of the regulations for part 600, subpart A, invalid, 
whether an individual section or language within a section, the 
remainder would still be in effect. We believe that each of the 
provisions discussed in this preamble serve one or more important, 
related, but distinct, purposes. Each provision provides a distinct 
value to the Department, the public, taxpayers, the Federal government, 
and institutions separate from, and in addition to, the value provided 
by the other provisions.
    Changes: We have added Sec.  600.12 to clarify that we designed the 
regulations to operate independently of each other and to convey the 
Department's intent that the potential invalidity of one provision 
should not affect the remainder of the provisions.

Change in Ownership Resulting in a Change in Control for Private 
Nonprofit, Private For-Profit, and Public Institutions (Sec.  600.31)

    Comments: One commenter expressed support for the changes to Sec.  
600.31 that clarify the terms of a change of ownership or ownership 
interest. Another commenter suggested that we clarify that the term 
``ownership'' is meant to include changes in management or control of 
public institutions.
    Discussion: We thank the commenter who supported the changes to 
this section. Further, we agree with the commenter who suggested that 
the term ``ownership'' as defined in Sec.  600.31 requires 
clarification with respect to public institutions. Accordingly, we 
clarify that ``change in ownership'' as applied in this section 
includes changes in management or control of public institutions. Such 
a change in management could include instances in which public 
institutions are merged into a new system or merged with another 
institution, or instances when boards of trustees are merged to provide 
joint oversight of more than one institution, among other things. This 
does not include instances when a new president or chancellor is hired 
or appointed, or when there is a change in the individual who holds the 
position of SHEEO.
    Changes: None.

Eligibility of Additional Locations (Sec.  600.32)

    Comments: Several commenters objected to the proposed change that 
would allow an entity acquiring a closing location to be liable only 
for improperly spent title IV funds and unpaid refunds from the prior 
and current academic years. Some argued that the Department is 
attempting to solve the problem of institutions closing without 
sufficient resources to repay outstanding liabilities by reducing the 
requirement for these institutions to make students, the Department, 
and taxpayers whole, rather than fulfilling its enforcement 
responsibility by requiring institutions to post letters of credit in 
certain circumstances to protect the Federal fisc. Others asserted that 
the change could result in students being duped into thinking they are 
being offered a new educational opportunity, while potentially losing 
access to closed school loan discharges in the process. The commenters 
requested that the Department require that purchasers accept all past 
liabilities for the locations they acquire, except as determined by the 
Secretary on the strength of the purchaser's change of ownership 
application with the Department,\7\ arguing that such action would 
enable the Department to retain some discretion to prevent 
inappropriate or high-risk purchases.
---------------------------------------------------------------------------

    \7\ Application for Approval to Participate in Federal Student 
Financial Aid Programs is available at eligcert.ed.gov/ows-doc/eapp.htm.
---------------------------------------------------------------------------

    Discussion: We disagree that Sec.  600.32 should be amended to 
require purchasers to accept all past liabilities for the school 
locations they acquire, except as determined by the Secretary on the 
strength of the purchaser's application. We believe it is reasonable to 
require new owners to accept liability for all financial aid credit 
balances (See Sec.  685.216 regarding unpaid refunds) owed to students 
who received title IV, HEA program funds and for all improperly 
expended or unspent title IV, HEA program funds received during the 
current academic year and up to one academic year prior by the 
institution that has closed or ceased to provide educational programs. 
This timeline mirrors the period of time during which the Department 
typically conducts program reviews, which includes the current year and 
the prior year. Program reviews focus on the current and prior year 
because they provide a more accurate picture of the institution's 
current administrative strength and function. This provision provides 
the same window to an outside entity to evaluate the extent to which 
potential liability exists due to the actions of a prior, unrelated 
owner, or to secure financing. There may be cases when the acquisition 
of a closing school by a new owner or entity serves the best interest 
of students, the local community, and taxpayers. Limiting the potential 
liability for which a new owner or entity is responsible does not 
relieve the past owner or entity of its liability for funds owed to the 
Department as a result of past actions, insufficiencies, or borrower 
defense to repayment claims.
    We also disagree that the changes to this section would ``dupe'' 
students into thinking they are being offered a new educational 
opportunity and deprive them of a closed school loan discharge. While 
it is true that this regulatory change may precipitate fewer school 
closings and, as a result, fewer closed school loan discharges, 
students will have the option of completing their program or 
transferring to a new institution to do so, rather than losing the time 
and effort they have invested at one institution by starting over, 
repeating classes, or earning additional credits elsewhere. This 
regulation does not interfere with a borrower's right or

[[Page 58849]]

ability to submit a borrower defense to repayment claim and seek relief 
from the Department in the event that misrepresentations occurred under 
prior ownership; however, it does limit the liability that a new owner 
assumes for actions that the prior owners took or failed to take.
    Changes: None.

Severability (Sec.  600.33)

    Comments: None.
    Discussion: We have added Sec.  600.33 to clarify that if a court 
holds any part of the regulations for part 600, subpart C, invalid, 
whether an individual section or language within a section, the 
remainder would still be in effect. We believe that each of the 
provisions discussed in this preamble serve one or more important, 
related, but distinct, purposes. Each provision provides a distinct 
value to the Department, the public, taxpayers, the Federal government, 
and institutions separate from, and in addition to, the value provided 
by the other provisions.
    Changes: We have added Sec.  600.33 to make clear that the 
regulations are designed to operate independently of each other and to 
convey the Department's intent that the potential invalidity of one 
provision should not affect the remainder of the provisions.

Termination and Emergency Action Proceedings (Sec.  600.41)

    Comments: Several commenters favored the changes to Sec.  600.41. 
These commenters did not provide additional details other than to note 
their support.
    Discussion: We thank the commenters for their support to delete an 
outdated reference formerly located in Sec.  600.41(a)(1)(ii)(B) that 
allowed for termination of an institution's eligibility under a show-
cause hearing, if the institution's loss of eligibility resulted from 
the institution's having previously qualified as eligible under the 
transfer of credit alternative to accreditation. This alternative has 
not been possible since its repeal in 1992.
    We further thank the commenters for their support of updating the 
terminology in Sec.  600.41(d) that changes the word ``certify'' to 
``originate,'' which is used in the Direct Loan Program, the only 
program under which the Department currently makes loans.
    Changes: None.

Severability (Sec.  600.42)

    Comments: None.
    Discussion: We have added Sec.  600.42 to clarify that if a court 
holds any part of the regulations for part 600, subpart D, invalid, 
whether an individual section or language within a section, the 
remainder would still be in effect. We believe that each of the 
provisions discussed in this preamble serve one or more important, 
related, but distinct, purposes. Each provision provides a distinct 
value to the Department, the public, taxpayers, the Federal government, 
and institutions separate from, and in addition to, the value provided 
by the other provisions.
    Changes: We have added Sec.  600.42 to make clear that the 
regulations are designed to operate independently of each other and to 
convey the Department's intent that the potential invalidity of one 
provision should not affect the remainder of the provisions.

The Secretary's Recognition of Accrediting Agencies

What definitions apply to this part? (Sec.  602.3)

    Comments: Two commenters opposed the proposed changes in Sec.  
602.3(b) that permit accrediting agencies to retain recognition if they 
meet a newly proposed definition of ``substantial compliance,'' rather 
than requiring them to be fully compliant with all applicable 
standards. The commenters asserted that this proposed definition is 
inconsistent with HEA section 496 and makes it virtually impossible for 
the Department to hold an agency accountable when it fails to perform.
    Discussion: We disagree with the commenters that the proposed 
definition of ``substantial compliance'' is inconsistent with the 
statute and makes it virtually impossible for the Department to hold an 
agency accountable when it fails to perform. For many years the 
Department relied on the ``substantial compliance'' standard in making 
recognition determinations and, currently, some accrediting agencies 
already recognize ``substantial compliance'' in their own standards.\8\ 
The statute requires the accrediting agency or association to 
demonstrate the ability and experience necessary to operate as an 
accrediting agency or association. It does not require that the 
accrediting agency demonstrate that it has applied each and every one 
of its standards, as evidenced by the fact that an accrediting agency 
must accredit or preaccredit only one institution prior to petitioning 
the Department for recognition. It also does not require the Department 
to deny recognition to an otherwise well-performing accrediting agency 
simply because of minor administrative omissions or errors, or because 
the agency had to make a minor exception to its regular policies in 
order to serve the needs of students. We see a significant difference 
between ``substantial compliance,'' which means that an agency is 
essentially compliant with the purpose or objective of the regulations, 
versus a finding of failing to perform or being noncompliant, for which 
the Department would make a finding of noncompliance.
---------------------------------------------------------------------------

    \8\ www.wscuc.org/book/export/html/924.
---------------------------------------------------------------------------

    In fact, by providing for ``substantial compliance'' and a process 
for monitoring institutional improvement, the Department may address 
minor concerns before they become major concerns and ensure that they 
are resolved quickly and appropriately. The monitoring report will 
afford accrediting agencies that are in substantial compliance with the 
criteria for recognition the opportunity to implement corrected 
policies or update policies to align with compliant practices. The 
monitoring report provides the Department with an additional oversight 
tool to ensure integrity in accreditation, in cases where the 
accrediting agency deficiency does not rise to the level of non-
compliance or a full compliance report.
    Changes: None.
    Comments: One commenter suggested that we could improve the 
definition of ``programmatic accrediting agency'' by beginning with the 
word ``usually'' or adding the phrase, ``this does not include agencies 
which accredit freestanding institutions offering a specific 
educational program.'' The commenter asserted that the proposed 
definition does not address situations in which closely related 
educational programs enable students to enter a broad spectrum of 
graduate and professional schools, and to embark on a variety of 
careers. Another commenter remarking on the definition of 
``programmatic accrediting agency'' encouraged the Department to ensure 
that programmatic accrediting agencies have the autonomy to focus on 
institutional quality.
    Discussion: While we recognize that some programmatic agencies 
accredit schools with programs that prepare students to enter a broad 
spectrum of graduate and professional schools, and to embark on a 
variety of careers, we believe the definition does not preclude them 
from continuing to do so, nor does it require that a program lead to 
only one career pathway or option. The Department appreciates the 
commenter's request that we ensure programmatic accrediting agencies 
have the autonomy to focus on quality, especially when programmatic 
accrediting agencies also serve as institutional accrediting agencies 
at

[[Page 58850]]

institutions that offer a single program or closely related programs 
that align with the programmatic accrediting agency's mission. We are 
confident that these regulations provide that autonomy.
    Changes: None.
    Comments: Several commenters requested additional time to come into 
compliance with the change from national and regional accreditation to 
institutional accreditation. The commenters did not object to this 
change but noted that entities that distinguish between national and 
regional accreditation in some of their policies will need to amend 
those policies. They cited, for example, some State laws and 
regulations that distinguish between national and regional 
accreditation and reported that those State regulators would need time 
to amend those laws and adjust the procedures in implementing those 
laws. Some commenters noted that the legislature in their State is not 
slated to meet again until 2021.
    Discussion: We appreciate the commenters' support and believe the 
State policies referenced provide further evidence for the need to 
eliminate the artificial distinction between regional and national 
accreditation because some of those policies deny opportunities for 
successful students to enter certain fields, it is incumbent upon State 
regulators to ensure the laws pertaining to an academic institution's 
required accreditation to qualify graduates for licensure and the 
procedures used to implement those laws do not disadvantage students 
who enroll in and complete programs at institutionally accredited 
institutions. While we cannot compel a State to act, we hope that 
States will recognize the Department's revised accrediting agency 
designations and make the necessary changes in their own laws or 
regulations.
    Changes: None.

Severability (Sec.  602.4)

    Comments: None.
    Discussion: We have added Sec.  602.4 to clarify that if a court 
holds any part of the regulations for part 602, subpart A, invalid, 
whether an individual section or language within a section, the 
remainder would still be in effect. We believe that each of the 
provisions discussed in this preamble serve one or more important, 
related, but distinct, purposes. Each provision provides a distinct 
value to the Department, the public, taxpayers, the Federal government, 
and institutions separate from, and in addition to, the value provided 
by the other provisions.
    Changes: We have added Sec.  602.4 to clarify that we designed the 
regulations to operate independently of each other and to convey the 
Department's intent that the potential invalidity of one provision 
should not affect the remainder of the provisions.

Link to Federal Programs (Sec.  602.10)

    Comments: One commenter objected to the change in this section, 
stating that the Department proposes to remove a requirement that 
accrediting agencies demonstrate their worth as gatekeepers to Federal 
aid and fails to explain or justify why it believes that simply sharing 
an institution with an accrediting agency recognized as a gatekeeper to 
Federal aid qualifies a brand-new accrediting agency to immediately 
gain access to full gatekeeping authority.
    Discussion: Section 602.10 does not eliminate any requirements. 
Rather, it provides that if an agency accredits one or more 
institutions that participate in HEA programs and that could designate 
the agency as its link to HEA programs, the agency satisfies the 
Federal link requirement, even if the institution currently designates 
another institutional accrediting agency as its Federal link.
    The significance of a Federal link is that it provides the basis 
for the Department's recognition of an accrediting agency. A Federal 
link, in and of itself, does not ensure recognition, nor does it ensure 
participation in title IV programs. A Federal link simply affirms that 
the agency's accreditation is a required element in enabling at least 
one of the institutions or programs it accredits to establish 
eligibility to participate in some other Federal program.
    Changes: None.

Geographic Area of Accrediting Activities (Sec.  602.11)

    Comments: Several commenters wrote in support of the Department's 
proposal, stating that it will ultimately relieve students of the 
burden to advocate for the quality of their education if their 
institution of record is nationally accredited. Another commenter 
agreed that it is problematic when students are treated disparately 
based on accrediting agency, especially since all agencies adhere to 
the same Department requirements. One commenter thanked the Department 
for clarifying that an agency must conduct its activities within a 
region or group of States, and for emphasizing that we would not 
require any institution or program to change to a different accrediting 
agency as a result of these regulatory changes.
    Discussion: We appreciate the commenters' support. The Department 
continues to require accrediting agencies to clarify the geographic 
area in which they operate, including all branch campuses and 
additional locations.
    Changes: None.
    Comments: One commenter objected to the elimination of the 
distinction between national and regional accrediting agencies based on 
a belief that there are differences in their standards for general 
education and faculty quality.
    Discussion: The change in nomenclature is intended specifically to 
counter this prevalent misconception. In fact, the Department applies 
the same standards for recognition to both national and regional 
accrediting agencies. Accrediting agencies, both regional and national, 
are often termed ``nationally recognized,'' including in the HEA and 
Department materials, which can also lead to confusion.\9\ Accrediting 
agencies do establish their own standards for general education and 
faculty quality and there is some variation in the standards they have 
set. For example, many agencies already allow for instructors in 
applied or vocational programs to substitute years of experience for 
academic credentials, which may not exist in some fields. However, 
those standards do not differ based on the agency's geographic scope or 
prior classification as a national or regional accrediting agency.
---------------------------------------------------------------------------

    \9\ 20 U.S.C. 1001.
---------------------------------------------------------------------------

    Changes: None.
    Comments: One commenter expressed concern that the Department's 
actions may interfere with academic freedom, while providing little or 
no relief to students whose academic credits are not accepted for 
transfer to another institution. The commenter asserted that State and 
Federal regulations create a floor in which an institution can operate, 
and an institution may choose to have a higher ceiling. The commenter 
remarked that institutions will still conduct their own evaluation of 
transfer credits, and the Department should not have a role in setting 
policy on academic determinations such as transfer credits. Other 
commenters echoed the position that the decision whether to accept 
credits for transfer falls on the institution based on its independent 
assessment of the quality of the prior learning.
    Discussion: The Department agrees that the determination of whether 
to accept credits for transfer falls on the institution based on its 
independent assessment of the quality of the prior

[[Page 58851]]

learning. The change to this regulation is designed not to interfere 
with academic freedom, but rather, to counter a detrimental myth that 
institutions that are regionally accredited are of higher academic 
quality than institutions that are nationally accredited. A recent 
review of regional accrediting standards points to a pervasive lack of 
focus on student learning and student outcomes among those agencies, 
although the same is not true among national accrediting agencies.\10\ 
Therefore, it is hard to make the case that regional accrediting 
agencies do more to ensure academic quality or place higher demands 
upon the institutions they accredit than national accrediting agencies. 
That said, because many of the most selective institutions in the 
United States are accredited by regional accrediting agencies, these 
agencies benefit from the reputations of a small number of their member 
institutions that are highly competitive and serve only the most well-
qualified applicants.
---------------------------------------------------------------------------

    \10\ www.americanprogress.org/issues/education-postsecondary/reports/2018/04/25/449937/college-accreditors-miss-mark-student-outcomes/.
---------------------------------------------------------------------------

    The Department believes that, regardless of the historical role 
that accrediting agencies have played, or the institutions that 
comprise the membership of a given accrediting agency, each student is 
entitled to an unbiased review of his or her academic record and 
learning accomplishments when applying for transfer, employment, or 
graduate school, and that no student should be disadvantaged because of 
the geographic scope of an institution's accrediting agency.
    Changes: None.
    Comments: One commenter asserted that the proposed regulatory 
change represents an unreasonable interpretation of HEA section 
496(a)(1) and is, therefore, not in accordance with the APA, which 
prohibits arbitrary and capricious changes to regulations, and is in 
excess of statutory jurisdiction under 5 U.S.C. 706(2)(C). Another 
commenter agreed that the proposed change does not adhere to the 
statutory language and suggested that, if regional accrediting agencies 
are not truly regional because of the manner in which they operate, and 
are instead national, the Department should classify them as such.
    Discussion: HEA section 496(a)(1) states that ``the accrediting 
agency or association shall be a State, regional, or national agency or 
association and shall demonstrate the ability and experience to operate 
as an accrediting agency or association within the State, region, or 
nationally, as appropriate.'' Section 602.11 specifies that the agency 
must demonstrate that it conducts accrediting activities within a 
State, if the agency is part of a State government; a region or group 
of States chosen by the agency in which an agency provides 
accreditation to a main campus, a branch campus, or an additional 
location of an institution; or the United States (i.e., the agency has 
accrediting activities in every State). However, the HEA does not 
require the Department to consider the agency's historic footprint to 
be part of its scope, which the Department has previously done through 
regulation. Rather, the HEA refers to all accrediting agencies 
recognized by the Secretary as ``nationally recognized'' without 
reference to the number and location of States in which an agency 
accredits institutions. See HEA section 101(a)(5).
    We disagree that this change is arbitrary and capricious. To the 
contrary, the Department believes this change is critically important 
given the expansion of distance learning, which allows students to 
attend an institution accredited by an agency whose geographic scope 
does not include the student's home State. This can often lead to 
confusion from students looking to contact their institution's 
accrediting agency, only to find out that the accrediting agency claims 
to not do business in their State. In addition, given the growth of 
institutions that have additional locations and branch campuses across 
the country, most accrediting agencies that originally accredited 
institutions only in a well-defined and geographically proximate group 
of States are now accrediting institutions in multiple States that are 
outside of their historic footprint. The Department recognizes that 
accrediting agencies previously described as ``regional'' are, in fact, 
conducting business across much of the country. Therefore, the 
Department seeks to realign its regulatory definitions with the statute 
to distinguish among agencies that have activities in one State, some 
or most States, and every State. As always, the Department uses the 
definition of ``State'' in Sec.  600.2 for these purposes.
    One non-Federal negotiator illustrated the need for this change 
with a map showing all of the States in which her agency has 
activities. The map (see Chart 2) revealed that the agency operates 
across most of the country, with activities in 48 States including the 
District of Columbia, as well as 163 ``international activities,'' even 
though the agency was historically classified as a regional agency with 
activities supposedly confined to 19 States. The Department's prior 
classifications inaccurately describe where that agency performs its 
work. To reduce confusion and to recognize that, in any given State, 
there may be schools accredited by more than one accrediting agency, 
the Department will require every accrediting agency to list the States 
in which it performs accrediting activities. This list could include 
one, some, most, or all States. However, the Department will align its 
nomenclature more closely with the HEA by referring to all of the 
agencies it recognizes as ``nationally recognized'' accrediting 
agencies.
    Although the historic distinction between regional and national 
accrediting agencies is irrelevant given the expansion of many 
accrediting agencies' work to States outside of their historical 
footprint, there is a meaningful and clear distinction between 
institutional agencies and programmatic agencies. The Department will 
continue to recognize that distinction, including that a programmatic 
accrediting agency could also be considered an institutional 
accrediting agency if it accredits single-program institutions. We also 
disagree that this change is outside of the Department's statutory 
authority and believe instead that it is required of the Department to 
more accurately describe the changing nature of accrediting agencies' 
work. The Department will continue fulfilling its statutory 
responsibility under 20 U.S.C. 1099b to recognize accrediting agencies 
or associations and it will continue to require accrediting agencies to 
publish a list of the States in which they perform their work.
    The negotiating committee considered reclassifying some regional 
accrediting agencies with broad geographic scope as national 
accrediting agencies but did not achieve consensus on this approach. 
Instead, consensus was achieved on relying upon statutory language that 
refers to all accrediting agencies recognized by the Secretary as 
nationally recognized agencies, and adhering to Sec.  602.11 by 
requiring each accrediting agency to list the States in which it 
performs accrediting activities.
    Changes: None.

Accrediting Experience (Sec.  602.12)

    Comments: One commenter was generally supportive of the proposed 
changes in this section that provide additional flexibility to 
accrediting agencies to accredit main campuses in States in which they 
currently or may plan to accredit branch campuses or additional 
locations. However, this commenter requested the Department require an 
agency seeking an expansion of scope into an area where it does not

[[Page 58852]]

have prior experience to demonstrate in the application process the 
ability and capacity necessary to justify and support such expanded 
scope. Another commenter who was generally supportive of the proposed 
changes in this section objected to the significant additional Federal 
oversight, as it pertains to the number of institutions or programs 
that a new agency or organization may accredit, and monitoring by the 
Department of the agency's accrediting decisions.
    Discussion: We appreciate the commenters' support for the change. 
However, the Department will no longer consider the accrediting 
agency's historical geographic footprint to be part of its scope. 
Instead, the geographic area (i.e., list of States) in which the agency 
performs its work must be reported to the Department and made available 
to the public.
    In instances in which an agency applies for a change of scope, the 
regulations continue to require an agency to demonstrate in the 
application process that it has the ability and capacity necessary to 
carry out that expansion of scope. However, we also recognize that an 
agency is not permitted to perform accrediting activities that are not 
yet part of its scope, which makes it a violation of the Department's 
regulations for an agency to gain experience doing something it is not 
approved to do. Therefore, since an agency is unlikely to be able to 
demonstrate experience in making accreditation or preaccreditation 
decisions under the expanded scope at the time of its application or 
review for an expansion of scope, the application may be reviewed to 
determine the agency's capacity to make decisions under the expanded 
scope. This provides an opportunity for an agency to gain experience 
making accreditation decisions in the area of expanded scope, which the 
Department may wish to limit to a small number of institutions or 
programs until the agency can then demonstrate, through experience, 
that it has the capacity to make additional decisions under the 
expanded scope. The purpose of this regulatory change is to grant 
limited authority for an agency that has the capacity to make decisions 
under an expanded scope to make such decisions and acquire--and 
demonstrate that it has acquired--experience doing so. Without these 
changes, the Department's existing regulations could be interpreted to 
contain circular logic (i.e., an agency cannot receive approval without 
prior experience, but cannot obtain that experience without the 
authority to do so). The Department will require monitoring reports to 
assure progress toward demonstrating the necessary experience.
    We do not agree that these regulations impose significant 
additional Federal oversight pertaining to the number of institutions 
or programs that a new agency can accredit and the monitoring of 
accrediting decisions. It is the responsibility of the Department to 
ensure that accrediting agencies are able to successfully determine the 
quality of the institutions or programs it accredits, and it is wholly 
appropriate to limit any potential risk until such time as the 
Department is satisfied that the agency has demonstrated through 
experience that it is capable of making those determinations.
    Changes: None.
    Comments: Several commenters objected to the removal of the 
requirement that accrediting agencies seeking recognition demonstrate 
two years of prior experience conducting accrediting activities, and 
that they are trusted by peer organizations, practitioners, and other 
stakeholders.
    The commenters argued that the proposed change to require the 
agency seeking recognition to cite at least one institution that uses 
the agency as a gatekeeper for Federal dollars is not an effective 
proxy for the current requirements. The commenters asserted that the 
Department failed to explain or justify why it believes that simply 
sharing an institution with an accrediting agency recognized as a 
gatekeeper to Federal aid qualifies a brand-new agency to immediately 
gain access to full gatekeeping authority.
    One commenter wrote that the Department does not define what it 
means to be ``affiliated,'' nor does it propose any meaningful criteria 
to determine whether an accrediting agency is ``affiliated'' with a 
recognized agency. The commenter added that the Department provided no 
evidence of how difficult it has been for new accrediting agencies to 
meet the two-year rule in the past, nor how many agencies have been 
unable to obtain initial recognition as a result.
    One commenter suggested changes to strengthen this provision, 
including: Placing restrictions on new agencies that gain recognition 
until they can demonstrate adequate experience and success in approving 
and reviewing programs or institutions and demonstrate financial 
stability, since an agency that is dependent on a small number of 
institutions as its revenue base creates a moral hazard wherein the 
agency has an incentive to maintain institutions among its membership 
that might not meet quality standards while also having an incentive to 
quickly approve new institutions to help build its financial base; a 
shortened recognition period instead of the full five years; limits on 
the number of institutions the agency can accredit; limits on growth in 
enrollment among the institutions it accredits; and restrictions on the 
ability to approve complex substantive changes such as change of 
ownership or control.
    Discussion: We disagree with the commenters who expressed concern 
that requiring at least one institution that uses the agency as a 
gatekeeper for Federal dollars is not an effective proxy for the 
current requirements. This is the requirement of the current 
regulations, so no changes were made to that requirement. The effect of 
this regulation is to permit an accrediting agency that accredits an 
institution that is also accredited by another accrediting agency that 
serves as the Federal link for that agency to obtain recognition. This 
is necessary to allow new agencies to gain recognition since 
institutions that already have an established agency are unlikely to 
change to a new accrediting agency until we recognize that agency.
    We also disagree with the commenters' assertion that the regulation 
would create a situation in which sharing an institution with an 
accrediting agency recognized as a gatekeeper to Federal aid would 
qualify a brand-new agency to immediately gain access to full 
gatekeeping authority. First, an agency would not be ``sharing'' an 
institution with another accrediting agency. Instead, an agency would 
be seeking dual accreditation, while identifying one agency to serve as 
its Federal gatekeeper, as our regulations require. As we explained in 
our response to comments in Sec.  602.10, the significance of a Federal 
link is that it provides a threshold minimal criterion to enable the 
Department to consider recognizing an accrediting agency, but a Federal 
link, in and of itself, does not ensure recognition, nor does it 
guarantee that an institution may participate in title IV programs, 
since other requirements also apply to such institutions. A Federal 
link simply affirms that the agency's accreditation is, or could meet, 
a required element in enabling at least one of the institutions or 
programs it accredits to establish eligibility to participate in some 
other Federal program.
    The Department believes that the term ``affiliated'' is not 
ambiguous and is commonly understood to mean closely associated with 
another entity, typically in a dependent or subordinate position. The 
Department interprets the term to mean an entity that is closely 
associated with the recognized accrediting agency

[[Page 58853]]

seeking to establish a new accrediting agency.
    As the Department noted during negotiated rulemaking, we do not 
have evidence to demonstrate how difficult it has been for new 
accrediting agencies to meet the two-year rule in the past, other than 
that there have been very few new institutional accrediting agencies 
recognized under the current regulations. New agencies face a difficult 
situation in that, under the current regulations, they need to convince 
an already-accredited institution to leave its established accrediting 
agency in the hope that the new agency gets recognized. This adds 
uncertainty that can harm students if their institution has any lapse 
in its accreditation. Alternatively, the new agency would need to 
identify institutions not already accredited to pursue accreditation 
with the new agency. That could be seen as a sign of the new agency's 
weakness since an institution new to accreditation is not likely to 
have the resources and experience of traditional institutions that have 
been accredited for many years. We cannot determine how many would-be 
agencies do not apply because they cannot identify institutions that 
are committed to using them for Federal gatekeeping purposes, as such 
an agency would never apply for recognition. Therefore, we do not have 
data to quantify how many agencies have been unable to obtain initial 
recognition as a result. We believe the dearth of new agencies shows 
that the barriers to entry for new accrediting agencies were so 
significant that they discouraged new entrants. We hope that by 
minimizing unnecessary barriers, new accrediting agencies will seek 
recognition from the Department.
    We appreciate the commenter's suggestions to strengthen the 
regulation in this part. However, we believe that sufficient guardrails 
and oversight are provided throughout these regulations, and 
specifically within the procedures located at Sec. Sec.  602.31 and 
602.32, as to render these additional limitations unnecessary. The 
Department will continue to evaluate the agency's adherence to Federal 
requirements, including its financial strength, the quality and 
sufficiency of its staff, and its administrative capability.
    Changes: None.
    Comments: Many commenters expressed concern that the proposed 
changes that permit recognized accrediting agencies to re-organize or 
spin off a portion of their accrediting business by setting up a 
separate agency present too much risk to Federal student aid dollars. 
They recommended that the Department amend the proposed regulations to 
more narrowly define the term ``is affiliated with or is a division 
of'' as it is used in this section. One of these commenters suggested 
that the definition require the new agency to have the same policies, 
staff, and financial and administrative capability of the original 
agency, or otherwise meet the requirement of two years accrediting 
experience in its own right. Another commenter recommended that the 
Department prohibit any new agency from ``spinning off'' of a 
recognized agency if that recognized agency has had any compliance 
issues during the last review period.
    Discussion: As we discussed previously in this preamble, we use the 
term ``affiliated'' to mean an entity that is closely associated with 
the recognized accrediting agency seeking to establish a new 
accrediting agency. We do not believe a narrower definition is 
required, as this establishes the appropriate conditions for 
consideration under this section.
    We do not expect that permitting affiliated entities to leverage 
the recognition of an accrediting agency will generate unacceptable 
risk to Federal student aid. The affiliation provision only satisfies 
the Federal link requirement for the new agency and does not provide an 
accelerated path to recognition. The new agency would still be 
responsible for satisfying the remaining requirements imposed by the 
Department for recognition.
    Similarly, we also do not believe it is necessary to prohibit any 
new agency from ``spinning off'' of a recognized agency if that 
recognized agency has had any compliance issues during the last review 
period, since the new agency is responsible for satisfying the 
requirements for recognition imposed by the Department.
    We do not think it is appropriate to require an affiliated agency 
to have the same policies, staff, and financial and administrative 
capability. The reason for creating an affiliated agency is likely to 
be based on the need to establish policies that differ in important 
ways in order to meet the unique needs of a subset of postsecondary 
institutions. Moreover, it may be impractical to expect the new agency 
to use staff who are fully employed by another agency. The Department 
would fully review, including whether they have sufficient staff to 
fulfill their obligations.
    The financial and administrative capability of the new agency is 
required as part of its determination of recognition; therefore, the 
new agency would be expected to be independently recognized as an 
accrediting agency, which is more important than relying upon the 
financial and administrative capability of the original agency. The 
only advantage being provided to affiliated agencies is the waiver of 
the requirement for two years of experience. All other standards for 
recognition must be met.
    Changes: None.
    Comments: One commenter disagreed with the proposal to eliminate 
the requirement that agencies seeking an expansion of scope provide 
documentation of their experience in accordance with Sec.  602.12(b), 
noting that the Department's explanation that cross-referenced sections 
cover this is incorrect and not in compliance with the APA. Another 
commenter stated that the rule will impede transparency in the 
Department's recognition process. The commenter stated that if we only 
included documents viewed on-site in the record if there were issues of 
noncompliance, it would make it difficult for NACIQI to validate the 
Department's determinations and ensure that the Department is 
fulfilling its oversight responsibilities. This commenter also urged 
the Department to include an on-site visit in addition to the document 
production currently required and to make all document production, 
review, and feedback of each accrediting agency public including those 
held onsite.
    Discussion: Section 602.32(j) requires agencies seeking an 
expansion of scope to provide documentation of their experience that 
satisfies the requirements of Sec.  602.12(b). We, therefore, disagree 
with the commenter who opined that we eliminated these requirements and 
violated the APA. We also disagree with the commenter who concluded 
that excluding records that demonstrate compliance would make it 
difficult for NACIQI to validate the Department's determinations and 
ensure that the Department is fulfilling its oversight 
responsibilities. While the NACIQI relies, in part, on the Department 
staff's final analysis of the agency, it also considers other 
information provided under Sec.  602.34(c). While under these 
regulations staff will not be required to upload every document they 
review, staff will be required to take notes regarding the review they 
conduct and provide a representative sample of evidence they identify 
to support their findings as part of their review. This evidence can be 
collected by making copies, saving images, or uploading a sample of 
documents reviewed.
    Changes: None.
    Comments: Several commenters opposed the proposed change to

[[Page 58854]]

Sec.  602.12(b)(2) that permits an agency that cannot demonstrate 
experience in making accreditation or preaccreditation decisions under 
the expanded scope at the time of its application or review for an 
expansion of scope to do so with limitations on the number of 
institutions or programs to which it may grant accreditation for a 
limited period of time. The commenters recognized that such agencies 
are also required under the proposed change to submit a monitoring 
report regarding accreditation decisions made under the expanded scope. 
One commenter requested that, if the Department proceeds with this 
change, that the regulation specify the agency ``will'' be subject to a 
limit of no more than five institutions or programs, within a specified 
volume of Federal financial dollars (e.g., $10 million annually), until 
they have completed a full recognition cycle and demonstrated that they 
are effective assessors of quality. Another commenter suggested the 
regulations include a required evaluation of the outcomes and actions 
taken by the agency at other degree levels.
    Discussion: We appreciate the commenters' input but believe that 
the regulations as written sufficiently ensure that an agency that 
demonstrates the capacity to administer an expanded scope, once 
authorized to make decisions under that expanded scope, is given time 
to also accumulate evidence of experience in doing so. The introduction 
of the monitoring report is an important element in support of this 
provision, as it provides the Department with an additional tool to 
detect and address any deficiencies that may arise as an agency begins 
to make decisions under the expanded scope. The regulation provides 
that the Department may limit the number of institutions or programs to 
which an accrediting agency may grant accreditation under the expanded 
scope for a designated period of time, and we believe it is appropriate 
to provide the Department with this discretion. The Department does not 
have the statutory authority to limit the amount of Federal financial 
aid dollars available to institutions or programs accredited by a 
specific agency if the students enrolled at an institution or in a 
program are qualified to receive Federal student aid.
    We do not agree that it is necessary in this section of the 
regulation to add a specific requirement that the Department conduct an 
evaluation of the outcomes and actions taken by the agency at other 
degree levels since such a review will automatically be part of the 
Department's continuing oversight of the agency, including any 
subsequent review for renewal of recognition.
    Changes: None.
    Comments: Some commenters expressed concern that lowering the 
requirements for accrediting agencies to become recognized is likely to 
have the unintended consequence of some agencies lowering their 
standards in order to accredit more institutions and programs.
    Discussion: We disagree that we have lowered the requirements for 
recognition of accrediting agencies. While changes have been made to 
allow for more competition and to address the need for innovation in 
higher education, these changes do not diminish the rigor with which 
the Department applies its standards during the recognition process, 
nor do they diminish the rigor agencies apply to their accreditation of 
institutions or programs. The Department does not anticipate recognized 
accrediting agencies will lower their standards in order to accredit 
more institutions and programs, as the reputation of an agency is 
critical to its members and their students. As noted earlier, it is 
still possible that an agency would lower standards to attract more 
institutions. The Department notes, however, that even under the 
current regulations an agency may lower its standards to attract or 
retain more members, so these new regulations do not create a new risk 
that does not already exist. Department staff and NACIQI monitor 
agencies to determine whether they maintain rigorous and appropriate 
standards that comply with the Department's regulations. The Department 
believes these regulations will give staff more capacity and means to 
do so. As many commenters have noted in response to our proposed 
regulations, accrediting agencies rely upon the trust and confidence of 
their peers and the community at large. The potential reputational 
damage that would result from lowered standards is an existential 
threat to an accrediting agency. In addition, if the standards no 
longer meet the Department's requirements, the accrediting agency will 
lose recognition by the Department.
    Changes: None.
    Comments: A couple of commenters objected to the Department's 
characterization of the growing practice of elevating the level of the 
credential required to satisfy occupational licensure requirements as 
credential inflation. They disagreed that professions that require 
graduate degrees may reduce opportunities for low-income students to 
pursue careers in those occupations.
    Discussion: We appreciate the perspective of these commenters and 
acknowledge that, in many professions, the skills and knowledge 
required to be successful in an increasingly complex world necessitate 
graduate or professional education. However, we are also aware of 
situations where the elevation of degree requirements for licensure or 
employment is not predicated on a demonstrated inability for academic 
institutions to meet the education and training demands of employers at 
the current degree level, such as by modifying the curriculum, but on 
other unrelated and pecuniary factors. Finally, while Federal student 
aid fully supports graduate and professional education programs with 
student loans, the Department is keenly aware of the disparate debt 
burden some programs place on students whose personal circumstances 
require them to fully finance the cost of their graduate or 
professional education, without the assurance of commensurate wages to 
service that debt. Graduate students, who commonly obtain Graduate PLUS 
loans, are limited only to borrowing up to the cost of attendance less 
any other financial aid. Therefore, they can accumulate far more 
Federal student loan debt than undergraduate students. The Department 
is concerned that, when credential requirements for a specific 
occupation are elevated, employers will not necessarily increase wages 
to account for the added cost of pursuing a higher-level credential.
    Changes: None.

Acceptance of the Agency by Others (Sec.  602.13)

    Comments: Several commenters objected to the decision to remove and 
reserve this section, arguing that wide acceptance by one's peers is an 
important criterion to ensure adequate oversight of institutions of 
higher education. Commenters opined that this wide acceptance signals 
the new agency is trusted by peer organizations, practitioners, and 
other stakeholders.
    Discussion: We appreciate the perspectives of these commenters; 
however, as noted in the NPRM, we believe that the current provisions 
of Sec.  602.13 duplicate requirements in other sections of the 
regulations. Commenters should note that we incorporated elements of 
Sec.  602.13 into the proposal for an initial application for 
recognition. Proposed Sec.  602.32(b) requires an agency seeking 
initial recognition to submit letters of support from accredited 
institutions or programs, educators, or employers and practitioners, 
explaining the role for such an agency and the reasons why they believe 
the

[[Page 58855]]

Department should recognize the agency. The change effectively enhances 
the wide acceptance requirement under Sec.  602.13 but applies it to 
only those accrediting agencies seeking initial recognition. In 
addition, under our current regulations, agencies are not required to 
provide letters from other accrediting agencies as evidence of wide 
acceptance. Some agencies have provided letters to demonstrate that 
programmatic accrediting agencies accept institutional accreditation by 
the agency as evidence of wide acceptance, but this is not required 
under our current regulations.
    Changes: None.
    Comments: One commenter expressed concern that the regulations in 
this section did not provide sufficient requirements for accrediting 
agencies that serve as financial stewards for Federal student aid. The 
commenter suggests that the Department impose, at a minimum, clear 
numerical caps on the number of institutions and programs that the 
agency may grant accreditation or preaccreditation for purposes of 
title IV.
    Discussion: Under current and proposed Sec.  602.36, the senior 
Department official (SDO) has the authority to limit, suspend, or 
terminate recognition of an agency if the NACIQI or Department staff 
demonstrate that deficiencies exist with the agency's compliance in 
meeting standards. For this reason, we do not believe it is necessary 
to impose a clear numerical cap on the number of institutions or 
programs that an agency may grant accreditation or preaccreditation for 
purposes of title IV aid. The senior Department official will determine 
if a limit is required and what that limit should be in the event that 
such a restriction is warranted by the recommendations of staff or 
NACIQI.
    Changes: None.

Purpose and Organization (Sec.  602.14)

    Comments: Two commenters expressed appreciation for the 
Department's recognition that the joint use of personnel, services, 
equipment, or facilities does not violate the ``separate and 
independent'' requirement.
    Discussion: We thank the commenters for their support.
    Changes: None.
    Comments: One commenter expressed support for the Department's 
interest in ensuring compliance with the long-established statutory 
requirement that accrediting agencies be ``separate and independent'' 
from any other institution, organization, or association. The commenter 
noted that they have witnessed the influence of professional 
associations on the standards established by accrediting agencies and 
the impact of this influence on the creation of requirements 
established by State licensure boards that quash innovation and new 
professional entrants.
    Discussion: We appreciate the commenter's support.
    Changes: None.
    Comments: One commenter recommended the Department revise this 
section to better address conflicts of interest and strengthen the role 
of public members. The commenter specifically suggested that we revise 
the definition to prevent newly retired administrators or professors 
from holding public commissioner positions; require all public 
commissioners to have a 10-year ``cooling off'' period from when they 
last worked primarily in higher education or owned equity in an 
institution of higher education; prohibit individuals who previously 
represented institutions on commissions from serving as public 
commissioners; and expand the ban on what constitutes employment 
connected to an institution in order to include individuals with any 
association to higher education institutions or organizations, not just 
individuals affiliated with the accrediting agency.
    Discussion: We appreciate the commenter's concern that public 
members of accrediting agency decision-making bodies may have conflicts 
of interest that impede their ability to fully represent their 
constituency. However, our experience with the recognized accrediting 
agencies does not support the assertion that members of a decision-
making body are unable to fulfill their duties because of prior 
employment or affiliation with a postsecondary institution. Indeed, the 
opportunity to meaningfully contribute while serving as a member of a 
decision-making body is enhanced with the specialized knowledge an 
individual may have acquired while working in postsecondary education, 
and each agency must establish and implement guidelines to avoid 
conflicts of interest.
    Changes: None.

Administrative and Fiscal Responsibilities (Sec.  602.15)

    Comments: Two commenters objected to the proposed changes in this 
section, suggesting that the changes to the required maintenance of 
records will impede transparency and accountability. These commenters 
argued that the absence of a record of the elements that informed the 
agency's final decision will hamper the Department in fulfilling its 
oversight responsibilities.
    Discussion: We disagree that the absence of a record of the 
elements that informed the agency's final decision will hamper the 
Department in fulfilling its oversight responsibilities. The Department 
is satisfied that the final decision documentation will provide 
sufficient detail to assess the agency's actions.
    Changes: None.
    Comments: One commenter recommended revising Sec.  602.15(a)(4) to 
provide for single-purpose institutions that prepare students for a 
wide variety of career and professions, to read, ``Educators, 
practitioners, and/or employers on its evaluation, policy, and 
decision-making bodies, if the agency accredits programs or single-
purpose institutions that prepare students primarily for a specific 
profession.''
    Discussion: We do not believe the suggested change substantively 
improves the regulatory language. Graduates of single-purpose 
institutions may pursue a variety of careers and professions.
    We also recognize that, while some programmatic accrediting 
agencies may accredit programs that prepare individuals for particular 
jobs, others might accredit programs that focus on unique curricular 
requirements or pedagogical practices, or that are based upon a shared 
set of underlying philosophical or religious beliefs. Such an agency 
might also accredit programs based on a shared set of scientific 
principles or educational standards. As such, an employer or a 
practitioner may not be able to provide feedback based on the way the 
program prepares individuals to perform a specific job function, but 
instead on the way that the program impacts other aspects of the 
person's contributions to the workplace more generally, including how 
graduates approach their work and solve problems.
    Changes: None.
    Comments: Two commenters requested that we clarify that the 
inclusion of students on decision-making bodies and employers on 
evaluation, policy, and decision-making bodies is optional.
    Discussion: Section 602.15(a)(4) provides that the agency will 
include ``Educators, practitioners, and/or employers on its evaluation, 
policy, and decision-making bodies, if the agency accredits programs or 
single-purpose institutions that prepare students for a specific 
profession.'' The agency may have one or more of these roles 
represented, but they are not required to have all of these roles 
represented on its

[[Page 58856]]

evaluation, policy, and decision-making bodies.
    Section 602.16(a)(5) provides that the agency will include 
``Representatives of the public, which may include students, on all 
decision-making bodies.'' The agency may include a student or students 
as public representatives as members of their decision-making bodies, 
but we do not require them to do so.
    Changes: None.
    Comments: One commenter recommended that we delete the phrase 
``which may include students'' from the provision of Sec.  602.15(a)(5) 
that includes members of the public on decision-making bodies. The 
commenter recommended that we explicitly note the possible inclusion of 
students in these roles in the accompanying handbook or guidelines. The 
commenter noted that, if subsequent experience shows that problems have 
materialized as a result of the presence of students, we can more 
easily modify the handbook or guidelines.
    Discussion: We appreciate the commenter's concern that students may 
not be well-suited to the work of an accrediting agency's decision-
making body, but the regulation does not require an agency to include a 
student as a member of the public. The intention of this regulatory 
provision is to recognize that, as entities that serve the interests of 
students by assuring the quality of postsecondary institutions, student 
perspectives should be represented. However, we also recognize that 
many, if not all, members of accrediting agency decision-making bodies 
consistently consider the needs of students. We note that agencies are 
free to include (or not include) students both before and after the 
effectiveness of this regulation. Students, like all members of agency 
decision-making bodies, must avoid conflicts of interest and adhere to 
other Department and agency requirements.
    Changes: None.
    Comments: Two commenters requested that we modify Sec.  
602.15(b)(2) that requires the agency to maintain complete and accurate 
records of ``all decision letters issued by the agency regarding the 
accreditation and preaccreditation of any institution or program and 
any substantive changes.'' The commenters suggested that we add a 
sentence to provide that this requirement would not apply to decision 
letters sent to institutions that are no longer in existence or 
accredited by the agency.
    Discussion: We appreciate the commenters' request, but note that, 
while it would likely be uncommon, a situation could arise that would 
necessitate the review of decision letters sent to institutions or 
programs that are no longer in existence or accredited by the agency.
    Changes: None.

Accreditation and Preaccreditation Standards (Sec.  602.16)

    Comments: One commenter stated that it would not be possible for an 
agency to effectively address the quality of an institution or program, 
as required by proposed Sec.  602.16(a), if the agency were prohibited 
from considering the impact of religious-based policies. The commenter 
suggested that such a provision gives too much deference to 
institutions; a religious institution can violate almost any 
accreditation standard so long as it justifies it with its religious 
mission. The commenter noted that the HEA, 20 U.S.C. 1099b(a)(4)(A), 
requires respect of all missions throughout the accreditation process 
and opines that the regulation appears to single out institutions with 
religious missions for special treatment. Additionally, the commenter 
suggested that the proposed regulatory language ``does not treat as a 
negative factor'' appears to go further than the term ``respect'' used 
in the statute.
    Discussion: We appreciate the comment. In light of the United 
States Supreme Court decision in Trinity Lutheran Church of Columbia, 
Inc. v. Comer, and the United States Attorney General's October 7, 2017 
Memorandum on Federal Law Protections for Religious Liberty pursuant to 
Executive Order 13798, the Department believes that it must provide 
more robust protection for faith-based institutions in situations in 
which their ability to participate in Federal student aid programs may 
be curtailed due to their religious mission. Allowing accrediting 
agencies to make negative decisions because of the exercise of religion 
could easily violate the Free Exercise Clause of the United States 
Constitution. While the HEA requires accrediting agencies to respect 
the missions of all institutions, the HEA singled out the need for 
accrediting agencies to respect religious missions, thereby emphasizing 
the need for particular attention to be paid to the rights of faith-
based institutions. In addition to the HEA, the Constitution protects 
religious missions in ways that other institutional missions are not 
protected. Simply requiring accrediting agencies to respect religious 
mission does not go far enough to ensure that faith-based institutions' 
Constitutional rights are protected. In addition, the Department feels 
the need to clarify that respecting a religious mission includes not 
considering an institution's policies or practices related to the 
tenets of its faith--which could include curricular requirements, 
hiring practices, conduct codes, and other aspects of student life and 
learning--as a negative factor in making an accreditation decision. In 
order to avoid Constitutional concerns or violations, the Department 
believes it is advisable to protect institutions' religious missions in 
the accreditation process, and that doing so includes not treating a 
policy or practice based on the religious mission as a negative factor, 
even if that policy or practice differs from particular points of view 
or priorities. The need to provide this protection has become apparent 
in several instances, including when the accreditation of faith-based 
universities has been publicly questioned by accrediting agencies due 
to their long-held institutional stances with a religious basis that 
have lost favor in academia and potentially the public at large.\11\
---------------------------------------------------------------------------

    \11\ www.christianpost.com/news/christian-college-says-accrediting-agencys-proposed-guideline-change-may-harm-religious-schools.html; https://www.empirestatetribune.com/est/campus/celina-durgin/03/03/2015/gordon-college-faces-potential-loss-of-accreditation-due-to-homosexuality-policy.
---------------------------------------------------------------------------

    In addition, under RFRA the government may only substantially 
burden a person's exercise of religion if the application of that 
burden to the person is the least restrictive means of furthering a 
compelling governmental interest.
    Where an accreditation decision does not respect the religious 
mission of an institution or uses as a negative factor an institution's 
religious mission-based policies, decisions, and practices in the areas 
covered by Sec.  602.16(a)(1)(ii), (iii), (iv), (vi), and (vii), the 
religious institution's exercise of religion could be substantially 
burdened. Furthermore, removing Federal aid would not be the least 
restrictive means of furthering a compelling governmental interest, as 
long as the agency can require that the institution's or program's 
curricula include all core components required by the agency.
    Thus, agencies must ensure that they do not use exercise of 
religion as a negative factor in their decision making.
    Changes: None.
    Comments: One commenter expressed concern that the inclusion of the 
phrase, ``consideration of State licensing examinations, course 
completion, and job placement rates'' in Sec.  602.16(a)(1)(i) imposes 
a vocational or occupational goal on postsecondary education. The 
commenter noted that, without in any way minimizing the importance of 
postsecondary education which does

[[Page 58857]]

focus on vocational and occupational outcomes, it is important to 
preserve that aspect of higher education that is centered on the 
transformation of the individual, on scholarship, and the development 
of the mind. The commenter requested that we include an explicit 
statement in the regulations to the effect that accrediting agencies 
may use indicators and expectations that are appropriate to the field 
of study, and that need not be quantitative in nature.
    Discussion: The language referenced by the commenter is part of the 
current regulations and makes clear that the use of these quantitative 
indicators is at the discretion of the agency, to be used only as 
appropriate. We did not propose changes to this language in the NPRM 
and are not making changes in these final regulations. We do not agree 
that we need an explicit statement in the regulations to the effect 
that accrediting agencies may use indicators and expectations that are 
appropriate to the field of study, as this is already permitted under 
the regulations. In addition, the regulations already permit an agency 
to rely upon qualitative indicators, or a mixture of qualitative and 
quantitative indicators, to evaluate an institution or program relative 
to its mission.
    Changes: None.
    Comments: Several commenters objected to this section of the 
regulations. One opined that only a well-rounded education, replete 
with the sciences, social sciences, humanities, and arts, can ensure 
that students are prepared not just to become members of the workforce, 
but also active and critical citizens of our Nation. Another offered 
that academic institutions need to have one set of consistent 
accreditation standards across all academic programs offered by the 
institution--arts, sciences, and humanities, as well as career-
technical education. The commenter stated that individual employer 
training programs are outside the scope of an academic institution's 
core programs, and should be funded by employers, not title IV funds, 
adding that career and technical education is broader than an 
individual employer's training program and qualifies students for 
gainful employment with a variety of employers.
    Discussion: We appreciate the commenters ideas on a well-rounded 
education; however, we do note that occupational programs are at the 
core of many traditional institutions. Occupational majors such as 
teacher education, nursing, and engineering continue to dominate 
student enrollments at many institutions. We disagree that our 
regulations imply that preparing for a specific occupation is the only 
goal of postsecondary education. Nonetheless, the Department of 
Education Organization Act of 1979 (Pub. L. 96-88 \12\) prohibits the 
Department from exercising any direction, supervision, or control over 
the curriculum, program of instruction, administration, or personnel of 
an educational institution, accrediting agency, or association.
---------------------------------------------------------------------------

    \12\ https://legcounsel.house.gov/Comps/Department%20Of%20Education%20Organization%20Act.pdf.
---------------------------------------------------------------------------

    Changes: None.
    Comments: Several commenters requested that the Department provide 
clarifying examples of ``clear expectations'' as referenced in Sec.  
602.16(a)(1). One commenter opined that ``clear expectations'' is not 
equivalent to the concept of effective application of standards and, as 
such, is inconsistent with the requirement in HEA section 496, 20 
U.S.C. 1099b, that the Secretary is responsible for determining that an 
accrediting agency or association has failed to apply effectively the 
criteria. Another commenter noted that, as written, the regulations 
could cause undue burden to the agency if it is interpreted to require 
the establishment of quantitative standards for faculty and fiscal 
capacity, among other elements, that would take away flexibility of the 
program and institution, depending on their mission and goals.
    Discussion: ``Clear expectations'' means that an agency must be 
direct and precise in communicating what requirements an institution or 
program must meet in order for the agency to make the determination 
that the institution or program is of sufficient quality to become 
accredited or maintain its accredited status. This does not mean that 
an accrediting agency must establish bright-line standards or require 
all institutions or programs to achieve the same quantitative results. 
It also does not preclude the use of qualitative standards for 
evaluating quality. Instead, it means that an accrediting agency must 
explain the criteria upon which it will make a determination that an 
institution is or is not providing instruction of sufficient quality. 
We do not believe that the use of ``clear expectations'' is 
inconsistent with the HEA; rather, we think it is far more consistent 
with the requirement that agencies assess institutional quality by 
reviewing a number of specific factors related to program design, 
instructional resources, and educational facilities. We believe that 
the prior regulations were insufficient because it was not clear what 
it meant to ``address'' quality.
    The Department does not agree that this provision increases burden 
on accrediting agencies, as the new regulations do not require the 
establishment of quantitative standards for faculty and fiscal 
capacity, nor do they disallow the use of qualitative measures to make 
a quality determination. While it is possible that an agency may wish 
to revise its policies and standards as a result of these regulatory 
changes and clarifications, which could impose a level of burden, it is 
not required. In some cases, accrediting agencies may wish to revise 
their standards to make them clearer, which may cause a short-term 
burden, but doing so may alleviate confusion that would, over the long 
run, be even more burdensome.
    Changes: None.
    Comments: One commenter expressed support for the proposed changes 
to Sec.  602.16(a)(2), as they provide alternative pathways for 
institutional Federal financial aid eligibility. Another commenter 
expressed support for the provisions in Sec.  602.16(a)(2)(ii) that 
make clear that, after the five-year limit on preaccreditation has 
expired, an agency must make a final accreditation action and must not 
place an institution or program on another type of temporary status. 
Two commenters expressed support for the regulations proposed at Sec.  
602.16(d)(1). One commenter noted that they provide alternative 
pathways for institutional Federal financial aid eligibility. One 
commenter appreciated that the regulations require accrediting agencies 
to clearly define ``direct assessment'' and be ready to evaluate it 
before they can accredit such programs.
    Discussion: We appreciate the commenters' support.
    Changes: None.
    Comments: Two commenters objected to proposed Sec.  602.16(d)(1). 
One commenter objected to the fact that the agency conducts an 
evaluation of the quality of institutions or programs. The commenter 
asserted that it is the faculty who have the expertise to make a 
judgment on the curriculum--and that expertise comes not only from 
within the discipline seeking to institute a new course, but 
inclusively from across the institution so that a wide perspective is 
provided for the quality and viability of the course or courses in 
question. The other commenter opined that the addition of direct 
assessment will increase credential inflation.
    Discussion: We appreciate the first commenter's point of view; 
however,

[[Page 58858]]

accrediting agencies are responsible for evaluating the academic 
quality of the programs or institutions they accredit. A key purpose of 
accreditation is to provide third-party verification of institutional 
or programmatic quality so, while the faculty may establish the 
curriculum, it is up to the accrediting agency to verify that it meets 
the standards put forth by the agency. In this section of the 
regulations, we are only amending the language to include a reference 
to direct assessment education, in addition to distance education and 
correspondence courses. We disagree with the commenter who opined that 
direct assessment programs would lead to credential inflation. Direct 
assessment programs directly measure student knowledge and learning, 
and have no direct bearing on the level of the credential a student 
earns. The credential associated with the program that considers direct 
assessment of student learning is determined by other factors.
    Changes: None.
    Comments: One commenter supported the provisions in Sec.  602.16(f) 
that would permit accrediting agencies to establish alternative 
standards for approval of curriculum. The commenter noted that this 
change would enable institutions to better address the needs of 
employers and help students to meet the educational requirements of 
professional credentialing or licensing boards of their chosen 
profession.
    Discussion: We appreciate the commenter's support.
    Changes: None.
    Comments: Two commenters objected to the provisions in Sec.  
602.16(f) that would permit accrediting agencies to establish 
alternative standards for approval of curriculum. One commenter argued 
that this would undermine faculty governance and is an unlawful 
incursion by the Department into matters of academic responsibility. 
Another commenter expressed concern about these provisions and 
requested clarification, noting it appeared that agencies would now be 
required to establish a standard to allow for institutions to have a 
separate curriculum approval process to support external entities 
(e.g., industry advisory boards, credentialing/licensing boards, 
employers) making decisions in this process and provide documentation 
to meet this criterion. The commenter observed that we do not restrict 
agencies from allowing institutions to have a separate curriculum 
approval process but said that it was unclear if separate approvals for 
external entities (e.g., employers) would now be required with this 
proposed provision. The commenter asked, if this was the case, what the 
expectations are for documenting the standards established for those 
external entities. The second commenter opined that the regulation 
would result in the emergence of low-level industry-based accrediting 
standards.
    Discussion: The commenters correctly noted that Sec.  602.16(f) 
would permit accrediting agencies to establish alternative standards 
for approval of curriculum. We would not require accrediting agencies 
to establish a standard to allow for institutions to have a separate 
curriculum approval process for a program that typically leads to a 
specific occupation; rather, these regulations allow for the 
development of such standards. The Department declines to establish new 
requirements for documenting alternative standards, because we believe 
that accrediting agencies are already required to document their 
standards and to retain documents supporting all final decisions.
    We do not expect these regulations will result in the emergence of 
low-level, industry-based accrediting standards, as we have not 
diminished the rigor with which the Department applies its standards 
during the recognition process, nor have we diminished the rigor 
agencies must apply to their accreditation of institutions or programs. 
To the contrary, we believe that the involvement of employers could 
have the opposite impact of strengthening the curriculum and increasing 
program rigor. As many commenters noted in response to our proposed 
regulations, accrediting agencies rely upon the trust and confidence of 
their peers and the community at large. The potential reputational 
damage that would result from lowered standards is an existential 
threat to an accrediting agency.
    Changes: None.
    Comments: Several commenters objected to the provisions in Sec.  
602.16(f)(4) that would permit accrediting agencies to maintain 
separate faculty standards for dual enrollment programs. The commenters 
noted that parity between dual enrollment programs and college courses 
is very important in order to avoid the perception that dual enrollment 
programs are ``lesser versions'' of college courses and to facilitate 
the transfer of credit. One group of commenters representing a rural 
institution noted that they have always firmly used the same 
credentialing and qualification standards for faculty teaching 
``regular'' courses and those teaching ``dual enrollment'' courses, as 
they believe that is important for maintaining quality and rigor.
    Discussion: We appreciate the commenters' concerns; however, as 
noted in the NPRM, the Department does not believe an agency should 
have to choose between setting rigorous standards for faculty that may 
be appropriate, for example, at comprehensive or research institutions, 
and providing students with the best opportunities possible, including 
in rural locations where faculty with specific kinds of degrees are not 
plentiful.
    In addition, the Department recognizes that, in many instances, 
high schools provide dual enrollment programs at their location due to 
unreasonable travel distances to a local college. In those instances, 
the high school teacher may have a different kind of academic 
credential but may have years of experience teaching college-level 
courses that are relevant to the dual enrollment opportunity. Also, the 
credential of choice may be very different for career and technical 
education instructors, where workforce experience may be far more 
important than the academic credential an instructor holds.
    Changes: The amendatory language in the NPRM added a new paragraph 
(b), and we should have redesignated all of the paragraphs that 
followed. Current paragraphs (d), (e), and (f) should have been 
redesignated as paragraphs (e), (f), and (g). We have revised the 
amendatory language to contain the correct numbering. We also include 
in the amendatory language Sec.  602.16(g)(4) that was inadvertently 
omitted from the NPRM. This paragraph provides that agencies are not 
prohibited from having separate faculty standards for instructors 
teaching courses within a dual or concurrent enrollment program, as 
defined in 20 U.S.C. 7801, or career and technical education courses, 
as long as the instructors, in the agency's judgment, are qualified by 
education or work experience for that role.

Application of Standards in Reaching an Accrediting Decision (Sec.  
602.17)

    Comments: One commenter opposed the changes to Sec.  602.17, 
arguing that the Department has made the requirements an agency must 
meet when applying its standards to accreditation decisions less 
rigorous. The commenter argued that the Department has failed to 
provide adequate justification for the proposed changes.
    Discussion: These regulations remain largely unchanged with respect 
to the requirements an agency must meet

[[Page 58859]]

when applying its standards to accreditation decisions. We are revising 
the requirements of Sec.  602.17(a)(3) to provide for the consideration 
of academic standards that are equivalent to those that are commonly 
accepted to facilitate the implementation and evaluation of pilot 
programs. The negotiators recognized that flexibility was required to 
allow agencies to consider their standards through a lens that fosters 
innovation, and we reiterate that this alternative approach is not a 
less rigorous approach.
    Changes: None.
    Comments: Two commenters expressed support for changes in Sec.  
602.17(a)(2) that require accrediting agencies to evaluate institutions 
at the institutional-level and at the individual program level. One of 
these commenters requested additional guidance concerning the 
Department's expectations for institutional accrediting agencies 
conducting evaluations at the program level. The commenter expressed 
concern that conflicts could arise due to competing interests if both 
an institutional accrediting agency and a programmatic or specialized 
accrediting agency review programs.
    Several commenters objected to the proposed changes in Sec.  
602.17(a)(2), arguing that the individual review of programs is not 
within the purview of institutional accrediting agencies. One commenter 
noted that institutional accrediting agencies look at each institution 
as a whole on an array of measures, such as financial stability, 
planning, and academic and related programs, including program review 
policies and implementation. The commenter stated that these agencies 
generally do not review individual programs unless something is called 
to their attention that affects existing standards. Two commenters 
wrote that this requirement would duplicate and confuse the 
institutional accrediting agencies' work with that of programmatic and 
specialized accrediting agencies, increasing the regulatory burden on 
accrediting agencies and institutions. One commenter requested 
clarification of the requirements and expectations for each type of 
agency, especially when a program holds an accreditation status with a 
programmatic accrediting agency.
    Discussion: We expect institutional accrediting agencies to 
demonstrate that they have established and use procedures for 
evaluating the quality of academic programs at an institution in 
accordance with these regulatory provisions. This is not a new 
requirement, as institutional accrediting agencies have always been 
responsible for evaluating the quality of the programs offered by the 
institutions it accredits. However, this does not mean that the agency 
must perform an in-depth review of every program offered by the 
institution. In general, an institutional accrediting agency should be 
aware of the programs offered by the institution and should make sure 
the institution has policies and practices in place to ensure that, in 
general, the academic programs offered meet the agency's quality 
standards. It is hard to imagine, in fact, how an accrediting agency 
could fulfill its obligation to ensure instructional or academic 
quality without engaging in a more detailed review of one or more of 
the institution's programs. Institutions are composed of academic 
programs and only through a review of those programs will an 
accrediting agency be able to determine whether an institution's 
policies regarding academic quality are effective in ensuring academic 
quality and rigor.
    An accrediting agency may use sampling or other methods in the 
evaluation to comply with these requirements. An agency may also use 
the accreditation by a recognized programmatic accrediting agency to 
demonstrate the evaluation of the educational quality of such programs.
    If conflicts arise between an institutional accrediting agency and 
a programmatic accrediting agency for a particular program, we would 
expect the institutional accrediting agency to consider the 
determination of quality made by the programmatic accrediting agency, 
as it possesses subject matter expertise. This reliance on programmatic 
accrediting agency's expertise mitigates duplication of effort, while 
providing an opportunity for collaboration and cohesion in an agency's 
independent assessment of program quality.
    Changes: None.
    Comments: One commenter suggested there is inconsistency between 
the requirements in Sec.  602.17(a)(2) and (b). Section 602.17(a)(2) 
requires accrediting agencies to evaluate student achievement and 
program outcomes at the institutional and programmatic level, while 
Sec.  602.17(b) permits accrediting agencies to use an institution's 
and program's self-study process to assess the institution's or 
program's education quality and success in meeting its mission and 
objectives, highlight opportunities for improvement, and include a plan 
for making those improvements. The commenter argued that there is 
significant research \13\ that one can objectively measure student 
achievement and outcomes, and that metrics and rubrics can validate 
that an institution and its academic programs are high quality and that 
institutions are properly measuring student achievement.
---------------------------------------------------------------------------

    \13\ Palomba, C., and Banta, T., ``The Essentials of Successful 
Assessment'' in Assessment Essentials: Planning, Implementing, and 
Improving Assessment in Higher Education, Jossey-Bass, 1999; Suskie, 
L., ``Assessing Student Learning: A Common Sense Guide,'' Anker 
Publishing, 2004; and learningoutcomesassessment.org.
---------------------------------------------------------------------------

    Discussion: The Department disagrees that the requirements in Sec.  
602.17(a)(2) and (b) are inconsistent. The requirements are 
complementary, as they require an agency to evaluate whether an 
institution or, in the case of a programmatic accrediting agency, a 
program is achieving its stated objectives, and require the institution 
or program to conduct a self-study to assess its educational quality 
and success in meeting its mission and objectives, highlight its 
opportunities for improvement, and develop a plan for making those 
improvements. Nothing in the regulations precludes an agency, 
institution, or program from using objective measures.
    Changes: None.
    Comments: One commenter supported the changes in Sec.  602.17(a)(3) 
that allow institutions to maintain requirements that ``at least 
conform to commonly accepted academic standards, or the equivalent, 
including pilot programs.'' The commenter noted that this provides 
institutions with the flexibility to pilot innovative, experimental 
programs while at the same time protecting consumers and maintaining 
educational quality.
    Discussion: We appreciate the commenter's support.
    Changes: None.
    Comments: One commenter opposed the changes to Sec.  602.17(a)(3) 
that would allow accreditation agencies to maintain degree and 
certificate requirements that at least conform to commonly accepted 
academic standards ``or the equivalent, including pilot programs in 
Sec.  [thinsp]602.18(b).'' The commenter stated that the Department has 
not provided examples or data to support the claim that currently 
institutions are resisting meaningful innovations that could benefit 
students and their fields, or an analysis of what the actual barriers 
are to enacting innovations when they are supported by faculty who 
teach in those fields. Another commenter suggested the Department 
create a probationary process for those institutions that propose an 
innovation to produce

[[Page 58860]]

outcomes more effectively or efficiently, during which they make a case 
for those innovations, try them out, and implement what works.
    Discussion: The Department has received input from several 
institutions that support the claim that commonly accepted academic 
standards can be an impediment to innovation. For example, an 
institution interested in moving to three-year baccalaureate degree 
programs is concerned that, although the same learning objectives may 
be met as in a four-year degree program, the three-year degree is not a 
commonly accepted academic standard. As the commenter above stated, the 
changes to this section of the regulations provide institutions with 
the flexibility to pilot innovative, experimental programs while at the 
same time protecting consumers and maintaining educational quality.
    The creation of a probationary process for institutions that 
propose an innovation to produce outcomes more effectively or 
efficiently, during which they make a case for those innovations, try 
them out, and implement what works falls within the purview of the 
accreditation agencies, and not the Department.
    Changes: None.
    Comments: One commenter objected to the phrase in Sec.  602.17(b) 
that reads, ``highlights opportunities for improvement, and includes a 
plan for making these improvements.'' The commenter suggested that this 
proposal is highly unworkable, because improvement in teaching and 
learning at the postsecondary level is rare, and that we should remove 
this language from the regulation.
    Discussion: We disagree with the commenter's assertion that 
improvement in teaching and learning at the postsecondary level is 
rare. The Academy of Arts & Sciences' report on Policies and Practices 
to Support Undergraduate Teaching Improvement 14 notes that 
``advances in the learning sciences are providing new insights into how 
students learn, and the ways in which teaching can support that 
learning. The main challenges are putting that knowledge in the hands 
of the faculty who teach undergraduates and providing them with the 
incentives and necessary support to use it.'' We agree that 
improvements in teaching and learning are challenging but also note 
that colleges and universities across the Nation expend significant 
efforts in this area.15 16 17 18 These regulations seek to 
encourage continued progress.
---------------------------------------------------------------------------

    \14\ amacad.org/publication/policies-and-practices-support-undergraduate-teaching-improvement.
    \15\ acue.org/wp-content/uploads/2018/07/ACUE-White-Paper1.pdf.
    \16\ Blackburn, R.T., Bober, A., O'Donnell, C., & Pellino, G. 
(1980). Project for faculty development program education: Final 
report. Ann Arbor, MI: University of Michigan, Center for the Study 
of Higher Education.
    \17\ academicaffairs.arizona.edu/uali-effective-strategies.
    \18\ insidehighered.com/blogs/higher-ed-gamma/strategies-improving-student-success.
---------------------------------------------------------------------------

    Changes: None.
    Comments: One commenter requested changes to Sec.  602.17(e) to 
better emphasize congressional intent that third-party comments play an 
important role in the accreditation process, not just ``information 
substantiated'' by the accrediting associations. The commenter 
expressed concern that associations of colleges and universities are 
inclined to protect their members, and the interests of their members, 
rather than act on the interests of students, taxpayers, and the 
Federal government.
    Discussion: We appreciate the commenter's request but note that we 
have revised Sec.  602.17(e) only to ensure that the data the 
accrediting agency considers are valid. We made no changes to the 
third-party comment requirements in Sec.  602.23(b). Third-party 
comments, along with any other information from other sources, will be 
used to determine whether the institution or program complies with the 
agency's standards. At the same time, we must ensure that institutions 
maintain their due process rights and that allegations of misconduct or 
illegal activity are not confused with proof of misconduct or illegal 
actions through a final judgment by the courts.
    Changes: None.
    Comments: Several commenters wrote in support of the changes to 
Sec.  602.17(g) that require an accrediting agency to demonstrate that 
it requires institutions that offer distance education or 
correspondence education to have processes in place to establish that a 
student who registers for a distance education or correspondence 
education course or program is the same student who participates and 
completes the course or program and receives academic credit. The 
commenters noted that removing the list of options for confirming 
student identity provides institutions flexibility to find solutions 
that fit the modality and content of the course and avoids obsolescence 
due to outdated technology and processes. One commenter also supported 
the requirement for notification of students of any additional charges 
(fees, software, hardware) associated with identity verification at the 
time of registration or enrollment.
    Discussion: We appreciate the commenters' support.
    Changes: None.
    Comments: Some commenters expressed concern that the requirements 
of Sec.  602.17(g) may incentivize profit-seeking entities to say that 
they can accomplish verifying student identity for a fee. According to 
the commenters, some of these entities have already asserted that test 
proctoring as a means of verifying student identity would no longer be 
acceptable because we did not include it in the proposed regulatory 
language. The commenters noted that, while the proposed language is 
clear, an additional sentence would assist institutional personnel in 
understanding our intent: ``By removing the list of verification 
methods, the Department does not imply that those techniques are 
invalid or would not be acceptable in fulfilling the requirements of 
this section.''
    Discussion: We are revising Sec.  602.17, in part, to provide 
greater flexibility to agencies in establishing requirements for 
verifying student identity. We neither require nor encourage the use of 
profit-seeking entities to comply with this provision. Additionally, 
the regulations stand alone and do not require a comparison of 
previously included text.
    We believe the regulations, as some commenters noted, clearly state 
the requirement and do not believe there is a need to state that the 
removal of the list of verification methods means that institutions 
could not continue to use such techniques. For example, while not 
included on our list of potential verification methods, test proctoring 
as a means of verifying student identity continues to be an acceptable 
method. While we agree with the commenters that removing the list of 
verification methods does not preclude an institution from continuing 
to use those methods, we do not typically include information in our 
regulations regarding what we are not regulating.
    Changes: None.
    Comments: One commenter requested that the Department revise Sec.  
602.17(g) to require accrediting agencies to prove they have robust 
systems to prevent what the commenter alleges to be widespread cheating 
in hybrid and online courses. Another commenter asserted that the 
proposed regulations are not sufficient to prevent student cheating, 
which they assert is very easy to do, especially online. The commenter 
stated that we should strengthen this

[[Page 58861]]

section to better control credential inflation associated with online 
cheating.
    Discussion: While we understand that many people assume that online 
and hybrid courses are more susceptible to student cheating than brick-
and-mortar courses, a recent study \19\ found that, ``contrary to the 
traditional views and the research literature, the surveyed students 
tend to engage less in AD [academic dishonesty] in online courses than 
in face-to-face courses.'' We do not believe there is a correlation 
between online cheating and credential inflation and the commenter 
provided no such evidence.
---------------------------------------------------------------------------

    \19\ researchgate.net/publication/325249542_Predictors_of_Academic_Dishonesty_among_undergraduate_students_in_online_and_face-to-face_courses.
---------------------------------------------------------------------------

    Changes: None.

Ensuring Consistency in Decision-Making (Sec.  602.18)

    Comments: Two commenters supported the proposed changes in Sec.  
602.18, writing that they provide flexibility for agencies in their 
application and enforcement of accreditation standards, and strong 
support for innovation in curriculum and instructional methods at 
institutions that serve non-traditional students through online 
instructional modalities.
    Discussion: We appreciate the commenters' support.
    Changes: None.
    Comments: One commenter asserted that the changes proposed in Sec.  
602.18 would weaken the expectation that accrediting agencies ensure 
quality, create loopholes in enforcement of standards, and diminish the 
Department's ability to take action against an agency that fails to act 
when necessary.
    Discussion: We disagree that the changes proposed in Sec.  602.18 
would weaken the expectation that accrediting agencies ensure quality, 
create loopholes in enforcement of standards, and diminish the 
Department's ability to act against an agency that fails to provide 
oversight when necessary. Indeed, the requirements in the section 
explicitly state that agencies must consistently apply and enforce 
standards. Moreover, while this section of the regulation applies 
specifically to the actions of the agency, subparts C and D detail, 
respectively, the requirements of the application and review process 
for agency recognition by Department staff and Department 
responsibilities, which continue to be rigorous and evidence based.
    Changes: None.
    Comments: One commenter requested that we revise Sec.  602.18(a) to 
make explicit that ``consistent'' does not mean ``identical.''
    Discussion: ''Consistent'' means free from variation or 
contradiction, accordant, coherent, compatible, concordant, conformable 
to, congruent, congruous, consonant, correspondent with or to, 
harmonious, or nonconflicting,\20\ whereas ``identical'' means ``being 
the same.'' \21\ We do not view these terms as interchangeable.
---------------------------------------------------------------------------

    \20\ merriam-webster.com/dictionary/consistent.
    \21\ merriam-webster.com/dictionary/identical.
---------------------------------------------------------------------------

    Changes: None.
    Comments: Two commenters supported the proposed changes to Sec.  
602.18(c) that would allow for agencies to work with institutions and 
programs to determine alternative means of satisfying standards and 
procedures due to special circumstances or hardships. One commenter 
appreciated the flexibility to find creative ways to report and comply 
with expectations when under hardship. Another commenter appreciated 
the Department's acknowledgement of the flexibility required to address 
student hardships and support innovation without jeopardizing 
recognition from the Department. The commenter is concerned, however, 
that allowing a program to remain out of compliance for three years, 
without any threat to its accreditation status, may allow for 
substandard education and the potential for unfair treatment of 
students to continue for an unreasonably long time. The commenter noted 
that, given the wide range of examples of circumstances that are beyond 
the control of an institution, from natural disasters to faculty 
recruitment issues, the Department should ensure that this provision 
continues to protect the interests of students, one of the primary 
purposes of accreditation.
    Discussion: We appreciate the commenters' support. We do not agree 
that the provisions of this part will lead to substandard education and 
the potential for unfair treatment of students to continue for an 
unreasonably long time. When curricular changes are needed for an 
institution to come into compliance with an agency's standards, it 
could take years for those changes to be developed, approved, and 
implemented, and for the positive effects of the new curriculum to be 
observed in the outcomes of program graduates. Nothing requires an 
accrediting agency to provide the full amount of time for an 
institution to come into compliance, and the Department expects that 
agencies would establish milestones that an institution must meet 
during the improvement period, as required in Sec.  602.19(b). Under 
current regulations, agencies can provide more than 12 months for an 
institution to come into compliance by granting ``good cause'' 
extensions. The Department believes that accrediting agencies have the 
experience and expertise to determine a reasonable time for an 
institution to come into compliance based on the steps necessary to 
come into compliance and the risk to students who continue to enroll 
during the improvement period. The requirements in Sec.  602.18(b) are 
precisely the guardrails necessary to protect students, even under 
unforeseen circumstances. The goals and metrics required by this 
provision under alternative standards must be equivalently rigorous to 
standards applied under normal circumstances.
    Changes: None.
    Comments: One commenter contended that the changes proposed in 
Sec.  602.18(b) would encourage credential inflation and education 
expansion.
    Discussion: We do not agree that the changes proposed in Sec.  
602.18(b) would encourage credential inflation and education expansion. 
The commenter attributed this potential risk to innovation; while we 
hope that innovation increases access to education for students seeking 
alternative postsecondary pathways, we do not associate that increase 
with credential inflation.
    Changes: None.
    Comments: Several commenters objected to Sec.  602.18(b)(3), which 
states that accrediting agencies may not use an institution's religious 
mission-based policies, decisions, and practices in certain areas--
curricula; faculty; facilities, equipment, and supplies; student 
support services; and recruiting and admissions practices--as a 
``negative factor'' in assessing the institution. The commenters 
asserted that this change elevates religious mission above other types 
of institutional mission, which the HEA similarly protects (20 U.S.C. 
1099b(a)(4)(A)). Commenters also contended that the Department has not 
adequately justified these proposed changes. They noted that we 
reported that we have not received any formal complaints about an 
institution's negative treatment during the accreditation process 
because of its adherence to a religious mission, nor have we provided 
any data on the number of institutions and students these changes would 
impact. Several commenters opined that the regulation

[[Page 58862]]

protects religious institutions that engage in discriminatory behavior.
    Discussion: Section 602.18 currently requires that accrediting 
agencies consistently apply and enforce standards that respect the 
stated mission of the institution, including religious mission. In 
light of the United States Supreme Court decision in Trinity Lutheran 
Church of Columbia, Inc. v. Comer, and the United States Attorney 
General's October 7, 2017 Memorandum on Federal Law Protections for 
Religious Liberty pursuant to Executive Order 13798, the Department 
believes that it must provide more robust protection for faith-based 
institutions in situations in which their ability to participate in 
Federal student aid programs may be curtailed due to accrediting agency 
decisions related to an agency's disagreement with tenets of the 
institution's faith-based mission, rather than actual insufficiencies 
in the institution's quality or administrative capability. Allowing 
accrediting agencies to make negative decisions because of the exercise 
of religion could easily violate the Free Exercise Clause of the United 
States Constitution. While the HEA requires accrediting agencies to 
respect the missions of all institutions, the HEA particularly singled 
out religious missions as something that agencies must respect, which 
suggests that Congress had concerns that faith-based institutions would 
be particularly vulnerable to negative accrediting agency decisions 
based on philosophical differences rather than insufficiencies of 
institutional quality or administrative capability. In addition to the 
HEA, the Constitution protects religious missions in ways that it does 
not protect other institutional missions. In order to avoid 
Constitutional concerns or violations, the Department believes this 
level of protection is appropriate regardless of whether there is a 
history of formal, documented complaints. When institutions believe 
that they have been treated unfairly based on their religious mission, 
they may fear retribution for issuing a formal complaint to the agency 
or the Department. However, in meetings with institutional leaders and 
organizations that represent faith-based institutions, and in the case 
of a recent proposed change in one agency's standards, it is clear to 
us that there is a real threat of negative accrediting agency action 
based on a philosophical disagreement In addition, under RFRA the 
government may only substantially burden a person's exercise of 
religion if the application of that burden to the person is the least 
restrictive means of furthering a compelling governmental interest. 
Where an accreditation decision uses as a negative factor an 
institution's religious mission-based policies, decisions, and 
practices in the areas covered by Sec.  602.16(a)(1)(ii), (iii), (iv), 
(vi), and (vii), the religious institution's exercise of religion could 
be substantially burdened. Furthermore, removing Federal aid would not 
be the least restrictive means of furthering a compelling governmental 
interest, as long as the agency can require that the institution's or 
program's curricula include all core components required by the agency. 
Thus, although the Department does not have data on the number of 
institutions that we would consider to have a religious mission under 
these regulations or know the number of students those institutions 
serve, National Center for Educational Statistics, Fall Enrollment and 
Number of Degree-Granting Postsecondary Institutions, by Control and 
Religious Affiliation of Institution: Selected Years, 1980 Through 2016 
(Aug. 2018) indicates that there were 881 faith-based institutions in 
the fall of 2016 as reported by the institutions. Institutions will 
continue to be subject to laws prohibiting discrimination, unless they 
are otherwise exempt.
    During rulemaking, one negotiator described the challenges that 
medical schools have faced when students, the institutions that provide 
medical education, or hospitals that provide medical residencies are 
unwilling to engage in practices that run counter to their religious 
beliefs or missions. Although agencies and institutions found a way to 
ensure that students could complete their medical training without 
violating their conscience or principles of their faith, there is no 
assurance that other agencies will come to a similar compromise or that 
other areas of conflict will be similarly resolved. These regulations 
ensure that popular opinion does not prevail when in opposition to 
tenets of faith at a faith-based institution, which is protected under 
the Constitution from being penalized for its religious mission.
    Changes: None.
    Comments: One commenter encouraged the Department to make more 
explicit that, when accrediting a program at a religiously affiliated 
institution, the agency ensures that the program's curricula include 
all core components required by the agency.
    Discussion: We are confident that the regulations are sufficient to 
make clear that a programmatic accrediting agency would ensure the 
program's curricula includes all of the core components required by the 
agency and, as appropriate, the licensing body for the profession for 
which the program prepares graduates. However, in some instances a 
program might partner with another institution that provides 
instruction in areas that run counter to the principles of faith at a 
faith-based institution. In other instances, a program might instruct 
students about practices or beliefs without requiring that students 
adopt those practices or beliefs.
    Changes: None.
    Comments: One commenter expressed concern that the Department will 
be investigating accreditation practices as they relate to an 
institution's mission, including religious mission. The commenter 
wondered if, for example, this regulatory change is meant to ensure 
that the Department will enforce the right of an Islamic institution to 
seek accreditation from a Christian-based accrediting agency.
    Discussion: The Secretary recognizes accrediting agencies to 
accredit institutions within an agency's individual approved scope of 
recognition. We do not require an accrediting agency to recognize an 
institution outside its approved scope, and the statute prohibits us 
from doing so for purposes of determining eligibility for Federal 
programs. If a Christian-based accrediting agency limits its scope to 
Christian institutions, we would not require it to accredit non-
Christian institutions; thus, we do not anticipate investigating 
actions that are contrary to the defined scope of an agency.
    Changes: None.
    Comments: One commenter requested that we frame the change in Sec.  
[thinsp]602.18(b)(6) in a way so that the public can have confidence 
that an institution or program has met accreditation standards 
throughout the full period that it claims accredited status. The 
commenter is concerned that retroactive accreditation, as framed in the 
proposed regulations, appears to enable an institution or program to 
claim it was accredited at the beginning of candidacy or 
preaccreditation status, even if it has not received a final 
affirmative accreditation decision.
    Discussion: We appreciate the commenter's concern and would not 
want the regulations to be interpreted to mean that an institution 
could claim retroactive accreditation effective at the point at which 
an institution submits an application for accreditation or 
preaccreditation status. It is our intention that the retroactivity 
would be limited to the point in the actual preaccreditation or 
accreditation process that resulted in an affirmative

[[Page 58863]]

decision that the institution or program is likely to succeed in its 
pursuit of accreditation, which is what preaccreditation or candidacy 
is intended to indicate. Thus, Sec.  602.18(b)(6)(ii) provides that 
retroactive accreditation may not predate the agency's formal approval 
of the institution or program for consideration in the agency's 
accreditation or preaccreditation process.
    We refer to the July 25, 2018 Memorandum \22\ that provides 
guidance regarding retroactive establishment of the date of 
accreditation. In accordance with a recommendation from the NACIQI, the 
Department agreed to permit the retroactive application of a date of 
accreditation, following an affirmative accreditation decision. Thus, 
we are codifying the current practices of many agencies, which the 
Department permitted prior to 2017 and once again permits.
---------------------------------------------------------------------------

    \22\ www2.ed.gov/admins/finaid/accred/retroactiveestablishmentofthedateofaccreditation72518.pdf.
---------------------------------------------------------------------------

    We adopted this policy recognizing that some programmatic 
accrediting agencies establish student enrollment or graduation 
requirements that a program must achieve prior to rendering a final 
accreditation decision for that program. This action is necessary to 
ensure that students who enrolled during the accreditation review 
period would be eligible for certain credentialing opportunities or 
jobs upon completion of the program that was awarded accreditation 
based on the quality of the program and the accreditation review that 
took place during the time these students were enrolled. Without this 
policy, no institution would want to put students in the position of 
completing a program that will never enable those students to apply for 
licensure or work in the field.
    Changes: None.
    Comments: Two commenters supported the changes in Sec.  602.18(c) 
that establish several conditions for alternative standards or 
extensions of time, including accrediting agency adoption, equivalent 
goals and metrics, a demonstrated need for the alternative, and 
assurance that it meets the intent of the original standard and does 
not harm students. One commenter noted that the proposed language 
includes enough guardrails and limitations to protect students, but 
also notes the importance for the Department to be rigorous in the 
oversight of any implementation of these provisions. One commenter 
suggested that the regulation would be more consistent with statute if 
we required agencies to report to the Department any actions involving 
alternative standards or extensions of time. The commenter noted that 
this could occur either at the time of recognition or annually, and in 
a format that would make clear to the public all such instances.
    Discussion: We appreciate the commenters' support. The Department 
assures the commenters that it will be rigorous in the oversight of any 
implementation of these provisions, including through the initial and 
renewal of recognition review processes. As required by Sec.  602.31, 
the Department will ensure that the agency complies with the criteria 
for recognition listed in subpart B of this part by, among other 
things, reviewing a copy of the agency's policies and procedures manual 
and its accreditation standards, including any alternative standards it 
has established. The agency will, in effect, provide the Department 
with information about its alternative standards or extensions of time 
through the documents it submits or that staff elect to review during 
the recognition process. The Department does not currently track the 
number of times agencies have provided good cause extensions under the 
current regulations and does not plan to add a separate reporting 
requirement as a result of these regulations. However, accrediting 
agency policies and standards, as well as an agency's final 
accreditation decisions and sanctions, are made available to the 
public, including on the accrediting agency's website.
    Changes: None.
    Comments: Several commenters expressed concern that the changes 
proposed in Sec.  602.18(c) that allow accrediting agencies to 
establish ``alternative'' standards for programs identified as 
``innovative'' have the potential to create a two-tiered system that 
likely would result in lower standards in certain programs. The 
commenters acknowledged that the Department's regulations must support 
learning innovations like competency-based education (CBE). One 
commenter noted that CBE enables their students to complete their 
credentials and degrees more quickly, affordably, and with greater 
relevancy to their career goals, inasmuch as they have a clearer 
identification of the knowledge and skills sought by employers. 
However, the commenter was concerned that, as written, the regulations 
would create conditions in which an accrediting agency's seal of 
approval would not be considered ``reliable'' or ``consistent'' as 
required by law, and students in some programs would be subjected to 
lower-quality curricula than students in other programs. The commenter 
opined that truly innovative programs do not need to be propped up by 
different agency standards in order to thrive; rather, this change 
could encourage accrediting agencies to lower their standards and allow 
programs out of compliance with the normal standards to still operate.
    A group of commenters expressed concern that the changes to Sec.  
602.18(c) would reduce institutional accountability, exposing students 
and taxpayers to significant risk. The commenters recommended that the 
Department specify the circumstances under which the alternative 
standards may apply and create a process to verify that the alternative 
is equivalent to the original standard.
    Another commenter suggested that the term ``monitoring'' is too 
vague to be meaningful.
    Discussion: We do not believe that the ability to establish 
alternate standards, or to establish alternate criteria for meeting a 
standard or alternate metrics for evaluating compliance with a single 
standard, will incentivize accrediting agencies to create a two-tiered 
system that likely would result in lower standards in certain programs. 
In some instances, the agency may elect to maintain a single standard, 
but allow alternative ways for a particular institution or program to 
meet that standard. Not only does the law require accrediting agencies 
to be reliable and consistent, but as we stated previously, accrediting 
agencies rely upon the trust and confidence of their peers and the 
community at large. The potential reputational damage that would result 
from lowered standards is an existential threat to an accrediting 
agency. Moreover, the regulation requires the agency to apply 
equivalent standards, policies, and procedures; a two-tiered system 
would not fulfill this requirement.
    The regulations include examples of the kinds of circumstances that 
could warrant the establishment of alternative standards. We do not 
believe it is reasonable for the Department to further specify the 
circumstances under which the alternative standards may apply, as the 
assumption is that some of these circumstances will be unanticipated 
and unprecedented. We also do not believe it is necessary to create a 
new process to verify that the alternative is equivalent to the 
original standard. When the Department conducts a review of an agency's 
standards, it will include any alternative standards that had been 
established and will ensure those standards are sufficient to ensure 
the quality of the institution.

[[Page 58864]]

    We also disagree that the term ``monitoring'' is too vague to be 
meaningful. To ``monitor'' means to observe, record, or detect.\23\ 
This is wholly consistent with the intention of the monitoring report.
---------------------------------------------------------------------------

    \23\ dictionary.com/browse/monitored.
---------------------------------------------------------------------------

    Changes: None.
    Comments: One commenter asserted that the proposed changes in Sec.  
602.18(c) violate the HEA and the APA. The commenter opined that the 
use of the word ``consistently'' in the HEA means that the accrediting 
agency must constantly adhere to the same standards and principles to 
ensure that courses or programs offered are of enough quality to 
achieve their stated objectives.
    The commenter asserted that, because the regulations do not 
delineate what would constitute ``special circumstances,'' accrediting 
agencies are permitted to avoid statutory compliance. Similarly, the 
commenter stated that, because the regulations do not specify what 
``innovative program delivery approaches'' or ``undue hardship on 
students'' mean, accrediting agencies would be able to avoid the 
statutorily required ``consistency.''
    The commenter objected to the provision that the agency's process 
for establishing and applying the alternative standards, policies, and 
procedures be set forth in its published accreditation manuals rather 
than requiring the agency to publish its ``alternative'' standards or 
make them available to the Department, State authorizers, or students. 
The commenter concluded that these proposed changes are arbitrary and 
capricious, not in accordance with law, and in excess of the 
Department's statutory jurisdiction under section 706 of the APA.
    Discussion: We agree with the commenter that the use of the word 
``consistently'' in the HEA means that the accrediting agency must 
constantly adhere to the same standards and principles to ensure that 
courses or programs offered are of sufficient quality to achieve their 
stated objectives. However, we do not agree that the establishment of 
alternative standards, criteria, or metrics is inconsistent with the 
intent of the statute. Rather, the regulations provide that an 
accrediting agency can establish a second set of standards that it 
consistently applies under the circumstances identified that 
necessitated the creation of alternative standards. The agency would be 
expected to apply the alternate standards fully and consistently in 
each instance in which the alternate standard (or criterion or metric) 
is indicated.
    We do not agree that because the regulations do not exhaustively 
enumerate what constitutes a ``special circumstance,'' ``innovative 
program delivery approaches,'' or ``undue hardship on students,'' 
accrediting agencies can avoid statutory compliance. Nothing in these 
regulations absolves an accrediting agency from its obligation to be a 
reliable authority as to the quality of education or training offered 
by the institutions it accredits.
    We believe it is appropriate and adequate for the accrediting 
agency to document its process for establishing and applying the 
alternative standards, metrics, policies, and procedures in its 
published accreditation manuals. These agencies make these manuals 
available and they would, therefore, be available to the Department, 
State authorizing agencies, or students.
    As we have stated previously, we do not agree that the changes in 
this part violate the HEA and the APA.
    Changes: None.
    Comments: One commenter requested that, in Sec.  602.18(c)(2), we 
replace the word ``metrics'' with ``expectations.'' The commenter was 
concerned that ``metrics'' implies a quantitative measure.
    Discussion: We do not believe that ``expectations'' captures the 
intention of word ``metrics'' in Sec.  602.18(c)(2). ``Metrics'' is 
commonly understood to mean a standard for measuring or evaluating 
something,\24\ while ``expectations'' generally refers to the act or 
state of looking forward or anticipating or the degree of probability 
that something will occur.\25\ Indeed, because this section of the 
regulations refers to ``metrics'' in combination with ``goals,'' we 
feel comfortable that an accrediting agency could set and apply 
qualitative, quantitative, or a combination of qualitative and 
quantitative measures.
---------------------------------------------------------------------------

    \24\ https://www.merriam-webster.com/dictionary/metrics?src=search-dict-box.
    \25\ https://www.merriam-webster.com/dictionary/expectations.
---------------------------------------------------------------------------

    Changes: None.
    Comments: One commenter requested that we clarify what ``undue 
hardship on students'' under Sec.  602.18(d)(1)(v) means so that is it 
not a blanket exception. The commenter asserted that the ``normal 
application'' of an agency's standards should always be made in 
students' interests, and that current and prospective students deserve 
to know about any problems related to a provider's accreditation and 
should not be used as an excuse for noncompliance.
    Discussion: We have intentionally not enumerated what might 
constitute ``undue hardship on students'' under Sec.  602.18(d)(1)(v) 
in order to provide accrediting agencies latitude to apply their 
judgment in the event of unforeseen circumstances. Moreover, we 
strongly agree that an agency's standards should always be made in 
students' interests. It is in keeping with this principle that we 
determined students would be best served if accrediting agencies could 
be responsive to institutional circumstances that necessitate the 
application of alternative standards or metrics recognizing that these 
standards or metrics would not and could not release the agency from 
its duty to be a reliable authority as to the quality of education or 
training offered by the institutions it accredits.
    Changes: None.
    Comments: One commenter requested that we revise Sec.  602.18(c)(4) 
to require institutions to ask students to provide written informed 
consent when they are participating in an innovative or alternative 
approach to their education.
    Discussion: We appreciate the commenter's request but believe that 
it would be too burdensome to require institutions to ask students to 
provide written informed consent when they are participating in an 
innovative or alternative approach to their education. Moreover, Sec.  
602.18(c)(4) applies to actions the accrediting agency will take to 
ensure the institutions or programs seeking the application of 
alternative standards have ensured students will receive equivalent 
benefit and not be harmed through such application, so it is left to 
the agency's discretion to require the institutions they accredit to 
obtain consent from students to participate in an innovative or 
alternative approach.
    Changes: None.
    Comments: Two commenters supported Sec.  602.18(d), noting that the 
regulation provides accrediting agencies additional flexibility in 
determining the length of time an institution or program may remain out 
of compliance in cases where circumstances are beyond the institution's 
or program's control. The commenters asserted that is a common-sense 
change and can help protect the interests of students, provided it is 
clear that these decisions are up to each accrediting agency and will 
not leave agencies vulnerable to legal action if they determine an 
extension is not appropriate. The commenters emphasized that it is up 
to the Department to ensure agencies use this

[[Page 58865]]

flexibility judiciously and do not allow unwarranted extensions of 
accreditation without compelling reason.
    Discussion: We appreciate the commenters' support and reassert our 
commitment to ensure agencies use this flexibility judiciously and do 
not allow unwarranted extensions of accreditation without compelling 
reason.
    Changes: None.
    Comments: Several commenters suggested that the changes proposed to 
Sec.  602.18(d) will make it easier for failing institutions to remain 
out of compliance with accrediting agency standards for a much longer 
time without serious accountability, subjecting multiple cohorts of 
students to subpar education. One commenter argued that we did not 
provide clear evidence that necessitated the increase in the additional 
time and number of years colleges can be out of compliance with 
accrediting agency standards, and opined that this change would likely 
exacerbate many of the issues facing students at the institution before 
action is taken by the agency. The commenter suggests that, if the 
Department were to extend this time frame, there should be stringent 
consequences that would discourage an institution from continuing out 
of compliance.
    Discussion: We disagree that the changes to Sec.  602.18(d) will 
make it easier for failing institutions to remain out of compliance 
with accrediting agency standards for a much longer time without 
serious accountability. The extension of time continues to be based 
upon an accrediting agency's determination of good cause and requires 
exceptional circumstances beyond the institution's control be present 
that impede the institution's ability to come into compliance more 
expeditiously. Moreover, the extension of time requires approval from 
the agency's decision-making body, confidence on the part of the agency 
that the institution will successfully come into compliance within the 
defined time period, and, most importantly, that the decision will not 
negatively impact students. We are confident that these provisions 
appropriately balance the need for flexibility during unusual 
circumstances and accountability to students who rely upon the 
accrediting agencies' determination of educational quality. The 
Department has seen multiple examples in which agencies have provided 
extended time beyond 12 months for an institution or program to come 
into compliance, especially during the recent recession when college 
enrollments surged, and employment outcomes deteriorated. In some 
instances, more time was required to improve educational outcomes, 
either because new job opportunities had to open up, or the institution 
had to substantially reduce enrollments in subsequent classes to adjust 
to the reality that high unemployment rates reduced opportunities for 
new college graduates, regardless of which institution they attended. 
In other instances, colleges or universities facing economic hardships 
have been given more than 12 months to execute planned giving campaigns 
or to take other measures to control spending and balance their budget. 
Still other institutions have been provided good cause extensions 
beyond 12 months when significant issues of noncompliance or management 
capacity are identified, since repairing facilities and replacing 
management teams can require longer than 12 months to complete. In 
recognition of circumstances such as these, the Department provides 
additional regulatory flexibility, but expects agencies to use this 
flexibility within defined parameters to ensure institutions or 
programs come into compliance.
    Changes: None.
    Comments: Two commenters requested that we revise Sec.  602.18(d) 
to address the expectations for how agencies must address noncompliance 
with standards, including timelines, in only one criterion to avoid 
confusion and conflicting terms. The commenters are seeking consistency 
with Sec.  602.20(a)(2).
    Discussion: We disagree that we should require consistency between 
the timelines in Sec. Sec.  602.18(d) and 602.20(a)(2). The regulations 
intentionally provide latitude to the accrediting agencies to establish 
timelines that are reasonable and appropriate to their process and 
procedures. Accrediting agencies may, and we expect most will, align 
their timelines for addressing noncompliance with their standards, but 
it is at their discretion to do so. Moreover, Sec.  602.18(d) contains 
optional timelines for implementation, whereas Sec.  602.20(a)(2) 
contains required implementation timelines. We note that the timeline 
of three years used in Sec.  602.18(d) can be used congruently with the 
enforcement timelines used in Sec.  602.20, which must not exceed the 
lesser of four years or 150 percent of the length of the program (for a 
programmatic agency) or the length of the longest program (for an 
institutional agency). The timelines in Sec.  602.20 are used when an 
agency finds an institution or program out of compliance with a 
standard; whereas the timelines in Sec.  602.18 are used when an 
institution or program works with an agency to address a circumstance 
that precludes compliance with a specific standard.
    Changes: None.
    Comments: One commenter requested that we amend Sec.  
602.18(d)(1)(i) to list the death of an institutional leader as an 
example of a circumstance that would serve as a basis for a good cause 
extension.
    Discussion: We disagree that the death of an institutional leader 
serves as an example of a circumstance that would serve as a basis for 
a good cause extension since institutional governance procedures 
require that an independent board of trustees make critical decisions 
regarding the institution. As a result, the death of an institution's 
leader should not result in an institution's inability to meet the 
requirements of its accrediting agencies. In fact, it would be 
inappropriate for an agency to opine on the appointment of senior 
leaders by an institution as long as the institution followed its 
policies and procedures for selecting a new leader, which could include 
the appointment of that leader by a State or other governmental entity, 
or potentially even the appointment of an institution's leader by 
election. The Department notes that there are no specific requirements 
in statute or regulations related to institutional governance. No 
particular model of governance, such as shared governance or faculty 
governance, is required. This is one model for administering an 
institution, but not the only acceptable model.
    In the case of private institutions, the governing board of the 
institution is best able to make decisions about the appointment of 
senior leaders. At public institutions, elected or appointed State 
leaders often provide input into these decisions.
    Changes: None.

Monitoring and Reevaluation of Accredited Institutions and Programs 
(Sec.  602.19)

    Comments: One commenter agreed with the provision in Sec.  
602.19(e) that NACIQI should review an institution when that 
institution's enrollment increases by 50 percent through distance 
education or correspondence courses in one year. The commenter noted 
that any enrollment change of this magnitude can place a significant 
strain on an institution's administrative capability and ability to 
maintain academic quality and rigor. Another commenter suggested that 
the word ``effectively'' in Sec.  602.19(b) is undefined

[[Page 58866]]

and could result in the misapplication of this regulation. Another 
commenter opined that Sec.  602.19(b) does not adequately address the 
problem of monitoring, asserting that the membership associations have 
consistently resisted taking full responsibility for monitoring and 
oversight.
    Discussion: While we appreciate the commenters' input regarding 
these provisions, we note that the only changes made to the regulations 
in this section were to update cross-references in Sec.  602.19(b) from 
Sec.  602.16(f) to 602.16(g), and in Sec.  602.19(e) from Sec.  
602.27(a)(5) to Sec.  602.27(a). There were no changes made to this 
section regarding the review of institutions based on changes in 
enrollments.
    Changes: None.

Enforcement of Standards (Sec.  602.20)

    Comments: One commenter supported the changes proposed in this 
section, noting that, currently, Sec.  602.20 sets forth a virtually 
inflexible process for agencies to address an institution or program 
that is not in compliance with a standard. The commenter observed that 
an agency must either immediately initiate adverse action or require 
the institution or program to bring itself into compliance in 
accordance with rigid deadlines. With the proposed changes, the 
commenter noted that agencies would be required to provide an out-of-
compliance institution or program with a reasonable timeline to come 
into compliance, and the timeline for compliance would consider the 
institution's mission, the nature of the finding, and the educational 
objectives of the institution or program. Another commenter who 
supported these changes expressed appreciation for the added 
flexibility for accrediting agencies in setting the length of time 
institutions or programs must come into compliance if found to be in 
noncompliance. This commenter noted that the change reflects the 
reality that, in some circumstances, institutions are unable to come 
into compliance under the current ``two-year'' rule.
    Discussion: We thank the commenters for their support and agree 
that in some instances, such as when an institution must undertake 
significant curriculum reform to improve student outcomes, it could 
take more than a year to implement the change. In particular, it can 
take significant time to obtain approval of the new curriculum through 
the faculty governance process. Once approved, the institution may need 
to enroll and graduate new cohorts of students under that new 
curriculum in order for the institution to fully demonstrate 
compliance.
    Changes: None.
    Comments: Several commenters objected to the changes proposed in 
this section, asserting that these changes would make it exceedingly 
difficult for the Department to ever hold an accrediting agency 
accountable. The commenters noted that current regulations already 
allow failing institutions to continue to operate out of compliance 
long past the current two- year deadline and few, if any, lose their 
accreditation. These commenters are concerned that the proposed 
flexibility to issue sanctions will make it almost impossible for 
accrediting agencies to hold an institution accountable in a timely 
manner. One commenter added that, when an institution is in the process 
of fixing deficiencies, we should prohibit access to any Federal 
financial aid programs until they are back in compliance. Another 
commenter asserted that the proposed regulation provides for an 
exceptionally long period of time to subject current and prospective 
students to uncertainty about the ultimate quality and value of that 
institution's credential. A group of commenters argued that the 
Department's reasoning ignores the reality that accrediting agencies 
often act far too slowly to protect students from predatory 
institutions and that students suffer when institutions continue to 
access title IV funds instead of closing. The commenters referenced 
recent high-profile closures of institutions that underscore the need 
for swifter action by accrediting agencies and the Department. The 
commenters asserted that expediency on the part of accrediting agencies 
could have protected tens of thousands of students from going further 
into debt by unknowingly continuing to attend failing institutions, and 
would have given those students an opportunity to transfer to higher-
performing institutions or to have their Federal student loans 
discharged.
    Discussion: Section 602.20 will not make it difficult for the 
Department to hold accrediting agencies accountable. The regulatory 
requirements for the enforcement of standards are extensive and include 
multiple elements that will inform the Department's oversight of the 
agencies' performance.
    We also do not agree that the flexibility to issue sanctions will 
make it almost impossible for accrediting agencies to hold an 
institution accountable in a timely manner. In fact, the accrediting 
agency's decision-making body continues to have the authority to 
determine how long a program or institution has to come into full 
compliance, and it retains the right to establish milestones that an 
institution must meet in order to maintain its accreditation. Agencies 
will continue to be held accountable for enforcing their standards and 
ensuring that institutions and programs are operating in compliance 
with them.
    It would be inappropriate to withhold title IV funds from an 
institution that is making timely and effective progress toward 
resolving a finding of noncompliance. Some findings of noncompliance 
are not directly related to educational quality or the student 
experience and may have no impact on the quality of education 
delivered. The intention is to provide programs and institutions with 
enough time and opportunity to comply with the accrediting agency's 
standards and minimize disruption to enrolled students' pursuit of 
their educational goals. Withdrawing title IV eligibility may have a 
devastating impact on students and may jeopardize an institution's 
financial viability over findings of noncompliance that do not indicate 
that a program or institution is failing. The Department does not 
believe that providing more time for institutions to come into 
compliance will support predatory practices, as the Department expects 
that an agency would take immediate action or require the institution 
to cease those practices immediately. For example, misleading 
advertisements should not be allowed to continue once discovered and 
errors in information on an institution's website would similarly need 
to be corrected immediately. The extended timeframe establishes a 
maximum period of time but does not assume that agencies will always 
provide the maximum time available for an institution to come into 
compliance.
    We do not agree that the provisions in this part provide an 
exceptionally long period of time for the institution or program to 
come into compliance. As other commenters have reported, certain 
metrics will not show improvement in the short term and require 
multiple cohorts of students to benefit from the changes the 
institution or program has put in place before the outcome measures 
reflect those enhancements.
    Finally, we do not agree that these regulations will cause 
accrediting agencies to act slowly or that students are better served 
by closing, rather than improving, an institution or program. Students 
are best served by an effective institution that affords the student 
the opportunity to achieve their educational goals in a program or at 
an institution that has been granted accreditation from

[[Page 58867]]

a recognized accrediting agency. This regulation supports an 
accrediting agency to work closely with the institutions or programs it 
accredits to ensure compliance with the agency's standards and 
educational quality.
    Changes: None.
    Comments: One commenter expressed concern that providing an 
institution or academic program with a ``reasonable'' written timeline 
for coming into compliance based on the nature of the finding, the 
stated mission, and educational objectives will result in litigation on 
what is a ``reasonable'' timeline for establishing compliance. The 
commenter remarked that institutions will seek the longest time 
possible to become compliant, harming students in subpar programs, 
while the accrediting agency will not have clear guidelines to force 
improvement by a set time prior to taking adverse action. Another 
commenter stated that the Department did not provide evidence that the 
current timeline is too aggressive or overly prescriptive, and that 
extending the time for an institution to come into compliance will 
result in inadequate protections for students.
    Discussion: We do not agree that the use of the term ``reasonable'' 
will result in litigation on what is a ``reasonable'' timeline for 
establishing compliance. While institutions or programs may seek to 
negotiate an extended period of time in which to come into compliance 
with the agency's standards, the accrediting agency's decision-making 
body will have made its determination of reasonableness based on the 
nature of the finding, the stated mission, and educational objectives 
of the institution or program. That determination will dictate the 
timeline to return to compliance, which can be less than, but must not 
exceed, the lesser of four years or 150 percent of the length of the 
program in the case of a programmatic accrediting agency, or 150 
percent of the length of the longest program at the institution in the 
case of an institutional accrediting agency. Any extension of the 
timeline beyond that prescribed timeframe must be made for good cause 
and in accordance with the agency's written policies and procedures for 
granting a good cause extension. The assurance of educational quality 
and the protection of students is a primary factor in the accrediting 
agency's determination of a reasonable timeline for institutional 
improvement. Moreover, nothing in this regulation precludes the use of 
mandatory arbitration agreements by agencies to reduce the risk of 
frivolous litigation by institutions regarding the time limits imposed 
by the agency.
    Changes: None.
    Comments: One commenter supported the proposed changes to Sec.  
602.20(a)(2) that allow additional time to document compliance, noting 
that, for some issues, such as program completion, it can take more 
than two years to show the effects of changes.
    Discussion: We thank the commenter for their support and agree that 
it can take more than two years to implement program improvements and 
see their impact on future graduating cohorts.
    Changes: None.
    Comments: One commenter objected to the provisions of Sec.  
602.20(a) that provide intermediate compliance checkpoints. The 
commenter asserted that these elements are confusing, and that each 
accrediting agency will handle this differently.
    Discussion: We do not agree that the opportunity for an accrediting 
agency to include intermediate checkpoints during the timeframe when a 
program or institution is working to come into full compliance with the 
agency's standards is confusing. The Department already requires each 
agency to apply monitoring and evaluation approaches in Sec.  
602.19(b). In Sec.  602.20, we do not prescribe how an agency will 
enforce its standards but require the agency to follow its Department-
approved written policies and provide the institution with a reasonable 
timeline for coming into compliance.
    We expect that accrediting agencies may utilize this provision 
differently, as they are not required to include intermediate 
checkpoints, and we anticipate they will do so in situations where it 
is important to gauge the progress toward compliance an institution or 
program is making. Intermediate checkpoints may be particularly useful 
to accrediting agencies when they have determined the timeframe for 
improvement is approaching or at the standard timeframe limit.
    Changes: None.
    Comments: One commenter expressed concern that we had removed a 
requirement from Sec.  602.20(a)(1) that an agency immediately initiate 
adverse action.
    Discussion: We continue to require accrediting agencies to initiate 
immediate adverse action when they have determined such action is 
warranted. We did not remove the requirement but relocated it to Sec.  
602.20(b).
    Changes: None.
    Comments: One commenter requested that we establish specific 
intervals for reviewing monitoring reports in Sec.  602.20(a)(2). The 
commenter opined that, as written, it is not clear if the monitoring 
period is inclusive of, or in addition to, any good cause extension. 
Another commenter suggested that we clarify that changes that can be 
made expeditiously must be implemented more quickly. The commenter 
recommended that accrediting organizations develop explicit timeframes 
for these changes, noting that students are not protected when an 
institution or program is out of compliance for four years. Another 
commenter recommended that we require an institution to make direct 
disclosures of actions or sanctions to prospective and enrolled 
students at the start of the timeframe specified in the monitoring 
report.
    Discussion: The changes to this section are designed to provide 
accrediting agencies with the flexibility to use monitoring reports and 
reasonable timelines for coming into compliance that are appropriate to 
the standard, the nature of the finding, the stated mission, and the 
educational objectives of the institution or program. It would not be 
effective to establish specific intervals for reviewing monitoring 
reports, as those intervals will and should vary based on the factors 
listed above. The Department intends the monitoring report process 
would be separate from the compliance report process that includes 
extensions for ``good cause.''
    We do not agree that it is necessary to explicitly require that 
changes that can be made expeditiously must be implemented more 
quickly. Implementation requirements based solely on timeliness would 
undermine the ability of an institution to prioritize changes that may 
be less timely but have greater benefits to students. We are confident 
that the decision-making bodies of recognized accrediting agencies will 
ensure that the timelines they establish for coming into compliance 
will be reasonable and consider the speed with which a remedy could be 
implemented.
    Finally, we do not agree that prospective and enrolled students 
would benefit from direct disclosures of monitoring activities. As we 
have stated in the NPRM and this preamble, we expect to use the 
monitoring report to address minor deviations from agency standards; 
alerting students each time a monitoring report is issued may undermine 
the effectiveness of student notifications for more serious findings of 
noncompliance subject to mandatory notification requirements.
    Changes: None.

[[Page 58868]]

    Comments: One commenter requested that we clarify in Sec.  
602.20(a)(4) what action would occur in response to a monitoring 
report. The commenter asserted that it is difficult to understand what 
it means to approve or disapprove a report.
    Discussion: Accrediting agencies will develop a written policy that 
describes how they will evaluate monitoring and compliance reports. The 
Department requires the use of monitoring and evaluation approaches in 
Sec.  602.19(b), which could include compliance or monitoring reports. 
We require agencies to describe the policies and procedures relating to 
such approaches currently, and that requirement would not change with 
the implementation of the new regulations.
    Changes: None.
    Comments: One commenter objected to the inclusion of ``immediate 
adverse action'' in Sec.  602.20(b). The commenter argued that, while 
accrediting agency staff can take immediate action, the decision-making 
body may not meet for several months. The commenter suggested we modify 
the language to empower senior staff, in consultation with the Chair of 
the decision-making body (or similar), to take immediate adverse 
action.
    Discussion: The requirement in Sec.  602.20(b) for an agency to 
immediately initiate adverse action when an institution or program does 
not bring itself into compliance within the specified period is not 
new. The Department maintains that this is a reasonable and appropriate 
expectation for accrediting agencies to ensure compliance with its 
standards.
    The decision-making body generates all accreditation decisions, 
except for the allowances in Sec.  602.22 for the review and approval 
or denial of specific substantive changes. The current use of 
``immediate adverse action'' in this section has been interpreted to 
mean as soon as the decision-making body first reviews and determines 
noncompliance. Nonetheless, many accrediting agencies have procedures 
in place for making accreditation decisions in between regularly 
scheduled meetings of the decision-making body.
    Changes: None.
    Comments: One commenter supported the provision in Sec.  602.20(c) 
that allows an accrediting agency that takes adverse action against the 
institution or program to maintain the accreditation or 
preaccreditation of the program or institution until the institution or 
program has had time to complete the teach-out process. However, the 
commenter was concerned that a temporary hold on accreditation action 
could be problematic for students seeking a closed school loan 
discharge and that there will be programs and institutions that retain 
their accreditation, but the programs will not meet licensing 
requirements with licensing boards due to the original deficiencies 
that led the institution or program to enter into a teach-out.
    Discussion: We appreciate the commenter's support. The regulation 
provides accrediting agencies with the latitude to maintain the 
institution's or program's accreditation or preaccreditation until the 
institution or program has had reasonable time to complete the 
activities in its teach-out plan, which could include assisting 
students in transferring or completing their programs, but it does not 
require them to do so. The intention of this provision is to ensure 
that students may successfully achieve their educational objectives. If 
the accrediting agency's finding would result in graduates of the 
program not meeting licensing requirements, we would expect the agency 
to take immediate adverse action. Many agencies already have similar 
policies or practices in place.
    We understand that an extension of accreditation through the teach-
out process would delay the availability of a closed school loan 
discharge for students who choose to interrupt, rather than complete, 
their academic program. However, a closed school loan discharge is 
available to students who leave a school up to 180 days prior to its 
closing, which should be ample time for the school to complete its 
teach-out. The Department has also clarified in its recently published 
Institutional Accountability regulations (84 FR 49788) that, in the 
event that a teach-out plan extends beyond 180 days, a student who 
elects at the time the teach-out is announced to pursue a closed-school 
loan discharge rather than participate in the teach-out will retain the 
right to receive a closed-school loan discharge. This is the case even 
if, under the terms and conditions of the teach-out plan, the 
institution does not close until more than 180 days after the 
announcement of the teach-out.
    Changes: None.
    Comments: Two commenters objected to the provision in Sec.  
602.20(d) that allows an agency that accredits institutions to limit 
the adverse or other action to specific programs at the institution or 
to specific additional locations of an institution, without taking 
action against the entire institution and all programs, provided the 
noncompliance was limited to a specific program or location. The 
commenters opined institutional accrediting agencies rarely evaluate 
individual programs, and that to do so may be prohibitively expensive 
and burdensome. The commenters further asked if the proposed changes 
could mean that an accrediting agency could sanction or withdraw 
accreditation from an institution based on a negative evaluation of a 
single program.
    Another commenter expressed concern that these provisions could 
harm students who leave their program due to adverse action on their 
program when the rest of the institution remains open. Those students 
would be ineligible for a closed school discharge. The commenter 
suggested that an institution should be financially responsible to make 
these students whole and refund all tuition charges for that program 
when a program closes and not the institution.
    Discussion: Under both the current regulations and these final 
regulations, an accrediting agency may sanction or withdraw 
accreditation from an institution based on the noncompliance with 
accrediting standards of a single program. However, the negotiating 
committee concurred that this could be an extreme reaction that could 
potentially harm many more students than are impacted by the 
deficiencies of a single program, and, accordingly, agreed to provide 
accrediting agencies with the ability to target their actions to 
noncompliant programs when an institution is otherwise compliant and 
serving its students.
    We do not agree that institutional accrediting agencies rarely 
evaluate individual programs. We recognize that an institutional 
accrediting agency may use sampling or other methods in the evaluation 
to conduct their review, and that an agency may rely upon the 
accreditation by a recognized programmatic accrediting agency to 
demonstrate the evaluation of the educational quality of such programs. 
This does not mean that an institutional accrediting agency must 
separately review every academic program offered by an institution. 
However, if an institutional accrediting agency determines that a 
single program is not compliant with the agency's standards, the agency 
could determine that its accreditation does not extend to that program.
    We acknowledge that the HEA does not provide a remedy for students 
who leave their program due to an adverse action by an accrediting 
agency against their program when the rest of the institution remains 
open. As a result, the Department does not have the legal authority to 
require institutions to

[[Page 58869]]

refund tuition and fees to students whose programs the accrediting 
agency found to be out of compliance with its standards.
    Changes: None.

Review of Standards (Sec.  602.21)

    Comments: One commenter contended that Sec.  602.21(a) imposes an 
undue burden on accrediting agencies and called for a review of 
standards only as circumstances dictate, noting the infrequency of 
changes in institutional and accreditation policies. The commenter 
further asserted the involvement of all relevant constituencies is an 
unrealistic requirement and suggested instead that we require 
accrediting agencies to invite participation from all relevant 
constituencies. They also requested that we define, or remove, the term 
``systematic.''
    One commenter supported the proposed changes to Sec.  602.21(d)(3) 
requiring agencies to respond to comments by constituencies during the 
review of standards. This commenter noted the process would be 
consistent with the comment process at other Federal agencies.
    A group of commenters noted concern that the regulations would 
allow institutions to establish alternate standards, making it more 
difficult for the Department to monitor accrediting agency performance. 
They noted risk of dilution of standards used to evaluate institutions, 
as well as concern that the Department would cease to require one set 
of evaluation standards. They further expressed concern that the 
regulations do not require transparency with respect to agencies' 
alternate standards, when or how the agencies may use alternate 
standards, or how the Department would assess compliance with agencies' 
alternate standards.
    Discussion: The Department considered the above comments thoroughly 
and notes that the Federal and non-Federal negotiators discussed many 
of the above stakeholders' views and concerns during the negotiated 
rulemaking process for Sec.  602.21. The Department believes that the 
proposed changes are consistent with HEA section 496(a)(4)(A), which 
requires that an agency's standards ensure that the institution's 
courses or programs are of sufficient quality to meet the stated 
objectives for which they are offered for the entire accreditation 
period.
    The revisions to Sec.  602.21 clarify that, when reviewing 
standards, agencies must maintain a comprehensive systematic program 
that involves all relevant constituencies and is responsive to comments 
received. Current regulations require an institution to complete the 
review of all of their standards at the same time. The Department 
believes it is reasonable for the agency to review different standards 
at different time intervals since doing so may be a more efficient way 
of completing the review and may allow the agency to be more responsive 
to the most important changes needed. Moreover, when the Department 
conducts a review of an agency's standards, it will include any 
alternative standards that an agency established and will ensure those 
standards sufficiently ensure the quality of the institution.
    The Department believes the proposed language will continue to 
allow the Department to monitor accrediting agency performance and 
ensure an agency's system of review is comprehensive and responsive to 
all constituencies while allowing for more innovation in program 
delivery and flexibility in response to demonstrated need, without 
imposing an undue burden on any party. As is currently the case, an 
agency would not be found to be out of compliance with the Department's 
regulations if one or more relevant constituencies fails to offer 
comments once made aware through a public comment period that the 
agency is reviewing or modifying its standards.
    Changes: None.

Substantive Change (Sec.  602.22)

    Comments: Several commenters supported the proposed changes to 
Sec.  602.22. One commenter specifically expressed support for the 
change that would allow an accrediting agency's senior staff to approve 
specific, substantive changes for institutions that are in good 
standing, without requiring the agency's decision-making body to 
approve these types of changes. Other commenters specifically supported 
the changes in Sec.  602.22 that clarify the process accrediting 
agencies must use when reviewing substantive changes and provide 
agencies with more flexibility to focus on changes that are high impact 
and high risk. The commenters opined that the proposed language will 
also give agencies more flexibility to approve less risky changes by 
granting an agency's decision-making body the authority to designate 
senior agency staff to approve or disapprove the substantive change 
request in a timely, fair, and equitable manner. Another commenter 
noted that this change will allow institutions to open satellite or 
branch campuses that would be accredited after opening. The commenter 
suggested that this relatively minor regulatory change opens the door 
for greater access to higher education for underserved communities who 
may be limited to choosing an institution that enables them to stay 
close to home. The commenter noted that these changes will facilitate 
growth in the market for higher education, encourage competition, and 
ensure fewer students turn down a quality education because of 
location. Another commenter expressed appreciation for the provisions 
that require accrediting agencies to monitor rapid growth in 
enrollment. The commenter asserted that quick, unprecedented growth 
opens the door to predatory practices, and does not provide typical 
safeguards for quality assurance.
    One commenter who opposed this change believed that it would allow 
political appointees to overturn long-standing Department policies. 
This commenter also expressed concern over potentially predatory 
practices and lower accrediting standards.
    Discussion: We thank the commenters who supported the changes in 
this section. We believe these changes allow for greater flexibility 
for institutions to innovate and respond to the needs of students and 
employers, while maintaining strict agency oversight in more targeted 
areas, such as those associated with higher risk to students or the 
institution's financial stability, such as changes in institutional 
mission, types of program offered, or level of credential offered.
    We disagree that the regulations will not provide safeguards for 
quality assurance. Accrediting agencies will continue to review 
substantive changes for quality assurance. Providing flexibility to 
accrediting agencies to allow senior staff to review and approve less 
risky changes enables accrediting agencies to focus their resources on 
issues that provide the highest level of risk to students and 
taxpayers. We disagree with the commenter who believed that this change 
invites predatory practices and lower standards. While it is possible 
that long-time policies could change, we believe that streamlining this 
process will not lead to a reduction in its rigor. Accrediting agencies 
do not employ political appointees; the commenter may be 
misunderstanding the fact that agencies, not the Department, are 
responsible for approving substantive change requests.
    Changes: We have made a technical correction to Sec.  602.22(a)(1) 
to make clear that the substantive changes subject to this regulation 
are not limited to changes to an institution's or program's mission, 
but rather, include all

[[Page 58870]]

substantive changes addressed in Sec.  602.22.
    Comments: Several commenters objected to the provisions in this 
section, asserting that they would create a rushed review process for 
program outsourcing requests with less stringent standards and less 
accountability; increase the risk that low-quality schools will be 
approved to receive Federal student aid to administer poor academic 
programs, which will waste students' time and educational benefits in 
addition to taxpayer dollars; let colleges close campuses and move 
online with inadequate review of substantive changes; allow an existing 
agency to expand its scope into areas where it lacks experience; and 
reduce accountability among agency commissioners, shifting 
responsibility and potential consequences of poor decision-making onto 
staff.
    Discussion: The changes in this section will provide flexibility to 
accrediting agencies while maintaining proper agency oversight of high-
risk changes. While we designed these regulatory changes to reduce the 
cost and time required for institutions to obtain approval from their 
accrediting agencies, agencies will still be held accountable for 
making well-reasoned decisions. These changes will also allow 
accrediting agencies to focus their limited resources on the types of 
changes that pose the greatest risk to students and taxpayers. The 
changes will also enable the decision-making bodies at accrediting 
agencies to focus on the most significant and potentially risky 
changes. The Department believes that appropriate and adequate review 
processes will remain in place and that allowing agencies to focus on 
changes with the most associated risk will improve oversight of 
institutions and protection of student and taxpayer interests.
    We do not agree that improved efficiency results in lax oversight. 
The foundation of this section of the regulations requires every agency 
to document adequate substantive change policies that ensure that any 
substantive change made after the agency has accredited or 
preaccredited the institution does not adversely affect the capacity of 
the institution to continue to meet the agency's standards.
    Changes: None.
    Comments: One commenter asked that we clarify whether Sec.  
602.22(a) pertains only to substantive changes in an institution's 
mission. The commenter suggested that the provisions in this section 
apply more broadly and that we remove the phrase ``change to the 
institution's or program's mission.''
    Discussion: Section 602.22(a) is intended to pertain to all of the 
substantive changes as described in Sec.  602.22(a)(1)(ii), and not 
just changes to an institution's or a program's mission. We agree with 
the commenter that the phrase ``change to the institution's or 
program's mission'' does not convey our intent to include all 
substantive changes as delineated in Sec.  602.22(a)(1)(ii).
    Changes: We are revising Sec.  602.22(a) by removing the words ``to 
the institution's or program's mission'' to clarify that Sec.  602.22 
applies to all substantive changes as specified in Sec.  
602.22(a)(1)(ii), and not just substantive changes to an institution's 
or program's mission.
    Comments: One commenter suggested that the regulations should allow 
accrediting agencies to designate future unknown innovations or changes 
as substantive, if those changes or innovations present a unique risk 
to students and taxpayers. Another commenter asked whether institutions 
must complete a substantive change application each time they would 
like to offer a program at the master's or doctoral level when the 
institution already offers the same area of study at the undergraduate 
or master's level.
    Discussion: In response to the commenter who suggested that we add 
a provision allowing agencies to designate future unknown innovations 
or changes as substantive, if the innovations or changes present a 
unique risk to students and taxpayer, the regulations provide that 
agencies must require an institution to obtain the agency's approval of 
a substantive change before the agency includes the change in the scope 
of accreditation or preaccreditation it previously granted to the 
institution. This provision enables an institution and agency to 
consider applications for substantive change based on a proposed change 
or innovation.
    We further clarify that an institution must submit a substantive 
change application whenever it seeks to increase its level of offering, 
including moving from the bachelor's level to a master's level and from 
a master's level to a doctoral level. An institution is not required to 
submit a substantive change application for each subsequent program at 
the same educational level.
    Changes: None.
    Comments: One commenter asked if we intend for Sec.  
602.22(a)(2)(ii) to provide that staff will decide the outcome, since 
there are accrediting agencies which do not meet every 90 days.
    Discussion: Under Sec.  602.22(a)(2)(ii), the Department intends to 
allow senior staff at accrediting agencies to make decisions regarding 
requests for approval of written arrangements, unless the agency or its 
senior staff determines significant related circumstances require a 
review of the request by the agency's decision-making body.
    Changes: None.
    Comments: One commenter asserted that the Department had 
interpreted in an overly broad way the statutory requirement in HEA 
section 496(c)(4) and (5) that accrediting agencies require that 
institutions establish a business plan prior to opening a branch 
campus, and that the agency will conduct an on-site visit of that 
branch campus within six months of its establishment. The commenter 
recommended that the regulations require approvals of all locations and 
site visits to all approved locations within six months of opening.
    Discussion: The Department disagrees that we have interpreted the 
statutory requirement too broadly. As the commenter notes, the HEA 
requires that any institution of higher education subject to its 
jurisdiction which plans to establish a branch campus submit a business 
plan, including projected revenues and expenditures, prior to opening 
the branch campus, and that the institution's accrediting agency agrees 
to conduct, as soon as practicable, but within a period of not more 
than six months of the establishment of a new branch campus or a change 
of ownership of an institution of higher education, an on-site visit of 
that branch campus or of the institution after a change of ownership. 
The regulations in Sec.  602.22 continue to require an accrediting 
agency to have an effective mechanism for conducting, at reasonable 
intervals, visits to a representative sample of additional locations. 
We do not believe it is necessary or practical to require an 
accrediting agency to require the approval of all locations or to visit 
all approved locations within six months of opening. While an 
accrediting agency may choose to require such approvals or site visits, 
we believe that the agency should have the flexibility to determine 
this rather than for us to regulate those actions.
    Changes: None.
    Comments: One commenter requested that the Department reconsider 
the provision in Sec.  602.22(b) that creates new circumstances under 
which certain activities by provisionally certified institutions will 
require substantive change approval by their institutional accrediting 
agency. The commenter urged the Department to consider limiting this 
new burden of review to

[[Page 58871]]

institutions that are on Heightened Cash Monitoring 2 (HCM2) or 
demonstrate some other more specific risk to students and title IV than 
just that the institutions are provisionally certified.
    Discussion: We proposed only two additional substantive changes for 
which an institution placed on probation or equivalent status must 
receive prior approval and for which other institutions must provide 
notice to the accrediting agency in Sec.  602.22(b). These include when 
the agency requires the institution to obtain the agency's approval of 
the substantive change before the agency includes the change in the 
scope of accreditation or preaccreditation it previously granted to the 
institution, and when the agency's definition of substantive change 
covers high-impact, high-risk changes.
    We do not believe it would be helpful to limit this change to those 
institution who are on HCM2 or who demonstrate specific risks. We 
believe this provision offers an important review that would only 
rarely occur if we limited the use to those circumstances suggested by 
the commenter.
    Changes: None.
    Comments: Three commenters opposed the revisions to the substantive 
change regulations, arguing the Department failed to provide enough 
evidence to justify the changes and to specify how we would assess 
whether a change is ``high-impact and high risk.'' The commenters 
opined that the changes are incongruent with statutory requirements 
pertaining to the approval of branch campuses and direct assessment 
programs.
    Discussion: The revisions to the substantive change regulations are 
designed to provide accrediting agencies more flexibility to focus on 
the most important changes. We believe that this targeted, risk-based 
approach focuses the agency's decision-making body's efforts on more 
relevant or risky issues in a changing educational landscape, while 
allowing an agency to delegate lower-risk decisions to staff. The 
Department considers a high-impact, high-risk change to include those 
changes provided as examples in the regulations (Sec.  
602.22(a)(ii)(A)-(J)), such as substantial changes in the mission or 
objectives of the institution or program; a change in legal status or 
ownership; changes to program offerings or delivery methods that are 
substantively different from current status; a change to student 
progress measures; a substantial increase in completion requirements; 
the acquisition of another institution or program; the addition of a 
permanent site to conduct a teach-out for another institution; and the 
addition of a new location or branch campus.
    We do not believe that the changes contradict the statutory 
requirements for the approval of branch campuses and direct assessment 
programs. HEA section 498 (20 U.S.C. 1099c(j)) provides the Secretary 
with the latitude to establish regulations that govern the 
certification of a branch of an eligible institution.
    Changes: None.
    Comments: One commenter asked that we clarify Sec.  602.22(b)(2), 
which refers to ``A change of 25 percent or more of a program since the 
agency's most recent accreditation review.'' The commenter asked if 
this is in reference to a change in the number of credit hours 
associated with the program and, if so, whether we would consider all 
courses, only courses within the discipline, or only general education 
courses.
    Discussion: When we referred to ``A change of 25 percent or more of 
a program since the agency's most recent accreditation review'' in 
Sec.  602.22(b)(2), we meant a single change, or the sum total of the 
aggregate changes, to a program's curriculum, learning objectives, 
competencies, number of credits required, or required clinical 
experiences. This would include changes in the general education 
courses required for program completion and not merely the courses 
within the discipline, program, or major.
    Changes: We have revised Sec.  602.22(b)(2) to clarify that we 
would consider an aggregate change of 25 percent or more of the clock 
hours or credit hours or program content of a program since the 
agency's most recent accreditation review to be a substantive change 
requiring prior approval under Sec.  602.22(b)).
    Comments: One commenter requested that we add the acquisition of 
any other institution, program, or location to the required 
representative sample of site visits to additional locations in Sec.  
602.22(d).
    Discussion: As stated earlier, the Department proposes revisions to 
the substantive change regulations to provide accrediting agencies more 
flexibility to focus on the most important changes. While an 
accrediting agency may choose to implement a policy such as what the 
commenter suggested, we do not believe it is appropriate to broadly 
regulate such activity.
    Changes: None.
    Comments: One commenter requested clarification as to when an 
institution must seek approval of a new location instead of reporting 
the change under Sec.  602.22(a)(1)(ii)(J) and Sec.  602.22(c).
    Discussion: As stated in Sec.  602.22(c), once an institution 
receives accrediting agency approval for two additional locations, it 
may report subsequent locations, rather than seeking additional 
approval, if it meets the conditions in Sec.  602.22(c).
    Changes: We have made a technical correction in Sec.  602.22(c) to 
clarify that institutions that have successfully completed at least one 
cycle of accreditation and have received agency approval for the 
addition of at least two additional locations must report these changes 
to the accrediting agency within 30 days, if the institution has met 
criteria included in this section of the regulations.

Operating Procedures All Accrediting Agencies Must Have (Sec.  602.23)

    Comments: Two commenters wrote in support of the requirements in 
Sec.  602.23(a)(2) that an accrediting agency make written materials 
available describing the procedures that institutions or programs must 
follow regarding the approval of substantive changes.
    Discussion: We appreciate the commenters' support.
    Changes: None.
    Comments: One commenter endorsed the change in Sec.  602.23(a)(5) 
that requires the mandatory disclosure of names, academic and 
professional qualifications, and relevant employment and organizational 
affiliations of members of the agency's decision-making bodies and 
principal administrative staff.
    Discussion: We appreciate the commenter's support.
    Changes: None.
    Comments: One commenter supported the change to Sec.  602.23(d) 
that permits publishing address and telephone information as an 
alternate form of agency contact information.
    Discussion: We appreciate the commenter's support.
    Changes: None.
    Comments: Two commenters agreed with the change to Sec.  602.23(f) 
that reserves preaccreditation status for institutions and programs 
that are likely to succeed in obtaining accreditation. The commenters 
noted that this is an important requirement, as institutions may be in 
preaccreditation status for five years and then may not succeed in 
getting accreditation. Students may suffer if their school does not 
achieve accreditation, and, if the school closes, taxpayers will be 
responsible for closed school loan discharges. One of the commenters 
also supported requiring

[[Page 58872]]

accrediting agencies to obtain a teach-out plan from all preaccredited 
institutions and recommended that they update the teach-out plans every 
six months if they include partner institutions, as those agreements 
and the regional education landscape change frequently.
    Discussion: We appreciate the commenters' support. We do not 
believe it is practical or necessary to require accrediting agencies to 
obtain updated teach-out plans from pre-accredited institutions every 
six months, nor would it be reasonable to expect an institution to seek 
contractual teach-out agreements with other institutions simply because 
the institution or program is in a preaccredited status. If an 
accrediting agency determines that it is necessary for an institution 
to implement its teach-out plan, the agency can request that the 
institution seek or enter into one or more contractual teach-out 
agreements with partner institutions that offer the courses or programs 
needed by the closing institution's students.
    Changes: None.
    Comments: A group of commenters objected to Sec.  602.23(f), 
asserting that it is unclear from the Department's reasoning exactly 
what risks, if any, the proposal to maintain preaccreditation status 
will mitigate. The commenters argued that the proposal increases risk 
by not removing title IV eligibility from a school that has 
demonstrated its inability to provide a quality education and allowing 
students to continue to attend that school for up to four months or 
longer. The commenters asserted that, if the Department agrees to then 
recognize those students' work as ``accredited,'' the students will 
still have to market themselves to other institutions and employers and 
will be ill equipped to effectively do so, having received such a poor 
education.
    Discussion: We intend for this provision to ensure that students 
can successfully achieve their educational objectives at the 
institution where they chose to enroll. We do not agree with the 
commenters' assertion that the student will have received a poor 
education, as there are many factors, apart from the quality of the 
education provided, that can result in an institution not receiving 
accreditation after a period of preaccreditation. An accrediting 
agency, in awarding preaccreditation, must believe that the program or 
institution is likely to obtain accreditation, meaning that the 
educational quality must meet the agency's requirements. Students may 
use title IV funds to enroll in a preaccredited program. Therefore, the 
accrediting agency must believe that it is of appropriate quality to 
likely become accredited. It would be detrimental to students to allow 
them to enroll in a preaccredited program and subsequently determine 
that the credits they earned during that enrollment would likely not 
transfer to another institution if the program is not fully accredited. 
Without such a provision, an institution could not recruit students to 
a preaccredited program, and the Department could not allow those 
students to obtain title IV funds. This would reduce the likelihood of 
institutions starting new programs in areas where there may be 
significant workforce demand.
    Changes: None.
    Comments: One commenter supported the proposal in Sec.  
602.23(f)(ii) to require accrediting agencies to insist on a teach-out 
plan from preaccredited institutions. However, the commenter suggested 
this provision does not ensure adequate protection. The commenter 
recommended that the Department require a teach-out agreement and that 
adequate funds are set aside to implement the agreement if the school 
does not receive accreditation.
    Discussion: We appreciate the commenter's support and suggestion. 
However, we believe it would be impractical to require preaccredited 
institutions to establish teach-out agreements, as these are 
contractual arrangements that are based on the number of students 
enrolled in a program (among other factors) and institutions would need 
to update them each term in order to accurately reflect the current 
status of the program. Also, an institution cannot force another 
institution to enter into a contractual agreement, especially since a 
teach-out agreement often includes financial arrangements between the 
two institutions. The Department cannot require any institution to 
enter into a contractual agreement with another institution and it 
would be difficult to know in advance what financial arrangements would 
be required by the receiving institution in the event of a teach-out, 
since this could change based on the number of students to be served at 
the time of the teach-out and other factors. The Department also lacks 
the authority to require institutions to post a letter of credit simply 
because they are in a preaccredited status.
    Changes: None.
    Comments: One commenter supported the proposed language in Sec.  
602.23(f)(2) that allows the Secretary to consider all credits and 
degrees earned and issued by an institution or program holding 
preaccreditation from a nationally recognized agency to be from an 
accredited institution or program. The commenter observed that this may 
help clarify what preaccreditation status means, prevent harm to 
students who attend preaccredited institutions or programs, and 
recognize that graduates of preaccredited programs are workforce-ready 
and, therefore, should be eligible for State or national credentials.
    Discussion: We appreciate the commenter's support.
    Changes: None.
    Comments: One commenter objected to the provisions of Sec.  
602.23(f)(iv), stating that instead of adding protections for students 
in the event the institution does not obtain accreditation, the 
Department proposes to allow an institution to maintain its 
preaccredited status, continue serving students, and collect student 
and taxpayer money even when it is now guaranteed the institution or 
program will not gain accreditation. The commenter asserted that 
preaccreditation status and accredited status are fundamentally not the 
same and that we should not consider them to be equal.
    Discussion: The Department has not proposed that a preaccredited 
program or institution continue to be able to operate in the rare 
instance that an agency makes a final decision not to award full 
accreditation. Instead, the Department seeks to protect students 
enrolled in preaccredited programs or institutions so that, in the 
event the program or institution does not receive full accreditation, 
the students are able to transfer credits and complete their program at 
another institution. The Department considers both preaccreditation and 
accreditation to be an accredited status. Since both accreditation and 
preaccreditation may allow a student to access title IV funds, the 
Department is committed to providing protections to students to ensure 
that the credits they earned using title IV funds can be transferred to 
other institutions. Several accrediting agencies require institutions 
or programs to graduate a cohort of students before they will grant 
full accreditation. However, the students who complete the program 
during a period of preaccreditation may not be eligible to sit for the 
licensure exam if the requirement to do so necessitates that they have 
graduated from an accredited program. Thus, it is important that these 
students be afforded the opportunity to fulfill their educational 
objective to be licensed in the profession for which they were prepared 
if the program or institution

[[Page 58873]]

became accredited based on the agency's review of the institution or 
program that took place during the time in which the student was 
enrolled. Accrediting agencies have reported to us that preaccredited 
programs and institutions typically proceed to fully accredited status. 
The agencies noted that they grant preaccreditation status when the 
agency has confidence that the institution or program will ultimately 
become accredited, but some agencies will not award full accreditation 
until they review licensure exam pass rates or other employment 
outcomes dependent upon a student having attended an accredited 
institution.
    Changes: None.

Additional Procedures Certain Institutional Accreditors Must Have 
(Sec.  602.24)

    Comments: Several commenters supported the Department's proposed 
changes to Sec.  602.24. Collectively, the commenters expressed 
appreciation for the flexibility afforded to institutions and 
accrediting agencies by the proposed rules, allowing them to focus more 
on innovating and providing students with a quality education.
    Discussion: We appreciate the commenters' support for these 
proposed changes and the Department's efforts to facilitate innovation 
and reduce regulatory burden.
    Changes: None.
    Comments: One commenter objected to the elimination of the 
requirement in Sec.  602.24(a) for an institution to include in its 
branch campus business plan submitted to the accrediting agency a 
description of the operation, management, and physical resources of the 
branch campus. The commenter asserted that the proposed changes fall 
short of what is required by statute--namely that ``any institution of 
higher education subject to [an accreditor's jurisdiction] which plans 
to establish a branch campus submit a business plan, including 
projected revenues and expenditures, prior to opening a branch 
campus.'' The commenter further asserted that the proposed revisions 
fail to establish what is a reasonable period needed to judge the 
appropriateness of opening a branch campus, and that the Department 
failed to conduct any cost-benefit analysis or adequately justify the 
change.
    Discussion: We disagree with the commenter that the changes to 
Sec.  602.24(a) fail to meet the statutory requirements. We proposed 
amendments to this provision specifically to remove requirements that 
we believe go beyond the statutory requirements. Additionally, we 
believe the requirements in Sec.  602.24(a) were either unnecessarily 
prescriptive or duplicated requirements in the revised Sec.  602.22. 
Regarding what we consider a reasonable time period for an agency to 
judge the appropriateness of opening a branch campus, we do not believe 
a compelling reason exists for the Department to impose strict calendar 
timeframes around such determinations. The amendatory text requires, 
with respect to branch campuses, an agency to demonstrate that it has 
established and uses all of the procedures prescribed in Sec.  
602.24(a). We expect an agency's protocols to facilitate this being 
accomplished in a timely manner. The reasons for the proposed changes 
to Sec.  602.24(a), removing the requirements for an institution to 
include in its branch campus business plan a description of the 
operation, management, and physical resources of the branch campus, and 
for an agency to extend accreditation to a branch campus only after the 
agency evaluates the business plan, are explained in the July 12, 2019 
NPRM and reiterated above. We do not believe it is further necessary to 
conduct a cost-benefit analysis to support these changes or that such 
an analysis is germane to the discussion of whether they are needed.
    As the Department noted during negotiated rulemaking, there are no 
data upon which to base the establishment of a reasonable period to 
judge the appropriateness of a branch campus. However, we believe the 
time required to obtain approval was, in many cases, so significant 
that it impeded institutional growth and student access. We hope with 
these changes that more closely align with the statute, we will enable 
institutions and accrediting agencies to be nimbler and more responsive 
to student demand. The regulations maintain important oversight 
protections by requiring the institution to submit a business plan and 
the accrediting agency to conduct a site visit within six months.
    Changes: None.
    Comments: Two commenters requested that the Department delete the 
reference in Sec.  602.24(c)(2)(i) to institutions merely placed on the 
reimbursement payment method described in Sec.  668.162(c)--commonly 
known as HCM. One of those commenters stressed that while we typically 
place institutions with composite scores of less than 1.5 on HCM1, this 
does not mean such institutions are in danger of closing. The commenter 
further noted that if no changes are made to the calculation of the 
composite score to reflect the recent change by the Financial 
Accounting Standards Board regarding leases, institutions will fail 
financial responsibility and be put on HCM1 when, economically, nothing 
has changed, and that institutions can be placed on HCM1 for various 
other reasons, including noncompliance with Clery Act standards or 
other regulatory matters. The commenter concluded the Department should 
revise Sec.  602.24(c)(2)(i) to pertain only to instances where an 
institution has been placed on the reimbursement payment method under 
Sec.  668.162(c) or the HCM payment method requiring the Secretary's 
review of the institution's supporting documentation under Sec.  
668.162(d)(2).
    Discussion: We believe the commenters may have misinterpreted 
proposed Sec.  602.24(c)(2)(i), which requires submission of a teach-
out plan if the Secretary notifies the agency that it has placed the 
institution on the reimbursement payment method under Sec.  668.162(c) 
or the HCM payment method requiring the Secretary's review of the 
institution's supporting documentation under Sec.  668.162(d)(2). Under 
the reimbursement payment method, an institution must, in addition to 
identifying the students or parents for whom reimbursement is sought, 
credit a student's or parent's ledger account for the amount of title 
IV, HEA funds he or she is eligible to receive, submit documentation 
showing that each student or parent included in the request was 
eligible to receive the title IV, HEA program funds requested, and show 
that any title IV credit balances have been paid. HCM2, described in 
Sec.  668.162(d)(2), mirrors the reimbursement payment method except 
that the Secretary may modify the documentation requirements and 
procedures used to approve the reimbursement request. HCM1, found in 
Sec.  668.162(d)(1) and identified by the commenter as the cash 
monitoring payment method on which the Department commonly places 
institutions with low composite scores, does not require the submission 
of documentation establishing the eligibility of a student. 
Institutions on HCM1 are not subject to the provisions of proposed 
Sec.  602.24(c)(2)(i).
    Changes: None.
    Comments: One commenter asked the Department to clarify the teach-
out requirements in Sec.  602.24(c) related to travel. The commenter 
questioned the standard that the teach-out arrangement should not 
require travel of substantial distances or durations, on the basis that 
it is vague and does not address situations where geographically 
convenient options for on-the-ground

[[Page 58874]]

programs are limited due to being at capacity enrollment or capped 
enrollment. The commenter concluded that it is insufficient merely to 
name local institutions with similar programs, as those programs are 
frequently unable to assist with a teach-out.
    The same commenter agreed with the Department that a teach-out by 
an alternative delivery modality is insufficient unless an option for a 
teach-out via the same delivery modality as the original educational 
program is also available. However, the commenter contended that the 
institution should also ensure there is a geographic limitation on this 
requirement, that is, an institution should not be permitted to have 
its own distance education program be offered as a teach-out when the 
on-ground offering is 200 miles away from the original on-ground 
location and there are significant transportation barriers.
    Finally, the commenter agreed with the Department that an 
accrediting agency should be permitted to waive the requirements 
related to the percentage of credits that must be earned at the 
institution awarding the educational credential for students completing 
their program under a written teach-out agreement, but recommended that 
the waiver also apply to institutions allowing students to transfer to 
the institution in lieu of a written teach-out agreement.
    Discussion: We agree that merely naming local institutions with 
similar programs does not constitute a teach-out agreement, yet we note 
that it may be appropriate in a teach-out plan.
    We appreciate the commenter's support regarding the insufficiency 
of alternative delivery modes for a teach-out and agree that it may be 
an option available, but it cannot be the only option provided to 
students. We further agree that the teach-out needs to provide the same 
method of delivery as the original education program.
    We do not, however, agree that we should prescribe a specific 
geographic limitation. The regulations require that the teach-out 
agreement provide students access to the program and services without 
requiring them to move or travel for substantial distances or 
durations. We believe that the accrediting agencies (and the States) 
should determine what is a reasonable distance or travel duration based 
on the circumstances of each location. For example, in some parts of 
the country, a 10-mile distance is the equivalent of more than an hour 
of driving time. In other parts of the country, it is unlikely that 
another institution would be available within a 10-mile radius and so 
it might be reasonable to expect students to travel farther to complete 
their program. The distance noted by the commenter would not be a 
reasonable distance. While we would support allowing the institution to 
offer its own distance education program as an option to its students, 
we would not allow that offering to supplant the requirement to provide 
a reasonable ``brick-and-mortar'' option to the students if the 
original education program was offered as an on-ground program.
    We thank the commenter who supported the Department's waiver of 
requirements related to the percentage of credits earned at the 
institution for students completing their program under a written 
teach-out agreement. We also agree that the same waiver should be 
available to students who transfer credits following a school closure, 
even if that transfer is not part of a formal teach-out agreement. 
However, we do not agree that this requires a change to the regulatory 
language in this section, as it is within the accrediting agency's 
authority to grant this waiver when it is appropriate to do so.
    Changes: None.
    Comments: One commenter asserted that the Department should require 
any institution that closes, as a condition of closing, provide current 
transcripts to every student, past and present, as well as refund to 
students all amounts paid retroactive to the beginning of the current 
semester. The commenter stated that this would hold for-profit 
institutions to the same standard as State-funded institutions.
    Discussion: We appreciate the commenter's concern for preservation 
of students' academic records and agree that closing institutions have 
an obligation to preserve those records and transfer them to the 
appropriate entity, as described in their teach-out plan. Teach-out 
plans must include arrangements for maintenance of records as well as 
instructions to students for how they can obtain those records. 
However, we do not have the authority to require a closing school to 
distribute transcripts to students. Additionally, most institutions 
require the submission of an official transcript directly from an 
institution for admission consideration. An institution might not 
consider a transcript submitted from an applicant to be an official 
transcript.
    The Department does not have the authority to require institutions 
to refund students for non-title IV tuition payments made. We agree 
that closing schools should reimburse students if tuition was paid for 
classes that will no longer be offered, but we do not have the 
authority to require that of institutions. We applaud States that 
require a closing or closed public institution to refund students' 
tuition and fees for the final term. However, we are aware that some 
States operate tuition recovery funds to enable students to receive 
financial reimbursement for some or all of the non-title IV tuition 
payments made in the event that an institution closes.
    Changes: None.
    Comments: One commenter, while generally supportive of the proposed 
changes to Sec.  602.24, suggested we prohibit closure of an 
institution based solely upon loss of accreditation. The commenter 
believed institutions should remain open for a period of one year or 
more after removal of accreditation to allow for students to determine 
whether they wish to complete their educational program at that 
institution. The commenter concluded that we should not allow the 
institution to solely determine the fate of students' academic careers.
    Discussion: The Department appreciates the commenter's support on 
these changes. We note, however, that we cannot prevent an institution 
from closing when it loses accreditation since many students could not 
continue their enrollment without access to title IV funds. Also, loss 
of accreditation is a circumstance that enables students to seek and 
receive a closed school loan discharge. The Department does not 
determine whether an institution is open or closed. The Department 
determines an institution's eligibility to participate in the title IV 
programs and recognizes that, in many instances, the loss of title IV 
eligibility makes it impossible for an institution to continue 
educating students.
    Changes: None.
    Comments: One commenter noted with regard to the proposed revisions 
to Sec.  602.24(c)(2)(iii) that a school that is on the verge of losing 
its recognition or intends to cease operations may not fully cooperate 
in carrying out teach-out mandates, assurances to students may not be 
implemented, and that expecting an orderly transition is not always 
realistic. The commenter believed the Department should conduct a 
careful review of previous terminations and closures to see if there 
are lessons to learn and apply.
    Discussion: The Department agrees with the commenter that an 
orderly transition does not occur in all cases, yet we strive for a 
transition that is as smooth as possible. The Department has examined, 
and will continue to

[[Page 58875]]

examine, school closures so that we and other triad partners can 
collectively assist students impacted by closures. Our experience 
suggests that students are best served when they have options to 
complete their program, including through an approved teach-out plan or 
teach-out agreement.
    Changes: None.
    Comments: One commenter recommended that the Department revisit 
proposed Sec.  602.24(c), outlining the circumstances under which an 
accrediting agency must require an institution to submit a teach-out 
plan. The commenter urged the Department to not rely on provisional 
certification as an indicator of trouble--since that is not always the 
case--and instead consider identifying problem institutions as those 
the Department has placed on HCM2 or has taken action against under 
subpart G of the General Provisions.
    Discussion: We agree with the commenter's position that provisional 
certification does not always indicate trouble. However, we believe 
that provisional certification imposes a higher level of risk to 
students and taxpayers and increases the likelihood that a school 
closure might ensue. Some accrediting agencies require all institutions 
to keep teach-out plans on file at all times. Teach-out plans do not 
require an institution to take any action, but instead to describe what 
the institution would do, and potential programs or institutions that 
could accept students, if the institution closes. Teach-out plans 
provide important information to the Department and States in the event 
of a school closure; thus, it protects students and taxpayers for 
institutions to have these plans on file when the institution is 
provisionally certified. The number of institutions on HCM2 or subject 
to an action under subpart G of the General Provisions consistently 
remains small compared with the number of provisionally certified 
institutions. Keeping in mind a teach-out plan acts as a preventive 
measure, we do not agree with the commenter that limiting the 
requirement to such a small number of institutions would help us 
achieve the desired outcome. We seek, instead, to identify institutions 
at risk for closure and ensure that a plan is in place so that the 
Department and States can assist students in transitioning to new 
programs and accessing their academic records if their institution 
closes.
    Changes: None.
    Comments: One commenter commended the Department for considering 
and including parts of a proposal submitted by negotiators 
strengthening teach-out requirements, securing teach-out agreements, 
and putting protections in place for students enrolled in schools at 
risk of closure, but stated the proposal in the consensus language does 
not go far enough in guaranteeing students will have high-quality 
teach-out options in the event their school closes. The commenter 
offered that the Department should require teach-out agreements, not 
make them optional, and we should clearly distinguish when an 
institution needs an agreement instead of just a plan. The commenter 
further asserted that the Department should require accrediting 
agencies to secure teach-out agreements when schools exhibit particular 
risk factors. The commenter suggested that, in the event of precipitous 
closure, accrediting agencies have routinely requested nothing more 
than teach-out plans when an institution exhibits warning signs, 
because under current regulations, securing a teach-out agreement is at 
the discretion of the agency and almost never results in the agency 
requesting a teach-out agreement.
    Discussion: We appreciate the strong support from this commenter 
and the non-Federal negotiators who worked with us to create a more 
robust framework to protect students. While we seek to provide 
protections for students affected by a school closure and strive to 
assist with the transition to high-quality academic programs, we cannot 
guarantee students will have high-quality teach-out options in the 
event their school closes. However, teach-out plans can be helpful to 
students, States, and the Department when a school closes and we are 
trying to help students identify another institution where they can 
complete their program and obtain the records they need to document 
their attendance or prior degree completion at the closed school.
    We do not believe it is possible for either the Department or the 
accrediting agencies to force an institution to engage in a teach-out 
agreement because such an agreement requires a contractual agreement 
between the closing school and a continuing school. Neither the 
Department nor an accrediting agency can require a continuing 
institution to enter into a teach-out agreement with a closing 
institution, and in some instances, the receiving institution in a 
teach-out agreement will accept students into some programs but cannot 
accommodate students in all programs or can accept some but not all 
students into a particular program. Teach-out agreements identify which 
students a continuing school will receive, how many credits it will 
receive in transfer, and any financial arrangements required to support 
the agreement. Neither the Department nor an accrediting agency can 
require an institution to accept students or credits from another 
institution. Moreover, the statute only requires that institutions have 
teach-out plans in place. We recently learned that some accrediting 
agencies will not review a teach-out agreement until the closing school 
has closed--at which point it may be too late to help students complete 
their program. We clarify in this regulation that agencies can and 
should request that an institution pursue teach-out agreements and 
review teach-out agreements prior to a school's closure. However, we 
cannot force an institution to enter into a contract with another 
institution, or to accept students into a program for which the 
receiving institution believes the transferring students are 
underprepared.
    Changes: None.
    Comments: One commenter expressed concern about the Department's 
proposal to remove the required agency review of institutional credit 
hour policies as well as the specifics of how an agency meets the 
requirements for such review in Sec.  602.24(f).
    Discussion: We continue to believe the agency review requirements 
are unnecessarily prescriptive and administratively burdensome without 
significantly improving accountability or protection for students or 
taxpayers. However, we note that the definition of ``credit hour'' in 
Sec.  600.2 requires that the amount of student work determined by an 
institution to comprise a credit hour be approved by the institution's 
accrediting agency or State approval agency. Moreover, nothing 
precludes an accrediting agency or State approval agency from examining 
or questioning an institution's credit hour policies either as part of 
a routine evaluation of that institution's academic programs or as the 
result of specific concerns brought to the attention of the accrediting 
agency.
    Changes: None.

Due Process (Sec.  602.25)

    Comments: Several commenters questioned the reasoning behind the 
proposed change to due process, stating that the Department did not 
explain how the change helps institutions understand accreditation 
status decisions. Further, the commenters believed the proposed changes 
would not clarify decisions issued by the agency's decision-making body 
for institutions or programs. The commenters contended that the 
Department should not permit an agency to re-evaluate its original

[[Page 58876]]

decision if an appeals panel reverses it but does not specifically 
remand the decision. In such a case, these commenters asserted, no 
further agency action should be allowed.
    Discussion: We considered views on Sec.  602.25 similar to the 
commenters during negotiated rulemaking. The Department believes that 
the changes sufficiently satisfy the intent of HEA section 496(a)(6), 
which provides that an agency must establish and apply review 
procedures throughout the accrediting process that comply with due 
process. The Department permits agencies to remand appeals panels' 
decisions to the original decision-making body for a final review. In 
the event that an agency does remand the decision to the original 
decision-making body, the Department believes it is important to 
require that the final decision issued by that body be consistent with 
the recommendations of the appeals panel.
    However, an appeals panel maintains the option to amend an adverse 
action, which could involve reaching a different conclusion.
    When the agency's appeals panel decides to remand the adverse 
action to the original decision-making body, the appeals panel must 
provide the institution or program with an explanation for any 
determination that differs from that of the original decision-making 
body. In the event that the decision is remanded, any decision issued 
by the original decision-making body must act in a manner consistent 
with the appeals panel's decisions or instructions.
    These changes will ensure that institutions or programs receive 
full information regarding the decisions pertaining to their 
accreditation status, and that decisions remanded back to the original 
decision-making body reflect the appeals panel's decision or 
recommendation. Additionally, the changes will provide that the 
original decision-making body speaks for the agency in addressing 
concerns raised in a remand.
    Changes: None.

Notification of Accrediting Decisions (Sec.  602.26)

    Comments: Several commenters agreed with the proposal in Sec.  
602.26(b) to reduce the amount of time within which an accrediting 
agency must notify State agencies and the Department regarding any 
adverse action taken against an institution so that these entities are 
notified at the same time as the institution. One commenter asked for 
clarification of the ``same time'' language to ensure that accrediting 
agencies adhere to the spirit and intent of the provision.
    Discussion: We appreciate the commenters' support of the reduced 
time to notify State agencies and the Department and note that the term 
``at the same time'' would generally mean within one business day and 
is consistent with current regulations.
    Changes: None.
    Comments: Several commenters agreed with requiring an institution 
to disclose adverse actions to current and prospective students within 
seven days. However, one commenter noted that disclosures that are 
hidden, inaccurate, confusing, or misleading fail to provide students 
with the information they need to make informed decisions. The 
commenter urged the Department to take steps to ensure that disclosures 
required under these regulations provide actual, effective notice and 
information that is accurate, meaningful, and actionable to students 
who may be unfamiliar with the accreditation system and the meaning of 
accreditation decisions and terminology. The commenter also urged the 
Department to ensure that the disclosures continue for the duration of 
the suspension or other adverse action so that the disclosures are more 
likely to reach all relevant students and prospective students.
    Discussion: We appreciate the support and suggestions of the 
commenters. We believe that providing initial notification within seven 
days provides transparency and protection to current and prospective 
students. Institutions are expected to maintain that disclosure until 
the suspension or adverse action is resolved. Beyond the Department's 
regulations, individual agencies often set additional requirements for 
how and where this information must be disclosed.
    The Department's regulations refer to the requirement that the 
agency must disclose the action taken in a manner that is clear, 
factual, and timely.
    Changes: None.
    Comments: One commenter disagreed with the proposed requirement to 
reduce the amount of time an accrediting agency has available to inform 
State agencies and the Department when an institution voluntarily 
withdraws from accreditation or preaccreditation or allows either to 
lapse from 30 to 10 days. The commenter stated that 10 days is 
unreasonable and places an unnecessary burden on agencies.
    Discussion: We appreciate the commenter's concerns; however, we 
believe that decreasing the notification timeframe to 10 days provides 
needed protections to students and taxpayers. The prompt notification 
of these changes is of critical importance to entities responsible for 
ensuring an institution's authority to operate or, in the case of the 
Department, to ensure that the institution continues to be able to 
participate in title IV programs.
    Changes: None.

Other Information an Agency Must Provide the Department (Sec.  602.27)

    Comments: One commenter disagreed with the proposed elimination of 
the requirement that an accrediting agency provide to the Department 
any annual report that it produces as well as the change to require an 
accrediting agency to consider any contact with the Department as 
confidential only where the Department determines a compelling need for 
confidentiality. The commenter stated that these changes lack a 
reasoned basis. Another commenter agreed with the Department making the 
determination regarding confidentiality as it would allow the 
Department to determine the appropriate classification under Federal 
law.
    Discussion: The Department has created monitoring tools that 
provide it with more real-time data and information to evaluate an 
agency. By the time an agency publishes an annual report, the data is 
often stale and unhelpful to the Department. We believe that 
eliminating the requirement to provide an annual report does not affect 
the Department's ability to monitor agencies and will increase 
efficiency and reduce administrative burden.
    Changes: None.

Severability (Sec.  602.29)

    Comments: None.
    Discussion: We have added Sec.  602.29 to clarify that if a court 
holds any part of the regulations for part 602, subpart B invalid, 
whether an individual section or language within a section, the 
remainder would still be in effect. We believe that each of the 
provisions discussed in this preamble serve one or more important, 
related, but distinct, purposes. Each provision provides a distinct 
value to the Department, the public, taxpayers, the Federal government, 
and institutions separate from, and in addition to, the value provided 
by the other provisions.
    Changes: We have added Sec.  602.29 to make clear that the 
regulations are designed to operate independently of each other and to 
convey the Department's intent that the potential invalidity of one 
provision should not affect the remainder of the provisions.

[[Page 58877]]

Activities Covered by Recognition Procedures (Sec.  602.30)

    Comments: One commenter objected to the Department's proposal to 
eliminate this provision. The commenter argued that, although the 
Department stated that the provisions in the current regulations in 
this section duplicate other regulatory provisions, we have failed to 
identify which sections in part 602 cover these activities. The 
commenter asserted that this is because these sections do not exist.
    Discussion: The recognition activities procedures that we removed 
in Sec.  602.30 duplicate provisions in Sec. Sec.  602.31(a), 
602.31(b), 602.31(c), 602.19(e), and 602.33. The sections are 
referenced within Sec.  602.30 in the current regulations and are 
contained within these regulations at the same cited locations.
    Changes: None.

Agency Submissions to the Department (Sec.  602.31)

    Comments: Several commenters disagreed with proposed changes to 
Sec.  602.31(a)(2). One commenter stated that the Department's proposal 
to eliminate a requirement that accrediting agencies submit not only 
documentation of compliance with the recognition criteria, but also 
evidence that the agency ``effectively applies those criteria'' 
conflicts with the statute as it requires that the Secretary limit, 
suspend, terminate, or require an agency to come into compliance if she 
determines that an accrediting agency or association has failed to 
effectively apply the criteria. Another commenter noted that this is a 
fundamental part of the application process.
    Discussion: The changes to Sec.  602.31(a)(2) continue to require 
the agency to provide documentation as evidence that the agency 
complies with the criteria for recognition listed in subpart B of this 
part, including a copy of its policies and procedures manual and its 
accreditation standards. The Department staff will analyze the 
information submitted, in accordance with the procedures described in 
Sec.  602.32, which include the current requirement to assess 
observations from site visits to gauge the efficacy of the agency's 
application of the criteria, rather than a simple attestation of that 
fact in the documentation submitted by the agency. In keeping with the 
statutory requirement, if the Secretary determines that an accrediting 
agency or association has failed to effectively apply the criteria in 
this section, or is otherwise not in compliance with the requirements 
of this section, the Secretary will limit, suspend, or terminate the 
Department's recognition, or require an agency to come into compliance.
    The regulations also recognize that, in some instances, an agency 
may not have the need to apply a particular policy, standard, or 
procedure during its recognition review period. In such instances, the 
agency should not be found to be noncompliant if it has the appropriate 
policy in place but has not yet had the need to implement it. For 
example, if no institution during the five-year review period has 
appealed a negative decision, the agency cannot prove that it follows 
its appeal procedures, but this does not indicate that the agency is 
noncompliant. However, if the agency has had occasion to implement a 
given policy, it must do so effectively.
    Changes: None.
    Comments: Commenters agreed that accrediting agencies should redact 
submissions of personally identifiable information (PII) and other 
sensitive information to prevent public disclosure of PII while 
facilitating access to documentation. One commenter stated that the 
Department should better identify what it means by PII before it 
requires agencies to perform the redaction.
    Discussion: We thank the commenters for their support on this 
proposed change. We believe that those who work with ``personally 
identifiable information'' generally understand what it includes, which 
is any data that could potentially identify a specific individual.
    PII is defined in 2 CFR 200.79 as information that can be used to 
distinguish or trace an individual's identity, either alone or when 
combined with other personal or identifying information that is linked 
or linkable to a specific individual. Some information that is 
considered to be PII is available in public sources such as telephone 
books, public websites, and university listings. This type of 
information is considered to be Public PII and includes, for example, 
first and last name, address, work telephone number, email address, 
home telephone number, and general educational credentials. The 
definition of PII is not anchored to any single category of information 
or technology. Rather, it requires a case-by-case assessment of the 
specific risk that an individual can be identified. Non-PII can become 
PII whenever additional information is made publicly available, in any 
medium and from any source, that, when combined with other available 
information, could be used to identify an individual. We do not believe 
that we need to further define PII.
    Changes: None.
    Comments: Another commenter stated that changing the timeframe to 
reapply for recognition to 24 months prior to the date on which the 
current recognition expires is unreasonable noting that in 24 months 
the information provided may be out of date. The commenter contended 
that the reason for the change likely has to do with understaffing at 
the Department.
    Discussion: The Department disagrees with the commenter. To the 
contrary, the 24-month timeframe provides ample opportunity for an 
agency, if found deficient in its policies and procedures, to update 
them as necessary to meet the Department's requirements. It also 
affords Department staff the opportunity to follow an individual 
accreditation decision from beginning to end, meaning that staff can 
observe both the site visit and the final agency decision for a single 
institution.
    The current timeframe makes it impossible for staff to observe the 
decision-making body considering the same institution for which the 
staff observed a site visit. Agencies will be able to provide the 
Department with information if updates occur during the 24-month 
period. Presently, there is no stated timeframe in the regulations, and 
providing 24 months allows the Department to perform a more thorough 
review of the agency and its activities. It also provides the agency 
sufficient time to make corrections to policies and procedures in order 
to come into compliance.
    Changes: None.
    Comments: One commenter noted that the Department proposes moving 
aspects of the recognition process to an on-site review, but it 
provides no explanation of how it will ensure adequate maintenance of 
records. The commenter asserted that this lack of records, which will 
impede NACIQI in its ability to review the record for its decision and 
shield the Department from accountability, violates the law.
    Discussion: We appreciate the commenter's concerns. Department 
staff will document the on-site review, including a description of 
documents reviewed, an explanation of how those documents support the 
staff finding, and in the event of a negative finding, will require 
staff to make copies or upload a sample of documents that provide 
evidence to support a staff finding or recommendation. This will be 
included in the agency review and will be provided to NACIQI for their 
review of the agency.

[[Page 58878]]

    The Department proposed this change in methodology in response to 
recommendations made by the Office of the Inspector General (OIG or IG) 
in its June 27, 2018 report, U.S. Department of Education's Recognition 
and Oversight of Accrediting Agencies.\26\ The OIG report expressed 
concern that agencies are able to provide examples of their best work 
in deciding on their own which documents to include as evidence in 
their petition for recognition or renewal of recognition. Instead, OIG 
recommended a representative sample of documents that accurately 
reflect a complete picture of the agency's work. Moreover, the IG 
expressed concern that staff do not review an appropriate number of 
institutional or programmatic decisions relative to the number of 
institutions or programs the agency accredits.
---------------------------------------------------------------------------

    \26\ www2.ed.gov/about/offices/list/oig/auditreports/fy2018/a09r0003.pdf.
---------------------------------------------------------------------------

    The IG recommended that the accreditation group use risk-based 
procedures and readily available information to identify the specific 
institutions and an appropriate number of institutions that each agency 
must use as evidence to demonstrate that it had effective mechanisms 
for evaluating an institution's compliance with accreditation standards 
before reaching an accreditation decision.
    The IG further recommended that the OPE accreditation group adopt 
written policies and procedures for evaluating agency recognition 
petitions that incorporate the elements of the recommendation described 
above and address specific documentation requirements to include each 
selected school's complete self-study report and the agency's site 
visit report and decision letter; and adopt a risk-based methodology, 
using readily available information, to identify high-risk agencies and 
prioritize its oversight of those agencies during the recognition 
period. These regulations and the June 2019 update to the Accreditation 
Handbook achieve these objectives.
    The Department is concerned that already petitions include tens of 
thousands of pages and adding to the size of petitions creates a number 
of practical challenges including demands of agency and staff time. As 
a result, the Department has determined that by receiving lists of 
upcoming accreditation decisions 24 months in advance of the 
recognition decision, staff will have more opportunities to participate 
in site visits or observe agency decisions regarding institutions that 
have demonstrated risk characteristics. In addition, by performing an 
on-site review, staff can review sections or excerpts of more 
documents, meaning that their review will include consideration of a 
larger number of member institution or program files.
    Changes: None.

Procedures for Department Review of Applications for Recognition or for 
Change of Scope, Compliance Reports, and Increases in Enrollment (Sec.  
602.32)

    Comments: Commenters stated that the Department should continue its 
practice of having career staff provide a draft report to agencies it 
reviews because the Department provides no reason to eliminate the 
practice.
    Discussion: The regulations provide that, if an agency is required 
to be reviewed by the NACIQI under Sec.  602.19(e), the Department will 
follow the process outlined in Sec.  602.32(a) through (h) which 
includes a provision for a draft report to the agency. However, the 
regulations do not require staff to make a preliminary recommendation 
regarding an agency's recognition status at the time of issuing a draft 
report. Only after considering the agency's response to the draft staff 
report, including additional evidence provided by the agency, and 
performing its on-site review(s) should staff make a recommendation 
regarding an agency's recognition status.
    Changes: None.
    Comments: One commenter stated that under proposed Sec.  602.32(b), 
the Department would only require that an accrediting agency provide 
letters from educators and institutions to show wide acceptance of the 
agency. However, the commenter suggested that both of those parties may 
have a conflict of interest in providing acceptance of the agency if 
they are an institution or work for an institution that is accredited 
by the agency. Further, the commenter stated that the requirement to 
show wide acceptance was not only applicable to initial approval, but 
also re-recognition. The commenter suggested that letters should not be 
used if all three come from the same institution and that the 
Department should justify why this provision should not apply to 
continued recognition.
    Discussion: We appreciate the comments on this topic; however, once 
an agency has been recognized, the fact that it has member institutions 
serves as evidence that the agency is valued by institutions and 
educators. It is important to request support from educators and 
institutions during the review of an application for initial 
recognition since the Department needs to be sure that the agency is 
likely to maintain a healthy membership and is not being created for 
the purpose of accrediting a single institution. We believe the 
original widely accepted standard in Sec.  602.13 was too subjective 
and was unclear about how many letters would be required to meet the 
standard. In some instances, agencies submitted multiple documents in 
support of their wide acceptance, yet staff found the agency to be out 
of compliance. In addition, this requirement could be used 
strategically by educators, licensing boards, and other agencies to 
block competition either among institutions or within the labor pool by 
narrowing available opportunities or the number of individuals who 
qualify for them. It is also possible that an agency that accredits a 
small number of programs or institutions could be a reliable authority 
on institutional quality, but because of the narrow scope of its work, 
lacks wide acceptance outside of the institutions for which it provides 
accreditation due to a lack of knowledge about the area by others, or 
due to philosophical differences in approach. The proposed change would 
streamline the current wide acceptance requirement while keeping 
guardrails for the initial recognition of an agency by ensuring they 
can demonstrate acceptance from the constituencies most relevant to 
them. The Department expects that letters of support reflect the wide 
variety of constituencies the agency serves but does not believe one-
size-fits-all regulatory requirements align with statutory authority, 
nor would they improve accrediting agency quality. The Department 
believes this requirement is most appropriate during initial 
recognition because it helps validate that there is a need for a newly 
recognized agency.
    Changes: None.
    Comments: One commenter stated that the current Sec.  602.32(d) 
specifies that final judgments on the merits by a court or 
administrative agency in complaints or legal actions against an 
accrediting agency are determinative of compliance. The commenter 
stated that the proposal to merely consider such final judgments is a 
significant change to the Department's procedures, and that the 
Department's explanation that the proposed change reflected the view of 
the Department and several committee members did not provide a 
justification that meets the burden of the APA.
    Discussion: Current Sec.  602.32(d) specifies that ``Department 
staff's evaluation of an agency may also include a review of 
information directly related to institutions or programs accredited or 
preaccredited by the

[[Page 58879]]

agency relative to their compliance with the agency's standards, the 
effectiveness of the standards, and the agency's application of those 
standards.'' The proposed change in this section does not substantively 
change this requirement. Moreover, there is no mention of the results 
of a final judgment on the merits by a court or administrative agency 
anywhere in the current regulations in part 602. The language 
referenced in the new regulations at Sec.  602.32(d)(2) states that 
complaints or legal actions against an accredited or preaccredited 
institution or programs accredited or preaccredited by the agency may 
be considered but are not necessarily determinative of compliance. This 
change was necessary to ensure that institutions and agencies have due 
process rights and benefit from the presumption of innocence such that 
allegations alone do not suffice as evidence of noncompliance.
    Changes: None.
    Comments: One commenter requested that the Department clarify what 
is meant, in Sec.  602.32(e), by the statement: ``that the agency was 
part of a concerted effort to unnecessarily restrict the qualifications 
necessary for a student to sit for a licensure or certification 
examination or otherwise be eligible for entry into a profession.'' 
Another stated that the Department provided no evidence that 
unnecessary qualifications are being imposed on students to sit for 
licensure or for certification and that the Department is trying to 
link the changes in Sec.  602.32(e) and (k) in order to prevent 
accrediting agencies from working with licensing bodies and States to 
prohibit discrimination.
    Discussion: The purpose of the change is to limit symbiotic 
relationships between accrediting agencies, institutions, and licensing 
boards, which together may limit access to professions by increasing 
education requirements without regard for consumer cost to the benefit 
of agencies, institutions, and licensing boards.
    The Department views such behavior as anticompetitive and contrary 
to the spirit, if not letter, of the ``separate and independent'' 
provisions in HEA section 496 as well as to basic fairness and the 
goals of the HEA, namely, to expand opportunity to Americans.
    In other instances, accrediting agencies may have formed such a 
close relationship with licensing boards that there is no opportunity 
for a new agency to form. Licensing boards may require individuals to 
have graduated from an institution approved by a specific accrediting 
agency to qualify for licensure. As a result, institutions--who want 
their graduates to obtain licensure--would not choose an agency who 
could not fulfill that licensure obligation. It may be difficult to 
sanction an agency that is the only agency providing the programmatic 
accreditation necessary for a graduate's entry into the workforce. 
Again, the Department places far greater importance on the acquisition 
of knowledge and skills than on how such knowledge and skills were 
acquired.
    Changes: None.
    Comments: One commenter stated that the Department failed to give 
an example, in connection with proposed Sec.  602.32(e), of how an 
accrediting agency deprived a faith-based institution of accreditation 
because of its religious mission. The commenter stated that proposed 
Sec.  602.32(e) would allow faith-based institutions to have their own 
accrediting agency, questioned what quality controls would exist for 
such an agency, and asserted that faith-based institutions should be 
required to adhere to the same academic standards as secular schools. 
Another commenter stated that the proposed regulations were not clear 
as to when an institution could make a complaint to the Department that 
its mission had been a negative factor in an accrediting agency's 
decision which could lead to confusion for accrediting agencies.
    Discussion: We believe the commenters may have intended to refer to 
Sec.  602.18(b)(3) rather than Sec.  602.32(e). Although the Department 
does not have evidence that faith-based institutions have been deprived 
of accreditation because of their religious missions, we have seen 
instances in which agencies have proposed changes to their standards 
that would have prevented those institutions from following the tenets 
of their faith. Faith-based institutions were successful in blocking 
those changes, but if the accrediting agency had not been responsive to 
the requests of its faith-based members, the change could have 
interfered with the mission of a number of faith-based institutions.
    The Free Exercise clause of the Constitution requires the 
Department to ensure that faith-based institutions are not deprived of 
access to Federal programs because of the exercise of their religious 
rights. A number of faith-based institutions have expressed concern to 
the Department that, while accreditation has ultimately been granted, 
some agencies have used accreditation to force institutions to 
implement policies and practices that may align with popular opinion, 
but may not be consistent with the tenets of their faith. Likewise, 
RFRA requires that the Federal government not substantially burden 
religious exercise unless it is the least restrictive means of 
furthering a compelling government interest. We are taking proactive 
steps to ensure that discrimination does not occur against faith-based 
institutions because of their religious exercise. Agencies that 
accredit faith-based institutions must meet the same standards to 
obtain recognition from the Secretary that are applicable to all 
accrediting agencies seeking the Secretary's recognition. All 
institutions have access to an existing complaint process that provides 
an opportunity for institutions to raise their concerns, including 
concerns about respect for their missions, to the Department. These 
regulations do not change the existing complaint process.
    Change: None.
    Comments: One commenter stated that, because the regulations do not 
specify how many or which criteria the accrediting agency must meet to 
be substantially compliant, the proposed regulations may allow an 
agency to be out of compliance with multiple criteria and still be a 
gatekeeper for Federal aid. Two commenters agreed with allowing an 
agency to continue to be recognized if it was in ``substantial 
compliance'' because it would allow an agency a four-year grace period 
to resolve any regulatory lapse, and, as one commenter noted, the 
language also ensures the unfettered ability of Department staff to re-
escalate an issue, should it prove more serious than initially 
determined. The commenter also noted that the Department would only use 
the designation in cases where an agency achieved compliance in all but 
a technical sense.
    Discussion: The Department disagrees with the commenter who stated 
that the ``substantial compliance'' standard would allow a noncompliant 
agency to continue to be recognized. An agency that is out of 
compliance would not be found to be substantially compliant. However, 
in some instances an agency may have been acting in accordance with the 
Department's requirements but may have a written policy that does not 
clearly articulate every aspect of the agency's policies or procedures. 
In other instances, the agency may have the correct policy in place and 
mostly acted in accordance with the policy but may be found to have a 
limited number of instances when special circumstances or employee 
error resulted in the agency deviating from its written policy. In 
other instances, a missing signature or the use of language that is not 
precisely the same as the language in the Department's regulations 
could result in a finding of noncompliance although

[[Page 58880]]

the agency's actions meet the Department's requirements.
    As one commenter noted, the proposed language regarding the use of 
monitoring reports for agencies that are substantially compliant 
relates to situations where there were technical compliance issues, but 
the agencies were meeting the spirit of the requirements. Section 602.3 
makes clear that a monitoring report is required to be submitted by an 
agency to Department staff when the agency is found to be substantially 
compliant but needs to make a minor correction to its policies or 
practices. The report must contain documentation to demonstrate that 
the agency is implementing its current or corrected policies, or that 
the agency, which is compliant in practice, has updated its policies to 
align with those compliant practices.
    Changes: We have made no changes as a result of this comment. 
However, we have modified Sec.  602.32 by condensing paragraphs (j) 
through (m), removing redundant language, including removing proposed 
Sec.  602.32(k), which was identical to proposed Sec.  602.32(e), and 
clarifying the process Department staff follow in their review of 
applications for recognition or for change of scope, compliance 
reports, and increases in enrollment.

Procedures for Review of Agencies During the Period of Recognition 
(Sec.  602.33)

    Comments: Several commentators stated that the proposed rules 
regarding the application process would make it more difficult for the 
Department to remove ineffective accrediting agencies that serve as 
gatekeepers for title IV aid. One commenter stated that the concept of 
a monitoring report for accrediting agencies that are ``substantially 
in compliance'' rather than fully meeting all requirements was a broad 
term that had no basis in statute. The commenter stated that the 
process would allow Department staff to make decisions without full 
transparency and public accountability versus a ``typical full agency 
review.''
    Discussion: The Department's intention in introducing the 
monitoring report is to enable accrediting agencies to more effectively 
resolve instances of minor exceptions to full compliance. Furthermore, 
we believe that the use of monitoring reports will increase the 
likelihood of identifying and correcting minor problems before they 
become larger problems.
    An accrediting agency that is failing to meet the Department's 
criteria for recognition remains subject to withdrawal of recognition. 
The Department has not yielded its authority or forfeited its 
responsibility for assuring that accrediting agencies are qualified 
gatekeepers of title IV aid. While the statute does not specify 
``substantial compliance'' as a status for accrediting agency 
recognition, it does not preclude the Secretary from making this 
designation and for many years substantial compliance was the standard 
used by the Department during recognition reviews. The introduction of 
the monitoring report and designation of substantial compliance 
provides the Department with more efficient and effective tools and 
methods to address minor deviations in process or procedures to ensure 
full compliance. It is also important to note that the monitoring 
report increases the level of transparency for recognition or 
accreditation decisions as it provides evidence that any minor 
omissions or inconsistencies are resolved, and that policies and 
procedures are put in place to prevent future inconsistencies. The 
monitoring report will be employed in situations where the accrediting 
agency is substantially compliant and requires only minor actions or 
sufficient time to come into full compliance.
    Changes: None.
    Comments: Regarding proposed changes to Sec.  602.33(c), one 
commenter stated that an on-site ``spot check'' of records during a 
visit may not be sufficient to understand an agency's full body of work 
during a review period. The commenter also noted that the Department 
must also have sufficient staff to handle the workload should these 
rule changes increase the number of agencies that need to be reviewed 
and monitored. The commenter supported the provisions that require the 
Department, for issues that cannot be resolved by Department staff, to 
seek public comment, make a recommendation to NACIQI, and, ultimately, 
refer the issue for Secretarial action; however, the commenter felt 
that the Department's decision to continue or not continue monitoring 
should also be public. One commenter stated that the Department should 
do more to monitor competition between accrediting agencies.
    Discussion: We disagree that the provisions of Sec.  602.33(c) 
constitute a ``spot check.'' The regulations will require the 
Department staff to conduct a thorough review and analysis of 
identified areas of concern or inconsistency. The on-site review is 
designed to increase the quality and scope of documents staff review, 
based on institutions or actions selected by staff, while reducing the 
burden of uploading thousands of pages of documents that may not be 
responsive to staff's specific concerns or questions. We appreciate the 
commenter's support for the provisions that require escalation of 
unresolved issues to NACIQI and believe that this process affords 
sufficient and appropriate transparency to the public. In response to 
the commenter who believed the Department should make its decision 
regarding the continuation of monitoring public, we reiterate that we 
will use the monitoring report for minor omissions or inconsistencies 
that we do not believe are cause for public concern.
    The Department seeks to acknowledge and correct even small 
deviations from standard practice to ensure that they are resolved 
before becoming larger problems, while at the same time not creating 
unnecessary work for the agency or taking time from a NACIQI meeting 
that would be better spent focusing on agencies with more serious 
compliance concerns.
    With regard to the commenter's concern that these regulations will 
reduce the stringency of the Department's oversight, we believe instead 
that these new regulations provide greater opportunities for the 
Department to take necessary action against an accrediting agency. For 
example, when institutions were limited to selecting an agency based on 
their location, and entire regions of the country were accredited by a 
single accrediting agency, the Department would have been reluctant to 
withdraw recognition from a regional accrediting agency, leaving an 
entire region of the country without a comprehensive institutional 
accrediting agency. The Department believes there is always a small 
risk that some agencies may feel pressured to lower standards in order 
to attract more member institutions. However, the Department does not 
believe this risk will grow as a result of these regulations and, as 
always, will be vigilant in monitoring agencies that insufficiently 
monitor the quality of the institutions and programs they oversee. The 
Department believes that by reducing unnecessary administrative burden 
from the recognition process, accrediting agencies can devote more time 
and resources to their primary responsibility of overseeing 
institutional quality and the student experience.
    The Department will perform risk-based analysis and review of 
agencies, including between official renewal of recognition activities, 
when we detect signs of risk through our various monitoring and program 
review activities. Through these revised processes, the Department 
believes it will be able to more effectively identify

[[Page 58881]]

and act against agencies that may be at risk of reducing rigor and 
causing harm to students and taxpayers.
    Changes: None.
    Comments: One commenter stated that the Department proposes 
eliminating a requirement that it review an agency at any time at the 
request of the NACIQI and that it does not mention this change in the 
NPRM. The commenter stated that the Department provides no reasoning or 
justification and appears not to have discussed this change during the 
rulemaking. The commenter stated that it is particularly problematic 
given the proposal to conduct monitoring reports without input or 
review from NACIQI.
    Discussion: The regulations do not eliminate an investigation at 
the request of NACIQI. This requirement is addressed in Sec.  
602.33(a)(2), which requires Department staff to act on information 
that appears credible and raises concerns relevant to the criteria for 
recognition. Thus, if NACIQI were to make a credible request, based on 
evidence of risk, the Department staff would act on this request and 
initiate a review or investigation.
    Changes: None.

Senior Department Official's (SDO's) Decision (Sec.  602.36)

    Comments: A few commenters opposed the additions to the types of 
decisions the SDO may make in Sec.  602.36(e), such as approving 
agencies for recognition and approving recognition with a monitoring 
report. These commenters feared the change would impede the 
Department's ability to perform an appropriate oversight function over 
accrediting agencies. Additionally, these commenters believed this 
change would conceal important monitoring of agencies not only from 
NACIQI, but also from the public. These commenters requested that the 
Department abandon these changes and fully review and evaluate 
accrediting agency performance.
    Discussion: The Department believes that creating required 
monitoring reports provides an additional tool to ensure accrediting 
agency compliance with recognition criteria. Under the current 
regulations, when the Department identifies minor omissions or 
inconsistencies in an agency's standards, policies, or procedures, the 
Department may not take action because the required action would be 
unjustifiably severe. On the other hand, the Department has sometimes 
determined a seasoned accrediting agency to be noncompliant because a 
single form was left unsigned or changes in board membership 
temporarily change the ratio of board participants. By adding the 
substantial compliance determination and a required monitoring report, 
the Department has the opportunity to award continuing recognition and 
continue to address minor irregularities or omissions. We will restrict 
the use of the monitoring report to instances when an agency has 
demonstrated substantial compliance and limit its use to low-risk 
situations. The monitoring report, for example, could include 
documentation to show that an agency has updated its written policies 
and procedures to align with its current practice, to ensure that 
controls have been put in place to make sure that all documents are 
properly signed, or to demonstrate that minor deviations that were made 
in order to accommodate students in unusual circumstances have not 
become standard practice.
    The decisions of the SDO are predicated on demonstrated compliance 
or substantial compliance with the criteria for recognition listed in 
subpart B of this part. Those decisions do include a wide range of 
determinations including, but not limited to, approving for 
recognition; approving with a monitoring report; denying, limiting, 
suspending, or terminating recognition; granting or denying an 
application for an expansion of scope; revising or affirming the scope 
of the agency; or continuing recognition pending submission and review 
of a compliance report. These decisions are based on the SDO's 
assessment of the agency's petition for recognition, Accreditation 
Group staff analysis and agency response, and the NACIQI review.
    Changes: None.
    Comments: A few commenters also criticized the changes in Sec.  
602.36(e) and (f) that allow the SDO to determine that an agency is 
compliant or substantially compliant. These commenters expressed 
concern that a determination of substantial compliance represents a 
weakening of protections or the allowance of agency inaction.
    A few commenters specifically disagreed with the change in Sec.  
602.36(e)(1)(i) allowing the SDO to determine that the agency has 
demonstrated compliance with a standard when an agency has required 
policies and procedures in place but has not had an opportunity to 
apply them. These commenters believed that this change violates the 
HEA, which they claimed requires the Department to act within 12 months 
or remove the agency's recognition if it does not comply or effectively 
apply required criteria. One commenter suggested that agencies could 
continually create new standards to avoid a Department finding for 
failure to follow their standards. Two commenters suggested that the 
Department withdraw this change.
    Discussion: We disagree with the commenters who argued against 
allowing the SDO to determine an agency to be compliant or 
substantially compliant. The provision still requires that the SDO make 
a compliance determination. We do not believe that this weakens the 
standard. Instead, we believe it allows the SDO to raise concerns about 
even small irregularities or omissions, and require the agency to 
resolve them, while at the same time allowing NACIQI to focus their 
time on agencies with clear areas of noncompliance.
    We also disagree with the commenters who opposed allowing the SDO 
to determine that an agency demonstrated compliance when the agency had 
the required policies and procedures in place but had not had the 
opportunity to apply them. We do not believe it is appropriate to 
penalize an accrediting agency that has the appropriate policies in 
place but has not had the need or opportunity to apply those policies 
during the review period. For example, a small accrediting agency may 
have policies in place to evaluate an expansion of scope at a member 
institution to include distance learning, but it may have no members 
that participate in distance learning or that add distance learning 
during the review period. Similarly, an agency may have a change-of-
control policy in place, but it may not have had an institution that 
requested consideration of a change-of-control during the review 
period, and the agency would have had no need to implement the policy. 
Accrediting agencies with a small number of members may have few or 
even no institutions that go through an initial accreditation or 
renewal of accreditation review during the agency's five-year 
recognition review period since agencies typically accredit 
institutions every 10 years.
    The Department believes that this is consistent with statute, which 
requires an agency to have accredited or preaccredited only one 
institution prior to being eligible for recognition. It is unlikely 
that an accrediting agency would be required to implement all of its 
policies in the course of accrediting or preaccrediting a single 
institution, which makes it clear that Congress did not expect that 
each agency would be required to implement every policy during each 
review cycle. This is not a change in policy because staff have 
considered these instances to meet the standard for compliance; 
however, the

[[Page 58882]]

Department seeks to codify this practice in these regulations.
    To be clear, this policy does not ignore instances when an agency 
elected to ignore a problem and not implement its written policies, but 
instead takes into account that agencies may not need to exercise every 
one of its policies during a five-year review period, and that is not a 
violation of the requirements of the HEA. In such a case, the 
Department will review the policies and procedures in place to be sure 
they comply with the Department's requirements. In addition, as soon as 
the need to apply that policy arises, the agency will be required to 
notify the Department so that the Department has the opportunity to 
conduct an evaluation of the agency's application of the policy. The 
agency has not failed to comply if it has not had the need or 
opportunity to apply a particular policy, as long as it has a policy in 
place and implements it properly if and when the need arises.
    Changes: None.

Severability (Sec.  602.39)

    Comments: None.
    Discussion: We have added Sec.  602.39 to make clear that, if any 
part of the regulations for part 602, subpart C, whether an individual 
section or language within a section, is held invalid by a court, the 
remainder would still be in effect. We believe that each of the 
provisions discussed in this preamble serve one or more important, 
related, but distinct, purposes. Each provision provides a distinct 
value to the Department, the public, taxpayers, the Federal government, 
and institutions separate from, and in addition to, the value provided 
by the other provisions.
    Changes: We have added Sec.  602.39 to make clear that the 
regulations are designed to operate independently of each other and to 
convey the Department's intent that the potential invalidity of one 
provision should not affect the remainder of the provisions.

Secretary's Recognition Procedures for State Agencies

Criteria for State Agencies (Sec.  603.24)

    Comments: One commenter supported the Department's removal of the 
requirement for State agencies that function as accrediting agencies to 
review and evaluate institutions' credit hour policies. This commenter 
agreed with the Department that the requirement adds burden without 
evidence of increased accountability, benefit to taxpayers, or 
assistance to students.
    Discussion: We thank the commenter for the support of the removal 
of this provision. We believe that it is beneficial to reduce burden 
when it does not jeopardize accountability.
    Changes: None.
    Comments: One commenter challenged the Department's assertion that 
the requirements were ``overly prescriptive'' and did not agree that 
State agencies functioning as accrediting agencies needed fewer 
restrictions in this area.
    Discussion: The Department maintains its position that the 
requirements in Sec.  603.24(c) to review policies related to credit 
hours are overly prescriptive and that the State agency serving as an 
accrediting agency should have autonomy and flexibility to work with 
institutions in developing and applying credit-hour policies. This 
change does not, as some commenters suggested, remove all oversight of 
institutions in this area (see the discussion above related to Sec.  
602.24). Instead, it provides for more flexibility and treats State 
agencies that serve as accrediting agencies the same as other agencies.
    Changes: None.

Severability (Sec.  603.25)

    Comments: None.
    Discussion: We have added Sec.  603.25 to clarify that if a court 
holds any part of the regulations for part 603, subpart B, invalid, 
whether an individual section or language within a section, the 
remainder would still be in effect. We believe that each of the 
provisions discussed in this preamble serve one or more important, 
related, but distinct, purposes. Each provision provides a distinct 
value to the Department, the public, taxpayers, the Federal government, 
and institutions separate from, and in addition to, the value provided 
by the other provisions.
    Changes: We have added Sec.  603.25 to make clear that the 
regulations are designed to operate independently of each other and to 
convey the Department's intent that the potential invalidity of one 
provision should not affect the remainder of the provisions.

Standards for Participation in the Title IV, HEA Programs

End of an Institution's Participation (Sec.  668.26)

    Comments: Several commenters supported allowing institutions to 
award and disburse title IV aid for up to 120 days following the end an 
institution's eligibility. These commenters noted that this would allow 
more students to complete their academic programs at the institution 
they selected without the disruption involved in relocating to another 
institution. One commenter also expressed that this change benefits 
closing institutions by providing continuity and strong operations 
through a closure.
    Discussion: We thank the commenters who supported the provision 
allowing a school to allow students an opportunity to complete their 
academic program at their chosen institution if they can do so within 
120 days. This minimizes disruption and allows for greater flexibility 
for students and for institutions--especially those who planned an 
orderly closure.
    The Department realized that, as written, Sec.  668.26(e)(1) could 
be read by some to permit an institution that no longer participates in 
title IV programs to continue receiving title IV aid. Instead, the 
Department's intent was a desire to enable the Secretary to allow an 
institution to continue participating in title IV programs for up to 
120 days after a State, an accrediting agency, or the Department has 
made the decision to remove State authorization, accreditation, or 
title IV participation, but defers the effective date of that decision.
    Comments: One commenter generally supported this provision but also 
expressed concern that the Department would not allow for more than 120 
days of funding following the decision to end an institution's 
participation. This commenter suggested alternative language that 
outlined parameters for which an institution would retain funding. 
These suggestions included disbursing only to students who were already 
enrolled when the institution announced its closure, disbursing only to 
students who had already completed at least 50 percent of the academic 
program, allowing disbursements only for institutions that were 
voluntarily withdrawing from participation in the title IV programs, 
and requiring the accrediting agency to approve the teach-out. These 
conditions, in the commenter's opinion, provided for what the commenter 
believed was the Department's intent--allowing for students to receive 
funding during an orderly closure of an institution.
    Discussion: We appreciate the support from the commenter and note 
that we have revised Sec.  668.26 to more clearly articulate the need 
for the State authorizing agency, accrediting agency, and Department to 
all agree that the institution has the capacity to conduct an orderly 
teach-out based on the teach-out plan provided by the institution. We 
note that we had addressed most of the

[[Page 58883]]

concerns expressed in the NPRM; however, we agree that additional 
assurances by each member of the triad are needed to provide an 
appropriate teach-out opportunity to students. To reiterate, in our 
proposal, we imposed numerous requirements on institutions that wish to 
avail themselves of the flexibility afforded by this provision. Most 
importantly, the Secretary may permit the institution to continue to 
originate, award, or disburse title IV, HEA program funds following a 
State authorizing agency or accrediting agency's decision to withdraw, 
suspend, or terminate State authorization or accreditation in 
circumstances when such a decision has a deferred effective date, and 
only if the State authorizing agency and accrediting agency agree that 
the cause of the probation or termination decision would not prevent 
the institution from engaging in an orderly teach-out. Note, however, 
that this is permissible only in certain circumstances and only with 
agreement from an institution's State authorizing agency and 
accrediting agency. In addition, the permission to originate, award, or 
disburse funds may not extend beyond the delayed effective date of the 
withdrawal, suspension, or termination decision, or 120 days following 
that decision, whichever is earlier.
    We require the institution to notify the Secretary of its plans to 
conduct an orderly closure and teach-out in accordance with accrediting 
agency requirements. Additionally, we compel the institution to 
continue to follow the terms and conditions of the program 
participation agreement.
    Finally, we limited the disbursements to enrolled students who 
could complete the program within the 120 days following the date of a 
final, non-appealable decision by State authorizing agency to remove 
State authorization, an accrediting agency to withdraw, suspend, or 
terminate accreditation, or the Secretary to end the institution's 
participation in title IV, HEA programs. Students would also be able to 
transfer to a new institution. To further protect both students and 
taxpayers, the Secretary together with the institution's State 
authorizing agency and accrediting agency must determine that with 
continuing title IV resources the institution is able to carry out a 
teach-out, and that the cause for the withdrawal, termination, or 
suspension of State authorization or accreditation would not prevent 
the institution from conducting a high-quality teach-out. For example, 
an accrediting agency could make the decision to withdraw accreditation 
because an institution does not meet the agency's requirements for 
long-term financial viability; however, the institution may still have 
sufficient resources if title IV participation continues to provide a 
teach-out that meets the requirements of the approved teach-out plan.
    We did not limit the provision to those who voluntarily withdrew 
from participation in the title IV programs. We believe that in those 
instances institutions are already permitted to continue to participate 
in title IV programs until the end of the approved teach-out plan or 
until such time that the institution is no longer providing a teach-out 
opportunity that meets the requirements of the teach-out plan.
    We agree that it is important for the State authorizing agency and 
the accrediting agency, not the institution itself, to determine 
regulatory requirements. We believe this adds additional assurances 
that the commenter thought were important.
    We do not agree with the commenter who believed that we need to 
provide for additional time beyond the 120 days after a decision to end 
participation in the title IV programs. We note that an institution 
executing an orderly closure has not ended its participation in the 
title IV programs by announcing a future closure. As an example, if an 
institution announces in July that it will operate for one more 
academic year and close at the end of its spring semester (which ends 
the following May), the institution continues to participate in the 
title IV programs and continues to receive title IV funds without the 
possible extension that may be available under this provision.
    Changes: The Department has added language to clarify that, in the 
event that the State authorizing agency or accrediting agency has made 
the decision to withdraw, suspend, or terminate accreditation or 
authorization, the Secretary may consider granting the institution the 
120-day teach-out opportunity only if the institution's State 
authorizing agency and accrediting agency agree that the cause for that 
negative action would not prevent the institution from conducting an 
orderly teach-out.
    Comments: Several other commenters opposed the Department providing 
title IV funds to students to allow them to complete a teach out for up 
to 120 days after a decision to end an institution's title IV 
eligibility. These commenters expressed serious concern about loosening 
standards for schools, expecting taxpayers to spend additional money to 
fund them, and preventing students from obtaining closed school 
discharges.
    Discussion: We disagree with the commenters who believe that the 
goal of this provision is to avoid closed school discharges. The 
Department reiterates that the Secretary may--but is not required to--
allow the use of this option in the event that the State authorizing 
agency makes the decision to end authorization, or the accrediting 
agency makes the decision to terminate, suspend, or withdraw 
accreditation, or the Department makes the decision to end the 
institution's title IV participation, but only with the agreement of 
the State authorizing agency and the institution's accrediting agency. 
This maximum 120-day extension of participation would be provided only 
when the institution demonstrates the capacity to administer title IV 
funds appropriately and provide a high-quality teach-out experience. 
Additionally, students who meet the closed school discharge 
requirements, and who did not opt to participate in the teach-out, 
would still be eligible for a closed school loan discharge as would 
students who agreed to participate in the teach-out in instances in 
which the institution does not fulfill the requirements of the teach-
out plan and meet the other requirements. A student who elects to 
participate in a teach-out, and then fails to complete the courses that 
were part of the student's teach-out agreement due to no fault of the 
institution, would not be eligible for a closed school loan discharge. 
The Department will not permit an institution to continue to 
participate in title IV after a decision has been made by the State 
authorizing agency, the accrediting agency, or the Department to remove 
authorization, accreditation, or to end title IV participation, without 
first confirming with the institution's accrediting agency and State 
authorizing agency that the institution has the capacity to conduct the 
120-day teach-out, and that the reason for the withdrawal, termination, 
or suspension of State authorization or accreditation does not prevent 
the institution from completing an orderly teach-out.
    Only those students who are enrolled will be able to participate in 
the teach-out either to complete their program or to transfer to a new 
institution. The institution would not be permitted to advertise or 
enroll new students during the 120-day period, in accordance with Sec.  
668.26(e)(1)(iii).
    Changes: We have revised Sec.  668.26(e)(1) to clarify that the 
provision for continued participation in title IV, HEA programs, for up 
to 120 days must precede the point at which the Secretary terminates 
the institution's program participation agreement; to

[[Page 58884]]

clarify that a student may take credits for the purpose of transferring 
to another institution; and to provide other clarifying and conforming 
edits.
    In addition, we have modified Sec.  668.26(e)(2) to cross-reference 
the regulations that address misrepresentation to students by the 
institution regarding the teach-out plan or teach-out agreement.

Severability (Sec.  668.29)

    Comments: None.
    Discussion: We have added Sec.  668.29 to clarify that if a court 
holds any part of the regulations for part 668, subpart B, invalid, 
whether an individual section or language within a section, the 
remainder would still be in effect. We believe that each of the 
provisions discussed in this preamble serve one or more important, 
related, but distinct, purposes. Each provision provides a distinct 
value to the Department, the public, taxpayers, the Federal government, 
and institutions separate from, and in addition to, the value provided 
by the other provisions.
    Changes: We have added Sec.  668.29 to make clear that the 
regulations are designed to operate independently of each other and to 
convey the Department's intent that the potential invalidity of one 
provision should not affect the remainder of the provisions.

Reporting and Disclosure of Information (Sec.  668.41)

    Comments: Multiple commenters opposed the proposed changes to the 
job placement rate disclosures. Many of those specifically opposed the 
change that would require an institution to disclose any placement rate 
it calculates. Those commenters also opposed the elimination of a 
requirement that institutions identify the source, timeframe, and 
methodology of the job placement rates they do disclose. One commenter 
suggested that by changing the requirements, an institution is likely 
to cherry pick the best calculations to disclose to students. 
Additionally, that commenter said that Federal funds should not support 
students in academic programs related to employment requiring licensure 
if the program does not meet the licensure requirements in a given 
State. Another commenter who opposed changes to the job placement 
disclosure requirements stated that placement rates are the most 
commonly inaccurate or misleading advertisements for academic programs. 
Another commenter stated that the Department did not justify why an 
institution is not required to disclose any job placement rate 
calculated at the behest of a State authorizer or accrediting agency.
    Discussion: The Department does not believe that the changes to the 
job placement rate disclosures will weaken protections to students. The 
Department believes that, if an institution uses a job placement rate 
in its advertising for students, or if an institution's accrediting 
agency or State requires the calculation of a job placement rate, the 
institution should be required to disclose those rates publicly. 
However, the Department agrees with the commenter that job placement 
rates are subject to inaccuracies and inconsistencies due to the 
reliance on self-reported data and the myriad methods used to calculate 
these rates. The Department believes that requiring institutions to 
disclose any job placement rates they calculate may cause institutions 
to simply calculate such rates less often or publish rates based on 
flawed methodologies or surveys that have an insufficient survey 
response rate. Required disclosure of any calculated job placement rate 
may yield unintended consequences, including diminishing institutions' 
willingness to examine ways to improve their program's placement rates 
or requiring the disclosure of data to students and prospective 
students that could be incomplete, invalid, or unreliable. The 
Department believes institutions should have the right to utilize 
internal data to diagnose and address program weaknesses and that this 
flexibility will benefit students.
    The Department disagrees with the commenter who claims institutions 
will disclose only positive calculations to students. The Department 
believes that institutions will work to improve their programs when job 
placement rates reflect poor results. Improving programs will help 
students, who will benefit from stronger programs and better job 
options after completion.
    There are other regulations that prohibit misrepresentation in 
advertising, including any misrepresentation of job placement rates 
used by an institution in advertisements.
    The Department believes that the regulations at Sec.  
668.41(d)(5)(ii) that require an institution to identify the source of 
the information provided in job placement rates is duplicative of the 
requirement in Sec.  668.41(d)(5)(i) that informs institutions that 
they may provide this disclosure using the institution's placement rate 
for any program based on data from State data systems, alumni or 
student satisfaction surveys, or other relevant sources and, as a 
result, is unnecessary. The changes made to this regulation do not 
prohibit institutions from providing students the calculation method 
they used to determine their published job placement rates.
    The Department also disagrees with the commenter who stated that 
programs that do not lead to licensure or certification should not be 
eligible to participate in the title IV programs. Students may wish to 
enroll in programs with no intention of attaining licensure or 
certification in that field and should retain the right to do so as 
long as they are aware of the limitations of the program. The 
Department also notes that, in Sec.  668.43(a)(14), the regulations 
require the disclosure of any placement rates calculated and reported 
to the institution's accrediting agency or State, if the agency or the 
State requires them.
    Changes: None.

Institutional Information (Sec.  668.43)

    Comments: Many commenters encouraged the Department to maintain 
strong disclosure requirements for institutions to help level the 
information playing field between students and institutions.
    One commenter recommended that the Department require institutions 
to share all disclosures through ``appropriate publications, mailings 
or electronic media,'' rather than having disclosures be ``readily 
available.'' That commenter continued by stating that the Department 
should develop requirements that preclude institutions from burying 
disclosures on a website with a lengthy list of other disclosures.
    Discussion: The Department thanks those commenters that encouraged 
the Department to maintain strong disclosure requirements for 
institutions. The Department continues to believe that providing 
disclosures on all programs that lead to licensure or certification, 
regardless of instructional modality, is the best way to ensure that 
all students are aware of the program's ability to prepare the student 
to sit for licensure or certification exams or qualify for licensure or 
certification.
    While the Department would applaud any institution that exceeds the 
requirement for making these required disclosures, the Department 
remains committed to requiring only that institutions have them 
``readily available.'' This is consistent with the statutory 
requirements for information dissemination activities in HEA section 
485(a)(1).
    Changes: None.
    Comments: Multiple commenters expressed support for a disclosure 
related to transfer credit policies,

[[Page 58885]]

suggesting that this change may encourage institutions to discontinue 
the practice of awarding transfer credit solely on the source of 
accreditation or tax status of the sending program or institution. The 
commenters stated that having credit transfer policy disclosures will 
provide transparency for students and help to ensure that institutions 
do not deny students a fair and fulsome evaluation of their earned 
academic credits.
    One commenter recommended that the Department also require this 
disclosure to be made to part-time students. Another commenter 
suggested that all accredited institutions' academic credits should be 
transferable because accredited institutions must meet established 
standards for course content, quality, and rigor.
    Discussion: The Department thanks those commenters who supported 
the Department's inclusion of a transfer credit disclosure. The 
Department views this requirement as necessary to ensure transparency 
to institutional policies related to transfer credits. The Department 
agrees that part-time students should also receive this disclosure.
    The Department does not have the authority to require institutions 
to accept academic credits earned at an accredited institution because 
the authority for that determination resides with the institution. The 
Department of Education Organization Act of 1979 (Pub. L. 96-88) 
prohibits the Department from dictating such matters.
    Changes: None.
    Comments: Multiple commenters opposed the inclusion of a transfer 
credit disclosure, including one commenter who stated that it would be 
duplicative and unnecessary for an institution to include in its 
transfer credit policy the disclosure of any types of institutions from 
which they will not accept credit. One commenter stated that this 
disclosure would interfere with academic review of credits by faculty 
members and would result in students receiving a poorer quality 
education from their programs. Another commenter stated that the 
disclosure would strip institutions of the autonomy to independently 
determine the transferability of credit and force institutions to 
accept credit from institutions that the accepting institution finds to 
be academically substandard.
    Discussion: The Department does not believe it is duplicative to 
require institutions to list any types of institutions from which the 
institution will not accept credits when also providing a description 
of the transfer credit policies. It is in the best interest of students 
to receive information about whether their credits will or will not 
transfer prior to attempting to transfer. Providing transparency to 
students regarding an institution's transfer credit policies will 
improve their ability to make informed enrollment decisions. In some 
cases, these disclosures will reduce the instances of students having 
to retake coursework or take additional courses after transferring to 
an institution that will not accept their previously earned credits. 
This requirement will not interfere with the academic review of a 
student's transfer courses or result in students who are less prepared 
academically. The Department is not requiring institutions to adopt a 
particular policy but is requiring institutions to disclose their 
policies and practices; it is vitally important for students to know if 
an institution categorically rejects credits based on the accrediting 
agency or tax status of other institutions.
    This disclosure has no impact on the academic review of credits by 
faculty members, or the autonomy to independently determine the 
transferability of credit. Moreover, it does not force institutions to 
accept credit from institutions that the accepting institution finds to 
be, as the commenter noted, academically ``substandard.'' The 
disclosure simply requires institutions to inform prospective students 
of any institutions or types of institutions from which it will not 
consider the transferability of earned academic credits.
    Comments: Multiple commenters expressed support for the inclusion 
of a requirement that institutions disclose to students whether their 
educational programs meet the requirements for licensure across States 
so that a student will know if their investment in an educational 
program will lead to the career the student intends to pursue. One 
commenter stated that this provision would encourage institutions to 
conduct research regarding whether their programs fulfill requirements 
for State licensure, and that it is vitally important for students to 
have as much information on State licensure as they can obtain. Another 
commenter called this a ``common-sense requirement'' that will help 
prospective students from wasting money on programs that will not lead 
to licensure.
    Discussion: The Department thanks those commenters who expressed 
support for the inclusion of licensure and certification disclosures. 
The Department continues to encourage institutions to determine if 
their programs meet licensure requirements and hopes that these 
regulations will encourage institutions to conduct such research.
    The Department acknowledges, however, that, in some instances, it 
can be difficult to ascertain the requirements for licensure or 
certification in certain States, and that States sometimes have 
conflicting requirements, which means that the institution may not be 
able to make the determination in every State or develop programs that 
meet the requirements of all States.
    Changes: None.
    Comments: Many commenters opposed the Department requiring 
institutions to disclose if a program meets a State's licensure or 
certification requirements. One commenter noted that students have as 
much access to State licensure requirements as institutions do. Another 
commenter opined that requiring institutions to assess whether a 
program meets the educational requirements for licensure or 
certification for employment in an occupation (Sec.  668.43(a)(5)(v)) 
should be removed because the disclosure is not required by the HEA and 
it places an undue burden on institutions.
    One commenter who opposed the inclusion of licensure disclosures 
asserted that many students do not want licensure and to require an 
institution to disclose this information creates undue burden to them 
for a reason that is not always the case. The same commenter opined 
that to obtain information on licensure and certification is difficult 
because the appropriate agencies do not always respond timely to 
inquiries. This commenter expressed concern that this disclosure 
requirement may discourage institutions from offering programs that 
lead to a career that requires licensure or certification because of 
the extra work this disclosure requirement would cause.
    Another commenter suggested that instead of requiring institutions 
to determine whether their program meets the requirements for State 
licensure or certification, the Department should require the States to 
make it easier to find and follow the State's licensure requirements.
    One commenter noted that the Department should reconsider its use 
of the student's location in determining the correct location for a 
licensure disclosure because a student may not plan to obtain licensure 
in the same location that the student is taking their courses. Another 
commenter requested that the Department go beyond requiring disclosure 
of whether programs meet State licensure requirements and require that 
all programs meet State licensure

[[Page 58886]]

requirements in all States where the institution offers the program.
    One commenter asked whether the Department means to permit an 
institution to continue to advertise a program based on whether the 
program would fulfill educational requirements for licensure or 
certification, but allow the institution to only make a disclosure to 
students on whether the institution had not made such a determination. 
The commenter was concerned that this would allow an institution to 
advertise misleading or inaccurate information about whether a program 
meets licensure or certification requirements.
    One commenter asked for advice on how to successfully comply with 
this requirement when many boards will not confirm whether the program 
meets licensure requirements until individuals apply for licensure or 
certification. Another commenter asked for clarification on what 
programs provide licensure or certification and would be bound by the 
licensure and certification disclosures. The commenter asked whether an 
accounting program that meets the requirements to sit for the Certified 
Public Accounting exam only in some States the program is offered in, 
but does not meet the qualifications to sit for that exam in other 
States, should be held to the licensure and certification disclosure.
    Another commenter encouraged the Department to retain the 
requirement for an institution to provide direct disclosures, 
especially related to when a program does not meet the licensure and 
certification requirements for a State.
    Discussion: The regulations do not require an institution to make 
an independent determination about whether the program it offers meets 
the licensure or certification requirements; the regulations provide 
that an institution may disclose that it has not made a determination 
as to whether a program's curriculum meets a State's educational 
requirements for licensure or certification. Including that option 
provides sufficient flexibility so that an institution need not incur 
any additional burden.
    The Department agrees that students may have the same access to 
State licensure and certification requirements as an institution; 
however, students may not have access to the requisite information to 
determine whether the program meets those requirements without 
assistance from program experts at the institution.
    The requirements in Sec.  668.43(a)(2) are for all programs that 
lead to licensure or certification, or that should lead to licensure or 
certification, regardless of whether these programs are offered through 
distance learning, through correspondence courses, at brick-and-mortar 
institutions, or through another modality.
    While the Department believes that students who enroll in programs 
that do not meet licensure and certification requirements for a State 
could still be title IV eligible, the Department also believes that an 
institution should disclose this information to all individuals who 
enroll in these programs so that they are making an informed enrollment 
choice. The Department does not believe that this disclosure will 
dissuade institutions from offering legitimate academic programs that 
may lead to State licensure or certification since, absent confirmation 
of the program's alignment with licensure requirements, the institution 
can simply notify a student that they have not determined whether its 
program meets those requirements. If an institution opts to not confirm 
whether a program meets the requirements for a State because it enrolls 
a small percentage of students in that State, the institution will 
remain compliant by disclosing that it has not made a determination.
    The Department understands that students may not plan to obtain 
licensure where they have established their location of record with the 
institution. However, the institution has an obligation to make this 
disclosure to students based on the students' current location. 
Additionally, we believe the term ``located'' will minimize confusion 
related to State legal residence requirements and is the term most 
commonly used by States in policies related to distance education.
    The Department requires institutions to only advertise true and 
factual statements about their programs. While the Department does not 
preclude an institution from advertising a program for which it has not 
made a determination regarding the program's alignment with State 
licensure or certification requirements, the Department expects that 
institutions will accurately and truthfully provide that information on 
the required disclosure.
    Regarding the timing of these disclosures, the Department expects 
that the institution will provide this disclosure before a student 
signs an enrollment agreement or, in the event that an institution does 
not provide an enrollment agreement, before the student makes a 
financial commitment to the institution. The Department further expects 
that an institution will determine a student's ``location'' based on 
its published policies, and that the location may include the address 
provided by the student at the time of enrollment or at any point when 
the student notifies the institution in writing of a change in location 
to a new State.
    The Department does not believe these regulations will limit the 
States in which an institution may recruit students since the 
institution can simply state that it has not determined whether the 
program meets State licensure or certification requirements in that 
State. However, the Department concedes that institutions that do make 
that determination may have a marketing advantage, since it might 
better inform student choice.
    The Department notes that these regulations require direct 
disclosures to students regarding licensure and certification as 
described in Sec.  668.43(c) and has not removed that requirement 
entirely; rather, the Department has clarified that this direct 
disclosure may be through email or other forms of electronic 
communication.
    Changes: None.
    Comments: Another commenter stated that they support this 
requirement but requested additional time for institutions to become 
compliant. Multiple commenters requested a delay of at least three 
years after the effective date of the regulations and contended that, 
since ``brick-and-mortar'' programs were not previously subject to this 
type of requirement, it would not be feasible to comply by July 1, 
2020. Another commenter asked whether an institution must comply with 
both the current regulations, effective as of July 1, 2018, or the new 
regulations, which will become effective on July 1, 2020. The commenter 
argued that the creation of two different processes to comply with two 
separate regulations would be extremely burdensome to the institution.
    Discussion: It is the Department's view that institutions do not 
require additional time to become compliant with the licensure or 
certification disclosure since an institution can comply with this 
disclosure requirement by informing students that it has not made a 
determination about whether its programs meet the licensure or 
certification requirements for a State. If the institution later makes 
a determination that its program does not meet a State's requirements 
for licensure or certification, it must disclose this fact. Therefore, 
the Department believes institutions can comply with this provision by 
July 1, 2020. Until July 1, 2020, an institution must comply with the 
disclosure requirements of the State

[[Page 58887]]

Authorization regulations published on December 19, 2016.
    Changes: None.
    Comments: Multiple commenters were supportive of the use of the 
term ``location'' when used for disclosures on licensure or 
certification, but asked for clarification on when, specifically, the 
Department considers an individual to be enrolled at the institution. 
One commenter also asked for clarification on what is meant by ``formal 
receipt of change of address by a student'' as it pertains to this 
disclosure. Another commenter stated that he supported the Department's 
willingness to allow institutions to use their own policies to 
determine a student's location.
    Discussion: The institution determines the student's location at 
the time of initial enrollment based on the information provided by the 
student, and upon receipt of information from the student that their 
location has changed, in accordance with the institution's procedures. 
Institutions may, however, develop procedures for determining student 
location that are best suited to their organization and the student 
population they serve. For instance, institutions may make different 
determinations for different groups of students, such as undergraduate 
versus graduate students.
    Changes: None.
    Comments: One commenter strongly supported the Department's 
proposal to require an institution to disclose information about teach-
out plans.
    Discussion: The Department appreciates the support of the commenter 
and believes that requiring disclosures about an institution's teach-
out plans and why an accrediting agency is requiring an institution to 
maintain one is an important disclosure for a student to receive.
    Changes: None.
    Comments: Multiple commenters raised concerns about the lack of 
specificity regarding what ``actions'' among the many actions that 
could be taken against an institution would require notification under 
the proposed rule, and what kind of ``notice'' would be sufficient to 
comply with this regulation.
    In particular, one commenter stated that there are several types of 
notice, all of which might be legally sufficient depending on the 
circumstances, but nevertheless would reflect different approaches by 
institutions to meeting the standard.
    Several other commenters, in addition to asking what constitutes 
sufficient notice, asked for greater clarity concerning which actions 
rise to the level of requiring notification. Another commenter pointed 
out that damage could be done to an institution as a result of a 
notification requirement, if the institution is required to supply 
notice of an investigation, action, or prosecution by a law enforcement 
agency before the investigation is complete and concerns are 
substantiated, and that such damage could be unjustified to the extent 
that the concerns are not ultimately substantiated. These commenters 
did not directly oppose the requirement that institutions disclose 
adverse actions against them, as proposed in Sec.  668.43(a)(20), but 
instead sought clarification regarding which actions rise to the level 
that requires notice.
    One commenter noted the general burden on institutions given the 
number of disclosures already required of institutions.
    Other commenters supported the inclusion of disclosures related to 
investigations conducted by a law enforcement agency for issues related 
to academic quality, misrepresentation, or fraud. One commenter sought 
to ensure that the proposed rulemaking includes actions from law 
enforcement agencies, attorney general offices, or state authorization 
entities so that all investigations that could impact an institution's 
state authorization are included.
    Discussion: As a matter of first principles, the Department 
believes a student is entitled to transparency and robust disclosure of 
pending legal actions by law enforcement agencies but realizes 
unwarranted allegations could impact the student's ability to complete 
their education or diminish the value of their education. The 
Department believes that legal actions that bear on an institution's 
accreditation, State authorization, or continuing participation under 
title IV are the types of legal actions that have the greatest 
potential to impact students. Therefore, by this rule, the Department 
seeks to ensure that these categories of legal actions are fully 
disclosed to students.
    The Department recognizes, in light of comments that it received, 
that the disclosure language provided in this section of the NPRM lacks 
the necessary specificity to guide institutions as they grapple with 
the practical challenges of determining which actions should result in 
notification and how that disclosure should be made. The use of terms 
such as ``actions'' and ``other severe matter[s]'' would result in 
unnecessary and inappropriate ambiguity.
    The Department agrees that it must more clearly define which 
categories of ``actions'' are subject to a notification requirement. 
The Department also agrees with commenters that notification 
requirements that sweep in unproven allegations could cause 
reputational and financial injury to an institution, prevent a current 
student from completing their education, deter new enrollments in or 
transfers to the institutions, or discourage students from enrolling in 
a program that could benefit them. Disclosure of a government 
investigation that might not even lead to allegations of misconduct 
against an institution could create significant negative consequences, 
including for students and alumni.
    Therefore, we are revising the regulations to eliminate 
investigations from the notification requirement, and better define 
what types of legal actions do require disclosure. Our goal is to 
ensure that students have access to information about pending legal 
proceedings, including those resulting from allegations of fraud or 
misrepresentation. This information may have the greatest potential to 
impact a student's education--including on their ability to make an 
informed choice about which school to attend, to complete a degree or 
program at a school they have chosen, or to subsequently benefit from 
an earned credential, without its value being inappropriately 
undermined by as-yet-unproven allegations. To strike this balance, in 
the final rule we provide that institutions must disclose only pending 
enforcement actions or prosecutions by law enforcement agencies in 
which a final judgment against the institution, if rendered, would 
result in an adverse action by an accrediting agency, revocation of 
State authorization, or limitation, suspension, or termination of 
eligibility to participate in title IV.
    Carving out the fact of investigations also protects students and 
graduates from having the value of their education or their chances of 
obtaining employment diminished merely because their educational 
institutions were subject to government investigations. While 
notification of pending enforcement actions or prosecution by a law 
enforcement agency could be useful to students to avoid enrolling at 
institutions that may be guilty of misrepresentation, the Department 
must balance this with damage that potential students could suffer if 
unfounded allegations against an institution deter students from 
enrolling in a program that would otherwise benefit them. In addition, 
the Department must balance the need to protect students against fraud 
and misrepresentation with the need to ensure that the value of a 
student's credential and their future

[[Page 58888]]

employability are not unnecessarily diminished by false allegations 
against the institution.
    This disclosure requirement, although it involves only disclosure 
to students and not reporting to the Secretary or a trigger for a 
letter of credit, mirrors the approach the Department took in its final 
2019 Borrower Defense to Repayment (BD) rule. In the 2019 BD rule, in 
eliminating some mandatory triggers for letters of credit based on 
pending claims and non-final judgments, the Department recognized the 
inappropriateness of imposing sanctions upon an institution based on 
unproven allegations. The Department also learned, as a result of the 
2016 BD rule, that requiring institutions to report to the Department 
all legal actions against them, without regard for materiality, created 
undue regulatory burden much larger than the level of burden estimated 
in the final 2016 BD rule. Relying on allegations or claims made 
against an institution to require an institution to provide a letter of 
credit also invites abuse and denies institutions due process by 
placing undue weight on unsubstantiated claims. Here, the Department is 
requiring institutions to focus on specific types of legal action--
enforcement actions and prosecutions--by a specific set of governmental 
entities--law enforcement agencies--that could have the most 
significant negative impact on students, therefore enabling them to 
make informed enrollment decisions.
    In this final regulation, disclosure is required only for 
enforcement actions and prosecutions, including those resulting from 
allegations of fraud or misrepresentation, where the institution can 
discern (based on the nature of the allegations and the progress of the 
case) that, if a final judgment is rendered against the institution, 
the institution's accreditor would take an adverse action against the 
institution, its State authorization would be revoked, or its title IV 
participation would be limited, suspended, or terminated. We have 
removed actions relating to ``academic quality'' from the list of 
actions requiring disclosure since accreditors and State authorizers 
are charged with making quality determinations, not State or Federal 
law enforcement agencies. Also, consistent with the 2019 BD rule, the 
Department is limiting the risks of abuse and denial of due process to 
institutions--by excluding the mere fact that an institution is under 
investigation from the disclosure requirement.
    We appreciate those commenters who agreed with the Department's 
inclusion of a disclosure requirement but asked that we clarify what a 
legally sufficient disclosure would look like. The Department agrees 
that greater clarity is necessary; however, this provision is part of a 
long list of items that must be disclosed by the institution and made 
readily available to enrolled and prospective students. The Department 
provides no additional guidance regarding how it must make those 
disclosures. Many institutions meet these requirements by including 
these disclosures on their website or in their catalog.
    Changes: In response to comments, we have revised Sec.  
668.43(a)(20) to provide that an institution must disclose enforcement 
actions or prosecutions by law enforcement agencies that, upon a final 
judgment, would result in an adverse action by an accrediting agency, 
revocation of State authorization, or suspension, limitation or 
termination of eligibility to participate in title IV. Investigations 
that have not progressed to pending enforcement actions or prosecutions 
need not be disclosed--regardless of their subject matter.
    Comments: One commenter supported the Department's proposal to 
require institutions to disclose written arrangements in the program 
description in instances in which they are used to engage a non-
accredited entity in providing portions of the program.
    Two commenters supported the Department's proposal to disclose the 
criteria used by institutions when evaluating prior learning experience 
stating that it is important to ensure that credits awarded based on a 
prior learning assessment are based on academic quality, which benefits 
students and the public. Another commenter noted that this disclosure 
can help improve academic completion while reducing education costs.
    Discussion: The Department thanks the commenter for their support 
for disclosing written arrangements included in a program's 
description, as proposed in Sec.  668.43(a)(12). The Department 
continues to believe that standardizing the location of this disclosure 
will provide uniform information to all students and provide them with 
easily accessible and discernable information in which to make 
enrollment decisions.
    The Department also thanks the commenters for their support for the 
requirement that institutions disclose their policies for evaluating 
and assigning credit based on a student's prior learning experience, as 
outlined in Sec.  668.43(a)(11)(iii). The Department continues to 
believe that this information is important to inform student choice 
since students often learn only after enrolling at a new institution 
that credits they believed they would earn through prior learning 
assessment are no longer being considered or granted. In addition, 
institutions should publish their policies regarding the acceptance of 
credits in transfer that were awarded through prior learning 
assessment. The Department believes this will also encourage 
institutions to potentially save students and taxpayers time and money.
    The Department disagrees with the characterization that it removed 
the requirements of disclosing a complaint process to students. To the 
contrary, the Department continues to require institutions to provide 
students with information about how to file a complaint against the 
institution with a relevant State agency. However, the regulations no 
longer require an institution to publish the complaint processes for 
both the State in which the student is located and the State in which 
the institution is located, as long as it discloses at least one point 
of contact for filing student complaints.
    The Department's final regulations require institutions to provide 
students or prospective students with contact information for filing 
complaints with its accrediting agency and with at least one relevant 
State agency or official, either in the State in which the institution 
is located or in the State in which the student is located, or a third 
party identified by a State or a State reciprocity agreement, with whom 
the student can file a complaint.
    Changes: None.

Institutional Disclosures for Distance or Correspondence Programs 
(Sec.  668.50)

    Comments: Many commenters supported removing the requirements of 
Sec.  668.50 and proposing similar requirements in Sec.  668.43(b) 
because they supported providing disclosures to all students, 
regardless of the program's mode of delivery.
    One commenter opposed removal of Sec.  668.50 stating that the 
Department was deleting most of the disclosure requirements for 
distance education programs. They further claimed that we only moved 
two disclosure requirements to Sec.  668.43.
    One commenter disagreed with the explanation provided in the NPRM 
that the deletion of refund policies in Sec.  668.50 eliminated a 
duplicative requirement already required under Sec.  668.42(a)(2). The 
commenter stated that Sec.  668.42(a)(2) does not require the 
disclosure of refund policies.

[[Page 58889]]

    One commenter stated they disagreed with statements made regarding 
the requirements included in Sec.  668.50. Specifically, they disagreed 
that the requirement to disclose adverse actions taken by a State or 
accrediting agency would be unnecessary. Instead, the commenter stated 
that these actions should be disclosed because those actions would 
generally lead to the program's ineligibility to participate in the 
title IV, HEA programs. The commenter stated that the definition of 
``adverse actions'' differed depending on the accrediting agency and 
that some of those actions would be at the level of information 
gathering, or probation, which would not end in the loss of title IV 
eligibility. Another commenter provided similar thoughts by stating 
that an institution required to supply notice of an investigation, 
action, or prosecution may damage the institution if it must provide 
that notification prior to the completion of an investigation. However, 
another commenter recommended that the Department keep the required 
disclosure on adverse actions from accrediting agencies because they 
may directly affect a student's ability to obtain a professional 
license. One commenter opposed the removal of the requirement that an 
institution disclose adverse actions taken by an accrediting agency 
because there are often times when an accrediting agency takes an 
adverse action that stops short of stripping an institution of its 
title IV eligibility and that students deserve to know when an 
institution fails to meet the very standards that makes it eligible for 
title IV participation. That same commenter also requested that the 
Department define the term ``adverse action'' from a State rather than 
removing the requirement.
    One commenter voiced support for a requirement to disclose adverse 
actions taken by a State or accrediting agency.
    Discussion: The Department appreciates the support of those who 
supported removing Sec.  668.50 and replacing those requirements with 
one that applies to all programs that lead to licensure or 
certification (or should lead to licensure or certification), 
regardless of the delivery modality of those programs. The Department 
believes this will provide all students with valuable information and 
necessary protections. However, the Department notes by moving 
disclosures from Sec.  668.50, which only applied to distance education 
programs and correspondence courses, to Sec.  668.43, which applies to 
all title IV eligible programs at institutions of higher education, the 
Department broadened the scope of these requirements so that more 
students can make informed enrollment decisions.
    The Department agrees with and thanks the commenter that noted it 
made an incorrect reference to current regulations requiring an 
institution to disclose refund policies. The Department meant to cite 
Sec.  668.43(a)(2) instead of Sec.  668.42(a)(2) as the section which 
requires institutions to disclose their refund policies. Section 
668.43(a)(2) requires that institutions make readily available to 
enrolled and prospective students any refund policy with which the 
institution must comply for the return of unearned tuition and fees, or 
other refundable portions of costs paid to the institution. This covers 
the requirements of Sec.  668.50(b)(6), which required institutions to 
disclose refund policies for the return of unearned tuition and fees 
with which the institution must comply under the laws of any State in 
which enrolled students reside.
    The Department also notes that disclosures related to adverse 
actions are now described at Sec.  668.43(a)(20), which requires an 
institution that an institution must disclose enforcement actions or 
prosecutions by law enforcement agencies that, upon a final judgment, 
would result in an adverse action by an accrediting agency, revocation 
of State authorization, or suspension, limitation or termination of 
eligibility to participate in title IV. Investigations that have not 
progressed to pending enforcement actions or prosecutions need not be 
disclosed--regardless of their subject matter. We respond to further 
comments about adverse actions in that section.
    The Department has retained the language in Sec.  602.24(c)(8)(ii) 
that an agency must not permit an institution to serve as a teach-out 
institution, if it is under investigation relating to academic quality, 
misrepresentation, fraud, or other severe matters by a law enforcement 
agency. We would consider an allegation or finding of criminal conduct, 
for example, to constitute a severe matter. The Department retains this 
language because of the contractual relationship between the closing 
institution and the teach-out institution, as well as the fact that the 
teach-out agreement must be approved by the accrediting agency, all of 
which give the teach-out institution the appearance of a preferred and 
streamlined option for students, and the teach-out institution benefits 
from an influx of new students. The Department has determined that to 
enjoy that benefit, the teach-out institution must not be subject to 
any ongoing investigation, as described in Sec.  602.24(c)(8)(ii). The 
Department believes that teach-out agreements constitute a unique and 
limited circumstance and, accordingly, has retained the consensus 
language excluding institutions that are subject to investigation as 
teach-out institutions.\27\
---------------------------------------------------------------------------

    \27\ Note: Nothing in Sec.  602.24(c)(8)(ii) or anything in this 
document burdens, limits, or impedes the Department's determinations 
in, or interpretations of, the Institutional Accountability 
regulations at 84 FR 49788.
---------------------------------------------------------------------------

    The Department stands by its assessment that disclosures of adverse 
actions taken by accrediting agencies often came too late to inform 
student enrollment decisions. As such, the final regulations at Sec.  
668.43(a)(19) require that if an accrediting agency requires an 
institution to maintain a teach-out plan, the institution must disclose 
the reason that the accrediting agency required such a plan. The 
Department believes this will assist students who are considering 
enrollment in programs where institutions may be in danger of closing 
or losing accreditation by informing them of this risk. On the other 
hand, some students may find teach-out plans to be reassuring on the 
basis that, should an institution close, there are options available to 
them to complete their programs.
    The institution is not precluded, as is also the case in the 2016 
State authorization regulations, from providing information to students 
about any investigation, action, or prosecution and any disagreement 
that the institution has with the validity of these allegations. While 
the Department understands that adverse actions from an accrediting 
agency may impact a student's ability to obtain professional licensure, 
the Department believes the proposed disclosure in Sec.  668.43(a)(19) 
addresses this concern and broadens it to accommodate all programs, not 
just those offered through distance or correspondence education. The 
Department emphasizes that, similar to requiring a letter of credit, 
requiring a teach-out plan does not necessarily mean that an 
institution will close, lose its accreditation, or lose its title IV 
eligibility; however, the teach-out plan will provide additional 
protections to students and taxpayers in the event that the institution 
does lose accreditation, State authorization, or title IV eligibility. 
The Department believes that Sec.  668.43(a)(20) provides appropriate 
protection to students when the institution's or program's accrediting 
agency takes negative action, and provides clarifying details about the 
kinds of adverse actions that must be disclosed. However, in moving the 
requirement to Sec.  668.43, the Department requires institutions to 
provide the

[[Page 58890]]

disclosure to students enrolled in all programs, not just distance 
education or correspondence programs.
    The Department thanks the commenter that supported the Department's 
changes to Sec.  668.50.
    Finally, we note that the amendatory instruction to remove Sec.  
668.50 was unintentionally omitted from the NPRM.
    Changes:
    Comments: None.
    Discussion: As described above, we believe that the substance of 
current Sec.  668.50 should be removed. In its place, we have added 
language to clarify that, if any part of the regulations for part 668, 
subpart D, whether an individual section or language within a section, 
is held invalid by a court, the remainder would still be in effect. We 
believe that each of the provisions discussed in this preamble serve 
one or more important, related, but distinct, purposes. Each provision 
provides a distinct value to the Department, the public, taxpayers, the 
Federal government, and institutions separate from, and in addition to, 
the value provided by the other provisions.
    Changes: We have revised Sec.  668.50 to remove the current text 
and added, in its place, text that clarified that the regulations are 
designed to operate independently of each other and to convey the 
Department's intent that the potential invalidity of one provision 
should not affect the remainder of the provisions.

Severability (Sec.  668.198)

    Comments: None.
    Discussion: We have added Sec.  668.198 to clarify that if a court 
holds any part of the regulations for part 668, subpart M, invalid, 
whether an individual section or language within a section, the 
remainder would still be in effect. We believe that each of the 
provisions discussed in this preamble serve one or more important, 
related, but distinct, purposes. Each provision provides a distinct 
value to the Department, the public, taxpayers, the Federal government, 
and institutions separate from, and in addition to, the value provided 
by the other provisions.
    Changes: We have added Sec.  668.198 to make clear that the 
regulations are designed to operate independently of each other and to 
convey the Department's intent that the potential invalidity of one 
provision should not affect the remainder of the provisions.

Executive Orders 12866, 13563, and 13771

Regulatory Impact Analysis

    Under Executive Order 12866, it must be determined whether this 
regulatory action is ``significant'' and, therefore, subject to the 
requirements of the Executive order and subject to review by the Office 
of Management and Budget (OMB). Section 3(f) of Executive Order 12866 
defines a ``significant regulatory action'' as an action likely to 
result in a rule that may--
    (1) Have an annual effect on the economy of $100 million or more, 
or adversely affect a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or State, local, or 
Tribal governments or communities in a material way (also referred to 
as an ``economically significant'' rule);
    (2) Create serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impacts of entitlement grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles stated in the 
Executive order.
    This final rule is an economically significant action and will have 
an annual effect on the economy of more than $100 million because the 
proposed changes to the accreditation process could increase student 
access, improve student mobility, and allow for the establishment of 
more innovative programs, including direct assessment programs, that 
may attract new students. According to the Department's FY 2020 Budget 
Summary, Federal Direct Loans and Pell Grants accounted for almost $124 
billion in new aid available in 2018. Given this scale of Federal 
student aid amounts disbursed yearly, even small percentage changes 
could produce transfers between the Federal government and students of 
more than $100 million on an annualized basis.
    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this rule 
as a ``major rule,'' as defined by 5 U.S.C. 804(2).
    This final rule is considered an E.O. 13771 deregulatory action. We 
estimate that this rule will generate approximately $16.0 million in 
annualized net PRA costs at a 7 percent discount rate, discounted to a 
2016 equivalent, over a perpetual time horizon. While there will be 
some PRA burden increase, we believe the greater effect of this 
regulation is to allow for additional entrants or enhanced competition 
in the postsecondary accreditation market and to promote innovation in 
higher education and it is deregulatory.
    As required by Executive Order 13563, the Department has assessed 
the potential costs and benefits, both quantitative and qualitative, of 
this regulatory action, and we are issuing these final regulations only 
on a reasoned determination that their benefits justify their costs. In 
choosing among alternative regulatory approaches, we selected those 
approaches that maximize net benefits. Based on the analysis that 
follows, the Department believes that the regulations are consistent 
with the principles in Executive Order 13563.
    We also have determined that this regulatory action does not unduly 
interfere with State, local, or Tribal governments in the exercise of 
their governmental functions.
    In accordance with the Executive orders, the Department has 
assessed the potential costs and benefits, both quantitative and 
qualitative, of this regulatory action. The potential costs associated 
with this regulatory action are those resulting from statutory 
requirements and those we have determined as necessary for 
administering the Department's programs and activities.
    In this regulatory impact analysis, we discuss the need for 
regulatory action, the potential costs and benefits, net budget 
impacts, assumptions, limitations, and data sources, as well as 
regulatory alternatives we considered.
    Elsewhere in this section, under Paperwork Reduction Act of 1995, 
we identify and explain burdens specifically associated with 
information collection requirements.

Need for Regulatory Action

    These final regulations address several topics, primarily related 
to accreditation and innovation. The Department issues these 
regulations primarily to update the Department's accreditation 
recognition process to reflect only those requirements that are 
critical to assessing the quality of an institution and its programs 
and to protect student and taxpayer investments in order to reduce 
unnecessary burden on institutions and accrediting agencies and allow 
for greater innovation and educational choice for students.
    In addition, these final regulations are needed to strengthen the 
regulatory triad by more clearly defining the roles and 
responsibilities of accrediting agencies, States, and the Department in

[[Page 58891]]

oversight of institutions participating in title IV, HEA programs. 
These final regulations revise the definition of ``State authorization 
reciprocity agreement'' to clarify that such agreements cannot prohibit 
any member State of the agreement from enforcing its own general-
purpose State laws and regulations outside of the State authorization 
of distance education.
    Another area addressed in these final regulations is the definition 
of ``religious mission'' as a published institutional mission that is 
approved by the governing body of an institution of postsecondary 
education and that includes, refers to, or is predicated upon religious 
tenets, beliefs, or teachings. These final regulations require 
accrediting agencies to consistently apply and enforce standards that 
respect the stated mission of the institution, including religious 
mission, and to not use not use as a negative factor the institution's 
religious mission-based policies, decisions, and practices in the areas 
covered by Sec.  [thinsp]602.16(a)(1)(ii), (iii), (iv), (vi), and 
(vii).

Summary of Comments on the RIA

    A number of commenters raised points about the analysis of these 
regulations in the NPRM. The Department summarizes and responds to 
comments related to the RIA here.
    Comments: One commenter noted that the expense incurred by their 
accrediting agency to submit a recognition application was not 
unreasonable under the current regulations and while they agreed 
generally with the review process changes, they did not see the 
proposed changes as entirely justified.
    Discussion: The Department thanks the commenter and welcomes the 
feedback. The Department believes the changes are justified for the 
numerous reasons outlined in the NPRM and elsewhere in this document. 
While the Department appreciates that some accrediting agencies can 
manage the existing burden, other agencies are struggling to do so or, 
at the very least, could redirect resources away from paperwork burden 
and towards direct work with the institutions or programs the agency 
oversees. The Department has received petitions for renewal of 
recognition that exceed 60,000 pages. Also, these new regulations 
provide staff the opportunity to randomly select files to review, and 
to perform oversight that includes a more representative sample and 
variety of documents--and not only those that an agency decides to 
submit.
    The Department also, as stated elsewhere, believes that a number of 
the current regulations prevent competition, create unnecessarily high 
barriers to entry for new accrediting agency, and make it difficult for 
institutions to effect the radical changes necessary to reduce cost and 
improve outcomes through educational innovations. The current 
regulations similarly do not differentiate between high-risk activities 
that demand greater attention, and low-risk activities that do not 
justify distracting agency decision-making bodies from more critical 
concerns related to ensuring educational quality. In addition, these 
regulations seek to reduce unnecessary delays in developing and 
implementing curricular and other changes in order to meet employer 
needs. These regulations also encourage institutions to participate in 
orderly teach-outs, thus providing more students with the opportunity 
to complete their program or transition to a new institution should 
their current institution close. Finally, these regulations eliminate 
the distinction between students enrolled in distance learning programs 
that lead to licensure and ground-based programs focused on the same by 
ensuring that all students--regardless of instructional modality--
understand whether the institution's programs will meet educational 
requirements for a graduate to become licensed and work in their field 
in a given State.
    Changes: None.
    Comments: One commenter stated that the Department failed to 
provide any legal, policy, factual, or cost-benefit analysis for the 
new definition of ``religious mission'' or the exemptions to 
accrediting agency standards. They point out that the definition is not 
mentioned in the RIA and no potential costs are cited if an institution 
claims exemption from any of a wide range of accreditation standards. 
Furthermore, there is no estimate of how many institutions may assert 
exemptions from accrediting standards based on the definition or from 
what types of standards they may assert exemptions.
    Discussion: The Department appreciates the commenter pointing out 
the need for discussion of the definition of religious mission and the 
associated impacts.
    Changes: We have added discussion of the definition of ``religious 
mission'' in the Costs, Benefits, and Transfers section.
    Comments: One commenter contended that the Department did not 
present any evidence that the current regulations have created any 
substantive barriers to innovation and noted that, in fact, as an 
example, distance education enrollment has grown significantly over the 
past two decades under the oversight of accrediting agencies. The 
commenter also contended that it may be desirable to have certain 
barriers in place to promote quality and protect students.
    The same commenter stated that the Department is greatly 
underestimating the cost of these final regulations, citing the $3.8 
billion estimate, with the reported range of estimated Pell Grant 
increases from $3.1 billion to $4.5 billion as too low and the increase 
in loan volume and Pell Grant recipients of at most two percent by 2029 
as also too low. The commenter alluded to historical evidence regarding 
the cost of innovation, citing the change from 1997 to 1998--prior to 
passage of a demonstration project that allowed institutions to move 
entirely online--to Fall 2017, after the law changed to permit online-
only institutions. The commenter stated that according to NCES data, 
enrollment in distance education programs during this period increased 
tremendously, from 1.3 million to over 6.5 million students.
    The commenter claimed that the estimated two percent increase 
reflected in the NPRM is likely a ``significant underestimate'' given 
the potential for new accrediting agencies, new providers, and new 
programs eligible for Federal funding. Also, according to the 
commenter, the Department failed to adequately consider costs 
associated with reduced oversight. The commenter stated that these 
final regulations are likely to greatly increase borrower defense 
claims that would arise from institutions operating without strong 
oversight from accrediting agencies and continuing to operate under new 
ownership after closure, and that, because the Department has not yet 
issued new final borrower defense regulations, it must estimate these 
costs based on the 2016 borrower defense regulations currently in 
effect. The commenter further noted that the added costs from borrower 
defense claims would be partially offset by fewer closed school 
discharges resulting from fewer institutions closing.
    The commenter stated that under these final regulations the bar 
would be lower for entry to new accrediting bodies and therefore the 
Department should assume an increase in new accrediting agencies.
    The commenter provided Department of Labor (DOL) data showing that 
DOL proposed to create ``standards recognition entities'' (SREs) that 
would act like accrediting agencies to approve apprenticeship programs. 
DOL estimates that it would receive 300 applications of which 100 would 
be totally new

[[Page 58892]]

applicants without any experience in the area. The commenter believed 
the Department should assume a more significant increase in applicants 
for Department recognition than it does as well as institutions that 
would be seeking sources of funding such as Title IV.
    The commenter stated that the Department's estimate of $3.8 billion 
for regulatory changes that affect the entire higher education 
landscape is less than the $6.2 billion it projects from rescinding 
gainful employment regulations that affect proprietary school programs 
and non-degree programs at public and nonprofit institutions that 
represent only a portion of the higher education landscape.
    The commenter asserted that the Department should revise its 
estimates substantially upwards.
    Discussion: The Department believes that the final regulations 
strike the right balance between the goals of encouraging innovation 
and ensuring accountability while providing sufficient oversight of 
accrediting agencies and institutions and protecting students, 
taxpayers, and the Federal government.
    With respect to the increase in distance education dating back to 
1997, the Department acknowledges that the impact of the expansion of 
distance education on total number of enrollments was significant as 
technological advances reduced barriers to entry for students who could 
not otherwise participate in opportunities offered by traditional 
ground campuses. The Great Recession further contributed to enrollment 
growth as high unemployment drove more individuals to participate in 
postsecondary education. In addition, regulatory changes that 
eliminated policies that once limited growth on line by the growth of 
programs on the ground also contributed to significant growth of 
enrollments in online education. While the proportion of enrolled 
students who take some or all classes online is increasing, the total 
number of students enrolled is shrinking. This suggests that how 
students receive education may continue to change, and this regulation 
could encourage even greater shifting of students to online modalities. 
Enrollments are shrinking at many institutions, including most online 
institutions.28 29 The Department also notes that the 
internet itself and the world wide web were only becoming popular in 
the mid-1990s and, according to many sources, including the National 
Science Foundation,\30\ by 1995, the internet was fully commercialized 
in the United States when the National Science Foundation Network was 
decommissioned, removing the last restrictions on use of the internet 
to carry commercial traffic.
---------------------------------------------------------------------------

    \30\ www.nsf.gov/news/special_reports/cyber/internet.jsp.
---------------------------------------------------------------------------

    In fact, according to a research article published in the journal 
Science, ``The internet's takeover of the global communication 
landscape was almost instant in historical terms: It only communicated 
1% of the information flowing through two-way telecommunications 
networks in the year 1993, already 51% by 2000, and more than 97% of 
the telecommunicated information by 2007.'' \31\ So, a substantial 
amount of growth in all online activity in the 1990s is attributable to 
the new internet and world wide web activity taking place in the mid-
1990s. Therefore, a comparison between the vast innovation taking place 
in the online technology arena over a 20-year period with any 
innovation evolving as a result of these regulations is not an 
``apples-to-apples'' comparison.
---------------------------------------------------------------------------

    \31\ ``The World's Technological Capacity to Store, Communicate, 
and Compute Information,'' Martin Hilbert and Priscila L[oacute]pez 
(2011), Science, 332(6025), pp. 60-65, available at: 
martinhilbert.net/WorldInfoCapacity.html.
---------------------------------------------------------------------------

    The Department believes that its financial aid estimates related to 
these regulations are not ``greatly underestimated'' as the commenter 
asserts. In fact, the Department realizes that any cost estimates 
relating to regulations of this type carry a strong element of 
speculation since many other variables are at play over the budget 
window from 2020 to 2029. And the Department also was cognizant of the 
lower estimate made concerning the lifting of the 50 percent rule 
related to institutional online courses, which, among other issues, 
underestimated the number of adult learners who wanted to enroll in 
postsecondary education if they could do so without quitting their jobs 
or enrolling in campus-based programs.
    Therefore, the Department provided three scenarios incorporating 
low, medium, and high assumptions consistent with regulatory 
guidelines. And, the Department does estimate that under the high 
scenario, additional higher educational costs of $4.5 billion are 
possible. While there is no definitive way to test these assumptions in 
the future, the Department does not accept the commenter's assertion 
that the Department is reducing accrediting agency oversight and 
weakening agency oversight of institutions which will result in 
significantly higher costs. The Department does not accept the premise 
that it is lowering the bar to accrediting oversight and reducing 
Federal responsibility. Given this different prediction about the 
outcome of these final regulations compared to the commenter, we do not 
anticipate a significant increase in borrower defense claims from these 
final regulations. The subsidy cost associated with the estimated 
increase in volume for these final regulations was based on the 
President's Budget FY 2020 baseline which included the implementation 
of the 2016 Borrower Defense rule and we do not believe these final 
regulations will necessarily lead to an increase in bad actors or 
conduct that would give rise to borrower defense claims under any 
version of that regulation. We also do not expect a substantial 
difference in the number of closed schools from these final 
regulations, so we do not estimate any savings from reduced closures 
tied to fewer accrediting agency actions at this time.
    Rather, as discussed earlier in the preamble, the Department views 
these regulations as enabling accrediting agencies and institutions to 
be nimbler and more responsive to changing economic conditions and 
workforce demands. The Department believes that the regulations are in 
the best interests of both students and taxpayers and will enable 
institutions to improve the quality of education.
    The Department appreciates the comments regarding DOL's recent NPRM 
to establish new Standards Recognition Agencies (SRAs). While there are 
similarities between SRAs and accrediting agencies, those similarities 
are limited to the need to evaluate quality based on a set of published 
standards or metrics. It is also important to note that SRAs are likely 
to include industry trade associations and other private-sector 
entities that may pay higher salaries or have higher costs of operating 
and decision-making based on the structure of these entities and salary 
trends in certain industries. DOL's cost estimates for establishing 
SRAs have no bearing on the Department's cost estimates related to 
reducing unnecessary regulatory burden, encouraging institutions to 
close in orderly fashions rather than precipitously, or allowing new 
agencies to enter a field that has a well-established history and a 
large number of existing participants. The Department believes it would 
be inappropriate to apply DOL's assumptions for the cost of creating a 
new quality assurance system to our regulations, which are designed

[[Page 58893]]

to increase competition and refocus accrediting agency activities on 
educational quality and the student experience.
    The estimates for these regulations do not assume loan performance 
will decline due to the rescission of the gainful employment rule. 
Although the gainful employment regulations primarily affect a limited 
number of institutions, their impact could have been significant, as 
they tied ineligibility to the debt-to-earnings metric. However, with 
only one year of GE data available, it is hard to speculate on the 
long-term impact of the GE regulations and whether program closures 
would have reduced the total number of students enrolled, or simply 
shifted where these students enrolled or which programs they pursued. 
On the other hand, although these regulations will affect all sectors, 
we believe their impact will be more limited.
    Changes: None.

Costs, Benefits, and Transfers

    As discussed in the NPRM, the Department is amending the 
regulations governing the recognition of accrediting agencies and 
institutional eligibility and certain student assistance general 
provisions, as well as making various technical corrections. A number 
of clarifying changes were made in these final regulations, including 
updates to the definitions of terms including State authorization 
reciprocity agreements, teach-out, and compliance report; noting that 
prior approval is required for an aggregate change of 25 percent or 
more of the clock hours, credit hours, or content of a program since 
the agency's most recent accreditation review; and requiring disclosure 
of negative actions taken by an accrediting agency, provided that an 
institution need not disclose allegations, lawsuits, or legal actions 
taken against it unless the institution has admitted guilt or there has 
been a final judgment on the merits. Additionally, we have made it 
clear that title IV participation may be extended for 120 days only 
after a decision to end participation has been made, but prior to the 
termination of accreditation, State authorization, or the program 
participation agreement. All of these changes are detailed in the 
Analysis of Comments and Changes section of this preamble and none are 
expected to significantly change the net budget impact or cost and 
benefits of the final regulations to students, institutions, or 
accrediting agencies.
    These final regulations will affect students, institutions of 
higher education, accrediting agencies, and the Federal government. The 
Department expects students, institutions, accrediting agencies, and 
the Federal government will benefit as these final regulations will 
provide transparency and increased autonomy and independence of 
agencies and institutions. We also intend for these final regulations 
to increase student access to postsecondary education, improve teach-
outs for students at closed or closing institutions, restore focus and 
clarity to the Department's agency recognition process, and integrate 
risk-based review into the accreditation recognition process.
    The Department of Education Organization Act of 1979 (Pub. L. 96-
88) prohibits the Department from intervening in institutional 
decisions regarding curriculum, faculty, administration, or academic 
programs of an institution of higher education. Instead, Congress 
assigned accrediting agencies the role of overseeing the quality of 
institutions and academic sufficiency of instructional programs. The 
Secretary recognized 53 accrediting agencies as of April 2019 as shown 
on the Department's financial aid accreditation websites.\32\ In 
addition, there were four State approval agencies that are also 
identified as title IV gatekeepers for the approval of postsecondary 
vocational education and five State approval agencies for the approval 
of nurse education (for non-title IV, HEA purposes).
---------------------------------------------------------------------------

    \32\ https://ope.ed.gov/dapip/#/home.
---------------------------------------------------------------------------

    The 53 accrediting agencies are independent, membership-based 
organizations that oversee students' access to qualified faculty, 
appropriate curriculum, and other support services. Of the 53 
accrediting agencies recognized by the Secretary, 36 accredit 
institutions for title IV, HEA purposes and 17 solely accredit 
programs. While postsecondary accreditation is voluntary, accreditation 
from either a nationally recognized accrediting agency or State 
approval agency is required for an institution to participate in the 
title IV, HEA programs. One goal of our negotiated rulemaking was to 
examine the Department's accreditation regulations and processes to 
determine which are critical to assessing the quality of an institution 
and its programs and to protecting student and taxpayer investments. In 
negotiating these regulations, negotiators reached consensus on the 
processes that accrediting agencies should follow and understood that 
certain tradeoffs would be inevitable. Providing greater flexibility in 
how agencies approach the accrediting process and promoting innovative 
practices while reducing administrative burden and streamlining 
operations are key objectives of these final regulations.
    The regulatory impact on the economy of these final regulations 
centers on the benefits of, and the tradeoffs associated with, (1) 
streamlining and improving the Department's process for recognition and 
review of accrediting agencies and (2) enabling accrediting agencies to 
exercise greater autonomy and flexibility in their oversight of member 
institutions and programs in order to facilitate agility and 
responsiveness and promote innovation. Although we estimate here the 
marketplace reaction by accrediting agencies, students, institutions, 
and governmental entities to such regulatory changes, generally, there 
is little critical data published on which to base estimates of how 
these final regulations, which primarily promote flexibility in 
accrediting processes, will impact various market segments.
Accrediting Agencies
    These final regulations will allow accrediting agencies the 
opportunity to exercise a greater degree of choice in how they operate. 
One key change in these final regulations pertains to the concept of 
not limiting an agency's accrediting activities to a particular 
geographic region. These final regulations remove the ``geographic area 
of accrediting activities'' from the definition of ``scope of 
recognition or scope.'' The current practice of recognizing geographic 
scope of an accrediting agency may discourage multiple agencies from 
also including the same State in their geographic scope. By removing 
this potential obstacle and acknowledging that many agencies already 
operate outside their recognized geographic scope, the Department seeks 
to provide increased transparency and introduce greater competition and 
innovation that could allow an institution or program to select an 
accrediting agency that best aligns with the institution's mission, 
program offerings, and student population.
    Under these final regulations, we will no longer require 
accrediting agencies to apply to the Department to change the 
geographic region in which the agencies accredit institutions, which 
occurs about once a year. However, we will require accrediting agencies 
to include in public disclosures the States (``geographic area'') in 
which they conduct their accrediting activities. This includes not only 
those States in which they accredit main campuses, but also the States 
in which the agencies accredit branch campuses or additional

[[Page 58894]]

locations. This will promote greater transparency and clarity for 
students while eliminating burden on agencies and the Department of 
recognition proceedings focusing on geographic scope as well as the 
anticompetitive impact of the Department appearing to endorse 
allocation among individual agencies of discrete geographic regions.
    In general, these final regulations will simplify the labeling of 
accrediting agencies to better reflect their focus. Therefore, the 
Department will no longer categorize agencies as regional or national; 
we will instead include them under a combined umbrella identified as 
``institutional'' or ``nationally recognized.'' The terms ``regionally 
accredited'' and ``nationally accredited'' related to institutional 
accreditation will no longer be used or recognized the Department. We 
will, however, allow agencies to market themselves as they deem 
appropriate. Programmatic agencies that currently accredit particular 
programs will retain that distinction under these final regulations.
    As a result of these changes, the Department expects that the 
landscape of institutional accrediting agencies may change over time 
from one where some agencies only accredit institutions headquartered 
in particular regions (as shown on the map in Chart 1) to one where 
institutional accrediting agencies accredit institutions throughout 
many areas of the United States based on factors such as institutional 
mission rather than geography. As indicated in Chart 2, provided by the 
Higher Learning Commission during the negotiated rulemaking sessions 
for this regulation, many of the institutions accredited by regional 
accrediting agencies engage in activities outside of their region so 
geographic distinctions in accreditation are less meaningful than they 
once might have been. As a result of these regulations, some 
accrediting agencies may capture a larger share of the market while 
agencies that specialize in niche areas may enjoy strong demand. 
However, we will not require any institution or program to change to a 
different accrediting agency as a result of these regulatory changes, 
nor will we require an agency to accept a new institution or program 
for which it did not have capacity or interest to accredit.
BILLING CODE 4000-01-P
[GRAPHIC] [TIFF OMITTED] TR01NO19.000


[[Page 58895]]


[GRAPHIC] [TIFF OMITTED] TR01NO19.001

BILLING CODE 4000-01-C
    Under these final regulations, accrediting agencies may realize 
burden reduction, streamlined operations, and an increase in autonomous 
control. For example, under the current regulations, an agency found to 
have a minor deficiency (such as a missing document) would be required 
to submit a compliance report, of which there were 17 submitted between 
2014 and 2018. Agencies required to prepare compliance reports need to 
invest a significant amount of time and resources. Additionally, 
compliance reports require extensive review by Department staff, 
NACIQI, and the senior Department official (SDO), at a minimum. Under 
these final regulations, the Department may find an agency to be 
substantially compliant and require it to submit a less burdensome 
monitoring report to address the concern without requiring NACIQI or 
SDO review, saving the agency and the Department time and money while 
maintaining ample oversight and preserving the same

[[Page 58896]]

opportunity to require the more extensive review if the agency's 
shortcomings prove to be not as readily remediated as anticipated. The 
final regulations will also reduce burden by allowing accrediting 
agencies to use senior staff instead of the agency's accrediting 
commission to approve substantive changes proposed by accredited 
institutions or programs. This allows accrediting agencies to structure 
their work more efficiently and permit the accredited entities to 
obtain agency approval more expeditiously where appropriate.
---------------------------------------------------------------------------

    \33\ Council for Higher Education Accreditation, Regional 
Accrediting Organizations web page. Available at https://www.chea.org/regional-accrediting-organizations-accreditor-type.
    \34\ Higher Learning Commission, Accreditation and 
Innovation.pdf Available at https://www2.ed.gov/policy/highered/reg/hearulemaking/2018/index.html.
---------------------------------------------------------------------------

    Under these final regulations, for institutions to receive 
recognition of preaccreditation or accreditation by the Secretary, they 
must agree to submit any dispute with the accrediting agency to 
arbitration before bringing any other legal action. This requirement 
highlights the existing statutory requirement, enables agencies to 
pursue adverse actions without an immediate threat of a lawsuit, and 
potentially minimizes litigation costs for accrediting agencies and 
institutions. The relative costs of litigation and arbitration can vary 
depending upon the nature of the dispute, the parties involved, varied 
costs in different States, and several other factors. According to the 
Forum, previously known as the National Arbitration Forum, total 
arbitration costs can amount to only 25 percent of the cost to bring 
the same action to court.\35\ Another article entitled ``The Iceberg: 
The True Cost of Litigation Versus Arbitration'' cites the average cost 
of arbitration for a business as approximately $70,000 while the 
average litigation costs for a given business total over $120,000.\36\
---------------------------------------------------------------------------

    \35\ www.ffiec.gov/press/comments/nationalarbforum.pdf.
    \36\ https://landwehrlawmn.com/cost-litigation-arbitration/.
---------------------------------------------------------------------------

    The Department does not receive information about the number of 
disputes between accrediting agencies and institutions that go to 
litigation or arbitration or data about the costs associated with both 
those actions. An initial review of legal news sources indicates a 
range of lawsuits and outcomes involving accrediting agencies and 
institutions.37(14)
---------------------------------------------------------------------------

    \37\ See, e.g. Wards Corner Beauty Academy v. National Accred. 
Comm'n of Arts & Sciences, 922 F.3d 568 (4th Cir. 2019) (affirming 
denial of relief to institution challenging withdrawal of 
accreditation); Professional Massage Training Center, Inc. v. 
Accreditation Alliance of Career Schools and Colleges, 781 F.3d 161 
(4th Cir. 2015) (reversing district court's decision to order 
reinstatement of accreditation and to award damages); Escuela de 
Medicina San Juan Bautista, Inc. v. Liaison Committee on Medical 
Education, 820 F. Supp. 2d 317 (D.P.R. 2011) (granting preliminary 
injunction vacating accrediting agency's appeal decision and 
requiring agency to conduct a new appeal); St. Andrews Presbyterian 
College v. Southern Ass'n of Colleges and Schools, Inc., 679 F. 
Supp. 2d 1320 (N.D. Ga. 2009) (upholding withdrawal of accreditation 
after 2 years of litigation); Western State University of Southern 
California v. American Bar Ass'n, 301 F. Supp. 2d 1129 (C.D. Calif. 
2004) (granting preliminary injunction against withdrawal of 
provisional accreditation).
---------------------------------------------------------------------------

    The likelihood is that, from a cost perspective, arbitration will 
be considerably less expensive for the accrediting agencies and 
institutions than litigation in the first instance and the assumption 
is outcomes will not vary greatly according to the process pursued. We 
note, however, that the final regulations do not preclude an 
institution from pursuing a legal remedy--as provided for in statute--
after going to arbitration. Therefore, the arbitration requirement may 
not ultimately change institutional behavior.
    Under these final regulations, accrediting agencies are required to 
report a number of items to the Department, institutions, or the 
public, as shown in the Paperwork Reduction Act section of this 
preamble. Accrediting agencies must, among other things: (1) Notify the 
Department of, and publish on their websites, any changes to the 
geographic scope of recognition; (2) publish policies for any 
retroactive application of an accreditation decision; (3) provide 
institutions with written timelines for compliance and a policy for 
immediate adverse action when warranted; (4) provide notice to the 
Department and students of the initiation of an adverse action; (5) 
update and publish requirements related to teach-out plans and teach-
out agreements; and (6) redact personally identifiable and other 
sensitive information prior to sending documents to the Department.
    We estimate the burden for all accrediting agencies will be 6,562 
hours and $297,652 annually at a $45.36 wage rate. There are also some 
provisions expected to reduce burden on accrediting agencies, 
including: (1) Allowing decisions to be made by a senior staff member; 
(2) using SDO determination and monitoring reports and reducing 
preparation and attendance at NACIQI meetings; and (3) removing 
existing requirements related to evaluating credit hours. We estimate 
that these changes will reduce burden for all accrediting agencies by 
2,655 hours and $120,431 at a $45.36 wage rate. We estimate the net 
annual burden for all accrediting agencies to be 3,907 hours and 
$177,222. We based these estimates on the 2018 median hourly wage for 
postsecondary education administrators in the Bureau of Labor 
Statistics Occupational Outlook handbook.\38\
---------------------------------------------------------------------------

    \38\ Bureau of Labor Statistics, U.S. Department of Labor, 
Occupational Outlook Handbook, Postsecondary Education 
Administrators, on the internet at https://www.bls.gov/ooh/management/postsecondary-education-administrators.htm (visited May 
21, 2019).
---------------------------------------------------------------------------

Institutions
    These final regulations will also affect institutions. Institutions 
may benefit from a more efficient process to establish new programs and 
the opportunity to seek out alternate accrediting agencies that 
specialize in evaluating their type of institution. Institutions may 
also benefit from having the option to use alternative standards for 
accreditation under Sec.  602.18, provided that the institution 
demonstrates the need for such an alternative and that it will not harm 
students. Institutions will also benefit from accrediting agencies 
having the authority to permit the institution to be out of compliance 
with policies, standards, and procedures otherwise required by the 
regulations, for a period of up to three years, and longer for good 
cause shown, where there are circumstances beyond the institution's or 
program's control requiring this exception. This gives institutions 
flexibility in the event of a natural disaster, a teach-out of another 
institution's students, significant documented local or national 
economic changes, changes in licensure requirements, undue hardship on 
students, and the availability of instructors who do not meet the 
agency's faculty standards but are qualified by education or work 
experience to teach courses within a dual or concurrent enrollment 
program.
    In making decisions about changing accrediting agencies, 
institutions will have to balance the expense of maintaining existing 
accreditation while working with new agencies and the possible 
reputational effects of appearing to shop for accreditation. On the 
other hand, if accrediting agencies do realign over time, some 
institutions may need to seek out alternate accreditation as their 
current agency may elect to specialize in a different market segment.
    The following table, based on Federal Student Aid (FSA) information 
as of April 2019, summarizes data related to title IV eligible 
institutions and their distribution according to type of primary 
accrediting agency, also known as the title IV gatekeeper accrediting 
agency.

[[Page 58897]]

    As currently configured, both public and private non-profit 
institutions overwhelmingly use regional accrediting agencies as their 
primary agency for title IV participation, whereas proprietary 
institutions almost exclusively use national agencies. We do not 
require foreign schools to report accreditation information, although 
they may do so. We show foreign schools simply to provide context for 
how many are participating.
[GRAPHIC] [TIFF OMITTED] TR01NO19.002

    As stated earlier, under these final regulations, the Department 
considers regional and national accrediting agencies under one overall 
``institutional'' umbrella. One objective of this policy is to increase 
students' academic and career mobility, by making it easier for 
students to transfer credits to continue or attain an additional degree 
at a new institution, by eliminating artificial boundaries between 
institutions due in part to reliance on a reputation associated with 
certain types of accrediting agencies. While this change would 
primarily result in some realignment of accrediting agencies and 
institutions, there is potential that certain postsecondary students 
could benefit and be enabled to transfer and continue their education 
at four-year institutions where previously they could not do so. This 
may result in greater access and increased educational mobility for 
students coming from proprietary institutions that use national 
accrediting agencies. It also may result in the award of increased 
financial aid, such as Federal Direct Student Loans and Pell Grants, on 
behalf of students pursuing additional higher education.
    From an impact perspective, there may be several outcomes. The 
likelihood in the near term is that the status quo--under which 
institutions, especially four-year institutions, maintain their 
distinction under institutional accreditation--prevails, and the impact 
is essentially zero or neutral. The Department is prohibited from 
dictating an institution's credit transfer or acceptance policy, though 
it strongly discourages anticompetitive practices or those that deny 
students the ability to continue their education without an evaluation 
of that student's academic ability or prior achievement. The Department 
is hopeful that changes in these regulations will make it easier for 
institutions to voluntarily set policies that promote competition, 
support strong academic rigor, and allow qualified credits to transfer. 
Nevertheless, we do not prohibit other practices in these final 
regulations, and certain institutions may initially resist the changes 
intended by these final regulations.
    A shift from strictly geographic orientation may occur over time, 
probably measured in years, as the characterization of 
``institutional'' in terms of accreditation becomes more prevalent and 
greater competition occurs, spurring an evolving dynamic marketplace. 
Accrediting agencies may align in different combinations that coalesce 
around specific institutional dimensions or specialties, such as 
institution size, specialized degrees, or employment opportunities. If 
access to higher-level educational programs by students improves, the 
Department anticipates some modest increase in financial aid, through 
Federal sources such as Direct Loans and Pell Grants.
    The Department approaches estimates for increased financial aid in 
terms of a range of low, medium, and high impacts based on student risk 
groups and institution sectors. This analysis appears in the section on 
Net Budget Impacts. A factor that could increase the Federal aid 
received by institutions is the proposed extension of time for 
achieving compliance in Sec.  602.20, which may reduce the likelihood 
an accrediting agency will drop an institution.
    Institutions with a religious mission would benefit from the 
requirement that accrediting agencies do not hold positions and 
policies resulting from that religious mission that do not interfere 
with the institution's or program's curricula including all core 
components required by the agency against the institution in its 
review. As of June 14, 2018, 277 institutions participating in title IV 
programs hold a religious exemption from some part of the regulations 
applicable to postsecondary institutions. These institutions, and 
others that may have similar religious missions, will be able to pursue 
such exemptions without concern that it will harm their accreditation 
status.
    Additionally, some institutions would benefit from the changes 
related to State authorization in Sec.  600.9 that generally maintain 
State reciprocity agreements for distance education and correspondence 
programs as an important method by which institutions may comply with 
State requirements and reduce the burden on institutions

[[Page 58898]]

that would otherwise be subject to numerous sets of varying 
requirements established by individual States. These final regulations 
allow religious institutions exempt from State authorization under 
Sec.  600.9(b) to comply with requirements for distance education or 
correspondence courses by States in which the institution is not 
physically located through State authorization reciprocity agreements. 
The final regulations also make the administration of distance 
education programs more efficient by replacing the concept of a 
student's residence with that of the student's location. As noted in 
the State Authorization section of this preamble, residency 
requirements may differ within States for purposes of voting, paying 
in-State tuition, and other rights and responsibilities. By using a 
student's location instead of residence, the Department intends to make 
its regulations more consistent with existing State requirements, make 
it easier for institutions to administer, and ensure that students who 
have not established legal or permanent residence in a State benefit 
from State requirements for an institution to offer distance education 
and correspondence courses in that State. Finally, these final 
regulations remove the duplicative student complaint process 
requirements under current Sec.  600.9(c)(2) as the regulations under 
Sec.  668.43(b) already require institutions to disclose the complaint 
process in each of the States where its enrolled students are located.
    Under the final regulations, institutions must make some new or 
revised disclosures to students and the Department, as shown in the 
Paperwork Reduction Act section of this preamble. Institutions will be 
required to (1) update their policies and procedures to ensure 
consistent determination of a student's location for distance education 
and correspondence course students, and, upon request, to provide 
written documentation from the policies and procedure manual of its 
method and basis for such determinations to the Secretary; (2) inform 
the Secretary of the establishment of direct assessment programs after 
the first; (3) inform the Secretary of written arrangements for an 
ineligible program to provide more than 25 percent of a program; and 
(4) provide disclosures to students about whether programs meet 
licensure requirements, acceptance of transfer credits, policies on 
prior learning assessment, and written arrangements for another entity 
to provide all or part of a program. We estimate the cost of these 
disclosures to institutions will be a burden increase of 581,980 hours 
annually, totaling $26,398,613 (581,980 * $45.36). This wage is based 
on the 2018 median hourly wage for postsecondary education 
administrators in the Bureau of Labor Statistics Occupational Outlook 
handbook.\39\
---------------------------------------------------------------------------

    \39\ Bureau of Labor Statistics, U.S. Department of Labor, 
Occupational Outlook Handbook, Postsecondary Education 
Administrators, available at www.bls.gov/ooh/management/postsecondary-education-administrators.htm (visited May 21, 2019).
---------------------------------------------------------------------------

    While institutions will incur some increased costs for these 
disclosures and notifications, we do think there will be time and cost 
savings from the consolidation of reporting requirements and several 
provisions in these final regulations. The final regulatory package 
will remove the current regulatory requirements in Sec.  668.50. This 
removes seven public disclosures that institutions offering distance 
education or correspondence courses were required to provide to 
students enrolled or seeking enrollment in such programs. Several of 
these disclosures will be required under Sec.  668.43 and are included 
in the $26 million in burden described previously.
    As detailed in the Paperwork Reduction Act section of this 
preamble, we expect these consolidations to save 152,405 hours for a 
total estimated reduction in burden of $6,913,091 at the hourly wage of 
$45.36 described above. Together, we estimate the expected net impact 
of the changes to disclosures to be an increase of 429,575 hours 
totaling $19,485,522 at the hourly wage of $45.36. The changes to the 
substantive change requirements may reduce the time and expense to 
institutions by streamlining approval of institutional or programmatic 
changes by dividing them into those that the agency must approve and 
those the institution must simply report to the agency, and also by 
permitting some changes to be approved by accrediting agency senior 
staff rather than by the entire accrediting commission, as well as by 
setting deadlines for agency approvals of written arrangements.
Students
    As discussed earlier, these final regulations will provide various 
benefits to students by improving access to higher education and 
mobility and promoting innovative ways for employers to partner with 
accrediting agencies in establishing appropriate quality standards that 
focus on clear expectations for success. The final regulations may make 
it easier for students to transfer credits to continue, or attain an 
additional degree, at a new institution, including students from 
proprietary institutions seeking additional education at four-year 
public or private nonprofit institutions. If institutions are better 
able to work with employers or communities to set up programs that 
efficiently respond to local needs, students could benefit from 
programs designed for specific in-demand skills. Students would have to 
consider if choosing a program in a preaccreditation status or one that 
takes an innovative approach provides a high-quality opportunity. The 
Department believes programs added in response to these final 
regulations will maintain the quality of current offerings because 
institutions are still required to obtain accrediting agency approval 
when they want to add programs that represent a significant departure 
from the existing offerings or educational programs, or method of 
delivery, from those that were offered when the agency last evaluated 
the institution and when they want to add graduate programs. Lower-
level programs that are related to what they are already offering are 
expected to leverage the strengths of the existing programs.
    The Department does not believe many students rely on the 
distinction between regional and national accrediting agencies when 
deciding between programs or institutions but instead base their choice 
on other factors such as location, cost, programs offerings, campus, 
and career opportunities. Therefore, we do not think there are costs to 
students from the change to institutional versus regional 
accreditation, especially since institutions will be allowed to use 
whatever terms accurately reflect their accreditation to the extent it 
is useful for informing the audience of particular communications.
    Additionally, if the accreditation market transforms over time and 
certain agencies develop strong reputations in specialized areas over 
time, that may be more informative for students interested in those 
outcomes.
    Students may also be affected by the provisions related to the 
definition of a religious mission and the ability of institutions to 
have policies that support their religious mission without it being a 
negative factor in the institution's accreditation review. Institutions 
should be clear in their religious mission statements and students 
should evaluate if that mission is consistent with their beliefs or if 
they are willing to attend an institution with those policies and 
perspectives. For some students, this may limit the options in a given 
commuting range or lead them to attend an institution whose religious 
mission they do not share.

[[Page 58899]]

    The changes to the institutional disclosures in these final 
regulations are also aimed at simplifying the disclosures and providing 
students more useful information. As detailed in the Disclosures 
section of the NPRM, these final regulations require disclosures to 
ensure that an institution provides adequate information for students 
to understand its transfer-of-credit policy, especially when that 
policy excludes credits from certain types of institutions. The 
Department also believes that disclosures relating to an institution's 
prior learning assessment policies are important to students, 
especially those who have not attended college before or who are 
returning to college after many years of experience or training in 
other fields. Students will also receive information about any written 
arrangements under which an entity other than the institution itself 
provides all or part of a program. Another key disclosure is whether 
the program meets educational requirements for licensure in the State 
in which the student is located. These final regulations about teach-
out plans required by accrediting agencies and State actions are 
intended to ensure that students have clear information about serious 
problems at their institutions, and this is most likely to occur when 
those institutions are required to have a teach-out plan in place or 
are under investigation by a State or other agency.
    Under these final regulations, in certain circumstances, such as 
when an accrediting agency places an institution on probation, the 
Department changes the institution to reimbursement payment method, or 
the institution receives an auditor's adverse opinion, an accrediting 
agency must require a teach-out plan to facilitate the opportunity for 
students to complete their academic program. A closing institution will 
also trigger a required teach-out opportunity. For students, this could 
enable them to complete a credential with less burden associated with 
transferring credits and finding a new program. Alternatively, they 
will have the option to choose a closed school discharge if it makes 
sense for their situation. The additional flexibility under these final 
regulations for accrediting agencies to sanction programs instead of 
entire institutions potentially creates a trade-off as the students in 
programs that close are not eligible for closed school discharges. 
However, by focusing on problematic programs, fewer institutions may 
close precipitously, and fewer students would have their programs 
disrupted.
Federal Government
    Under these final regulations, the Federal government would incur 
some additional administrative costs.
    We do not expect the costs associated with processing post-
participation disbursements to be significant, as the disbursement 
system is well-established and designed to accommodate fluctuations in 
disbursements. A file review at the agency would be incorporated into 
the review of agency applications. Currently, the Department reviews 
approximately 10 accrediting agencies for initial or renewal 
applications annually and we expect a file review will take Department 
staff 6 hours at a GS-14 Step 1 hourly wage rate of $43.42. The 
potential increase in the number of reviews due to these final 
regulations is uncertain, but we estimate a cost of $261 per review (6 
hours * $43.42). Additional costs may also arise from increased senior 
Department official reviews under proposed Sec.  602.36(g), which 
provides an agency subject to a determination that a decision to deny, 
limit, or suspend recognition may be warranted with an opportunity to 
submit a written response and documentation addressing the finding, and 
the staff with an opportunity to present its analysis in writing. The 
Department has reviewed 17 compliance reports between 2014 and 2018; we 
do not expect the administrative burden on the Department from this 
provision to be significant.
    The Federal government will benefit from savings due to a reduced 
number of closed school loan discharges as a result of an expected 
increase in students completing teach-outs, but it may also incur 
annual costs to fund more Pell Grants and some title IV loans for 
students participating in teach-outs and increased volume from new 
programs or extension of existing programs, as discussed in the Net 
Budget Impacts section.
Net Budget Impacts
    We estimate that these final regulations will have a net Federal 
budget impact over the 2020-2029 loan cohorts of $35 million in outlays 
in the primary estimate scenario and an increase in Pell Grant outlays 
of $3,744 million over 10 years, for a total net impact of $3,779 
million. A cohort reflects all loans originated in a given fiscal year. 
Consistent with the requirements of the Credit Reform Act of 1990, 
budget cost estimates for the student loan programs reflect the 
estimated net present value of all future non-administrative Federal 
costs associated with a cohort of loans. The Net Budget Impact is 
compared to a modified version of the 2020 President's Budget baseline 
(PB2020) that adjusts for the recent publication of the final Borrower 
Defense rule.
    As the Department recognizes that the market transformations that 
could occur in connection with these final regulations are uncertain 
and we have limited data on which to base estimates of accrediting 
agency, institutional, and student responses to the regulatory changes, 
we present alternative scenarios to capture the potential range of 
impacts on Federal student aid transfers. An additional complicating 
factor in developing these estimates are the related regulatory changes 
on which the committee reached consensus in this negotiated rulemaking 
that we will propose in separate notices of proposed rulemaking. For 
example, we will address the potential expansion of distance education 
or direct assessment programs because of significant proposed changes 
in the regulations governing such programs in a separate notice of 
proposed rulemaking. In this analysis, we address the impact of the 
accreditation changes and other changes in these final regulations but 
recognize that attributing future changes in the Federal student aid 
disbursements to provisions that have overlapping effects is an inexact 
process. Therefore, in future proposed regulations, as appropriate, we 
will consider interactive effects related to the changes in these 
regulations.
    The main budget impacts estimated from these final regulations come 
from changes in loan volumes and Pell Grants disbursed to students as 
establishing a program becomes less burdensome and additional students 
receive title IV, HEA funds for teach-outs. Changes that could allow 
volume increases include making it easier for the Department to 
recognize new accrediting agencies and reducing the experience 
requirement for expanding an agency's scope to new degree levels. 
Agencies will also be able to establish alternative standards that 
require the institution or program to demonstrate a need for the 
alternative approach, as long as the alternative will not harm students 
and that they will receive equivalent benefit. The alternative standard 
could allow for the faster introduction of innovative programs. The 
possibility of additional accrediting agencies would increase the 
chances for institutions to find an agency. Institutions' liability 
associated with acquiring additional locations and expanded time to 
come into compliance could also keep programs operating longer than 
they otherwise might. The

[[Page 58900]]

tables below present the assumed grant and loan volume changes used in 
estimating the net budget impact of these final regulations for the 
primary scenario, with discussion about the assumptions following the 
tables.

                                             Table 2A--Assumptions About Change in Pell Grants by Award Year
                                                              [Additional Pell recipients]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               2020       2021       2022       2023       2024       2025       2026       2027       2028       2029
--------------------------------------------------------------------------------------------------------------------------------------------------------
4-year public.............................          0      8,845     15,075     30,789     39,292     48,153     57,375     66,980     68,903     70,333
2-year public.............................          0      6,790     11,624     17,891     24,469     31,395     38,633     46,219     47,710     48,933
4-year private............................          0      3,252      5,514     11,215     14,272     17,456     20,806     24,230     24,869     25,369
2-year private............................          0        163        281        433        597        772        956      1,155      1,193      1,235
Proprietary...............................          0      4,988     10,266     15,832     21,691     25,102     28,679     32,454     33,612     34,570
                                           -------------------------------------------------------------------------------------------------------------
    Total.................................  .........     24,038     42,760     76,161    100,321    122,879    146,450    171,037    176,288    180,441
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Estimated program costs for Pell Grants range from $30.1 billion in 
AY 2021-22 to $37.2 billion in AY 2029-30, with a 10-year total 
estimate of $333.8 billion. On average, the FY 2020 President's Budget 
projects a baseline increase in Pell Grant recipients from 2020 to 2029 
of approximately 200,000 annually. The increase in Pell Grant 
recipients estimated due to these final regulations ranges from about 
12 percent in 2021 to approximately 90 percent by 2029 of the projected 
average annual increase that would otherwise occur. However, even the 
additional 180,441 recipients estimated for 2029 would account for 
approximately 2 percent of all estimated Pell recipients in 2029 and 
results in an increase in program costs of approximately $4,427 
million, a 1.3 percent increase in estimated 10-year Pell Grant program 
costs of $333.8 billion.

                            Table 2B--Assumptions About Change in Loan Volume From Final Regulations by Cohort and Risk-Group
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                     PB2020 vol est        Percent change in loan volume by risk group and cohort--subsidized and unsubsidized loans
                                    (subsidized and  ---------------------------------------------------------------------------------------------------
                                     unsubsidized)
                                  -------------------   2020      2021      2022      2023      2024      2025      2026      2027      2028      2029
                                     FY2020 ($mns)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proprietary......................              2,774         0       0.5         1       1.5         2         3         4         5         5         5
2-Year Non-Profit................              4,981         0       0.3       0.5      0.75         1      1.25       1.5         2      2.25       2.5
4-Year Fr/So.....................             17,118         0       0.3       0.5         1         1       1.5         2      2.75       3.5         4
4-Year Jr/Sr.....................             20,063         0       0.3       0.5         1         1       1.5         2      2.75       3.5         4
Grads............................             50,734         0         0      -0.2      -0.2      -0.2      -0.2      -0.3      -0.3      -0.3      -0.3
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
                                     PB2020 vol est                   Percent change in loan volume by risk group and cohort--PLUS loans
                                         (PLUS)      ---------------------------------------------------------------------------------------------------
                                  -------------------
                                     FY2020 ($mns)      2020      2021      2022      2023      2024      2025      2026      2027      2028      2029
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proprietary......................                356         0      0.25       0.5      0.75         1       1.5         2       2.5       2.5       2.5
2-Year Non-Profit................                133         0      0.15      0.25     0.375       0.5     0.625      0.75         1     1.125      1.25
4-Year Fr/So.....................              8,003         0      0.15      0.25       0.5       0.5      0.75         1     1.375      1.75         2
4-Year Jr/Sr.....................              5,713         0      0.15      0.25       0.5       0.5      0.75         1     1.375      1.75         2
Grads............................             11,888         0         0      -0.2      -0.2      -0.2      -0.2      -0.3      -0.3      -0.3      -0.3
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As seen from the approximately $100 billion annual loan volume, 
even small changes will result in a significant amount of additional 
loan transfers. We update loan volume estimates regularly; for PB2020 
the total non-consolidated loan volume estimates between FY2020 and 
FY2029 range from $100.2 billion to $116.1 billion. The additional high 
and low scenarios represent a 20 percent increase or decrease from the 
assumptions presented in the table. The Department does not anticipate 
that the changes in the final regulations will lead to widely different 
scenarios for volume growth and therefore believes the 20 percent range 
captures the likeliest outcomes. For the provisions aimed at reducing 
closed school discharges by enhancing teach-outs, the main assumption 
is that closed school discharges will decrease by 10 percent, with a 20 
percent decrease in the high scenario and a 5 percent decrease in the 
low scenario. With some exceptions, the Department has limited 
information about teach-outs and what motivates students to pursue them 
versus a closed school discharge, but we assume proximity to 
completion, convenience, and perception of the quality of the teach-out 
option have a substantial effect. Absent any evidence of the effect of 
the proposed changes on student response to teach-out plans, the 
Department has made a conservative assumption about the decrease in 
closed school discharges and the potential savings from the proposed 
changes may be higher.
    However, since the publication of the NPRM describing the 
accreditation changes, the final Borrower Defense rule was published on 
September 23, 2019 \40\ and reduced expected discharges as the 
elimination of automatic closed school discharges generated more 
savings than the extension of the closed school window to 180 days 
increased discharges. In order to avoid attributing savings in these 
final regulations for reductions in closed school discharges that would 
occur because of the borrower defense changes, the Department re-
estimated the savings from this provision against the PB2020 baseline 
with the borrower defense closed school changes incorporated in it. 
Evaluated against this reduced level of expected future closed school 
discharges, the estimated savings from the closed school provision 
decreased

[[Page 58901]]

from $120 million in the main 10 percent reduction scenario to $79 
million.
---------------------------------------------------------------------------

    \40\ 84 FR 49788 published September 23, 2019. Available at 
https://www.govinfo.gov/content/pkg/FR-2019-09-23/pdf/2019-19309.pdf.
---------------------------------------------------------------------------

    The assumed changes in loan volume would result in a small cost 
that represents the net impact of offsetting subsidy changes by loan 
type and risk group due to positive subsidy rates for Subsidized and 
Unsubsidized Stafford loans and negative subsidy rates for Parent PLUS 
Loans and the interaction of the potential reduction in closed school 
discharges and increases in loan volume. The costs of the volume 
increase do differ from the NPRM as a result of the modified baseline 
that takes the final Borrower Defense rule into account as reduced 
discharge rates reduce subsidy costs. We do not assume any changes in 
subsidy rates from the potential creation of new programs or the other 
changes reflected in these final regulations. Depending on how programs 
are configured, the market demand for them, and their quality, key 
subsidy components such as defaults, prepayments, and repayment plan 
choice may vary and affect the costs estimates. For example, if 
institutions with less favorable program outcomes find more lenient 
accrediting agencies or if they take advantage of the substantive 
change policy revisions to expand their program offerings, there could 
be an increase in default rates or other repayment issues. On the other 
hand, institutions with strong programs may take advantage of the 
flexibility allowed by the substantive change policy revisions to 
expand their program offerings, possibly by adding certificate 
programs. We do not have information at this point to assume that new 
programs established under these provisions would have a different 
range of performance from current programs or to estimate how 
performance could vary.
    Table 3 summarizes the Pell and loan effects for the Low, Main, and 
High impact scenarios over a 10-year period with years 2022 through 
2029 showing amounts of over $100 million in outlays per year. Each 
column reflects a low impact, medium impact, or high impact scenario 
showing estimated changes to Pell Grants and Direct Loans under those 
low, medium, and high conditions. Therefore, the overall amounts 
reflect the sum of outlay changes occurring under each scenario for 
Pell Grants and Direct Loans when combined. The loan amounts reflect 
the combined change in the volumes and closed school discharges, which 
do have interactive and offsetting effects. For example, the closed 
school changes had estimated savings ranging from $41 million to $164 
million when evaluated without the volume changes, and the volume 
changes had costs of $81 million to $139 million when estimated without 
the closed school changes.

                 Table 3--Estimated Net Impact of Pell Grant and Loan Changes--2020-2029 Outlays
                                                     [$mns]
----------------------------------------------------------------------------------------------------------------
                                                                        Low            Main            High
----------------------------------------------------------------------------------------------------------------
Pell Grants.....................................................           2,981           3,744           4,463
Loans...........................................................              40              35             -25
                                                                 -----------------------------------------------
    Overall.....................................................           3,021           3,779           4,438
----------------------------------------------------------------------------------------------------------------

    When considering the impact of these final regulations on Federal 
student aid programs, a key question is the extent to which the changes 
will expand the pool of students who will receive grants or borrow 
loans compared to the potential shifting of students and associated aid 
to different programs that may arise because of the changes in 
accreditation. The Department believes many of the final regulatory 
provisions that clarify definitions or reflect current practice will 
not lead to significant expansion of program offerings that would not 
otherwise occur for reasons related to institutions' business plans or 
academic mission. We believe these provisions may ease the burden of 
setting up new programs and accelerate the timeframe for offering them. 
Accreditation is a significant consideration when establishing a 
program because of the expense and work involved in seeking and 
maintaining it, but institutions make decisions about programs to offer 
based on employment needs, student demand, availability of faculty, and 
several other factors. Therefore, the Department does not expect these 
final regulations to increase total loan volumes more than 2 percent or 
Pell Grant recipients more than 2 percent by 2029 compared to the FY 
2020 President's Budget baseline.
    Another factor reflected in Table 3 is that we do not expect the 
impacts of these final regulations to occur immediately upon 
implementation, but to be the result of changes in postsecondary 
education over time. Institutions generally undergo accreditation 
review every 7 to 10 years, depending upon the accrediting agency and 
their status. Additionally, accrediting agencies may develop a new 
focus area or geographic scope over time as they increase resources to 
expand their operations. To the extent that there is a change in the 
institutional accreditation landscape, we would not expect institutions 
to change agencies until their next review point, so the impacts of 
these final regulations will be gradual.
    The changes to the substantive change requirements, which will 
allow institutions to respond quickly to market demand and create 
undergraduate programs at different credential levels and focus agency 
attention on the creation of graduate certificate and masters level 
programs where many loan dollars are directed, could lead to expansion 
in Federal aid disbursed. The increased volume change of the high 
scenario reflects uncertainty about the extent of this potential 
expansion, as well as the fact that much of the expansion may involve 
online programs subject to forthcoming proposed regulatory changes that 
would interact with these final regulations. The number of graduate 
programs awarding credentials has increased substantially since the 
introduction of graduate PLUS loans in 2006, as has the volume of loans 
disbursed to graduate borrowers, as shown in Table 5. These final 
regulations will not change the substantive change requirements for 
graduate programs. This emphasis reflects the Department's concern 
about the growing practice of elevating the level of the credential 
required to satisfy occupational licensure requirements. Focusing 
accrediting agency attention on graduate programs may slow down or 
prevent the creation of some new programs, which we reflect in the 
slight reduction in graduate loan volume in Table 2.

[[Page 58902]]



                              Table 4 41--Programs Awarding Credentials and Credentials Awarded in Selected Years 2006-2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Programs                                         Awards
                                                         -----------------------------------------------------------------------------------------------
                                                             2006        2010        2013        2017        2006        2010        2013        2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
Undergraduate Certificates..............................      50,960      58,870      60,440      64,490   1,461,460     734,880   1,987,740   1,919,950
    Public 4 year.......................................       1,890       3,130       4,160       7,970      30,740      34,840     104,860     196,790
    Private 4 year......................................       1,810       2,280       2,490       2,810      21,640       9,990      27,320      27,720
    Prop 4 year.........................................         950       1,550       2,150       1,820      30,220      13,680      61,200      61,470
    Public 2 year or less...............................      33,570      37,250      36,740      39,020     713,690     409,720     986,440   1,064,240
    Private 2 year or less..............................       1,290       1,050       1,010         890      58,490      22,350      41,920      40,030
    Prop 2 year or less.................................      11,440      13,620      13,900      11,990     606,670     244,290     766,010     529,700
+Undergraduate Degrees..................................     136,190     149,840     161,220     168,980   4,596,970   2,144,470   5,942,860   6,164,090
    Public 4 year.......................................      40,000      42,670      46,770      55,080   2,126,290   1,036,150   2,709,700   3,048,600
    Private 4 year......................................      57,240      61,950      67,070      71,550   1,101,850     488,020   1,289,280   1,349,090
    Prop 4 year.........................................       4,680       9,460      11,270       7,170     202,920     159,620     519,650     342,520
    Public 2 year or less...............................      30,280      31,590      31,880      32,320   1,029,930     413,450   1,282,000   1,343,570
    Private 2 year or less..............................         840         620         570         540      19,480       4,240      13,200      14,090
    Prop 2 year or less.................................       3,160       3,550       3,660       2,330     116,510      42,980     129,020      66,210
Graduate Certificates...................................       5,580       7,530       9,920      13,280      74,870      33,990      74,870      74,870
    Public 4 year.......................................       2,320       3,250       4,480       6,740      31,620      14,560      48,950      65,420
    Private 4 year......................................       3,000       4,000       4,780       5,860      40,830      17,770      48,450      51,400
    Prop 4 year.........................................         260         280         650         680       2,400       1,660       7,420       7,990
    Public 2 year or less...............................  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........
    Private 2 year or less..............................  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........
    Prop 2 year or less.................................  ..........  ..........  ..........  ..........          20  ..........  ..........  ..........
Graduate Degrees........................................      44,370      47,970      51,820      59,980   1,465,180     712,760   1,875,660   1,993,430
    Public 4 year.......................................      24,850      25,850      27,370      32,250     731,320     335,760     870,070     935,950
    Private 4 year......................................      18,280      20,190      22,270      25,160     672,990     323,390     834,740     899,630
    Prop 4 year.........................................       1,230       1,920       2,180       2,580      60,880      53,610     170,840     157,850
    Public 2 year or less...............................  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........
    Private 2 year or less..............................  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........
    Prop 2 year or less.................................  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........
--------------------------------------------------------------------------------------------------------------------------------------------------------

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

    \41\ U.S. Department of Education analysis of IPEDS completion 
data for 2006, 2010, 2013, and 2017. Available at https://nces.ed.gov/ipeds/datacenter/DataFiles.aspx.

                       Table 5 42--Graduate PLUS and Graduate Unsubsidized Loans Disbursed to Students in Selected Years 2006-2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                            AY2005-06          AY2009-10                    AY2012-13                             AY2016-17
                                       -----------------------------------------------------------------------------------------------------------------
                                            Grad PLUS          Grad PLUS          Grad PLUS          Grad unsub         Grad PLUS          Grad unsub
--------------------------------------------------------------------------------------------------------------------------------------------------------
Public................................         12,793,910      1,276,149,977      1,838,645,436     10,232,321,388      2,444,408,219     10,584,552,835
Private...............................         59,288,547      3,909,981,128      4,934,939,609     12,629,730,564      6,094,281,420     13,030,559,389
Proprietary...........................          4,000,483        575,779,471        830,210,361      3,967,504,952      1,106,645,769      3,410,171,851
                                       -----------------------------------------------------------------------------------------------------------------
    Total.............................         76,082,940      5,761,910,576      7,603,795,406     26,829,556,904      9,645,335,408     27,025,284,075
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Unsubsidized loans to graduate students not included as not split in volume reports until 2010-11.

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

    \42\ FSA Data Center loan volume files available at https://studentaid.ed.gov/sa/about/data-center/student/title-iv.
---------------------------------------------------------------------------

    These final regulations also aim to bring greater clarity to the 
nature of teach-outs and to create a more orderly process for students 
and institutions when institutions are closing precipitously. We seek 
through these final regulations to provide students with the 
opportunity to finish their program of study and attain their 
credential and keep closed school discharges to a minimum to reduce 
taxpayer cost.
    These final regulations will permit an accrediting agency to 
sanction a specific program or location within an institution without 
acting against the entire institution if the agency found that only 
that program or location was noncompliant. The Department recognizes 
that this situation would preclude a student from obtaining a closed 
school discharge, since only a program was subject to closure and not 
the entire institution. However, accrediting agency actions have rarely 
been the sole cause of institutional closure, so the potential 
application of this more limited response may not change the level of 
closed school discharges significantly.
    Nevertheless, students would be entitled to teach-outs that 
facilitate program completion and degree attainment. In turn, the 
expansion of teach-outs could have budgetary impacts related to 
financial aid amounts as students take out loans or grants to complete 
their programs. When participating in a teach-out, the receiving 
institution may not charge students more than what the closing or 
closed institution would have charged for the same courses. If teach-
outs increase significantly, this could result in some increase in loan 
volume and Pell Grants to such students. Closed school discharges are a 
very small percent of cohort volume, so we do not expect the potential 
volume increase associated with increased teach-outs ranges to be 
substantial or to contribute to the volume increases presented in Table 
2.

[[Page 58903]]

Accounting Statement
    As required by OMB Circular A-4 (available at www.whitehouse.gov/sites/default/files/omb/assets/omb/circulars/a004/a-4.pdf), in the 
following table we have prepared an accounting statement showing the 
classification of the expenditures associated with the provisions of 
these final regulations. This table provides our best estimate of the 
changes in annual monetized transfers as a result of these final 
regulations. Expenditures are classified as transfers from the Federal 
Government to affected student loan borrowers and Pell Grant 
recipients.

 Table 6--Accounting Statement: Classification of Estimated Expenditures
                              [In millions]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                Category                             Benefits
------------------------------------------------------------------------
Restored focus and clarity for
 accrediting agency recognition process.          Not Quantified
------------------------------------------------------------------------
                                                  Not Quantified
------------------------------------------------------------------------


 
                                                       Costs
                Category                 -------------------------------
                                                7%              3%
------------------------------------------------------------------------
Cost of compliance with paperwork                  $20.1           $20.1
 requirements...........................
------------------------------------------------------------------------


 
                                                     Transfers
                Category                 -------------------------------
                                                7%              3%
------------------------------------------------------------------------
Increased Pell Grants transferred to              $323.2          $351.9
 students who enter postsecondary
 education because of programs
 established or that remain open because
 of accreditation changes or who
 participate in teach-outs..............
Change in transfers from increased                   1.9             2.2
 Federal student loans transferred to
 students who enter postsecondary
 education because of programs
 established or that remain open because
 of accreditation changes or who
 participate in teach-outs and reduced
 closed school discharges from the
 Federal Government to affected
 borrowers..............................
------------------------------------------------------------------------

Regulatory Alternatives Considered

    In the interest of ensuring that these final regulations produce 
the best possible outcome, we considered a broad range of proposals 
from internal sources as well as from non-Federal negotiators and 
members of the public as part of the negotiated rulemaking process. We 
reviewed these alternatives in detail in the preamble to the NPRM under 
the ``Reasons'' sections accompanying the discussion of each proposed 
regulatory provision. Among the items discussed was removing or 
revising the limit on how much of a program a non-accredited entity may 
offer, which could allow faster expansion of programs but raised 
concerns about maintaining program quality. Also, a variety of 
alternatives to the proposed elimination of the requirement that an 
agency must have conducted accrediting activities for at least two 
years prior to seeking recognition when the agency is affiliated with, 
or is a division of, a recognized agency were considered by the 
negotiating committee. The committee did not agree to a proposal to 
make all regional accrediting agencies national but did agree to using 
the institutional designation for Department business. The committee 
also considered stricter requirements for obtaining approval of 
graduate programs. These proposals would likely have had a stronger 
negative effect on graduate program creation than these final 
regulations.

Paperwork Reduction Act of 1995

    As part of its continuing effort to reduce paperwork and respondent 
burden, the Department provides the general public and Federal agencies 
with an opportunity to comment on proposed and continuing collections 
of information in accordance with the Paperwork Reduction Act of 1995 
(PRA) (44 U.S.C. 3506(c)(2)(A)). This helps ensure that: The public 
understands the Department's collection instructions, respondents can 
provide the requested data in the desired format, reporting burden 
(time and financial resources) is minimized, collection instruments are 
clearly understood, and the Department can properly assess the impact 
of collection requirements on respondents.
    Sections 600, 602, and 668 contain information collection 
requirements. Under the PRA the Department has submitted a copy of 
these sections to OMB for its review.
    A Federal agency may not conduct or sponsor a collection of 
information unless OMB approves the collection under the PRA and the 
corresponding information collection instrument displays a currently 
valid OMB control number.
    Notwithstanding any other provision of law, no person is required 
to comply with, or is subject to penalty for failure to comply with, a 
collection of information if the collection instrument does not display 
a currently valid OMB control number.
    In these final regulations, we display the control numbers assigned 
by OMB to any information collection requirements adopted in the final 
regulations. In the case of a new information collection, the OMB 
control number will be issued upon the information collection request 
approval.

Discussion

    The goal of accreditation is to ensure that institutions of higher 
education meet acceptable levels of quality. Accreditation in the 
United States involves non-governmental entities as well as Federal and 
State government agencies. Accreditation's quality assurance function 
is one of the three main elements of oversight governing the HEA's 
Federal student aid programs. In order for students to receive Federal 
student aid from the Department for postsecondary study, the 
institution must be accredited by a ``nationally recognized'' 
accrediting agency (or, for certain vocational institutions, approved 
by a recognized State approval agency), be authorized by the State in 
which the institution is located, and receive approval from the 
Department through a program participation agreement.
    Accrediting agencies, which are private educational associations

[[Page 58904]]

operating in multiple states or with national scope, develop evaluation 
criteria and conduct peer evaluations to assess whether institutions 
and programs meet those criteria. Institutions and programs that 
request an accrediting agency's evaluation and that meet that agency's 
criteria are then ``accredited.''
    As of April 2019, the Secretary recognized 53 accrediting agencies 
that are independent, membership-based organizations designed to ensure 
students have access to qualified faculty, appropriate curriculum, and 
other support services. Of these 53 accrediting agencies recognized by 
the Secretary, 36 are institutional for title IV HEA purposes and 18 
are solely programmatic. Institutional accrediting agencies accredit 
institutions of higher education, and programmatic accrediting agencies 
accredit specific educational programs that prepare students for entry 
into a profession, occupation, or vocation. The PRA section will use 
these figures in assessing burden. Additionally, we use the number of 
title IV eligible institutions noted in the Regulatory Impact Analysis 
(1,860 public institutions, 1,704 private institutions, and 1,783 
proprietary institutions) as the basis for assessing institutional 
burden in the PRA.
    Through this process we identified areas where cost savings will 
likely occur under the final regulations; however, many of the 
associated criteria do not have existing information collection 
requests and consequently we did not then assign OMB numbers for data 
collection purposes. Instead, we included them in the collections table 
in a column titled: ``Estimated savings absent ICR requirement,'' and 
they are sometimes referred to as ``hours saved.'' We did not include 
these areas of anticipated costs savings in the total burden 
calculations.

Section 600.9--State Authorization

Requirements
    Under Sec.  600.9(c)(2)(i), the institution must determine in which 
State a student is located while enrolled in a distance education or 
correspondence course when the institution participates in a State 
authorization reciprocity agreement under which it is covered in 
accordance with the institution's policies and procedures. The 
institution must make such determinations consistently and apply them 
to all students.
    Under Sec.  600.9(c)(2)(ii), the institution must, upon request, 
provide the Secretary with written documentation of its determination 
of a student's location, including the basis for such determination.
Burden Calculation
    We estimate that, on average, an institution will need 30 minutes 
to update its policies and procedures manual to ensure consistent 
location determinations for distance education and correspondence 
course students. Additionally, we estimate that it will take an 
institution 30 minutes to provide the Secretary, upon request, with 
written documentation from its policies and procedures manual of its 
method of determination of a student's location, including the basis 
for such determination.

                                         Table 7--Sec.   600.9(c)(2)(i)
----------------------------------------------------------------------------------------------------------------
                    Entity                         Responses            Time per response           Total hours
----------------------------------------------------------------------------------------------------------------
Public........................................           1,860  .5 hours (30 min.)..............           = 930
Private.......................................           1,704  .5 hours (30 min.)..............           = 852
Proprietary...................................           1,783  .5 hours (30 min.)..............           = 892
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
                                                ..............  ................................         = 2,674
----------------------------------------------------------------------------------------------------------------

    We estimate that no more than five percent of institutions will be 
required to provide written documentation to the Secretary regarding 
the basis for the institutions' determinations of a State location for 
a student. We estimate that 93 public institutions will require 47 
hours to provide written documentation of their basis for a location 
determination for a student as requested by the Secretary. We estimate 
that 85 private institutions will require 43 hours to provide written 
documentation of their basis for a location determination for a student 
as requested by the Secretary. We estimate that 89 proprietary 
institutions will require 45 hours to provide written documentation of 
their basis for a location determination for a student as requested by 
the Secretary.

                                         Table 8--Sec.   600.9(c)(2)(ii)
----------------------------------------------------------------------------------------------------------------
                    Entity                         Responses            Time per response           Total hours
----------------------------------------------------------------------------------------------------------------
Public........................................           1,860  5% x .5 hours (30 min.).........            = 47
Private.......................................           1,704  5% x .5 hours (30 min.).........            = 43
Proprietary...................................           1,783  5% x .5 hours (30 min.).........            = 45
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
                                                ..............  ................................           = 135
----------------------------------------------------------------------------------------------------------------

    The estimated burden for Sec.  600.9 is 2,809 hours under OMB 
Control Number 1845-0144. The estimated institutional cost is $127,416 
based on $45.36 per hour for Postsecondary Education Administrators, 
from the 2019 Bureau of Labor Statistics Occupational Outlook Handbook.

Section 602.12--Accrediting Experience

Requirements
    The Department will require under Sec.  602.12(b)(1) that an 
accrediting agency notify the Department of its geographic expansion 
and to publicly disclose it on its website.
Burden Calculation
    Under Sec.  602.12(b)(1), we estimate that, on average, it will 
take an agency 1 hour to inform the Department that it has expanded its 
geographic scope and to disclose the information publicly on its 
website. However, overall burden will decrease because an agency will 
no longer need to request approval of such

[[Page 58905]]

an expansion by the Department, which takes, on average, 20 hours. The 
Department has received, on average, one such request annually.
    The estimated burden under Sec.  602.12 will increase by 1 hour [1 
x 1] under OMB Control Number 1840-0788. In addition, in absence of an 
ICR for expansion of scope, we estimate, on average, burden reduction 
under Sec.  602.12 will be 19 hours [1 x (20-1)] under OMB Control 
Number 1840-0788. The estimated institutional cost is $45.36 based on 
$45.36 per hour for Postsecondary Education Administrators, from the 
2019 Bureau of Labor Statistics Occupational Outlook Handbook.

Section 602.18--Ensuring Consistency in Decision-Making; Section 
602.20--Enforcement of Standards; Section 602.22--Substantive Changes 
and Other Reporting; Section 602.23--Operating Procedures All Agencies 
Must Have; Section 602.24--Additional Procedures Certain Institutional 
Agencies Must Have; and Section 602.26--Notifications of Accrediting 
Decisions: All Related to Final Accreditation Agency Policy Changes

Requirements
    Under Sec.  602.18(a)(6), we will require that accrediting agencies 
publish any policies for retroactive application of an accreditation 
decision. The policies must not provide for an effective date that 
predates an earlier denial by the agency of accreditation or 
preaccreditation to the institution or program or the agency's formal 
approval of the institution or program for consideration in the 
agency's accreditation or preaccreditation process.
    Under Sec.  602.20(a)(2), we will require that accrediting agencies 
provide institutions or programs with written timelines for coming into 
compliance, which may include intermediate checkpoints as the 
institutions progress to full compliance.
    Under Sec.  602.20(b), we will require that accrediting agencies 
have a policy for taking immediate adverse action when warranted. We 
will require both changes to remove overly prescriptive timelines for 
accrediting agencies that will emphasize acting in the best interest of 
students rather than merely acting swiftly.
    Under Sec.  602.20(d), we will add that accrediting agencies could 
limit adverse actions to specific programs or additional locations 
without taking action against the entire institution. This change will 
provide accrediting agencies with more tools to hold programs or 
locations within institutions accountable.
    The Department will revise substantive change regulations to 
provide accrediting agencies more flexibility to focus on the most 
important changes. Under Sec.  602.22(a)(3)(i), we will allow 
accrediting agencies' decision-making bodies to designate agency senior 
staff members to approve or disapprove certain substantive changes. 
Under Sec.  602.22(a)(3)(ii), we will allow a 90-day timeframe (180 
days for those with significant circumstances) for accrediting agencies 
to make final decisions about substantive changes involving written 
arrangements for provision of 25 to 50 percent of a program by a non-
eligible entity. Under Sec.  602.22(b), we will add two additional 
substantive changes for which an institution placed on probation or 
equivalent status must receive prior approval and for which other 
institutions must provide notice to the accrediting agency. Under Sec.  
602.23(f)(1)(ii), agencies must require that all preaccredited 
institutions have a teach-out plan that ensures students completing the 
teach-out will meet curricular requirements for professional licensure 
or certification, if any. Further, the teach-out plan must include a 
list of academic programs offered by the institution, as well as the 
names of other institutions that offer similar programs and that could 
potentially enter into a teach-out agreement with the institution.
    Under final Sec.  602.24(a), agencies are no longer required to use 
an institution's business plan, submitted to the Department, to 
describe the operation, management, and physical resources of the 
branch campus and remove the requirement that an agency may only extend 
accreditation to a branch campus after the agency evaluates the 
business plan and takes whatever other actions it deems necessary to 
determine that the branch campus has enough educational, financial, 
operational, management, and physical resources to meet the agency's 
standards.
    Under Sec.  602.24(c), we will require new requirements for teach-
out plans and teach-out agreements. These changes will add additional 
specificity and clarity to teach-out plans and agreements and new 
provisions regarding when they will be required, what they must 
include, and what accrediting agencies must consider before approving 
them.
    Under Sec.  602.24(f), we will require that agencies adopt and 
apply the definitions of ``branch campus'' and ``additional location'' 
in 34 CFR 600.2, and on the Secretary's request, conform its 
designations of an institution's branch campuses and additional 
locations with the Secretary's if it learns its designations diverge. 
This change will standardize the use of these terms and alleviate 
misunderstandings.
    Under Sec.  602.26(b), we will require that accrediting agencies 
provide written notice of a final decision of a probation or equivalent 
status, or an initiated adverse action to the Secretary, the 
appropriate State licensing or authorizing agency, and the appropriate 
accrediting agencies at the same time it notifies the institution or 
program of the decision.
    Further, we will require the institution or program to disclose 
such an action within seven business days of receipt to all current and 
prospective students.
Burden Calculation
    Under Sec.  602.18(a)(6), Sec.  602.20(a)(2), Sec.  602.20(b), 
Sec.  602.20(d), Sec.  602.22(a)(3)(i), Sec.  602.22(a)(3)(ii), Sec.  
602.22(b), Sec.  602.23(f)(1)(ii), Sec.  602.24(a), Sec.  602.24(c), 
Sec.  602.24(f), and Sec.  602.26(b), we estimate that, on average, an 
agency will need 12 hours to develop policies regarding submitting 
written documentation to the Secretary, which includes obtaining 
approval from its decision-making bodies, updating its policies and 
procedures manual, distributing the new policies to its institutions, 
and training agency volunteers on the changes.
    Collectively, the one-time estimated burden for Sec.  602.18(a)(6), 
Sec.  602.20(a)(2), Sec.  602.20(b), Sec.  602.20(d), Sec.  
602.22(a)(3)(i), Sec.  602.22(a)(3)(ii), Sec.  602.22(b), Sec.  
602.23(f)(1)(ii), Sec.  602.24(a), Sec.  602.24(c), Sec.  602.24(f), 
and Sec.  602.26(b), is 636 hours (53 x 12) under OMB Control Number 
1840-0788. The estimated institutional cost is $28,849 based on $45.36 
per hour for Postsecondary Education Administrators, from the 2019 
Bureau of Labor Statistics Occupational Outlook Handbook.

[[Page 58906]]



                          Table 9--Summary of Accrediting Agency Policy Manual Changes
----------------------------------------------------------------------------------------------------------------
                                                                                     Number of
                          Requirements                                 Hours         agencies      Total burden
----------------------------------------------------------------------------------------------------------------
Write Policies..................................................               4              53             212
Obtain Approval.................................................               2              53             106
Update Manual...................................................               2              53             106
Distribute Policies.............................................               1              53              53
Train Volunteers................................................               3              53             159
                                                                 -----------------------------------------------
    Total.......................................................              12              53             636
----------------------------------------------------------------------------------------------------------------

Section 602.22--Substantive Changes and Other Reporting Requirements

Requirements
    Under 602.22(a)(3)(i), for certain substantive changes, the 
agency's decision-making body may designate agency senior staff to 
approve or disapprove the request.
Burden Calculation
    Although a formal ICR does not exist under Sec. Sec.  
602.22(a)(3)(i), we estimate that we will save time, on average, by 6 
hours given that a designated agency staff member could approve or 
disapprove certain substantive changes in place of decision-making 
bodies.
    The estimated amount of time saved under Sec.  602.22(a)(3)(i) is 
318 hours [53 x (-6)] under OMB Control Number 1840-0788. There is no 
estimated institutional cost under Sec.  602.22(a)(3)(i), but we 
believe that there will be an overall savings of $14,424.48 for 
agencies.

Section 602.23--Operating Procedures All Agencies Must Have

Requirements
    Under Sec.  602.23(a)(2), we will require that accrediting agencies 
make publicly available the procedures that institutions or programs 
must follow in applying for substantive changes. While we are aware 
that some agencies voluntarily make such procedures publicly available, 
we will now require it. Further, we will require that the agencies make 
publicly available the sequencing of steps relative to any applications 
or decisions required by States or the Department relative to the 
agency's preaccreditation, accreditation or substantive change 
decisions.
Burden Calculation
    Under Sec.  602.23(a)(2), we estimate that, on average, it will 
take an agency a one-time effort of 2 hours to make its application 
procedures publicly available. We anticipate that accrediting agencies 
will use their websites to comply, but any reasonable method is 
acceptable if the information is available to the public.
    The estimated one-time burden for Sec.  602.23 is 106 hours (53 x 
2) under OMB Control Number 1840-0788. The estimated institutional cost 
is $4,808 based on $45.36 per hour for Postsecondary Education 
Administrators, from the 2019 Bureau of Labor Statistics Occupational 
Outlook Handbook.

Section 602.24--Additional Procedures Certain Institutional Agencies 
Must Have

Requirements
    Under final Sec.  602.24(a), agencies will not have to require an 
institution's business plan, submitted to the Department, to describe 
the operation, management, and physical resources of the branch campus 
and we will remove the requirement that an agency may only extend 
accreditation to a branch campus after the agency evaluates the 
business plan and takes whatever other actions it deems necessary to 
determine that the branch campus has enough educational, financial, 
operational, management, and physical resources to meet the agency's 
standards. Final Sec.  602.24(c) will establish new requirements for 
teach-out plans and teach-out agreements, including when an agency must 
require them and what elements the agency must include.
    Final Sec.  602.24(f) will remove the requirement that an agency 
conduct an effective review and evaluation of the reliability and 
accuracy of the institution's assignment of credit hours.
Burden Calculation
    We believe the requirements under Sec.  602.24 that we are deleting 
are unnecessarily prescriptive and administratively burdensome without 
adding significant assurance that the agency review will result in 
improved accountability or protection for students or taxpayers.
    Institutional accrediting agencies reviewed and extended 
accreditation to 53 branch campuses in 2018; and 26 to date in 2019. 
Given these figures, we estimate that under final Sec.  602.24(a), an 
agency will save, on average, three hours ([2 hours x 53 business plans 
= 106]/36 institutional accrediting agencies = 3 hours) not reviewing 
business plans for branch campus applications. Under Sec.  602.24(c), 
we estimate that an agency will need, on average, an additional hour to 
review the extra requirements for teach-out plans and teach-out 
agreements of their Title IV gatekeeping institutions (1 hour x 5,347 
institutions).
    Accrediting agencies review their institutions at different 
intervals with a maximum of 10 years. Using a five-year interval as a 
``mean,'' agencies will review and evaluate credit hours of 5,347 Title 
IV gatekeeping institutions every five years. Under Sec.  602.24(f), we 
estimate that accrediting agencies have conducted the one-time review 
and evaluation of 80 percent (4,277) of their institutions' credit 
hours given the requirement became effective eight years ago (2011) 
leaving, no more than likely, 20 percent (1,070) of institutions' 
credit hours to be reviewed and evaluated.
    Collectively, under Sec.  602.24(a), (c), and (f), we estimate, on 
average, added burden of 5,347 hours (1 x 5,347); and 2,246 saved hours 
(106 + 2,140) if an ICR was associated with the final changes to lift 
required review of institutions' business plans and credit hours.
    The estimated institutional cost is $242,540 based on $45.36 per 
hour for Postsecondary Education Administrators, from the 2019 Bureau 
of Labor Statistics Occupational Outlook Handbook.

[[Page 58907]]



  Table 10--Summary of Proposed Burden and Hours Saved for Additional Procedures Certain Institutional Agencies
                                                    Must Have
----------------------------------------------------------------------------------------------------------------
                     Changes                           Hours      Branch  campus   Total burden     Hours saved
----------------------------------------------------------------------------------------------------------------
Business Plans--Applications....................               2              53  ..............             106
Teach-out Plans & Agreements....................               1           5,347           5,347  ..............
Credit Hours....................................             2 x      5,347 x 20  ..............           2,140
                                                 ---------------------------------------------------------------
    Total.......................................               1  ..............           5,347           2,246
----------------------------------------------------------------------------------------------------------------

Section 602.31--Agency Applications and Reports To Be Submitted to the 
Department

Requirements
    Given the increased number of Freedom of Information Act (FOIA) 
requests, in Sec.  602.31(f), we will require that accrediting agencies 
redact personally identifiable information and other sensitive 
information prior to sending documents to the Department to help 
prevent public disclosure of that sensitive information.
Burden Calculation
    In FY 2018, the Department closed 10 FOIA requests that were 
associated with accreditation. The estimated calculations are based on 
the time Department staff spent redacting PII, not the total time staff 
used to conduct searches and process the requests. Using the FY 2018 
FOIA data related to accrediting agencies, we estimate that, on 
average, it will take an agency 5.37 hours to comply with the final 
redaction requirements under Sec.  602.31(f).
    The estimated burden for Sec.  602.31 is 285 hours ([285 hours/53 
agencies] = 5.37) under OMB Control Number 1840-0788. The estimated 
institutional cost is $12,928 based on $45.36 per hour for 
Postsecondary Education Administrators, from the 2019 Bureau of Labor 
Statistics Occupational Outlook Handbook.

                             Table 11--Summary of Burden for Agencies to Redact PII
----------------------------------------------------------------------------------------------------------------
                                                                                   Total cost
                                                   Hours        Cost per hour        burden         Per agency
----------------------------------------------------------------------------------------------------------------
    Total...................................             285           $45.36          $12,928             $244
----------------------------------------------------------------------------------------------------------------

Section 602.32--Procedures for Applying for Recognition, Renewal of 
Recognition, or for Expansion of Scope, Compliance Reports, and 
Increases in Enrollment

Requirements
    Under Sec.  602.32(a), we will specify what accrediting agencies 
preparing for recognition renewal will submit to the Department 24 
months prior to the date their current recognition expires.
    Under Sec.  602.32(j)(1), we will outline the process for an agency 
seeking an expansion of scope, either as a part of the regular renewal 
of recognition process or during a period of recognition.
Burden Calculation
    Under Sec.  602.32(a), we anticipate that, on average, it will take 
an agency 3 hours to gather, in conjunction with materials required by 
Sec.  602.31(a), a list of all institutions or programs that the agency 
plans to consider for an award of initial or renewed accreditation over 
the next year or, if none, over the succeeding year, and any 
institutions subject to compliance reports or reporting requirements. 
Also, under Sec.  602.32(j)(1), we anticipate that, on average, it will 
take an agency 20 hours to compose and submit a request for an 
expansion of scope of recognition.
    Over the last five years, the Department has received fewer than 
five requests for expansion of scope.
    The estimated burden for Sec.  602.32 is 179 hours (53 x 3) + (1 x 
20) under OMB Control Number 1840-0788. The estimated institutional 
cost is $8,119 based on $45.36 per hour for Postsecondary Education 
Administrators, from the 2019 Bureau of Labor Statistics Occupational 
Outlook Handbook.

Section 602.36--Senior Department Official's Decision

Requirements
    Under final Sec.  [thinsp]602.36(f), the SDO will determine whether 
an agency is compliant or substantially compliant, which will give 
accrediting agencies opportunities to make minor modifications to 
reflect progress toward full compliance using periodic monitoring 
reports.
Burden Calculation
    If we determine that an agency is substantially compliant, the SDO 
will allow the agency to submit periodic monitoring reports for review 
by Department staff in place of the currently used compliance report; 
the compliance report, requires a review by the NACIQI, attendance at 
one of its bi-annual meetings, and conceivably comments filed with the 
SDO and an appeal to the Secretary. From 2014 through 2018, the 
Department reviewed 17 compliance reports. Under final Sec.  
[thinsp]602.36(f) these 17 compliance reports would have had the 
following designations: Five monitoring reports (one annually); two 
requiring both compliance and monitoring reports (less than one 
annually); and 10 (two annually) as compliance reports. Using data from 
our findings during reviews, we anticipate that final changes will 
reduce the burden on an agency.
    If an accrediting agency is required to submit a monitoring report, 
we estimate that, on average, the final changes will save an agency 72 
hours for travel and meeting attendance, given we will not require 
attendance at one of NACIQI's bi-annual meetings unless the agency does 
not address the initial areas of noncompliance satisfactorily through 
the use of monitoring reports. However, if we require an accrediting 
agency to submit both a monitoring report and a compliance report, we 
estimate that the final changes in Sec.  [thinsp]602.36(f) will 
increase the burden for an accrediting agency by 8 hours as the agency 
completes its application for renewal of recognition by the Secretary.

[[Page 58908]]

    We estimate that, on average, the burden for Sec.  [thinsp]602.36 
will increase 8 hours (1 x 8) under OMB Control Number 1840-0788. 
However, considering the time saved for travel, we estimate (72 - 8 = 
64) 64 saved hours overall. The estimated institutional cost is $363 
based on $45.36 per hour for Postsecondary Education Administrators, 
from the 2019 Bureau of Labor Statistics Occupational Outlook Handbook.

                      Table 12--Summary of Burden and Hours Saved Using Monitoring Reports
----------------------------------------------------------------------------------------------------------------
                   Report type                        Number           Hours       Total burden     Hours saved
----------------------------------------------------------------------------------------------------------------
Monitoring......................................               1              72  ..............              72
Monitoring and Compliance.......................               1               8               8  ..............
----------------------------------------------------------------------------------------------------------------

Section 668.26--End of an Institution's Participation in the Title IV, 
HEA Programs

Requirements
    Under final Sec.  [thinsp]668.26, the Secretary may permit an 
institution that has ended its participation in title IV programs to 
continue to originate, award, or disburse title IV funds for up to 120 
days under specific circumstances. The institution must notify the 
Secretary of its plans to conduct an orderly closure in accordance with 
its accrediting agency, teach out its students, agree to abide by the 
conditions of the program participation agreement in effect at the time 
of the loss of participation, and provide written assurances of the 
health and safety of the students, the adequate financial resources to 
complete the teach-out and the institution is not subject to adverse 
action by the institution's State authorizing body or the accrediting 
agency.
Burden Calculation
    We estimate that, on average, an institution will need 5 hours to 
draft, and finalize for the appropriate institutional management 
signature, the written request for extension of eligibility from the 
Secretary. We anticipate that 5 institutions may utilize this 
opportunity annually.

                                             Table 13--Sec.   668.26
----------------------------------------------------------------------------------------------------------------
                                                                                     Time per
                           Respondent                                Responses       Response       Total hours
                                                                                      (hours)
----------------------------------------------------------------------------------------------------------------
Public..........................................................               1               5             = 5
Private.........................................................               2               5            = 10
Proprietary.....................................................               2               5            = 10
                                                                 -----------------------------------------------
    Total.......................................................  ..............  ..............            = 25
----------------------------------------------------------------------------------------------------------------

    The estimated burden for Sec.  [thinsp]668.26 is 25 hours under OMB 
Control Number 1845-0156. The estimated institutional cost is $1,134 
based on $45.36 per hour for Postsecondary Education Administrators, 
from the 2019 Bureau of Labor Statistics Occupational Outlook Handbook.

Section 668.43--Institutional Information

Requirements
    The final regulations in Sec.  [thinsp]668.43(a)(5) will require an 
institution to disclose whether the program will fulfill educational 
requirements for licensure or certification if the program is designed 
to or advertised as meeting such requirements. Institutions will be 
required to disclose, for each State, whether the program did or did 
not meet such requirements, or whether the institution had not made 
such a determination.
    The final regulations in Sec.  [thinsp]668.43(a)(11) will revise 
the information about an institution's transfer of credit policies to 
require the disclosure of any types of institutions from which the 
institution will not accept transfer credits. Institutions will also be 
required to disclose any written criteria used to evaluate and award 
credit for prior learning experience.
    The final regulations in Sec.  [thinsp]668.43(a)(12) will require 
institutions to provide disclosures in the program description 
regarding written arrangements under which an entity other than the 
institution itself provides all or part of a program.
    The final regulations will add disclosure requirements that are in 
statute but not reflected fully in the regulations as well as new 
disclosure requirements. These disclosures will include: In Sec.  
[thinsp]668.43(a)(13), the percentage of the institution's enrolled 
students disaggregated by gender, race, ethnicity, and those who are 
Pell Grant recipients; in Sec.  [thinsp]668.43(a)(14) placement in 
employment of, and types of employment obtained by, graduates of the 
institution's degree or certificate programs; in Sec.  
[thinsp]668.43(a)(15) the types of graduate and professional education 
in which graduates of the institution's four-year degree programs 
enrolled; in Sec.  [thinsp]668.43(a)(16) the fire safety report 
prepared by the institution pursuant to Sec.  [thinsp]668.49; in Sec.  
[thinsp]668.43(a)(17) the retention rate of certificate- or degree-
seeking, first-time, full-time, undergraduate students; and in Sec.  
[thinsp]668.43(a)(18) institutional policies regarding vaccinations.
    The final regulations in Sec.  [thinsp]668.43(a)(19) will require 
an institution to disclose to students if its accrediting agency 
requires it to maintain a teach-out plan under Sec.  
[thinsp]602.24(c)(1), and to indicate the reason why the accrediting 
agency required such a plan.
    The final regulations in Sec.  [thinsp]668.43(a)(20) will require 
that an institution must disclose enforcement actions or prosecutions 
by law enforcement agencies that, upon a final judgment, would result 
in an adverse action by an accrediting agency, revocation of State 
authorization, or suspension, limitation or termination of eligibility 
to participate in title IV. Investigations that have not progressed to 
pending enforcement actions or prosecutions need not be disclosed--
regardless of their subject matter.
    The final regulations will add a new paragraph (c) requiring an 
institution to make direct disclosures to individual students in 
certain circumstances.

[[Page 58909]]

Institutions will be required to disclose to a prospective student that 
the program in which they intended to enroll did not meet the 
educational requirements for licensure in the State in which the 
student was located, or if such a determination of whether the program 
met the licensure requirements in that State had not been made. We will 
also require an institution to make a similar disclosure to a student 
who was enrolled in a program previously meeting those requirements 
which ceased to meet the educational requirements for licensure in that 
State. The final regulations will hold the institutions responsible for 
establishing and consistently applying policies for determining the 
State in which each of its students is located. Such a determination 
will have to be made at the time of initial enrollment, and upon 
receipt of information from the student, in accordance with 
institutional policies, that his or her location had changed to another 
State. The final regulations require institutions to provide the 
Secretary, on request, with written documentation of its determination 
regarding a student's location.
Comments
    Several commenters disagreed with the proposed estimated time in 
the NPRM regarding the licensure and certification disclosure 
requirements as well as the estimated time to gather and complete the 
individualized disclosures. They felt that the proposed hours per 
institution was underestimating the time it would take an institution 
to research and maintain programmatic license or certification 
information.
Discussion
    As we stated in the preamble, the Department does not require that 
an institution determine the licensure and certification requirements 
for their eligible programs for each State. If an institution does not 
make such a determination for each State, it can inform students that 
it has not made such a determination and comply with the regulations. 
The Department has not made an adjustment to the estimated burden 
hours.
Burden Calculation
    We anticipate that most institutions will provide this disclosure 
information electronically on either the general institution website or 
individual program websites as required. Using data from the National 
Center for Educational Statistics, there were approximately 226,733 
certificate and degree granting programs in 2017 identified for the 
public, private and proprietary sectors. Of those, public institutions 
offered 134,387 programs, private institutions offered 70,678 programs, 
and proprietary institutions offered 21,668 programs.
    For Sec.  668.43(a)(5)(v), we estimate that five percent or 11,337 
of all programs will be designed for specific professional licenses or 
certifications required for employment in an occupation or is 
advertised as meeting such State requirements. We further estimate that 
it will take an institution an estimated 50 hours per program to 
research individual State requirements, determine program compatibility 
and provide a listing of the States where the program curriculum meets 
the State requirements, where it does not meet the State requirements, 
or list the States where no such determination has been made. We base 
this estimate on institutions electing not to research and report 
licensing requirements for States in which they had no enrollment or 
expressed interest. Additionally, we believe that some larger 
institutions and associations have gathered such data and have shared 
it with other institutions so there is less burden as they complete 
this research.
    The estimated burden for Sec.  668.43(a)(5)(v) will be 566,850 
hours under OMB Control Number 1845-0156.

                                        Table 14--Sec.   668.43(a)(5)(v)
----------------------------------------------------------------------------------------------------------------
                                                                                     Time per
                           Respondent                                Responses       response       Total hours
                                                                                      (hours)
----------------------------------------------------------------------------------------------------------------
Public..........................................................           6,719              50       = 335,950
Private.........................................................           3,534              50       = 176,700
Proprietary.....................................................           1,084              50        = 54,200
                                                                 -----------------------------------------------
    Total.......................................................  ..............  ..............       = 566,850
----------------------------------------------------------------------------------------------------------------

    For Sec.  668.43(a)(11) through (20), we estimate that it will take 
institutions an average of 2 hours to research, develop and post on 
institutional or programmatic websites the required information. The 
estimated burden for Sec.  668.43(a)(13) through (20) will be 10,694 
hours under OMB Control Number 1845-0156.

                                   Table 15--Sec.   668.43(a)(11) Through (20)
----------------------------------------------------------------------------------------------------------------
                                                                                     Time per
                           Respondent                                Responses       response       Total hours
                                                                                      (hours)
----------------------------------------------------------------------------------------------------------------
Public..........................................................           1,860               2         = 3,720
Private.........................................................           1,704               2         = 3,408
Proprietary.....................................................           1,783               2         = 3,566
                                                                 -----------------------------------------------
    Total.......................................................  ..............  ..............        = 10,694
----------------------------------------------------------------------------------------------------------------

    For Sec.  668.43(c), we anticipate that institutions will provide 
this information electronically to prospective students regarding the 
determination of a program's curriculum to meet State requirements for 
students located in that State or if no such determination has been 
made. Likewise, we anticipate that institutions will provide this 
information electronically to enrolled students when a determination 
has been made that the

[[Page 58910]]

program's curriculum no longer meets State requirements. We estimate 
that institutions will take an average of 2 hours to develop the 
language for the individualized disclosures. We estimate that it will 
take an additional average of 4 hours for the institutions to disclose 
this information to prospective and enrolled students for a total of 6 
hour of burden. We estimate that five percent of the institutions will 
meet the criteria to require these disclosures. The estimated burden 
for Sec.  668.43(c) will be 1,602 hours under OMB Control Number 1845-
0156.

                                           Table 16--Sec.   668.43(c)
----------------------------------------------------------------------------------------------------------------
                                                                                     Time per
                          Respondent                                Responses        response       Total hours
                                                                                      (hours)
----------------------------------------------------------------------------------------------------------------
Public........................................................   1,860 x 5% = 93               6           = 558
Private.......................................................   1,704 x 5% = 85               6           = 510
Proprietary...................................................   1,783 x 5% = 89               6           = 534
                                                               -------------------------------------------------
    Total.....................................................  ................  ..............         = 1,602
----------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------
                         Section                            Total hours
------------------------------------------------------------------------
668.43(a)(5)............................................         566,850
668.43(a)(11)-(20)......................................          10,694
668.43(c)...............................................           1,602
------------------------------------------------------------------------

    The total estimated burden for final Sec.  668.43 will be 579,146 
hours under OMB Control Number 1845-0156. The estimated institutional 
cost is $26,270,062.56 based on $45.36 per hour for Postsecondary 
Education Administrators, from the 2019 Bureau of Labor Statistics 
Occupational Outlook Handbook.

668.50--Institutional Disclosures for Distance or Correspondence 
Programs

Requirements
    The final regulatory package will remove the current regulatory 
requirements in Sec.  668.50, add in its place a severability 
provision.
Burden Calculation
    The final regulatory package will remove the current regulatory 
requirements in Sec.  668.50. This removes seven public disclosures 
that institutions offering distance education or correspondence courses 
were required to provide to students enrolled or seeking enrollment in 
such programs. These disclosures included whether the distance 
education program was authorized by the State where the student 
resided, if the institution was part of a State reciprocity agreement 
and consequences of a student moving to a State where the institution 
did not meet State authorization requirements.
    Other disclosures covered the process of submitting a complaint to 
the appropriate State agency where the main campus is located, process 
of submitting a complaint if the institution is covered under a State 
reciprocity agreement, disclosure of adverse actions initiated by the 
institution's State entity related to distance education, disclosure of 
adverse actions initiated by the institution accrediting agency, the 
disclosure of any refund policy required by any State in which the 
institution enrolls a student, and disclosure of whether the distance 
education program meets the applicable prerequisites for professional 
licensure or certification in the State where the student resides, if 
such a determination has been made. Also, there were two disclosures 
that were required to be provided directly to currently enrolled and 
prospective students in either distance education. Those disclosures 
included notice of an adverse action taken by a State or accrediting 
agency related to the distance education program and provided within 30 
days of when the institution became aware of the action; and, a notice 
of the institution's determination the distance education program no 
longer meets the prerequisites for licensure or certification of a 
State. This disclosure had to be made within seven days of such a 
determination.
    The removal of these regulations will eliminate the burden as 
assessed Sec.  668.50 which is associated with OMB Control Number 1845-
0145. The total burden hours of 152,405 are currently in the 
information collection 1845-0145 that will be discontinued upon the 
final effective date of the regulatory package. The estimated 
institutional cost savings is $-6,913,091 based on $45.36 per hour for 
Postsecondary Education Administrators, from the 2019 Bureau of Labor 
Statistics Occupational Outlook Handbook.
    Consistent with the discussion above, the following chart describes 
the sections of the final regulations involving information collection, 
the information being collected and the collections that the Department 
will submit to OMB for approval and public comment under the PRA, and 
the estimated costs associated with the information collections. The 
monetized costs of the increased burden on institutions and accrediting 
agencies using wage data developed using Bureau of Labor Statistics 
data, available at https://www.bls.gov/ooh/management/postsecondary-education-adminstrators.htm is $26,696,265 as shown in the chart below. 
At the effective date of July 1, 2020, there will be a savings of 
$7,033,522 for a total annual net cost of $19,662,744. This cost is 
based on the estimated hourly rate of $45.36 for institutions and 
accrediting agencies.

[[Page 58911]]



                                             Collection Information
----------------------------------------------------------------------------------------------------------------
                                                                                              Estimated savings
 Regulatory section      Information collection     OMB control No. and    Estimated costs       absent  ICR
                                                     estimated burden                            requirement
----------------------------------------------------------------------------------------------------------------
Sec.                  Institution must determine   OMB 1845-0144. We     $127,417..........
 600.9(c)(2)(i),       in which State a student     estimate that the
 Sec.                  is located while enrolled    burden will
 600.9(c)(2)(ii)--St   in a distance education or   increase by 2,809
 ate authorization.    correspondence course when   hours.
                       the institution
                       participates in a State
                       authorization reciprocity
                       agreement under which it
                       is covered in accordance
                       with the institution's
                       policies and procedures,
                       and make such
                       determinations
                       consistently and apply
                       them to all students.
                      Institution must, upon
                       request, provide the
                       Secretary with written
                       documentation of its
                       determination of a
                       student's location,
                       including the basis for
                       such determination.
Sec.   602.12(b)(1)-- Agency will notify the       OMB 1840-0788. We     $45...............  We estimate that,
 Accrediting           Department of a geographic   estimate that the                         on average,
 experience.           expansion and publicly       burden will                               agencies will save
                       disclose it on the           increase by 1 hour.                       19 hours given
                       agency's website, without                                              they will inform
                       requesting permission.                                                 the Department of
                                                                                              a geographic
                                                                                              expansion rather
                                                                                              than request it,
                                                                                              amounting to a
                                                                                              $861.84 savings.
Sec.   602.18(a)(6)-- Agency will publish and      OMB 1840-0788. We     $28,849...........
 Ensuring              distribute new policies,     estimate that the
 consistency in        with detailed                burden will
 decision-making.      requirements.                increase by 636
                                                    hours.
Sec.   602.20(a)(2);
 Sec.   602.20(b),
 Sec.   602.20(d)--
 Enforcement of
 standards.
Sec.
 602.22(a)(3)(i),
 Sec.
 602.22(a)(3)(ii),
 Sec.   602.22(b)--
 Substantive changes
 and other reporting
 requirements.
Sec.
 602.23(f)(1)(ii)--O
 perating procedures
 all agencies must
 have.
Sec.   602.24(a),
 Sec.   602.24(c),
 Sec.   602.24(f)--
 Additional
 procedures certain
 institutional
 agencies must have.
Sec.   602.26(b)--
 Notifications of
 accrediting
 decisions.
Sec.                  Agency will designate a      ....................  ..................  We estimate
 602.22(a)(3)(i)--Su   staff member to approve or                                             agencies will
 bstantive changes     disapprove certain                                                     save, on average,
 and other reporting   substantive changes.                                                   318 hours, given
 requirements.                                                                                designated
                                                                                              substantive
                                                                                              approvals could be
                                                                                              determined by a
                                                                                              senior staff
                                                                                              member in place of
                                                                                              the now required
                                                                                              decision-making
                                                                                              body, amounting to
                                                                                              $14,424.48.
Sec.   602.23(a)(2),  Agency will make publicly    OMB 1840-0788. We     $4,808............
 Sec.                  available the procedures     estimate that the
 602.23(f)(1)(ii)--O   that institutions or         burden will
 perating procedures   programs must follow in      increase by 106
 all agencies must     applying for                 hours.
 have.                 accreditation,
                       preaccreditation, or
                       substantive changes and
                       the sequencing of those
                       steps relative to any
                       applications or decisions
                       required by States or the
                       Department relative to the
                       agency's preaccreditation,
                       accreditation or
                       substantive change
                       decisions; require that
                       all preaccredited
                       institutions have a teach-
                       out plan with specific
                       requirements.
Sec.   602.24--       Agency will delete existing  OMB 1840-0788. We     $242,540..........  We estimate that
 Additional            credit hour policy           estimate that the                         agencies will save
 procedures certain    requirements and overly      burden will                               overall, on
 institutional         prescriptive language; and   increase by 5,347                         average, 2,246
 agencies must have.   add new language with        hours.                                    hours given the
                       definition clarifications.                                             final regulation
                                                                                              will delete
                                                                                              existing
                                                                                              requirements
                                                                                              related to
                                                                                              evaluating credit
                                                                                              hours amounting to
                                                                                              a $101,878.56
                                                                                              savings.
Sec.   602.31(f)--    Agency will redact           OMB 1840-0788. We     $12,928...........
 Agency applications   personally identifiable      estimate that the
 and reports to be     information and other        burden will
 submitted to the      sensitive information        increase by 285
 Department.           prior to sending documents   hours.
                       to the Department.

[[Page 58912]]

 
Sec.   602.32(a),     Specifies what accrediting   OMB 1840-0788. We     $8,119............
 Sec.                  agencies preparing for       estimate that the
 602.32(j)(1)--Proce   recognition renewal will     burden will
 dures for applying    submit to the Department     increase by 179
 for recognition,      24 months prior to the       hours.
 renewal of            date their current
 recognition, or for   recognition expires;
 expansion of scope,   outlines the process for
 compliance reports,   an agency seeking an
 and increases in      expansion of scope, either
 enrollment.           as a part of the regular
                       renewal of recognition
                       process or during a period
                       of recognition.
Sec.   602.36(f)--    Senior Department Official   OMB 1840-0788. We     $363..............  The increase in
 Senior Department     will determine whether an    estimate that the                         burden does not
 official's            agency is compliant or       burden will                               reflect the time
 decision.             substantially compliant,     increase by 8                             saved for
                       which will give              hours.                                    preparing and
                       accrediting agencies                                                   attending NACIQI
                       opportunities to make                                                  meetings. We
                       minor modifications to                                                 estimate that
                       reflect progress toward                                                there will be 72
                       full compliance using                                                  hours saved, on
                       periodic monitoring                                                    average, amounting
                       reports.                                                               to $3,265.92.
Sec.   668.26--End    Secretary may permit an      OMB 1845-0156. We     $1,134............
 of an institution's   institution that has ended   estimate that the
 participation in      its participation in title   burden will
 the Title IV, HEA     IV programs to continue to   increase by 25
 programs.             originate, award, or         hours.
                       disburse title IV funds
                       for up to 120 days under
                       specific circumstances.
                       The institution must
                       notify the Secretary of
                       its plans to conduct an
                       orderly closure in
                       accordance with its
                       accrediting agency, teach
                       out its students, agree to
                       abide by the conditions of
                       the program participation
                       agreement in effect at the
                       time of the loss of
                       participation, and provide
                       written assurances of the
                       health and safety of the
                       students, the adequate
                       financial resources to
                       complete the teach-out and
                       the institution is not
                       subject to adverse action
                       by the institution's State
                       authorizing body or the
                       accrediting agency.
Sec.   668.43(a)(5)-- The final regulations will   OMB 1845-0156. We     $25,712,316.......
 Institutional         require an institution to    estimate that the
 information.          disclose whether a program   burden will
                       will fulfill educational     increase by 566,850
                       requirements for licensure   hours.
                       or certification if the
                       program is designed to or
                       advertised as meeting such
                       requirements. Institutions
                       will be required to
                       disclose, for each State,
                       whether the program did or
                       did not meet such
                       requirements, or whether
                       the institution had not
                       made such a determination.
Sec.   668.43(a)(11)  The final regulations will   OMB 1845-0156. We     $485,080..........
 through (20)--        add disclosure               estimate that the
 Institutional         requirements that are in     burden will
 information.          statute but not reflected    increase by 10,694
                       fully in the regulations     hours.
                       as well as new disclosure
                       requirements.
Sec.   668.43(c)--    The final regulations will   OMB 1845-0156. We     $72,667...........
 Institutional         require direct disclosure    estimate that the
 information.          to individual students in    burden will
                       circumstances where an       increase by 1,602
                       offered program no longer    hours.
                       met the education
                       requirements for licensure
                       in a State where a
                       prospective student was
                       located, as well as to
                       students enrolled in a
                       program that ceased to
                       meet such requirements.
Sec.   668.50--       The final regulations will   OMB 1845-0145. We     This represents a
 Institutional         remove and replace this      estimate a decrease   cost savings of
 Disclosure for        language with a              of 152,405 hours.     $6,913,091.
 Distance or           severability provision.      We will discontinue
 Correspondence        The final regulations have   this collection
 Programs.             moved some of the            upon the final
                       disclosure requirements      effective date of
                       from this section to Sec.    the regulatory
                        668.43. Other               package.
                       requirements have been
                       deemed duplicative.
----------------------------------------------------------------------------------------------------------------

    The total burden hours and change in burden hours associated with 
each OMB Control number affected by the regulations follows:

[[Page 58913]]



------------------------------------------------------------------------
                                                   Total      Change in
                  Control No.                      burden       burden
                                                   hours        hours
------------------------------------------------------------------------
1840-0788.....................................       10,550       +6,562
1845-0144.....................................        2,969       +2,809
1845-0145.....................................     -152,405     -152,405
1845-0156.....................................      579,171     +579,171
------------------------------------------------------------------------

    If you want to comment on the final information collection 
requirements, please send your comments to the Office of Information 
and Regulatory Affairs, OMB, Attention: Desk Officer for U.S. 
Department of Education. Send these comments by email to 
[email protected] or by fax to (202) 395-6974. You may also send 
a copy of these comments to the Department contact named in the 
ADDRESSES section of this preamble.
    We have prepared an Information Collection Request (ICR) for these 
collections. You may to review the ICR, which is available at 
www.reginfo.gov. Click on Information Collection Review. These final 
collections are identified as final collections 1840-0788, 1845-0012, 
1845-0144, 1845-0145, and 1845-0156.

Regulatory Flexibility Act Certification

    The Secretary certifies that these final regulations will not have 
a significant economic impact on a substantial number of small 
entities.
    Of the entities that the final regulations will affect, we consider 
many institutions to be small. The Department recently proposed a size 
classification based on enrollment using IPEDS data that established 
the percentage of institutions in various sectors considered to be 
small entities, as shown in Table 17. We described this size 
classification in the NPRM published in the Federal Register on July 
31, 2018 for the proposed borrower defense rule (83 FR 37242, 37302). 
The Department discussed the proposed standard with the Chief Counsel 
for Advocacy of the Small Business Administration, and while no change 
has been finalized, the Department continues to believe this approach 
better reflects a common basis for determining size categories that is 
linked to the provision of educational services.

                           Table 17--Small Entities Under Enrollment Based Definition
----------------------------------------------------------------------------------------------------------------
                 Level                            Type                 Small           Total          Percent
----------------------------------------------------------------------------------------------------------------
2-year................................  Public..................             342           1,240              28
2-year................................  Private.................             219             259              85
2-year................................  Proprietary.............           2,147           2,463              87
4-year................................  Public..................              64             759               8
4-year................................  Private.................             799           1,672              48
4-year................................  Proprietary.............             425             558              76
                                                                 -----------------------------------------------
    Total.............................  ........................           3,996           6,951              57
----------------------------------------------------------------------------------------------------------------

    However, we do not expect the final regulations to have a 
significant economic impact on small entities. Nothing in the final 
regulations will compel institutions, small or not, to engage in 
substantive changes to programs that will trigger reporting to 
accrediting agencies or the Department. The final regulations will 
consolidate or relocate several institutional disclosures and add 
disclosure requirements under Sec.  668.43, including disclosures 
relating to whether a program meets requirements for licensure, 
transfer of credit policies, written criteria to evaluate and award 
credit for prior learning experience, and written agreements under 
which an entity other than the institution itself provides all or part 
of a program. The final regulations will also add disclosure 
requirements that exist in statute but are not currently reflected in 
the regulations, including: (1) The percentage of the institution's 
enrolled students who are Pell Grant recipients, disaggregated by race, 
ethnicity, and gender; (2) placement in employment of, and types of 
employment obtained by, graduates of the institution's degree or 
certificate programs if its accrediting agency or State required it to 
calculate such rates; (3) the types of graduate and professional 
education in which graduates of the institution's four-year degree 
programs enrolled; (4) the fire safety report prepared by the 
institution pursuant to Sec.  668.49; (5) the retention rate of 
certificate- or degree-seeking, first-time, full-time, undergraduate 
students; and (6) institutional policies regarding vaccinations. The 
small institutions that have distance education or correspondence 
programs will benefit from the elimination of the disclosure 
requirement related to the complaints process. Across all institutions, 
the net result of the institutional disclosure changes is $19,485,522 
and there is no reason to believe the burden will fall 
disproportionately on small institutions. Using the 57 percent figure 
for small institutions in Table 17, the estimated cost of the 
disclosures in the final regulations for small institutions is 
$11,106,748. Institutions of any size will benefit from the opportunity 
to seek out a different or additional accreditation in a timeframe that 
suits them, but there is no requirement to do so.
    The other group affected by the final regulations are accrediting 
agencies. The State agencies that act as accrediting are not small, as 
we define public institutions as ``small organizations'' if they are 
operated by a government overseeing a population below 50,000.
    The Department does not have revenue information for accrediting 
agencies and believes most organize as nonprofit entities that we 
define as ``small entities'' if they are independently owned and 
operated and not dominant in their field of operation. While dominance 
in accreditation is hard to determine, as it currently stands, the 
Department believes regional accrediting agencies are dominant within 
their regions and programmatic accrediting agencies very often dominate 
their field. Therefore, we do not consider the 53 accrediting agencies 
to be small entities.
    Even if we considered the accrediting agencies to be small 
entities, we designed these final regulations to grant the agencies 
greater operational flexibility and to reduce administrative burden so 
they can focus on higher risk changes to institutions and programs. 
Nothing in the final regulations will require accrediting agencies to 
expand their operations or take on new institutions, but they will give 
them that opportunity. There could even be potential opportunities for 
accrediting agencies that are small entities to develop in specialized 
areas and potentially grow.
    Thus, the Department believes small entities will experience 
regulatory relief and a positive economic impact as a result of these 
final regulations with effects that will develop over years as

[[Page 58914]]

accrediting agencies and institutions decide how to react to the 
changes in the final regulations.

Intergovernmental Review

    These programs are subject to the requirements of Executive Order 
12372 and the regulations in 34 CFR part 79. One of the objectives of 
the Executive order is to foster an intergovernmental partnership and a 
strengthened federalism. The Executive order relies on processes 
developed by State and local governments for coordination and review of 
proposed Federal financial assistance.
    This document provides early notification of our specific plans and 
actions for these programs.

Assessment of Educational Impact

    Based on the response to the NPRM and on our review, we have 
determined that these final regulations do not require transmission of 
information that any other agency or authority of the United States 
gathers or makes available.

Federalism

    Executive Order 13132 requires us to ensure meaningful and timely 
input by State and local elected officials in the development of 
regulatory policies that have federalism implications. ``Federalism 
implications'' means substantial direct effects on the States, on the 
relationship between the National Government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government.
    In the NPRM we noted that Sec. Sec.  600, 602, 603, and 668 may 
have federalism implications and encouraged State and local elected 
officials to review and provide comments on these final regulations. In 
the Public Comment section of this preamble, we discuss any comments we 
received on this subject.
    Accessible Format: Individuals with disabilities can obtain this 
document in an accessible format (e.g., Braille, large print, 
audiotape, or compact disc) on request to one of the program contact 
persons listed under FOR FURTHER INFORMATION CONTACT.
    Electronic Access to This Document: The official version of this 
document is the document published in the Federal Register. You may 
access the official edition of the Federal Register and the Code of 
Federal Regulations at www.govinfo.gov.
    At this site you can view this document, as well as all other 
documents of this Department published in the Federal Register, in text 
or Adobe Portable Document Format (PDF). To use PDF, you must have 
Adobe Acrobat Reader, which is available free at the site.
    You may also access documents of the Department published in the 
Federal Register by using the article search feature at: 
www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department.

List of Subjects

34 CFR Part 600

    Colleges and universities, Foreign relations, Grant programs--
education, Loan programs--education, Reporting and recordkeeping 
requirements, Student aid, Vocational education.

34 CFR Part 602

    Colleges and universities, Reporting and recordkeeping 
requirements.

34 CFR Part 603

    Colleges and universities, Vocational education.

34 CFR Part 654

    Grant programs-education, Reporting and recordkeeping requirements, 
Scholarships and fellowships.

34 CFR Part 668

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

34 CFR Part 674

    Loan programs-education, Reporting and recordkeeping, Student aid.

    Dated: October 18, 2019.
Betsy DeVos,
Secretary of Education.

    For the reasons discussed in the preamble, the Secretary of 
Education amends parts 600, 602, 603, 654, 668 and 674 of title 34 of 
the Code of Federal Regulations as follows:

PART 600--INSTITUTIONAL ELIGIBILITY UNDER THE HIGHER EDUCATION ACT 
OF 1965 AS AMENDED

0
1. The authority citation for part 600 continues to read as follows:

    Authority:  20 U.S.C. 1001, 1002, 1003, 1088, 1091, 1094, 1099b, 
and 1099c, unless otherwise noted.


0
2. Section 600.2 is amended by:
0
a. Adding in alphabetical order a definition for ``Additional 
location'';
0
b. Revising the definition of ``Branch Campus'';
0
c. Adding in alphabetical order a definition for ``Preaccreditation'';
0
d. Removing the definition of ``Preaccredited'';
0
e. Adding in alphabetical order a definition for ``Religious mission'';
0
f. Revising in alphabetical order the definition of ``State 
authorization reciprocity agreement'';
0
g. Adding in alphabetical order definitions for Teach-out'' and 
``Teach-out agreement''; and
0
h. Revising the definition of ``Teach-out plan''.
    The additions and revisions read as follows:


Sec.  600.2  Definitions.

* * * * *
    Additional location: A facility that is geographically apart from 
the main campus of the institution and at which the institution offers 
at least 50 percent of a program and may qualify as a branch campus.
* * * * *
    Branch campus: An additional location of an institution that is 
geographically apart and independent of the main campus of the 
institution. The Secretary considers a location of an institution to be 
independent of the main campus if the location--
    (1) Is permanent in nature;
    (2) Offers courses in educational programs leading to a degree, 
certificate, or other recognized educational credential;
    (3) Has its own faculty and administrative or supervisory 
organization; and
    (4) Has its own budgetary and hiring authority.
* * * * *
    Preaccreditation: The status of accreditation and public 
recognition that a nationally recognized accrediting agency grants to 
an institution or program for a limited period of time that signifies 
the agency has determined that the institution or program is 
progressing toward full accreditation and is likely to attain full 
accreditation before the expiration of that limited period of time 
(sometimes referred to as ``candidacy'').
* * * * *
    Religious mission: A published institutional mission that is 
approved by the governing body of an institution of postsecondary 
education and that includes, refers to, or is predicated upon religious 
tenets, beliefs, or teachings.
* * * * *
    State authorization reciprocity agreement: An agreement between two 
or more States that authorizes an

[[Page 58915]]

institution located and legally authorized in a State covered by the 
agreement to provide postsecondary education through distance education 
or correspondence courses to students located in other States covered 
by the agreement and cannot prohibit any member State of the agreement 
from enforcing its own general-purpose State laws and regulations 
outside of the State authorization of distance education.
* * * * *
    Teach-out: A process during which a program, institution, or 
institutional location that provides 100 percent of at least one 
program engages in an orderly closure or when, following the closure of 
an institution or campus, another institution provides an opportunity 
for the students of the closed school to complete their program, 
regardless of their academic progress at the time of closure.
    Teach-out agreement: A written agreement between institutions that 
provides for the equitable treatment of students and a reasonable 
opportunity for students to complete their program of study if an 
institution, or an institutional location that provides 100 percent of 
at least one program offered, ceases to operate or plans to cease 
operations before all enrolled students have completed their program of 
study.
    Teach-out plan: A written plan developed by an institution that 
provides for the equitable treatment of students if an institution, or 
an institutional location that provides 100 percent of at least one 
program, ceases to operate or plans to cease operations before all 
enrolled students have completed their program of study.
* * * * *

0
3. Section 600.4 is amended by revising paragraph (c) to read as 
follows:


Sec.  600.4  Institution of higher education.

* * * * *
    (c) The Secretary does not recognize the accreditation or 
preaccreditation of an institution unless the institution agrees to 
submit any dispute involving an adverse action, such as the final 
denial, withdrawal, or termination of accreditation, to arbitration 
before initiating any other legal action.
* * * * *

0
4. Section 600.5 is amended by revising paragraphs (d) and (e) to read 
as follows:


Sec.  600.5  Proprietary institution of higher education.

* * * * *
    (d) The Secretary does not recognize the accreditation of an 
institution unless the institution agrees to submit any dispute 
involving an adverse action, such as the final denial, withdrawal, or 
termination of accreditation, to arbitration before initiating any 
other legal action.
    (e) For purposes of this section, a ``program leading to a 
baccalaureate degree in liberal arts'' is a program that is a general 
instructional program falling within one or more of the following 
generally accepted instructional categories comprising such programs, 
but including only instruction in regular programs, and excluding 
independently designed programs, individualized programs, and 
unstructured studies:
    (1) A program that is a structured combination of the arts, 
biological and physical sciences, social sciences, and humanities, 
emphasizing breadth of study.
    (2) An undifferentiated program that includes instruction in the 
general arts or general science.
    (3) A program that focuses on combined studies and research in 
humanities subjects as distinguished from the social and physical 
sciences, emphasizing languages, literature, art, music, philosophy, 
and religion.
    (4) Any single instructional program in liberal arts and sciences, 
general studies, and humanities not listed in paragraphs (e)(1) through 
(3) of this section.
* * * * *

0
5. Section 600.6 is amended by revising paragraph (d) to read as 
follows:


Sec.  600.6  Postsecondary vocational institution.

* * * * *
    (d) The Secretary does not recognize the accreditation or 
preaccreditation of an institution unless the institution agrees to 
submit any dispute involving an adverse action, such as the final 
denial, withdrawal, or termination of accreditation, to arbitration 
before initiating any other legal action.
* * * * *

0
6. Section 600.9 is amended by:
0
a. Revising paragraphs (b) and (c); and
0
b. Revising paragraph (d)(1)(iii). The revisions read as follows:


Sec.  600.9  State authorization.

* * * * *
    (b) An institution is considered to be legally authorized to 
operate educational programs beyond secondary education if it is exempt 
as a religious institution from State authorization under the State 
constitution or by State law.
    (c)(1)(i) If an institution that meets the requirements under 
paragraph (a)(1) or (b) of this section offers postsecondary education 
through distance education or correspondence courses to students 
located in a State in which the institution is not physically located 
or in which the institution is otherwise subject to that State's 
jurisdiction as determined by that State, except as provided in 
paragraph (c)(1)(ii) of this section, the institution must meet any of 
that State's requirements for it to be legally offering postsecondary 
distance education or correspondence courses in that State. The 
institution must, upon request, document the State's approval to the 
Secretary; or
    (ii) If an institution that meets the requirements under paragraph 
(a)(1) or (b) of this section offers postsecondary education through 
distance education or correspondence courses in a State that 
participates in a State authorization reciprocity agreement, and the 
institution is covered by such agreement, the institution is considered 
to meet State requirements for it to be legally offering postsecondary 
distance education or correspondence courses in that State, subject to 
any limitations in that agreement and to any additional requirements of 
that State not relating to State authorization of distance education. 
The institution must, upon request, document its coverage under such an 
agreement to the Secretary.
    (c)(2)(i) For purposes of this section, an institution must make a 
determination, in accordance with the institution's policies or 
procedures, regarding the State in which a student is located, which 
must be applied consistently to all students.
    (ii) The institution must, upon request, provide the Secretary with 
written documentation of its determination of a student's location, 
including the basis for such determination.
    (iii) An institution must make a determination regarding the State 
in which a student is located at the time of the student's initial 
enrollment in an educational program and, if applicable, upon formal 
receipt of information from the student, in accordance with the 
institution's procedures, that the student's location has changed to 
another State.
* * * * *
    (d) * * *
    (1) * * *
    (iii) The additional location or branch campus must be approved by 
the institution's recognized accrediting agency in accordance with 
Sec.  602.22(a)(2)(ix) and (c).
* * * * *

[[Page 58916]]


0
7. Section 600.11 is amended by revising paragraphs (a) and (b)(2) to 
read as follows:


Sec.  600.11  Special rules regarding institutional accreditation or 
preaccreditation.

    (a) Change of accrediting agencies. (1) For purposes of Sec. Sec.  
600.4(a)(5)(i), 600.5(a)(6), and 600.6(a)(5)(i), the Secretary does not 
recognize the accreditation or preaccreditation of an otherwise 
eligible institution if that institution is in the process of changing 
its accrediting agency, unless the institution provides the following 
to the Secretary and receives approval:
    (i) All materials related to its prior accreditation or 
preaccreditation.
    (ii) Materials demonstrating reasonable cause for changing its 
accrediting agency. The Secretary will not determine such cause to be 
reasonable if the institution--
    (A) Has had its accreditation withdrawn, revoked, or otherwise 
terminated for cause during the preceding 24 months, unless such 
withdrawal, revocation, or termination has been rescinded by the same 
accrediting agency; or
    (B) Has been subject to a probation or equivalent, show cause 
order, or suspension order during the preceding 24 months.
    (2) Notwithstanding paragraph (a)(1)(ii) of this section, the 
Secretary may determine the institution's cause for changing its 
accrediting agency to be reasonable if the agency did not provide the 
institution its due process rights as defined in Sec.  602.25, the 
agency applied its standards and criteria inconsistently, or if the 
adverse action or show cause or suspension order was the result of an 
agency's failure to respect an institution's stated mission, including 
religious mission.
    (b) * * *
    (2) Demonstrates to the Secretary reasonable cause for that 
multiple accreditation or preaccreditation.
    (i) The Secretary determines the institution's cause for multiple 
accreditation to be reasonable unless the institution--
    (A) Has had its accreditation withdrawn, revoked, or otherwise 
terminated for cause during the preceding 24 months, unless such 
withdrawal, revocation, or termination has been rescinded by the same 
accrediting agency; or
    (B) Has been subject to a probation or equivalent, show cause 
order, or suspension order during the preceding 24 months.
    (ii) Notwithstanding paragraphs (b)(2)(i)(A) and (B) of this 
section, the Secretary may determine the institution's cause for 
seeking multiple accreditation or preaccreditation to be reasonable if 
the institution's primary interest in seeking multiple accreditation is 
based on that agency's geographic area, program-area focus, or mission; 
and
* * * * *

0
8. Add Sec.  600.12 to read as follows:


Sec.  600.12  Severability.

    If any provision of this subpart or its application to any person, 
act, or practice is held invalid, the remainder of the subpart or the 
application of its provisions to any person, act, or practice shall not 
be affected thereby.

0
9. Section 600.31 is amended by:
0
a. Revising paragraph (a)(1);
0
b. In paragraph (b), revising the definitions of ``Closely-held 
corporation'', ``Ownership or ownership interest'', ``Parent'', and 
``Person''; and
0
c. Revising paragraphs (c)(3) through (5).
    The revisions read as follows:


Sec.  600.31  Change in ownership resulting in a change in control for 
private nonprofit, private for-profit and public institutions.

    (a)(1) Except as provided in paragraph (a)(2) of this section, a 
private nonprofit, private for-profit, or public institution that 
undergoes a change in ownership that results in a change in control 
ceases to qualify as an eligible institution upon the change in 
ownership and control. A change of ownership that results in a change 
in control includes any change by which a person who has or thereby 
acquires an ownership interest in the entity that owns the institution 
or the parent of that entity, acquires or loses the ability to control 
the institution.
* * * * *
    (b) * * *
    Closely-held corporation. Closely-held corporation (including the 
term ``close corporation'') means--
    (1) A corporation that qualifies under the law of the State of its 
incorporation or organization as a closely-held corporation; or
    (2) If the State of incorporation or organization has no definition 
of closely-held corporation, a corporation the stock of which--
    (i) Is held by no more than 30 persons; and
    (ii) Has not been and is not planned to be publicly offered.
* * * * *
    Ownership or ownership interest. (1) Ownership or ownership 
interest means a legal or beneficial interest in an institution or its 
corporate parent, or a right to share in the profits derived from the 
operation of an institution or its corporate parent.
    (2) Ownership or ownership interest does not include an ownership 
interest held by--
    (i) A mutual fund that is regularly and publicly traded;
    (ii) A U.S. institutional investor, as defined in 17 CFR 240.15a-
6(b)(7);
    (iii) A profit-sharing plan of the institution or its corporate 
parent, provided that all full-time permanent employees of the 
institution or its corporate parent are included in the plan; or
    (iv) An employee stock ownership plan (ESOP).
    Parent. The parent or parent entity is the entity that controls the 
specified entity directly or indirectly through one or more 
intermediaries.
    Person. Person includes a legal entity or a natural person.
* * * * *
    (c) * * *
    (3) Other entities. The term ``other entities'' includes limited 
liability companies, limited liability partnerships, limited 
partnerships, and similar types of legal entities. A change in 
ownership and control of an entity that is neither closely-held nor 
required to be registered with the SEC occurs when--
    (i) A person who has or acquires an ownership interest acquires 
both control of at least 25 percent of the total of outstanding voting 
stock of the corporation and control of the corporation; or
    (ii) A person who holds both ownership or control of at least 25 
percent of the total outstanding voting stock of the corporation and 
control of the corporation, ceases to own or control that proportion of 
the stock of the corporation, or to control the corporation.
    (4) General partnership or sole proprietorship. A change in 
ownership and control occurs when a person who has or acquires an 
ownership interest acquires or loses control as described in this 
section.
    (5) Wholly owned subsidiary. An entity that is a wholly owned 
subsidiary changes ownership and control when its parent entity changes 
ownership and control as described in this section.
* * * * *

0
10. Section 600.32 is amended by revising paragraphs (c) introductory 
text, (c)(1) and (2), (d)(1), (d)(2)(i) introductory text, and 
(d)(2)(i)(A) and (B) to read as follows:


Sec.  600.32  Eligibility of additional locations.

* * * * *

[[Page 58917]]

    (c) Notwithstanding paragraph (b) of this section, an additional 
location is not required to satisfy the two-year requirement of Sec.  
600.5(a)(7) or Sec.  600.6(a)(6) if the applicant institution and the 
original institution are not related parties and there is no 
commonality of ownership, control, or management between the 
institutions, as described in 34 CFR 668.188(b) and 34 CFR 668.207(b) 
and the applicant institution agrees--
    (1) To be liable for all improperly expended or unspent title IV, 
HEA program funds received during the current academic year and up to 
one academic year prior by the institution that has closed or ceased to 
provide educational programs;
    (2) To be liable for all unpaid refunds owed to students who 
received title IV, HEA program funds during the current academic year 
and up to one academic year prior; and
* * * * *
    (d)(1) An institution that conducts a teach-out at a site of a 
closed institution or an institution engaged in a teach-out plan 
approved by the institution's agency may apply to have that site 
approved as an additional location if--
    (i) The closed institution ceased operations, or the closing 
institution is engaged in an orderly teach-out plan and the Secretary 
has evaluated and approved that plan; and
    (ii) The teach-out plan required under 34 CFR 668.14(b)(31) is 
approved by the closed or closing institution's accrediting agency.
    (2)(i) An institution that conducts a teach-out and is approved to 
add an additional location described in paragraph (d)(1) of this 
section--
    (A) Does not have to meet the requirement of Sec.  600.5(a)(7) or 
Sec.  600.6(a)(6) for the additional location described in paragraph 
(d)(1) of this section;
    (B) Is not responsible for any liabilities of the closed or closing 
institution as provided under paragraph (c)(1) and (c)(2) of this 
section if the institutions are not related parties and there is no 
commonality of ownership or management between the institutions, as 
described in 34 CFR 668.188(b) and 34 CFR 668.207(b); and
* * * * *

0
11. Add Sec.  600.33 to read as follows:


Sec.  600.33  Severability.

    If any provision of this subpart or its application to any person, 
act, or practice is held invalid, the remainder of the subpart or the 
application of its provisions to any person, act, or practice shall not 
be affected thereby.

0
12. Section 600.41 is amended by:
0
a. Removing paragraph (a)(1)(ii)(B) and redesignating paragraphs 
(a)(1)(ii)(C) through (G) as paragraphs (a)(1)(ii)(B) through (F); and
0
b. Revising paragraph (d) introductory text.
    The revision reads as follows:


Sec.  600.41  Termination and emergency action proceedings.

* * * * *
    (d) After a termination under this section of the eligibility of an 
institution as a whole or as to a location or educational program 
becomes final, the institution may not originate applications for, make 
awards of or commitments for, deliver, or disburse funds under the 
applicable title IV, HEA program, except--
* * * * *

0
13. Add Sec.  600.42 to read as follows:


Sec.  600.42  Severability.

    If any provision of this subpart or its application to any person, 
act, or practice is held invalid, the remainder of the subpart or the 
application of its provisions to any person, act, or practice shall not 
be affected thereby.

PART 602--THE SECRETARY'S RECOGNITION OF ACCREDITING AGENCIES

0
14. The authority citation for part 602 continues to read as follows:

    Authority:  20 U.S.C. 1099b, unless otherwise noted.


0
15. Section 602.3 is amended by:
0
a. Redesignating the introductory text as paragraph (b);
0
b. Adding paragraph (a); and
0
c. In newly redesignated paragraph (b):
0
i. Removing the definition of ``Branch campus'';
0
ii. Revising the definition of ``Compliance report'';
0
iii. Removing the definition of ``Correspondence education'' and 
``Direct assessment program'';
0
iv. Revising the definition of ``Final accrediting action'';
0
v. Removing the definition of ``Institution of higher education or 
institution'';
0
vi. Adding in alphabetical order a definition for ``Monitoring 
report'';
0
vii. Removing the definitions of ``Nationally recognized accrediting 
agency, nationally recognized agency, or recognized agency'' and 
``Preaccreditation'';
0
viii. Revising the definitions of ``Programmatic accrediting agency'' 
and ``Scope of recognition or scope'';
0
ix. Removing the definition of ``Secretary'';
0
x. Revising the definition of ``Senior Department official'';
0
ix. Removing the definition of ``State'';
0
x. Adding in alphabetical order a definition for ``Substantial 
compliance''; and
0
xi. Removing the definitions of ``Teach-out agreement'' and ``Teach-out 
plan''.
    The additions and revisions read as follows:


Sec.  602.3  What definitions apply to this part?

    (a) The following definitions are contained in the regulations for 
Institutional Eligibility under the Higher Education Act of 1965, as 
amended, 34 CFR part 600:

(1) Accredited
(2) Additional location
(3) Branch campus
(4) Correspondence course
(5) Direct assessment program
(6) Institution of higher education
(7) Nationally recognized accrediting agency
(8) Preaccreditation
(9) Religious mission
(10) Secretary
(11) State
(12) Teach-out
(13) Teach-out agreement
(14) Teach-out plan

    (b) * * *
* * * * *
    Compliance report means a written report that the Department 
requires an agency to file when the agency is found to be out of 
compliance to demonstrate that the agency has corrected deficiencies 
specified in the decision letter from the senior Department official or 
the Secretary. Compliance reports must be reviewed by Department staff 
and the Advisory Committee and approved by the senior Department 
official or, in the event of an appeal, by the Secretary.
* * * * *
    Final accrediting action means a final determination by an 
accrediting agency regarding the accreditation or preaccreditation 
status of an institution or program. A final accrediting action is a 
decision made by the agency, at the conclusion of any appeals process 
available to the institution or program under the agency's due process 
policies and procedures.
* * * * *
    Monitoring report means a report that an agency is required to 
submit to Department staff when it is found to be substantially 
compliant. The report contains documentation to demonstrate that--
    (i) The agency is implementing its current or corrected policies; 
or

[[Page 58918]]

    (ii) The agency, which is compliant in practice, has updated its 
policies to align with those compliant practices.
* * * * *
    Programmatic accrediting agency means an agency that accredits 
specific educational programs, including those that prepare students in 
specific academic disciplines or for entry into a profession, 
occupation, or vocation.
* * * * *
    Scope of recognition or scope means the range of accrediting 
activities for which the Secretary recognizes an agency. The Secretary 
may place a limitation on the scope of an agency's recognition for 
title IV, HEA purposes. The Secretary's designation of scope defines 
the recognition granted according to--
    (i) Types of degrees and certificates covered;
    (ii) Types of institutions and programs covered;
    (iii) Types of preaccreditation status covered, if any; and
    (iv) Coverage of accrediting activities related to distance 
education or correspondence courses.
    Senior Department official means the official in the U.S. 
Department of Education designated by the Secretary who has, in the 
judgment of the Secretary, appropriate seniority and relevant subject 
matter knowledge to make independent decisions on accrediting agency 
recognition.
    Substantial compliance means the agency demonstrated to the 
Department that it has the necessary policies, practices, and standards 
in place and generally adheres with fidelity to those policies, 
practices, and standards; or the agency has policies, practices, and 
standards in place that need minor modifications to reflect its 
generally compliant practice.
* * * * *

0
16. Add Sec.  602.4 to read as follows:


Sec.  602.4  Severability.

    If any provision of this subpart or its application to any person, 
act, or practice is held invalid, the remainder of the subpart or the 
application of its provisions to any person, act, or practice shall not 
be affected thereby.

0
17. Section 602.10 is amended by revising paragraph (a) to read as 
follows:


Sec.  602.10  Link to Federal programs.

* * * * *
    (a) If the agency accredits institutions of higher education, its 
accreditation is a required element in enabling at least one of those 
institutions to establish eligibility to participate in HEA programs. 
If, pursuant to 34 CFR 600.11(b), an agency accredits one or more 
institutions that participate in HEA programs and that could designate 
the agency as its link to HEA programs, the agency satisfies this 
requirement, even if the institution currently designates another 
institutional accrediting agency as its Federal link; or
* * * * *

0
18. Section 602.11 is revised to read as follows:


Sec.  602.11  Geographic area of accrediting activities.

    The agency must demonstrate that it conducts accrediting activities 
within--
    (a) A State, if the agency is part of a State government;
    (b) A region or group of States chosen by the agency in which an 
agency provides accreditation to a main campus, a branch campus, or an 
additional location of an institution. An agency whose geographic area 
includes a State in which a branch campus or additional location is 
located is not required to also accredit a main campus in that State. 
An agency whose geographic area includes a State in which only a branch 
campus or additional location is located is not required to accept an 
application for accreditation from other institutions in such State; or
    (c) The United States.

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



0
19. Section 602.12 is revised to read as follows:


Sec.  602.12  Accrediting experience.

    (a) An agency seeking initial recognition must demonstrate that it 
has--
    (1) Granted accreditation or preaccreditation prior to submitting 
an application for recognition--
    (i) To one or more institutions if it is requesting recognition as 
an institutional accrediting agency and to one or more programs if it 
is requesting recognition as a programmatic accrediting agency;
    (ii) That covers the range of the specific degrees, certificates, 
institutions, and programs for which it seeks recognition; and
    (iii) In the geographic area for which it seeks recognition; and
    (2) Conducted accrediting activities, including deciding whether to 
grant or deny accreditation or preaccreditation, for at least two years 
prior to seeking recognition, unless the agency seeking initial 
recognition is affiliated with, or is a division of, an already 
recognized agency.
    (b)(1) A recognized agency seeking an expansion of its scope of 
recognition must follow the requirements of Sec. Sec.  602.31 and 
602.32 and demonstrate that it has accreditation or preaccreditation 
policies in place that meet all the criteria for recognition covering 
the range of the specific degrees, certificates, institutions, and 
programs for which it seeks the expansion of scope and has engaged and 
can show support from relevant constituencies for the expansion. A 
change to an agency's geographic area of accrediting activities does 
not constitute an expansion of the agency's scope of recognition, but 
the agency must notify the Department of, and publicly disclose on the 
agency's website, any such change.
    (2) An agency that cannot demonstrate experience in making 
accreditation or preaccreditation decisions under the expanded scope at 
the time of its application or review for an expansion of scope may--
    (i) If it is an institutional accrediting agency, be limited in the 
number of institutions to which it may grant accreditation under the 
expanded scope for a designated period of time; or
    (ii) If it is a programmatic accrediting agency, be limited in the 
number of programs to which it may grant accreditation under that 
expanded scope for a certain period of time; and
    (iii) Be required to submit a monitoring report regarding 
accreditation decisions made under the expanded scope.

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

Sec.  602.13   [Removed and Reserved]

0
20. Section 602.13 is removed and reserved.

0
21. Section 602.14 is revised to read as follows:


Sec.  602.14  Purpose and organization.

    (a) The Secretary recognizes only the following four categories of 
accrediting agencies:
    (1) A State agency that--
    (i) Has as a principal purpose the accrediting of institutions of 
higher education, higher education programs, or both; and
    (ii) Has been listed by the Secretary as a nationally recognized 
accrediting agency on or before October 1, 1991.
    (2) An accrediting agency that--
    (i) Has a voluntary membership of institutions of higher education;
    (ii) Has as a principal purpose the accrediting of institutions of 
higher education and that accreditation is used to provide a link to 
Federal HEA programs in accordance with Sec.  602.10; and

[[Page 58919]]

    (iii) Satisfies the ``separate and independent'' requirements in 
paragraph (b) of this section.
    (3) An accrediting agency that--
    (i) Has a voluntary membership; and
    (ii) Has as its principal purpose the accrediting of institutions 
of higher education or programs, and the accreditation it offers is 
used to provide a link to non-HEA Federal programs in accordance with 
Sec.  602.10.
    (4) An accrediting agency that, for purposes of determining 
eligibility for title IV, HEA programs--
    (i)(A) Has a voluntary membership of individuals participating in a 
profession; or
    (B) Has as its principal purpose the accrediting of programs within 
institutions that are accredited by another nationally recognized 
accrediting agency; and
    (ii) Satisfies the ``separate and independent'' requirements in 
paragraph (b) of this section or obtains a waiver of those requirements 
under paragraph (d) of this section.
    (b) For purposes of this section, ``separate and independent'' 
means that--
    (1) The members of the agency's decision-making body, who decide 
the accreditation or preaccreditation status of institutions or 
programs, establish the agency's accreditation policies, or both, are 
not elected or selected by the board or chief executive officer of any 
related, associated, or affiliated trade association, professional 
organization, or membership organization and are not staff of the 
related, associated, or affiliated trade association, professional 
organization, or membership organization;
    (2) At least one member of the agency's decision-making body is a 
representative of the public, and at least one-seventh of the body 
consists of representatives of the public;
    (3) The agency has established and implemented guidelines for each 
member of the decision-making body including guidelines on avoiding 
conflicts of interest in making decisions;
    (4) The agency's dues are paid separately from any dues paid to any 
related, associated, or affiliated trade association or membership 
organization; and
    (5) The agency develops and determines its own budget, with no 
review by or consultation with any other entity or organization.
    (c) The Secretary considers that any joint use of personnel, 
services, equipment, or facilities by an agency and a related, 
associated, or affiliated trade association or membership organization 
does not violate the ``separate and independent'' requirements in 
paragraph (b) of this section if--
    (1) The agency pays the fair market value for its proportionate 
share of the joint use; and
    (2) The joint use does not compromise the independence and 
confidentiality of the accreditation process.
    (d) For purposes of paragraph (a)(4) of this section, the Secretary 
may waive the ``separate and independent'' requirements in paragraph 
(b) of this section if the agency demonstrates that--
    (1) The Secretary listed the agency as a nationally recognized 
agency on or before October 1, 1991, and has recognized it continuously 
since that date;
    (2) The related, associated, or affiliated trade association or 
membership organization plays no role in making or ratifying either the 
accrediting or policy decisions of the agency;
    (3) The agency has sufficient budgetary and administrative autonomy 
to carry out its accrediting functions independently;
    (4) The agency provides to the related, associated, or affiliated 
trade association or membership organization only information it makes 
available to the public.
    (e) An agency seeking a waiver of the ``separate and independent'' 
requirements under paragraph (d) of this section must apply for the 
waiver each time the agency seeks recognition or continued recognition.

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



0
22. Section 602.15 is revised to read as follows:


Sec.  602.15  Administrative and fiscal responsibilities.

    The agency must have the administrative and fiscal capability to 
carry out its accreditation activities in light of its requested scope 
of recognition. The agency meets this requirement if the agency 
demonstrates that--
    (a) The agency has--
    (1) Adequate administrative staff and financial resources to carry 
out its accrediting responsibilities;
    (2) Competent and knowledgeable individuals, qualified by education 
or experience in their own right and trained by the agency on their 
responsibilities, as appropriate for their roles, regarding the 
agency's standards, policies, and procedures, to conduct its on-site 
evaluations, apply or establish its policies, and make its accrediting 
and preaccrediting decisions, including, if applicable to the agency's 
scope, their responsibilities regarding distance education and 
correspondence courses;
    (3) Academic and administrative personnel on its evaluation, 
policy, and decision-making bodies, if the agency accredits 
institutions;
    (4) Educators, practitioners, and/or employers on its evaluation, 
policy, and decision-making bodies, if the agency accredits programs or 
single-purpose institutions that prepare students for a specific 
profession;
    (5) Representatives of the public, which may include students, on 
all decision-making bodies; and
    (6) Clear and effective controls, including guidelines, to prevent 
or resolve conflicts of interest, or the appearance of conflicts of 
interest, by the agency's--
    (i) Board members;
    (ii) Commissioners;
    (iii) Evaluation team members;
    (iv) Consultants;
    (v) Administrative staff; and
    (vi) Other agency representatives; and
    (b) The agency maintains complete and accurate records of--
    (1) Its last full accreditation or preaccreditation review of each 
institution or program, including on-site evaluation team reports, the 
institution's or program's responses to on-site reports, periodic 
review reports, any reports of special reviews conducted by the agency 
between regular reviews, and a copy of the institution's or program's 
most recent self-study; and
    (2) All decision letters issued by the agency regarding the 
accreditation and preaccreditation of any institution or program and 
any substantive changes.

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



0
23. Section 602.16 is revised to read as follows:


Sec.  602.16  Accreditation and preaccreditation standards.

    (a) The agency must demonstrate that it has standards for 
accreditation, and preaccreditation, if offered, that are sufficiently 
rigorous to ensure that the agency is a reliable authority regarding 
the quality of the education or training provided by the institutions 
or programs it accredits. The agency meets this requirement if the 
following conditions are met:
    (1) The agency's accreditation standards must set forth clear 
expectations for the institutions or programs it accredits in the 
following areas:
    (i) Success with respect to student achievement in relation to the 
institution's mission, which may include different standards for 
different

[[Page 58920]]

institutions or programs, as established by the institution, including, 
as appropriate, consideration of State licensing examinations, course 
completion, and job placement rates.
    (ii) Curricula.
    (iii) Faculty.
    (iv) Facilities, equipment, and supplies.
    (v) Fiscal and administrative capacity as appropriate to the 
specified scale of operations.
    (vi) Student support services.
    (vii) Recruiting and admissions practices, academic calendars, 
catalogs, publications, grading, and advertising.
    (viii) Measures of program length and the objectives of the degrees 
or credentials offered.
    (ix) Record of student complaints received by, or available to, the 
agency.
    (x) Record of compliance with the institution's program 
responsibilities under title IV of the Act, based on the most recent 
student loan default rate data provided by the Secretary, the results 
of financial or compliance audits, program reviews, and any other 
information that the Secretary may provide to the agency; and
    (2) The agency's preaccreditation standards, if offered, must--
    (i) Be appropriately related to the agency's accreditation 
standards; and
    (ii) Not permit the institution or program to hold preaccreditation 
status for more than five years before a final accrediting action is 
made.
    (b) Agencies are not required to apply the standards described in 
paragraph (a)(1)(x) of this section to institutions that do not 
participate in title IV, HEA programs. Under such circumstance, the 
agency's grant of accreditation or preaccreditation must specify that 
the grant, by request of the institution, does not include 
participation by the institution in title IV, HEA programs.
    (c) If the agency only accredits programs and does not serve as an 
institutional accrediting agency for any of those programs, its 
accreditation standards must address the areas in paragraph (a)(1) of 
this section in terms of the type and level of the program rather than 
in terms of the institution.
    (d)(1) If the agency has or seeks to include within its scope of 
recognition the evaluation of the quality of institutions or programs 
offering distance education, correspondence courses, or direct 
assessment education, the agency's standards must effectively address 
the quality of an institution's distance education, correspondence 
courses, or direct assessment education in the areas identified in 
paragraph (a)(1) of this section.
    (2) The agency is not required to have separate standards, 
procedures, or policies for the evaluation of distance education or 
correspondence courses.
    (e) If none of the institutions an agency accredits participates in 
any title IV, HEA program, or if the agency only accredits programs 
within institutions that are accredited by a nationally recognized 
institutional accrediting agency, the agency is not required to have 
the accreditation standards described in paragraphs (a)(1)(viii) and 
(a)(1)(x) of this section.
    (f) An agency that has established and applies the standards in 
paragraph (a) of this section may establish any additional 
accreditation standards it deems appropriate.
    (g) Nothing in paragraph (a) of this section restricts--
    (1) An accrediting agency from setting, with the involvement of its 
members, and applying accreditation standards for or to institutions or 
programs that seek review by the agency;
    (2) An institution from developing and using institutional 
standards to show its success with respect to student achievement, 
which achievement may be considered as part of any accreditation 
review; or
    (3) Agencies from having separate standards regarding an 
institution's or a program's process for approving curriculum to enable 
programs to more effectively meet the recommendations of--
    (i) Industry advisory boards that include employers who hire 
program graduates;
    (ii) Widely recognized industry standards and organizations;
    (iii) Credentialing or other occupational registration or 
licensure; or
    (iv) Employers in a given field or occupation, in making hiring 
decisions.
    (4) Agencies from having separate faculty standards for instructors 
teaching courses within a dual or concurrent enrollment program, as 
defined in 20 U.S.C. 7801, or career and technical education courses, 
as long as the instructors, in the agency's judgment, are qualified by 
education or work experience for that role.

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



0
24. Section 602.17 is revised to read as follows:


Sec.  602.17  Application of standards in reaching accreditation 
decisions.

    The agency must have effective mechanisms for evaluating an 
institution's or program's compliance with the agency's standards 
before reaching a decision to accredit or preaccredit the institution 
or program. The agency meets this requirement if the agency 
demonstrates that it--
    (a) Evaluates whether an institution or program--
    (1) Maintains clearly specified educational objectives that are 
consistent with its mission and appropriate in light of the degrees or 
certificates awarded;
    (2) Is successful in achieving its stated objectives at both the 
institutional and program levels; and
    (3) Maintains requirements that at least conform to commonly 
accepted academic standards, or the equivalent, including pilot 
programs in Sec.  602.18(b);
    (b) Requires the institution or program to engage in a self-study 
process that assesses the institution's or program's education quality 
and success in meeting its mission and objectives, highlights 
opportunities for improvement, and includes a plan for making those 
improvements;
    (c) Conducts at least one on-site review of the institution or 
program during which it obtains sufficient information to determine if 
the institution or program complies with the agency's standards;
    (d) Allows the institution or program the opportunity to respond in 
writing to the report of the on-site review;
    (e) Conducts its own analysis of the self-study and supporting 
documentation furnished by the institution or program, the report of 
the on-site review, the institution's or program's response to the 
report, and any other information substantiated by the agency from 
other sources to determine whether the institution or program complies 
with the agency's standards;
    (f) Provides the institution or program with a detailed written 
report that assesses the institution's or program's compliance with the 
agency's standards, including areas needing improvement, and the 
institution's or program's performance with respect to student 
achievement;
    (g) Requires institutions to have processes in place through which 
the institution establishes that a student who registers in any course 
offered via distance education or correspondence is the same student 
who academically engages in the course or program; and
    (h) Makes clear in writing that institutions must use processes 
that protect student privacy and notify students of any projected 
additional student charges associated with the verification of student 
identity at the time of registration or enrollment.

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



0
25. Section 602.18 is revised to read as follows:

[[Page 58921]]

Sec.  602.18  Ensuring consistency in decision-making.

    (a) The agency must consistently apply and enforce standards that 
respect the stated mission of the institution, including religious 
mission, and that ensure that the education or training offered by an 
institution or program, including any offered through distance 
education, correspondence courses, or direct assessment education is of 
sufficient quality to achieve its stated objective for the duration of 
any accreditation or preaccreditation period.
    (b) The agency meets the requirement in paragraph (a) of this 
section if the agency--
    (1) Has written specification of the requirements for accreditation 
and preaccreditation that include clear standards for an institution or 
program to be accredited or preaccredited;
    (2) Has effective controls against the inconsistent application of 
the agency's standards;
    (3) Bases decisions regarding accreditation and preaccreditation on 
the agency's published standards and does not use as a negative factor 
the institution's religious mission-based policies, decisions, and 
practices in the areas covered by Sec.  602.16(a)(1)(ii), (iii), (iv), 
(vi), and (vii) provided, however, that the agency may require that the 
institution's or program's curricula include all core components 
required by the agency;
    (4) Has a reasonable basis for determining that the information the 
agency relies on for making accrediting decisions is accurate;
    (5) Provides the institution or program with a detailed written 
report that clearly identifies any deficiencies in the institution's or 
program's compliance with the agency's standards; and
    (6) Publishes any policies for retroactive application of an 
accreditation decision, which must not provide for an effective date 
that predates either--
    (i) An earlier denial by the agency of accreditation or 
preaccreditation to the institution or program; or
    (ii) The agency's formal approval of the institution or program for 
consideration in the agency's accreditation or preaccreditation 
process.
    (c) Nothing in this part prohibits an agency, when special 
circumstances exist, to include innovative program delivery approaches 
or, when an undue hardship on students occurs, from applying equivalent 
written standards, policies, and procedures that provide alternative 
means of satisfying one or more of the requirements set forth in 34 CFR 
602.16, 602.17, 602.19, 602.20, 602.22, and 602.24, as compared with 
written standards, policies, and procedures the agency ordinarily 
applies, if--
    (1) The alternative standards, policies, and procedures, and the 
selection of institutions or programs to which they will be applied, 
are approved by the agency's decision-making body and otherwise meet 
the intent of the agency's expectations and requirements;
    (2) The agency sets and applies equivalent goals and metrics for 
assessing the performance of institutions or programs;
    (3) The agency's process for establishing and applying the 
alternative standards, policies, and procedures is set forth in its 
published accreditation manuals; and
    (4) The agency requires institutions or programs seeking the 
application of alternative standards to demonstrate the need for an 
alternative assessment approach, that students will receive equivalent 
benefit, and that students will not be harmed through such application.
    (d) Nothing in this part prohibits an agency from permitting the 
institution or program to be out of compliance with one or more of its 
standards, policies, and procedures adopted in satisfaction of 
Sec. Sec.  602.16, 602.17, 602.19, 602.20, 602.22, and 602.24 for a 
period of time, as determined by the agency annually, not to exceed 
three years unless the agency determines there is good cause to extend 
the period of time, and if--
    (1) The agency and the institution or program can show that the 
circumstances requiring the period of noncompliance are beyond the 
institution's or program's control, such as--
    (i) A natural disaster or other catastrophic event significantly 
impacting an institution's or program's operations;
    (ii) Accepting students from another institution that is 
implementing a teach-out or closing;
    (iii) Significant and documented local or national economic 
changes, such as an economic recession or closure of a large local 
employer;
    (iv) Changes relating to State licensure requirements;
    (v) The normal application of the agency's standards creates an 
undue hardship on students; or
    (vi) Instructors who do not meet the agency's typical faculty 
standards, but who are otherwise qualified by education or work 
experience, to teach courses within a dual or concurrent enrollment 
program, as defined in 20 U.S.C. 7801, or career and technical 
education courses;
    (2) The grant of the period of noncompliance is approved by the 
agency's decision-making body;
    (3) The agency projects that the institution or program has the 
resources necessary to achieve compliance with the standard, policy, or 
procedure postponed within the time allotted; and
    (4) The institution or program demonstrates to the satisfaction of 
the agency that the period of noncompliance will not--
    (i) Contribute to the cost of the program to the student without 
the student's consent;
    (ii) Create any undue hardship on, or harm to, students; or
    (iii) Compromise the program's academic quality.

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



0
26. Section 602.19 is revised to read as follows:


Sec.  602.19  Monitoring and reevaluation of accredited institutions 
and programs.

    (a) The agency must reevaluate, at regularly established intervals, 
the institutions or programs it has accredited or preaccredited.
    (b) The agency must demonstrate it has, and effectively applies, 
monitoring and evaluation approaches that enable the agency to identify 
problems with an institution's or program's continued compliance with 
agency standards and that take into account institutional or program 
strengths and stability. These approaches must include periodic 
reports, and collection and analysis of key data and indicators, 
identified by the agency, including, but not limited to, fiscal 
information and measures of student achievement, consistent with the 
provisions of Sec.  602.16(g). This provision does not require 
institutions or programs to provide annual reports on each specific 
accreditation criterion.
    (c) Each agency must monitor overall growth of the institutions or 
programs it accredits and, at least annually, collect head-count 
enrollment data from those institutions or programs.
    (d) Institutional accrediting agencies must monitor the growth of 
programs at institutions experiencing significant enrollment growth, as 
reasonably defined by the agency.
    (e) Any agency that has notified the Secretary of a change in its 
scope in accordance with Sec.  602.27(a) must monitor the headcount 
enrollment of each institution it has accredited that offers distance 
education or correspondence courses. The Secretary will require a 
review, at the next meeting of the National Advisory Committee on 
Institutional Quality and Integrity, of any change in scope

[[Page 58922]]

undertaken by an agency if the enrollment of an institution that offers 
distance education or correspondence courses that is accredited by such 
agency increases by 50 percent or more within any one institutional 
fiscal year. If any such institution has experienced an increase in 
head-count enrollment of 50 percent or more within one institutional 
fiscal year, the agency must report that information to the Secretary 
within 30 days of acquiring such data.

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



0
27. Section 602.20 is revised to read as follows:


Sec.  602.20  Enforcement of standards.

    (a) If the agency's review of an institution or program under any 
standard indicates that the institution or program is not in compliance 
with that standard, the agency must--
    (1) Follow its written policy for notifying the institution or 
program of the finding of noncompliance;
    (2) Provide the institution or program with a written timeline for 
coming into compliance that is reasonable, as determined by the 
agency's decision-making body, based on the nature of the finding, the 
stated mission, and educational objectives of the institution or 
program. The timeline may include intermediate checkpoints on the way 
to full compliance and must not exceed the lesser of four years or 150 
percent of the--
    (i) Length of the program in the case of a programmatic accrediting 
agency; or
    (ii) Length of the longest program at the institution in the case 
of an institutional accrediting agency;
    (3) Follow its written policies and procedures for granting a good 
cause extension that may exceed the standard timeframe described in 
paragraph (a)(2) of this section when such an extension is determined 
by the agency to be warranted; and
    (4) Have a written policy to evaluate and approve or disapprove 
monitoring or compliance reports it requires, provide ongoing 
monitoring, if warranted, and evaluate an institution's or program's 
progress in resolving the finding of noncompliance.
    (b) Notwithstanding paragraph (a) of this section, the agency must 
have a policy for taking an immediate adverse action, and take such 
action, when the agency has determined that such action is warranted.
    (c) If the institution or program does not bring itself into 
compliance within the period specified in paragraph (a) of this 
section, the agency must take adverse action against the institution or 
program, but may maintain the institution's or program's accreditation 
or preaccreditation until the institution or program has had reasonable 
time to complete the activities in its teach-out plan or to fulfill the 
obligations of any teach-out agreement to assist students in 
transferring or completing their programs.
    (d) An agency that accredits institutions may limit the adverse or 
other action to particular programs that are offered by the institution 
or to particular additional locations of an institution, without 
necessarily taking action against the entire institution and all of its 
programs, provided the noncompliance was limited to that particular 
program or location.
    (e) All adverse actions taken under this subpart are subject to the 
arbitration requirements in 20 U.S.C. 1099b(e).
    (f) An agency is not responsible for enforcing requirements in 34 
CFR 668.14, 668.15, 668.16, 668.41, or 668.46, but if, in the course of 
an agency's work, it identifies instances or potential instances of 
noncompliance with any of these requirements, it must notify the 
Department.
    (g) The Secretary may not require an agency to take action against 
an institution or program that does not participate in any title IV, 
HEA or other Federal program as a result of a requirement specified in 
this part.

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



0
28. Section 602.21 is amended by revising paragraphs (a) and (c) and 
adding paragraph (d) to read as follows:


Sec.  602.21  Review of standards.

    (a) The agency must maintain a comprehensive systematic program of 
review that involves all relevant constituencies and that demonstrates 
that its standards are adequate to evaluate the quality of the 
education or training provided by the institutions and programs it 
accredits and relevant to the educational or training needs of 
students.
* * * * *
    (c) If the agency determines, at any point during its systematic 
program of review, that it needs to make changes to its standards, the 
agency must initiate action within 12 months to make the changes and 
must complete that action within a reasonable period of time.
    (d) Before finalizing any changes to its standards, the agency 
must--
    (1) Provide notice to all of the agency's relevant constituencies, 
and other parties who have made their interest known to the agency, of 
the changes the agency proposes to make;
    (2) Give the constituencies and other interested parties adequate 
opportunity to comment on the proposed changes; and
    (3) Take into account and be responsive to any comments on the 
proposed changes submitted timely by the relevant constituencies and 
other interested parties.
* * * * *

0
29. Section 602.22 is revised to read as follows:


Sec.  602.22  Substantive changes and other reporting requirements.

    (a)(1) If the agency accredits institutions, it must maintain 
adequate substantive change policies that ensure that any substantive 
change, as defined in this section, after the agency has accredited or 
preaccredited the institution does not adversely affect the capacity of 
the institution to continue to meet the agency's standards. The agency 
meets this requirement if--
    (i) The agency requires the institution to obtain the agency's 
approval of the substantive change before the agency includes the 
change in the scope of accreditation or preaccreditation it previously 
granted to the institution; and
    (ii) The agency's definition of substantive change covers high-
impact, high-risk changes, including at least the following:
    (A) Any substantial change in the established mission or objectives 
of the institution or its programs.
    (B) Any change in the legal status, form of control, or ownership 
of the institution.
    (C) The addition of programs that represent a significant departure 
from the existing offerings or educational programs, or method of 
delivery, from those that were offered or used when the agency last 
evaluated the institution.
    (D) The addition of graduate programs by an institution that 
previously offered only undergraduate programs or certificates.
    (E) A change in the way an institution measures student progress, 
including whether the institution measures progress in clock hours or 
credit-hours, semesters, trimesters, or quarters, or uses time-based or 
non-time-based methods.
    (F) A substantial increase in the number of clock hours or credit 
hours awarded, or an increase in the level of credential awarded, for 
successful completion of one or more programs.
    (G) The acquisition of any other institution or any program or 
location of another institution.
    (H) The addition of a permanent location at a site at which the 
institution is conducting a teach-out for students of another 
institution that has ceased

[[Page 58923]]

operating before all students have completed their program of study.
    (I) The addition of a new location or branch campus, except as 
provided in paragraph (c) of this section. The agency's review must 
include assessment of the institution's fiscal and administrative 
capability to operate the location or branch campus, the regular 
evaluation of locations, and verification of the following:
    (1) Academic control is clearly identified by the institution.
    (2) The institution has adequate faculty, facilities, resources, 
and academic and student support systems in place.
    (3) The institution is financially stable.
    (4) The institution had engaged in long-range planning for 
expansion.
    (J) Entering into a written arrangement under 34 CFR 668.5 under 
which an institution or organization not certified to participate in 
the title IV, HEA programs offers more than 25 and up to 50 percent of 
one or more of the accredited institution's educational programs.
    (K) Addition of each direct assessment program.
    (2)(i) For substantive changes under only paragraph (a)(1)(ii)(C), 
(E), (F), (H), or (J) of this section, the agency's decision-making 
body may designate agency senior staff to approve or disapprove the 
request in a timely, fair, and equitable manner; and
    (ii) In the case of a request under paragraph (a)(1)(ii)(J) of this 
section, the agency must make a final decision within 90 days of 
receipt of a materially complete request, unless the agency or its 
staff determine significant circumstances related to the substantive 
change require a review by the agency's decision-making body to occur 
within 180 days.
    (b) Institutions that have been placed on probation or equivalent 
status, have been subject to negative action by the agency over the 
prior three academic years, or are under a provisional certification, 
as provided in 34 CFR 668.13, must receive prior approval for the 
following additional changes (all other institutions must report these 
changes within 30 days to their accrediting agency):
    (1) A change in an existing program's method of delivery.
    (2) An aggregate change of 25 percent or more of the clock hours, 
credit hours, or content of a program since the agency's most recent 
accreditation review.
    (3) The development of customized pathways or abbreviated or 
modified courses or programs to--
    (i) Accommodate and recognize a student's existing knowledge, such 
as knowledge attained through employment or military service; and
    (ii) Close competency gaps between demonstrated prior knowledge or 
competency and the full requirements of a particular course or program.
    (4) Entering into a written arrangement under 34 CFR 668.5 under 
which an institution or organization not certified to participate in 
the title IV, HEA programs offers up to 25 percent of one or more of 
the accredited institution's educational programs.
    (c) Institutions that have successfully completed at least one 
cycle of accreditation and have received agency approval for the 
addition of at least two additional locations as provided in paragraph 
(a)(1)(ii)(I) of this section, and that have not been placed on 
probation or equivalent status or been subject to a negative action by 
the agency over the prior three academic years, and that are not under 
a provisional certification, as provided in 34 CFR 668.13, need not 
apply for agency approval of subsequent additions of locations, and 
must report these changes to the accrediting agency within 30 days, if 
the institution has met criteria established by the agency indicating 
sufficient capacity to add additional locations without individual 
prior approvals, including, at a minimum, satisfactory evidence of a 
system to ensure quality across a distributed enterprise that 
includes--
    (1) Clearly identified academic control;
    (2) Regular evaluation of the locations;
    (3) Adequate faculty, facilities, resources, and academic and 
student support systems;
    (4) Financial stability; and
    (5) Long-range planning for expansion.
    (d) The agency must have an effective mechanism for conducting, at 
reasonable intervals, visits to a representative sample of additional 
locations approved under paragraphs (a)(1)(ii)(H) and (I) of this 
section.
    (e) The agency may determine the procedures it uses to grant prior 
approval of the substantive change. However, these procedures must 
specify an effective date, on which the change is included in the 
program's or institution's grant of accreditation or preaccreditation. 
The date of prior approval must not pre-date either an earlier agency 
denial of the substantive change, or the agency's formal acceptance of 
the application for the substantive change for inclusion in the 
program's or institution's grant of accreditation or preaccreditation. 
An agency may designate the date of a change in ownership as the 
effective date of its approval of that substantive change if the 
accreditation decision is made within 30 days of the change in 
ownership. Except as provided in paragraphs (d) and (f) of this 
section, an agency may require a visit before granting such an 
approval.
    (f) Except as provided in paragraph (c) of this section, if the 
agency's accreditation of an institution enables the institution to 
seek eligibility to participate in title IV, HEA programs, the agency's 
procedures for the approval of an additional location that is not a 
branch campus where at least 50 percent of an educational program is 
offered must include--
    (1) A visit, within six months, to each additional location the 
institution establishes, if the institution--
    (i) Has a total of three or fewer additional locations;
    (ii) Has not demonstrated, to the agency's satisfaction, that the 
additional location is meeting all of the agency's standards that apply 
to that additional location; or
    (iii) Has been placed on warning, probation, or show cause by the 
agency or is subject to some limitation by the agency on its 
accreditation or preaccreditation status;
    (2) A mechanism for conducting, at reasonable intervals, visits to 
a representative sample of additional locations of institutions that 
operate more than three additional locations; and
    (3) A mechanism, which may, at the agency's discretion, include 
visits to additional locations, for ensuring that accredited and 
preaccredited institutions that experience rapid growth in the number 
of additional locations maintain education quality.
    (g) The purpose of the visits described in paragraph (f) of this 
section is to verify that the additional location has the personnel, 
facilities, and resources the institution claimed it had in its 
application to the agency for approval of the additional location.
    (h) The agency's substantive change policy must define when the 
changes made or proposed by an institution are or would be sufficiently 
extensive to require the agency to conduct a new comprehensive 
evaluation of that institution.

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



0
30. Section 602.23 is amended by:
0
a. Revising paragraphs (a)(2), (a)(5) introductory text, and (d);
0
b. Redesignating paragraph (f) as paragraph (g); and
0
c. Adding a new paragraph (f).

[[Page 58924]]

    The revisions and addition read as follows:


Sec.  602.23  Operating procedures all agencies must have.

    (a) * * *
    (2) The procedures that institutions or programs must follow in 
applying for accreditation, preaccreditation, or substantive changes 
and the sequencing of those steps relative to any applications or 
decisions required by States or the Department relative to the agency's 
preaccreditation, accreditation, or substantive change decisions;
* * * * *
    (5) A list of the names, academic and professional qualifications, 
and relevant employment and organizational affiliations of--
* * * * *
    (d) If an institution or program elects to make a public disclosure 
of its accreditation or preaccreditation status, the agency must ensure 
that the institution or program discloses that status accurately, 
including the specific academic or instructional programs covered by 
that status and the name and contact information for the agency.
* * * * *
    (f)(1) If preaccreditation is offered--
    (i) The agency's preaccreditation policies must limit the status to 
institutions or programs that the agency has determined are likely to 
succeed in obtaining accreditation;
    (ii) The agency must require all preaccredited institutions to have 
a teach-out plan, which must ensure students completing the teach-out 
would meet curricular requirements for professional licensure or 
certification, if any, and which must include a list of academic 
programs offered by the institution and the names of other institutions 
that offer similar programs and that could potentially enter into a 
teach-out agreement with the institution;
    (iii) An agency that denies accreditation to an institution it has 
preaccredited may maintain the institution's preaccreditation for 
currently enrolled students until the institution has had a reasonable 
time to complete the activities in its teach-out plan to assist 
students in transferring or completing their programs, but for no more 
than 120 days unless approved by the agency for good cause; and
    (iv) The agency may not move an accredited institution or program 
from accredited to preaccredited status unless, following the loss of 
accreditation, the institution or program applies for initial 
accreditation and is awarded preaccreditation status under the new 
application. Institutions that participated in the title IV, HEA 
programs before the loss of accreditation are subject to the 
requirements of 34 CFR 600.11(c).
    (2) All credits and degrees earned and issued by an institution or 
program holding preaccreditation from a nationally recognized agency 
are considered by the Secretary to be from an accredited institution or 
program.
* * * * *

0
31. Section 602.24 is revised to read as follows:


Sec.  602.24  Additional procedures certain institutional agencies must 
have.

    If the agency is an institutional accrediting agency and its 
accreditation or preaccreditation enables those institutions to obtain 
eligibility to participate in title IV, HEA programs, the agency must 
demonstrate that it has established and uses all of the following 
procedures:
    (a) Branch campus. The agency must require the institution to 
notify the agency if it plans to establish a branch campus and to 
submit a business plan for the branch campus that describes--
    (1) The educational program to be offered at the branch campus; and
    (2) The projected revenues and expenditures and cash flow at the 
branch campus.
    (b) Site visits. The agency must undertake a site visit to a new 
branch campus or following a change of ownership or control as soon as 
practicable, but no later than six months, after the establishment of 
that campus or the change of ownership or control.
    (c) Teach-out plans and agreements. (1) The agency must require an 
institution it accredits to submit a teach-out plan as defined in 34 
CFR 600.2 to the agency for approval upon the occurrence of any of the 
following events:
    (i) For a nonprofit or proprietary institution, the Secretary 
notifies the agency of a determination by the institution's independent 
auditor expressing doubt about the institution's ability to operate as 
a going concern or indicating an adverse opinion or a finding of 
material weakness related to financial stability.
    (ii) The agency acts to place the institution on probation or 
equivalent status.
    (iii) The Secretary notifies the agency that the institution is 
participating in title IV, HEA programs under a provisional program 
participation agreement and the Secretary has required a teach-out plan 
as a condition of participation.
    (2) The agency must require an institution it accredits or 
preaccredits to submit a teach-out plan and, if practicable, teach-out 
agreements (as defined in 34 CFR 600.2) to the agency for approval upon 
the occurrence of any of the following events:
    (i) The Secretary notifies the agency that it has placed the 
institution on the reimbursement payment method under 34 CFR 668.162(c) 
or the heightened cash monitoring payment method requiring the 
Secretary's review of the institution's supporting documentation under 
34 CFR 668.162(d)(2).
    (ii) The Secretary notifies the agency that the Secretary has 
initiated an emergency action against an institution, in accordance 
with section 487(c)(1)(G) of the HEA, or an action to limit, suspend, 
or terminate an institution participating in any title IV, HEA program, 
in accordance with section 487(c)(1)(F) of the HEA.
    (iii) The agency acts to withdraw, terminate, or suspend the 
accreditation or preaccreditation of the institution.
    (iv) The institution notifies the agency that it intends to cease 
operations entirely or close a location that provides one hundred 
percent of at least one program, including if the location is being 
moved and is considered by the Secretary to be a closed school.
    (v) A State licensing or authorizing agency notifies the agency 
that an institution's license or legal authorization to provide an 
educational program has been or will be revoked.
    (3) The agency must evaluate the teach-out plan to ensure it 
includes a list of currently enrolled students, academic programs 
offered by the institution, and the names of other institutions that 
offer similar programs and that could potentially enter into a teach-
out agreement with the institution.
    (4) If the agency approves a teach-out plan that includes a program 
or institution that is accredited by another recognized accrediting 
agency, it must notify that accrediting agency of its approval.
    (5) The agency may require an institution it accredits or 
preaccredits to enter into a teach-out agreement as part of its teach-
out plan.
    (6) The agency must require a closing institution to include in its 
teach-out agreement--
    (i) A complete list of students currently enrolled in each program 
at the institution and the program requirements each student has 
completed;
    (ii) A plan to provide all potentially eligible students with 
information about how to obtain a closed school discharge

[[Page 58925]]

and, if applicable, information on State refund policies;
    (iii) A record retention plan to be provided to all enrolled 
students that delineates the final disposition of teach-out records 
(e.g., student transcripts, billing, financial aid records);
    (iv) Information on the number and types of credits the teach-out 
institution is willing to accept prior to the student's enrollment; and
    (v) A clear statement to students of the tuition and fees of the 
educational program and the number and types of credits that will be 
accepted by the teach-out institution.
    (7) The agency must require an institution it accredits or 
preaccredits that enters into a teach-out agreement, either on its own 
or at the request of the agency, to submit that teach-out agreement for 
approval. The agency may approve the teach-out agreement only if the 
agreement meets the requirements of 34 CFR 600.2 and this section, is 
consistent with applicable standards and regulations, and provides for 
the equitable treatment of students being served by ensuring that the 
teach-out institution--
    (i) Has the necessary experience, resources, and support services 
to provide an educational program that is of acceptable quality and 
reasonably similar in content, delivery modality, and scheduling to 
that provided by the institution that is ceasing operations either 
entirely or at one of its locations; however, while an option via an 
alternate method of delivery may be made available to students, such an 
option is not sufficient unless an option via the same method of 
delivery as the original educational program is also provided;
    (ii) Has the capacity to carry out its mission and meet all 
obligations to existing students; and
    (iii) Demonstrates that it--
    (A) Can provide students access to the program and services without 
requiring them to move or travel for substantial distances or 
durations; and
    (B) Will provide students with information about additional 
charges, if any.
    (8) Irrespective of any teach-out plan or signed teach-out 
agreement, the agency must not permit an institution to serve as a 
teach-out institution under the following conditions:
    (i) The institution is subject to the conditions in paragraph 
(c)(1) or (2) of this section.
    (ii) The institution is under investigation, subject to an action, 
or being prosecuted for an issue related to academic quality, 
misrepresentation, fraud, or other severe matters by a law enforcement 
agency.
    (9) The agency is permitted to waive requirements regarding the 
percentage of credits that must be earned by a student at the 
institution awarding the educational credential if the student is 
completing his or her program through a written teach-out agreement or 
transfer.
    (10) The agency must require the institution to provide copies of 
all notifications from the institution related to the institution's 
closure or to teach-out options to ensure the information accurately 
represents students' ability to transfer credits and may require 
corrections.
    (d) Closed institution. If an institution the agency accredits or 
preaccredits closes without a teach-out plan or agreement, the agency 
must work with the Department and the appropriate State agency, to the 
extent feasible, to assist students in finding reasonable opportunities 
to complete their education without additional charges.
    (e) Transfer of credit policies. The accrediting agency must 
confirm, as part of its review for initial accreditation or 
preaccreditation, or renewal of accreditation, that the institution has 
transfer of credit policies that--
    (1) Are publicly disclosed in accordance with Sec.  
[thinsp]668.43(a)(11); and
    (2) Include a statement of the criteria established by the 
institution regarding the transfer of credit earned at another 
institution of higher education.
    (f) Agency designations. In its accrediting practice, the agency 
must--
    (1) Adopt and apply the definitions of ``branch campus'' and 
``additional location'' in 34 CFR 600.2;
    (2) On the Secretary's request, conform its designations of an 
institution's branch campuses and additional locations with the 
Secretary's if it learns its designations diverge; and
    (3) Ensure that it does not accredit or preaccredit an institution 
comprising fewer than all of the programs, branch campuses, and 
locations of an institution as certified for title IV participation by 
the Secretary, except with notice to and permission from the Secretary.

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


0
32. Section 602.25 is amended by revising paragraphs (f)(1)(iii) and 
(iv) to read as follows:


Sec.  602.25  Due process.

* * * * *
    (f) * * *
    (1) * * *
    (iii) Does not serve only an advisory or procedural role, and has 
and uses the authority to make the following decisions: To affirm, 
amend, or remand adverse actions of the original decision-making body; 
and
    (iv) Affirms, amends, or remands the adverse action. A decision to 
affirm or amend the adverse action is implemented by the appeals panel 
or by the original decision-making body, at the agency's option; 
however, in the event of a decision by the appeals panel to remand the 
adverse action to the original decision-making body for further 
consideration, the appeals panel must explain the basis for a decision 
that differs from that of the original decision-making body and the 
original decision-making body in a remand must act in a manner 
consistent with the appeals panel's decisions or instructions.
* * * * *

0
33. Section 602.26 is amended by:
0
a. Redesignating paragraphs (b), (c), (d), and (e) as paragraphs (c), 
(d), (e), and (f);
0
b. Adding a new paragraph (b); and
0
c. Revising newly redesignated paragraphs (c), (d), (e), and (f).
    The addition and revisions read as follows:


Sec.  602.26  Notification of accrediting decisions.

* * * * *
    (b) Provides written notice of a final decision of a probation or 
equivalent status or an initiated adverse action to the Secretary, the 
appropriate State licensing or authorizing agency, and the appropriate 
accrediting agencies at the same time it notifies the institution or 
program of the decision and requires the institution or program to 
disclose such an action within seven business days of receipt to all 
current and prospective students;
    (c) Provides written notice of the following types of decisions to 
the Secretary, the appropriate State licensing or authorizing agency, 
and the appropriate accrediting agencies at the same time it notifies 
the institution or program of the decision, but no later than 30 days 
after it reaches the decision:
    (1) A final decision to deny, withdraw, suspend, revoke, or 
terminate the accreditation or preaccreditation of an institution or 
program.
    (2) A final decision to take any other adverse action, as defined 
by the agency, not listed in paragraph (c)(1) of this section;
    (d) Provides written notice to the public of the decisions listed 
in paragraphs (b) and (c) of this section within one business day of 
its notice to the institution or program;

[[Page 58926]]

    (e) For any decision listed in paragraph (c) of this section, 
requires the institution or program to disclose the decision to current 
and prospective students within seven business days of receipt and 
makes available to the Secretary, the appropriate State licensing or 
authorizing agency, and the public, no later than 60 days after the 
decision, a brief statement summarizing the reasons for the agency's 
decision and the official comments that the affected institution or 
program may wish to make with regard to that decision, or evidence that 
the affected institution has been offered the opportunity to provide 
official comment;
    (f) Notifies the Secretary, the appropriate State licensing or 
authorizing agency, the appropriate accrediting agencies, and, upon 
request, the public if an accredited or preaccredited institution or 
program--
    (1) Decides to withdraw voluntarily from accreditation or 
preaccreditation, within 10 business days of receiving notification 
from the institution or program that it is withdrawing voluntarily from 
accreditation or preaccreditation; or
    (2) Lets its accreditation or preaccreditation lapse, within 10 
business days of the date on which accreditation or preaccreditation 
lapses.
* * * * *

0
34. Section 602.27 is revised to read as follows:


Sec.  602.27  Other information an agency must provide the Department.

    (a) The agency must submit to the Department--
    (1) A list, updated annually, of its accredited and preaccredited 
institutions and programs, which may be provided electronically;
    (2) A summary of the agency's major accrediting activities during 
the previous year (an annual data summary), if requested by the 
Secretary to carry out the Secretary's responsibilities related to this 
part;
    (3) Any proposed change in the agency's policies, procedures, or 
accreditation or preaccreditation standards that might alter its--
    (i) Scope of recognition, except as provided in paragraph (a)(4) of 
this section; or
    (ii) Compliance with the criteria for recognition;
    (4) Notification that the agency has expanded its scope of 
recognition to include distance education or correspondence courses as 
provided in section 496(a)(4)(B)(i)(I) of the HEA. Such an expansion of 
scope is effective on the date the Department receives the 
notification;
    (5) The name of any institution or program it accredits that the 
agency has reason to believe is failing to meet its title IV, HEA 
program responsibilities or is engaged in fraud or abuse, along with 
the agency's reasons for concern about the institution or program; and
    (6) If the Secretary requests, information that may bear upon an 
accredited or preaccredited institution's compliance with its title IV, 
HEA program responsibilities, including the eligibility of the 
institution or program to participate in title IV, HEA programs.
    (b) If an agency has a policy regarding notification to an 
institution or program of contact with the Department in accordance 
with paragraph (a)(5) or (6) of this section, it must provide for a 
case-by-case review of the circumstances surrounding the contact, and 
the need for the confidentiality of that contact. When the Department 
determines a compelling need for confidentiality, the agency must 
consider that contact confidential upon specific request of the 
Department.

0
35. Add Sec.  602.29 to read as follows:


Sec.  602.29  Severability.

    If any provision of this subpart or its application to any person, 
act, or practice is held invalid, the remainder of the subpart or the 
application of its provisions to any person, act, or practice shall not 
be affected thereby.

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

Sec.  602.30  [Removed and Reserved]

0
36. Section 602.30 is removed and reserved.

0
37. Section 602.31 is revised to read as follows:


Sec.  602.31  Agency applications and reports to be submitted to the 
Department.

    (a) Applications for recognition or renewal of recognition. An 
accrediting agency seeking initial or continued recognition must submit 
a written application to the Secretary. Each accrediting agency must 
submit an application for continued recognition at least once every 
five years, or within a shorter time period specified in the final 
recognition decision, and, for an agency seeking renewal of 
recognition, 24 months prior to the date on which the current 
recognition expires. The application, to be submitted concurrently with 
information required by Sec.  [thinsp]602.32(a) and, if applicable, 
Sec.  [thinsp]602.32(b), must consist of--
    (1) A statement of the agency's requested scope of recognition;
    (2) Documentation that the agency complies with the criteria for 
recognition listed in subpart B of this part, including a copy of its 
policies and procedures manual and its accreditation standards; and
    (3) Documentation of how an agency that includes or seeks to 
include distance education or correspondence courses in its scope of 
recognition applies its standards in evaluating programs and 
institutions it accredits that offer distance education or 
correspondence courses.
    (b) Applications for expansions of scope. An agency seeking an 
expansion of scope by application must submit a written application to 
the Secretary. The application must--
    (1) Specify the scope requested;
    (2) Provide copies of any relevant standards, policies, or 
procedures developed and applied by the agency for its use in 
accrediting activities conducted within the expansion of scope proposed 
and documentation of the application of these standards, policies, or 
procedures; and
    (3) Provide the materials required by Sec.  [thinsp]602.32(j) and, 
if applicable, Sec.  [thinsp]602.32(l).
    (c) Compliance or monitoring reports. If an agency is required to 
submit a compliance or monitoring report, it must do so within 30 days 
following the end of the period for achieving compliance as specified 
in the decision of the senior Department official or Secretary, as 
applicable.
    (d) Review following an increase in headcount enrollment. If an 
agency that has notified the Secretary in writing of its change in 
scope to include distance education or correspondence courses in 
accordance with Sec.  [thinsp]602.27(a)(4) reports an increase in 
headcount enrollment in accordance with Sec.  [thinsp]602.19(e) for an 
institution it accredits, or if the Department notifies the agency of 
such an increase at one of the agency's accredited institutions, the 
agency must, within 45 days of reporting the increase or receiving 
notice of the increase from the Department, as applicable, submit a 
report explaining--
    (1) How the agency evaluates the capacity of the institutions or 
programs it accredits to accommodate significant growth in enrollment 
and to maintain education quality;
    (2) The specific circumstances regarding the growth at the 
institution or program that triggered the review and the results of any 
evaluation conducted by the agency; and
    (3) Any other information that the agency deems appropriate to 
demonstrate the effective application of the criteria for recognition 
or that the Department may require.

[[Page 58927]]

    (e) Consent to sharing of information. By submitting an application 
for recognition, the agency authorizes Department staff throughout the 
application process and during any period of recognition--
    (1) To observe its site visits to one or more of the institutions 
or programs it accredits or preaccredits, on an announced or 
unannounced basis;
    (2) To visit locations where agency activities such as training, 
review and evaluation panel meetings, and decision meetings take place, 
on an announced or unannounced basis;
    (3) To obtain copies of all documents the staff deems necessary to 
complete its review of the agency; and
    (4) To gain access to agency records, personnel, and facilities.
    (f) Public availability of agency records obtained by the 
Department.
    (1) The Secretary's processing and decision-making on requests for 
public disclosure of agency materials reviewed under this part are 
governed by the Freedom of Information Act, 5 U.S.C. 552; the Trade 
Secrets Act, 18 U.S.C. 1905; the Privacy Act of 1974, as amended, 5 
U.S.C. 552a; the Federal Advisory Committee Act, 5 U.S.C. Appdx. 1; and 
all other applicable laws. In recognition proceedings, agencies must, 
before submission to the Department--
    (i) Redact the names and any other personally identifiable 
information about individual students and any other individuals who are 
not agents of the agency or of an institution or program the agency is 
reviewing;
    (ii) Redact the personal addresses, personal telephone numbers, 
personal email addresses, Social Security numbers, and any other 
personally identifiable information regarding individuals who are 
acting as agents of the agency or of an institution or program under 
review;
    (iii) Designate all business information within agency submissions 
that the agency believes would be exempt from disclosure under 
exemption 4 of the Freedom of Information Act (FOIA), 5 U.S.C. 
552(b)(4). A blanket designation of all information contained within a 
submission, or of a category of documents, as meeting this exemption 
will not be considered a good faith effort and will be disregarded; and
    (iv) Ensure documents submitted are only those required for 
Department review or as requested by Department officials.
    (2) The agency may, but is not required to, redact the identities 
of institutions or programs that it believes are not essential to the 
Department's review of the agency and may identify any other material 
the agency believes would be exempt from public disclosure under FOIA, 
the factual basis for the request, and any legal basis the agency has 
identified for withholding the document from public disclosure.
    (3) The Secretary processes FOIA requests in accordance with 34 CFR 
part 5 and makes all documents provided to the Advisory Committee 
available to the public.
    (4) Upon request by Department staff, the agency must disclose to 
Department staff any specific material the agency has redacted that 
Department staff believes is needed to conduct the staff review. 
Department staff will make any arrangements needed to ensure that the 
materials are not made public if prohibited by law.
    (g) Length of submissions. The Secretary may publish reasonable, 
uniform limits on the length of submissions described in this section.

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


0
38. Section 602.32 is revised to read as follows:


Sec.  602.32  Procedures for submitting an application for recognition, 
renewal of recognition, expansion of scope, compliance reports, and 
increases in enrollment.

    (a) An agency preparing for renewing recognition will submit, 24 
months prior to the date on which the current recognition expires, and 
in conjunction with the materials required by Sec.  [thinsp]602.31(a), 
a list of all institutions or programs that the agency plans to 
consider for an award of initial or renewed accreditation over the next 
year or, if none, over the succeeding year, as well as any institutions 
or programs currently subject to compliance report review or reporting 
requirements. An agency that does not anticipate a review of any 
institution or program for an initial award of accreditation or renewed 
accreditation in the 24 months prior to the date of recognition 
expiration may submit a list of institutions or programs it has 
reviewed for an initial award of accreditation or renewal of 
accreditation at any time since the prior award of recognition or 
leading up to the application for an initial award of recognition.
    (b) An agency seeking initial recognition must follow the policies 
and procedures outlined in paragraph (a) of this section, but in 
addition must also submit--
    (1) Letters of support for the agency from at least three 
accredited institutions or programs, three educators, and, if 
appropriate, three employers or practitioners, explaining the role for 
such an agency and the reasons for their support; and
    (2) Letters from at least one program or institution that will rely 
on the agency as its link to a Federal program upon recognition of the 
agency or intends to seek multiple accreditation which will allow it in 
the future to designate the agency as its Federal link.
    (c) Department staff publishes a notice of the agency's submission 
of an application in the Federal Register inviting the public to 
comment on the agency's compliance with the criteria for recognition 
and establishing a deadline for receipt of public comment.
    (d) The Department staff analyzes the agency's application for 
initial or renewal of recognition, to determine whether the agency 
satisfies the criteria for recognition, taking into account all 
available relevant information concerning the compliance of the agency 
with those criteria and the agency's consistency in applying the 
criteria. The analysis of an application may include and, after January 
1, 2021, will include--
    (1)(i) Observations from site visits, on an announced or 
unannounced basis, to the agency or to a location where the agency 
conducts activities such as training, review and evaluation panel 
meetings, or decision meetings;
    (ii) Observations from site visits, on an announced or unannounced 
basis, to one or more of the institutions or programs the agency 
accredits or preaccredits;
    (iii) A file review at the agency of documents, at which time 
Department staff may retain copies of documents needed for inclusion in 
the administrative record;
    (iv) Review of the public comments and other third-party 
information Department staff receives by the established deadline, the 
agency's responses to the third-party comments, as appropriate, and any 
other information Department staff obtains for purposes of evaluating 
the agency under this part; and
    (v) Review of complaints or legal actions involving the agency; and
    (2) Review of complaints or legal actions against an institution or 
program accredited or preaccredited by the agency, which may be 
considered but are not necessarily determinative of compliance.
    (e) The Department may view as a negative factor when considering 
an application for initial, or expansion of scope of, recognition as 
proposed by an agency, among other factors, any evidence that the 
agency was part of a concerted effort to unnecessarily restrict

[[Page 58928]]

the qualifications necessary for a student to sit for a licensure or 
certification examination or otherwise be eligible for entry into a 
profession.
    (f) Department staff's evaluation of an agency may also include a 
review of information directly related to institutions or programs 
accredited or preaccredited by the agency relative to their compliance 
with the agency's standards, the effectiveness of the standards, and 
the agency's application of those standards, but must make all 
materials relied upon in the evaluation available to the agency for 
review and comment.
    (g) If, at any point in its evaluation of an agency seeking initial 
recognition, Department staff determines that the agency fails to 
demonstrate compliance with the basic eligibility requirements in 
Sec. Sec.  [thinsp]602.10 through 602.15, the staff--
    (1) Returns the agency's application and provides the agency with 
an explanation of the deficiencies that caused staff to take that 
action; and
    (2) Requires that the agency withdraw its application and instructs 
the agency that it may reapply when the agency is able to demonstrate 
compliance.
    (h) Except with respect to an application that has been returned 
and is withdrawn under paragraph (g) of this section, when Department 
staff completes its evaluation of the agency, the staff may and, after 
July 1, 2021, will--
    (1) Prepare a written draft analysis of the agency's application;
    (2) Send to the agency the draft analysis including any identified 
areas of potential noncompliance and all third-party comments and 
complaints, if applicable, and any other materials the Department 
received by the established deadline or is including in its review;
    (3) Invite the agency to provide a written response to the draft 
analysis and third-party comments or other material included in the 
review, specifying a deadline that provides at least 180 days for the 
agency's response;
    (4) Review the response to the draft analysis the agency submits, 
if any, and prepares the written final analysis--
    (i) Indicating that the agency is in full compliance, substantial 
compliance, or noncompliance with each of the criteria for recognition; 
and
    (ii) Recommending that the senior Department official approve, 
renew with compliance reporting requirements due in 12 months, renew 
with compliance reporting requirements with a deadline in excess of 12 
months based on a finding of good cause and extraordinary 
circumstances, approve with monitoring or other reporting requirements, 
or deny, limit, suspend, or terminate recognition; and
    (5) Provide to the agency, no later than 30 days before the 
Advisory Committee meeting, the final staff analysis and any other 
available information provided to the Advisory Committee under Sec.  
602.34(c).
    (i) The agency may request that the Advisory Committee defer acting 
on an application at that Advisory Committee meeting if Department 
staff fails to provide the agency with the materials described, and 
within the timeframes provided, in paragraphs (g)(3) and (5) of this 
section. If the Department staff's failure to send the materials in 
accordance with the timeframe described in paragraph (g)(3) or (5) of 
this section is due to the failure of the agency to, by the deadline 
established by the Secretary, submit reports to the Department, other 
information the Secretary requested, or its response to the draft 
analysis, the agency forfeits its right to request a deferral of its 
application.
    (j) An agency seeking an expansion of scope, either as part of the 
regular renewal of recognition process or during a period of 
recognition, must submit an application to the Secretary, separately or 
as part of the policies and procedures outlined in paragraph (a) of 
this section, that satisfies the requirements of Sec. Sec.  602.12(b) 
and 602.31(b) and--
    (1) States the reason for the expansion of scope request;
    (2) Includes letters from at least three institutions or programs 
that would seek accreditation under one or more of the elements of the 
expansion of scope; and
    (3) Explains how the agency must expand capacity to support the 
expansion of scope, if applicable, and, if necessary, how it will do so 
and how its budget will support that expansion of capacity.
    (k) The Department may view as a negative factor when considering 
an application for initial or expansion of scope of recognition as 
proposed by an agency, among other factors, any evidence that the 
agency was part of a concerted effort to unnecessarily restrict the 
qualifications necessary for a student to sit for a licensure or 
certification examination or otherwise be eligible for entry into a 
profession.
    (l) Department staff's evaluation of a compliance report includes 
review of public comments solicited by Department staff in the Federal 
Register received by the established deadline, the agency's responses 
to the third-party comments, as appropriate, other third-party 
information Department staff receives, and additional information 
described in paragraphs (d) and (e) of this section, as appropriate.
    (m) The Department will process an application for an expansion of 
scope, compliance report, or increase in enrollment report in 
accordance with paragraphs with paragraphs (c) through (h) of this 
section.

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



0
39. Section 602.33 is revised to read as follows:


Sec.  602.33  Procedures for review of agencies during the period of 
recognition, including the review of monitoring reports.

    (a) Department staff may review the compliance of a recognized 
agency with the criteria for recognition at any time--
    (1) Based on the submission of a monitoring report as directed by a 
decision by the senior Department official or Secretary; or
    (2) Based on any information that, as determined by Department 
staff, appears credible and raises concerns relevant to the criteria 
for recognition.
    (b) The review may include, but need not be limited to, any of the 
activities described in Sec.  602.32(d) and (f).
    (c) If, in the course of the review, and after providing the agency 
the documentation concerning the inquiry and consulting with the 
agency, Department staff notes that one or more deficiencies may exist 
in the agency's compliance with the criteria for recognition or in the 
agency's effective application of those criteria, Department staff--
    (1) Prepares a written draft analysis of the agency's compliance 
with the criteria of concern;
    (2) Sends to the agency the draft analysis including any identified 
areas of noncompliance and all supporting documentation;
    (3) Invites the agency to provide a written response to the draft 
analysis within 90 days; and
    (4) Reviews any response provided by the agency, including any 
monitoring report submitted, and either--
    (i) Concludes the review;
    (ii) Continues monitoring of the agency's areas of deficiencies; or
    (iii)(A) Notifies the agency, in the event that the agency's 
response or monitoring report does not satisfy the staff, that the 
draft analysis will be finalized for presentation to the Advisory 
Committee;
    (B) Publishes a notice in the Federal Register with an invitation 
for the public to comment on the agency's compliance with the criteria 
in question and establishing a deadline for receipt of public comment;
    (C) Provides the agency with a copy of all public comments received 
and

[[Page 58929]]

invites a written response from the agency;
    (D) Finalizes the staff analysis as necessary to reflect its review 
of any agency response and any public comment received;
    (E) Provides to the agency, no later than 30 days before the 
Advisory Committee meeting, the final staff analysis and a recognition 
recommendation and any other information provided to the Advisory 
Committee under Sec.  602.34(c); and
    (F) Submits the matter for review by the Advisory Committee in 
accordance with Sec.  602.34.

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



0
40. Section 602.34 is revised to read as follows:


Sec.  602.34  Advisory Committee meetings.

    (a) Department staff submits a proposed schedule to the Chairperson 
of the Advisory Committee based on anticipated completion of staff 
analyses.
    (b) The Chairperson of the Advisory Committee establishes an agenda 
for the next meeting and, in accordance with the Federal Advisory 
Committee Act, presents it to the Designated Federal Official for 
approval.
    (c) Before the Advisory Committee meeting, Department staff 
provides the Advisory Committee with--
    (1) The agency's application for recognition, renewal of 
recognition, or expansion of scope when Advisory Committee review is 
required, or the agency's compliance report and supporting 
documentation submitted by the agency;
    (2) The final Department staff analysis of the agency developed in 
accordance with Sec.  [thinsp]602.32 or Sec.  [thinsp]602.33, and any 
supporting documentation;
    (3) The agency's response to the draft analysis;
    (4) Any written third-party comments the Department received about 
the agency on or before the established deadline;
    (5) Any agency response to third-party comments; and
    (6) Any other information Department staff relied upon in 
developing its analysis.
    (d) At least 30 days before the Advisory Committee meeting, the 
Department publishes a notice of the meeting in the Federal Register 
inviting interested parties to make oral presentations before the 
Advisory Committee.
    (e) The Advisory Committee considers the materials provided under 
paragraph (c) of this section in a public meeting and invites 
Department staff, the agency, and other interested parties to make oral 
presentations during the meeting. A transcript is made of all Advisory 
Committee meetings.
    (f) The written motion adopted by the Advisory Committee regarding 
each agency's recognition will be made available during the Advisory 
Committee meeting. The Department will provide each agency, upon 
request, with a copy of the motion on recognition at the meeting. Each 
agency that was reviewed will be sent an electronic copy of the motion 
relative to that agency as soon as practicable after the meeting.
    (g) After each meeting of the Advisory Committee, the Advisory 
Committee forwards to the senior Department official its recommendation 
with respect to each agency, which may include, but is not limited to--
    (1)(i) For an agency that is fully compliant, approve initial or 
renewed recognition;
    (ii) Continue recognition with a required compliance report to be 
submitted to the Department within 12 months from the decision of the 
senior Department official;
    (iii) In conjunction with a finding of exceptional circumstances 
and good cause, continue recognition for a specified period in excess 
of 12 months pending submission of a compliance report;
    (iv) In the case of substantial compliance, grant initial 
recognition or renewed recognition and recommend a monitoring report 
with a set deadline to be reviewed by Department staff to ensure that 
corrective action is taken, and full compliance is achieved or 
maintained (or for action by staff under Sec.  [thinsp]602.33 if it is 
not); or
    (v) Deny, limit, suspend, or terminate recognition;
    (2) Grant or deny a request for expansion of scope; or
    (3) Revise or affirm the scope of the agency.

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



0
41. Section 602.35 is amended:
0
a. In paragraph (a), by adding the word ``business'' between ``ten'' 
and ``days'';
0
b. In paragraph (c)(1), by removing the words ``documentary evidence'' 
and adding in their place the word ``documentation''; and
0
c. In paragraph (c)(2), by adding the word ``business'' between ``ten'' 
and ``days'' and adding a sentence to the end of the paragraph.
    The addition reads as follows:


Sec.  602.35  Responding to the Advisory Committee's recommendation.

* * * * *
    (c) * * *
    (2) * * * No additional comments or new documentation may be 
submitted after the responses described in this paragraph are 
submitted.
* * * * *

0
42. Section 602.36 is revised to read as follows:


Sec.  602.36  Senior Department official's decision.

    (a) The senior Department official makes a decision regarding 
recognition of an agency based on the record compiled under Sec. Sec.  
602.32, 602.33, 602.34, and 602.35 including, as applicable, the 
following:
    (1) The materials provided to the Advisory Committee under Sec.  
602.34(c).
    (2) The transcript of the Advisory Committee meeting.
    (3) The recommendation of the Advisory Committee.
    (4) Written comments and responses submitted under Sec.  602.35.
    (5) New documentation submitted in accordance with Sec.  
602.35(c)(1).
    (6) A communication from the Secretary referring an issue to the 
senior Department official's consideration under Sec.  602.37(e).
    (b) In the event that statutory authority or appropriations for the 
Advisory Committee ends, or there are fewer duly appointed Advisory 
Committee members than needed to constitute a quorum, and under 
extraordinary circumstances when there are serious concerns about an 
agency's compliance with subpart B of this part that require prompt 
attention, the senior Department official may make a decision on an 
application for renewal of recognition or compliance report on the 
record compiled under Sec.  602.32 or Sec.  602.33 after providing the 
agency with an opportunity to respond to the final staff analysis. Any 
decision made by the senior Department official under this paragraph 
from the Advisory Committee may be appealed to the Secretary as 
provided in Sec.  602.37.
    (c) Following consideration of an agency's recognition under this 
section, the senior Department official issues a recognition decision.
    (d) Except with respect to decisions made under paragraph (f) or 
(g) of this section and matters referred to the senior Department 
official under Sec.  602.37(e) or (f), the senior Department official 
notifies the agency in writing of the senior Department official's 
decision regarding the agency's recognition within 90 days of the 
Advisory Committee meeting or conclusion of the review under paragraph 
(b) of this section.

[[Page 58930]]

    (e) The senior Department official's decision may include, but is 
not limited to, approving for recognition; approving with a monitoring 
report; denying, limiting, suspending, or terminating recognition 
following the procedures in paragraph (g) of this section; granting or 
denying an application for an expansion of scope; revising or affirming 
the scope of the agency; or continuing recognition pending submission 
and review of a compliance report under Sec. Sec.  602.32 and 602.34 
and review of the report by the senior Department official under this 
section.
    (1)(i) The senior Department official approves recognition if the 
agency has demonstrated compliance or substantial compliance with the 
criteria for recognition listed in subpart B of this part. The senior 
Department official may determine that the agency has demonstrated 
compliance or substantial compliance with the criteria for recognition 
if the agency has a compliant policy or procedure in place but has not 
had the opportunity to apply such policy or procedure.
    (ii) If the senior Department official approves recognition, the 
recognition decision defines the scope of recognition and the 
recognition period. The recognition period does not exceed five years, 
including any time during which recognition was continued to permit 
submission and review of a compliance report.
    (iii) If the scope of recognition is less than that requested by 
the agency, the senior Department official explains the reasons for 
continuing or approving a lesser scope.
    (2)(i) Except as provided in paragraph (e)(3) of this section, if 
the agency fails to comply with the criteria for recognition listed in 
subpart B of this part, the senior Department official denies, limits, 
suspends, or terminates recognition.
    (ii) If the senior Department official denies, limits, suspends, or 
terminates recognition, the senior Department official specifies the 
reasons for this decision, including all criteria the agency fails to 
meet and all criteria the agency has failed to apply effectively.
    (3)(i) If the senior Department official concludes an agency is 
noncompliant, the senior Department official may continue the agency's 
recognition, pending submission of a compliance report that will be 
subject to review in the recognition process, provided that--
    (A) The senior Department official concludes that the agency will 
demonstrate compliance with, and effective application of, the criteria 
for recognition within 12 months from the date of the senior Department 
official's decision; or
    (B) The senior Department official identifies a deadline more than 
12 months from the date of the decision by which the senior Department 
official concludes the agency will demonstrate full compliance with, 
and effective application of, the criteria for recognition, and also 
identifies exceptional circumstances and good cause for allowing the 
agency more than 12 months to achieve compliance and effective 
application.
    (ii) In the case of a compliance report ordered under paragraph 
(e)(3)(i) of this section, the senior Department official specifies the 
criteria the compliance report must address, and the time period for 
achieving compliance and effective application of the criteria. The 
compliance report documenting compliance and effective application of 
criteria is due not later than 30 days after the end of the period 
specified in the senior Department official's decision.
    (iii) If the record includes a compliance report required under 
paragraph (e)(3)(i) of this section, and the senior Department official 
determines that an agency has not complied with the criteria for 
recognition, or has not effectively applied those criteria, during the 
time period specified by the senior Department official in accordance 
with paragraph (e)(3)(i) of this section, the senior Department 
official denies, limits, suspends, or terminates recognition, except, 
in extraordinary circumstances, upon a showing of good cause for an 
extension of time as determined by the senior Department official and 
detailed in the senior Department official's decision. If the senior 
Department official determines good cause for an extension has been 
shown, the senior Department official specifies the length of the 
extension and what the agency must do during it to merit a renewal of 
recognition.
    (f) If the senior Department official determines that the agency is 
substantially compliant, or is fully compliant but has concerns about 
the agency maintaining compliance, the senior Department official may 
approve the agency's recognition or renewal of recognition and require 
periodic monitoring reports that are to be reviewed and approved by 
Department staff.
    (g) If the senior Department official determines, based on the 
record, that a decision to deny, limit, suspend, or terminate an 
agency's recognition may be warranted based on a finding that the 
agency is noncompliant with one or more criteria for recognition, or if 
the agency does not hold institutions or programs accountable for 
complying with one or more of the agency's standards or criteria for 
accreditation that were not identified earlier in the proceedings as an 
area of noncompliance, the senior Department official provides--
    (1) The agency with an opportunity to submit a written response 
addressing the finding; and
    (2) The staff with an opportunity to present its analysis in 
writing.
    (h) If relevant and material information pertaining to an agency's 
compliance with recognition criteria, but not contained in the record, 
comes to the senior Department official's attention while a decision 
regarding the agency's recognition is pending before the senior 
Department official, and if the senior Department official concludes 
the recognition decision should not be made without consideration of 
the information, the senior Department official either--
    (1)(i) Does not make a decision regarding recognition of the 
agency; and
    (ii) Refers the matter to Department staff for review and analysis 
under Sec.  602.32 or Sec.  602.33, as appropriate, and consideration 
by the Advisory Committee under Sec.  602.34; or
    (2)(i) Provides the information to the agency and Department staff;
    (ii) Permits the agency to respond to the senior Department 
official and the Department staff in writing, and to include additional 
documentation relevant to the issue, and specifies a deadline;
    (iii) Provides Department staff with an opportunity to respond in 
writing to the agency's submission under paragraph (h)(2)(ii) of this 
section, specifying a deadline; and
    (iv) Issues a recognition decision based on the record described in 
paragraph (a) of this section, as supplemented by the information 
provided under this paragraph (h).
    (i) No agency may submit information to the senior Department 
official, or ask others to submit information on its behalf, for 
purposes of invoking paragraph (h) of this section. Before invoking 
paragraph (h) of this section, the senior Department official will take 
into account whether the information, if submitted by a third party, 
could have been submitted in accordance with Sec.  602.32(a) or Sec.  
602.33(e)(2).
    (j) If the senior Department official does not reach a final 
decision to approve, deny, limit, suspend, or terminate an agency's 
recognition before the expiration of its recognition period, the senior 
Department official

[[Page 58931]]

automatically extends the recognition period until a final decision is 
reached.
    (k) Unless appealed in accordance with Sec.  602.37, the senior 
Department official's decision is the final decision of the Secretary.

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



0
43. Section 602.37 is revised to read as follows:


Sec.  602.37  Appealing the senior Department official's decision to 
the Secretary.

    (a) The agency may appeal the senior Department official's decision 
to the Secretary. Such appeal stays the decision of the senior 
Department official until final disposition of the appeal. If an agency 
wishes to appeal, the agency must--
    (1) Notify the Secretary and the senior Department official in 
writing of its intent to appeal the decision of the senior Department 
official, no later than 10 business days after receipt of the decision;
    (2) Submit its appeal to the Secretary in writing no later than 30 
days after receipt of the decision; and
    (3) Provide the senior Department official with a copy of the 
appeal at the same time it submits the appeal to the Secretary.
    (b) The senior Department official may file a written response to 
the appeal. To do so, the senior Department official must--
    (1) Submit a response to the Secretary no later than 30 days after 
receipt of a copy of the appeal; and
    (2) Provide the agency with a copy of the senior Department 
official's response at the same time it is submitted to the Secretary.
    (c) Once the agency's appeal and the senior Department official's 
response, if any, have been provided, no additional written comments 
may be submitted by either party.
    (d) Neither the agency nor the senior Department official may 
include in its submission any new documentation it did not submit 
previously in the proceeding.
    (e) On appeal, the Secretary makes a recognition decision, as 
described in Sec.  [thinsp]602.36(e). If the decision requires a 
compliance report, the report is due within 30 days after the end of 
the period specified in the Secretary's decision. The Secretary renders 
a final decision after taking into account the senior Department 
official's decision, the agency's written submissions on appeal, the 
senior Department official's response to the appeal, if any, and the 
entire record before the senior Department official. The Secretary 
notifies the agency in writing of the Secretary's decision regarding 
the agency's recognition.
    (f) The Secretary may determine, based on the record, that a 
decision to deny, limit, suspend, or terminate an agency's recognition 
may be warranted based on a finding that the agency is noncompliant 
with, or ineffective in its application with respect to, a criterion or 
criteria for recognition not identified as an area of noncompliance 
earlier in the proceedings. In that case, the Secretary, without 
further consideration of the appeal, refers the matter to the senior 
Department official for consideration of the issue under Sec.  
[thinsp]602.36(g). After the senior Department official makes a 
decision, the agency may, if desired, appeal that decision to the 
Secretary.
    (g) If relevant and material information pertaining to an agency's 
compliance with recognition criteria, but not contained in the record, 
comes to the Secretary's attention while a decision regarding the 
agency's recognition is pending before the Secretary, and if the 
Secretary concludes the recognition decision should not be made without 
consideration of the information, the Secretary either--
    (1)(i) Does not make a decision regarding recognition of the 
agency; and
    (ii) Refers the matter to Department staff for review and analysis 
under Sec.  [thinsp]602.32 or Sec.  [thinsp]602.33, as appropriate; 
review by the Advisory Committee under Sec.  [thinsp]602.34; and 
consideration by the senior Department official under Sec.  
[thinsp]602.36; or
    (2)(i) Provides the information to the agency and the senior 
Department official;
    (ii) Permits the agency to respond to the Secretary and the senior 
Department official in writing, and to include additional documentation 
relevant to the issue, and specifies a deadline;
    (iii) Provides the senior Department official with an opportunity 
to respond in writing to the agency's submission under paragraph 
(g)(2)(ii) of this section, specifying a deadline; and
    (iv) Issues a recognition decision based on all the materials 
described in paragraphs (e) and (g) of this section.
    (h) No agency may submit information to the Secretary, or ask 
others to submit information on its behalf, for purposes of invoking 
paragraph (g) of this section. Before invoking paragraph (g) of this 
section, the Secretary will take into account whether the information, 
if submitted by a third party, could have been submitted in accordance 
with Sec.  [thinsp]602.32(a) or Sec.  [thinsp]602.33(c).
    (i) If the Secretary does not reach a final decision on appeal to 
approve, deny, limit, suspend, or terminate an agency's recognition 
before the expiration of its recognition period, the Secretary 
automatically extends the recognition period until a final decision is 
reached.

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



0
44. Add Sec.  602.39 to read as follows:


Sec.  602.39  Severability.

    If any provision of this subpart or its application to any person, 
act, or practice is held invalid, the remainder of the subpart or the 
application of its provisions to any person, act, or practice shall not 
be affected thereby.

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

PART 603--SECRETARY'S RECOGNITION PROCEDURES FOR STATE AGENCIES

0
45. The authority citation for part 603 continues to read as follows:

    Authority:  20 U.S.C. 1094(C)(4), unless otherwise noted.


Sec.  603.24  [Amended]

0
46. Section 603.24 is amended by removing paragraph (c) and 
redesignating paragraph (d) as paragraph (c).

0
47. Add Sec.  603.25 to read as follows:


Sec.  603.25  Severability.

    If any provision of this subpart or its application to any person, 
act, or practice is held invalid, the remainder of the subpart or the 
application of its provisions to any person, act, or practice shall not 
be affected thereby.

PART 654--[REMOVED AND RESERVED]

0
48. Under the authority of 20 U.S.C. 1099b, part 654 is removed and 
reserved.

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

0
49. The authority citation for part 668 continues to read as follows:

    Authority:  20 U.S.C. 1001-1003, 1070g, 1085, 1088, 1091, 1092, 
1094, 1099c-1, 1221-3, and 1231a, unless otherwise noted.


Sec.  [thinsp]668.8  [Amended]

0
50. Section 668.8 is amended in paragraph (l)(2) introductory text by 
removing the words ``in accordance with 34 CFR 602.24(f) or, if 
applicable, 34 CFR 603.24(c),''.

0
51. Section 668.26 is amended by:
0
a. Redesignating paragraph (e) as paragraph (f); and

[[Page 58932]]

0
b. Adding new paragraph (e).
    The addition reads as follows:


Sec.  [thinsp]668.26  End of an institution's participation in the 
Title IV, HEA programs.

* * * * *
    (e)(1) Notwithstanding the requirements of any other provision in 
this section, with agreement from the institution's accrediting agency 
and State, the Secretary may permit an institution to continue to 
originate, award, or disburse funds under a Title IV, HEA program for 
no more than 120 days following the date of a final, non-appealable 
decision by an accrediting agency to withdraw, suspend, or terminate 
accreditation, by a State authorizing agency to remove State 
authorization, or by the Secretary to end the institution's 
participation in title IV, HEA programs if--
    (i) The institution has notified the Secretary of its plans to 
conduct an orderly closure in accordance with any applicable 
requirements of its accrediting agency;
    (ii) As part of the institution's orderly closure, it is performing 
a teach-out that has been approved by its accrediting agency;
    (iii) The institution agrees to abide by the conditions of the 
program participation agreement that was in effect on the date of the 
decision under paragraph (e)(1), except that it will originate, award, 
or disburse funds under that agreement only to enrolled students who 
can complete the program within 120 days of the decision under 
paragraph (e)(1) or who can transfer to a new institution; and
    (iv) The institution presents the Secretary with acceptable written 
assurances that--
    (A) The health and safety of the institution's students are not at 
risk;
    (B) The institution has adequate financial resources to ensure that 
instructional services remain available to students during the teach-
out; and
    (C) The institution is not subject to probation or its equivalent, 
or adverse action by the institution's State authorizing body or 
accrediting agency, except as provided in paragraph (e)(1).
    (2) An institution is prohibited from engaging in 
misrepresentation, consistent with 34 CFR part 668 subpart F and 
consistent with 34 CFR part 685 subpart B, about the nature of its 
teach-out plans, teach-out agreements, and transfer of credit.
* * * * *

0
52. Add Sec.  668.29 to read as follows:


Sec.  668.29  Severability.

    If any provision of this subpart or its application to any person, 
act, or practice is held invalid, the remainder of the subpart or the 
application of its provisions to any person, act, or practice shall not 
be affected thereby.


Sec.  [thinsp]668.41  [Amended]

0
53. Section 668.41 is amended by:
0
a. Removing the word ``calculates'' and adding in its place the phrase 
``publishes or uses in advertising'' in paragraph (d)(5)(i)(A);
0
b. Removing and reserving paragraph (d)(5)(ii); and
0
c. Removing paragraph (d)(5)(iii).

0
54. Section 668.43 is amended by:
0
a. Removing the word ``and'' at the end of paragraph (a)(5)(iii);
0
b. Adding the word ``and'' at the end of paragraph (a)(5)(iv);
0
c. Adding paragraph (a)(5)(v);
0
d. Removing the word ``and'' at the end of paragraph (a)(10)(iii);
0
e. Revising paragraphs (a)(11) and (12);
0
f. Adding paragraphs (a)(13) through (20); and
0
g. Adding paragraph (c).
    The additions and revisions read as follows:


Sec.  [thinsp]668.43  Institutional information.

    (a) * * *
    (5) * * *
    (v) If an educational program is designed to meet educational 
requirements for a specific professional license or certification that 
is required for employment in an occupation, or is advertised as 
meeting such requirements, information regarding whether completion of 
that program would be sufficient to meet licensure requirements in a 
State for that occupation, including--
    (A) A list of all States for which the institution has determined 
that its curriculum meets the State educational requirements for 
licensure or certification;
    (B) A list of all States for which the institution has determined 
that its curriculum does not meet the State educational requirements 
for licensure or certification; and
    (C) A list of all States for which the institution has not made a 
determination that its curriculum meets the State educational 
requirements for licensure or certification;
* * * * *
    (11) A description of the transfer of credit policies established 
by the institution, which must include a statement of the institution's 
current transfer of credit policies that includes, at a minimum--
    (i) Any established criteria the institution uses regarding the 
transfer of credit earned at another institution and any types of 
institutions or sources from which the institution will not accept 
credits;
    (ii) A list of institutions with which the institution has 
established an articulation agreement; and
    (iii) Written criteria used to evaluate and award credit for prior 
learning experience including, but not limited to, service in the armed 
forces, paid or unpaid employment, or other demonstrated competency or 
learning;
    (12) A description in the program description of written 
arrangements the institution has entered into in accordance with Sec.  
[thinsp]668.5, including, but not limited to, information on--
    (i) The portion of the educational program that the institution 
that grants the degree or certificate is not providing;
    (ii) The name and location of the other institutions or 
organizations that are providing the portion of the educational program 
that the institution that grants the degree or certificate is not 
providing;
    (iii) The method of delivery of the portion of the educational 
program that the institution that grants the degree or certificate is 
not providing; and
    (iv) Estimated additional costs students may incur as the result of 
enrolling in an educational program that is provided, in part, under 
the written arrangement;
    (13) The percentage of those enrolled, full-time students at the 
institution who--
    (i) Are male;
    (ii) Are female;
    (iii) Receive a Federal Pell Grant; and
    (iv) Are a self-identified member of a racial or ethnic group;
    (14) If the institution's accrediting agency or State requires the 
institution to calculate and report a placement rate, the institution's 
placement in employment of, and types of employment obtained by, 
graduates of the institution's degree or certificate programs, gathered 
from such sources as alumni surveys, student satisfaction surveys, the 
National Survey of Student Engagement, the Community College Survey of 
Student Engagement, State data systems, or other relevant sources 
approved by the institution's accrediting agency as applicable;
    (15) The types of graduate and professional education in which 
graduates of the institution's four-year degree programs enrolled, 
gathered from such sources as alumni surveys, student satisfaction 
surveys, the National Survey of Student Engagement, State data systems, 
or other relevant sources;
    (16) The fire safety report prepared by the institution pursuant to 
Sec.  [thinsp]668.49;

[[Page 58933]]

    (17) The retention rate of certificate- or degree-seeking, first-
time, full-time, undergraduate students entering the institution;
    (18) Institutional policies regarding vaccinations;
    (19) If the institution is required to maintain a teach-out plan by 
its accrediting agency, notice that the institution is required to 
maintain such teach-out plan and the reason that the accrediting agency 
required such plan under Sec.  [thinsp]602.24(c)(1); and
    (20) If an enforcement action or prosecution is brought against the 
institution by a State or Federal law enforcement agency in any matter 
where a final judgment against the institution, if rendered, would 
result in an adverse action by an accrediting agency against the 
institution, revocation of State authorization, or limitation, 
suspension, or termination of eligibility under title IV, notice of 
that fact.
* * * * *
    (c)(1) If the institution has made a determination under paragraph 
(a)(5)(v) of this section that the program's curriculum does not meet 
the State educational requirements for licensure or certification in 
the State in which a prospective student is located, or if the 
institution has not made a determination regarding whether the 
program's curriculum meets the State educational requirements for 
licensure or certification, the institution must provide notice to that 
effect to the student prior to the student's enrollment in the program.
    (2) If the institution makes a determination under paragraph 
(a)(5)(v)(B) of this section that a program's curriculum does not meet 
the State educational requirements for licensure or certification in a 
State in which a student who is currently enrolled in such program is 
located, the institution must provide notice to that effect to the 
student within 14 calendar days of making such determination.
    (3)(i) Disclosures under paragraphs (c)(1) and (2) of this section 
must be made directly to the student in writing, which may include 
through email or other electronic communication.
    (ii)(A) For purposes of this paragraph (c), an institution must 
make a determination regarding the State in which a student is located 
in accordance with the institution's policies or procedures, which must 
be applied consistently to all students.
    (B) The institution must, upon request, provide the Secretary with 
written documentation of its determination of a student's location 
under paragraph (c)(3)(ii)(A) of this section, including the basis for 
such determination.
    (C) An institution must make a determination regarding the State in 
which a student is located at the time of the student's initial 
enrollment in an educational program and, if applicable, upon formal 
receipt of information from the student, in accordance with the 
institution's procedures under paragraph (c)(3)(ii)(A) of this section, 
that the student's location has changed to another State.
* * * * *

0
55. Section 668.50 is revised to read as follows:


Sec.  668.50  Severability.

    If any provision of this subpart or its application to any person, 
act, or practice is held invalid, the remainder of the subpart or the 
application of its provisions to any person, act, or practice shall not 
be affected thereby.


Sec.  [thinsp]668.188  [Amended]

0
56. Section 668.188 is amended in paragraph (c) introductory text by 
removing the citation ``34 CFR 602.3'' and adding in its place ``34 CFR 
600.2''.

0
57. Add Sec.  668.198 to read as follows:


Sec.  668.198  Severability.

    If any provision of this subpart or its application to any person, 
act, or practice is held invalid, the remainder of the subpart or the 
application of its provisions to any person, act, or practice shall not 
be affected thereby.

PART 674--FEDERAL PERKINS LOAN PROGRAM

0
58. The authority citation for part 674 continues to read as follows:

    Authority:  20 U.S.C. 1070g, 1087aa-1087hh; Pub. L. 111-256, 124 
Stat. 2643; unless otherwise noted.


Sec.  [thinsp]674.33  [Amended]

0
59. Section 674.33 is amended in paragraph (g)(4)(i)(C) by removing the 
citation ``34 CFR 602.2'' and adding in its place ``34 CFR 600.2''.

[FR Doc. 2019-23129 Filed 10-31-19; 8:45 am]
 BILLING CODE 4000-01-P