[Federal Register Volume 85, Number 171 (Wednesday, September 2, 2020)]
[Rules and Regulations]
[Pages 54742-54818]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-18636]
[[Page 54741]]
Vol. 85
Wednesday,
No. 171
September 2, 2020
Part III
Department of Education
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34 CFR Parts 600, 602 and 668
Distance Education and Innovation; Final Rule
Federal Register / Vol. 85 , No. 171 / Wednesday, September 2, 2020 /
Rules and Regulations
[[Page 54742]]
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DEPARTMENT OF EDUCATION
34 CFR Parts 600, 602 and 668
[Docket ID ED-2018-OPE-0076]
RIN 1840-AD38
Distance Education and Innovation
AGENCY: Office of Postsecondary Education, Department of Education.
ACTION: Final regulations.
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SUMMARY: The Secretary amends the general, establishing eligibility,
maintaining eligibility, and losing eligibility sections of the
Institutional Eligibility regulations issued under the Higher Education
Act of 1965, as amended (HEA), related to distance education and
innovation. In addition, the Secretary amends the Student Assistance
General Provisions regulations issued under the HEA.
DATES: Effective date: These regulations are effective July 1, 2021.
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 information on these Distance
Education and Innovation regulations, please contact Greg Martin at
(202) 453-7535 or by email at [email protected].
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) amends the general,
establishing eligibility, maintaining eligibility, and losing
eligibility sections of the Institutional Eligibility regulations
issued under the Higher Education Act of 1965, as amended (HEA),
related to distance education and innovation. In addition, the
Secretary amends the Student Assistance General Provisions regulations
issued under the HEA. A more detailed summary can be found in the
Summary of the Major Provisions of This Regulatory Action section.
Summary of the Major Provisions of This Regulatory Action
These regulations--
Clarify that when calculating the number of correspondence
students, a student is considered ``enrolled in correspondence
courses'' if correspondence courses constitute 50 percent or more of
the courses in which the student enrolled during an award year;
Limit the requirement for the Secretary's approval to an
institution's first direct assessment program at each credential level;
Require institutions to report to the Secretary when they
add a second or subsequent direct assessment program or establish a
written arrangement for an ineligible institution or organization to
provide more than 25 percent, but no more than 50 percent, of a
program;
Require prompt Department action on any application an
institution submits to the Secretary seeking a determination that it
qualifies as an eligible institution and on any reapplications for a
determination that the institution continues to meet the requirements
to be an eligible institution for HEA programs;
Allow students enrolled in eligible foreign institutions
to complete up to 25 percent of an eligible program at an eligible
institution in the United States; and clarify that, notwithstanding
this provision, an eligible foreign institution may permit a Direct
Loan borrower to perform research in the United States for not more
than one academic year if the research is conducted during the
dissertation phase of a doctoral program;
Clarify the conditions under which a participating foreign
institution may enter into a written arrangement with an entity that
does not participate in the title IV, HEA programs;
Provide flexibility to institutions to modify their
curricula at the recommendations of industry advisory boards and
without relying on a traditional faculty-led decision-making process;
Provide flexibility to institutions when conducting clock-
to-credit hour conversions to eliminate confusion about the inclusion
of homework time in the clock-hour determination.
Clarify the eligibility requirements for a direct
assessment program;
Clarify, in consideration of the challenges to
institutions posed by minimum program length standards associated with
occupational licensing requirements, which vary from State to State,
that an institution may demonstrate a reasonable relationship between
the length of a program, as defined in 20 U.S.C. 1001(b)(1), and the
entry-level requirements of the occupation for which that program
prepares students;
Clarify that a student is not considered to have withdrawn
for purposes of determining the amount of title IV grant or loan
assistance that the student earned if the student completes all the
requirements for graduation for a non-term program or a subscription-
based program, if the student completes one or more modules that
comprise 49 percent or more of the number of days in the payment
period, or if the institution obtains written confirmation that the
student will resume attendance in a subscription-based or non-term
program;
Remove provisions pertaining to the use and calculation of
the Net Present Value of institutional loans for the calculation of the
90/10 ratio for proprietary institutions, because the provisions are no
longer applicable;
Clarify the satisfactory academic progress requirements
for non-term credit or clock programs, term-based programs that are not
a subscription-based program, and subscription-based programs;
Clarify that the Secretary will rely on the requirements
established by an institution's accrediting agency or State authorizing
agency to evaluate an institution's appeal of a final audit or program
review determination that includes a finding about the institution's
classification of a course or program as distance education, or the
institution's assignment of credit hours;
Clarify that the Secretary may deny an institution's
certification or recertification application to participate in the
title IV, HEA programs if an institution is not financially responsible
or does not submit its audits in a timely manner; and
Clarify that an institution is not financially responsible
if a person who exercises substantial ownership or control over an
institution also exercised substantial ownership or control over
another institution that closed without executing a viable teach-out
plan or agreement.
Costs and Benefits
As further detailed in the Regulatory Impact Analysis, the benefits
of the regulations include--
(1) Updating and clarifying definitions of key terms related to
distance education, correspondence courses, direct assessment, and
competency-based programs to support the continued development of these
innovative educational methods;
(2) Identifying a disbursement process for a subscription model for
competency-based education so schools know how their students can
access title IV aid for them, removing one potential barrier to growth
of such programs; and
(3) Eliminating references to outdated technologies and making the
regulations
[[Page 54743]]
flexible enough to accommodate further technological advancements.
Institutions that choose to offer these programs will benefit from
the clarifications of terms and processes involved in establishing and
administering direct assessment programs and reduced barriers to entry.
While those currently offering such programs or competency-based
courses will be best positioned to offer new programs in the near-term,
we expect additional institutions to take advantage of the
opportunities to offer new programs. While it is more a function of
continued evolution in the postsecondary market, removing the barriers
to entry will increase competition and some institutions could face a
cost associated with losing students to those that offer appealing new
programs.
The emphasis on flexibility, workforce development, and innovative
educational approaches will be beneficial to students. Students,
especially non-traditional students that find the existing competency-
based or distance education programs to be appealing for various
reasons, can benefit from flexible pacing and different models for
assessing progress. Additionally, while competency-based models are a
relatively new segment of the postsecondary market, some evidence
suggests that the self-pacing model and other efforts by institutions
to accommodate other scheduling demands students have, and to recognize
knowledge and skills gained elsewhere, may allow students to graduate
with lower debt.\1\ However, it is not clear how students will respond,
and whether more traditional students will also be attracted to
competency based programs as more institutions develop them.
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\1\ www.texaspolicy.com/new-study-less-expensive-competency-based-education-programs-just-as-good-as-traditional-programs/.
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These regulations involve a significant amount of monetary
transfers among the Federal Government, students, and institutions
through increased Pell Grants and Federal student loans. The Department
assumes students in the existing baseline who switch from one program
to another will receive similar amounts of Federal aid, thus these
changes will not have a significant budget impact. We estimate that new
students attracted to new competency-based or other programs developed,
in part, because of the clarity created by these regulations will have
a net Federal budget impact over the 2020-2029 loan cohorts of $[-237]
million in outlays in the primary estimate scenario and an increase in
Pell Grant outlays of $1,021 million over 10 years, for a total net
impact of $784 million. The Department provides additional detail
related to budget estimates in the Regulatory Impact Analysis section
and provides burden estimates in the Paperwork Reduction Act section.
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 regulatory changes to regulations at title 34,
parts 600, 602, and 668 of the Code of Federal Regulations included in
this document for early implementation beginning on September 2, 2020,
at the discretion of each institution, or each agency, as appropriate.
The Department will implement the regulations as soon as possible after
the implementation date and will publish a separate notice announcing
the timing of the implementation. Otherwise, the final regulations
included in this document are effective July 1, 2021.
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 April 2,
2020. The Secretary invited comments on the proposed regulations by May
4, 2020, and 238 parties submitted comments. An analysis of the
comments and of the changes in the regulations since publication of the
notice of proposed rulemaking (NPRM) \2\ follows.
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\2\ 85 FR 18638.
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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 changes, technical changes,
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 typically address comments pertaining to
issues that were not within the scope of the NPRM.
General Support
Comments: Many commenters expressed support for the regulations and
urged the Department not to modify them in a way that would weaken
student protections. These commenters, including several students,
expressed that they supported the regulation as a means of both
reducing barriers to innovation and achieving greater responsiveness to
workforce needs. Stating that the Department's regulations have not
kept up with changing technologies, many commenters underscored the
importance of these regulations considering the sudden move to distance
education due to COVID-19.
Several students supporting the rule also urged instructors,
institutions, accrediting agencies, or the Federal Government to do
more to keep up with changing technologies, suggesting that the lessons
learned during the pandemic would pay dividends in terms of better and
more responsive academic programs after it is over. Several commenters
said the regulations would reduce administrative burden, complement the
changes made in the accreditation final rule,\3\ and properly balance
support for innovation with protections for students and/or taxpayers.
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\3\ 84 FR 58834.
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A few commenters also--
(1) praised the move to a focus on competencies and skills, rather
than seat time;
(2) suggested the regulation would have the benefit of reducing
costs for students;
(3) acknowledged that distance education does not necessarily make
a course high- or low-quality but suggested that outdated technology
and teaching methods can be to blame for lower outcomes;
(4) asserted the rule would protect students from bad actors,
especially during the pandemic, and noted approvingly that even the
American Bar Association, which is typically resistant to distance
education, has been forced by the pandemic to embrace distance
learning, along with other flexibilities; and
[[Page 54744]]
(5) suggested more innovative learning methods could close
educational disparities and, by extension, wealth disparities, which
could lead to more American innovation, including patents and other
ideas that could benefit humanity.
However, one commenter expressed that while many will see the
benefits of distance education after the pandemic is over, that
commenter cautioned that some programs would not be appropriate to
conduct fully online and that flexibility should remain for blended
learning along with research to evaluate efficacy.
Other commenters supported the rule, generally noting that they--
(1) appreciated the safeguards to ensure regular interaction, which
would reduce the need for instructors to assign ``largely pointless
work'' to satisfy the standard; (2) praised the clarity of the
regulations, particularly the definitions; and (3) suggested the
regulations will benefit the education system by allowing programs to
be more specifically tailored to each student's individual needs.
One commenter said the rule would expand access to high-quality,
affordable education options to a broader segment of students and that
the proposals were generally fair to students, incentivized rather than
punished innovation, focused quality assurance on outcomes, simplified
eligibility requirements, and protected student and taxpayer
investments.
One commenter supported the Department's effort to realign the
roles and responsibilities of the regulatory triad in postsecondary
education: The Federal Government, State authorizing agencies, and
accrediting agencies.
Another commenter noted that institutions have been slow to adopt
competency-based education (CBE) programs, often due to Federal
regulations, and further suggested these programs could particularly
benefit veterans and military-connected students and hoped institutions
would develop new CBE programs because of these regulations.
Discussion: The Department thanks these commenters for their
support for these regulations, including the greater clarity provided
in a number of definitions. We appreciate hearing from student
commenters who shared their perspectives, especially as they relate to
the impact of the COVID-19 pandemic on their educational experience,
and we appreciate their efforts to embrace innovation, and the optimism
they expressed that these regulations will help them and students to
follow. The Department agrees with many commenters that it is best to
allow institutions to better serve students utilizing the latest
technology and to do so now, given the challenges many students and
institutions are facing.
The Department agrees that the proposed rule appropriately balances
the need for innovation with strong protections for students and
taxpayers. We also agree with the commenter who suggested that some
disciplines may require at least some in-person instruction and noted
that instructors, institutions, and accrediting agencies are in the
best position to determine whether distance, blended, or ground-based
instruction is most appropriate. The Department agrees that additional
research could help it make even more informed decisions in the future.
We also agree that veterans, military-connected students, and many
other students can benefit from CBE programs and that more students
will benefit from these programs because of these regulations.
Changes: None.
Comments: One commenter praised the negotiation process, calling it
open, engaging, thorough, and fair, resulting in regulations that
provide better clarity and protections for students. The commenter
stated that the subcommittee, which made a complete set of
recommendations to the main committee, engaged in active and informed
interaction.
One commenter supported the Department's effort to select
negotiators representing diverse perspectives. The commenter expressed
gratitude for the significant time and effort negotiators spent on this
rulemaking. This commenter and several others also praised the work of
the negotiators and the Department in reaching consensus.
One commenter supported the consensus agreement and the proposed
rule for clarifying and reaffirming the appropriate role of accrediting
agencies in ensuring the integrity of distance education programs. The
commenter also asked that the Department not include additional
provisions that were not negotiated.
Discussion: We appreciate the support from commenters and agree
that one benefit of these regulations is to ensure clarity of the role
of accrediting agencies in matters related to distance education. We
note that the Administrative Procedure Act (APA) does not permit us to
include additional provisions that were not subject to the rulemaking
effort.
Changes: None.
Comments: Many commenters urged the Department to maintain
consensus language in the final rule and not make changes that would
weaken protections for students.
Discussion: We appreciate these commenters' suggestion and agree
that the final rule should maintain the consensus language to the
greatest extent practicable. The Department is leaving most of the
consensus language in the proposed rule unchanged. As discussed
elsewhere, the Department is making some changes at the request of
commenters, including to permit the use of asynchronous clock hours
offered through distance education and subscription-based disbursement
for programs not offered through direct assessment programs. As
discussed in this document, the Department believes the benefits of
these changes outweigh any risks. However, the Department believes the
final rule will maintain the important protections for students
presented in the NPRM.
Changes: None.
Comments: Several commenters acknowledged that the COVID-19
pandemic necessitates some flexibility in the short-term but greater
oversight in the long-term regarding distance education.
Discussion: The Department believes, as detailed elsewhere, that
the regulations appropriately consider both protections for consumers
and taxpayers as well as the need for innovation. While we did not know
during rulemaking sessions that a pandemic was in our future, these
regulations address the needs of both institutions and students in
response to COVID-19 and serve as additional evidence that the
rulemaking effort resulted in a needed and meaningful modernization of
our prior regulations. The Department also believes that there need not
be a tradeoff between consumer protection and innovation.
Changes: None.
Comments: Several commenters supported many of the provisions of
the proposed rule while suggesting that the lack of safeguards
generally, or with regard to distance education in particular, may have
downsides that necessitate strong consumer protections to protect
students and some groups of students in particular (including veterans
and military-connected students, low-income students, students of
color, and those lacking academic preparation).
Additionally, several commenters suggested that proprietary
institutions would be especially likely to treat students unfairly.
Discussion: The Department agrees that students should select
programs that align well with their prior academic preparation, their
learning style, and
[[Page 54745]]
their lifestyle. Additionally, we believe that all educational programs
must continue to have proper oversight by the Department, States, and
accrediting agencies. While protections for all students are important,
the benefits of a program should not be denied to some students simply
because the program is not the right choice for others. The Department
notes that the growth of adaptive learning and artificial intelligence
tools in recent years have allowed institutions to provide more
personalized academic supports, at scale, that may be even better than
what would be available in a traditional classroom, particularly in
traditional large lecture courses. These technologies may facilitate
more regular and effective faculty-student interaction than a
traditional classroom format enables.
The Department believes the enforcement of provisions protecting
students is vital and should occur without regard to the tax status of
the institution in question unless Congress directs the Department
otherwise. The Department takes all allegations of harm to students
seriously and does not condone improper conduct by any type of
institution whether public, private non-profit, or proprietary.
Changes: None.
Comments: One commenter urged the Department to avoid provisions
that would create unintended consequences for osteopathic clinical
education programs, including students completing out-of-State clinical
rotations. The commenter further requested that the Department avoid
new financial and administrative burdens during the COVID-19 pandemic.
Discussion: The Department considered clinical education programs
in this rulemaking as well as the accreditation rulemaking, which
covered issues related to State authorization of distance education and
are effective July 1, 2020. These distance education and innovation
regulations become effective July 1, 2021, allowing institutions and
others adequate time to plan for their implementation. Early
implementation is optional. We do not anticipate that these regulations
will create unique burdens on osteopathic clinical education programs,
which may elect to not integrate or expand distance learning
opportunities within those programs. The Department sought to reduce
financial and regulatory burden overall during this rulemaking. The
Regulatory Impact Analysis and Paperwork Reduction Act sections of this
final rule contain additional information about cost and burden.
Changes: None.
General Opposition
Comments: Several commenters expressed opposition to the final
regulations because of concerns over whether they would weaken existing
regulatory requirements on distance education programs. Other
commenters opposed the final regulations because they worried about the
potential negative impacts on colleges, universities, and the learning
environments of all students. One of these commenters suggested that
the cumulative effect of the proposed rule would allow for drastic and
unnecessary changes in the name of efficiency and innovation, while
sacrificing students' learning and protection in the process, leading
to further damage to students and taxpayers. Many of these commenters
expressed similar concerns that the proposed changes would expose
students and taxpayer-funded Federal aid dollars to undue risk.
Discussion: We thank the commenters for expressing their concerns,
and we have considered their objections. We do not share their
apprehension about the predicted consequences of these final
regulations. In fact, we believe that this final rule properly balances
the need to protect student interests and guard taxpayer dollars, while
also providing innovators the tools to deliver high-quality, distance
education for students in the 21st century. We do not believe these
goals must necessarily come at the expense of one another.
Changes: None.
Comments: Some commenters stated that the Department should rescind
the proposed regulations and redraft new regulations that protect
educational quality, the interests of students and taxpayers, and the
general higher education community.
Another commenter agreed that the proposed regulations should be
rescinded, in part, because the Department did not conduct reasoned
rulemaking as required by the APA. This commenter suggested that some
negotiators did not understand the rules and that the Department
``stacked the deck'' with an unmanageable agenda, created negotiating
committees stacked heavily in favor of industry, and starved the
committee of any real data or information to inform the rulemaking.
Further, the commenter stated that the Department ``bullied''
negotiators who ``dared to oppose the Department's proposals and
threatened others with promises of worse regulations if they refused to
accede.'' The commenter concluded that the result was an
``illegitimate'' vote of consensus. The same commenter added that the
Department reneged on its historic consensus and changed the final
regulations without sufficient factual justification. The commenter
stated that the Department relied on ``little more than anecdotes,
industry proposals, and ideology'' in its original proposals. The
commenter also added that the Distance Education subcommittee should
have more fully included student and taxpayer voices and interests and
that the Department failed to follow its own agreed to protocols by not
providing a preamble to members to review and comment on prior to
publication. Similarly, a different commenter remarked that student
veterans were not sufficiently represented, and more similar
individuals should have been added to the negotiating committees.
Another commenter argued that the livestreaming was not open to the
public and that the consensus vote on the regulations could not be
considered either valid or indicative of general support from any of
the communities around the negotiation table. Further, the commenter
stated that the data provided to the negotiators was disjointed and
insufficient and that the Department should incorporate additional
reporting requirements for distance education purposes, specifically
reporting about the distance education status of students who take
Federal loans.
A group of commenters objected to the rulemaking process, stating
that the Department appointed negotiators who appeared to have been
selected, not for their subject-matter expertise, but for their ties to
the for-profit college industry.
Discussion: As we stated in the final regulations on student
assistance general provisions, the Secretary's recognition of
accrediting agencies, and the Secretary's recognition procedures for
State agencies published on November 1, 2019, we disagree with the
commenters who said that the Department's rulemaking process was
flawed.\4\ It is not uncommon for the Department to address multiple
topics with a single negotiated rulemaking committee, nor was this the
first time that the Department utilized non-voting subcommittees to
delve into a specific topic and provide recommendations to the main
committee. The subcommittee's recommendations 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 a consensus agreement. The
Department notes that we added an
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additional negotiator, and an additional negotiating session at the
request of negotiators, to represent all relevant constituencies and in
hope of reaching consensus.
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\4\ See: 84 FR 58836.
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The Department disagrees with the commenter that our efforts to
achieve consensus were inappropriate. Contrary to the commenter's
assertions, the Department compromised countless times, moved away from
its initial proposals, and accepted negotiators' request for
substantially more time to negotiate.
Regarding the makeup of the subcommittee, the process of negotiated
rulemaking 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 selected
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 selected negotiators with
the goal of providing adequate representation for the affected parties
while keeping the size of the committee manageable. At the request of
negotiators, the Department agreed to add a representative of State
Higher Education Executive Officers on the main committee. In addition,
a representative of the New York Attorney General was added as a member
to the subcommittee.
Students and consumer protection advocates were represented by non-
Federal negotiators on the full committee and the subcommittee--student
veterans were well-represented on the full committee--with primary and
alternate representatives for each of these constituencies. Moreover,
the Department conducted three public hearings before the negotiated
rulemaking began and provided time for public comment on each of the 12
days that the main committee convened.
We disagree with the commenters who stated that the Department
failed to provide data or evidence, or stated that the data was
disjointed or insufficient, to support the need for the proposed
regulatory changes during negotiated rulemaking. The Department was
unable to fulfill several data requests made by negotiators because the
information was not available, but we do not believe the absence of
those data prevented negotiators from considering reasoned proposals.
We appreciate the commenter's proposal to add reporting
requirements to the final regulations, but we do not adopt their
proposal. The Department is comfortable with the current regime of
reporting requirements for distance education and does not wish to
create new burden on institutions that rely on or integrate distance
education technology in their education programs.
We acknowledge that there were temporary connectivity issues with
the livestreaming of the distance education subcommittee. While we
regret the interruption, the Department worked quickly to restore the
connection to ensure that interested parties could view the discussion.
The sessions were also recorded and can be viewed on the Department's
YouTube channel.\5\ The proceedings of the main committee can be viewed
at edstream.ed.gov.
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\5\ U.S. Department of Education YouTube page, www.youtube.com/user/usedgov/videos.
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We based the proposed regulatory changes on many factors, including
public feedback, research outlined in greater detail in the NPRM, 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.
Changes: None.
Comments: One commenter provided statistics showing the types of
institutions that are active in the online education industry and on
the growing expansion of online education. This commenter concluded
that growth has not correlated with increased access to minority and
non-traditional students or more quality programs. The commenter also
referenced lawsuits against online education providers and outlined
arguments against distance education.
Discussion: We appreciate the information provided by the
commenter, as well as the outline of the arguments against distance
education. We note, however, that institutions from all sectors-
regardless of whether they provide online or in-person classroom
instruction-have been the subject of lawsuits and borrower defense
claims. We reaffirm that legal action and the borrower defense process
remain available to all students, notwithstanding these distance
education regulations.\6\
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\6\ 84 FR 49788.
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The Department acknowledges the commenter's reference to litigation
against online education providers, but those legal actions do not
direct the Department's regulatory work. We also acknowledge the
arguments against distance education, but the Department does not
advocate for one type of education delivery system over any other. The
Department supports education innovation that is rigorous, meets
students' needs, and assists students in achieving their educational
goals. These final regulations assist in removing unnecessary barriers
to that innovation, while also assuring that online programs remain
academically rigorous, well-planned, and appropriate.
Changes: None.
Comments: One commenter remarked that the Department has led
taxpayers to believe that changes to the distance education regulations
will allow students to ``fast-track their education and save money''
and that the taxpayer will eventually pay the bill. The commenter also
wrote that CBE and career technology training is the ``adult version of
Common Core.''
Another commenter stated the proposed regulations are intended to
create tax breaks and ease burdens on wealthy taxpayers.
Discussion: The Department is confused by the commenter who
suggested that the intended purpose of the final rule was to create tax
breaks and ease the burden on wealthy taxpayers. The Department is not
empowered to create tax breaks.
We are similarly confused by the commenter who stated that CBE and
career technology training is the ``adult version of Common Core.'' The
Department is not attempting to dictate academic content or establish
national content standards, so we are unclear on any similarity to a
set of elementary and secondary English language arts and mathematics
standards. While some students may be able to complete their program
more quickly, the Department disagrees that this will result in some
sort of ``balance'' that must be covered by taxpayers. The Department
also never stated that the final rule would allow students to ``fast-
track'' their education. We believe that students should be able to
access educational services that are appropriate to their needs,
provide them with high-quality training and education, and meet the
requirements of the HEA, as amended.
Changes: None.
[[Page 54747]]
Comments: One commenter stated that any weakening of the
protections included in the consensus language would present a serious
risk to all students, especially Latino students, who, according to the
commenter, are overrepresented at institutions that, on average,
produce worse outcomes for students. Another commenter similarly
remarked that non-traditional students would be negatively impacted by
the final regulations.
Discussion: We appreciate the commenters' submissions and share
their desire for all students--men, women, minorities, under-
represented populations, and non-traditional populations--to have
access to high-quality education services.
The Department rejects the notion that student protections are
weakened in the proposed rule or that any such weakening
disproportionately impacts one student population over another. As we
stated in the Program Integrity: Gainful Employment final regulations,
the Department believes that more must be done to improve outcomes for
high-risk students, and more options must be made available to students
for whom college--and, especially, the traditional college experience--
is not the best or preferred option.\7\ We believe that high-quality
distance education programs, like the ones envisioned by the members of
the subcommittee, can and do meet students' unique needs and expand
educational opportunities to students previously underserved.
---------------------------------------------------------------------------
\7\ 84 FR 31433.
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Changes: None.
Comments: A group of commenters stated that the Department is
attempting to use its deregulatory agenda to override congressional
intent to ensure program quality and to protect students, taxpayers,
and the integrity of the Federal financial aid programs. The commenters
also suggest that the Department abused its rulemaking authority by
rolling back legislative protections that guard the integrity of the
student financial aid system. The commenters argued that the
Department's actions further jeopardize students' opportunities to
access a higher education system that promotes economic mobility.
Finally, the commenters concluded that the Department's agenda is proof
of its intent to disregard its obligation to responsibly administer
Federal Student Aid (FSA) programs.
Discussion: The Department thanks the commenters for their
submission. We share their concern for protecting students, taxpayers,
and the integrity of Federal financial aid programs. The consensus
language reflects that concern. The Department notes that it is not
within our regulatory authority to roll back legislative protections;
our regulations--and these final regulations specifically--must fall
within the parameters authorized by statute.
We disagree with commenter's suggestion that the final regulations
jeopardize opportunities to access higher education. This final rule
promotes more high-quality, distance education opportunities for
students who are not otherwise capable of attending traditional
classroom-based courses. In fact, much of our work is animated by the
desire to expand opportunities through education for economic mobility
and advancement.
The Department takes its responsibility to administer the title IV
programs seriously and strenuously seeks to guard taxpayers' dollars in
the operation of those programs. We disagree with the commenters'
suggestions otherwise.
Finally, legislators have the ability to further clarify their
intent through future legislative action. We look forward to working
with Congress on any such actions to promote educational opportunities
for all students.
Changes: None.
Comments: One commenter wrote that the intent of the final
regulations is to loosen the restrictions on institutions offering
distance learning. The commenter stated that allowing schools to have
more latitude over certain rules leaves room for schools to cut corners
to save money at the expense of quality. The commenter added that the
Department's contention that the reduction in regulation will increase
the number of programs offered by institutions is exactly what
predatory, for-profit, and fraudulent institutions want and that it
will inevitably make it easier for such institutions to access
financial aid funds at the cost of the students and taxpayers. Finally,
the commenter said that loosening restrictions would allow a school to
recycle pre-recorded lectures, give the student a test, and issue
unwarranted degrees if the student passes. The commenter was concerned
that such an outcome would greatly impact instructors' financial well-
being and the quality of the workforce.
Discussion: The intent of the final regulations is not to loosen
restrictions on any type of institution. The Department will continue
to hold all education providers accountable. The Department does not
condone the behavior of those who wrongfully cut corners to save money,
take advantage of students, misrepresent the selectivity of their
online programs, engage in pay-to-play admissions schemes, engage in
predatory advertisement or enrollment activities, or fraudulently
misrepresent their educational programs--and likely student outcomes.
We will take necessary actions to hold institutions accountable,
regardless of their tax status or organizational structure.
The Department appreciates the commenters concerns and addresses
the point regarding the use of recycled or pre-recorded lectures in the
appropriate sections below. However, we note that such a concern is not
limited to distance learning modalities.
Changes: None.
Comments: Many commenters asked the Department to rescind the
proposed rule or, alternatively, delay its implementation, to maintain
existing rules protecting the role of faculty and student interaction
and restricting outsourcing. This would allow Congress and the public
to better assess the needs of students and institutions. One of these
commenters wrote that the Department has a responsibility to avoid
making changes to distance education that would open the door to
instruction without interaction between students and faculty, leaving
students entirely reliant on software, apps, games, and prerecorded
video. This commenter also wrote that the proposed rules would
``undermine meaningful instruction by replacing it with standardized
exams.'' The commenter concluded that further deregulation in the
distance education environment did not make sense and that it would be
dangerous to students and faculty who are trying to design high-quality
programs to weaken the consensus language by expanding CBE programs.
Discussion: The Department disagrees with the commenter's
suggestion. We see no compelling reason, nor has one been provided
through the public comment process, to rescind or delay the final
regulations. We also note that reauthorization of the HEA is many years
overdue, and statute currently references technologies that are sorely
outdated. Therefore, we cannot rely solely on Congress to respond to
the need for higher education to adapt and evolve to serve the needs of
students.
While we understand that some may oppose the growth of distance
education, largely because of concerns about what this means to the job
prospects of current and future educators, those concerns are
misplaced. The role of the instructor is critical in high-quality
distance education, as explained in the appropriate section below, and
these regulations reaffirm the importance of
[[Page 54748]]
regular and substantive interaction as a key element that distinguishes
between distance learning and correspondence education.
We do not agree that the proposed rule would undermine meaningful
instruction by replacing it with standardized exams and are confident
that these final regulations do the opposite.
Changes: None.
Comments: One commenter suggested that the Department should only
allow some types of programs to offer distance education courses. The
commenter advocated for a rigid classification, reviewed by the
Department, of subject matter areas that would be eligible for remote
classes. The commenter stated that the basis for such a proposal is
that some careers, such as nursing and teaching, require real world
experiences and that the value that professors bring to their students
is not the same in an online program.
Discussion: The Department thanks the commenter for this proposal,
but we do not adopt this change. While we recognize that the
experiences of online learning and traditional classroom learning can
be very different, the Department believes that high-quality learning
is possible in both environments. We do not wish to forestall students
interested in nursing and teaching to be kept out of those fields
because they are not able to attend traditional, in-person classes. In
many instances, distance learning opportunities are limited to students
who are already working in fields such as teaching or nursing, and who
do not need additional hands-on experiences. In many instances,
distance learning enables practicing professionals to complete post-
graduate certificates or graduate degrees. Moreover, for many
occupations, accrediting agencies and State licensing boards restrict
the use of distance learning within certain programs.
As we have seen during the COVID-19 pandemic, some accrediting
agencies and State licensing boards are beginning to recognize the
opportunities presented by distance learning and are permitting certain
portions of programs to be provided through distance modalities. We
will continue to rely on accrediting agencies and State licensing
boards to determine when and if distance learning opportunities meet
the education and training needs of students in particular fields.
Changes: None.
Comments: Many commenters referenced COVID-19 in their submissions
to the Department and remarked upon the expanded prevalence of distance
education.
One commenter suggested that the proposed rule should be
deliberated and commented on after the pandemic is over because the
``last thing on American's [sic] minds'' is the accreditation of online
schools.
Many commenters concluded that a 30-day comment period during a
pandemic was not sufficient to thoroughly review the proposed rules.
These commenters requested that the Department delay the implementation
of the proposed rules.
A group of commenters stated that, at this pivotal moment and
informed by institutions' experiences during the pandemic, any
weakening of strong protections for students and taxpayers would open
the door for predatory actors to repeat past abuses, putting the most
vulnerable students at even greater risk.
One commenter stated that the Department cannot, in good faith,
move forward with any of the issues in the final regulations without
first grappling with the massive changes that the COVID-19 crisis will
bring to online education.
A group of commenters proposed that the Department reopen the
rulemaking process or postpone the enactment of the final regulations
to allow for additional comments. Many of these commenters noted
potential difficulty in responding to the NPRM because of COVID-19. One
commenter suggested that military and veterans' communities should be
allotted extra time to provide comments. Another commenter noted the
need for the Department to put the needs of our nation's college
students before the needs of ``distance education opportunists.''
Discussion: While we acknowledge that the NPRM may not have been
top-of-mind for most Americans during the COVID-19 pandemic, the
Department is confident 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 approximately one full year before the
comment period began, which afforded interested parties additional time
to begin formulating their comments.
Prior to issuing the proposed regulations, the Department conducted
three 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, 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, 2020, for them to be effective on July 1, 2021. Delaying the
effective date of these regulations would unnecessarily delay the
realization of the benefits associated with these changes.
Changes: None.
Correspondence Courses: Definition and Limitations (Sec. Sec. 600.2
and 600.7)
Comments: Two commenters expressed support for the proposed
definition of the term ``correspondence course.'' One of those
commenters specifically supported the elimination of the reference to
self-pacing in the previous definition of ``correspondence course'' and
indicated that the proposed definition makes it clearer that self-paced
programs are not necessarily correspondence programs. One commenter
also expressed support for the clarification regarding the definition
of a ``correspondence student'' in proposed Sec. 600.7(b)(2),
indicating that the specificity in the new definition would support new
and innovative academic models.
Discussion: The Department thanks the commenters for their support.
Changes: None.
Comments: Several commenters opposed the Department's proposed
changes to the definition of ``correspondence course,'' arguing that
the changes would make the distinction between distance education and
correspondence courses less clear. These commenters stressed the
importance of maintaining that distinction given the more limited
amount of support by qualified instructors in correspondence courses
and past abuses associated with correspondence study. Another commenter
indicated that the existing definition of ``correspondence course''
already adequately distinguished correspondence education from distance
education and did not need to be changed.
Discussion: We agree with the commenter about the importance of
support by qualified instructors, especially given the emphasis of that
concept in the statutory definition of ``distance education,'' which
requires ``regular and substantive interaction'' between students and
instructors. We also agree that it is important for the regulatory
definitions of distance education and correspondence courses
[[Page 54749]]
to be sufficiently distinct, both to implement the statutory
distinction between the terms and to ensure that institutions are able
to design programs in a way that maintains compliance and avoids audit
or program review findings with respect to their online programs.
However, we disagree that the proposed changes will blur the
distinction between the two terms.
The most significant change made to the definition of
``correspondence course'' in these regulations is the removal of the
concept of self-pacing, which is not vital to the distinction between
correspondence courses and distance education. The HEA also does not
mention the concept of self-pacing, nor does it express that such a
condition would require a course to be treated as offered through
correspondence education rather than through distance education. We
believe that the aspects of the definition of ``correspondence course''
that have been maintained in the definition--for example, that
interaction in such a course is limited, not regular and substantive,
and primarily initiated by the student--are more than adequate to
preserve the important regulatory distinction between distance
education and correspondence courses.
Changes: None.
Comments: One commenter objected to the proposed definition of
``correspondence student'' under proposed Sec. 600.7(b)(2), asserting
that the definition weakens the distinction between distance education
and correspondence courses and could result in a larger number of
participating institutions and students engaging in correspondence
study.
Discussion: We disagree that the proposed changes to Sec.
600.7(b)(2) will weaken the distinction between distance education and
correspondence courses or result in a greater number of institutions or
students engaging in correspondence study. The only impact of the
changes is to clarify how to calculate the number of correspondence
students for the purpose of determining whether an institution has
exceeded the statutory limitation on the number of correspondence
students that may be enrolled at an eligible institution during an
award year. The other relevant statutory and regulatory restrictions on
correspondence study that discourage institutions from offering
correspondence programs--for example, the institutional eligibility
limitations, the restriction to half-time enrollment status for
purposes of calculating Pell Grant disbursement amounts, and the
limitations on the components of cost of attendance for students
enrolled solely in correspondence study--would remain unchanged.
Changes: None.
Definition of Academic Engagement (Sec. 600.2)
Comments: Many commenters supported the Department's proposed
definition of ``academic engagement.'' Several commenters noted that by
moving key concepts on attendance and academic activities from the
Return of title IV funds (R2T4) regulations (under Sec. 668.22) to a
new definition of ``academic engagement'' in Sec. 600.2, the
Department emphasizes the importance of active student participation in
other parts of the regulations. One commenter also noted that the
definition would expand academic quality and accountability. Two
commenters specifically stressed their support of the Department's
acknowledgement within the definition that student academic engagement
can take on different forms, including interactive online courses and
computer instruction.
Two commenters specifically expressed support for the Department's
inclusion of Sec. 600.2(2)(iv), ``Participating in an interactive
tutorial, webinar, or other interactive computer-assisted
instruction,'' in the definition. The commenters indicated that they
believe this inclusion will help clarify the role adaptive learning and
other technologies can play in providing academic engagement.
Discussion: The Department thanks the commenters for their support.
Changes: None.
Comments: Several commenters requested that the Department include
new categories of activities under the definition of ``academic
engagement.'' Two commenters asked that the Department add a category
for education offered through virtual and augmented reality because
those modalities are becoming more commonly used in higher education.
One commenter suggested that the Department include as a category
under ``academic engagement'' instruction through computer-mediated
adaptive instruction that alters the learning experience for each
student based on that student's needs. Another commenter requested that
the Department clarify that instructor interaction does not have to
occur exclusively with a human instructor.
Discussion: As the Department discussed in the preamble to the NPRM
(85 FR 18638-18702), we consider ``other interactive computer-assisted
instruction'' to include the use of artificial intelligence or other
adaptive learning tools where the student is receiving feedback from
technology-mediated instruction. Computer-assisted instruction would
also include instruction through virtual or augmented reality, or any
other form of instruction in which a student actively participates in a
computer-based or computer-mediated learning environment, with or
without the presence of a human instructor. An explicit goal of this
rulemaking has been to reduce the need for updates to regulation when
new technologies are developed, and so this definition is also
inclusive of technologies that are in their infancy or not yet invented
as long as they meet the regulation's other requirements. Therefore,
because the types of learning described by the commenters (and others)
are already accommodated in the proposed definition of ``academic
engagement,'' we do not believe it is necessary to add additional
categories.
Changes: None.
Comments: One commenter expressed concern that the proposed
definition of ``academic engagement'' would require more than simply
actively logging into a website. The commenter indicated that this
could cause undue burden for students who were unable to academically
engage during normal hours or afford the technologies required by
institutions to demonstrate academic engagement as defined.
Another commenter voiced a concern that paragraph (3)(iv) of the
proposed definition, which states that academic engagement does not
include participating in academic counseling or advisement, could
discourage instructors from taking the time to speak with students
about their academic future or professional goals. The commenter
mentioned that depending on the nature of the course, it may be
difficult at times for instructors to differentiate between interacting
with students about ``academic matters,'' which qualify as academic
engagement, and ``academic counseling and advisement,'' which does not
qualify. The commenter requested that the Department remove the
exclusion of academic counseling or advisement from the definition of
academic engagement.
Discussion: We disagree that the definition of ``academic
engagement'' causes undue burden for students. Many institutions
previously believed that, under the Department's prior regulations,
students were required to not only log in, but engage in an activity
weekly for which the institution maintains documentation to prove that
the student was engaged every couple of days. This was identified as a
[[Page 54750]]
burdensome requirement that significantly exceeds requirements for
ground-based instruction, and that often requires students enrolled in
distance education to make time for what is otherwise viewed as ``busy
work.'' The new regulation clarifies that engagement must be meaningful
in order to be used as the basis for complying with the Department's
related requirements (such as identifying a student's withdrawal date),
but does not require, for example, students to post a non-substantive
blog post each week simply to ``check the box'' on documenting
participation.
The definition does not require a student to log in or participate
in a course or learning environment at a particular time, nor does it
require or incentivize institutions to demand the use of expensive
technologies to demonstrate academic engagement. The definition does
rely on the concept of active participation by a student in his or her
learning, which the Department believes is a necessary requirement for
academic engagement. This concept of active participation--which cannot
be demonstrated merely by documenting that a student has logged into an
online system--is also vital to other regulatory requirements,
including for purposes of determining a student's withdrawal date under
the R2T4 regulations.
For similar reasons, we also decline to remove the exclusion of
academic counseling and advisement from the definition of ``academic
engagement.'' While the Department views advisory activities related to
a student's academic or career trajectory as an important component of
many postsecondary programs, such advising by itself does not
demonstrate that a student is participating or engaged in his or her
academic program. Negotiators agreed that to the extent a qualified
instructor is providing advising relevant to a specific course--for
example, explaining where a student can find answers to content-related
questions, or recommending a particular approach to a writing
assignment for the course--academic engagement is taking place.
However, general academic or technical advising that is provided
outside of a specific course, and that is often provided by someone who
does not qualify as an instructor for the course in which the student
must be academically engaged--for example, guidance regarding which
classes the student plans to take in the future, or technical support
with instructional technology--does not constitute academic engagement.
Changes: None.
Comments: Several commenters asked the Department to clarify its
position regarding asynchronous academic engagement. The commenters
indicated that while the Department specifically mentions synchronous
instruction in the definition, it does not mention asynchronous
instruction even though asynchronous instruction is referenced
elsewhere, both in the ``distance education'' definition in Sec. 600.2
and as part of the new ``week of instruction'' definition in Sec.
668.3. One commenter specifically suggested including ``or
asynchronous'' after ``synchronous'' in paragraph (2)(i) of the
definition to clarify that asynchronous attendance and participation in
the classroom is included when documenting academic engagement in an
online program. Another commenter asserted that though certain
asynchronous activities, such as engagement in interactive forms of
computer-assisted instruction, might be read into the listed activities
in paragraph (2)(iv) of the definition, the omission of a direct
reference to asynchronous instruction makes it difficult to have
confidence in such an interpretation.
Discussion: The Department's intent was not to exclude asynchronous
participation in learning activities from the definition of academic
engagement. Asynchronous academic engagement could occur under any of
the categories described in the definition except for the category
described under paragraph (2)(i) that describes attendance at a
synchronous lecture, recitation, or field or laboratory activity. For
example, a student can work on an academic assignment--described under
paragraph (2)(ii) of the definition--at the time of his or her
choosing, and submission of that assignment is an asynchronous learning
activity that does not require real-time interaction with an
instructor. Similarly, a student could demonstrate academic engagement
under paragraph (2)(iv), ``participating in an interactive tutorial,
webinar, or other interactive computer-assisted instruction,'' by
engaging in a presentation through a virtual or augmented reality
system or by participating in an online learning activity that uses
artificial intelligence or adaptive learning. We do not believe that it
is necessary to add the word ``asynchronous'' to the definition given
the incorporation of this concept in each of these activities. We also
decline to remove the word ``synchronous'' from paragraph (2)(i), since
in that context it is used to describe a particular type of learning
activity that is performed in real time with an instructor.
Changes: None.
Definition of Additional Location (Sec. 600.2)
Comments: One commenter requested clarification about the addition
of a definition of ``additional location.''
Discussion: We did not seek comment on the ``additional location''
definition in the NPRM that we address in this final rule. Instead, we
sought comments on that definition in an NPRM published in the Federal
Register on June 12, 2019 (84 FR 27404). That NPRM included
Accreditation-related definitions, including the definition of
``additional location.'' We published a final rule that included the
definition of ``additional location'' in the Federal Register on
November 1, 2019 (84 FR 58834) in which we addressed comments we
received related to the definition.
Changes: None.
Definition of a Clock Hour (Sec. 600.2)
Comments: Numerous commenters voiced disagreement with the
provisions in the Department's proposed definition of the term ``clock
hour'' that require each clock hour in a distance education program to
include synchronous instruction where students have an opportunity to
interact with instructors and asked the Department to reconsider this
requirement.
Several commenters indicated that the proposed clock hour
definition regarding distance education was too restrictive and should
conform to the Department's definition of ``distance education,'' which
allows for ``regular and substantive interaction between the students
and the instructor or instructors, either synchronously or
asynchronously.'' The commenters asked the Department to reconsider
whether clock hours could be earned through asynchronous instruction,
noting that several educational platforms are already capable of
monitoring a student's participation and clocking the student out if
active engagement ceases.
One commenter noted the Department's reluctance to support
asynchronous distance education (ADE) instruction within the clock hour
definition was most likely due to the concern as to whether a clock
hour student's required ``seat time''--50 minutes in a 60-minute
period--could be validated. The commenter indicated that current
technology already provides effective tools which, if properly
incorporated into an asynchronous distance education platform, marry
effective program instruction with effective ``seat time'' validation.
As explained by the commenter, an
[[Page 54751]]
electronic synchronous distance education platform would include such
components as sign-in assurance, time monitoring through trackable
digital media assets, automated sign-off for inactivity, live student
to student and student to instructor activities and automated Q & A,
and testing processes. Based on this information, the commenter
requested that the Department modify its proposed definition of a
``clock hour'' to permit instruction provided via electronic
synchronous distance education.
One commenter stressed that permitting the development of
asynchronous instruction in clock hour programs allows for the kind of
instructional flexibility needed for career and technical education
providers to use new methods of simulated, technology-mediated
instruction without constraint or fear of compliance findings.
Several commenters voiced a strong desire to afford the same
flexibilities to students enrolled in clock hour distance education
courses as students enrolled in credit hour distance education
programs. To that end, one commenter indicated that program structure
(clock hours or credit hours) is often based on institutional or State
governance and has no relationship to the quality or content of a
program. The commenters asserted that students enrolled in clock hour
programs should not be penalized merely due to institutional structure.
Another commenter stated that limiting clock hour distance
education coursework to synchronous online classes would limit the
convenience and flexibility to students of access to course content at
any time or place. Several commenters expressed concerns that limiting
distance education clock hour eligibility to synchronous activities
could limit innovation and discourage institutions from creating more
flexible and accessible learning experiences which could reduce
potential barriers to access and completion of postsecondary programs
and promote a more diverse student population.
Several commenters stressed that the Department authorizes
postsecondary institutions to offer eligible postsecondary programs in
a distance learning format as approved by the institution's accrediting
agency and that the exact same standards, quality assurance, integrity
and accountability measures used to approve traditional on-campus
programs are also applied to the distance education programs approved
by the accrediting bodies.
Several more commenters indicated that current technology in higher
education attendance monitoring provides systems that monitor
participation, proctor exams, verify attendance and provide tools for
students to interact with instructors at the time and place of their
choosing. The commenters further explained that online content is most
often used to supplement in-person training or lab work and that
asynchronous instruction can now be monitored by a school through many
educational platforms, students can be clocked out for inactivity, and
instructors and students have a variety of ways to interact with each
other and review various course materials. Many commenters expressed a
belief that current technology available to students and educators
allow for the same objectives to be met in an asynchronous format,
while allowing for more flexibility to overcome challenges related to
geography, learning preferences, work or family obligations,
disabilities, or resources. One commenter suggested asynchronous
learning could include the recording of classes to be viewed within a
specified time with periodic class meetings to answer questions.
Several commenters urged the Department to allow asynchronous
instruction via distance education if approved by State and accrediting
agencies as long as an institution could clearly demonstrate instructor
engagement with the student during each clock hour through a variety of
means, which could include technology such as adaptive learning and
artificial intelligence.
Two commenters indicated that the synchronous format described in
the proposed definition is too limiting and would not be broad enough
to allow students to engage in certain types of projects or assignments
such as reviewing written or recorded lectures outside of regular
classroom hours. Another commenter stated that the critical variable is
not coordinated schedules or designated time, but a learning
environment with diverse and engaging learning activities and faculty
involvement.
Two commenters supported the inclusion of distance education into
the Department's clock hour definition, arguing that distance learning
technology has sufficiently advanced to permit institutions to conduct
remotely synchronous instruction with students and to monitor the exact
amount of time that students spend participating in these learning
sessions. However, the commenters urged the Department to provide more
clarification and greater flexibility under paragraph (3) of the clock
hour definition which states that an institution must be capable of
monitoring a student's attendance in 50 out of 60 minutes for each
clock hour. Specifically, the commenters requested that the Department
clarify that the new clock hour definition not require an institution
to have live instructor involvement with a student each hour, so long
as the institution can monitor a student's participation during 50
minutes of each hour and the institution can otherwise demonstrate
academic engagement (per the Department's definition) by utilizing
suitable technology as demonstrated to the appropriate State and
accrediting agency. The commenters stressed that requiring ``face-to-
face'' contact each hour or at least one live touch by an instructor
per clock hour for synchronous or asynchronous instruction would ignore
the direction that the Department's Proposed Rule is heading to expand
recognition of the capabilities of technological advances to monitor
student academic engagement and impose an undue hardship on students
who need maximum scheduling flexibility in completing clock hours by
means of distance education.
One commenter objected to the proposed clock hour definition and
suggested the definition be reworded to account for students who may
have relocated to a different time zone from their institution, and
therefore might not be able to attend a class session in real time or
interact with the instructor during the normal period of attendance.
The commenter indicated that they currently attend a class in a
different time zone and often have to watch recordings of the class and
do not want these types of situations to be excluded from being counted
towards a student's academic progress.
One commenter requested that the Department clarify if it indeed
intended to limit distance education clock-hour eligibility to only
synchronous learning experiences but instead grant more flexibility to
correspondence courses. The commenter was concerned that, given the
limitations on correspondence students and courses applied to
correspondence education, institutions would prefer to designate
courses as distance education rather than correspondence whenever
appropriate.
One commenter urged the Department to extend the temporary
flexibilities for online instruction for clock hour programs due to the
current coronavirus crisis as outlined in the Department's guidance for
COVID-19. The commenter noted that the Department's temporary
flexibility allows schools to offer synchronous or asynchronous online
clock hour programs as long as the
[[Page 54752]]
school can demonstrate student academic engagement through various
online learning platforms and systems or based on school data or the
instructor's own knowledge. The commenter indicated that extending
these flexibilities would allow institutions to determine on a local
basis how to transition back to on-ground education and clarify that
clock hour schools are permitted to offer hybrid programs--partially
on-ground and partially online--through this period to provide maximum
flexibility to meet the health and safety needs of employees and
students.
Several commenters specifically requested that the Department
modify paragraph (1)(iv) of the proposed clock hour definition to
include both attendance in a synchronous or asynchronous class for
distance education coursework, while one commenter asked the Department
to include ``participation through asynchronous academic engagement''
or similar language to the distance education eligibility criteria in
paragraph (1)(iv) of the clock hour definition.
In addition, several commenters asked the Department to consider
modifying paragraph (1)(iv) to read, ``In distance education, 50 to 60
minutes in a 60-minute period of attendance in a `computer-assisted'
class, lecture, or recitation where there is opportunity for direct
interaction between the instructor and students'', while other
commenters simply requested that the word ``synchronous'' be removed
from paragraph (1)(iv). The commenters explained that removing the word
synchronous from the definition would allow institutions who wish to
offer clock hour programs synchronously or asynchronously, or a
combination of both, the flexibility and opportunity to prepare the
twenty-first century workforce in engaging and innovative ways.
Discussion: We are persuaded by the comments that preventing
institutions from offering instruction by asynchronous means is
unnecessarily restrictive and counter to the purposes of this
rulemaking. The emergence of the COVID-19 pandemic has illustrated the
need for institutional and student flexibility with regard to the time
and place that coursework is completed, and a number of licensing
agencies are also creating new flexibilities for the use of
asynchronous learning in clock hour programs. Asynchronous learning
allows students to design their own learning schedules around the
demands of work and family that often interfere with class activities
offered only at prescribed times. This flexibility can also greatly
benefit students with health concerns for whom participation is
contingent upon treatment schedules and feeling well enough to perform
required tasks. The individual pacing made possible by asynchronous
learning allows for a more tailored educational experience that
promotes mastery of subject matter over attendance in scheduled
activities. Moreover, the availability of asynchronous learning allows
for mixed model learning reflective of non-title IV eligible
programming with theory learned asynchronously and specific practical
tasks through synchronous instruction.
The Department does not wish to impede technological innovations at
institutions that can help students overcome barriers to access and
completion.
The existence of the ``regular and substantive interaction''
requirement related to clock hours offered through distance education
and the requirement that clock hours meet the requirements of an
institution's accrediting agency and State provide the safeguards that
ensure that students have access to quality instruction and instructor
support. Given these baseline requirements, it is not necessary to
require students to interact with instructors synchronously to earn
clock hours.
We also believe that commenters have made a strong case that, given
current technology, clock hours completed asynchronously can be
adequately supervised and monitored, provided the institution maintains
the appropriate technological resources and internal controls. We
disagree with commenters who indicated that learning technology is not
yet capable of monitoring student engagement in this manner, especially
since the Department has already reviewed and approved clock hour
programs that used online learning platforms that are capable of the
required monitoring.
The Department remains concerned about the possibility that clock
hours offered asynchronously could be used as a means to complete
unsupervised homework assignments rather than coursework that otherwise
would have occurred in the classroom, which is prohibited under the
Department's longstanding policy for clock-hour programs. Our position
is that the requirement for supervision of a clock hour in an
asynchronous learning environment is met when the institution is
capable of documenting the specific form of academic engagement
associated with the activity--for example, asynchronous participation
in an interactive tutorial or webinar online or a learning activity
involving adaptive learning or artificial intelligence--and the
institution has technological resources and policies and procedures
that are sufficient to monitor and document the time each student
spends performing that activity. If either of these conditions are not
met, an institution would not be permitted to include time spent on an
online activity toward completion of a clock hour for purposes of the
title IV, HEA programs.
We also agree with the commenters who argued that clock hours
offered asynchronously should involve academic engagement, as defined
elsewhere in these regulations, since that concept involves active
participation in learning activities rather than passive consumption of
knowledge or merely logging into an online system. An institution
should establish, in accordance with its policies and those of its
accrediting agency or State, what it considers to be academic
engagement in a clock hour program in order to clearly demonstrate that
students have spent the recorded time performing an activity.
Institutions are permitted to offer clock hour programs both
through correspondence or distance education, and the Department
declines to opine on which type of program is most appropriate or best
suited to the needs of individual students. However, institutions
offering clock hour programs using distance education continue to be
subject to the general requirements in the definition of ``distance
education,'' which requires regular and substantive interaction between
students and instructors. In such programs, some, but not all, clock
hours would need to involve substantive interaction between students
and instructors.
Changes: We have modified paragraph (1)(iv) of the ``clock hour''
definition to express that a clock hour includes a synchronous or
asynchronous class, lecture, or recitation where there is an
opportunity for direct interaction between instructors and students. We
also added a new subordinate paragraph to include, as part of the
definition of a clock hour, 50 to 60 minutes of active participation in
an asynchronous learning activity involving academic engagement in
which a student interacts with technology that can monitor and document
the amount of time that the student participates in the activity.
Comments: One commenter urged the Department to provide flexibility
to institutions with distance education clock hour programs, whether
taught in
[[Page 54753]]
synchronous or asynchronous learning environments, such that when
monitoring clock hours, the institutions be given the flexibility to
assign clock hours based upon the assignments provided to students as
long as there is adequate communication between the instructor and
students. The commenter mentioned that providing the flexibility to
monitor that instructors are providing relevant assignments equal to
the number of clock hours for which a student is enrolled would be
adequate since the quality of the educational program has been reviewed
and monitored by the school's accrediting agency.
Two commenters indicated that monitoring each student's time spent
on academic engagement would be challenging given the cost and
availability of current technology. One of those commenters indicated
that it is currently impossible to properly monitor and track a
student's attendance in 50 out of 60 minutes for each clock hour via
distance education due to a lack of institutional means and
technological uniformity. In addition, the commenter expressed a
concern that the notion that technology has sufficiently advanced to
permit institutions to conduct remotely synchronous, face-to-face
instruction with students and to monitor the exact amount of time
students participate in learning sessions is flawed because it is based
on the premise that both the instructors and students can obtain,
operate, and monitor the required devices needed to properly conduct
distance education learning. The commenter asserted that the Department
would be best served by dropping the new clock hour definition and
instead, focusing on ensuring that an adequate amount of work is being
completed rather than mandating a set amount of time be spent on
coursework.
Discussion: While we agree that it should be possible for a student
to earn clock hours through participation in asynchronous online
learning activities, we disagree that an institution can measure such
clock hours without monitoring a student's actual participation in
those activities. A clock hour is a period of 50 to 60 minutes in a 60-
minute period spent receiving instruction or actively participating in
a particular educational activity, and institutions are responsible for
measuring the amount of time that students spend in such activities.
The Department has never permitted institutions to award clock hours
based on estimates of completed work and does not intend to do so for
clock hour programs offered through distance education. We also
disagree with the commenter that the technology needed to perform this
monitoring does not exist or that it cannot be obtained by institutions
and students. The Department has seen demonstrations of such technology
by institutions that offer clock hour programs and was convinced that
the technology was both viable and appropriate for use in monitoring
clock hours completed asynchronously.
Changes: None.
Comments: One commenter asserted that the Department's proposed
clock hour definition fell short of its stated goal in the NPRM ``to
remove barriers that institutions face when trying to create and
implement new and innovative ways of providing education to students.''
Specifically, the commenter suggested that the modern-day use of a
calculation of seat time to measure student learning and progress is
grounded on a false premise, especially considering today's online
technologies, including artificial intelligence and adaptive learning
tools. The commenter opined that since the definition of a ``clock
hour'' is not defined in title IV, the Department should consider
removing the definition of ``clock hour'' from Sec. 600.2 and instead,
rely on accrediting agencies, as the entities that set standards on
academic quality, to provide academic oversight of institutions'
policies relating to the measurement of student learning and progress.
Discussion: We disagree that the use of clock hours to measure a
student's progress for purposes of the title IV, HEA programs prevents
institutions from using innovative technology or instructional methods.
We believe that it is vital for institutions to be able to award and
disburse title IV, HEA assistance using clock hours as a measurement of
student progress because that form of measurement still aligns with
many Federal and State licensure requirements for a variety of
professions. This alignment ensures that institutions that are already
required to monitor and document a student's successful completion of
clock hours for other purposes can use that monitoring to demonstrate
that the student has made progress for purposes of the title IV, HEA
programs rather than requiring such institutions to perform a
cumbersome and potentially burdensome conversion of clock hours to
credit hours or some other equivalent measure.
Changes: None.
Comments: One commenter expressed concern that the clock hour
definition does not define student seat time precisely enough. The
commenter pronounced that a vague seat time requirement may cause undue
challenges for an institution with rigorous accrediting agencies at the
regional and/or professional level.
Discussion: The Department does not establish academic requirements
for educational programs, including clock hour programs. Under the
Department of Education Organization Act, such requirements remain
within the purview of accrediting agencies and States, which are free
to set requirements they feel appropriate for what is considered
successful completion of a clock hour in each program.\8\ This
longstanding approach to the oversight of academic requirements
recognizes the autonomy of postsecondary institutions and the unique
qualifications of their accrediting agencies and States to respond to
issues of academic quality.
---------------------------------------------------------------------------
\8\ See 20 U.S.C. 3403(b).
---------------------------------------------------------------------------
Changes: None.
Comments: One commenter urged the Department to maintain the
requirements listed under paragraph (3) requiring programs to meet all
clock hour limitations or criteria established by school accrediting
agencies, States, and applicable licensure bodies. The commenter also
expressed support for limiting clock hours via distance education to
synchronous programs in the final rule because monitoring a student's
completion of a clock hour in an asynchronous program would be
virtually impossible.
The commenter stated that monitoring asynchronous learning would
diverge too much from the proposed clock hour definition and the
Department would most likely be unable to assess the minimum technology
needed for institutions to adequately monitor asynchronous distance
education learning.
Discussion: We do not believe that it would be impossible for an
institution to maintain the appropriate technology and procedures to
monitor and document clock hours earned based on completing
asynchronous educational activities. However, we agree that it is
important to ensure that institutions comply with any requirements set
by accrediting agencies or State licensing or approval agencies
regarding clock hours and intend to retain that component of the clock
hour definition.
Changes: None.
Definition of Credit Hour (Sec. 600.2)
Comments: Numerous commenters expressed their overall support for
the proposed changes to the definition of a
[[Page 54754]]
credit hour, with several of those commenters specifically asking that
the Department make no changes to the consensus language agreed to by
negotiators. Some of this support was qualified to varying degrees,
ranging from observations that the credit hour is a less than ideal
measure of student progress to a request on the part of two commenters
concerned about the rule's enforceability that the Department restore
the requirements in Sec. Sec. 602.24(f) and 603.24(c) (84 FR 58931)
requiring that accreditors and State agencies respectively, conduct
review and evaluation of the reliability and accuracy of the
institution's assignment of credit hours.
One commenter expressed opposition to the revised definition of
``credit hour'' based on concerns that changing the definition of
``credit hour'' to focus on student learning time may pose new risks to
students and their privacy. The commenter offered that if recording of
individual learning time becomes desirable initially for credit hour
validation, it may become desirable for individual student measurement,
and that the potential consequences of this should be available for
public review.
Another commenter asserted that the Department should maintain the
definition of ``credit hour'' in the NPRM but that the Department made
proposals to change the definition without any evidentiary basis or
support, rendering them legally insufficient under the APA. The
commenter asserted that by failing to present evidence during the
negotiated rulemaking that would justify a change, and by failing to
suggest in the NPRM that the Department has support to justify those
original proposals now, the Department has no choice but to maintain
the consensus definitions included in the NPRM.
Concerned that the proposed definition of ``credit hour'' does not
adequately account for transfer credits, one commenter offered
revisions to the amendatory text in the NPRM that would change the
characterization of a credit hour as, ``an amount of student work'' to
``work by a student with average, but appropriate, preparation . . .''
and include recognition and consideration of the importance and
widespread usage of credit transfer among institutions. The commenter
also suggested that the Department address a perceived disparity
between workload expectations of students in on-campus courses versus
those offered through distance education. The commenter proposed to
stipulate the equivalent amount of work as required in paragraph (1)(i)
of the definition of ``credit hour'' for other academic activities as
established by the institution be consistent, by institution and
course, between requirements for on-campus and on-line monitoring of
student work.
Discussion: We appreciate the general support for our proposal to
broaden the definition of ``credit hour'' in a way that focuses on
student learning rather than seat time and is flexible enough to
account for innovations in the delivery models used by institutions.
Even among those commenters whose support was tempered with
reservations over the proposed definition of a ``credit hour'' either
adhering too closely to the current definition or broadening it too
much, there was strong agreement that no changes should be made to the
consensus language in the NPRM.
In response to those commenters who expressed support for the
proposed changes to the definition of ``credit hour'' but asked that
the Department restore the requirements in current Sec. Sec. 602.24(f)
and 603.24(c), as previously explained in the preamble to the November
1, 2019 final rule on State Authorization and Accreditation (84 FR
58875), 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 ``credit hour'' definition in both
current and proposed 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 authorizing
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.
We disagree with the commenter who opposed the changes to the
definition of ``credit hour'' proposed in the NPRM on the basis that an
increased focus on student learning time may pose new risks to students
and their privacy. The definition of ``credit hour'' as proposed in the
NPRM does not place an increased emphasis on learning time. Time-based
requirements relative to classroom instruction and other academic
activities included in the proposed definition of ``credit hour'' are
those found in the current definition. Additional language in the
proposed definition clarifies that, in determining the amount of work
associated with a credit hour, an institution may consider a variety of
delivery methods, measurements of student work, academic calendars,
disciplines, and degree levels. This new language actually deemphasizes
the strict measure of learning time.
Although the Department takes seriously any identified risk to
student privacy, the commenter was not specific as to what those risks
are. Finally, with respect to the potential consequences of these
proposed rules being available for public review, we believe the
comment period following publication of the NPRM in the Federal
Register provided such an opportunity.
We further disagree with the commenter who asserted that the
Department made proposals to change the definition of ``credit hour''
without any evidentiary basis or support, rendering them legally
insufficient under the APA, or that it failed to present evidence
during the negotiated rulemaking that would justify changing the
definition of ``credit hour.'' In preparation for the subcommittee
meetings on distance learning and innovation, the Department produced
several position papers outlining its reasons and justifications for
all proposed rule changes under consideration by that subcommittee,
including those related to the definition of a credit hour. The
proposed definition was discussed at length in the subcommittee and
again at the negotiating table. A detailed, written discussion of the
Department's reasons for proposing these changes is contained in the
April 2, 2020 NPRM on pages 18646 and 18647. However, we appreciate the
commenter's overall support for the consensus language.
In response to the commenter who expressed concern that the
proposed definition of ``credit hour'' does not account for transfer
hours, we note that credit hours, as they pertain to the title IV, HEA
programs, are a measure of student workload necessary to determine
enrollment status and award amounts. Credit hours that an institution
accepts on transfer have no effect on making these determinations and
are, therefore, not integral to the definition of a credit hour for
title IV purposes. The commenter identified several problems with
respect to transfer hours, including the disparity among institutions
in how transfer hours are considered and accepted.
While we agree on the need to address challenges regarding transfer
of credit, we do not believe that this definition is the appropriate
place to do so or that the revisions to the proposed definition of
``credit hour'' suggested by the commenter would change the way
transfer hours are treated by
[[Page 54755]]
institutions. With regard to any disparities that may exist between
what is expected of students taking classes offered through distance
education and what is expected of students enrolled in classes offered
on campus, we do not agree with the commenter that these can be
addressed by revising the proposed definition of ``credit hour.''
Institutions themselves set the academic standards for their programs.
The definition of ``credit hour'' merely establishes a reasonable
measure of student workload. We believe that the amendatory text,
agreed to by negotiators, permitting an institution, in determining the
amount of work associated with a credit hour, to take into account a
variety of delivery methods, measurements of student work, academic
calendars, disciplines, and degree levels, accommodates a variety of
modalities, including distance education.
Changes: None.
Definition of Distance Education
Comments: Numerous commenters expressed their support for the
Department's proposed definition of ``distance education.'' Many
commenters thanked the Department for providing greater clarity and
specificity to the definition. One commenter highlighted several recent
audits by the Department's Office of Inspector General (OIG) focusing
on the requirements for regular and substantive interaction and pointed
to the large amount of proposed liabilities in those audits as a reason
that the definition of ``distance education'' needed to be clarified.
Another commenter asserted that the changes modernize the definition
and permits more flexibility for postsecondary institutions to offer
educational programs.
Several commenters were appreciative of the Department's efforts to
eliminate references to outdated technology such as CD-ROMs. Other
commenters indicated that the definition holds institutions accountable
for providing students in distance education programs with
communication and engagement with qualified instructors on a
predictable and regular basis.
Many commenters supported the addition of the concept of
``qualified instructors'' who meet the instructional requirements of an
institution's accrediting agency. One commenter stated that the
proposed definition would provide institutions with a single, clear
definition of ``instructor'' for financial aid purposes, that could
help prevent confusion during audits about which staff members can be
classified as instructors. One commenter also expressed support for the
Department's use of the plural ``instructors'' rather than ``the
instructor'' because it would enable more people to teach as a team and
provide more individualized attention to students.
Several commenters supported the Department's proposed requirements
for substantive interaction, indicating that the definition supports a
variety of activities needed for teaching and learning. One commenter
indicated that defining and clarifying what constitutes ``substantive
interaction'' between students and faculty would give institutions the
ability to innovate without fear of the loss of Federal student aid
eligibility. Another commenter indicated that the requirements for
substantive interaction are appropriately adaptable because they allow
accrediting agencies to approve different types of instructional
activities. One other commenter was supportive of the consensus
language relating to substantive interactions, noting that while the
Department's original proposal had defined substantive interaction as
an interaction that simply related to course material under discussion,
negotiators opposed this language because it did not specifically
address teaching and learning in the way that the consensus language
does.
Several commenters also supported the Department's requirements for
regular interaction. One commenter indicated that the flexibility of
the definition was important given variability across a wide range of
program types and topics and helped limit administrative burden.
Another commenter supported the ability for institutions to determine
the number of substantive interactions that are appropriate based on
the length and amount of content associated with a course. One
commenter expressed strong support for requiring both predictable
opportunities for interaction and the prompt and proactive monitoring
of student engagement, indicating that the requirements would result in
more affordable and accessible pathways for students while ensuring
high-quality instruction.
Discussion: The Department thanks the commenters for their support.
Changes: None.
Comments: Many commenters urged the Department to maintain the
regulatory language agreed upon in consensus with non-Federal
negotiators for regular and substantive interaction and the
requirements for instructors in distance education programs. Several
commenters pointed out that the consensus agreement for the proposed
definition of ``distance education'' reflected a thoroughly discussed
compromise among negotiators.
Several commenters contended that it is imperative to clearly
distinguish between distance education and correspondence courses and
ensure that quality standards exist for distance education programs,
especially given the history of abuses related to correspondence
courses. The commenters asserted that diluting the proposed definition
could result in online programs becoming eligible for Federal student
aid even when the programs do not offer the same quality of education
or degree of connection between students and qualified instructors. One
of those commenters urged the Department not to revert to its original
proposal to allow accrediting agencies alone to articulate requirements
for regular and substantive interaction and instructors with minimal
Federal guidelines. One commenter asserted that the Department's
original proposals for changing the definition, later rejected in the
consensus language, would have undermined the requirements for regular
and substantive interaction and for the qualifications for an
instructor and urged the Department not to return to those proposals.
Other commenters pointed out that the requirements for regular and
substantive interaction exist in law because of past abuses in
correspondence programs, particularly of veterans seeking to use
educational benefits. One of these commenters noted that after passage
of the 1944 Servicemen's Readjustment Act of 1944 (commonly known as
the ``GI Bill'') hundreds of thousands of servicemen used their
education benefits under that law to enroll in correspondence courses,
but only approximately 10.7 percent of those veterans completed their
programs. That commenter also pointed out that Congress acted in the
early 1990s to address similar types of abuses in correspondence
courses related to the title IV, HEA programs. Another commenter noted
that the OIG has repeatedly raised concerns about distance education
and has characterized it as an area that poses significant risk to the
integrity of the FSA programs.
One commenter referred to research that shows that Latino students
enrolled in online education have lower academic and attainment
outcomes than in face-to-face courses and that interviews with such
students highlight the absence of a meaningful student-
[[Page 54756]]
instructor relationship as a contributing factor to those poor
outcomes. Another commenter referenced research that suggests faculty-
student interaction plays a key role in a quality online education and
that underprepared and disadvantaged students tend to underperform and,
on average, experience poor outcomes in such programs. That commenter
also referenced research that suggests online students desire greater
interaction with their instructors and that, in general, online
education has not improved affordability, frequently costs more, and
does not produce a positive return on investment. One commenter
asserted that if the requirement for regular and substantive
interaction is weakened, there is a risk that inequities will increase
between those students who have access to substantive interaction with
instructors and those who do not. That commenter expressed that this is
an even more critical issue now that institutions are moving online
because of the COVID-19 emergency.
Discussion: We agree that it is important for the regulations to
clearly distinguish between the definitions of ``distance education''
and ``correspondence courses'' and believe that the proposed
definitions accomplish that goal. Whereas the definition of a
correspondence course describes interaction between students and
instructors in such the course as ``limited . . . not regular and
substantive, and . . . primarily initiated by the student,'' the
definition of distance education requires regular and substantive
interaction between students and instructors and clearly explains the
requirements for each component of that definition. We also agree that
it is important to adhere to the agreed-upon language of the members of
the subcommittee and full committee, who were able to reach agreement
on the definition of the term despite strong initial differences of
opinion on the matter. We agree with the commenters who referenced the
importance of regular and substantive interaction between students and
instructors, particularly for students who are underprepared, and
believe that the requirements for such interaction expressed in the
definition strike the appropriate balance between assuring interaction
with qualified instructors and allowing institutions the flexibility to
offer programs using innovative, student-oriented pedagogical
techniques.
Changes: None.
Comments: Several commenters opined on whether the Department
should incorporate the concept of an ``instructional team'' into the
definition of ``distance education.''
One of these commenters described the use of instructional teams as
a practice that occurs in on-campus settings across various fields of
study and that provides exceptional opportunity to students by allowing
them to interact with several experts in a given course. Another
commenter argued that explicitly addressing the concept of
instructional teams in the definition would acknowledge the reality
that distance education is an instructional team endeavor that does not
rely upon arbitrary distinctions between an instructor and someone
involved in facilitating the delivery of course content who is not
considered an instructor.
One commenter argued that team-based instructional models could be
complicated if substantive interactions could only be provided by
individuals that met an accrediting agency's requirements for
instruction and noted that some types of interactions described under
paragraph (3) of the definition, including assessing or providing
feedback on a student's coursework, could be provided by assessment
specialists who do not meet the definition's requirements for a
qualified instructor.
Conversely, one commenter objected to the Department's proposal to
use the term ``instructors'' rather than ``the instructor,'' arguing
that doing so would allow quasi-professionals to teach more advanced
subject matter as part of a team. The commenter asserted that this
situation could result in such instructors only tangentially monitoring
student discussion rather than substantively engaging with students.
Discussion: The Department does not object to the use of
instructional teams, regardless of the modality of the coursework.
Indeed, we support innovative educational models that provide
additional support, both academic and otherwise, to support student
success. However, we believe that the current regulatory language
accommodates the use of instructional teams and no change is necessary
in order further encourage their use.
Regardless of the composition of an instructional team, the
Department expects that such a team would include qualified individuals
with subject matter expertise who are expected to instruct, guide, or
otherwise respond to questions from students about the subject matter
of a course or competency. Such individuals, assuming they meet
accrediting agency requirements for instruction, are the staff members
whose substantive interaction with students can fulfill the
requirements of the ``distance education'' definition for regular and
substantive interaction between students and instructors. Note that
accrediting agencies can choose to designate individuals as instructors
who do not meet the traditional criteria for faculty, and many already
do in instances, for example, where workforce experience may be more
important to teaching and learning than an advanced degree. Accreditors
are also permitted to designate an individual as an ``instructor''
meeting its requirements only in specific situations, for example,
where a less-experienced individual is teaching in a team setting with
an experienced instructor of record having responsibility for the
course in general. Given this degree of flexibility, we believe that
the regulation as written provides ample opportunity for distance
education to occur with the use of instructional teams, but only when
such use conforms with the requirements of an instruction's accrediting
agency.
Changes: None
Comments: Several commenters expressed concern with the
Department's proposal to replace the list of technologies in the
definition of ``distance education'' with the phrase ``other media.''
Two commenters indicated that the word ``media'' was not specific
enough to limit the types of modalities that could be used in distance
education. One of those commenters recommended that the Department add
the phrase ``and other types of media'' after listing each type of
technology. The other commenter recommended that the Department
continue to add new media types to the definition rather than removing
the existing types that were listed.
One commenter suggested that the Department eliminate the list of
technologies that could be used to offer a program through distance
education unless we plan to update the appropriate formats on a regular
basis (for example, annually).
Another commenter expressed concern that replacing references to
types of media with the phrase ``other media'' could cause
institutional officials to interpret the phrase as the use of one type
of media.
Discussion: We appreciate the commenters' suggestions, but we do
not plan to update the list of acceptable technologies at this time.
The HEA currently prescribes the types of technologies that may be used
for distance education, and in this rulemaking the Department is not
making changes to the statutory
[[Page 54757]]
requirement, but is instead simplifying this list in the regulations by
referring to ``other media'' rather than including all of the types of
media that may be used to deliver distance education.
Changes: None.
Comments: One commenter suggested that the Department define
``instruction'' rather than ``instructor'' and use the definition of
the former to inform requirements for the latter.
Discussion: The Department chose to clarify the requirements for an
instructor for purposes of the definition of ``distance education''
because the term is specifically used in statute with reference to
distance education. Moreover, we believe that it is beyond our purview
to define the term ``instruction'' given its broad application in
postsecondary education and the restrictions on the Department's
oversight of academic quality in the Department of Education
Organization Act.
Changes: None.
Comments: One commenter expressed concern about the variability
between accrediting agencies regarding their requirements for an
instructor in the context of the definition of ``distance education.''
The commenter stated that each accrediting agency should have a strong
definition of a quality instructor that includes requirements for
qualifications to teach in the relevant competencies. Two commenters
also recommended that in cases where students have multiple
instructors, the students should be informed of which instructor is the
instructor of record.
Discussion: We believe that accrediting agencies are the
appropriate arbiters of academic quality for postsecondary education,
including regarding the appropriate requirements for instructors. The
Department is prohibited from creating regulations or other
requirements regarding the academic quality of educational programs
under the Department of Education Organization Act. Furthermore, while
it is true that there may be variation among accrediting agencies
regarding requirements for instructors, we believe this is appropriate
given the different types of qualifications that may be needed
depending on the types of programs and degree levels offered.
Changes: None.
Comments: Several commenters sought clarification regarding the
Department's requirements for ``regular interaction.''
One commenter indicated that interactions in asynchronous courses
may not be predictable and asked the Department to clarify by providing
a specific length of time that it considered to be ``regular'' for
purposes of this definition.
Another commenter asked how institutions would monitor a student's
engagement in distance education, particularly when an interaction
occurs during a videoconference where the instructor is working to
develop the student's understanding of a particular topic while also
attempting to monitor the student's engagement.
One commenter expressed concern that the regulations only require
the opportunity for interactions with instructors when needed. The
commenter indicated that this lack of mandatory proactive instruction,
when combined with a lack of emphasis on faculty involvement, could
lead to confusion about the distinction between distance education and
correspondence courses. The commenter recommended that the Department
delete the words ``the opportunity'' from paragraph (5)(i) of the
definition and delete ``when needed'' from paragraph (5)(ii) in order
to require proactive substantive interaction for every student.
Several commenters noted that the regulations describing ``regular
interaction'' included a requirement for the interaction to be
``regular,'' which the commenters felt was redundant. Three of those
commenters recommended that the Department replace the phrase ``regular
and predictable basis'' with the phrase ``scheduled and predictable
basis.''
Discussion: Given the variety of distance education programs,
coursework, instructional modalities, and course schedules, we do not
believe it is practical to offer a specific timeframe for regular
interaction. The Distance Learning and Innovation subcommittee strongly
disagreed with that approach when it was presented, arguing that
establishing such a timeframe would either be overly prescriptive or
excessively complex. Similarly, an institution cannot be expected to
ensure perfect attendance by students at each opportunity for
interaction with an instructor, which is why the Department, the
subcommittee, and the negotiating committee agreed to frame the
requirement as an ``opportunity'' for interaction rather than a
required interaction. This approach has the added benefit of allowing
institutions to demonstrate compliance with the requirements at the
program design level without documenting each and every interaction
between students and instructors.
The requirements for regular interaction include monitoring a
student's ``academic engagement and success'' with respect to a course
or competency. This requirement is not intended to mandate that
instructors personally monitor each student's engagement throughout
each class session while also instructing, facilitating discussion, or
responding to questions from students. Instead, the requirement is
intended to ensure that instructors are generally monitoring whether a
student is engaged and successful throughout a given course or
competency and takes appropriate action as needed. Such monitoring
could include evaluating a student's level of participation in
synchronous class sessions, but it could also involve monitoring the
student's activity on course websites or materials; considering the
quality of the student's assignments or responses to questions about
course materials; evaluating the level of the student's understanding
of course materials during conversations with instructors or
performance on exams; or other forms of monitoring the student's
engagement and success in the course or competency.
We agree with the commenters that the word ``scheduled'' is more
descriptive and provides greater clarity than the word ``regular'' for
purposes of describing ``regular interaction.'' Furthermore, the
Department believes that the word ``scheduled'' more clearly reflects
the intent of the Distance Learning and Innovation subcommittee and the
full negotiating committee to ensure that students are provided
scheduled opportunities to interact with instructors for which the
students can prepare in advance.
Changes: We have replaced the phrase ``predictable and regular
basis'' with the phrase ``predictable and scheduled basis'' in
paragraph (5)(i) of the definition.
Comments: One commenter explained that there are two types of
distance education models that higher education has developed--
synchronous and asynchronous--and that the asynchronous model better
reflects the realities of working adults, differing levels of
preparation, and the importance of assessment. The commenter pointed
out that many new students in higher education are ``non-traditional''
and include a large number of veterans and students with families. The
commenter asserted that these students have schedules that they cannot
control and are better served by asynchronous courses that support
their needs for flexibility, while the institution ensures that each
student is evaluated based on the student's demonstration of mastery of
the competency or course. The commenter
[[Page 54758]]
recommended that the requirements for regular interaction point to
interactions that are appropriate to the course modality and consistent
with student success.
Discussion: We agree with the commenter that distance education
may, in many cases, have the capability to address the needs of non-
traditional students better than traditional classroom courses.
However, we disagree that the regulatory definition needs to include a
reference to the appropriateness of interactions with respect to course
modality and student success for institutions to offer programs that
are sufficiently flexible. Though the definition of ``distance
education'' establishes certain requirements for interaction in online
programs, the Department defers to institutions and their accrediting
agencies regarding whether a program's design involves interactions
that are appropriate and tailored to the needs of students.
Changes: None.
Comments: A few commenters asked questions about the relationship
between the Department's final regulations and the COVID-19 pandemic.
One commenter asked the Department how its proposed definition of
distance education would prepare institutions for future pandemics and
whether institutions should be required to implement distance education
training programs so that they are prepared to shift to an online
modality if and when a pandemic prevents in-person instruction once
again. The commenter asserted that new options for learning modalities
would not prompt an increase in the number of students enrolling in
distance education courses and asked how the Department's proposal
would reduce barriers to access for students given those trends.
Another commenter pointed out that the Department's recent guidance
for distance education related to the COVID-19 pandemic were
inconsistent with the regulatory requirements for distance education in
the proposed rule.
Discussion: Many institutions with limited distance education
offerings at the time of the initial COVID-19 outbreak were unprepared
for the impacts of the pandemic and did not have adequate resources or
the expertise to quickly shift to an online learning modality. Though
many institutions were able to shift to an entirely new modality, many
were still faced with a complicated and confusing regulatory framework
for distance education that they had never encountered before. The
Department's hope is that clarifying and expanding the definition of
``distance education'' will offer a degree of certainty to institutions
both familiar and unfamiliar with online learning and will make it
easier for institutions to shift to an online modality in the event of
a pandemic in the future.
The Department's recent COVID-19 distance education guidance for
institutions related to COVID-19 was intended to be temporary and was
necessary to address the urgent need to shift instructional operations
online very quickly. The Department has established a specific
timeframe for that guidance and will expect institutions to again
comply with regulatory and statutory requirements when the waivers and
flexibility related to COVID-19 expire.
Changes: None.
Comments: Many commenters asked questions about the Department's
requirements for ``substantive interaction'' under the definition of
``distance education.''
A few commenters asked the Department to clarify whether
substantive interaction was required to occur regularly at the
``instructor level'' or the ``course-competency level.'' Two of those
commenters expressed concern that if the definition were applied at the
instructor level and not the course-competency level, it could exclude
some aspects of an ``unbundled'' instructional model. One commenter
offered the example of assessment experts whose skills and expertise
are tailored toward developing and scoring assessment, as well as
providing students with feedback, but who might not be considered to be
``faculty.'' That commenter argued that the Department should indicate
that its intent was for substantive interaction to occur at the course/
competency level.
Several commenters asked the Department to explain the interaction
between the regulations requiring at least two types of substantive
interactions and the requirements for such interactions to be
``regular.'' One commenter asked whether both types of substantive
interaction were required throughout a semester, or whether an
institution could engage in one or the other activities at any time to
meet the requirements. A separate commenter asked whether the two forms
of substantive interaction needed to be alternated on a regular basis
or whether both forms of interaction were required in the same class
session. That commenter recommended that the Department either clarify
this point or strike the requirement for more than one form of
substantive interaction, asserting that it could cause implementation
challenges. Another commenter requested that the Department remove the
requirement for at least two types of substantive interaction because
it was unclear how often each type of interaction needed to occur and
such ambiguity could cause considerable confusion for institutions
attempting to implement the requirements.
One commenter asked how instructors would calculate the time that
they spend on substantive interaction when one of the categories of
such interaction includes responding to questions about the content of
a class.
Discussion: The Department's requirements for regular and
substantive interaction between instructors and students occurs at the
course or competency level. The Department's intent with this
definition is to ensure that, for a given unit of study (for example, a
class such as English 101 or a competency such as the ability to
perform statistical analysis) a student has ample opportunity to
substantively interact with an instructor and the instructor (or
instructors) monitor the student's engagement and performance, and
provide scheduled opportunities for interaction with the student as
needed on the basis of that monitoring. Additionally, the regulations
must apply at the course or competency level because they are designed
to distinguish distance education from correspondence courses for
purposes of exempting distance education from the limitations on the
percentage of correspondence courses that an institution may offer.
Applying the regulatory requirements for distance education at the
instructional unit level ensures that any online course or competency
that is misclassified as distance education can be included in the
calculation of the percentage of correspondence courses that the
institution offers for purposes of the institutional eligibility
requirements under 34 CFR 600.7.
The Department also applies the requirement for a substantive
interaction to include at least two types of activities listed in the
definition at the course or competency level. The definition of
``distance education'' lists several different types of interaction
that can fulfill the requirements for ``substantive interaction,''
including direct instruction, assessment, responding to questions about
the course materials, facilitating a group discussion regarding the
course content, or other instructional activities approved by the
institution's accrediting agency. The definition requires an
institution to perform at least two of those activities, and since we
apply the regulation at the course or competency
[[Page 54759]]
level, we also require an institution to perform at least two of those
activities over the period of time that the student completes the
course or competency. We believe that requiring a specific timeframe,
sequence, or frequency that the activities need to occur within that
timeframe would be impractical and would extend beyond our purview
under the Department of Education Organization Act.
The Department does not expect an institution to measure or
document the exact amount of time that it or its students spend on any
particular type of substantive interaction. An institution is expected
to maintain academic policies or procedures that create expectations
for faculty to substantively interact with students on a predictable
and scheduled basis and to monitor each student's engagement and
success and follow up with the student as needed.
Changes: None.
Comments: One commenter recommended that the Department add
language requiring that institutions using distance education ensure
the accessibility of the learning materials and remain compliant with
Section 508 of the Rehabilitation Act. The commenter argued that
technology can be a limiting factor for individuals with disabilities
if the systems used are not accessible.
The commenter also asked the Department to add a requirement for
instructors to be ``flexible and work with the student to determine the
most appropriate communication mode to maximize the student's ability
to participate.'' The commenter indicated that because some students
struggled with communication technology, instructors should customize
their online programs to ensure that students are being evaluated for
their knowledge of content rather than their ability to access
technology.
Discussion: The Department does not believe it is appropriate to
regulate the Rehabilitation Act using the definition of ``distance
education,'' which is derived from the HEA. That said, we strongly
support the intent of the Rehabilitation Act and expect every
institution with a distance education program to adhere to that law's
statutory and regulatory requirements.
Changes: None.
Comments: Many commenters requested that the Department replace the
``and'' between paragraphs (5)(i) and (ii) of the definition with
``or'' in order to allow an institution to fulfill the requirement by
taking either of the actions in paragraph (5)--providing the
opportunity for substantive interactions with the student on a
predictable and regular basis or monitoring the student's academic
engagement and success and ensuring that an instructor is responsible
for promptly and proactively engaging with the student--as opposed to
requiring the institution to take both of those actions. One of these
commenters argued that the proposed regulations would require
institutions to adhere to a time-bound model that may not be
appropriate for the institution's instructional modality or its
students. Two other commenters indicated that the intent of the
Distance Learning and Innovation subcommittee was to allow institutions
to choose the type of ``regular'' interaction that best suited the
academic program and recognized that some institutions have
sophisticated technologies that monitor student engagement and success
and alert instructors when students are not engaged or are struggling
with material. These and other commenters also cautioned that requiring
both components of the definition could result in a requirement that
institutions adhere to a strict, time-bound schedule, which is counter
to the format in many competency-based education programs. Many
commenters also argued that many institutions lack the technology or
resources needed to monitor a student's engagement and success. Another
commenter indicated that the ``and'' would limit the variety of
instructional approaches that could be available to institutions if one
or the other action fulfilled the requirement. One commenter also noted
that reverting to ``or'' between those paragraphs would recognize the
importance of a team approach to instruction and co-curricular
activities. Several commenters argued that reverting to ``or'' would
set expectations for distance education, including monitoring each
student's engagement, beyond what is expected or required for on-campus
instruction. Several commenters also asserted that the change to
``and'' could push institutions to adopt learning analytics tools to
track student progress, which could increase the cost of educating
students and introduce privacy or other ethical concerns. One commenter
pointed out that requiring institutions to implement both components of
the requirements for regular interaction could prevent them from
adjusting quickly to market demands and emerging technology. Finally,
one commenter pointed out that the Department's OIG would rely upon the
new regulatory definition of ``distance education'' when assessing an
institution's compliance, suggesting that additional flexibility in the
definition was therefore preferable.
Discussion: As one commenter noted, the Distance Learning and
Innovation subcommittee's recommendation was to allow an institution to
fulfill the requirement for regular interaction by either maintaining
predictable and scheduled opportunities for interaction or by
maintaining a system for evaluating a student's engagement and progress
and ensuring that an instructor followed up when appropriate. The
subcommittee's intent was to allow institutions with self-paced
programs to use other techniques other than scheduling planned
interactions, which in the past had led to perfunctory mandatory phone
calls or class sessions that did not provide great benefit to students.
Despite the subcommittee's concerns about requiring predictable
opportunities for interaction, the full negotiating committee decided
that it was important for both conditions to be met. The committee
believed that the proposed definition, requiring both predictable
interactions and student monitoring, offered sufficient flexibility
regarding the number and frequency of scheduled interactions based upon
the length and intensity of the student's coursework. In a self-paced
course or competency in which a student approaches the coursework at
his or her own pace, the institution is not required to schedule, for
example, weekly opportunities for interaction. Instead, the institution
may decide that the appropriate timeframe for scheduled opportunities
for interactions is bi-weekly or monthly, or a different frequency.
Furthermore, by not requiring mandated interactions, the definition
does not impose a bureaucratic requirement for a scheduled course
session, but instead simply ensures that students are aware that there
will be planned occasions that they will be able to interact with an
instructor about course content.
Similar concerns were also raised by commenters about requiring
more traditional class-based online programs to maintain a system for
monitoring student engagement and interacting with the students on that
basis. We disagree with several commenters that institutions would need
to purchase expensive software to track and monitor each student's
online activities to determine whether the student was sufficiently
engaged. While such software would meet the requirement if it were part
of a system for monitoring and interacting with students when the need
arose, it is not a required element for regular and substantive
interaction.
[[Page 54760]]
The Department's expectation is that instructors take a proactive
approach to determining when students need assistance and then offering
that assistance, and this could be done either using sophisticated
systems for monitoring student activity or more traditional person-to-
person evaluation or through the use of tests and quizzes. The required
``monitoring'' could consist of evaluating each student's performance
in regular online class sessions or in regular assignments that have
been turned in. This type of monitoring is common to nearly all
postsecondary programs and has been performed since before the internet
existed.
Given all of these factors and the level of importance accorded by
the negotiating committee to the use of ``and'' between paragraphs
(5)(i) and (ii) of the definition, we decline to revert to the word
``or'' between those paragraphs.
Changes: None.
Comments: One commenter proposed that the Department should provide
an outline of the new definition of ``distance education'' to offer
clarity to government officials and citizens about the changes to the
definition.
Discussion: We thank the commenter for this suggestion and agree
that an outline could make the changes clearer. We plan to publish a
clear description of each of the changes to the definition of
``distance education'' in the FSA Handbook after the changes become
effective.
Changes: None.
Comments: Several commenters asked the Department to clarify
whether interactions that were initiated by a student would meet the
requirements for regular and substantive interaction between students
and instructors. One of those commenters sought clarification regarding
whether the Department intends to require evidence of instructor-
initiated interaction, student-initiated interaction, or both.
Discussion: The Department does not consider substantive
interactions initiated by students to meet the requirements for regular
interaction in the definition of ``distance education.'' An institution
meets the requirement for regular interaction between students and
instructors by, in part, providing the opportunity for substantive
interactions with the student on a scheduled and predictable basis
commensurate with the length of time and the amount of content in the
course or competency. This requirement could be met if instructors made
themselves available at a specific scheduled time and through a
specific modality (e.g., an online chat or videoconference) for
students to interact about the course material, regardless of whether
the students chose to make use of this opportunity or interact with the
instructor at the scheduled time. However, if an institution does not
offer such opportunities for interaction on a regular and scheduled
basis in an online program and instead relies solely upon students to
initiate interactions with instructors, it would not meet the
requirements for regular and substantive interaction between students
and instructors and the online program would be considered to be taught
using correspondence courses.
Changes: None.
Comments: Several commenters asked how the Department would oversee
various aspects of the definition of distance education. One commenter
asked how the Department would assess whether an institution's
instructional activities were approved by the institution's or
program's accrediting agency in audits or program reviews. The
commenter also asked whether accrediting agencies would be required to
create a list of approved instructional activities or whether the
Department would allow agencies to have more ambiguous standards that
are applied on a case-by-case basis, which could result in most or all
institutions meeting the requirements. Another commenter asked what
oversight mechanisms the Department would use to verify the amount of
substantive interaction reported by institutions.
Discussion: The Department's oversight of the requirements for
regular and substantive interaction between students and instructors
will focus on five critical factors that differentiate distance
education from correspondence courses. The Department will seek to
determine whether--
The institution's online instruction is delivered through
an appropriate form of media;
The instructors with whom students regularly and
substantively interact meet the requirements of the institution's
accrediting agency for instruction in the subject matter;
Instructors engage in at least two forms of substantive
interaction meeting the regulatory requirements for the course or
competency;
The institution has established scheduled and predictable
opportunities for substantive interaction between students and
instructors and create expectations for instructors to monitor each
student's engagement and substantively engage with students on the
basis of that monitoring; and
Instructors are responsive to students' requests for
instructional support.
The Department will evaluate whether an instructor meets an
accrediting agency's requirements by reviewing the agency's written
standards and any communication between the agency and the institution
regarding the agency's requirements or whether the instructors in
question met such requirements. If the Department is unable to
determine whether the instructor meets the agency's requirements by
reviewing such written materials, it may contact the agency to seek a
determination on the matter.
The Department does not require an institution to monitor or
document every interaction between an instructor and a student to
demonstrate that it has fulfilled the requirements for regular and
substantive interaction. However, we encourage institutions to consider
whether they have adequate means of monitoring online programs to
ensure that they continue to meet all the conditions of the definition.
In overseeing the requirements for regular and substantive interaction
with instructors, the Department will determine whether an institution
has established sufficient internal controls to demonstrate that it has
established (1) appropriate academic policies and procedures for its
instructors to implement these provisions; and (2) a system for
monitoring or periodically evaluating its online programs to ensure
that its instructors continue to observe such policies over time.
Comments: One commenter, arguing that direct instruction was at the
core of higher education, recommended that the Department require
``substantive interaction'' to include direct instruction in addition
to two other elements.
Discussion: The required elements for substantive interaction were
determined in consensus with the negotiating committee, and the
Department does not believe it would be appropriate to diverge from
that agreement to narrow the types of program offerings that would meet
the Department's definition of ``distance education.'' Furthermore, we
do not believe it is advisable to require regular direct instruction in
all distance education programs given the proliferation of promising
new educational models that do not rely on regularly scheduled
instructional sessions. The Department wishes to remind the commenter
that in the case of in-person classroom-based instruction, most schools
are not required to take attendance. It the case of credit hour
programs, it is the job of
[[Page 54761]]
the institution to provide the opportunity and it is the job of the
student to take it.
Changes: None.
Comments: One commenter expressed dissatisfaction with the
Department's proposed definitions of ``correspondence course'' and
``distance education,'' stating that the requirement for ``constant
communication'' initiated by the instructor in distance education was
unfair and would hinder students who need flexibility with respect to
the time and place that they interact with their instructors.
Discussion: The proposed definition of ``distance education'' does
not require constant communication between students and instructors and
in fact only requires scheduled opportunities for interaction with
qualified instructors and a system for monitoring student engagement
and success. We believe these requirements are reasonable and will
permit substantial flexibility for institutions to create new
educational models that place the student, rather than the instructor
or the institution, at the center of the learning exercise.
Changes: None.
Comments: Several commenters emphasized the importance of improving
the quality of information and oversight related to distance education.
One commenter said that while some information exists about
distance education in the Integrated Postsecondary Education Data
System (IPEDS), the data are not current and include only the number of
students enrolled in distance education courses and completing distance
education programs. The commenter also indicated that the National
Center for Education Statistics (NCES) sample surveys collect some
information about engagement with distance education, but because those
surveys are based on samples and are not conducted annually, their
usefulness in answering policy and research questions is limited. The
commenter argued that the Department should improve timely data
collection about distance education given the significant number of
students who enroll in that format, the uncertainty about future
reliance on distance education options, and the importance of
evaluating regulations related to distance education. The commenter
suggested adding a field for the distance education status of enrolled
title IV recipients in the National Student Loan Data System (NSLDS).
Another commenter suggested that the Department require institutions to
establish a new location with the Department for exclusively online
students. That commenter also reiterated a proposal that had been
proposed by one of the non-Federal negotiators during negotiated
rulemaking: That the Department require institutions to report, for
students who are enrolled in programs in which at least one course can
be completed online, whether each recipient of title IV, HEA assistance
is enrolled exclusively online, exclusively as a brick-and-mortar
student, or as a hybrid student in both online and brick-and-mortar
instruction. One commenter called for a demonstration program for
competency-based education authorized by Congress that would test
replacements for the credit hour and allow institutions to reasonably
experiment with different models of interaction with students, but
argued that in lieu of such a program no changes should be made to the
consensus regulations.
Discussion: We agree with the commenters who suggested that
additional data regarding the use of distance education would be
helpful; however, we do not believe that collecting such data through
the National Student Loan Data system is the appropriate vehicle for
that data collection to occur. We will consider the feasibility of the
other suggestions offered by commenters for collecting data related to
students who are enrolled in distance education. The Department does
not have the authority without action by Congress to develop a
demonstration program with waivers that exceed the Department's
authority under the Experimental Sites Initiative.
Changes: None.
Comments: One commenter recommended that the Department eliminate
the regulatory definition of ``regular and substantive interaction''
for distance education entirely, arguing that there is no reason to
impose additional requirements beyond what is in the statute given
advances in technology that permit detailed monitoring of a student's
online activities. The commenter suggested that the Department is not
obligated to define ``regular and substantive interaction'' in a way
that would prevent many on-ground courses from meeting those
requirements. The commenter further advised that the Department's
definition of ``academic engagement'' was sufficient to eliminate any
confusion that had arisen about distance education because it is widely
understood that ``regular and substantive interaction'' is a
descriptive term for ``academic engagement.'' Finally, the commenter
noted that the Department is not required to follow or defer to its
prior sub-regulatory guidance, in particular Dear Colleague Letter GEN-
14-23, which provides additional explanation regarding the meaning of
``regular and substantive interaction'' with respect to distance
education.
Discussion: We disagree that the statutory requirements for
``regular and substantive interaction'' for a distance education
program are sufficiently clear that a regulatory definition is not
needed. For more than a decade since the statutory definition of
``distance education'' was first created, institutions have expressed
confusion about the practical meaning of the term and have argued that
the ambiguity of what constitutes regular and substantive interaction
have hampered innovation as a result of fears of non-compliance and
audit or program review findings. Moreover, the concept of ``regular
and substantive interaction'' is an important differentiating factor
between distance education and correspondence courses, which, if
improperly understood, could result in institutional ineligibility for
an institution that suddenly becomes aware that it has been offering
more than half of its courses or enrolling more than half of its
students through correspondence courses. We also disagree that the
definition, as currently written, would be impossible to meet if it
were offered in a classroom setting, since scheduling class sessions
and performing ongoing monitoring of each student's performance and
engagement in class are traditional teaching functions that do not
require the use of sophisticated software systems.
We also disagree that the definition of ``academic engagement''
necessarily includes regular and substantive interaction between
students and instructors and can be used in lieu of a description of
those requirements in the regulations. While substantive interaction
with an instructor related to a student's coursework is certainly a
form of academic engagement, it is not synonymous with the broader
concept of academic engagement.
Finally, the Department agrees that it is not required by law to
continue to abide by the guidance in Dear Colleague Letter GEN-14-23,
and plans to retract and revise aspects of that guidance as well as
guidance in Dear Colleague Letter GEN-13-10, related to the application
process for direct assessment programs, that will no longer apply upon
the implementation of these regulations.
Changes: None.
Comments: One commenter recommended that the Department include the
concept of ``co-curricular'' education in the definition of distance
[[Page 54762]]
education, in particular with regard to the requirements for
substantive interaction. The commenter proposed that the definition be
revised to express that distance education could be either curricular
or co-curricular.
The commenter asserted that such revisions would recognize the
importance of co-curricular activities, which the commenter defined as
activities associated with and complementary of the curriculum. The
commenter argued that, for many students who enroll in distance
education programs, particularly adult learners, co-curricular learning
plays a critical role in enhancing the student experience and helping
to ensure student persistence and success and that such learning has
also played a similar role in ground-based programs.
Discussion: The Department agrees with the commenter that co-
curricular activities--which are generally aligned with and designed to
complement the academic curriculum--are useful and often vital
components of a postsecondary program that support student persistence
and success. Because of the close ties between academic coursework and
co-curricular activities, we believe that there may be occasions in
which such activities are designated by an institution's accrediting
agency as types of substantive interaction under paragraph (4)(v) of
the definition of ``distance education.'' If an accrediting agency
designates a co-curricular activity as a type of substantive
interaction, interactions involving that activity would meet the
requirements of the definition. However, we believe that including the
concept of co-curricular activities in the definition would increase
the scope of activities more broadly than intended by the negotiating
committee, and therefore decline to add the suggested language to the
text of the definition.
Changes: None.
Comments: Two commenters offered conflicting opinions on whether
the Department should emphasize the concept of ``faculty'' rather than
``instructors'' in the definition of ``distance education''.
One commenter argued that the current requirements for instructors
left too much discretion to institutions and accrediting agencies. The
commenter recommended that the Department should emphasize to
accrediting agencies that faculty should be the primary ``instructors''
in postsecondary education, regardless of modality. The commenter was
supportive of innovation and the use of artificial intelligence or
other innovative technologies but indicated that innovation could occur
in the context of faculty interaction with students. The commenter
expressed concern that the requirements for distance education in the
proposed definition would not be the same as those for other
modalities.
Another commenter expressed the opposite view, arguing that the
Department's OIG had raised concerns about replacing the word
``instructor'' with the word ``faculty'' in the ``Promoting Real
Opportunity, Success, and Prosperity through Education Reform Act''
(PROSPER Act), which was introduced in 2017. The commenter noted that
the OIG believed that using the word ``faculty'' in the statutory
definition of ``distance education'' would allow a school to qualify
for full participation in the FSA programs based on email contact
between students and faculty on matters unrelated to the subject matter
of a program.
Discussion: Though we do not agree with the level of concern that
was raised by the Department's OIG regarding the use of the word
``faculty,'' or that the use of that word in lieu of ``instructor''
would substantially undermine the definition of ``distance education,''
we believe that the word ``instructor'' is more appropriate in this
context. Given the use of the word ``instructor'' in the statutory
definition of ``distance education,'' we believe that it is appropriate
to focus on a staff member's instructional function, rather than that
person's faculty role, when making a determination about whether the
staff person can fulfill the requirement for regular and substantive
interaction with students. The function of instruction and the role of
faculty are not necessarily synonymous; for example, many institutions
hire research faculty that do not have teaching responsibilities.
Changes: None.
Comments: One commenter indicated that the proposed requirements
for substantive interaction did not appear to require any direct
instruction or group discussion. The commenter asked whether it would
be possible for an institution to fulfill the requirements for
substantive interaction without human engagement, e.g., through
assessment and responses to students' questions through software or
other non-human means. The commenter recommended that the Department
include requirements for ``engagement between students and
instructors'' rather than merely a reference to ``engaging students''
to make it clear that interactions need to be with human beings to meet
the requirements.
Discussion: Only individuals responsible for delivering course
content and who meet the qualifications for instruction established by
an institution's accrediting agency can fulfill the requirements for
regular and substantive interaction with students. The Department does
not prohibit other forms of substantive interaction that do not involve
qualified instructors, but under the statutory definition such
interaction cannot meet the requirements in the definition of
``distance education.'' Interactions with artificial intelligence,
adaptive learning systems, or other forms of interactive computer-
assisted instructional tools qualify as types of ``academic
engagement,'' but in this limited context those forms of engagement do
not meet the statutory requirements for regular and substantive
interaction between students and instructors.
While we agree with the commenter about the importance of human
interaction in this definition, we do not believe the commenter's
proposed changes are necessary because the definition currently
requires regular and substantive interaction between students and
instructors; substantive interactions with machines or other forms of
technology that do not involve instructor would therefore not qualify.
Changes: None.
Comments: One commenter asked the Department to reconsider the need
for the specific language regarding distance education in an
accrediting agency's scope of recognition and, in doing so, recognize
that distance education is a more global term regarding instructional
delivery provided which can include online delivery of instruction and
internships and field experiences, such as clinical rotations.
Discussion: While the Department recognizes that the term
``distance education'' is used to describe a wide variety of activities
in higher education, the HEA requires a distance education program to
be evaluated and approved by an accrediting agency with approval of
distance education in the scope of its recognition by the Secretary.
Changes: None
Definition of Juvenile Justice Facility (Sec. 668.2)
Comment: One commenter supported the new definition of a juvenile
justice facility to ensure that an otherwise eligible student is not
prohibited from receiving a Federal Pell Grant solely because of
confinement in such a facility.
Discussion: We appreciate the support from the commenter. The
Department has received questions in the past about
[[Page 54763]]
whether these facilities are correctional institutions and whether
students in the facilities are eligible for Federal Pell Grants.
Neither the HEA nor our regulations previously defined the term
``juvenile justice facility.'' Therefore, we proposed to define this
term in the regulations to codify sub-regulatory guidance published on
December 8, 2014 (Dear Colleague Letter GEN 14-21). We also sought to
clarify the term as referenced in the Department's regulations and
materials, including in the definition of ``incarcerated student.''
Accordingly, we aimed to clarify that students in juvenile justice
facilities may receive a Federal Pell Grant if they are otherwise
eligible.
Changes: None.
Comment: One commenter provided both support and opposition to the
definition of ``juvenile justice facility.'' The commenter stated that
the HEA does not allow those who are incarcerated in a Federal or State
prison to receive a Federal Pell Grant and quoted the statutory
language. This commenter then noted that our proposed HEA change would
define ``juvenile justice facility'' as being included among the list
of correctional facilities in the definition of ``incarcerated
student'' for the purposes of Pell Grant availability. The commenter
favored extending Pell Grants to students in juvenile justice
facilities but opposed including juvenile justice facilities under the
correctional institutions in the ``incarcerated student'' definition.
The commenter believed that the Department's proposed definition caused
confusion about what constitutes an incarcerated student by including
juvenile justice facilities within the ``incarcerated student''
definition. Finally, this commenter also noted that the Department did
not include any evidence or studies from appropriate prison education
experts on how this change would clarify the availability of Pell
Grants to students in juvenile justice facilities.
Discussion: We proposed this new definition to clarify that a
person incarcerated in a juvenile justice facility is not considered to
be incarcerated in a Federal or State penal institution, regardless of
who operates or has jurisdiction over the facility. This definition
clarifies that students incarcerated in a juvenile justice facility
continue to be eligible for Federal Pell Grants. We believe the
commenter was mistaken. These regulations do not change or contravene
the HEA. Additionally, the Department is unaware of available research
on the interpretation of this term and is merely codifying current
practice.
Changes: None.
Definition of Incarcerated Student (Sec. 668.2)
Comments: A couple of commenters expressed support for the revised
definition of an incarcerated student. One commenter supported the
emphasis on access to Federal Pell Grants while in a juvenile justice
facility, noting the importance of funding to complete postsecondary
education coursework and potentially obtain an academic credential. The
commenter believed this change would not only help those in juvenile
justice facilities, but society as a whole because education increases
the likelihood of positive outcomes when students are released and
reduces the likelihood those students will reoffend. Another commenter
who supported the proposed change suggested that adding the term
``juvenile justice facility'' to the incarcerated student definition
might imply that the Department is barring access to Federal Pell
Grants to students serving in such a facility.
Discussion: We appreciate the commenters' support for the revised
``incarcerated student'' definition. We do not agree that the revised
definition implies a prohibition on eligibility for a Federal Pell
Grant for those in a juvenile justice facility. In fact, we amended the
definition of incarcerated student to clarify that those held in a
juvenile justice facility are not considered to be incarcerated to
ensure that these students continue to be eligible for Federal Pell
Grants.
Changes: None.
Comment: One commenter indicated that some criminal juvenile
activity and related records may be confidential and pointed out that
individuals may be in a juvenile facility voluntarily or without a
court requirement. The commenter suggested that privacy concerns call
for the Department to reconsider adding ``juvenile justice facility''
to the incarcerated student definition. This commenter further noted
that the Free Application for Federal Student Aid (FAFSA) does not
include a question about incarceration and assumed that the Department
would seek such information. The commenter asserted that continuing to
exclude the phrase would simplify the regulation and avoid excluding
necessary exceptions.
Discussion: The changes to the definition of ``incarcerated
student'' do not substantively change our current practice. We revised
this definition for clarity and to ensure access to Federal Pell Grants
for those in a ``juvenile justice facility.'' We do not believe this
revised definition requires access to confidential records or poses a
privacy risk, nor are we aware of any needed exceptions to the
regulatory definition. As we will not exclude those in a ``juvenile
justice facility'' from receiving the Federal Pell Grant, this change
would not require an additional FAFSA question or the need for other
information.
Changes: None.
Direct Assessment Programs (Sec. Sec. 600.10 and 668.10)
Comments: Numerous commenters supported the proposed changes
intended to simplify and clarify regulations for direct assessment
programs. Commonly expressed among those writing in support, was the
belief that the proposed changes strike an appropriate balance between
supporting innovation, along with reducing the administrative burden on
institutions, and ensuring a level of oversight necessary to promote
program integrity.
Discussion: We appreciate the commenters' support for these
proposed changes.
Changes: None.
Comments: Several commenters expressed opposition to the proposed
changes in Sec. 600.10 requiring an institution to seek and obtain the
Department's approval of a direct assessment program only when the
institution adds such a program for the first time, and when the
institution offers the first direct assessment program at each level of
offering (e.g., a first direct assessment master's degree program or
bachelor's degree program) than what the Secretary had previously
approved. Overwhelmingly, these commenters asserted that, in proposing
not to require institutions to obtain approval for all direct
assessment programs, the Department is acting contrary to the intent of
Congress as expressed in section 481(b)(4) of the HEA and exceeding its
statutory authority. In the opinion of the commenters, this will result
in diminished oversight protection, which currently ensures that new
direct assessment programs receive adequate scrutiny and that each new
eligible direct assessment program is approved by the Secretary. One
commenter further suggested the Department was attempting to ``rewrite
statute through regulation,'' with another commenter offering that,
``The Department does not have the authority to grant the Secretary
discretion to approve some direct assessment programs and not others,''
while another commenter expressed the opinion that in proposing these
changes, the Department has acted without supporting evidence or basis
in law.
[[Page 54764]]
Conveying disagreement with the Department's position, expressed in
the NPRM, that once an institution demonstrates it can capably
administer a direct assessment program, there is little risk that the
same institution would not properly administer other direct assessment
programs, a few commenters noted that programs of all types at the same
institution, within the same credential level, can vary in quality and
value, making it crucial for the Department maintain its oversight
responsibilities consistent with its statutory obligations. One of
those commenters also took issue with the Department's reasoning that,
it ``will review the institution's processes related to title IV aid
administration but will not evaluate the academic content or academic
quality of programs, except to confirm that an accrediting agency has
specifically approved each program,'' arguing that the Department's
accreditation regulations, published in November 2019, weaken the
accreditor's review and allow an accreditor's senior staff, rather than
the accreditor's appointed board of commissioners, to review, approve,
and monitor substantive changes to direct assessment programs.
The same commenter offered that the Department failed to consider
its OIG audits of accreditors of competency-based education programs
that demonstrated why accreditors cannot be solely responsible for the
evaluation and oversight of direct assessment programs. In the opinion
of the commenter, the Department further failed to consider the OIG
audits during the negotiated rulemaking or ask for public comment on
how the audit findings may demonstrate whether accreditors' senior
staff alone will be able to adequately assess the administration and
effectiveness of direct assessment programs without the Department's
review, as mandated by statute. Finally, referencing case law
(Connecticut Light & Power Co. v. Nuclear Reg. Comm., 673 F.2d 525, 528
(D.C. Cir. 1982)), the commenter suggested that, the Department has
failed to provide an accurate picture of the reasoning that has led to
the proposed rule, resulting in interested parties being unable to
comment meaningfully upon the agency's proposals. The commenter
additionally cited Portland Cement Ass'n v. Ruckelshaus, 486 F.2d 375,
393 (D.C. Cir.1973) for the proposition that, ``It is not consonant
with the purpose of a rulemaking proceeding to promulgate rules on the
basis of inadequate data, or on data that, [in] critical degree, is
known only to the agency.''
A few commenters, in addition to asserting that the Department has
a statutory obligation to approve each new direct assessment program,
expressed the belief that direct assessment programs have access to a
separate financing model from other types of credit-hour or clock-hour-
based programs. This supports (in the opinion of the commenters)
heightened oversight of direct assessment programs, achieved through
requiring institutions to obtain Department approval for each such
program.
One commenter maintained that the current regulations for
determining direct assessment program eligibility should be unaltered
because direct assessment programs are exempt from limitations on
written arrangements. The commenter explained that, per Sec.
668.10(e), direct assessment programs are exempt from the restriction
that limits the percentage of learning resources that are provided by
other entities, making the risks of inadequate oversight associated
with such programs greater than they might otherwise be. In the
commenter's opinion, under the Department's proposed regulations an
institution that has already received approval for a direct assessment
program at a given credential level would be able to stand up
subsequent direct assessment programs at the same credential level
where up to 100 percent of those programs is offered by outside
entities without review from the Department regarding the program's
eligibility.
Discussion: We disagree with the commenters who assert that the
Department did not have adequate legal authority to require the
Department's approval of a direct assessment program only when the
institution adds such a program for the first time, and when the
institution offers the first direct assessment program at each level of
offering than what was previously approved. Section 481(b)(4) of the
HEA states that ``In the case of a program being determined eligible
for the first time . . . such determination shall be made by the
Secretary before such program is considered to be an eligible
program.'' While Congress clearly intended for the Department to
undertake an evaluation and approval of an institution's offering of
direct assessment, whether or not the requirement applies on a program-
by-program basis is not prescribed and, therefore, left to the
Department.
We also disagree that requiring the Department's approval only for
the first direct assessment program that an institution offers (or the
first such program at a new level of offering) will result in
diminished oversight or undermine the integrity of the title IV, HEA
programs. As we indicated in the preamble to the NPRM, the Department
does not evaluate academic content or academic quality of programs, but
instead focuses its review of a direct assessment program on the
institution's title IV aid administration in such programs.
Institutions typically use information provided by the Department in
response to their initial approvals to inform subsequent applications
for direct assessment programs. Thus, multiple evaluations of direct
assessment at the same institution often results in the institution
providing nearly the same information for each subsequent program, and
results in an approval process that yields little value to students,
the institution, or taxpayers. Moreover, the Department's regulations
under Sec. 668.10(a)(5) will still require an institution's
accrediting agency to review and approve each direct assessment program
and an institution's credit or clock hour equivalency methodology and
institutions will be required to report new direct assessment programs
to the Department in accordance with new Sec. 600.21(a)(12), which
will provide the Department with an opportunity to ensure that such
programs have been appropriately reviewed and approved by an
institution's accrediting agency.
The commenter who asserted that the Department did not consider the
findings of its OIG when proposing the changes to the direct assessment
programs is incorrect. In developing proposed regulations relating to
direct assessment programs, we considered the findings in several of
the Inspector General's audits \9\ over the past decade relating to
direct assessment programs. In those audits, the Inspector General made
a number of recommendations that have already been adopted by the
Department's Office of Postsecondary Education and FSA, including
ensuring that School Participation Division managers are fully informed
of issues raised during the review of direct assessment program
applications,
[[Page 54765]]
monitoring and evaluating accrediting agency approvals of direct
assessment programs, and referring concerns about accrediting agency
reviews of direct assessment programs to the Office of Postsecondary
Education's Accreditation Group. The Department also included a new
provision in these regulations, in consensus with negotiators, to
require institutions to address how they avoid paying title IV, HEA
program funds for credit that might be given students on the basis of
prior learning or life experience in their direct assessment
applications. We agree with the OIG that payment of title IV aid for
credit earned through prior learning remains an ongoing risk that
requires ongoing oversight and mitigation. We recognize that
institutions offering direct assessment programs may use financing
models that differ from credit hour versions of the same program;
however, we believe that the risks associated with these models can be
addressed in the institution's first direct assessment application and
in requirements for institutions to report subsequent direct assessment
programs to the Department. Furthermore, many competency-based
programs, including direct assessment programs, use subscription-based
financing models that are specifically addressed by the Department's
proposed completion-based approach to disbursement of title IV, HEA
program funds in subscription-based programs. The Department plans to
continue monitoring use of the subscription-based disbursement system
to determine whether additional changes are needed in the future.
---------------------------------------------------------------------------
\9\ ``Direct Assessment Programs: Processes for Identifying
Risks and Evaluating Applications for Title IV Eligibility Need
Strengthening to Better Mitigate Risks Posed to the Title IV
Programs,'' published September 30, 2014; ``The Higher Learning
Commission Could Improve Its Evaluation of Competency-Based
Education Programs to Help the Department Ensure the Programs Are
Properly Classified for Title IV Purposes,'' published September 30,
2015; and ``The Western Association of Schools and Colleges Senior
College and University Commission Could Improve Its Evaluation of
Competency-Based Education Programs to Help the Department Ensure
Programs Are Properly Classified for Title IV Purposes,'' published
August 2, 2016.
---------------------------------------------------------------------------
Finally, the commenter who indicated that direct assessment
programs are exempt from the restriction on the percentage of learning
resources that are provided by other entities is correct, but we
disagree that this exemption should prevent the Department from making
the changes to the regulations agreed upon by the negotiating
committee. The commenter argues that the Department will have no
oversight over subsequent direct assessment programs added by an
institution after its initial application, but that is inaccurate.
Institutions will still be required to submit materials related to
their direct assessment programs through the Department's reporting
process under Sec. 600.21(a)(12). This reporting requirement will
permit the Department to continue to monitor the types of direct
assessment programs that are offered by an institution after its
initial application and take action if it determines that there are
irregularities with a particular program or programs.
Changes: None.
Comments: One commenter objected to the use of the word
``abilities'' in the definition of ``direct assessment,'' arguing that
using the word ``abilities'' in this context poses new risks to
students and their privacy. The commenter explained that abilities
might include psychological information that is confidential and
governed by healthcare information protection laws. Citing the need to
legally protect psychological abilities data in ways that might differ
from the information protection protocols applicable to other education
data, the commenter suggested that the potential consequences be
provided for public review and comment before the Department moves to
make the change final.
Discussion: Nothing in the Department's regulations would permit an
institution to violate applicable privacy laws, including healthcare
laws, with respect to a student's psychological or cognitive abilities.
The word ``abilities'' in these regulations refers only to the things
that a student must demonstrate that he or she can do related to the
competencies required in a direct assessment program.
Changes: None.
Comments: A few commenters, one of whom asserted that the NPRM
failed to discuss reasonable alternatives, offered modifications they
urged the Department to consider. One of these proposed the creation of
a two-tier application process. The first tier would include all new
programs and apply all of the application elements in the evaluation;
the second tier would include additional programs offered at the same
credential level, requiring only descriptions of the program under
consideration and an explanation of how learning objectives are set and
evaluated, without the necessity for the institution to provide
information on the methodology for determining an equivalent number of
credit or clock hours. Another suggested modification to what was
proposed in the NPRM was that the Department require accreditors to
utilize the Competency-Based Network (C-BEN) Quality Framework for
Competency-Based Educational Programs in evaluating direct assessment
programs so that both students and policymakers can be confident the
program has been designed to meet quality standards. A further
recommendation was the inclusion of additional language in the
regulation which would require institutions to notify the Department
and seek approval for substantively changed processes or policies
within the approved direct assessment model for the institution.
Discussion: We thank the commenter for the suggestion regarding a
two-tier process for the Department's approval of direct assessment
programs. Though we decline to adopt the suggestion, the process for
the Department's evaluation of an institution's first and subsequent
direct assessment programs will proceed in a similar fashion. An
institution's first application for direct assessment, or its first
application at a new level of offering, will undergo the Department's
full approval process and the institution will not be permitted to
disburse title IV, HEA program funds until it has received the
Department's approval. Subsequent programs at the same level(s) of
offering will be reported to the Department under new Sec.
600.21(a)(12), and this reporting process will require the institution
to submit to the Department a description of the program and evidence
that its accrediting agency has approved the program and the
institution's methodology for determining credit or clock hour
equivalency for the program.
We also appreciate the commenter's suggestion regarding a
requirement for an institution to notify the Department and seek
approval for changed processes or policies for the institutions direct
assessment offerings. Though we believe that it would be too burdensome
to implement this suggestion any time such a change occurred, the
Department will evaluate such changes, and all regulatory requirements
for an institution's direct assessment programs, during an
institution's application for recertification.
There was no discussion during negotiated rulemaking regarding a
requirement for accrediting agencies to the use of C-BEN's Quality
Framework for Competency-Based Educational Programs \10\ (Quality
Framework) when approving new direct assessment programs, and we do not
feel it is appropriate to introduce new requirements for accrediting
agencies at this stage given that the Department has already published
its final rule on accreditation. Additionally, though the Quality
Framework includes helpful principles for the design and implementation
of high-quality competency-based programs and we encourage institutions
to consider these principles when planning to offer competency-based
education programs, the principles may not be appropriate for all
accrediting agencies in all
[[Page 54766]]
circumstances and imposing them on all accrediting agencies could
undermine the autonomy of those entities and their oversight of
academic quality, which is protected by the HEA. Therefore, we decline
at this time to include a requirement for accrediting agencies to use
the standards described in the Quality Framework when approving
competency-based education programs, including direct assessment
programs.
---------------------------------------------------------------------------
\10\ www.cbenetwork.org/wp-content/uploads/2018/09/Quality-Framework-for-Competency-Based-Education-Programs-Updated.pdf.
---------------------------------------------------------------------------
Changes: None.
Comments: A few commenters indicated concerns over the proposed
requirement for an institution to establish a methodology to reasonably
equate each module in the direct assessment program to either credit or
clock hours. Expressing disappointment at the Department's continued
reliance on clock or credit-hour equivalencies, one of those commenters
stressed the very nature of direct assessment programs in utilizing
direct assessment of student learning or recognizing the direct
assessment of student learning by others in lieu of credit or clock
hours as the measure of student learning, and offered that the
Department's focus on equating each module in the direct assessment
program to either credit or clock hours is inconsistent with the HEA,
which merely requires that any such assessment is consistent with the
accreditation of the institution or program utilizing the results of
the assessment (20 U.S.C. 1088(b)(4)). The same commenter further
asserted that requiring institutions to craft, implement, and explain
methodologies for creating credit or clock hour equivalences is
administratively burdensome and shifts the program's focus away from
student learning in favor of seat time.
Another commenter suggested that the use of the term ``module'' in
Sec. 668.10(a)(3) as the period measure of learning in direct
assessment programs is confusing since it is already used in Sec.
668.22, and in the NPRM further limited to describe courses in standard
and nonstandard-term programs in relation to the return to title IV
funds. In order to avoid this confusion the commenter recommended that
the Department remove the term ``module'' in the direct assessment
context and instead require in Sec. 668.10(a)(3) that ``An institution
must establish a methodology to reasonably equate each of its stated
measures of learning in the direct assessment program to either credit
hours or clock hours . . .'' (85 FR 18698). This change, the commenter
argues, would not alter the substance and meaning of the amendments in
any way.
Discussion: We disagree with the commenters who asserted that it is
not necessary for the Department to require an institution to clearly
describe its methodology for developing credit or clock hour
equivalencies for its direct assessment programs. This requirement is
vital to the integrity of the title IV, HEA programs because the
requirements for calculating awards and disbursement amounts under
those programs is still performed using credit or clock hours. Though
we acknowledge that the credit hour is an outdated method of measuring
a student's workload based on seat time and that developing an
equivalency system involves administrative burden, there is currently
no widely-accepted alternative ``currency'' for learning and
workload.\11\ Without such an alternative, the Department will continue
to use credit or clock hour equivalencies in order to ensure that an
institution's choice of a unit of measurement for a direct assessment
program does not result in an unfair or inflated determination of a
student's eligibility for title IV, HEA funds. Such a ``currency'' is
also important in enabling students to transfer credits between
institutions.
---------------------------------------------------------------------------
\11\ www.luminafoundation.org/files/resources/cracking-the-credit-hour.pdf.
---------------------------------------------------------------------------
The Department encourages institutions and accrediting agencies to
consider options for measures of student learning and workload that do
not rely on credit hours but can be widely accepted and understood by
practitioners and adopted by accrediting agencies. If the use of such a
measure becomes prevalent in postsecondary education, the Department
will consider allowing institutions to rely upon that measure for
competency rather than requiring an equivalency to credit or clock
hours.
Though we agree with the commenter who indicated that it was
possible that the use of the term ``module'' in this section could be
conflated with the different usage of the term in the R2T4 regulations
under Sec. 668.22, we decline to make a change in this case. We
believe that replacing the word ``module'' would require the use of
another term that may result in a substantively different approach in
the direct assessment regulations. Because we did not discuss such an
approach with the negotiating committee, nor include discussion of the
issue in the NPRM, we decline to make the change at this time.
Additionally, we do not believe that any confusion regarding the word
``module'' will undermine the requirements in either Sec. 668.10 or
Sec. 668.22 because of the different context for the usage of the word
in each section.
Changes: None.
Comments: One commenter offered that, while the proposed regulation
states that title IV, HEA funds cannot be utilized for the portion of
the direct assessment program that the student is awarded based on
prior learning, it does not define what activities comprise prior
learning. In the opinion of the commenter, this leaves the proposed
regulation open to a variety of interpretations and may result in
miscommunication and confusion between the Department and institutions.
The commenter proposes that ``prior learning'' and ``prior learning
assessment'' be defined as follows:
Prior Learning--Learning obtained outside of an academic
context (experiential, personal, professional, workplace, etc.) that
has not been officially awarded as academic credit.
Prior Learning Assessment--is the process that evaluates
and recognizes prior learning and awards the appropriate level of
academic credit based on established institutional/organizational
standards. Assessment of prior learning may occur before and during
(concurrently) credit bearing (title IV eligible) course and programs.
Discussion: We thank the commenter for the suggestions regarding
how to define prior learning in the context of the direct assessment
regulations. When the term ``prior learning'' is used in these
regulations, it means learning that occurred prior to the student's
enrollment at the institution or in a context other than the curriculum
in which the student is enrolled (for example, the student's workplace
or another academic institution). Prior learning includes learning
associated with the transfer of credit from a prior institution, since
the credits earned through transfer cannot be included in a student's
enrollment status for purposes of calculating eligibility for title IV,
HEA assistance. We agree with the commenter's definition of ``prior
learning assessment,'' which means a process for evaluating and
recognizing prior learning and awarding the appropriate level of
academic credit based on established institutional/organizational
standards. We also agree that assessment of prior learning may occur
prior to and during a student's enrollment at the institution.
Changes: None.
Comments: One commenter suggested that competency-based education,
as a less mature field, may not be ready for expansion. However, the
commenter indicated that it is important to make data available that
might help
[[Page 54767]]
researchers, practitioners, and others understand the field better and
provide research and information that help future efforts by the
Department or Congress to enable innovation while protecting students
and taxpayers. The commenter offered several suggestions for the
Department to collect and share data about direct assessment programs
that have been approved directly by the Department, including
publication of a list of institutions that have been approved for
direct assessment and collecting information about tuition, retention
rates, and completion rates for each direct assessment program. The
commenter also suggested disaggregating and identifying these programs
on the College Scorecard. The commenter recommended against requiring
the collection or sharing of data related to course-based competency-
based education programs that do not require Department approval given
the potential for increased burden.
Discussion: We thank the commenter for their suggestions regarding
how to improve data on direct assessment programs and institutional
accountability. We believe that the commenter's suggestion of
publishing a list of approved direct assessment programs and the
institutions that offer them is reasonable and we will evaluate whether
it is possible to post a public list of such programs. However, because
the number of direct assessment programs remains small, we do not
believe that we should collect data for such programs exceeding what is
collected for other types of programs, nor do we currently intend to
provide data on the College Scorecard specifically related to direct
assessment programs. We will consider doing so in the future if the
number of direct assessment programs increases substantially.
We agree with the commenter that additional data is not needed for
course-based competency-based programs. Because there is no consistent
statutory definition of a competency-based program that does not use
direct assessment, the Department does not feel that it is practical or
useful to attempt to collect data about such programs, since the data
would reflect a wide range of programs, many of which have in common
only the competency-based learning modality.
Changes: None.
New Program Approval (Sec. 600.20)
Comments: Many commenters supported the removal of Sec.
600.20(d)(1)(ii)(B), which provides that an institution that is
submitting a notice in accordance with Sec. 600.20(d)(1)(ii)(A) is not
required to obtain approval to offer the additional program unless
notified by the Secretary at least 30 days before the first day of
class that the program must be approved. The commenters stated that
these current regulations create an unnecessary burden, make it more
difficult to quickly respond to the needs of employers, and duplicate
the oversight of programs by State authorizing agencies and accrediting
agencies. The commenters also supported the addition of provisions
requiring that the Department take prompt action on any materially
complete application under Sec. 600.20(a) or (b). Two commenters also
noted that it is very difficult for institutions to be expected to wait
until 30 days prior to the start of the program to advertise or enroll
students in the program. One commenter also underscored the benefits of
reduced redundancy while supporting the effort to minimize the impact
of delays by the Department in the program approval process.
Discussion: The Department agrees with the commenters. Removing
Sec. 600.20(d)(1)(ii)(B) will ease the process of approving new
programs and allow institutions to offer new programs in a timely
manner to meet both student demand and workforce needs. The Department
agrees that the current provision creates significant uncertainty about
whether an institution will be allowed to offer a program until the
program has nearly begun, without a tangible benefit in terms of
oversight. It is not reasonable to expect institutions to either enroll
students in a program that may not be allowed to operate or expect
students to wait to enroll in these programs until 30 days prior to the
start of the program. The Department seeks to conduct proper oversight
in a timely manner without undue impact to institutions or students. As
many commenters noted, this oversight role may also be duplicative of
what is overseen by accrediting agencies and State authorizing
agencies.
Changes: None.
Comments: One commenter encouraged the Department to consider
streamlining the proposed regulations and processes for institutions on
provisional status. The commenter suggested the Department either
modify the regulations or use its discretion to streamline approvals
for institutions with a strong record of compliance and stability. The
commenter emphasized that the COVID-19 crisis may force an increasing
number of institutions to be placed on provisional status and that such
institutions may need quick assistance starting new and innovative
programs.
Discussion: The Department thanks the commenter for the suggestion.
The Department has already proposed important regulatory flexibilities
without jeopardizing proper oversight. Further regulatory changes would
risk violating the consensus agreement and weakening important
oversight of program reviews. The Department currently considers the
past record of an institution in these reviews but agrees that some
administrative processes could be improved to provide more timely
responses, better communication, and more consistent decisions. The
Department has already evaluated what it would take to make such
improvements and hopes to implement them soon but declines to make
further regulatory changes as the commenters suggest. The Department
also thanks the commenters for the suggestion on streamlining processes
in regard to COVID-19, but we believe the impacts COVID-19 has on
schools will not necessarily result in a larger number of institutions
that are placed on provisional status.
Changes: None.
Comments: Several commenters disagreed with the Department's
contention that the changes in Sec. 600.20 restore functions related
to program quality to accrediting agencies and State authorizing
agencies. Instead, these commenters say that the approval process
relates to the requirements related to access to title IV aid.
Therefore, the commenters say, institutions should be required to
report their intent to establish new programs to protect students and
taxpayer funds. The commenters also assert that the elimination of the
list of elements the Secretary will consider when reviewing an
application under this section was not part of the consensus language
nor was it explained in the NPRM and therefore the change should be
reverted to the consensus language in the final rule.
Discussion: The Department disagrees with the assertions made by
the commenters. While they are correct that the provisions of Sec.
600.20 broadly relate to the Department's oversight of access to title
IV aid, the overwhelming majority of these provisions are left
unchanged. Institutions continue to be required to notify the Secretary
of their intent to offer an additional educational program. The
proposed regulations simply require the Department to act promptly and
remove restrictions that unnecessarily prevent an institution from
quickly developing new programs in response to requests by students,
[[Page 54768]]
employers, or others. It is to the benefit of both students and
institutions that there be certainty well in advance that a planned
program will be able to operate. The Department intended that the
amendatory instructions in the NPRM would be consistent with the
consensus language adopted during the negotiated rulemaking. The
amendatory instructions that were published, however, contained errors,
which the Department has corrected in this final rule. The description
of the changes to Sec. 600.20 in the preamble to the NPRM accurately
reflected the consensus language.
Changes: None.
Comment: One commenter noted that the amendatory language appeared
to contain drafting errors or changes that were not appropriately
described, which differed from consensus language. The commenter urged
the Department to reopen the NPRM for additional comment. The commenter
noted that the proposed amendatory language would delete current Sec.
600.20(d)(1)(ii)(E), a change that they would oppose on the basis that
the elements in that section are important for any approvals the
Secretary may consider. The commenter urged the Department to maintain
current Sec. 600.20(d)(1)(ii)(E) (which is redesignated as Sec.
600.20(d)(1)(ii)(D)) and revise the reference in that section to
paragraph (d)(1)(ii)(B), which was deleted in the consensus language,
to instead refer to paragraph (d)(1)(ii)(C), which relates to the
Secretary's approval of an additional educational program.
Discussion: The Department appreciates the commenter's close review
of the proposed amendatory language. We did not intend to deviate from
the consensus language of Sec. 600.20 and identified and discussed
each of the intended revisions in the preamble to the NPRM. We agree
that the proposed amendatory language contained errors, especially
related to the revised numbering of paragraphs in Sec. 600.20(d)(1)
and believe that the commenter's suggested revisions are reasonable.
Changes: We have revised the amendatory language to reflect the
consensus language, and also revised the reference in redesignated
paragraph (d)(1)(ii)(D) to refer to paragraph (d)(1)(ii)(C).
Subscription Period Disbursement (Sec. Sec. 668.2 and 668.164)
Comments: Many commenters supported the Department's definition of
a subscription-based program model within Sec. 668.2. Two commenters
indicated that the subscription-based model addresses the unique nature
of competency-based and other self-paced programs of study and further
encourages institutions of higher education to innovate by creating
learning modalities that allow students to learn at their own pace
while remaining eligible for title IV, HEA program assistance. Another
commenter opined that the proposed subscription-based system supports
postsecondary access and affordability for working adults. One
commenter stated that the proposed subscription-based model balances
flexible timelines for students with completion requirements that
maintain the integrity of the title IV, HEA programs. Another commenter
was supportive of the changes in timeframes associated with
disbursements for subscription-based programs and indicated
appreciation for the ability for institutions to offer early
disbursements in such programs, asserting that the model's completion
requirements would be essential to encouraging and supporting students
to complete their programs on time. Another commenter supported the
changes because it would permit self-paced coursework to ``float''
beyond the end of a term until a student masters the learning
objectives for that coursework. Several commenters expressed support
for proposed definition of a ``full-time student'' under Sec. 668.2 as
it relates to subscription-based programs; one of those commenters
indicated that it made sense to prevent a student from receiving a
disbursement based on retaken coursework in a subscription-based
program, and another stated that to do otherwise would be nonsensical.
Discussion: The Department thanks the commenters for their support.
Changes: None.
Comments: Two commenters, while supportive of the Department's
proposed regulations regarding subscription-based programs, urged the
Department to rely more heavily on data and evidence to oversee such
programs. One of those commenters noted that the Department has not yet
produced any findings from its CBE Experiment and asked the Department
to produce the statutorily-mandated reports detailing the findings of
its experiments.\12\ This commenter also encouraged the Department to
improve the collection of data from participating institutions in the
future so that CBE experiments will be more useful in the future. The
other commenter emphasized the importance of focusing on student
outcomes to evaluate institutions and their impacts on students and the
nation's ability to develop the talent needed to address economic and
social challenges. The commenter expressed that shifting to a more
transparent, outcomes-focused accountability system depends on the
ability of existing and new entities to access and use better data and
emphasized the importance of equity and quality in any such system.
---------------------------------------------------------------------------
\12\ experimentalsites.ed.gov/exp/approved.html.
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Discussion: We agree with commenters about the importance of using
data and evidence in the Department's oversight of subscription-based
programs, and that such information is an important component of an
outcomes-based accountability framework. To those ends, the Department
plans to monitor which programs use the subscription-based model and
will evaluate student-level data, such as disbursement amounts, debt
levels, and withdrawal rates for students who are enrolled in such
programs. This evaluation will take the place of the Department's CBE
Experiment, which will end on June 30, 2020. The Department will also
publish a final report on the CBE Experiment that will offer more
information to the public about the results of that experiment related
to subscription-based programs.
Changes: None.
Comments: One commenter, while acknowledging appreciation for the
Department's attempt to balance the subscription-based model's
completion requirements with the likelihood that some students could
struggle to make progress during a specific period, indicated concern
that the lack of alignment between disbursements and payment periods
could cause confusion amongst students, families, and (at least
initially) institutions.
Discussion: We disagree that the subscription-based disbursement
model is excessively complicated. Though the model does require an
institution to carefully monitor a student's progress in order to
ensure that he or she does not receive subsequent disbursements of
title IV, HEA program assistance, each institution has the ability to
clearly express to students the number of credits (or the equivalent)
that must be completed by a given date in order to receive aid in the
future. This facet of the subscription-based disbursement model has
already been successfully implemented for many non-term programs under
the existing disbursement system for such programs.
Changes: None.
Comments: Several commenters asked the Department to allow the
subscription-based model to be used for programs that are not offered
using direct assessment. One of those
[[Page 54769]]
commenters asked that the Department extend the ability to use the
subscription-based disbursement model to any self-paced postsecondary
program, arguing that doing so would provide for greater innovation
while still tying access to Federal aid with student achievement. The
commenter suggested that such a change would likely increase interest
among institutions and software vendors to support innovation by using
the new model.
Two commenters expressed a related concern about institutions that
had been participating in the Department's CBE Experiment and asked if
such institutions offering credit-hour CBE programs would transition
following the end of that experiment, which had allowed institutions to
use a form of this model on a limited basis.
One commenter, while supportive of the Department's proposed
regulations for subscription-based programs, urged the Department not
to expand the definition or weaken the flexibilities provided by such
programs. The commenter noted that subscription-based systems are not
without risk to students, since in such programs students are
effectively committed to a single price based on the number of courses
they expected to complete at the start of the semester, and this means
that students who do not complete their programs quickly could overpay
for an education that the student does not benefit from. The commenter
emphasized that because tuition in subscription-based programs will be
largely financed with student debts, students who do poorly in
subscription-based programs could be at risk.
Discussion: The Department agrees with commenters who argue that
the subscription-based method for disbursing title IV, HEA program
assistance should be extended to programs other than direct assessment
programs. The Department had originally intended to limit the
applicability of those provisions to direct assessment programs in
order to ensure that the disbursement method was used only in programs
offered by CBE. However, many CBE programs are not offered using direct
assessment and would thus be prevented from using the subscription-
based model.
Commenters also make a strong argument that limiting the
applicability of the requirements to direct assessment programs would
sharply limit the use of the model and would discourage software
providers from creating technology that assists institutions in
disbursing title IV, HEA funds using this method. This, in turn, would
prevent the model from being effectively scaled at most institutions
given the cost of incorporating the model into existing technology
supporting the administration of title IV, HEA program funds.
Moreover, we did not intend to hamper or limit flexibility in
disbursement of title IV, HEA assistance for institutions that had
previously been participants in the Department's CBE Experiment, but
recognize that many of those institutions measure student progress
using credit hours rather than direct assessment, which would have
precluded them from using the subscription-based disbursement model
under the proposed rule. We believe that expanding the use of the
subscription-based model to any institution using subscription pricing
will permit institutions with CBE programs using such pricing to
transition more easily into full regulatory compliance following the
end of the CBE Experiment.
Finally, the Department believes that the subscription-based model
includes safeguards for both students and taxpayers that limit the risk
of expanding the use of the model more broadly. The model protects
taxpayers by requiring students to complete courses or competencies
before receiving subsequent disbursements of title IV, HEA program
funds. The model also improves upon the existing non-term disbursement
system for students by allowing students to switch between full-time
and less-than-full-time versions of a program in order to limit the
number of courses they are required to complete in order to receive
subsequent disbursements of title IV, HEA program funds.
We share commenters' concerns that students in subscription-based
programs could quickly accrue debt while falling behind in their
coursework. This risk was specifically why we designed the model to
require students to complete coursework before receiving subsequent
disbursements of title IV, HEA program funds. Institutions and students
will both have a strong incentive to act if a student finds a
subscription-based program too challenging or fails to make progress.
Faced with the possibility of a student losing access to aid, an
institution may provide additional assistance or resources to the
student or encourage the student to transfer into a version of the
program at a reduced enrollment status better suited to the student's
rate of progress. Similarly, the student may decide to seek additional
support or transfer into a different program. In either case, the
model's completion requirements prevent a student from taking on too
much debt if the student is unable to complete coursework in the
program.
Finally, use of the model would still be limited to institutions
that charge students on a subscription basis, a practice which is rare
and primarily used by competency-based programs. The Department will
evaluate the effectiveness of, and monitor risks associated with, the
model as it begins to be used more broadly and will make any changes
necessary to protect students and the integrity of the title IV, HEA
programs.
Changes: We have removed the words ``direct assessment'' from the
first sentence in the definition of ``subscription-based program.''
Comments: One commenter requested a correction to the definition of
a subscription-based program by adding ``(or the equivalent)''
following ``credit hours'' in the first sentence of the definition
paragraph. The commenter contends this would align the first sentence
to the third and last sentences of the same paragraph where the
parenthetical already exists.
Discussion: We agree with the commenter that referring to the
equivalent of credit hour in the specified location would improve the
consistency of the definition.
Changes: We have added the words ``(or the equivalent)'' following
the words ``credit hours'' in the first sentence of the definition of
``subscription-based program.''
Comments: One commenter expressed support for the Department's
decision to provide a student with some control over the pace of
learning in his or her subscription-based program by selecting a
program version at a specific enrollment status. The commenter
indicated that allowing a student to change to different program
versions no more often than once per year supports student flexibility
and results in a manageable level of administrative burden. Conversely,
another commenter asserted that the Department had not provided
sufficient justification for preventing students from switching between
versions of a subscription-based program no more than once per academic
year.
Discussion: The limitation on the number of times that a student is
permitted to switch between versions of a subscription-based program
was agreed upon by the Distance Learning and Innovation subcommittee as
a condition for the Department to waive the requirement for an
institution to evaluate a student's pace for satisfactory academic
progress purposes in a subscription-based program. We believe
[[Page 54770]]
that evaluating a student's pace is unnecessary if the program requires
a particular rate of completion in order for the student to continue
receiving title IV, HEA program assistance over time. This condition is
met if the subscription-based program both requires the student to
maintain a consistent enrollment status (e.g., half-time or full-time)
and the student does not regularly change that enrollment status, which
in turn would adjust the number of credits the student was required to
complete before receiving subsequent disbursements.
Allowing a student to frequently adjust enrollment status (e.g., by
switching between versions of the same program) would mean that,
without requiring the institution to evaluate the student's pace toward
completion of the program, the Department would have no mechanism for
ensuring that the student completes his or her program in a timely
manner. We believe that the greater flexibility associated with the
ability to switch enrollment status would be offset by the
substantially greater complexity associated with measuring a student's
pace for satisfactory academic progress purposes. Therefore, the
Department believes that not requiring pace evaluations, but limiting
students to switching between versions of the same subscription-based
program once per year, is the most appropriate way to ensure that the
student maintains an appropriate pace (in the judgment of the
institution) toward program completion.
Changes: None.
Comments: One commenter asked whether a student enrolled in a
subscription-based program would be required to complete credits
associated with a payment period that the student did not attend in
order to receive subsequent disbursements of title IV, HEA program
assistance.
Discussion: A student in a subscription-based program is not
required to complete credit hours (or the equivalent) associated with a
payment period the student did not attend. In a subscription-based
program, the number of credit hours (or the equivalent) that a student
is required to complete accrue only for payment periods in which the
student attends at least one day. If an institution determines that a
student did not attend a given payment period, the credit hours (or the
equivalent) associated with that payment period would not accrue toward
the student's future completion requirements.
Changes: None.
Comments: One commenter requested clarification regarding how a
student would switch between versions of the same subscription-based
program with different enrollment status requirements. The commenter
inquired whether a student would be held accountable for incomplete
credits associated with one enrollment level after changing to a
different enrollment level and asked whether the Department would leave
this to the discretion of institutional policy.
To illustrate the question, the commenter sought the Department's
viewpoint on an example of a student making such a change. In the
commenter's example, a full-time student has completed six subscription
periods, each of which is associated with 12 credit hours. Thus, the
student would be required to have completed at least 60 credit hours
(12 credit hours multiplied by five terms, excluding the first one that
the student attended) before receiving title IV, HEA assistance for a
future payment period. However, at the end of the sixth payment period,
the student has only completed 52 credit hours. At that time, the
student switches to a half-time version of the same subscription-based
program. The commenter asked whether the student would still need to
complete eight more credit hours (more than the six hours associated
with half-time enrollment status) before receiving another disbursement
of title IV, HEA funds in the next payment period.
Discussion: In the situation described, the student would be
required to complete eight more credit hours before receiving a
disbursement at half-time enrollment status for the following payment
period. Such a student would then be required to complete a further six
credit hours (in addition to the eight credit hours needed to gain
eligibility for the next disbursement) in order to receive the
following disbursement of title IV, HEA program funds for the payment
period after that.
Any time that a student begins attendance in a payment period in a
subscription-based program, the student must complete the credit hours
(or the equivalent) associated with that payment period (except for the
first payment period that the student attends) before receiving title
IV, HEA program funds for the following payment period. When a student
transfers between versions of the same subscription-based program, the
student must first complete the hours associated with the student's
enrollment status in the previous version of the program. Because the
completion requirement in a subscription-based program is based on the
number of payment periods that a student has attended, a student in
such a program may only change his or her enrollment status at the
beginning of a payment period, and when doing so must complete all the
hours accrued for that program before receiving a subsequent
disbursement of title IV, HEA funds.
Note that a student who transfers from a subscription-based program
to a non-term program, or a term-based program that does not use
subscription periods, is not required to complete additional credit
hours before receiving a disbursement in his or her new program. This
includes cases in which the student transfers from a subscription-based
version of a program to a version of the same program that does not use
subscription periods.
Changes: None.
Comments: One commenter asked whether a student's Pell Grant
enrollment status would need to be adjusted at the end of a
subscription period to exclude any coursework for which the student did
not begin attendance. The same commenter asked the Department to
clarify whether a student could begin coursework used to establish the
Pell Grant enrollment status after the subscription period for which
the student was paid had ended.
Discussion: Normally, a student in a term-based program is required
to attend each class that the institution uses to establish the
student's Pell Grant enrollment status under the Pell Grant regulations
under Sec. 690.80(b)(2)(ii). Similar to a student enrolled in a
nonterm program, a student in a subscription-based program is not
required to attend all of the courses in a payment period that comprise
the student's enrollment status. This is because the Department
presumes that the student must attend a sufficient number of classes or
demonstrate a sufficient number of competencies in order to earn the
credit hours (or the equivalent) before receiving subsequent
disbursements of title IV, HEA program funds.
Note that because a student in a subscription-based program is
always treated as having the same enrollment status, there is also no
need for an institution to establish a Pell Grant recalculation date
under Sec. 690.80(b)(2)(i).
Changes: None.
Comments: Two commenters asked the Department to clarify whether
the use of the subscription-based disbursement model will be optional
or required for an institution that offers a program that is billed by
subscription period. Both commenters requested that an institution be
given the option to use other disbursement methods--such as for
standard term, nonstandard term, or nonterm programs--if the
institution
[[Page 54771]]
otherwise meets the requirements to use those alternative disbursement
methods. One of those commenters asked that institutions be permitted
to continue using their current method for delivering title IV, HEA
program funds while developing student-friendly plans to convert from
one model to another and allowing software vendors to design, develop,
and test the complex new disbursement model. The commenter argued that
such flexibility would provide options for institutions wishing to
``teach out'' students who were already receiving title IV, HEA program
funds using one of the existing disbursement systems.
Another commenter interpreted the proposed definitions of the terms
``subscription-based program'' and ``full-time student'' to require
institutions that use a subscription-based pricing model to also use
the subscription-based model for disbursing title IV, HEA program
funds. The commenter disagreed with this perceived approach, explaining
that an institution could use subscription pricing in a program that
otherwise meets the requirements to be treated as a traditional term-
based program. The commenter recommended that the Department allow an
institution the flexibility to choose the type of disbursement method
that best suits it even if it uses a subscription pricing model.
Discussion: The Department views the use of the subscription-based
model for disbursing title IV, HEA programs funds as entirely optional.
All programs that meet the requirements for the subscription-based
disbursement model would also be permitted to use the existing
framework for disbursing funds in a non-term program. Additionally, if
a subscription-based program also meets the requirements for a term-
based program--for example, students are required to begin and end all
courses or competencies within the term start and end dates--the
institution can disburse funds using standard terms or non-standard
terms (as applicable) instead of the subscription-based format.
When the final rule is effective, an institution that wishes to
adopt the subscription-based format may ``teach out'' students who had
previously been provided aid under the existing term-based or non-term
disbursement systems. The institution would then be permitted to begin
enrolling new cohorts of students using the subscription-based format.
An institution could also choose to withdraw students from their term-
based or non-term programs and enroll the students under the
subscription-based model. Students who transfer from a term-based or
non-term program into a subscription-based program will be treated like
all other students who first enroll in subscription-based programs,
i.e., they will not be required to complete the credit hours (or the
equivalent) associated with the first payment period of their
enrollment in the program and will be required to complete the
appropriate number of hours to receive subsequent disbursements
thereafter. Note that students who transfer from one subscription-based
program to another at the same institution, including transfers between
versions of the same program, will not receive a ``free'' payment
period when they transfer and must complete all the credit hours (or
the equivalent) that have accrued in the prior program before receiving
a disbursement in the program to which the student transferred.
Changes: None.
Comments: One commenter opposed the requirement for a student to
complete a specific number of credit hours (or the equivalent) in order
to receive subsequent disbursements of title IV, HEA program funds in a
subscription-based program. The commenter also contended that
institutions using innovative learning models rarely originate single-
term loans, and that the requirement to make two equal disbursements of
a single-term loan is difficult to understand and results in a
frustrating student experience just prior to a student's completion of
a program. The commenter recommended that the Department allow one
disbursement of a single term loan for single term loans with loan
periods exceeding four and a half months in a subscription-based
program.
Discussion: We appreciate the comments and the recommendation but
do not plan to change requirements under the Direct Loan regulations,
because those regulations were not discussed during negotiated
rulemaking, nor published for comment in the NPRM. Additionally, the
completion requirements are integral to the subscription-based
disbursement system and help to ensure that students are making
adequate progress in their programs. The requirements were agreed upon
by both the Distance Learning and Innovation subcommittee and the full
negotiating committee, and we do not plan to eliminate those completion
requirements for students in subscription-based programs.
Changes: None.
Definition of Weeks of Instructional Time (Sec. 668.3)
Comments: Commenters expressed overwhelming support for the
Department's definition of a week of instructional time related to an
academic year under Sec. 668.3(a)(2)(ii) to include programs that use
asynchronous coursework through distance education or correspondence.
Several commenters acknowledged the Department's efforts to create a
definition that accounts for innovative non-traditional programs that
are offered asynchronously, reflecting the unique nature of distance
education modalities. Several commenters also noted that while time
continues to be an important factor in awarding and disbursing title
IV, HEA program funds, the new definition was a step away from a rigid
conception of time-based, scheduled instruction, and a positive step
toward emphasizing learning over time. One commenter also indicated
that the new definition would provide clarity and transparency
regarding regulatory thresholds for a week of instructional time.
Discussion: The Department thanks the commenters for their support.
Changes: None.
Comments: One commenter indicated that changing the definition of
``a week of instructional time'' is not necessary, because accrediting
agencies are responsible for the content of instruction.
Discussion: We agree that accrediting agencies have authority over
instructional quality at postsecondary institutions. However, we do not
believe that such authority precludes or obviates the need for changes
to the definition of a week of instructional time.
Changes: None.
Written Arrangements at Domestic Institutions (Sec. 668.5)
Comments: A few commenters supported the proposed changes to
written arrangements because they believe the changes will promote
innovation and workforce responsiveness. One commenter said the changes
will provide students with access to more high-quality programs.
Another commenter said the changes will align the needs of graduates
with those of employers and allow institutions to offer timely,
relevant educational program offerings they may be unable to provide on
their own, allowing them to better attract and retain students. One
commenter supported the proposal, citing an improved ability for
employers to engage with institutions to reduce skills gaps and
personalize learning.
[[Page 54772]]
Discussion: The Department appreciates the support for the proposed
changes.
Changes: None.
Comments: Many commenters supported the consensus language,
including the requirement in both current regulation and the proposed
regulation that an ineligible institution or organization may provide
up to 25 percent of a program (or up to 50 percent with accrediting
agency approval). Several of these commenters urged the Department not
to go beyond the 25 percent and 50 percent limits because doing so
could pose risks to students and taxpayers, and particularly
disadvantaged groups of students, especially if an outside entity could
provide more than half of a program. They stated in various ways that
going above 50 percent would risk, or outright permit, institutions to
lend their accreditation or title IV eligibility status to others. One
of these commenters worried that the motivation for abuse could be more
acute given potentially declining revenues during and after the COVID-
19 pandemic if the Department went beyond 25 and 50 percent limits.
These commenters cited discussion at negotiated rulemaking, including
negotiators' rejection of proposals that would have allowed
institutions to go beyond these limits. One of these commenters
suggested that the current limit of 50 percent would allow for
sufficient flexibility for institutions while ensuring they pass
accountability measures.
Discussion: The Department appreciates the support for consensus
language from these commenters and acknowledges concerns about written
arrangements, especially if the 25 and 50 percent limits were lifted.
This topic received extensive discussion during negotiated rulemaking,
both from negotiators and subcommittee members. The Department agrees
that using written arrangements for all or nearly all of a program
could raise questions about which entity confers the credential.
Anything beyond 75 percent may trigger restrictions from accrediting
agencies who require the institution conferring the credential to
deliver at least 25 percent of the program. While the consensus
agreement would not allow institutions to go beyond 50 percent, the
Department maintains that written arrangements beyond 50 percent
theoretically could be used responsibly.
The Department disagrees with the implication from many commenters
that written arrangements are somehow inherently dangerous for students
or that the risk for abuse is greater for disadvantaged groups of
students or considering the COVID-19 pandemic. Instead, the Department
sees written arrangements as a tool that can provide more opportunity
for students (especially for the groups or in the circumstances cited
by commenters), because even the most well-resourced institutions may
not be able to provide every conceivable course or instructional
resource. In fact, many well-resourced institutions struggle to keep up
with the latest practices of their students' future employers and
written arrangements can help. Such tools can, of course, be misused
and the Department encourages accrediting agencies to support written
arrangements where they offer benefits to students, but be wary of them
if they merely serve as a lifeline to institutions that could not
otherwise meet the accrediting agency's requirements for fiscal and
administrative capacity (or other standards) under Sec. 602.16.
However, we agree with commenters who noted that the proposed language,
which streamlines approvals but maintains the 25 and 50 percent limits,
was the product of an extensively discussed consensus agreement and, as
a result, the Department declines to make changes.
Changes: None.
Comments: One commenter was generally supportive of the provisions
in this section, but opposed the 50 percent cap and suggested at least
moving it to 75 percent, believing the Department is not sufficiently
promoting innovative workforce partnerships, especially given the
COVID-19 pandemic's impact on the economy.
Discussion: As noted elsewhere in this section, the Department
would have preferred greater flexibility for institutions to use
written arrangements and believes such allowance could have been used
responsibly. However, we agree with commenters who noted that the
proposed language, which streamlines approvals but maintains the 25 and
50 percent limits, was the product of an extensively discussed
consensus agreement and so the Department declines to make changes.
Changes: None.
Comments: One commenter supported the provisions of Sec. 668.5(f)
that clarify the ability of institutions utilizing written arrangements
to modify their curriculum to meet workforce needs, but opposed the
provisions that clarify the ability of institutions to make governance
or decision-making changes as an alternative to faculty control or
approval. This commenter argued that advisory boards should not have
greater authority than faculty and that faculty expertise should be
used to inform program design. Another commenter also opposed the
latter provision citing their institution's shared governance model.
One commenter suggested that faculty support must be a prerequisite to
any academic or administrative change and believed that the Department
is taking away the opportunity for faculty and staff to be involved in
administrative changes.
Discussion: The Department agrees that faculty perform an important
role in any institution, but strongly disagrees that faculty should
have veto authority over virtually every academic or administrative
decision. Institutions use written arrangements to benefit from outside
expertise, to better align a program with workforce needs, or for other
purposes. The Department thanks the commenter for supporting this goal
but notes that alignment with workforce needs can be achieved in
different ways, including ways that are recommended by expert advisory
boards that may have more direct experience in the workforce and better
understand contemporary needs. To achieve this goal, many institutions
understandably wish to act quickly in such cases for the benefit of
their students. Institutions may be hamstrung if they must ask
permission from different parties. Institutions may use traditional
governance models. However, the Department sought to clarify that
institutions may determine the level of faculty input that should be
provided on decisions relating to written arrangements. The Department
disagrees with the commenter's suggestion that the proposed rule
affirmatively takes away the opportunity for faculty and staff
involvement in administrative changes due to the diversity of existing
governance arrangements.
Changes: None.
Comments: Several commenters related their concern about written
arrangements to concerns about the extent to which institutions utilize
online program managers (OPM) or other similar third parties that
assist institutions with various functions not related to the actual
provision of academic instruction. One commenter stated that the
exclusion of issues related to OPMs from this rulemaking has prevented
proper oversight of distance education programs, but generally
supported the addition of language to clarify how to calculate the
percentage of a program that is part of a written arrangement. This
commenter believed that agreements with OPMs covering issues such as
course development, instructor training, and student recruitment should
be treated as written arrangements because they are
[[Page 54773]]
distinct from other types of agreements such as food service where the
institution may not have expertise. The commenter opposed tuition-
sharing arrangements as being a source of risk. One commenter expressed
appreciation for the Department's mention in the NPRM that written
arrangements do not apply to such third-party services. One commenter
suggested the proposed rule could incorrectly be read to imply that a
written arrangement would be required if an outside entity provides
design or administration but not instruction. One commenter implored
the Department not to ``gut the meaning of college.'' Other commenters
raised concerns with OPMs or other arrangements such as the acquisition
of a proprietary institution by a public institution that do not relate
to the proposed rule.
Discussion: Although mentioned briefly in the NPRM, the Department
wishes to expand upon its long-standing position that written
arrangements do not generally apply to contracts with OPMs. Use of the
word ``design'' or ``administration'' in Sec. 668.5(g) may refer to
one or more of the following--establishing the requirements for
successful completion of the course; delivering instruction in the
course; or assessing student learning. One example of this would be if
an ineligible entity provides instructors and delivers instruction via
a ground-based or online program separate from what the eligible
institution would normally provide. This would not include, as the
commenter worries some might infer, a course's ``platform or method of
delivery, technical support, or student services.'' In fact,
institutions frequently utilize employer advisory boards or other
outside expertise to develop courses or use a variety of methods to
recruit students without written arrangements. In addition, just as in
elementary and secondary schools, outside providers are frequently used
to provide training and professional development to instructors in
postsecondary education. Requiring a written arrangement for these core
functions could grind the basic functions of an institution to a halt.
Instead, the Department believes Sec. 668.5(h) is a non-exhaustive
list of activities that do not require written arrangements, but many
others from contracting for food service, or with OPMs, or facilitating
ground-based instruction through upkeep to facilities--should be
assumed to not require a written arrangement either, in accordance with
longstanding practice. We further question one commenter's premise that
written arrangements should only be for functions where the institution
would not have expertise, such as food service. The diversity of
institutional expertise is one reason the Department does not use such
criteria to distinguish between agreements requiring written
arrangements from those that do not. Instead, the regulations state
that they are required if an ineligible entity provides ``part of the
educational program,'' which means actual delivery of instruction using
outside instructors and facilities. The Department assures one
commenter that it is not changing and could not ``gut'' the meaning of
college.
Changes: None.
Comments: Two commenters noted that a limited number of
institutions were permitted to go above the 50 percent limit to partner
with ineligible providers as part of the Department's Educational
Quality through Innovative Partnerships (EQUIP) experiment. These
commenters said that participants have struggled to meet Department
benchmarks necessary to launch their programs and, as a result, data
has been quite limited and so should not be used to justify changes to
written arrangements. One commenter further suggested that some
participants in the program engaged in practices that were harmful to
students, noting one was cited by its State for deceptive advertising,
and another precipitously closed. As a result, they asserted that not
enough information is known about whether these types of programs can
be successful.
Discussion: EQUIP was launched under the Department's Experimental
Sites Initiative.\13\ We acknowledge the limitations of the
experiment.\14\ The Department believes there were multiple design
flaws in that experiment, many unrelated to flexibility for written
arrangements. As the commenters acknowledge, most potential
participants were unable to start-up their programs and begin utilizing
the waivers. This was at least in part due to the experiment's
requirements, written under the prior administration, were so
burdensome and complex that many institutions expressing interest did
not ultimately apply, and those that applied, have slowly dropped out
at various stages in the years-long process of attempting to obtain
approval for and launch these programs. Much of this complexity relates
to burdensome reporting requirements, the requirement for a third-party
quality assurance entity to oversee program outcomes (in addition to
the accrediting agency), and other issues (some quite similar to
suggestions made at the negotiating table and by commenters). While
these mechanisms were designed to protect students, promote
transparency, allow for a rigorous evaluation, and other laudable
goals, the Department believes that they were ultimately too burdensome
and costly to justify the potential benefits of participation, which
may have ultimately denied students the opportunity to benefit from
innovative programs that were potentially quite valuable. In short, the
Department believes that the most significant lesson from EQUIP is that
burden must be weighed against safeguards in order to support
innovation while protecting students. This was one of the reasons that
the Department undertook this rulemaking and made the changes to Sec.
668.5 and other sections.
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\13\ 80 FR 62047.
\14\ ed.gov/news/press-releases/expanding-pathways-success-after-high-school-us-department-education-approves-first-innovative-equip-experiment.
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Changes: None.
Comments: Several commenters urged the Department to rescind
changes made to Sec. 602.22 in the accreditation rulemaking that allow
senior staff of an accrediting agency to review several types of
substantive change requests, including those relating to written
arrangements, rather than requiring the agency's decision-making body
to make the decision. One commenter also suggested removing a change
that would require expedited approval by accrediting agencies of
written arrangements, adding other reporting and data collection
requirements, and closely reviewing written arrangements approved by
accrediting agencies during recognition reviews. Another commenter
suggested seeking data on the use of written arrangements from
institutions and accrediting agencies.
Discussion: The changes to Sec. 602.22 were made in a separate
rulemaking effort and the Department declines to rescind the change it
made months ago. However, the Department reminds these commenters, some
of whom are strongly urging the Department to stick with the consensus
agreement's limits of 25 and 50 percent in Sec. 668.5(c), that the
Department and others agreed that maintaining these limits would not
impede innovation, as long as approvals by accrediting agencies could
be streamlined and take less time. We continue to believe that the
consensus language strikes the right balance between enabling
innovation and protecting students and taxpayers. The Department will
uphold the consensus language regarding the 25 and 50
[[Page 54774]]
percent limits in Sec. 668.5(c), as well as regarding the efforts to
streamline approvals in Sec. 602.22 either. The Department believes
that these changes reduce burden on accrediting agencies and streamline
institutions' ability to respond to workforce needs, as outlined in
greater detail in the Department's NPRM and final rule on
accreditation.\15\ As discussed during negotiated rulemaking, the
Department declines to add further burdensome reporting requirements;
however, according to Sec. 668.43(a)(12), institutions are required to
disclose written arrangements to students, which is an added
requirement included in the Accreditation and State Authorization final
rule to improve transparency.
---------------------------------------------------------------------------
\15\ 84 FR 27404 and 84 FR 58834, respectively.
---------------------------------------------------------------------------
Changes: None.
Comments: Several commenters responded to the question posed by the
Department in the NPRM, which asked whether the requirement for non-
accredited entities to demonstrate prior experience and effectiveness
prior to engaging in a written arrangement would be too difficult to
meet. These commenters suggested that it would be too difficult for
most third-party providers to meet a requirement to ``demonstrate
experience'' before being given the opportunity to do so. One commenter
added that institutions are sufficiently motivated to ensure academic
rigor when using written arrangements and thoroughly vet them before
signing a contract. This commenter noted that the content provided by
the ineligible provider must still meet standards for accreditation and
said that new entrants often have the most advanced and desirable
content. The commenter questioned what type of information would be
sufficient to demonstrate experience if the provision remained. Another
commenter added that the ``experience'' requirement would intrude into
matters overseen by accrediting agencies. And one commenter believed
the requirement was ambiguous while restraining innovation.
Discussion: The Department agrees with the commenters who uncovered
serious flaws in a requirement to demonstrate prior experience and
effectiveness. The Department does not change consensus language
without a good reason, especially in a provision so vigorously debated
during negotiations. However, after negotiations, the Department noted
similarity between the experience requirement in Sec. 668.5(c)(1)(i)
and provisions removed in the accreditation regulations, especially
those in Sec. 602.12, which previously required accrediting agencies
to demonstrate prior experience in a given area before the Department
would allow an expansion of scope to conduct accreditation activities
in those areas. We removed such provisions because they could have had
an anticompetitive effect and created a sometimes-impossible standard
requiring an entity to demonstrate experience doing something they are
legally barred from doing. The Department was unable to find, and
commenters did not suggest, a workable alternative that would have
maintained the language while avoiding similar problems. The Department
does not believe a viable alternative exists that would provide
meaningful protection without having an anticompetitive effect, being
overly burdensome, or being unenforceable. In addition, the Department
believes the requirement that the provider be effective in meeting
stated learning objectives is vague, likely unenforceable, may be
deemed arbitrary and capricious, and may violate 20 U.S.C. 3403(b),
which prohibits the Secretary from exercising authority over
curriculum, administration, and personnel of educational institutions.
The Department believes that commenters made a compelling case that the
proposed provision could interfere into areas overseen by accrediting
agencies.
Changes: The Department concurs with the commenters. We have
deleted Sec. 668.5(c)(1)(i) and renumbered the section accordingly.
Comments: One commenter supported the proposed removal of language
that previously required the certificate or degree-granting institution
to provide more than 50 percent of the educational program in a written
arrangement between two or more eligible institutions owned or
controlled by the same individual, partnership, or corporation.
One commenter opposed this change and stated that there may be
differences in quality or the student experience between institutions
sharing ownership, which could lead to students being misled about the
nature of their education. The commenter suggested students may be
required to take more courses online through one affiliated institution
when they expected to be taking ground-based courses from the other.
The commenter suggested the Department has provided insufficient
evidence to support the change.
Discussion: The Department thanks the commenter for supporting
removal of this restrictive provision. The Department maintains that
there is value in maintaining flexibility to achieve synergies between
two or more eligible institutions owned or controlled by the same
individual, partnership, or corporation.
The COVID-19 pandemic highlights a worst-case scenario, where
institutions had to quickly move students online and expand any remote
learning infrastructure they had at their disposal. However, a local or
national economic shift that quickly necessitates more training in one
area and less in another may be a more common example. The Department
notes that many accrediting agencies require at least 25 percent of the
program to be delivered by the institution conferring the credential
and defers to accrediting agencies in this area. The Department does
not believe this provision, which applies to a very small subset of
institutions and students, exposes those students to meaningful
additional risk and notes that any misrepresentation or fraud of the
kind the commenter fears may be addressed through existing enforcement
means. As noted elsewhere, we not only maintained the requirement to
disclose these arrangements to students in Sec. 668.43(a)(12), but we
actually strengthened those requirements in the accreditation final
rule, which was developed though a consensus agreement as part of the
same negotiated rulemaking as this regulation.\16\
---------------------------------------------------------------------------
\16\ 84 FR 58834.
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Students may enroll in a program they choose. However, options are
finite and may be unexpectedly limited, regardless of the use of a
written arrangement. Unavailability of faculty or facilities,
insufficient demand to offer a certain course during any given term, or
other factors could limit students' options. In most cases, despite the
commenter's assertions, the Department believes this provision is
likely to increase (rather than decrease) available options to
students. The risk of fraud is always present any time Federal funds
are involved. The Department prefers strong enforcement of a limited
number of important and straightforward safeguards rather than
diverting resources to maintaining numerous low-risk restrictions that
could deny benefits to students.
Changes: None.
Clock to Credit Hour Conversion (Sec. 668.8)
Comments: One commenter expressed support for the proposed changes
to Sec. 668.8(k), noting that the changes eliminate confusion about
the inclusion of homework time in the clock-hour determination.
[[Page 54775]]
Another commenter asserted that compliance with these regulatory
changes would, in addition to having negative financial effects, be
potentially burdensome, and conflict with accreditor expectations. The
commenter further offered that credit hours are more suitable than
clock hours for evaluating satisfactory academic progress and the
current regulation (Sec. 668.8(k) and (l)) is more reflective of the
levels of learning at their institution. Finally, the commenter
expressed concern over the effect the proposed changes might have on
the institution's ability to provide the same levels of contact for
online and in-person courses.
One commenter noted that the Department neglected in the NPRM to
address the proposed change to Sec. 668.8(k)(2)(ii), removing the
requirement that an institution demonstrate students enroll in and
graduate from degree programs and replacing it with a requirement that
the institution demonstrate that at least one student was enrolled in
the program during the current or most recently completed award year.
The commenter asserted that the proposed rule would allow institutions
to effectively invent a nonexistent program to use as a back-door way
to avoid the conversion formula, thus compromising program integrity.
Discussion: The actual scope of what was proposed in the NPRM is
essentially a revision to the conversion formula. The applicability of
clock-to-credit-hour conversion is not expanded as a result of these
changes. Under current regulations, any program that is at least two
academic years in length and provides an associate or bachelor's degree
(presumably the overwhelming majority of those programs offered at
four-year public and private, degree-granting institutions) is not
subject to clock-to-credit-hour conversion. This would not change under
what was proposed in the NPRM. It should further be noted that there
are no Department rules requiring the use of clock hours as opposed to
credit hours in measuring students' progress.
We inadvertently omitted from the NPRM any discussion of proposed
Sec. 668.8(k)(2)(ii), which removes the requirement that an
institution demonstrate students enroll in and graduate from degree
programs and replaces it with a requirement that the institution
demonstrate that at least one student was enrolled in the program
during the current or most recently completed award year, and thank the
commenter who brought this omission to our attention. This change was
made at the request of negotiators who expressed the concern that
programs with small numbers of students may not produce graduates in a
given year, or even over a couple of years, raising the prospect of
those programs being found in violation of Sec. 668.8(k)(2)(ii). The
change was included in amendatory text on which consensus was reached.
While appreciative of those negotiators' concerns, we are persuaded
that removal of the requirement for institutions to demonstrate that
students enroll in and graduate from the program would make it possible
for an unscrupulous institution to stand-up nonexistent programs that
do not actually graduate anyone, effectively circumventing the clock-to
credit-hour conversion requirement.
With respect to degree programs with limited numbers of students,
we note that current Sec. 668.8(k)(2)(ii) makes no mention of the
frequency with which students must be shown to graduate from the degree
program that courses from the program that would otherwise be subject
to clock-to-credit hour conversion are acceptable toward; and a year
where no student graduates from the degree program is not, in and of
itself, an indicator of noncompliance. Accordingly, we are revising
Sec. 668.8(k)(2)(ii) to clarify that an institution must be able to
demonstrate that at least one student graduated from the program during
the current award year or the two preceding award years. We continue to
believe that the exception in Sec. 668.8(k)(2) is appropriately
limited to programs that consistently produce graduates. Even where an
institution is not attempting to deliberately circumvent clock-to-
credit-hour requirements, a circumstance where no student graduates
from the degree-granting program over multiple years legitimately calls
into question whether that program is truly meeting the requirements
for the exception found in Sec. 668.8(k)(2). Therefore, because the
exemption requirement only applies when an institution offers a program
that leads to a degree, and the shortest degree programs are generally
no less than two years in length, the Department believes that a two-
year look-back period would be sufficient to identify programs that
could fulfill this requirement for an exemption from the clock-to-
credit conversion requirements. If no student graduates from a program
during the entire expected timeframe for completion of that program, it
calls into question whether the transferability of credits into such a
program is in fact useful to a student enrolled in a non-degree
programs, which is the essence of the exemption in the first place.
Changes: We have revised Sec. 668.8(k)(2)(ii) to clarify that in
meeting the clock-to-credit hour exemption, an institution must
demonstrate that at least one student graduated from the program during
the current award year or the two preceding award years.
Certification Procedures (Sec. 668.13)
Comments: Several commenters stated their support for language
providing that if the Secretary does not make a decision to grant or
deny certification within 12 months of an institution's expiration date
of its current period of participation, the Department will grant the
institution an automatic recertification, which may be provisional. The
commenters supported this change for the increased certainty and
transparency it provides to institutions that would otherwise receive
month-to-month extensions of their eligibility. The commenters also
believed that such changes properly balance this increased certainty
for institutions with Department oversight on behalf of students and
taxpayers. One commenter added that the change will allow institutions
to move forward with new programs in a timely and responsive manner.
Discussion: The Department thanks the commenters for their support
and agrees that the changes provide for increased certainty and
transparency while balancing the need to protect students and
taxpayers.
Changes: None.
Comment: One commenter opposed automatic certification renewal when
the Secretary does not decide to grant or deny within 12 months of an
institution's expiration date. The commenter claimed that this change
contradicts the HEA and circumvents the Secretary's obligations under
the Act. The commenter asserted that this change would undo the
Secretary's obligation under 20 U.S.C. 1099c(a) to evaluate the
institution's legal authority to operate within a State, accreditation
status, administrative capability, and financial responsibility. The
commenter also claimed that the Department provided no evidence of the
uncertainty experienced by institutions because of the current
practice. The commenter suggested that there could be good reason for
the Department to delay its review, including if it is investigating
the institution. The commenter believed that, due to the lack of
evidence or reasoning, the proposed change is both arbitrary and
capricious and that the Department would violate the APA by making the
proposed change. The commenter further stated that the Department
failed to consider
[[Page 54776]]
reasonable alternatives and that it has a legal obligation to do so.
The commenter suggested that the Department instead seek additional
funding for staff to review recertification applications to ensure a
prompt review and decision. The commenter also proposed providing a
shorter extension of, perhaps, three or six months while the Department
continues its review.
Discussion: The Department appreciates the commenter's interest in
this topic. Certification decisions can have major implications for
institutions and students. We agree that more must be done at the
administrative level to provide more timely responses and better
communication. However, we believe those steps alone are insufficient.
Further, we believe it is in the best interest of students and
taxpayers for the Department to timely identify deficiencies and take
appropriate action.
The Department appreciates the suggestion that the Department grant
three- or six-month extensions instead of a month-to-month extension.
However, institutions must make important budgetary and academic
decisions annually. The Department believes those proposals would have
the same drawbacks and present the same uncertainty to institutions as
the status quo. An extension longer than one year would not give the
Department sufficient oversight to revisit a decision in the short term
if needed.
The Department disagrees that it has failed to provide a proper
justification for this change and did not deviate from the consensus
language on this topic. As discussed during negotiated rulemaking and
as other commenters have noted, delaying decisions causes significant
uncertainty. The Department believes that 12 months beyond the
expiration date of the institution's current certification is more than
sufficient time, especially since the institution is required to submit
the application for recertification no less than 90 days prior to the
expiration of its current certification. The Department's review
usually begins more than a month before the expiration date, adding
additional time to the process. If an investigation is underway, the
Department has other options at its disposal. The Department can
provisionally certify the institution for as little as one year or can
deny the recertification if justified. If the Department must issue
sanctions, it may do so at any time. This change does not reduce the
Department's enforcement power. Instead, it encourages the Department
to process applications promptly, which provides timely feedback for
institutions, helps the Department to properly oversee institutions,
and can allow speedier remedies if deficiencies are identified. As
such, and contrary to the assertion made by this commenter, the
certification renewal process outlined in Sec. 668.13 is neither
arbitrary and capricious nor would it constitute an impermissible
abdication of the Secretary's responsibility to determine an
institution's legal authority to operate within a State, its
accreditation status, and its administrative capability and financial
responsibility when determining the institution's eligibility to
participate in title IV, HEA programs.
Changes: None.
Limitation on Number of Clock Hours Based on Minimum State Requirements
(Sec. 668.14(b)(26))
Comments: Many commenters supported the proposed requirement that
eligible short-term programs demonstrate reasonable program length.
These commenters acknowledged the trade-off between setting proper
safeguards to ensure program length is not inflated and ensuring
students are able to meet States' occupational licensure requirements.
The commenters believed that the Department struck a proper balance,
which will promote worker mobility across State lines and reduce
barriers to employment, especially in regional economies that cross
State boundaries.
Several other commenters underscored that the negotiating committee
compromised on the provisions related to program length and suggested
that the provisions would protect students from fraud. One of these
commenters noted the proposed rule provided balance and an acute
positive impact on student veterans and military-connected students.
Several commenters said they preferred the proposed rule's
provision over other options discussed during negotiated rulemaking,
especially the Department's initial proposal allowing program length of
100 percent of the longest minimum requirement in any State. These
commenters urged the Department to maintain the consensus agreement
contained in the proposed rule.
One commenter praised the changes to this provision and the
positive impact they will have on veterans and their spouses, who
frequently move across State lines.
One commenter suggested that the proposed provision did not go far
enough to prevent institutions from lengthening their programs in ways
that do not benefit students, including if labor markets do not
significantly overlap two States' borders. They cited past statements,
including from the Department's OIG, of institutions that the
commenters say falsified their program length. Instead, this commenter
suggested that we allow institutions to lengthen their program based on
an adjacent State's requirement only if the institution is within a
metropolitan statistical area (MSA) that includes another State. The
commenter also suggested an alternative, that the institution instead
attest to, and demonstrate if asked, that it has enrolled a student who
lived in that State within the preceding three years or that recent
graduates are gainfully employed in that State.
One commenter supported the proposed rule in this area and cited a
need for greater occupational licensure reciprocity across State lines.
Discussion: We appreciate the support from commenters on this issue
and acknowledge that setting the right balance on this issue is
difficult for reasons outlined in the NPRM, most notably that
individuals often move from one State to another or live, work, and
learn in different States at the same time.
The Department appreciates the concern from the commenter who
suggested the proposed rule would not go far enough to prevent
institutions from artificially increasing program length. We have
serious concerns any time an institution, accrediting agency, or State
takes steps to artificially limit access to a profession. The
Department will continue to speak out against such policies and take
steps where possible to prevent credential inflation and related
barriers to opportunity. However, as outlined in the NPRM and supported
by many commenters, the Department believes this language strikes a
reasonable balance between supporting students who must qualify for
State licensure and preventing abuse. If abuse rises to the level of
falsification of documents, as the commenter suggests, we will use
existing enforcement methods.
The Department thanks the commenter for the suggestion about tying
requirements to out-of-State MSAs or past success at finding students
employment in a neighboring State. However, we believe this would
hamper mobility across State lines and impose burdens on institutions
and the Department. The tie to MSAs would only benefit areas that are
more heavily populated or where MSAs cross State lines (they frequently
do not) so the
[[Page 54777]]
proposal does not seem to be a viable alternative.\17\
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\17\ www2.census.gov/geo/maps/metroarea/us_wall/Sep2018/CBSA_WallMap_Sep2018.pdf.
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We also do not agree that institutions should be required to
demonstrate that their graduates have been successful at finding
employment in another State when the institution's programs, under our
current regulations, may be unable to meet the requirements of
preparing individuals to be licensed in that State.
The Department appreciates the support of the commenter who noted
that reciprocity for occupational licensure is a helpful, but
incomplete, step States can take to lower barriers for individuals.
Time-based requirements that may not be tied to employer needs can be
harmful and deny opportunity to individuals looking to build a better
life.
Changes: None.
Comments: A few commenters supported the proposed provision and
asked that the Department define ``adjacent State'' to include States
whose border is within 100 miles of the State in which the institution
is located to allow for greater flexibility for regional economies.
Discussion: Although the Department appreciates the suggestion to
define an ``adjacent State'' as one whose border is within 100 miles of
the State in which the institution is located, such a change would not
align with the consensus agreement or the definition of the word
``adjacent'' in this context, which means ``having a common endpoint or
border.'' \18\ The Department wishes to maximize opportunity and
minimize barriers and appreciates hearing from institutions with
students that may benefit from this provision. However, many States
have ``statutory language allowing reciprocity or endorsement
agreements for licenses'' including for cosmetology and, as already
mentioned, States have opportunities to lower the barriers they have
erected in these areas.\19\ As many commenters have noted, the
consensus agreement in this area involved genuine compromise and
balancing of competing priorities. While a small number of students may
be willing to travel up to 100 miles and cross two State borders to
work or learn, the Department does not believe this benefit is
outweighed by the risk of institutions using a significantly longer
requirement two States away in order to lengthen their programs for all
students.
---------------------------------------------------------------------------
\18\ merriam-webster.com/dictionary/adjacent.
\19\ ncsl.org/research/labor-and-employment/occupational-licensing-statute-database.aspx.
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Changes: None.
Comments: A few commenters requested that the Department use its
authority to allow voluntary early implementation of this provision.
Discussion: The Department will allow voluntary early
implementation on the entire rule, including this provision.
Changes: None.
Return of Title IV Funds (R2T4) (Sec. 668.22)
Comments: Numerous commenters expressed support for the proposed
changes in the treatment of title IV funds when a student withdraws.
One of those commenters stated that the changes regarding which
students are considered withdrawn for R2T4 calculation are a welcome
attempt to resolve technical problems in the current rules existing for
students enrolled in self-paced instruction and in modules, whose
treatment with respect to R2T4 sometimes does not reflect their actual
level of coursework completion. Another commenter expressed
appreciation for the Department's attention in considering the
inequities that currently exist for students withdrawing from a program
delivered in modules. Pointing out the unfairness of penalizing a
student by requiring an R2T4 calculation and the potential return of
funds solely because that student completed her program on a more
aggressive timeline than originally anticipated, other commenters
thanked the Department for removing the requirement to conduct an R2T4
calculation in cases where a student has completed graduation
requirements.
Discussion: We appreciate the support of these commenters.
Changes: None.
Comments: Several commenters requested clarification on the
proposed rule, which does not consider a student withdrawn from a
program offered in modules if the student completes:
One module that includes 50 percent or more of the number
of days in the payment period,
A combination of modules that when combined contain 50
percent or more of the number of days in the payment period, or
Coursework equal to or greater than the coursework
required for the institution's definition of a half-time student under
Sec. 668.2 for the payment period.
The commenters identified various ways in which application of the
proposed rule as written might result in inequitable treatment of
students who withdraw from programs taught in modules. One commenter
offered the example of a 102-day term consisting of two modules, the
first module 50 days in length and ending on a Friday and the second
comprising the remaining 52 days and beginning the following Monday.
Students who complete only the first module could be treated as
withdrawn, because their first module included a scheduled break or did
not include a weekend.
Another commenter provided the example of a program offered in
standard semesters, each comprised of two, 8-week modules. Both modules
of the fall semester, each 54 days in length, are separated by a
weekend and there are no breaks of five or more days in the semester.
The spring semester contains a spring break of nine days occurring
between the first and second modules (each 54 days in length) of the
semester. A student enrolls in five credits in the first module of the
fall semester and six credits in the second module of that term,
successfully completing the first module but opting not to return for
the second module. With the break included, the fall semester is 110
days in length, 54 days, or 49 percent of which the student completed,
meaning he or she would be considered withdrawn. Another student
enrolls in the same pattern during the spring semester, again
completing the first module of 54 days but not returning for the second
module, also 54 days in length. However, with the spring break excluded
from the number of the number of days in the semester, this student has
completed 54 of 108 days or 50 percent of the spring semester and is
not considered withdrawn. Both students completed the same five credits
and 54 days in the payment period, but in the case of the first student
the institution is required to perform the R2T4 calculation due to the
break between the modules being less than five days (i.e., a weekend).
Finally, one commenter explained that in a standard term program
where the total days in the payment period is an odd number and the
first of two modules offered over the semester is one day shorter than
the second, a student enrolling in both modules but completing only the
first module would complete only 49 percent of the payment period. The
commenter offered that this could result in students, who for all
intents and purposes completed a module lasting half of the term, being
considered withdrawn for lack of one day.
To address these issues, commenters variously suggested counting
only days of instruction (excluding both breaks and weekends) instead
of calendar days, excluding scheduled breaks of less than 5 days
between modules from the number of calendar days to address the issue
of weekends between modules,
[[Page 54778]]
and changing the minimum completion percentage from ``50 percent or
more'' to ``49 percent or more.''
Discussion: We agree with the commenters that additional
clarifications to the proposed changes in Sec. 668.22 are necessary to
avoid the potential unintended consequences identified above. As
expressed in the preamble of the NPRM, the Department's intent in
proposing modifications to the treatment of modules in the R2T4 was
that a student would be considered to have completed the period if he
or she completed coursework constituting at least half of the days in
the period, not including the days in scheduled breaks. It is not our
intent in these final rules that students who have otherwise met that
standard be considered withdrawn due to minor differences in the number
of days that constitute 50 percent of a term, resulting from weekends
falling between modules, the absence of breaks of five days or more, or
terms with uneven numbers of days etc. Accordingly, we are revising
proposed Sec. 668.22(a)(2)(ii)(A)(2)(i) and (ii) to reflect that a
student who withdraws from a program offered in modules who completes
one module that includes 49 percent or more of the number of days in a
payment period or a combination of modules that when combined contain
49 percent or more of the number of days in the payment period, will
not be considered withdrawn. This change will ensure that a day or two
difference in the number of days in each module does not become the
determining factor in whether a student is considered withdrawn. We are
further revising Sec. 668.22(a)(2)(ii)(A)(2)(i)and (ii) to exclude
scheduled breaks of five or more consecutive days and all days between
modules from the number of days in the payment period used to calculate
whether the module(s) completed by the student comprise 49 percent of
the payment period.
Changes: We have revised Sec. 668.22(a)(2)(ii)(A)(2)(i) and (ii)
to reflect that a student who completes all the requirements for
graduation from his or her program before completing the days or hours
in the period that he or she was scheduled to complete is not
considered to have withdrawn from a program offered in modules if the
student successfully completes one module that includes 49 percent or
more of the number of days in the payment period, excluding scheduled
breaks of five or more consecutive days and all days between modules or
combination of modules that when combined contain 49 percent or more of
the number of days in the payment period, excluding scheduled breaks of
five or more consecutive days and all days between modules.
Comments: One commenter referenced the Department's proposal in the
preamble of the NPRM to amend Sec. 668.22(l)(6) to clarify that a
program is ``offered in modules'' if the program uses a standard term
or nonstandard-term academic calendar, is not a subscription-based
program, and a course or courses in the program do not span the entire
length of the payment period or period of enrollment. The preamble also
stated that non-term programs would no longer be considered programs
``offered in modules'' in any circumstances. Specifically, the
commenter requested the Department clarify whether a student who
completes at least a half-time coursework in a subscription period
before ceasing enrollment will be considered to have withdrawn from the
payment period for purposes of R2T4.
Another commenter expressed overall support for the proposed
changes to Sec. 668.22(l)(6), clarifying that a program is ``offered
in modules'' if the program uses a standard-term or nonstandard-term
academic calendar, is not a subscription-based program, and a course or
courses in the program do not span the entire length of the payment
period or period of enrollment. However, the commenter noted that the
change, while discussed in the preamble, is not included in the
amendatory text of the NPRM. The same commenter offered that, given
these changes, use of the term ``module'' in Sec. 668.10(a)(3),
relevant to direct assessment programs, is confusing and an alternative
term should be found to replace it.
Discussion: We appreciate the commenter bringing the omission of
proposed Sec. 668.22(l)(6) from the preamble to our attention.
A student in a subscription-based or nonterm program is not
considered to have completed a payment period if the student completed
at least half-time coursework in that payment period because the
Department does not consider a nonterm program or a subscription-based
program to be ``offered in modules.'' The nature of such programs--
which are not required to set limits on the timeframes for students to
complete coursework--are not suited to the use of modules, which
presume a clear start and end date for the coursework that a student is
attempting during a payment period. Such a timeframe is crucial to the
incorporation of modules into the Department's framework for the R2T4
calculations because the number of days in the modules that a student
is scheduled to complete in a payment period or period of enrollment
comprise the denominator of the calculation that determines the amount
of title IV, HEA program funds that the student earns for the period.
During meetings of the Distance Learning and Innovation
subcommittee, the Department specifically expressed its intent to make
changes to Sec. 668.22 that would exclude non-term and subscription-
based programs from the types of programs that are considered ``offered
in modules'' and eliminate regulations specific to subscription-based
and nonterm programs that previously incorporated the concept of
modules. As noted above, these changes are discussed in the preamble to
the NPRM but are not reflected in the amendatory text. The Department
therefore believes that it is necessary to make a change to Sec.
668.22(l)(6) in order to fully implement its proposed approach, which
was approved by both the Distance Learning and Innovation subcommittee
and the full negotiated rulemaking committee.
Finally, regarding the reference to modules in Sec. 668.10, we
believe the term is used correctly in that section and does not
prejudice the amendatory text in Sec. 668.22(l)(6). Proposed Sec.
668.10(a)(3) requires an institution to establish a methodology to
reasonably equate each module in the direct assessment program to
either credit hours or clock hours. If it were the case that all direct
assessment programs were subscription-based, this might be a source of
confusion. However, many direct assessment programs are offered in
terms using modules. We believe the clear statement in Sec.
668.22(l)(6) that a program offered in modules is not considered to be
a subscription-based program is sufficient to avoid any confusion
between these two sections.
Changes: We have revised Sec. 668.22(l)(6) to clarify that a
program is ``offered in modules'' if the program uses a standard term
or nonstandard-term academic calendar, is not a subscription-based
program, and a course or courses in the program do not span the entire
length of the payment period or period of enrollment. The amendatory
text in the final rule includes Sec. 668.22(l)(6) which was
inadvertently omitted in the NPRM.
Comments: One commenter requested that the Department clarify
whether a completed module is one the student successfully completed,
or simply one the student attended all the way through, i.e., the
module end date is in the past, the student began attendance and did
not withdraw or stop attending;
[[Page 54779]]
the module grade(s) could be earned failing grades or incompletes.
Discussion: As discussed in the NPRM, the Department proposed to
revise its approach to the treatment of students who complete some, but
not all, of the coursework they were scheduled to attend during a
payment period to ensure more equitable treatment of such students
while maintaining the integrity of the title IV, HEA programs. In
achieving that balance, the Department believes it is reasonable to
require that a student successfully complete the module(s) comprising
49 percent of the payment period or half-time enrollment. This standard
will have the added benefit of reducing confusion for institutions that
are not required to take attendance, since passing grades will
necessarily be the determining factor in whether a student is treated
as a completer rather than a withdrawal. Successful completion of a
module requires the student receive at least one passing grade for that
module. Successful completion of coursework equal to or greater than
the coursework necessary for half-time enrollment requires that the
student receive a passing grade in a sufficient number of credits to
comprise half-time enrollment status (as defined by the institution
under applicable regulations) for the payment period.
A student who completes a module but receives all incomplete
grades, or a combination of course incompletes and failing grades is
not considered to have successfully completed that module unless at
least one course incomplete converts to a passing grade before the
deadline by which the institution must otherwise perform an R2T4
calculation for that student. Likewise, a student receiving all course
incompletes or a combination of course incompletes and failing grades
is not considered to have successfully completed the number of credits
necessary to establish half-time enrollment unless a number of course
incompletes sufficient to comprise half-time enrollment convert to
passing grades before the deadline by which the institution must
otherwise perform an R2T4 calculation for that student.
Changes: We have revised the provisions of Sec.
668.22(a)(2)(ii)(A)(2) to reflect that a student who is enrolled in a
program offered in modules is not considered to have withdrawn if the
student successfully completes one module that includes 49 percent or
more of the number of days in the payment period, excluding scheduled
breaks of five or more consecutive days, and all days between modules
or combination of modules that when combined contain 49 percent or more
of the number of days in the payment period, excluding scheduled breaks
of five or more consecutive days and all days between modules.
Comments: One commenter noted that proposed Sec.
668.22(a)(2)(i)(C) provides that for a student in a standard or
nonstandard-term program, excluding a subscription-based program, the
student is not scheduled to begin another course within a payment
period or period of enrollment for more than 45 calendar days after the
end of the module the student ceased attending, unless the student is
on approved leave of absence, as defined in paragraph (d). However,
Sec. 668.22(a)(2)(i)(D), which provides that for a student in a non-
term program or a subscription-based program, the student is unable to
resume attendance within a payment period or period of enrollment for
more than 60 calendar days after ceasing attendance, lacks a similar
qualifier clarifying that a student who is unable to resume attendance
within the prescribed period is not considered withdrawn if on an
approved leave of absence.
Discussion: We appreciate the commenter bringing this unintentional
discrepancy to our attention and clarify that no student on an approved
leave of absence is ever considered to be withdrawn.
Changes: We have revised Sec. 668.22(a)(2)(i)(D) to clarify that a
student who is unable to resume attendance in a non-term or
subscription-based program within a payment period or period of
enrollment within 60 calendar days after ceasing enrollment is,
nevertheless, not considered withdrawn if on an approved leave of
absence.
Comments: One commenter asked the Department to consider whether,
in view of the November 5, 2019 electronic announcement (EA) extending
the maximum length of a semester to 21 weeks, proposed changes to Sec.
668.22(a)(3)(ii) requiring students enrolled in programs offered in
standard terms to confirm that they will enroll in another module
within 45 days of ceasing enrollment to avoid being treated as
withdrawn is still justified. The commenter observed that prior to the
Department's revised policy for standard term length issued on November
5, 2019, it was uncommon for a module in a standard term program to
begin more than 45 days following the end of a prior module. However,
the new guidance that allows a standard term to be as long as 21 weeks,
increases the likelihood that more than 45 days would elapse.
Discussion: While the commenter is correct in asserting that a
standard term of 21 weeks, as permitted by the November 5, 2019 EA,
increases the potential for a student to be scheduled to return to a
course that begins more than 45 days after the end of the module the
student ceased attending, we are not persuaded that this obviates the
reasons for which the Department proposed the changes to Sec.
668.22(a)(3)(ii). As explained in the preamble of the NPRM, the
Department maintains the same concerns about long periods of non-
attendance for standard term programs as it does for nonstandard-term
and non-term programs and believes that students should be treated
consistently in these situations. The increased likelihood for these
extended periods of non-attendance to occur with longer standard terms,
we believe, argues in favor of this requirement.
Changes: None.
Comments: Under proposed Sec. 668.22(l)(9), a student in a program
offered in modules is scheduled to complete the days in a module if the
student's coursework in that module was used to determine the amount of
the student's eligibility for title IV, HEA funds for the payment
period or period of enrollment. One commenter requested that the
Department clarify whether the most recent determination of enrollment
status would be used for this purpose or whether the Department is
referring to a specific initial or ``census'' date, or whether this can
be a matter of institutional policy. The commenter asked, if the
latter, will institutions have the latitude to implement a policy with
multiple points of determination during the term much like existing
policies with multiple Pell recalculation dates?
Discussion: In the preamble to the NPRM, the Department proposed to
use the student's schedule at a fixed point to determine the number of
days the student is scheduled to attend during the period for R2T4
purposes. Using this approach, subsequent fluctuations in the student's
enrollment would have no effect on the number of days in the
denominator of the R2T4 calculation if the student withdraws, resulting
in a greater degree of certainty for students, a diminished likelihood
of improper payments, and reduced administrative burden for
institutions performing such calculations. In order to allow
institutions flexibility in adopting a policy that is practical for
their program(s), we are not prescribing a specific date that
institutions must use as the fixed point for determining the number of
days the student is scheduled to attend. A Pell recalculation date or
[[Page 54780]]
census date is an allowable option, as would be some other date
determined by the institution. An institutional policy that includes
multiple dates, such as is permitted for Pell recalculation dates, is
acceptable.
Changes: None.
Comments: One commenter noted that the proposed amendatory text in
Sec. 668.22(a)(2)(ii)(A)(3), addressing written confirmation for a
payment period or period of enrollment in which courses in the program
are offered in modules, specifically allows ``electronic
confirmation,'' whereas Sec. 668.22(a)(2)(ii)(A)(4) and (5) pertaining
to subscription-based programs and non-term programs respectively, make
no reference to the use of electronic confirmation.
Discussion: We thank the commenter for bringing this inconsistency
to our attention. It is the Department's longstanding policy that, in
the absence of regulations specifically requiring that a notification
or authorization be sent via U.S. mail, a school may provide notices or
receive authorizations electronically. It is further permissible to use
an electronic process to provide required notices and make disclosures
by directing students to a secure website that contains the required
notifications and disclosures. Because of this, we believe specific
mention, in any regulation, of the option to distribute required
notifications and disclosures, or collect required authorizations and
confirmations through electronic means, is redundant and may cause
confusion.
Changes: We have revised Sec. 668.22(a)(2)(ii)(A)(3) to remove the
reference to ``electronic confirmation.''
Satisfactory Academic Progress (Sec. 668.34)
Comments: Several commenters expressed general support for the
proposed changes to satisfactory academic progress (SAP). However, some
of those commenters asked that the Department consider amending the
proposed rule to account for enrollment status in determining whether a
student is meeting maximum timeframe requirements as measured in
calendar time. One commenter objected to allowing institutions to
measure maximum timeframe in calendar time because it could negatively
affect students for whom life challenges preclude ongoing full-time
attendance. The commenter suggested an alternative of allowing a
maximum timeframe of 200 percent of program length. The commenter also
suggested grandfathering students under existing standards as another
alternative.
Discussion: We appreciate the support for our proposals to
eliminate redundancy and provide greater flexibility in the application
of SAP requirements. In response to those commenters who suggested that
the definition of ``maximum timeframe,'' as measured in calendar time,
accommodate differences in enrollment status, we note that the
limitation on maximum timeframe of 150 percent of the published length
of the program (for an undergraduate program) is an intentionally
static measure designed to ensure completion of that program within a
reasonable time. For example, a four-year, 120 credit Bachelor of Arts
program may have a maximum timeframe of 180 attempted credits or six
years. Measuring maximum timeframe for the program in credit hours,
with pace determined by dividing the cumulative number of successfully
completed credit hours by the cumulative number of attempted hours,
does account for variances in enrollment status. However, this is
because credit hours are measured only as attempted, not because
students who attend part-time are permitted additional hours beyond
180. Calendar time elapses at a constant rate regardless of how many
credit hours a student attempts or completes. As a result, maximum time
frame expressed in calendar time is, necessarily, less flexible with
respect to variances in enrollment status. Factoring part-time
enrollment into the measurement of students' pace would potentially
result in a maximum timeframe, as expressed in calendar time, of
greater than 150 percent of published program length.
We do not agree that allowing institutions to measure maximum
timeframe in calendar time will negatively affect students whose
personal situations preclude full-time attendance in a program. First,
this flexibility was not proposed with the expectation that large
numbers of institutions would adopt calendar time in lieu of credit
hours. Most institutions will continue to express maximum timeframe for
their programs in credit hours which, as described above, does account
for differing enrollment statuses throughout a student's matriculation.
Those institutions opting to measure in calendar time will likely do so
having determined that it makes better sense for the type of programs
they offer, e.g., competency-based programs or programs requiring a
prescribed set of courses in each term for all students. Last, we
remind commenters that a student who fails to meet SAP, including for
reasons related to maximum timeframe, may file a SAP appeal (if the
institution's SAP policy permits such appeals).
Changes: None.
Foreign Schools (Sec. Sec. 600.52 and 600.54)
Comments: Two commenters supported retaining the current exception
for independent research done by an individual student in the United
States. The provision permits not more than one academic year of
research conducted during the dissertation phase of a doctoral program
(and where the research can only be performed at a facility in the
United States). The provision also permits an eligible foreign
institution to enter into a written arrangement with an eligible
institution within the United States to provide no more than 25 percent
of the courses required for a student's eligible program. However, both
commenters requested that the proposed regulation be broadened such
that a doctoral student, having already completed 25 percent of his or
her eligible program by taking coursework in the United States, would
be permitted an additional full academic year to conduct independent
research there. One of those commenters opined that the research phase
of a doctoral program can take years and should not be subject to an
artificial time limit that could preclude students from pursuing a
program that provides insights into their chosen field. The commenter
concluded that since the research phase of a doctoral program is
separate and distinct from the classroom phase, it is both logical and
equitable that students be permitted to undertake research in the
United States without regard to whether or not they have taken a
portion of their classroom study in that country.
Responding to the Department's request for comments on whether
written arrangements for students studying in the U.S. should include
organizations that are not eligible institutions, one commenter replied
in the affirmative. The commenter explained that a student's home
institution is responsible for designing and supervising its students
and that any written arrangement involving another entity, whether an
eligible institution or not, is ultimately subject to the approval and
review of the home, eligible institution. The eligible institution must
itself be approved to offer postsecondary education by a recognized
authority in its home country that provides oversight that is the
equivalent of that provided in the United States. The commenter further
stressed that, as proposed, the rules regarding written arrangements
would
[[Page 54781]]
circumscribe the ability of eligible foreign institutions to offer
diverse programs that include partnerships with other universities that
specialize in certain topics, and entities which provide unique
experiences within a student's program of study, as well as access to
career-enhancing internships.
One commenter supported the proposed revisions to Sec. 600.54(c)
that would permit written arrangements between an eligible foreign
institution and an ineligible entity, provided the ineligible entity is
an institution that satisfies the definition in paragraphs (1)(iii) and
(iv) of ``foreign institution'' and the ineligible foreign institution
provides 25 percent or less of the educational program. The same
commenter requested that, given the potential for ongoing ramifications
related to the COVID-19 pandemic, the Department increase the
percentage of study permitted at recognized ineligible foreign
institutions to as much as 50 percent. This, it was suggested, would
provide students the flexibility to navigate the changing situation
without having to appeal for special dispensation in future
circumstances that are impossible to predict.
Two commenters asked that the Department reconsider the prohibition
on foreign institutions offering any portion of an eligible program
through distance education found in current Sec. 600.51(d). One of
those commenters suggested that there is sufficient ambiguity in the
applicable statute on which to base permitting some use of distance
education, especially in view of the temporary flexibilities extended
under the Coronavirus Aid, Relief, and Economic Security Act (CARES)
Act.\20\ Another commenter expressed the opinion that temporary
flexibility, under the CARES Act, for foreign institutions to use
distance education is tacit acknowledgement by Congress of the
difficulties American students face as a result of the ban on distance
education. In view of this, the commenter asked that the Department
modify its regulations to permit American students to take up to 25
percent of their program of study via distance education.
---------------------------------------------------------------------------
\20\ S. 3548, 116th Congress (2020).
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Finally, one commenter rejected the proposal to allow students
enrolled in foreign institutions to complete up to 25 percent of a
program in the United States based on concerns that, in conjunction
with other Department rule changes, there would be no way to determine
the fiscal and academic quality of such foreign institutions, and the
potential for the change to result in opening the door to millions of
students receiving degrees without completing the requirements deemed
necessary by academic and industry leaders. The commenter further
expressed opposition to foreign institutions gaining access to, and
leveraging control over title IV financial aid, explaining that this
would be a direct and overtly questionable act, constituting an ethical
breach, and not in the best interest of the Department, American higher
education institutions, or our nation's students.
Discussion: We appreciate the commenters' concerns over the need
for universities to make flexible and diverse research opportunities
available for doctoral candidates whose specialized research often
takes place over several years, and requires travel to specific
locations, including in the United States. However, the Department is
not convinced that providing those opportunities necessitates or
warrants allowing students who have already completed 25 percent of
their programs in the United States to spend an additional year
conducting research in the United States. This ``stacking'' would
create the potential for a student enrolled in a four-year doctoral
program at an eligible foreign institution to complete half of that
program in the United States. As explained in the preamble of the NPRM,
the Department's intention in proposing these rules is to enhance the
range of educational opportunities available to U.S. students enrolled
in eligible foreign institutions, aligning them with those enjoyed by
students attending domestic institutions, while adhering to the basic
principle that U.S. students borrowing from the Direct Loan program for
enrollment in a program at an eligible foreign institution should
reside in the country where that institution is located. We believe
this balance to be equally necessary at the graduate and undergraduate
level.
The Department is declining to permit stacking of the allowance for
a student to complete up to 25 percent of their program at an eligible
institution in the United States under proposed Sec. 600.52. However,
an exception is permitted for independent research done by an
individual student in the United States for not more than one academic
year for research conducted during the dissertation phase of a doctoral
program (where the research can only be performed at a facility in the
United States) under current Sec. 600.51. Nevertheless, we wish to
clarify that the proposed changes to Sec. 600.52 do not preclude an
institution from allowing doctoral students to study and/or conduct
research in the United States using the flexibilities provided in each
section. The examples below illustrate the practical application of
both provisions.
Example 1
A student in the dissertation phase of her three-year doctoral
program requests permission from the institution to conduct research in
the United States. The student has not completed any portion of her
program in the United States. Having concurred that her research can
only be performed at a facility located there, the institution approves
one year of research time in the United States.
Example 2
A student enrolled in a three-year doctoral program requests to
study at an institution in the United States under a written
arrangement. The home institution approves her request to take 12
credits at the Ph.D. level over two 16-week semesters, 24 percent of
the length of the program as determined under proposed Sec. 668.5(g)
(i.e., dividing the number of semester, trimester, or quarter credit
hours, clock hours, or the equivalent that are provided by the eligible
U.S. institution by the total number of semester, trimester, or quarter
credit hours, clock hours, or the equivalent required for completion of
the program). Subsequently, while in the dissertation phase of her
program, the student requests to conduct research in the United States.
Because the one-year limit on the amount of time a doctoral student may
remain in the United States in order to conduct research is measured in
calendar time, it is necessary for the institution to consider any time
the student has already spent studying or conducting research there.
With 32 weeks of previous study factored in, the student is approved
for an additional period of research in the United States of up to 20
weeks.
We thank the commenter who responded to our request for comments on
whether written arrangements for students studying in the U.S. should
include organizations that are not eligible institutions. With respect
to internships, we agree with the commenter that limiting these to
eligible institutions would circumscribe opportunities for U.S.
students attending eligible foreign institutions in a way that is
contrary to the intent of proposed regulations. The preponderance of
internship opportunities is not at eligible postsecondary institutions
but rather with corporations, other businesses, and non-profit
organizations other than
[[Page 54782]]
postsecondary institutions. Given the extent to which relevant
internship experience can enhance a student's educational experience
and affect a graduate's employment prospects, we are convinced that
U.S. students attending eligible foreign institutions should not be
placed at a disadvantage relative to their counterparts attending
domestic institutions, and should have the same opportunities to pursue
internships in any country including the United States.
While appreciative of the commenter's position that increased
latitude be accorded coursework as well, we are not similarly persuaded
of the need to allow U.S. students attending eligible foreign
institutions to take coursework in the United States, as part of their
eligible program, at any entity other than an eligible institution.
Unlike the situation in foreign countries, where another eligible
institution may not exist or be within a reasonable travel distance for
ground-based instruction, there is no lack of eligible institutions in
the United States with which to execute a written arrangement. We
believe the partnerships with other universities in specialized topics
and unique student experiences referred to by the commenter can readily
be secured through written arrangements with one or more of the 6,000
plus eligible institutions in the United States. In addition, we are
concerned that an institution in a foreign country may not have
sufficient opportunity to enforce elements of a written arrangement
with a non-eligible entity located in the U.S., making such
arrangements inherently risky.
As a result, we are amending proposed Sec. 600.52 (Foreign
institution) to remove internships and externships from the list of
program-related activities that may only be performed in the United
States at an eligible institution, and specifying that internships and
externships may be provided by an ineligible organization as described
in proposed Sec. 668.5(h)(2). Proposed Sec. 668.5(h)(2) clarifies
that the limitations on written arrangements are not applicable to the
internship or externship portion of a program if the internship or
externship is governed by the standards of an outside oversight entity,
such as an accrediting agency or government entity, that require the
oversight and supervision of the institution, where the institution is
responsible for the internship or externship and students are monitored
by qualified institutional personnel.
We thank the commenter for writing in support of the proposed
revisions to Sec. 600.54(c) that would permit written arrangements
between an eligible foreign institution and an ineligible entity (other
than in the United States), provided the ineligible entity is an
institution that satisfies the definition in paragraphs (1)(iii) and
(iv) of ``foreign institution'' and the ineligible foreign institution
provides 25 percent or less of the educational program. However, we
disagree with the commenter that the percentage of a program that is
provided by the ineligible entity should be increased to 50 percent.
Domestic institutions entering into a written arrangement with an
ineligible entity to offer more than 25 percent, but less than 50
percent of an eligible program, must obtain accreditor approval. No
similar protocol exists for foreign institutions. Requiring that a non-
eligible entity satisfy the regulatory definition of ``foreign
institution'' does reasonably assure some degree of program integrity.
However, the Department is not persuaded that this is an adequate
substitute for accreditor approval where the percentage of the eligible
program offered by an ineligible entity would be greater than 25
percent. Moreover, it would create a standard for eligible foreign
institutions lower than that applied to domestic institutions.
In response to the commenters who asked that the Department
reconsider the prohibition on foreign institutions offering any portion
of an eligible program through distance education reflected in current
Sec. 600.51(d), we note that this prohibition (sec. 481(b)(3) of the
HEA) is statutory and provides no flexibility. Although the CARES Act
does authorize the use of distance education by eligible foreign
institutions, and we believe that students benefit from having access
to distance learning opportunities, including while enrolled at a
foreign institution, that authority is temporary and tied to the
national emergency declared on March 13, 2020.
We disagree with the commenter who objected to allowing students
enrolled in foreign institutions to complete up to 25 percent of a
program in the United States, and asserted that the Department would be
unable--(1) To determine the fiscal and academic quality of such
foreign institutions; or (2) to prevent millions of students from
receiving degrees without completing the requirements deemed necessary
by academic and industry leaders. We further disagree that these
changes facilitate foreign institutions gaining access to or leveraging
control over title IV financial aid. First, eligible foreign
institutions already participate in the Direct Loan program. The
changes proposed in the NPRM do not, in any way, increase the scope of
foreign institutions' participation in the title IV programs, nor do
they loosen the existing financial responsibility standards that
eligible foreign institutions must adhere to. Regarding academic
quality and the potential for students to receive degrees that their
work does not merit, we note that the proposed regulations make no
changes to the current rules governing institutional eligibility.
Lastly, we are uncertain of what the commenter means with reference to
foreign institutions gaining access to or leveraging control over the
title IV programs. As previously discussed, eligible foreign
institutions already participate in the Direct Loan program, and the
title IV, HEA programs are not structured in such a way that it is
possible for any institution, foreign or domestic, to leverage control
over them.
Changes: The definition of Foreign institution in proposed Sec.
600.52 (Foreign institution, paragraph (1)(ii)(C)) is changed to remove
internships and externships from the list of program-related activities
that may only be performed in the United States at an eligible
institution. Paragraph (1)(ii)(C)(2) is added to allow participation in
an internship or externship provided by an ineligible organization as
described in Sec. 668.5(h)(2).
Request for Review (Sec. 668.113)
Comments: One commenter expressed strong support for the proposed
changes to Sec. 668.113, establishing that if a final audit
determination or final program review determination includes
liabilities resulting from the institution's classification of a course
or program as distance education, or the institution's assignment of
credit hours, the Secretary would rely on the requirements of the
institution's accrediting agency or State approval agency regarding
qualifications for instruction and whether the work associated with the
institution's credit hours is consistent with commonly accepted
practices in higher education.
Another commenter, offering qualified support for the proposed
changes, suggested that the Department clarify which fields would be
suitable for distance education as the criteria for applying the
standards in Sec. 668.113. To make these determinations, the commenter
offered that the Department should analyze whether the use of distance
education is appropriate for and sustains the quality of instruction in
those online programs where a final program review or audit
determination has assessed liabilities.
[[Page 54783]]
Discussion: We thank the commenter who expressed strong support for
these proposed changes. In response to the commenter who suggested the
Department clarify which fields are suitable for distance education and
make determinations regarding the appropriateness of that mode of
instruction for individual programs, we note that the applicable
statute and regulations place no constraints on the fields of study in
which an institution may offer instruction using distance education,
nor do they grant the Department authority to make such determinations.
Assessing the quality of an educational program offered by an eligible
postsecondary institution or establishing if that program may be
offered using distance education is entirely within the purview of the
institution's accrediting agency and, in some cases, the State agency
with oversight responsibilities. Were an institution to offer a program
through distance education that its accrediting agency or State agency
had determined may not be taught using that modality, the Department
would hold the institution potentially liable for all of the title IV
funds disbursed to students enrolled in that program. The proposed
changes to Sec. 668.113 do not, in any way, compromise the
Department's oversight authority in this area and, if anything, clarify
that institutions are accountable to accreditor and State agency
requirements in offering programs through distance education.
Changes: None.
Past Performance (Sec. 668.174)
Comments: Several commenters agreed that the proposal that an
institution is not financially responsible if a person who exercises
substantial ownership or control over an institution also exercised
substantial ownership or control over another institution that closed
without a viable teach-out plan approved by that institution's
accrediting agency and/or state regulatory body. The commenters
believed the proposal change will help to protect students attending
institutions that close and ensure that individuals affiliated with an
institution that closed without a viable teach out plan, will not
participate again in the title IV programs.
Discussion: The Secretary thanks the commenters for their support.
Changes: None.
Factors of Financial Responsibility (Sec. Sec. 668.15 and 668.171-
668.175)
Comments: One commenter questioned the need for, and implications
of, the proposal to apply the financial standards in Sec. 668.15 to
institutions that undergo a change of ownership and control. The
commenter noted that historically, the Department has used only two of
the financial measures in this section--the acid test ratio and
positive tangible net worth or positive unrestricted net asset
standards--to evaluate institutions that changed ownership and control.
The commenter argued that applying, or potentially applying, all of
Sec. 668.15 to changes in ownership would constitute a significant
change in Department practice that would more appropriately call for a
substantive rulemaking to clarify the relationship between the two
sections of the regulations that address financial responsibility--
Sec. Sec. 668.15 and 668.171 through 668.175. In addition, the
commenter stated that the proposed change to the title and
applicability of this section was presented during negotiated
rulemaking as a technical update rather than a substantive change.
Given the significant concern of many institutions and others for
the Department to initiate a rulemaking on financial responsibility
standards and the composite score, the commenter urged the Department
to withdraw this proposed change and defer making revisions to changes
of ownership standards to a broader rulemaking discussion.
Discussion: In as much as the Department intended to clarify that
Sec. 668.15 applies only to institutions that undergo a change of
ownership and control, we agree with the commenter that a broader
discussion is warranted, particularly since the Department intends to
conduct future negotiated rulemaking for the financial responsibility
standards, including those applicable to changes of ownership.
Changes: We have withdrawn the proposed changes to Sec. 668.15.
Executive Orders 12866, 13563, and 13771
Regulatory Impact Analysis
Under Executive Order 12866, the Office of Management and Budget
(OMB) determines whether this regulatory action is ``significant'' and,
therefore, subject to the requirements of the Executive order and
subject to review by 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.
OMB has determined that this rule is an economically significant
action and would have an annual effect on the economy of more than $100
million. This regulation will enable institutions to harness the power
of innovation to expand postsecondary options, leverage advances in
technology to improve student learning, and allow students to progress
by demonstrating competencies rather than seat time. 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, the
addition of even small percentage changes could result in 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).
Under Executive Order 13771, for each new regulation that the
Department proposes for notice and comment or otherwise promulgates
that is a significant regulatory action under Executive Order 12866,
and that imposes total costs greater than zero, it must identify two
deregulatory actions. For FY 2020, any new incremental costs associated
with a new regulation must be fully offset by the elimination of
existing costs through deregulatory actions. The rule is considered an
E.O. 13771 deregulatory action. We believe the effect of this
regulation will be to remove barriers for development of distance and
direct assessment programs and their participation in title IV, HEA
funding, reduce the Department's role in approving programs, and
promote innovation in higher education. We believe this regulatory
action will be, in sum, deregulatory.
As required by Executive Order 13563, the Department has assessed
the potential costs and benefits, both
[[Page 54784]]
quantitative and qualitative, of this regulatory action, and we are
issuing these 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 will 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, both quantitatively and qualitatively, the potential costs
and benefits of this regulatory action.
In this regulatory impact analysis, we discuss the need for
regulatory action, the potential costs and benefits, net budget
impacts, and 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
The emphasis in the regulations is on clarifying the distinctions
between distance education and correspondence courses, affirming the
permissibility of team teaching models, improving worker mobility by
accommodating differences in licensure requirements across State lines,
simplifying conversions between clock and credit hours to enable
students to meet licensure requirements while also earning credits more
likely to transfer to other institutions, establishing regulations
regarding subscription-based programs so that institutions can
confidently implement programs that measure competencies rather than
seat time, and reducing barriers that limit the number of direct
assessment programs available to students.
These changes benefit institutions by enabling them to employ
innovative methods and models without undue risk of inadvertently
violating title IV requirements. These options benefit students by
expanding the number of postsecondary education opportunities available
to them, including those who may have been poorly served by more
traditional ``seat-time'' instructional models. By providing a larger
variety of postsecondary options and strategies such as blended
learning, adaptive learning, and competency-based education, students
may be much more likely to persist in and complete their programs and
institutions will be much more equipped to drive student
success.21 22 The regulations define or clarify terms such
as ``correspondence course,'' ``distance education,'' and ``regular and
substantive interaction,'' and would streamline the current regulations
to reduce the complexity of performing clock-to-credit hour
conversions, disbursing aid to students enrolled in subscription-based
programs, and ensuring that programs align with program length
restrictions, while improving worker mobility across State lines. In
some instances, the definitions clarify terms used in, but not defined
by, the HEA. In other cases, the regulations codify program
administration requirements that had previously been communicated only
through sub-regulatory guidance, to give institutions the certainty
they need to expand the postsecondary education options that they make
available to students.
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\21\ www2.deloitte.com/us/en/insights/industry/public-sector/improving-student-success-in-higher-education.html.
\22\ www.texaspolicy.com/new-study-less-expensive-competency-based-education-programs-just-as-good-as-traditional-programs/.
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For instance, while CBE programs using direct assessment have been
permitted by statute since 2006, most institutions continue to evaluate
progress in CBE programs based on measures of time (or time
equivalency) rather than a student's demonstration of competency. This
is largely due to uncertainties regarding how to disburse and calculate
return-to-title IV for students enrolled in programs that measure
competencies rather than time.
As a result, the potential benefits of CBE programs, such as
accelerated learning and completion as well as providing better
assurances to employers that graduates are prepared for workplace
demands, were mitigated because programs still were required to adhere
to time-based title IV disbursement methodologies.\23\ These
regulations provide needed certainty to institutions about how to
disburse aid to students enrolled in CBE programs. The regulations also
eliminate a significant legal obstacle to the adoption of direct
assessment CBE programs by permitting title IV-eligible programs to be
offered partly through direct assessment and partly using credit or
clock hours. Eliminating this restriction makes it easier for
institutions to experiment with direct assessment without having to
immediately establish and implement a program offered entirely through
direct assessment.
---------------------------------------------------------------------------
\23\ www2.deloitte.com/us/en/insights/industry/public-sector/improving-student-success-in-higher-education.html.
---------------------------------------------------------------------------
The regulations acknowledge that subscription-based programs are
permissible and provide instructions to institutions about how to
disburse aid and evaluate satisfactory academic progress for students
enrolled in these programs. These regulations also reduce the steps
involved in gaining approval for direct assessment programs, which
reduces the burden associated with administering these programs and
reduces the risk that an institution could invest resources in
designing a high-quality program that the Department denies or
unnecessarily delays. Institutions that better understand the rules for
administering Federal student aid in circumstances that depart from
traditional delivery models are more likely to invest in developing one
of those models, and administering it properly, thus avoiding improper
payments and improving the student experience.
The regulations also acknowledge that, given the cost of developing
sophisticated technology-driven instructional tools or building
specialized facilities on college campuses, a rational approach may be
to rely on a third-party provider with a much broader reach than an
individual institution or on industry partners who have other
incentives to maintain state-of-the-art facilities and equipment. Until
institutions fully understand what is permissible in the development
and implementation of innovative delivery models, institutional leaders
will remain largely risk averse, and solutions that would otherwise
help large numbers of students will not be made available to them.
Finally, the regulations change the return of title IV funds and
satisfactory academic progress provisions to reduce administrative
burden and increase flexibility for many postsecondary institutions
offering innovative programs. Reducing the amount of burden and expense
associated with the administration of the title IV, HEA programs for
unique or non-traditional programs will also encourage institutions to
offer programs that do not fit into the traditional mold and improve
the available offerings for students.
The Department believes this regulatory action will have an annual
effect on the economy of more than $100 million. If students have more
postsecondary options to select from and if more students persist to
completion, the number of students who enroll for the full duration of
a program may increase. For example, although
[[Page 54785]]
extremely limited in availability now, if there were fewer barriers to
starting a direct assessment program, there could be an increase in the
number available, and perhaps adult learners would find this to be a
more satisfying way to learn, or the only way they can juggle the
demands of work, school, and family.
While a limited number of experienced institutions with established
direct assessment programs may increase their program offerings, it is
difficult to predict whether larger numbers of students will be
attracted to higher education, in general, or if the current number of
students would be distributed differently across the landscape of
available programs. Direct assessment programs may be considerably more
attractive to busy adult learners who would get credit for what they
know from prior work or life experience.\24\
---------------------------------------------------------------------------
\24\ onlinelibrary.wiley.com/doi/full/10.1002/cbe2.1008.
---------------------------------------------------------------------------
The demand for distance education programs has visibly increased in
recent years. In 2003-04, 15.6 percent of undergraduate students took
at least one distance education class and only 4.9 percent of students
were exclusively in distance education while by 2015-16, 43 percent of
undergraduate students took at least one distance education class and
approximately 11 percent were in exclusively distance programs.\25\ In
many cases, more students are taking at least one online class while
enrolled in a traditional ground-based program. Correspondingly, there
has also been significant growth in the number of students who are
enrolled in exclusively online programs.\26\ We have also seen
significant redistribution of online enrollments as some large non-
profit and public institutions have increased their market share, while
at the same time some proprietary schools that once dominated distance
education delivery are suffering sizeable enrollment losses and even
closures. Overall, growth in the number of students enrolled
exclusively online has been moderate, increasing 22 percent between
2013 and 2018. The number of students taking at least one online class
has increased 28 percent between 2013 and 2018.27 28 29
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\25\ U.S. Department of Education, National Center for Education
Statistics, Digest of Education Statistics 2018, Table 311.22.
Number and percentage of undergraduate students enrolled in distance
education or online classes and degree programs, by selected
characteristics: Selected years, 2003-04 through 2015-16. Available
at nces.ed.gov/programs/digest/d18/tables/dt18_311.22.asp.
\26\ www.insidehighered.com/digital-learning/article/2019/12/11/more-students-study-online-rate-growth-slowed-2018.
\27\ nces.ed.gov/programs/digest/d18/tables/dt18_311.15.asp.
\28\ nces.ed.gov/programs/digest/d14/tables/dt14_311.15.asp.
\29\ U.S. Department of Education, National Center for Education
Statistics, IPEDS, Spring 2019, Fall Enrollment component
(provisional data)., Number and percentage distribution of students
enrolled at title IV institutions, by control of institution,
student level, level of institution, distance education status of
student, and distance education status of institution: United
States, fall 2018.
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While current providers of CBE and direct assessment learning do so
through distance learning modalities, it is possible that, as
regulatory requirements become clearer, those institutions that
primarily provide ground-based education will also develop and
implement CBE and direct assessment programs. On the other hand,
programs that lead to licensure may be slower to introduce CBE or
direct assessment models since licensing boards may resist change--
although in the wake of COVID-19 we are seeing greater receptivity
among licensing boards to distance learning.\30\
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\30\ ij.org/wp-content/themes/ijorg/images/ltw2/License_to_Work_2nd_Edition.pdf.
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As can be seen in Table 1 below, which is based on data collected
by the National Center for Education Statistics (NCES), while the
percentage of students who are enrolled exclusively in online programs
has increased slightly between 2013 and 2018, the largest growth has
been in the percentage of students who take at least one, but not all,
of their classes online. The number of students engaged in online
learning grew between 2013 and 2018 from approximately 5.5 million to
6.9 million. This suggests that learning modalities will change as
innovation creates a broader range of options. However, despite the
increase in enrollments in online options, the total number of
postsecondary enrollments has been in decline for the last several
years. Therefore, it is clear that an increase in the percentage of
students who enroll in online classes will, alone, not likely result in
overall increases in postsecondary enrollments. College enrollments are
most dependent upon economic cycles, so changes in delivery models may
be less important than macroeconomic conditions in determining total
enrollments.
Table 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
No-distance At least one All-distance
All institutions Total students (#) education courses distance course, not education courses
(%) all (%) (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2018............................................................ 20,008,434 65.3 18.4 16.3
2017............................................................ 19,765,598 66.3 18.0 15.7
2015............................................................ 19,977,270 70.2 15.4 14.4
2013............................................................ 20,375,789 72.9 14.1 13.1
4-year (total):
2018........................................................ 13,901,011 64.3 18.0 17.6
2017........................................................ 13,823,640 65.8 17.3 16.9
2015........................................................ 13,486,342 69.7 14.4 15.9
2013........................................................ 13,407,050 73.0 12.2 14.8
2-year (total):
2018........................................................ 6,107,423 67.6 19.2 13.2
2017........................................................ 5,941,958 67.5 19.5 13.0
2015........................................................ 6,490,928 71.2 17.6 11.2
2013........................................................ 6,968,739 72.7 17.6 9.8
Public:
2018........................................................ 14,639,681 66.1 21.5 12.3
2017........................................................ 14,560,155 67.8 20.8 11.4
2015........................................................ 14,568,103 72.0 18.0 10.0
2013........................................................ 14,745,558 74.6 16.7 8.7
Private Non-Profit:
2018........................................................ 4,147,604 69.7 10.1 20.2
[[Page 54786]]
2017........................................................ 4,106,477 71.3 9.5 19.2
2015........................................................ 4,063,372 75.0 8.5 16.5
2013........................................................ 3,974,004 80.0 6.9 13.1
Private For-Profit:
2018........................................................ 1,221,149 41.0 8.6 50.4
2017........................................................ 1,098,966 29.0 11.1 59.9
2015........................................................ 1,345,795 35.9 8.6 55.5
2013........................................................ 1,656,227 40.7 7.6 51.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Growth in the number and percentage of online learners was
especially strong among private not-for-profit institutions, where
students who took all courses through distance education increased over
54 percent, from 13.1 to 20.2 percentage points. At 2-year
institutions, the percentage of students taking all courses online
increased from 9.8 to 13.2 percentage points, almost a 35-percent jump
from 2013 to 2018. However, total enrollments at 2-year institutions
during that same time period decreased by over 850,000 students.
While the percentage of students enrolled exclusively in distance
learning is highest among proprietary institutions (60 percent),
relatively few students are enrolled at these institutions (only
approximately 1 million of the nearly 20 million enrolled in
postsecondary education in 2017 were enrolled at proprietary
institutions). There have been sizable decreases in total enrollments
at proprietary institutions between 2013 and 2017, and in 2017 only
659,379 students were enrolled exclusively online at proprietary
institutions as compared to 821,296 students who were enrolled
exclusively online at private non-profit institutions and 1.6 million
who were enrolled exclusively in online programs at public
institutions. These data suggest that increases in enrollments among
exclusively online courses do not necessarily result in increased
number of total postsecondary enrollments.
The information about the number and distribution of distance
education programs and students has clearly been temporarily altered in
2020 because of COVID-19 and the disruption of ground-based campus
operations during times of mandatory or recommended quarantine. While
some students may have withdrawn because of COVID-19 related
circumstances, the Department believes that most students continued
their program, albeit at least temporarily in a distance format. The
extent to which this transformation continues in the remainder of 2020
and beyond will depend on the further developments with respect to
COVID-19, the experience students have in their distance education
courses and the value they place on campus activities, and the
decisions institutions make about resuming on-campus programs.
Additionally, as noted by the commenter, adverse economic conditions
have been associated with increases in postsecondary enrollment,
particularly for programs with an emphasis on career training and
development. Postsecondary enrollment increased substantially from
2007-08 to 2010-11 as students responded to the recession during that
time.\31\ Table 2 reflects this increase and the significant growth in
proprietary enrollment during this period. The shape of the economic
recovery from COVID-19 and the experience and outcomes of those who
pursued postsecondary credentials during the last recession may affect
how big an increase is seen in future postsecondary enrollment. The
Department believes it is reasonable to expect some additional increase
in new distance education students, the possibility of which is
incorporated into the cost estimate in the Net Budget Impact section of
this RIA.
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\31\ Foote, A. & Grosz, M. (2019). The Effect of Local Labor
Market Downturns on Postsecondary Enrollment and Program Choice. MIT
Press Journals.
Schmidt, Erik, ``Postsecondary Enrollment Before, During, and
Since the Great Recession,'' P20-580, Current Population Reports,
U.S. Census Bureau, Washington, DC, 2018. (https://www.census.gov/content/dam/Census/library/publications/2018/demo/P20-580.pdf).
Barr, Andrew, and Sarah Turner. 2012. ``Out of a Job and into
School: Labor Market Policies and College Enrollment during the
Great Recession.'' Working Paper, University of Virginia.
\32\ U.S. Department of Education, National Center for Education
Statistics, Digest of Education Statistics 2018, Table 303.20: Total
fall enrollment in all postsecondary institutions participating in
title IV programs and annual percentage change in enrollment, by
degree-granting status and control of institution: 1995 through
2017. Available at https://nces.ed.gov/programs/digest/d18/tables/dt18_303.20.asp. Last Accessed May 26, 2020.
Table 2 32--Trends in Fall Enrollment 2007-2013 by Control of Institution
--------------------------------------------------------------------------------------------------------------------------------------------------------
Public Private Proprietary Total
Year -------------------------------------------------------------------------------------------------------------------
Number Percent Number Percent Number Percent Number Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
2007................................ 13,603,772 ........... 3,595,466 ........... 1,478,231 ........... 18,677,469 ...........
2008................................ 14,090,863 3.6 3,684,190 2.5 1,778,731 20.3 19,553,784 4.7
2009................................ 14,936,402 6.0 3,793,751 3.0 2,123,270 19.4 20,853,423 6.6
2010................................ 15,279,455 2.3 3,881,630 2.3 2,430,657 14.5 21,591,742 3.5
2011................................ 15,251,185 -0.2 3,954,173 1.9 2,368,440 -2.6 21,573,798 -0.1
2012................................ 15,000,302 -1.6 3,973,422 0.5 2,174,457 -8.2 21,148,181 -2.0
2013................................ 14,856,309 -1.0 3,990,858 0.4 2,000,883 -8.0 20,848,050 -1.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
The CBE marketplace overall has also seen significant attention
from within the postsecondary education community and general public,
but the direct assessment component of CBE has not, potentially because
of the
[[Page 54787]]
length of time it takes for the Department to review applications for
direct assessment programs, and because several audits by the
Department's OIG in the past decade have been sharply critical of the
oversight of direct assessment by the Department and accrediting
agencies.33 34 35 The Department also believes that another
recent report by the Department's Inspector General, which found one
institution's team teaching model did not comply with title IV, HEA
requirements, may have deterred other institutions that were
considering the development of CBE programs. Even the threat of an
audit finding recommending the return of hundreds of millions of
dollars in title IV funds could dissuade institutions from pursuing
such innovations. This may still be the case even if audit
recommendations are not accepted by the Department.\36\
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\33\ www2.ed.gov/about/offices/list/oig/auditreports/fy2014/a05n0004.pdf.
\34\ www2.ed.gov/about/offices/list/oig/auditreports/fy2015/a05o0010.pdf.
\35\ www2.ed.gov/about/offices/list/oig/auditreports/fy2016/a05p0013.pdf.
\36\ www2.ed.gov/documents/press-releases/20190111-wgu-audit.pdf.
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The Department's data does not break out information about
competency-based education students to the same extent as it does for
distance education students, but a number of surveys and articles
provide some background on existing programs. According to the 2018
National Survey of Postsecondary Competency-Based Education (NSPCBE),
co-authored by American Institutes of Research (AIR) and Eduventures, a
majority of respondents believe that CBE will experience strong growth
although they also perceive that a number of barriers to implementation
remain.\37\ The survey was sent to over 3,000 institutions including
primarily 2- and 4-year institutions listed in the Integrated
Postsecondary Education Data System (IPEDS). About 69 percent of
respondents were 4-year institutions and 31 percent were 2-year
institutions. A total of 501 institutions replied to the survey,
representing a survey response rate of 16 percent. It is possible that
the survey may suffer from selection bias if the institutions that
completed the survey were more likely to be those institutions
considering adding CBE programs, which would mean that the survey
results could not be accurately projected to the full postsecondary
system.
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\37\ www.air.org/sites/default/files/National-Survey-of-Postsec-CBE-2018-AIR-Eduventures-Jan-2019.pdf.
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Four-hundred-thirty of the 501 respondents reported being
interested in, or in the process of, implementing CBE programs, while
71 indicated no interest. Some 57 institutions stated that they were
currently offering at least one CBE program, with these institutions,
in aggregate, offering a total of 512 CBE programs. The largest portion
of programs (427 of 512) was at the undergraduate level with 85 at the
graduate level. The highest concentration of CBE programs was in the
fields of nursing and computer science. Given the requirement for
nursing students to participate in clinical rotations, it is likely
that CBE programs in nursing were designed to target students who are
already registered nurses (with an associate degree) and now wish to
complete a bachelor's degree.
Over 50 percent of institutions reported CBE undergraduate
enrollments of no more than 50 students per program while only a small
number of institutions (approximately 4 percent) enrolled more than
1,000 undergraduate students in CBE programs at their institution.
Thus, assuming these findings are characteristic of the overall CBE
landscape, it appears that most institutions are still in the early
stages of implementing CBE programs with only a handful of institutions
operating large-scale programs.
Similar results were described in the 2019 survey that had 602
respondents with 54 percent from public institutions, 42 percent from
private, nonprofit institutions and 4 percent were from proprietary
institutions.\38\ Of the 588 programs offered by 64 institutions, 84
percent were undergraduate and 16 percent were graduate programs. The
majority of existing programs remain small, with 53 percent with
enrollment under 50 students.\39\ As in the 2018 survey, popular fields
for competency-based programs include nursing, computer and information
sciences, and business administration.\40\ Seventy-seven percent of
responding institutions with competency-based programs reported that
they are eligible for Federal financial aid. Of those, 75 percent
report they maintain that eligibility by using a course structure to
map to credit hours.\41\
---------------------------------------------------------------------------
\38\ American Institutes for Research, State of the Field--
Findings from the 2019 National Survey of Postsecondary Competency-
Based Education, available at www.air.org/sites/default/files/National-Survey-of-Postsecondary-CBE-Lumina-October-2019-rev.pdf.
\39\ Id., p. 25.
\40\ Id., p.26.
\41\ Id., p.31.
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One of the three top barriers to implementing CBE programs, as
cited by over 50 percent of the responding institutions, was ``Federal
student aid regulations.'' The other two key barriers to entry included
the need to change business processes and the high costs associated
with start-up. While the survey results point to a guarded optimism on
the growth of CBE programs, this optimism is tempered by a perception
that the regulatory climate needs to be flexible and conducive to
expansion of CBE programs; however, the report suggests that it is
crucial to preserve consumer protections.
The Department agrees with this theme, as we noted in the executive
summary of the NPRM that ``the purpose of these distance education and
innovation regulations is to reduce barriers to innovation in the way
institutions deliver educational materials and opportunities to
students, and assess their knowledge and understanding, while providing
reasonable safeguards to limit the risks to students and taxpayers.''
Therefore, these final regulations send a signal to the higher
education community that the Department is committed to reducing
regulatory burden to make way for responsible innovations, such as CBE
programs and direct assessment programs. Further, the regulations would
enable institutions to develop new title IV disbursement models, such
as subscription-based programs, to align the delivery of aid with
programs that allow students to complete as many classes as possible
during a given period of time, but to also pace themselves
appropriately based on other demands and learning needs.
While technology has transformed the way almost every industry in
America does business, it may have not fundamentally transformed the
way we educate students, monitor their progress, or diagnose when and
what kind of additional support services a student needs. Many
institutions are educating postsecondary students today in a very
similar manner to methods and practices used a hundred years ago.
Nonetheless, there have been some early innovators who have made
advances despite the Department's lagging in this area. In that regard,
this rule represents the Department's effort to catch up with
innovations that are already taking place at forward-looking
institutions. We seek to promote continuing innovation, both in
distance learning and ground-based education. The regulations update
our definitions of ``distance education'' and ``correspondence
courses'' to acknowledge that as a result of CBE and
[[Page 54788]]
direct assessment, many students enrolled in distance education
progress at their own pace, which is a characteristic that in the past
was determinant of a correspondence course. With the introduction of
adaptive learning and other technologies, a student enrolled in
distance education is likely to be learning at his or her own pace,
although that learner continues to have regular and substantive
interactions with the instructor(s). The regulations acknowledge that
adaptive learning can play an important role in a student's educational
experience and can facilitate regular and substantive interaction
between students and instructors by providing students with continuous
feedback regarding their learning. The Department appreciates the
considerable effort of negotiators to recommend and agree to regulatory
changes that promote and enable flexibility, while at the same time
ensuring the preservation of student protections and the responsible
distribution of title IV, HEA assistance.
It is the combination of changes addressed in these final
regulations that cumulatively would have sufficient impact on the
economy to warrant classifying this regulation as economically
significant. Specifically, while there could be increases in the number
of students seeking title IV, HEA assistance, or the number of students
who persist to completion, these increased Federal expenditures could
result in the preparation of a more capable workforce and a better-
educated citizenry. As more adults are required to obtain additional
postsecondary courses or credentials throughout their professional
lifetime, the availability of more efficient learning opportunities,
such as CBE and direct assessment learning, will enable more adults to
evolve in their careers.
Summary of Comments and Changes From NPRM
As described throughout this preamble, the Department considered a
number of comments and made some technical corrections and changes in
these final regulations. One comment focused on the RIA analysis and
emphasized that the Department should have accounted for the effects of
COVID-19 and the resulting increase in distance education. The
commenter noted that previous recessions had resulted in significant
increases in postsecondary enrollment and that the specifics of the
COVID-19 situation would likely result in students choosing distance
education options over traditional, campus-based programs. The
commenter also pointed out that distance education and competency-based
programs are often attractive to veterans, students of color, low-
income students, students who are parents, or working students who are
disproportionately affected by the COVID-19 health effects and economic
disruption. The commenter encouraged the Department to rescind the
rule, open a new round of negotiated rulemaking in light of COVID-19,
or, at least to redo the cost estimates and regulatory analysis for
these final regulations to take COVID-19 impacts into account.
The Department appreciates the comment and recognizes that the NPRM
was published on April 2, 2020, when we were still understanding the
impact that COVID-19 could have on enrollments in distance learning.
The rapid transformation of the postsecondary educational landscape as
a result of COVID-19 supports the Department's point that the creation
of innovative postsecondary programs, including distance education and
competency-based programs, will be driven by student demands and other
events that generate demand. The changes in these final regulations
allow those student-driven program development decisions to be
implemented more efficiently while maintaining appropriate safeguards
for students.
Another consideration is that the cost estimate for the NPRM and
these final regulations is intended to capture the impacts of the
regulatory changes. The rapid transformation to distance education
occurred independent of these final regulations, although the
Department did waive several provisions in line with the proposed
changes in these final regulations to facilitate the response to COVID-
19. For example, the Department waived preapproval requirements that
would have otherwise delayed institutions in their efforts to move to
distance learning, and it permitted accreditors to develop policies and
procedures to enable rapid transition to distance learning without
going through the regular policy-making process that would have taken
months to accomplish. In addition, the Department permitted students
enrolled at foreign institutions to complete up to 25 percent of their
program at an eligible U.S. institution or an ineligible foreign
institution so that students whose primary institution suspended
operations could continue their education elsewhere without
jeopardizing their continued participate in title IV programs. The
consequences of COVID-19 and subsequent economic disruption are part of
the conditions and environment within which these regulations will have
an impact, and while it may be impossible to definitively distinguish
between the effects of the regulations versus the effects of COVID-19
on the transition to distance learning, we attempt in this RIA to do
so. In light of the recent, COVID-19 related transformation in
postsecondary education, the Department has updated some of the
information about such programs and has considered how the experience
over the past months may increase or accelerate institutions' plans to
develop additional distance or competency-based programs. This is
addressed in the Net Budget Impact section of this RIA.
Costs, Benefits, and Transfers
The Department anticipates that the regulations would affect
students, IHEs, accrediting agencies, and the Federal Government. State
government may also be impacted in some instances. Table 3 refers to
key changes described in the identified preamble sections and
summarizes potential impacts.
Table 3--Summary of Key Changes
----------------------------------------------------------------------------------------------------------------
Change Affected parties Impacts
----------------------------------------------------------------------------------------------------------------
Reg Section 600.2--Definitions
----------------------------------------------------------------------------------------------------------------
Create definition for ``academic Students/Institutions/ Clarifies and expands the types of
engagement''. Federal Government. activities that verify student
enrollment for the purpose of performing
return to title IV funds calculations
while standardizing the Department's
definition of ``academic engagement''
for use elsewhere in the regulations.
Prevents improper payment of title IV
funds to students who are not
legitimately engaged in postsecondary
learning.
[[Page 54789]]
Defines ``clock hour'' for distance Students/Institutions/ Codifies current policy allowing
education. Federal Government/ institutions to record clock hours
Accrediting Agencies. earned through distance education but
requires such hours to be taught through
synchronous or, as permitted by these
final regulations, asynchronous
instruction by the instructor. Clock
hours may be earned through distance
education only when permitted by
licensing boards or other regulatory
entities that require enrollment to be
measured in clock hours. Regulatory
clarity may encourage greater use of
distance education to provide the
didactic portion of occupationally
focused programs, thus expanding access
to students who are working, raising
families, or live far from campus. As
described in the preamble and further
discussed after this table, potential
concerns with allowing asynchronous
instruction include a lack of direct
interaction and the use of the hours for
the completion of homework.
Modifies definitions of ``correspondence Students/Institutions/ Benefits students by encouraging the
course'' and ``distance education'' to Federal Government/ development of programs taught by
clarify that it is permissible to Accrediting Agencies. instructional teams consisting of
employ a team approach to instruction experts in the various elements of high-
and clarifies that the requirements for quality instruction, as opposed to a
regular interaction are met if the more traditional model that relies on a
institution provides opportunities for single faculty member to meet all of the
interaction, even if each student does student's learning needs. Benefits
not take advantage of each opportunity. students and institutions by potentially
Removes self-pacing from definition of reducing some of the costs of
``correspondence course'' as it is not instruction. Reduces the need for
a necessary characteristic for such institutions to require students to
courses. engage in less substantive work solely
for the purpose of documenting that
regular and substantive interaction took
place in order to document that a course
is offered using distance education and
is not a correspondence course.
Refines definition of ``credit hour'' to Students/Institutions/ Maintains time-based standard to ensure
reflect current sub-regulatory guidance Federal Government. consistency among institutions regarding
in DCL GEN-11-06 that references a the awarding of academic credit, while
variety of delivery methods. also creating the necessary flexibility
to consider that many new educational
delivery models are not based on seat
time. Codifies flexibility provided in
sub-regulatory guidance under the
Department's Dear Colleague Letter GEN-
11-06.
Amends definition of ``distance Students/Institutions/ Updates regulations to remove references
education'' by removing references to Federal Government/ to outdated forms of electronic media
specific kinds of electronic media used Accrediting Agency. and to ensure that new forms of
in providing instruction, relegating electronic media will be covered by the
the determination of instructor regulations in the future. Acknowledges
qualifications to accrediting agencies, that the use of interactive learning
including the use of interactive technologies can facilitate regular and
technologies to meet the requirements substantive interaction between students
for ``substantive interaction,'' and and instructors. Benefits institutions
establishing standards for ``regular by more clearly explaining regulatory
interaction'' that include predictable compliance requirements for educational
opportunities for interaction and innovations, thus reducing risk and
monitoring of student engagement. potential financial penalties for those
institutions pursuing educational
innovation. Benefits students by
expanding learning opportunities and
flexibilities, including personalized
learning, without unnecessary
bureaucratic hurdles for the purpose of
meeting title IV requirements for
regular participation. Benefits the
Federal Government by ensuring that
students are receiving high-quality
education when using Federal student aid
to pay for that education. Benefits
students by ensuring that online
learning includes meaningful
interactions with qualified instructors
who can monitor and improve student
learning.
Clarifies definitions of ``incarcerated Students/Institutions/ Reflects current practice and sub-
student'' and ``juvenile justice Federal Government. regulatory guidance and clarifies that
facilities''. individuals in certain correctional
facilities may be eligible for Pell
grants, but limits the use of Pell
grants to appropriate instructional
expenses.
Amends definition of ``nonprofit Institutions............... Redundant language removed; no impact
institution'' to delete reference to anticipated.
501(c)(3) tax status.
----------------------------------------------------------------------------------------------------------------
Reg Section 600.7--Conditions of Institutional Eligibility
----------------------------------------------------------------------------------------------------------------
Establishes that a student is not Students/Institutions...... Impact minimal based on the small number
considered to be ``enrolled in of correspondence courses operating in
correspondence courses'' until at least the country. Potential benefit to
50 percent of the student's classes are institutions and students is that
correspondence courses. enrollment in a single or small number
of correspondence courses does not cause
a student to be counted against the
institution for eligibility purposes.
Provides greater flexibilities for
students who are managing multiple life
demands or for whom travel to the campus
is difficult or for whom technology
access is limited, by allowing them to
participate in a small number of
correspondence courses without putting
title IV participation for the
institution at risk.
----------------------------------------------------------------------------------------------------------------
[[Page 54790]]
Reg Section 600.10--Date, Extent, Duration, and Consequences of Eligibility
----------------------------------------------------------------------------------------------------------------
Limits Secretary's approval of direct Students/Institutions/ Acknowledges that the Department's role
assessment programs at the same Federal Government. in approving direct assessment programs
academic levels to the first such is limited to ensuring the integrity of
program at an institution. the title IV, HEA programs, and assumes
that if an institution can disburse aid
properly to students in one program at a
given academic level, it is likely to be
able to do so for additional programs.
Ensures that an institution that creates
a first new direct assessment program at
a new academic level is reviewed by the
Department to ensure appropriate
administration of title IV funds.
Encourages institutions that have
demonstrated the ability to design and
operate a direct assessment program to
expand that model of instruction and
enables institutions to respond more
quickly to student and workforce needs.
Reduces a potential barrier or reduces
time required to establish a direct
assessment program. A consequence of
eliminating the requirement that the
Secretary approve each new direct
assessment program at the same academic
level is that it may lead to the rapid
expansion a direct assessment programs
without the guardrail of the
Department's review.
----------------------------------------------------------------------------------------------------------------
Reg Section 600.20--Notice and application procedures for establishing, reestablishing, maintaining, or
expanding institutional eligibility and certification
----------------------------------------------------------------------------------------------------------------
Requires the Secretary to provide timely Students/Institutions/ Benefits institutions and students by
review of new program applications and Federal Government. allowing faster development of new
enables institutions to start programs, especially those responsive to
advertising programs early enough to workforce development needs. Reflects
enroll a full cohort of students. role of accreditors in assessing program
quality and Department's intent to rely
on accreditor's assessment except in
rare circumstances related to the
Department's statutory and regulatory
requirements or specific requirements of
the institution's PPA. Protects an
institution from Department's failure to
act on an application for new program
approval and reduces the likelihood that
delays on the Department's part will
require an institution to navigate the
State and accreditor approval process a
second time.
----------------------------------------------------------------------------------------------------------------
Reg Section 600.21--Updating Application Information
----------------------------------------------------------------------------------------------------------------
Adds reporting requirements for (1) the Institutions/Federal With the elimination of the requirement
addition of second and subsequent Government. for the Department to approve subsequent
direct assessment programs at the same programs, this allows the Department to
academic level. monitor the growth and development of
direct assessment programs. Also allows
cross-checking with accreditors to be
sure program or arrangement has
approval.
----------------------------------------------------------------------------------------------------------------
Reg Section 600.52 and 600.54 (related to Foreign Institutions)
----------------------------------------------------------------------------------------------------------------
Amended to permit written arrangements Students/Institutions/ Benefits students by allowing them to
with an eligible institution in the Federal Government. take Federal student loans to enroll at
United States to provide no more than certain foreign institutions but retain
25 percent of a student's program. the ability to take a limited number of
courses in the U.S., such as during
summer breaks. Also enables title IV-
participating students enrolled at
foreign institutions to pursue
qualifying internships or externships in
the United States at entities other than
eligible institutions. Benefits students
by allowing them to find internships or
externships in a variety of settings in
which they may wish to pursue a career.
Amended to permit written arrangements Students/Foreign Allows students at eligible foreign
between a foreign institution and an Institutions/Federal institutions to take courses at other
ineligible entity for no more than 25 Government. approved foreign institutions in that
percent of a student's program; country, thus benefiting from the same
provided that the ineligible entity opportunities as their international
satisfies definition of ``foreign peers enrolled at foreign schools.
institution''. Broadens educational opportunities
available to U.S. students at foreign
institutions while maintaining
reasonably equivalent quality. However,
while the regulations require the
ineligible institution to meet the
requirements of the foreign country in
which it is located, these arrangements
would not be overseen by a recognized
accrediting agency or the Department,
outside of the regulatory requirements,
which may make it difficult to ensure
academic quality of the coursework
offered by the ineligible foreign
institution.
----------------------------------------------------------------------------------------------------------------
Reg Section 668.2--Definitions
----------------------------------------------------------------------------------------------------------------
Eliminates definition of Academic None....................... ACG program is no longer authorized by
Competitiveness Grant (ACG). HEA. Removing definition has no impact
on students or institutions.
[[Page 54791]]
Amends ``full-time student'' to define Students/Institutions/ Provides clarity for institutions
requirements for subscription-based Federal Government. regarding subscription-based models and
programs and to prevent an institution how they can be structured to permit
offering such a program from including students to receive title IV, HEA
repeated courses for which a student assistance.
has already received a passing grade in
a student's enrollment status.
Defines ``subscription-based program'' Students/Institutions/ Revision from NPRM expands use of
for title IV disbursement purposes as Federal Government. subscription-based model to all types of
standard or non-standard term program programs, not just direct assessment
for which an institution charges a programs. Benefits all parties by
student for a term with the expectation clarifying how title IV aid
that the student completes a specified disbursements work for subscription-
number of credit hours within the term. based programs. Provides flexibility for
Clarifies that no specific timeframe students to take advantage of self-
applies for the terms and that students pacing inherent in this program model
must complete a cumulative number of while limiting potential for abuse by
credit hours (or the equivalent) during requiring completion before subsequent
or following the term before receiving disbursements of aid. Some protection
another disbursement of title IV funds. for students with possibility of one
single subscription period for catch-up
work before loss of title IV
eligibility. Clarity provided by
definition may increase the
establishment of direct assessment
programs or other programs that could
benefit from this approach, to the
benefit of the institutions that offer
them, and as options for students,
including the non-traditional students
that have taken advantage of existing
CBE programs. Provides an opportunity
for students who fall behind in a
subscription-based program to catch up
and get back on track. A potential risk
of expanding subscription-based model
beyond direct assessment programs
include the possibility that students in
subscription-based programs will quickly
accrue debt early in their programs
while falling behind in their
coursework.
Requires institutions to establish a Students/Institutions/ Provides consistency for students
single enrollment status that applies Federal Government. regarding expectations for completion of
to a student throughout his or her coursework in a subscription-based
enrollment in a subscription-based program. Offers clarity to institutions
program, with the student able to regarding requirements for structuring
change their enrollment status once in such programs to ensure access to
an academic year. Federal aid. Improves program integrity
by limiting options for students to
avoid completion requirements through
changes in enrollment status.
Explains method for determining number Students/Institutions/ Benefits institutions by clarifying how
of credit hours (or the equivalent) Federal Government. to match disbursements to pace of each
that must be completed before student's progress. Benefits the Federal
subsequent disbursements of title IV Government by establishing a clear
aid. completion standard for students to meet
before they receive subsequent
disbursements of Federal aid. Benefits
students by allowing for an additional
term to ``catch-up'' on coursework
before losing title IV eligibility.
Modifies definition of ``third party None....................... Reflects current practices and
servicer'' to use ``originating loans'' terminology. No impact anticipated on
instead of ``certifying loan any party.
applications''.
----------------------------------------------------------------------------------------------------------------
Reg Section 668.3--Academic Year
----------------------------------------------------------------------------------------------------------------
Revises definition of ``week of Students/Institutions/ Benefits institutions by clarifying
instructional time'' as it pertains to Federal Government. requirements for building instructional
an institution's ``academic year.'' One calendars in programs offered
part of the definition would cover asynchronously through distance
traditional postsecondary programs and education and may spur additional
remain unchanged and the other would innovation given better understanding of
cover programs using asynchronous compliance thresholds. Benefits students
coursework through distance education and the Federal Government by ensuring
or correspondence courses. For these that institutions make appropriate
courses, defines it as a week in which instructional materials and support
the institution ``makes available the available during instructional periods
instructional material, other in exchange for Federal student aid. As
resources, and instructor support noted by commenters, the interactions in
necessary for academic engagement and asynchronous courses may not be
completion of course objectives''. predictable.
----------------------------------------------------------------------------------------------------------------
Reg Section 668.5--Written Arrangements to Provide Educational Programs
----------------------------------------------------------------------------------------------------------------
Clarifies that institutions using Institutions/Faculty/ Enables institutions to keep pace with
written arrangements may align or Students/Accrediting changing needs of employers and protects
modify their curriculum to meet Agencies. non-accredited providers from having
requirements of industry advisory their educational programs or
boards or other industry-recognized technologies manipulated by others. This
credentialing bodies rather than going is important since providers through
through a mandatory, and typically written arrangements must prove the
lengthy, shared governance decision- efficacy of their programs, so outsiders
making process. should not be allowed to modify or
change the program in a way that could
influence those results. Ensures that
students are better prepared for entry
to the workforce in certain occupations.
Could create tension with faculty and
reduce their influence over certain
aspects of the curriculum but could
require proper oversight by partnering
institutions and accreditors to reduce
risk of harm to students.
[[Page 54792]]
Clarifies calculation of percentage of Students/Institutions/ Ensures that degree-granting institutions
program that could be provided by an Accreditors/Ineligible retain academic control of a program and
ineligible institution. Entities involved in maintain the responsibility for
Written Arrangements. delivering at least half of an academic
program. Setting out a clear methodology
makes clear when and how written
arrangements may be used but ensures
that colleges and universities are not
simply outsourcing instructional
responsibilities to non-accredited
providers. Benefits institutions by
improving speed with which accrediting
agencies review and approve such
arrangements. While the accrediting
agency can deny the request for a
written arrangement, increasing the
speed for review and expanding the
options for staff that can review these
arrangements could make for a less
robust or rigorous review. Benefits
students and institutions by allowing
institutions to engage other providers,
such as unions and apprenticeship
providers, who may have specialized
facilities and uniquely trained
employees who can serve as teachers and
mentors. Benefits institutions by
allowing them to offer educational
opportunities or technologies that are
developed by outside providers who may
be better situated to invest in new
technologies due to their opportunities
to deliver them to a larger population
of students than are typically at a
single institution.
Clarifies that written arrangements are Institutions/Students...... Offers clarity for institutions to ensure
not necessary for certain other that use of written arrangements does
interactions with outside entities. not result in fewer credits being
Specifically, the limitations in Sec. accepted through transfer or awarded
668.5 do not apply to the transfer of through prior learning assessment.
credits, use of prior learning Benefits students by reducing costs and
assessment or other non-traditional time to completion for those who bring
methods of providing academic credit, pre-existing knowledge and skills to the
or the internship or externship portion classroom.
of a program.
Removes 50 percent limitation on written Institutions............... Allows greater opportunities for
arrangements between two or more institutions to share administrative or
eligible institutions under joint instructional resources when under
ownership. shared ownership.
Ineligible entities would not, as was Institutions............... Allows institutions to use third parties
proposed in the NPRM, have to to deliver portions of programs, to
demonstrate experience in delivery and integrate advanced technologies, enable
assessment of the program or portion student access to specialized facilities
the ineligible entity delivers and that and experts, expand the number of
the programs have been successful in learning options available to students
meeting stated learning objectives. and potentially increase the number of
students an institution can responsibly
serve. While written arrangements may
reduce the cost of delivering certain
kinds of instruction, constructing
specialized facilities, or developing
new technologies, the written
arrangement will have associated costs
that could reduce revenue. Students
could have access to newer technologies
or higher quality instruction than could
be provided by the institution. In the
final regulations, ineligible entities
will not be required to demonstrate
prior experience and success in meeting
learning objectives for portions of
programs they deliver. However, there
are potential risks inherent in
contracting with an ineligible entity
that lacks demonstrable experience. The
outside provider could be of lower
quality, have less of a vested interest
in the student's success, or lack the
necessary resources to provide the
educational services agreed upon in the
written arrangement.
----------------------------------------------------------------------------------------------------------------
Reg Section 668.8--Eligible Programs
----------------------------------------------------------------------------------------------------------------
Eliminates consideration of ``out-of- Institutions............... Aligns the Department's requirements with
class'' hours for purposes of those of most licensing boards and
performing clock-to-credit conversions simplifies the conversion process.
for non-degree programs that are Enables students to meet licensure
subject to those requirements. requirements in programs that are title
IV eligible and helps institutions by
allowing them to comply with the
reasonable length requirements while
also allowing credit hour to clock hour
conversions. May result in additional
title IV funds expenditures for programs
currently lacking any out-of-class
components.
----------------------------------------------------------------------------------------------------------------
Reg Section 668.10--Direct Assessment Programs
----------------------------------------------------------------------------------------------------------------
Revises definition of ``direct Institutions............... Simplifies and clarifies requirements
assessment'' and eliminates separate related to direct assessment programs.
definitions of key terms for direct
assessment programs, referring instead
to requirements elsewhere in
regulations.
[[Page 54793]]
Eliminates certain prohibitions on types Students/Institutions/ Allows institutions to provide students
of coursework that can be offered Federal Government. with more options so that learners can
through direct assessment, including select the learning modality that best
remedial coursework, and enables meets their needs. Allows students to
``hybrid'' programs to provide students take some traditional courses even if
options to take some direct assessment some of their other courses are direct
courses and some traditional or assessment courses. Recognizes that co-
distance learning courses. remediation is a promising practice, and
direct assessment classes may increase
the number of students who can
participate in co-remediation programs
while taking other classes.
Codifies current policy by adding Students/Institutions/ Benefits students and taxpayers by
prohibition on paying title IV, HEA Federal Government. discouraging institutions from charging
funds for credit earned solely through excessive fees for conducting prior
prior learning assessment. learning assessment and ensures that
taxpayer dollars are not being used to
pay institutions for instruction that
they are not providing.
----------------------------------------------------------------------------------------------------------------
Reg Section 668.13--Certification Procedures
----------------------------------------------------------------------------------------------------------------
Automatic renewal of an institution's Institutions............... Benefits institutions by setting a time
certification if the Secretary does not limit for the uncertainty of month-to-
make a decision on an application for month eligibility. With the option of
recertification submitted no later than provisional recertification, the
90 calendar days before its PPA expires Department retains sufficient control
within 12 months. over recertification process but cannot
use certification delays to prevent
institutions from starting new programs
or making other necessary changes.
----------------------------------------------------------------------------------------------------------------
Reg Section 668.14--Program Participation Agreement
----------------------------------------------------------------------------------------------------------------
Clarifies requirements related to making Institutions............... Benefits institutions by reducing the
data available to prospective students amount of information that must be
about the most recent employment disclosed to students to enable
statistics, graduation statistics, or institutions to include graduation rates
other information to substantiate the or employment statistics in their
truthfulness of its advertising that marketing materials. Benefits students
uses job placement rates to attract by improving the accuracy and
students. truthfulness of published outcomes data,
and by making an appropriate amount of
information available to students
without overwhelming them with
extraneous data. Maintains the
requirement for institutions to make
available any information needed to
substantiate the truthfulness of the
institution's advertisements about job
placement or graduation rates.
Eliminates requirements to provide the ........................... Considered redundant to requirement to
source of such statistics, associated provide data and other information to
timeframes, and methodology. substantiate truth in the institution's
advertising.
Aligns program length to occupational Students/institutions...... Allows institutions to create programs
requirements. Limits program length to that meet professional licensure
150 percent of minimum program length requirements in multiple States, thus
for the State in which the institution expanding the potential pool of students
is located or 100 percent of the served and the number of job
minimum program hours for licensure in opportunities available to graduates.
an adjoining State. Students benefit by increased
occupational mobility and, in some
cases, being able to go to school in a
lower cost State but work upon
graduation in a different State where
wages are higher. Conversely, if an
institution increases program length, a
student may have to pay more to meet
requirements of a State in which the
student does not plan to work.
Requires updates to teach-out plans Students/Institutions/ Allows accrediting agencies to gather
after specified negative events. Accrediting Agencies. more information from institutions that
will be helpful to triad partners in
assisting students find transfer and
teach-out opportunities, and retain
access to their academic records, when a
school closure occurs. Requires
institutions to update teach-out plans
in instances where risk of closure
increases.
----------------------------------------------------------------------------------------------------------------
Reg Section 668.22--Treatment of Title IV Funds When a Student Withdraws
----------------------------------------------------------------------------------------------------------------
Adds several exceptions to determination Students/Institutions...... Benefits institutions by not requiring
a student has withdrawn, including them to return title IV funds simply
early completion of requirements for because a student is a faster learner.
graduation, completion of module(s) Benefits students by allowing them to
containing 49 percent or more of the complete courses at a quicker pace and
days in the payment period, or still retain full title IV eligibility.
completion of coursework equal to or Could improve completion rates and
greater than the institution's reduce time to completion if students
requirements for a half-time student. are not required to participate in busy
work if they finish the legitimate work
required by the course more quickly than
other students.
Applies 45-day time limit on delaying Students/Institutions...... Improves consistency of regulations as
withdrawal for students who cease they apply to programs with different
attendance to standard term programs. types of academic calendars and
Eliminates references to modules for addresses concerns about long periods of
nonterm programs and revises timeframes non-attendance by students. Ensures that
for allowing students to provide institutions perform return of title IV
written confirmation of intent to calculations when students cease
return without beginning an approved attendance for long periods of time
leave of absence. without beginning an approved leave of
absence.
[[Page 54794]]
Clarifies requirements for determining Institutions/Federal Simplifies and clarifies requirements for
the number of days in the payment Government. establishing the denominator of the
period or period of enrollment for a return of title IV funds calculation
student who is enrolled in a program when a student is enrolled in a program
offered using modules. Requires an that uses modules. May result in a
institution to include all the days in greater amount of title IV funds being
modules that included coursework used returned for a limited number of
to determine the student's eligibility students who enroll in numerous modules
for title IV, HEA assistance. during a payment period or period of
enrollment but fail to attend those
modules.
Eliminates references to programs under ........................... No impact anticipated for technical
which financial aid is no longer changes incorporating current policy.
disbursed. Adds Iraq and Afghanistan
Service Grants to types of aid subject
to the return of title IV funds
calculation and clarifies order for
application of returned funds.
----------------------------------------------------------------------------------------------------------------
Reg Section 668.28--Non-Title IV Revenue (90/10)
----------------------------------------------------------------------------------------------------------------
Removes references to net present value ........................... No impact anticipated for technical
when including institutional loans in changes.
the 90/10 calculation.
----------------------------------------------------------------------------------------------------------------
Reg Section 668.34--Satisfactory Academic Progress
----------------------------------------------------------------------------------------------------------------
Eliminates pace requirements for Students/Institutions/ Reduces burden on institutions for making
satisfactory academic progress for Federal Government. pace-based title IV calculations for
subscription-based programs. students in subscription-based programs.
Improves flexibility for students by
allowing them to determine the pace of
their learning without certain limits.
Allows maximum timeframe for Students/Institutions/ Increases flexibility for institutions
undergraduate programs measured in Federal Government. and students and provides new options
credit hours to be expressed in for monitoring student progress when
calendar time in addition to current traditional semester-based time
credit hour measurement. Limited to 150 constraints conflict with a student's
percent of published length of program. work or life responsibilities. However,
sets outer limit for use of aid to
ensure that students are progressing
through their program and using Federal
student aid funds efficiently.
----------------------------------------------------------------------------------------------------------------
Reg Section 668.111--Scope and Purpose and 668.113--Request for Review
----------------------------------------------------------------------------------------------------------------
Indicates that, for final audit or Institutions/Federal Conforms with changes to definitions of
program review determinations related Government. ``distance education'' and ``credit
to classification of a program as hour'' and provides regulatory clarity
distance education or the assignment of that accreditors are the triad member
credit hours, the Secretary will rely given the responsibility of monitoring
on institution's accrediting agency or program quality and establishing
State agency requirements. standards for academic quality, faculty
credentials, and effective distance
learning.
----------------------------------------------------------------------------------------------------------------
Reg Section 668.164--Disbursing Funds
----------------------------------------------------------------------------------------------------------------
Establishes disbursement requirements Students/Institutions/ Conforming change with disbursement
specific to subscription-based Federal Government. pattern for subscription-based programs
programs. Sets the later of 10 days in Sec. 668.2 to enforce requirement
before the first day of classes in the that no disbursements be made until the
payment period or the date the student student has completed the appropriate
completed the cumulative number of credit hours.
credit hours associated with student's
enrollment status in all prior terms
attended.
----------------------------------------------------------------------------------------------------------------
Reg Section 668.171--General
----------------------------------------------------------------------------------------------------------------
Allows the Secretary to determine an Institutions/Federal Codifies current practice; no impact
institution is not financially Government. expected.
responsible if the institution does not
submit its financial and compliance
audits by the date permitted and manner
required under Sec. 668.23.
----------------------------------------------------------------------------------------------------------------
Reg Section 668.174--Past Performance
----------------------------------------------------------------------------------------------------------------
Adds the term ``entity'' or ``entities'' Institutions/Federal Allows the Department to consider more
to various provisions as ownership may Government. ownership structures when evaluating
be vested in an entity or an individual. past performance.
[[Page 54795]]
Clarifies that institution is not Institutions/Federal Allows the Department to consider whether
financially responsible if a person who Government. a person or entity affiliated with an
exercises substantial ownership or institution has overseen the precipitous
control over the institution also closure of another institution with the
exercised substantial ownership or goal of preventing an institution from
control over another institution that being substantially owned or controlled
closed without a viable teach-out plan by persons or entities that would cause
or agreement approved by the the institution to be financially
institution's accrediting agency and irresponsible and close without
faithfully executed by the institution. providing to students a plan to finish
their education in place or at another
institution.
----------------------------------------------------------------------------------------------------------------
Reg Section 668.175--Alternative Standards and Requirements
----------------------------------------------------------------------------------------------------------------
Eliminates reference to fax transmission None....................... Change to recognize technological
advancements. No impact.
----------------------------------------------------------------------------------------------------------------
A key change that would result from this regulation is greater
certainty among institutions about how to implement innovative programs
without running afoul of title IV disbursement requirements.
Institutions are not inherently opposed to regulations, but instead
crave information that will enable them to be sure they are complying
with regulations that are otherwise difficult to interpret. The new
definitions ensure a shared understanding of the various kinds of
programs an institution can provide and the rules for disbursing title
IV aid to students enrolled in those programs. Greater clarity in our
regulations will reduce the likelihood that student and taxpayer
dollars will be wasted or that institutions will face undeserved
negative program review findings and financial liabilities that could
have devastating consequences to the institution and its students.
Significant changes in the final regulation from the proposed
regulations include: (1) The expansion of the subscription-based
disbursement model to all programs, not just direct assessment; (2)
modification of the clock hour definition to include clock hours in
which instruction occurs asynchronously; (3) clarification that
internships and externships of students at foreign institutions can be
completed at entities in the United States that are not eligible
institutions; (4) elimination of the prior experience requirement for
ineligible entities involved in a written agreement; and (5) withdrawal
of the proposed provisions regarding change of ownership in Sec.
668.15.
Students
Students will benefit from the expanded program options available
when institutions understand the ground rules for offering new kinds of
programs and when they do not fear surprises at a program review.
Despite being permitted by the HEA for decades, there are relatively
few competency-based programs available to students, and even fewer
direct assessment programs. Yet these types of programs may be very
appealing to adult learners who bring considerable knowledge and skills
to their programs. Expansion of subscription-based programs provides
students with the scheduling flexibility they may need if managing
responsibilities from school, work, and family. A clearer framework for
administering title IV aid to students enrolled in competency-based
programs on a subscription basis may increase institutions' willingness
to develop new programs. To the extent that institutions determine that
this funding model fits other types of programs, the expansion of this
disbursement model beyond direct assessment programs in these final
regulations increases the flexibility and options for students.
Students will have to evaluate if programs using this model meet their
schedule and educational objectives.
The regulations eliminate the financial penalties that students and
institutions would otherwise face when a student progresses quickly
through a course and completes it early. Students, especially non-
traditional students, could benefit from the flexible pacing and
different model for assessing progress offered by this type of program.
The emphasis on flexibility, workforce development, and innovative
educational approaches could be beneficial to students and the national
economy.
According to U.S. Census data,\42\ for the civilian non-
institutionalized population, there were approximately 44 million
adults between the ages of 25 and 49 with high school or some college
as their highest educational level in 2018. Even a small percentage of
that group represents a sizeable potential market for expansion of
competency-based or other distance education programs. Additionally,
students outside that age range and those with a degree may want to
pursue competency-based graduate certificates or degrees to enhance
their careers. While a variety of factors may explain individual
education attainment, to the extent that traditional programs were not
suitable for some students' academic and employment goals, competency-
based programs may provide an appealing option. However, evaluating the
quality of new programs may be challenging, and it could be difficult
to determine how much a student should learn to be awarded a certain
amount of credit, as opposed to more traditional delivery models that
award aid and mark progress by the number of hours during which a
student is scheduled to be in class (many institutions do not take
attendance, and therefore do not monitor how much time an individual
student actually is in class). As with all programs, students would
need to carefully consider if specific competency-based or distance
education programs are appropriate for their objectives and learning.
Distance learning, subscription-based programs, and other self-paced
options require a higher degree of academic discipline on the part of
students, which may pose challenges to students who are already
burdened by work and family responsibilities.\43\ For those who are so
motivated, they could complete their program more quickly. For those
who struggle to stay engaged, innovative learning models emphasizing
coach or mentor support may improve retention and completion in online
programs
[[Page 54796]]
where students with poor self-directed learning skills might otherwise
fail.44 45
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\42\ U.S. Census Bureau, Table 1. Educational Attainment of the
Population 18 Years and Over, by Age, Sex, Race, and Hispanic
Origin: 2018. Available at www.census.gov/data/tables/2018/demo/education-attainment/cps-detailed-tables.html. Last accessed
November 29, 2019.
\43\ California Community College Chancellor's Office, 2017
Distance Education Report, 2017, http://californiacommunitycolleges.cccco.edu/Portals/0/Reports/2017-DE-Report-Final-ADA.pdf.
\44\ www.texaspolicy.com/new-study-less-expensive-competency-based-education-programs-just-as-good-as-traditional-programs/.
\45\ Xu, D. and Xu, Y. March 2019. The Promises and Limits of
Online Higher Education: Understanding How Distance Education
Affects Access, Cost, and Quality. American Enterprise Institute.
---------------------------------------------------------------------------
Another potential benefit for students in competency-based programs
could be reduced costs to obtain a postsecondary credential. Western
Governors University (WGU), for example, is known for its success in
adopting this instructional approach, although it still disburses aid
using a time-based model. In its 2018 annual report, WGU states that
the average time to a bachelor's degree completion among its students
is 2.5 years, which could generate substantial savings to students and
taxpayers. An analysis done by Robert Kelchen \46\ based on 14 cost
structures at 13 institutions for credits earned through portfolio or
prior learning assessment found that significant savings could be
generated, but they vary substantially among colleges. Potential
savings for 3 credits varied from $127 to $1,270.\47\ The fee
structure, amount of credits allowed to be obtained through these
methods, the availability of Federal aid, and the ability of students
to pass those assessments with limited attempts all contribute to
determining whether a competency-based approach would generate savings
for a given student. The other pricing model, one that is supported by
the regulations, is subscription based pricing in which the potential
savings relate to the number of credits a student completes during a
subscription period and student's eligibility for financial aid in
their specific program. Kelchen calculates the number of credits needed
in a subscription period for students who receive a full Pell Grant and
non-aided students to break even with traditional pricing models at 5
institutions that offer a subscription pricing option. These range from
6 credits for a non-aided student to 27 credits for a student in a
bachelor's degree program who receives a full Pell Grant.\48\ The
subscription periods and prices vary by institution and pricing
policies may have been updated since the time of this analysis, but
that idea that subscription pricing may result in cost savings for
students depending upon the speed of their progress is still valid.\49\
---------------------------------------------------------------------------
\46\ Robert Kelchen, The Landscape of Competency-Based
Education--Enrollments, Demographics, and Affordability, January
2015. Center for Higher Education Reform, American Enterprise
Institute AEI Series on Competency-Based Higher Education. Available
at www.aei.org/wp-content/uploads/2015/04/Competency-based-education-landscape-Kelchen-2015.pdf.
\47\ Id, p. 11, Table 4 Cost Structures of Portfolio and Prior
Learning Assessment Programs.
\48\ Id, p.14. Table 5 Costs of Subscription-Based CBE Programs
Compared to Other Online Providers.
\49\ Western Governors University, WGU 2018 Annual Report, p.
17. Available at www.wgu.edu/content/dam/western-governors/documents/annual-report/annual-report-2018.pdf.
---------------------------------------------------------------------------
While more difficult to quantify, the Department also expects
students would find benefits in programs they can complete more quickly
in terms of reduced opportunity costs, which include wages lost when
the student is in school rather than in the job for which the student
is preparing. Also, since student retention declines as time to degree
completion expands, programs that enable students to finish more
quickly are likely to increase credential completion.
Of course, it could be the unique attributes of WGU, or the
students attracted to the institution, that contribute to these
results, and it is not yet known if the results would be replicated by
other institutions that adopt the WGU model. A number of factors,
including a given student's anticipated pace of learning, likelihood of
completion, desired employment outcomes, personal motivation, and the
range of options available to them will influence the return the
student enjoys on their educational investment.
Students will also benefit from the changes to the definition of a
week of instruction. Under the regulations, institutions would be less
likely to assign less substantive work to students (such as posting a
blog or responding to a chat) simply to meet title IV requirements.
Where these activities are substantive, they will likely continue to
take place, but in many instances, these activities have been
integrated into courses simply to provide evidence of ``regular and
substantive'' interaction. Students who may otherwise be successful in
distance learning can become frustrated if they are not allowed to move
at their own pace because of requirements to post blogs, participate in
chats, or answer questions that do not actually enhance learning.
The inclusion of asynchronous coursework that provides for direct
interaction between students and instructors in the definition of
clock-hours could expand the options for students in such programs.
Asynchronous coursework has the advantage of being able to facilitate
an individualized learning experience for each student in a way that
cannot be accomplished through scheduled meetings or lectures. Students
can access lectures and other class activities as their schedules
permit, spending as much time as is necessary to master a particular
task or concept. New technologies permit lectures to be combined with
videos and other resources enabling students to pause at any point to
reinforce mastery of subject matter. Moreover, the availability of
asynchronous learning allows for mixed model learning reflective of
non-title IV eligible programming with theory learned asynchronously
and specific practical tasks through synchronous instruction.
Adjustments made for COVID-19 conditions have demonstrated to
institutions, accrediting agencies, and licensing agencies that at
least some parts of certain clock-hour programs can be delivered
effectively through asynchronous coursework. While this will need to be
monitored on an ongoing basis, this development will benefit students
involved in these programs.
The Department provides additional detail related to burden
estimates in the Paperwork Reduction Act section of this final rule and
none of the burden is assigned to students in that analysis.
Institutions
Institutions should benefit from the regulatory clarifications,
especially those institutions that seek to expand competency-based and
direct assessment learning options but are uncertain as to the
Department's requirements for disbursing aid to students enrolled in
those programs. A significant barrier to entry for institutions seeking
to provide direct assessment programs is a lack of clarity regarding
what the Department expects of these programs in order to approve them,
and the slowness with which the Department has made decisions on
applications submitted by institutions. Only six institutions, as of
2020, have been approved by the Department to offer direct assessment
programs. This indicates that there could be a lack of interest in
offering direct assessment programs, or institutions are hesitant to
invest in their development because approval requirements are too
burdensome or uncertainties too great about what the Department and
accreditors require. The regulations will reduce burden and provide
clarity to encourage more institutions to experiment with direct
assessment programs. Under the rule, the Department is required to
approve the first direct assessment program offered by an institution
at a given credential level, but after that, only the accreditor would
be required to review the
[[Page 54797]]
program to ensure academic quality. Some institutions may aggressively
seek approval for more direct assessment programs, while others may
take a wait-and-see attitude until other institutions have forged new
ground.
In the short term, it is likely that institutions already approved
to offer at least one direct assessment program will expand offerings
since their experience well positions them to do so. According to the
Department's data, there are only six institutions that have
established direct assessment programs. Although these institutions may
expand the number of direct assessment programs available, the
Department anticipates that these programs would mostly attract
students away from more traditional distance learning programs, but may
not add significantly to the total number of students enrolled in
postsecondary education. Students looking for a flexible postsecondary
program can find many advantages through distance education already but
may gravitate to direct assessment programs because of added
advantages, including in pacing and format. The Department's
assumptions about potential student growth related to the regulations
are described in the Net Budget Impact section of this analysis.
However, over time, additional institutions may develop new direct
assessment programs, especially if early adopters create demand among
students for this new form of education. The Department projects that
if new institutions engage in direct assessment, and those already
approved to offer direct assessment programs launch new programs, there
could be shifting of students from other programs to self-paced direct
assessment programs. It is also possible that students not interested
in current pedagogical models will find direct assessment programs to
be attractive and will decide to enroll in a postsecondary program.
This could increase the number of students who would qualify for Pell
Grants or take Federal Direct Loans. While increased interest in direct
assessment could result in higher title IV participation, it is
possible that students enrolled in direct assessment programs would
finish their programs more quickly, therefore reducing the amount of
financial aid a student uses to complete his or her program.
Changes to the limitations on the ability of clock hour programs to
offer didactic instruction through distance learning may enable more
individuals to enroll in these programs. The inclusion of asynchronous
coursework with sufficient monitoring of participation and direct
interaction between instructors and students in the definition of clock
hour in these final regulations could expand institutions' program
offerings. In turn, this could increase the number of individuals
qualified for State licensure or certification, and thus gainful
employment, in licensed occupations. There are very few clock-hour
programs that use distance learning to provide portions of the program
since there are few State or professional licensing boards that permit
distance learning for clock-hour programs. However, for clock-hour
programs permitted to incorporate distance learning, it is possible
that more students will be served or that more students will persist to
completion.
The regulations more clearly define what constitutes a reasonable
length for clock-hour programs and allow institutions to meet the
licensure requirements of surrounding States, thus enabling greater
student and workforce mobility. There are only a few States that have
licensure requirements that are significantly longer than other States,
but if programs in surrounding States increase their clock hours to
meet those requirements, there could be small increases in cost and
utilization of title IV, HEA assistance. On the other hand, if programs
can be structured to ensure that students can work if they cross State
lines, there could be cost savings since, under the status quo, a
student who moves from one State to another may be required to start
their program over in order to meet the clock-hour requirements since
shorter-term ``completer programs'' are not typically approved by those
States. Therefore, this regulation could reduce the cost of education
for students who move from one State to the next and could increase
worker mobility in fields that employ large numbers of workers, such as
cosmetology and massage therapy.50 51
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\50\ www.bls.gov/ooh/personal-care-and-service/barbers-hairstylists-and-cosmetologists.htm.
\51\ www.bls.gov/ooh/healthcare/massage-therapists.htm.
---------------------------------------------------------------------------
Institutions will also benefit from simplifications to the formula
for clock-to-credit hour conversions. The regulations would eliminate
the need for institutions to consider the number of homework hours
associated with each credit hour in programs that are subject to the
conversion. This change reduce administrative burden while allowing
institutions to offer programs in credit hours that are more likely to
transfer to other schools than clock hours, but still meet the clock-
hour requirements of licensing boards by calculating clock-hour
equivalencies.
Institutions will also benefit from the options allowed in these
final regulations with respect to asynchronous coursework in clock-hour
programs and the expansion of subscription-based disbursement beyond
direct assessment programs. Institutions considering asynchronous
coursework would have to invest in systems to monitor active
engagement, but several such technologies are available. Expanding
subscription-based disbursement could lead to economies of scale that
make it worthwhile for institutions to develop such subscription-based
pricing plans. These changes from the NPRM give institutions additional
options in designing their programs. This could also result in
additional competition from expanded course offerings at other
institutions.
As discussed further in the Paperwork Reduction Act of 1995 section
of this preamble, the regulations are expected to result in a net
reduction in burden for institutions. In estimating costs and savings
associated with these changes in burden, we assume that these
activities are conducted by postsecondary administrators, which earn an
average wage of $53.47.\52\ Throughout, to estimate the total costs and
savings associated with these changes, we multiply wage rates by two to
account for overhead and benefits. The elimination of the Net Present
Value calculation related to the 90/10 rule is estimated to save -2,808
hours, which would generate cost savings of approximately $300,000
annually. The regulations also impose burden related to reporting
subsequent direct assessment programs estimated to impose 18 hours of
burden annually for a cost of $1,926 using the same hourly rate of
$53.47 multiplied by two for overhead and benefits for a rate of
$106.94. Together, the estimated net reduction in burden for
institutions is -2,790 hours and $-298,363.
---------------------------------------------------------------------------
\52\ www.bls.gov/oes/current/oes119033.htm.
---------------------------------------------------------------------------
Accrediting Agencies
The regulations recognize the primary role that accrediting
agencies play in evaluating the quality of new programs and approving
institutions to offer them. Although the Department's review of direct
assessment programs focuses on an institution's technical ability to
calculate and disburse title IV aid to students enrolled in these
programs, accreditors have always had--and will continue to have--the
responsibility of ensuring that these programs are
[[Page 54798]]
rigorous and of high quality. In conjunction with the recently
published Accreditation and State Authorization Regulations, one or
more existing or new accrediting agencies may step forward to become a
leader in the field for assessing and approving direct assessment
programs, which could lead to more rapid expansion of direct assessment
programs. Accrediting agencies will continue to play an important role
in approving written arrangements covering between 25 and 50 percent of
a program; however, changes already published in the accreditation
regulations to allow these approvals to take place at the staff level,
and requirements for accrediting agencies to approve or deny them
within 90 days, could encourage more institutions to consider entering
into written arrangements.
Accrediting agencies play an important role in evaluating the
quality of academic programs, including distance education programs,
and will continue to play that role. These regulations do not create
new responsibilities in this regard; however, until accrediting
agencies have more experience in reviewing and approving competency-
based and direct assessment programs, the approval process could be
somewhat more burdensome. Some agencies may also need to develop new
standards to facilitate the evaluation of these programs, but many
already have such standards in place. If growth in competency-based
programs is more significant than anticipated, there could be an
increase in accrediting agency workload, but it is possible that demand
for approval of traditional programs would decline as interest shifts
to competency-based or direct assessment programs.
The Department provides additional detail related to burden
estimates in the Paperwork Reduction Act section of this final rule and
does not estimate any additional burden to accrediting agencies from
the regulations.
Federal Government
In the regulations, the Federal Government is reducing some of the
complexity of administering Federal student aid and calculating return-
to-title IV obligations. These regulations also reaffirm that it is
accreditors--and not the Department--who are authorized by the HEA to
establish and evaluate compliance with education quality standards,
including when innovative delivery models challenge the status quo. The
regulations require the Secretary to provide a timely review of new
program applications and limit the Secretary's approval of direct
assessment programs at the same academic level to the first such
program at an institution, both provisions designed to support the
expansion of innovative educational programs.
Net Budget Impact
We estimate that these regulations will have a net Federal budget
impact for Federal student loan cohorts between 2020-2029, of $[-54]
million in outlays in the primary estimate scenario and an increase in
Pell Grant outlays of $1,163 million over 10 years, for a total net
impact of $1,109 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 (PB2021) that adjusts for the publication of the final
Borrower Defense, Gainful Employment, and Accreditation and State
Authorization rules.
The Department emphasizes that its estimates of transformations in
higher education delivery that could occur as a result of these
regulations are uncertain. Similarly, the Department is constrained in
its budget estimates by the limited data available to it. We estimate
how institutions and students would respond to the regulatory changes,
and we present alternative scenarios to capture the potential range of
impacts on Federal student aid transfers. Similarly, we do not attempt
to estimate effects based on evidence cited in this preamble that
students enrolled in similar programs have persisted longer, completed
at higher rates, and finished in a shorter period of time with less
debt. While increased enrollment and persistence could result in
increased transfers to students in the form of Federal student aid
grants and loans, it could also produce graduates better prepared to
succeed in the workplace and encourage robust economic growth. The
Administration's emphasis on workforce development may encourage more
institutions to implement competency-based educational programs, which
could improve employment outcomes and loan repayment performance.
There is anecdotal evidence that competency-based education
programs may have strong loan repayment performance. Looking again to
WGU, an institution that has been an early adopter of competency-based
learning, we note that its three-year cohort default rates of 4.6
percent for 2014, 4.1 percent for 2015, and 4.2 percent for 2016 \53\
are below the national average of 10.1 percent overall in 2016 (6.6
percent for private, 9.6 percent for public, and 15.2 percent for
proprietary institutions).\54\ Comparatively, Capella University,
another leader in competency-based education, had a cohort default rate
of 6.5 percent in 2015 and 6.8 percent in 2016.\55\ Factors that could
lead to lower defaults among institutions employing innovative learning
models--and in particular when those models are used to provide
graduate education--may be that they would attract older students who
are employed and are seeking specific credentials for advancement or a
career change. These individuals may be more likely to have resources
(including those provided by current employers) to reduce the need to
borrow and to repay any loans they need to take. On the other hand, the
non-traditional students that may be the primary market for competency-
based learning or direct assessment may have employment and family
obligations that could make them less likely to complete their
programs, potentially increasing their default risk.
---------------------------------------------------------------------------
\53\ U.S. Department of Education, Official Cohort Default Rates
for Schools, PEPS300.xls available at www2.ed.gov/offices/OSFAP/defaultmanagement/cdr.html.
\54\ U.S. Department of Education, Comparison of FY 2016
Official National Cohort Default Rates to Prior Two Official Cohort
Default Rates available at www2.ed.gov/offices/OSFAP/defaultmanagement/schooltyperates.pdf. Accessed February 21, 2020.
\55\ U.S. Department of Education, Official Cohort Default Rates
for Schools, PEPS300.xls available at www2.ed.gov/offices/OSFAP/defaultmanagement/cdr.html.
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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 addressed in separate notices of
rulemaking. The budget impacts estimated here are in addition to the
potential increases attributed to the accreditation changes promulgated
in the final rule published November 1, 2019 that are reflected in the
PB 2021 baseline.\56\
---------------------------------------------------------------------------
\56\ 84 FR 58834.
---------------------------------------------------------------------------
The main budget impacts estimated from these final regulations come
from changes in loan volumes and Pell Grants disbursed to students if
these new delivery models were to attract an increased number of
students who receive title IV, HEA funds. The Department believes that
much of the growth in this area will come from future students that
shift from more traditional ground-based or distance
[[Page 54799]]
learning programs to those offered using competency-based learning or
direct assessment methods. In developing the primary estimate, the
Department does not estimate the types of programs and institutions
students who choose competency-based education may come from or the
potential cost differential between those programs, as further
discussed after Table 5. Instead, we assume that the growth associated
with programs that are developed or expanded in part because the
regulations make it easier to administer title IV aid to such programs
comes from students who would not otherwise have borrowed to attend a
different type of program and apply an average level of borrowing to
each estimated enrollee. The Department believes that many of the
students who enroll in CBE will do so as a substitute for a different
type of program for which they likely would receive some form of title
IV aid, but there will be some small increase in enrollment from
students who either not have pursued postsecondary education or who
would not have received title IV aid for their program. Additionally,
the alternate budget scenarios consider the possibility that the
implementation of new pedagogical and delivery models could result in
more or fewer new students being interested in pursuing a postsecondary
credential. Expansion of subscription-based programs, provisions in
these regulations that would encourage innovation, the growth of
workforce development programs, and the new methods of delivery may
particularly appeal to non-traditional students. Tables 4.A to 4.E
illustrate the changes in title IV grant and loan volume developed for
use in estimating the net budget impact of these regulations for the
primary scenario, with discussion about underlying assumptions
following the tables.
In order to have a common basis for the Pell Grant and loan
assumptions and to facilitate comment, we started the estimate with an
assumption about the number of additional programs that would be
established because of the combined effect of the regulations. As noted
in response to the comment about the RIA in the NPRM, the expansion of
distance education in response to COVID-19 disruptions is not a
response to these regulations, and the extent to which the
transformation will persist is unknown. Instead, the response to COVID-
19 has provided evidence that additional flexibilities are necessary
and appropriate to enable institutions to adapt to the changing needs
of students and society.
We did not increase the estimated number of students to reflect the
current shift of campus-based students to distance learning, nor did we
attribute to the regulation the possibility that some students may
prefer that distance programs or alternative types of programs like CBE
after their experience during the COVID-19 shutdown. Additionally, any
COVID-19 related economic downturn will be reflected in future baseline
updates, with the potential increase in enrollment and related
financial aid as a reaction to economic conditions and not driven by
the changes in these final regulations. However, we did recognize that
institutions' experience in shifting programs to distance platforms may
encourage them to accelerate the development of distance of CBE
programs. Students may also decide that distance learning is a good
approach for them and consider it for furthering their education or for
future programs. This is reflected in an increase in programs in Table
4.A to 968 compared to 864 in the NPRM, leading to an estimated 60,379
additional Pell Grant recipients. On the other hand, because the rapid
shift to distance may provide students with sub-optimal experiences,
there could also be a negative backlash in which students will resist
engaging in distance learning if their experience during the COVID-19
necessitated transition was less than satisfactory.
Table 4.A--Assumptions About Cumulative Number of Additional Programs by Size of Program
--------------------------------------------------------------------------------------------------------------------------------------------------------
Size of program 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
--------------------------------------------------------------------------------------------------------------------------------------------------------
25........................................ 24 72 95 150 225 275 325 375 420 450
75........................................ 12 20 40 60 90 110 135 150 175 200
150....................................... 10 18 26 40 68 75 90 113 120 128
350....................................... 8 15 25 30 38 50 60 70 80 90
750....................................... 3 8 14 20 30 38 48 56 65 70
1500...................................... 1 4 7 10 14 18 20 25 28 30
--------------------------------------------------------------------------------------------------------------------------------------------------------
As seen in Table 4.A, we expect the current trends of distance
education programs capturing an increasing share of students to
continue, and perhaps to accelerate as institutions and accreditors
become more experienced in establishing or evaluating these programs.
We also expect more institutions to engage in competency-based learning
and direct assessment, which may or may not be delivered online. The
initial distribution of programs by enrollment size uses information
from the 2018 AIR survey and the 2019 survey; \57\ however, we
acknowledge that the results of that survey may be biased in that we
expect the small proportion of institutions interested in starting CBE
or direct assessment programs were more likely to respond. Nonetheless,
these are the best data available to us, and we projected the results
of that survey onto the postsecondary system as a whole. We assumed,
based on the 2018 and 2019 survey data, that the majority of programs
will be small, but assumed that over time larger programs would evolve.
---------------------------------------------------------------------------
\57\ American Institutes for Research, State of the Field--
Findings from the 2019 National Survey of Postsecondary Competency-
Based Education, available at www.air.org/sites/default/files/National-Survey-of-Postsecondary-CBE-Lumina-October-2019-rev.pdf.
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In addition, as institutions become more comfortable with using
written agreements to access facilities and experts that private sector
organizations and unions make available, there could be growth in
career and technical education programs that are currently limited due
to the high cost of constructing facilities, procuring equipment and
hiring faculty qualified to teach in those programs.\58\ As more
hospitals and health care facilities require nurses to have bachelor's
degrees, we expect to see continued growth of RN to BSN programs, which
can be delivered using CBE or direct assessment because students in
these programs are typically required to be working in the field, thus
negating the need for the institution to provide clinical placements.
---------------------------------------------------------------------------
\58\ Shulock, N., Lewis, J., & Tan, C. (2013). Workforce
Investments: State Strategies to Preserve Higher-Cost Career
Education Programs in Community and Technical Colleges. California
State University: Sacramento. Institute for Higher Education
Leadership & Policy.
---------------------------------------------------------------------------
[[Page 54800]]
Other factors that support the increase in programs are recent
regulatory developments with respect to accreditation and no
requirement for approval of new delivery methods as a substantive
change. The provisions requiring the Secretary to provide a timely
review of new program applications and to limit the Secretary's review
to the first competency-based education program at a given academic
level could also accelerate the process of establishing programs.
We then had to develop an assumption for how many of the additional
programs would be undergraduate or graduate programs for the purposes
of determining how many would potentially serve Pell recipients and
subsidized loan borrowers. Of the 512 programs described in the 2018
survey, approximately 17 percent were identified as graduate programs
and of the 588 programs described in the 2019 survey, 16 percent were
graduate programs. However, competency-based programs could be a good
fit for working adults wanting a self-paced program to earn a graduate
credential, so we assumed that that the distribution of undergraduate
versus graduate programs would change over time, especially among
smaller programs, as shown in Table 4.B.
Table 4.B--Undergraduate Share of Cumulative Additional Programs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Size of program 2021 (%) 2022 (%) 2023 (%) 2024 (%) 2025 (%) 2026 (%) 2027 (%) 2028 (%) 2029 (%) 2030 (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
25........................................ 83 78 70 65 60 55 50 50 45 45
75........................................ 83 78 70 65 60 60 60 60 60 60
150....................................... 83 78 70 65 60 60 60 60 60 60
350....................................... 83 80 75 75 75 70 70 70 70 70
750....................................... 83 80 80 80 75 75 75 75 75 75
1,500..................................... 83 83 80 80 78 78 75 75 75 75
--------------------------------------------------------------------------------------------------------------------------------------------------------
This resulted in an assumed number of additional undergraduate and
graduate students who may receive Pell Grants or take loans.
Table 4.C--Number of Additional Undergraduate Students
--------------------------------------------------------------------------------------------------------------------------------------------------------
Size of program 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
--------------------------------------------------------------------------------------------------------------------------------------------------------
25........................................ 498 1,404 1,663 2,438 3,375 3,781 4,063 4,688 4,725 5,063
75........................................ 747 1,170 2,100 2,925 4,050 4,950 6,075 6,750 7,875 9,000
150....................................... 1,245 2,106 2,730 3,900 6,075 6,750 8,100 10,125 10,800 11,520
350....................................... 2,324 4,200 6,563 7,875 9,975 12,250 14,700 17,150 19,600 22,050
750....................................... 1,743 4,800 8,400 12,000 16,875 21,375 27,000 31,500 36,563 39,375
1,500..................................... 1,245 4,980 8,400 12,000 16,380 21,060 22,500 28,125 31,500 33,750
-------------------------------------------------------------------------------------------------------------
Total................................. 7,802 18,660 29,855 41,138 56,730 70,166 82,438 98,338 111,063 120,758
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 4.D--Number of Additional Graduate Students
--------------------------------------------------------------------------------------------------------------------------------------------------------
Size of program 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
--------------------------------------------------------------------------------------------------------------------------------------------------------
25........................................ 100 400 710 1,310 2,250 3,090 4,060 4,690 5,780 6,190
75........................................ 150 330 900 1,580 2,700 3,300 4,050 4,500 5,250 6,000
150....................................... 260 590 1,170 2,100 4,050 4,500 5,400 6,750 7,200 7,680
350....................................... 480 1,050 2,190 2,630 3,330 5,250 6,300 7,350 8,400 9,450
750....................................... 360 1,200 2,100 3,000 5,630 7,130 9,000 10,500 12,190 13,130
1,500..................................... 260 1,020 2,100 3,000 4,620 5,940 7,500 9,380 10,500 11,250
-------------------------------------------------------------------------------------------------------------
Total................................. 1,610 4,590 9,170 13,620 22,580 29,210 36,310 43,170 49,320 53,700
--------------------------------------------------------------------------------------------------------------------------------------------------------
The next assumption involved the percent of those additional
students who would receive Pell Grants and would take out different
types of loans. For existing programs, the percent of undergraduates
with Pell Grants is approximately 39 percent overall,\59\ but this
varies significantly by institution and program type. One motivating
factor for competency-based programs is to expand opportunities for
non-traditional students, who typically qualify for Pell grants at
higher rates; in the 2018-19 award year 54% of dependent applicants had
a Pell eligible expected family contribution (EFC), while 85% of
independent applicants met that threshold. However, independent
applicants are often ineligible for Pell at relatively moderate
incomes--in AY 2018-19 88 percent of the eligible independent
applicants with dependents had family incomes under $50,000 and 96
percent of the eligible independent applicants without dependents had
family incomes under $25,000. If programs attract more students from
lower income brackets, Pell Grant costs will increase. On the other
hand, CBE and distance learning programs, including direct assessment
programs, may be more attractive to working adults, who may be less
likely to qualify for Pell grants given their earnings. Evidence is
mixed from existing programs, both because the data does not always
distinguish students in CBE programs from those in traditional programs
at the institution and the
[[Page 54801]]
percentage of students receiving Pell Grants does vary among
institutions with at least some CBE programs. In 2017-18 IPEDS student
financial assistance data, the percent of undergraduates receiving a
Pell Grant at some institutions known for at least some CBE programs
was 30 percent for Western Governor's University, 33 percent for
Sinclair Community College, 35 percent for Northern Arizona University,
43 percent for Capella University, 45 percent for the University of
Wisconsin Flex program, and 47 percent for Southern New Hampshire
University. Nonetheless, we assumed that the percentage of students who
may be eligible for Pell Grants increases to 50 percent, resulting in
the estimated number of additional Pell recipients shown in Table 4.E.
---------------------------------------------------------------------------
\59\ U.S. Department of Education, The FY 2021 Justification of
Appropriations Estimates to Congress Vol. II: Student Financial
Assistance, p. p-11. Available at www2.ed.gov/about/overview/budget/budget21/justifications/p-sfa.pdf.
Table 4.E--Estimated Additional Pell Recipients
--------------------------------------------------------------------------------------------------------------------------------------------------------
Size of program 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
--------------------------------------------------------------------------------------------------------------------------------------------------------
25........................................ 249 702 831 1,219 1,688 1,891 2,031 2,344 2,363 2,531
75........................................ 374 585 1,050 1,463 2,025 2,475 3,038 3,375 3,938 4,500
150....................................... 623 1,053 1,365 1,950 3,038 3,375 4,050 5,063 5,400 5,760
350....................................... 1,162 2,100 3,281 3,938 4,988 6,125 7,350 8,575 9,800 11,025
750....................................... 872 2,400 4,200 6,000 8,438 10,688 13,500 15,750 18,281 19,688
1,500..................................... 623 2,490 4,200 6,000 8,190 10,530 11,250 14,063 15,750 16,875
-------------------------------------------------------------------------------------------------------------
Total................................. 3,901 9,330 14,928 20,569 28,365 35,083 41,219 49,169 55,531 60,379
--------------------------------------------------------------------------------------------------------------------------------------------------------
We also assumed a distribution of Pell recipients based on expected
growth in programs by type and control of institutions, as shown in
Table 4.F. However, the share of programs reflected in Table 4.F does
not necessarily reflect the share of students at each type of
institution.
Table 4.F--Assumed Distribution of New Programs by Institutional
Category
------------------------------------------------------------------------
Share of
programs (%)
------------------------------------------------------------------------
4-year public........................................... 22
2-year public........................................... 30
4-year private.......................................... 15
2-year private.......................................... 8
Proprietary............................................. 25
------------------------------------------------------------------------
We recognize that competency-based and direct assessment programs,
in particular, are a relatively new and developing part of the
postsecondary market and it is not clear what institutions will pursue
opportunities in this area or how the size and scope of programs
offered will develop. Estimated program costs for Pell Grants range
from $30.1 billion in AY 2021-22 to $36.1 billion in AY 2030-31, with a
10-year total estimate of $329.0 billion. On average, the FY 2021
President's Budget projects a baseline increase in Pell Grant
recipients from 2021 to 2030 of approximately 150,000 annually. The
increase in Pell Grant recipients estimated due to these regulations
ranges from about 6 percent in 2022 to approximately 41 percent by 2030
of the projected annual increase that would otherwise occur. The
additional 60,379 recipients estimated for 2030 would account for under
1 percent of all estimated 8.25 million Pell recipients in 2030-31 and
result in an increase in program costs of approximately $1,397 million,
a 0.4 percent increase in estimated 10-year Pell Grant program costs of
$329.0 billion.
For the loan programs, we used the estimated split between graduate
and undergraduate programs to develop additional volume estimates by
loan type and student loan model risk-group. Table 4.G presents the
assumed borrowing rate by loan type of the additional students.
Table 4.G--Estimated Borrowing Rates by Loan Type
--------------------------------------------------------------------------------------------------------------------------------------------------------
2021 (%) 2022 (%) 2023 (%) 2024 (%) 2025 (%) 2026 (%) 2027 (%) 2028 (%) 2029 (%) 2030 (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Subsidized................................ 45 45 45 45 45 45 45 45 45 45
Unsubsidized.............................. 55 55 55 55 55 55 55 55 55 55
Parent PLUS............................... 10 10 10 10 10 10 10 10 10 10
Grad Unsubsidized......................... 35 35 35 35 35 35 35 35 35 35
Grad PLUS................................. 25 25 25 25 25 25 25 25 25 25
--------------------------------------------------------------------------------------------------------------------------------------------------------
We then used estimated average loans by loan type as projected for
the PB2021 estimates to estimate a total increase in volume by loan
type, as shown in Tables 4.H and 4.I.
Table 4.H--Estimated Average Amounts per Borrower by Loan Type
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average loan 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
--------------------------------------------------------------------------------------------------------------------------------------------------------
Subsidized................................ 4,240 4,240 4,240 4,250 4,250 4,260 4,260 4,270 4,280 4,290
Unsubsidized.............................. 4,630 4,660 4,700 4,720 4,760 4,780 4,820 4,830 4,860 4,880
PLUS...................................... 18,550 18,880 19,290 19,620 19,920 20,440 20,780 21,070 21,460 21,860
Grad Unsubsidized......................... 20,660 20,910 21,120 21,230 21,330 21,590 21,810 22,080 22,290 22,500
Grad PLUS................................. 25,990 26,760 27,510 28,130 28,640 29,330 30,100 30,870 31,760 32,660
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 54802]]
Table 4.I--Estimated Additional Loan Volume by Loan Type
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Additional loan volume 2021 2022 2023 2024 2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
Subsidized............................................... 14,886,216 35,603,280 56,963,340 78,675,469 108,496,125
Unsubsidized............................................. 19,867,793 47,825,580 77,175,175 106,792,950 148,519,140
Parent PLUS.............................................. 14,472,710 35,230,080 57,590,295 80,711,775 113,006,160
Grad Unsubsidized........................................ 11,641,910 33,591,915 67,784,640 101,203,410 168,570,990
Grad PLUS................................................ 10,460,975 30,707,100 63,066,675 95,782,650 161,672,800
--------------------------------------------------------------------------------------------------------------------------------------------------------
Additional loan volume 2026 2027 2028 2029 2030
--------------------------------------------------------------------------------------------------------------------------------------------------------
Subsidized............................................... 134,508,701 158,032,688 188,955,506 213,906,375 233,122,354
Unsubsidized............................................. 184,467,071 218,541,813 261,233,569 296,870,063 324,113,130
Parent PLUS.............................................. 143,419,815 171,305,125 207,197,113 238,340,125 263,975,895
Grad Unsubsidized........................................ 220,725,365 277,172,385 333,617,760 384,769,980 422,887,500
Grad PLUS................................................ 214,182,325 273,232,750 333,164,475 391,600,800 438,460,500
--------------------------------------------------------------------------------------------------------------------------------------------------------
Clearly, the large average borrowing amounts of graduate students
contribute significantly to the loan volume estimates, so a different
mix of programs or a different borrowing level would affect the
estimated impact of the regulations, so we adjust this factor in the
alternate scenarios to identify a range of possible impacts.
As subsidy rates differ by risk group and loan type, the Department
assumed a distribution of the undergraduate loans as shown in Table
4.J. This distribution is based on the PB2021 distribution of loan
volume by risk group, but reduces the share in the 4-year Junior/Senior
risk group by 10-15 percentage points and the 4-year Freshman/Sophomore
risk group by approximately 5 percentage points and increases the share
in the 2-year risk groups. All graduate loans are in the graduate risk
group.
Table 4.J--Assumed Distribution of Additional Loan Volumes by Risk Group
----------------------------------------------------------------------------------------------------------------
Unsubsidized Parent PLUS
Subsidized (%) (%) (%)
----------------------------------------------------------------------------------------------------------------
2-year Proprietary.............................................. 18 15 10
2-year Not-for-Profit........................................... 20 15 10
4-year Freshman/Sophomore....................................... 32 35 42
4-year Junior/Senior............................................ 30 35 38
----------------------------------------------------------------------------------------------------------------
The resulting additional loan volumes are generated by simple
multiplication of the estimated additional undergraduate students by
the percent borrowing and average amount per borrower by loan type, and
then by the distribution by risk group. The same process occurred for
graduate students.
As seen from the approximately $100 billion total annual loan
volume, even small changes would result in a significant amount of
additional loan transfers. We update loan volume estimates regularly;
for PB2021 the total non-consolidated loan volume estimates between
FY2021 and FY2030 range from $94 billion to $107 billion. The assumed
changes in loan volume would result in a small savings that represents
the net impact of offsetting subsidy changes by loan type and risk
group due to positive subsidy rates for Subsidized and Unsubsidized
Stafford loans and negative subsidy rates for PLUS Loans. Given the
higher loan amounts associated with PLUS loans and loans to graduate
students, the negative subsidy rates that range from -20.57 in 2021 to
-16.60 in 2028 generate significant savings ($-427 mn in outlays) to
offset the increased costs in other loan types. In Alternate 2, the
higher non-consolidated loan volume eventually results in higher
consolidated loan volume, that, combined with the other positive
subsidy categories results in a net cost in that scenario.
We do not assume any changes in subsidy rates from the potential
creation of new programs or the other changes reflected in the
regulations. We are uncertain to what extent and in what direction the
performance of programs that expand or develop under the regulations
will shift relative to current programs. As indicated previously,
several institutions known for competency-based programs have default
performance that is as good as or better than national averages, but it
is not clear that most programs that will be created in the future will
achieve that result. 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 cost estimates.
Table 5 summarizes the Pell and loan effects for the Main, Alt1,
and Alt2 scenarios over a 10-year period. Each column reflects a
scenario showing estimated changes to Pell Grants and Direct Loans
under those conditions. Therefore, the overall amounts reflect the sum
of outlay changes occurring under each scenario for Pell Grants and
Direct Loans when combined.
[[Page 54803]]
Table 5--Estimated Net Impact of Pell Grant and Loan Changes-- 2021-2030 Outlays
[$mns]
----------------------------------------------------------------------------------------------------------------
Main Alt 1 Alt 2
----------------------------------------------------------------------------------------------------------------
Pell Grants..................................................... 1,163 465 1,804
Loans........................................................... -54 -26 107
-----------------------------------------------
Overall..................................................... 1,109 439 1,911
----------------------------------------------------------------------------------------------------------------
The cost estimates presented above do not attempt to account for
several factors that could ultimately result in a different net budget
impact than the primary estimate presented in Table 5, including
potential cost differences among programs and relative repayment
performance. As discussed previously, one potential benefit of
competency based programs is reduced costs for students relative to
other programs. If a large share of students would have attended a
different program or completed faster, their Pell Grant or borrowing
may be lower than assumed in the PB2021 baseline. However, without more
significant evidence, we are not estimating any savings from that
possibility. Other provisions that we do not include in the budget
estimate because of limited information on the potential significance
include the treatment of out-of-class hours and the reasonable length
provisions related to clock hour programs.
As discussed previously, the uncertainty around several factors
affected by the changes led the Department to develop some alternative
scenarios for the potential impacts. The extent to which institutions
invest in making direct assessment programs work and try to enroll
additional students as opposed to converting some portion of existing
enrollments to this type of program is unclear. In the AIR survey about
competency-based education, approximately 40 percent of the 501
institutional respondents indicated CBE is in their institutions'
strategic plans in a ``minor way'' and 16 percent in a ``major
way''.\60\ It is also unclear if the size and type of existing CBE
programs is representative of future CBE programs, especially direct
assessment programs.
---------------------------------------------------------------------------
\60\ www.air.org/sites/default/files/National-Survey-of-Postsec-CBE-2018-AIR-Eduventures-Jan-2019.pdf.
---------------------------------------------------------------------------
In order to capture the effect of changing some of the key
assumptions associated with the primary budget estimate, the Department
developed the Alternate Scenarios presented in Table 6. Alternate 1 is
a low impact scenario that reduces the number of additional programs
and students and lowers the average amount borrowed and the percentage
of students eligible for Pell Grants. Alternate 2, the high impact
scenario, increases programs and student growth, the percentage of Pell
recipients, and amounts borrowed.
Table 6--Alternate Scenarios
------------------------------------------------------------------------
Alternate 1--low Alternate 2--high
impact impact
------------------------------------------------------------------------
Program Growth.............. Eliminate half the + 20 programs per
programs per cell cell for 3 smallest
for 3 smallest categories; +5
categories and one- programs per cell
third of programs for 3 largest size
in 3 largest size categories through
categories. 2025 and +10 per
cell for 2026 to
2029.
Undergraduate Program Share. +15 percent......... -15 percent.
Percent of Pell Recipients.. 30 percent.......... 75 percent.
Distribution of Pell 4-yr Public 10%..... 4-yr Public 30%.
Recipients by Institutional 4-yr Private 5%..... 4-yr Private 24%.
Category. 2-yr Public 38%..... 2-yr Public 20%.
2-yr Private 10%.... 2-yr Private 5%.
Proprietary 37%..... Proprietary 21%.
Borrowing Rates............. Subsidized -10%..... Subsidized +5%.
Unsubsidized -15%... Unsubsidized +10%.
Plus -5%............ Plus +5%.
Grad Unsub -15%..... Grad Unsub +10%.
Grad Plus -15%...... Grad Plus +10%.
Average Loan Amount......... Decrease 20 percent. Increase 10 percent.
Distribution by Risk Group 2-yr Prop -10%...... 2-yr Prop +15%.
(Subsidized and 2-yr NFP -5%........ 2-yr NFP +10%.
Unsubsidized). 4-yr FRSO +10%...... 4-yr FRSO -15%.
4-yr JRSR +5%....... 4-yr JRSR -10%.
GRAD No change...... GRAD No change.
Distribution by Risk Group 2-yr Prop -6%....... 2-yr Prop +12%.
(PLUS). 2-yr NFP -3%........ 2-yr NFP +8%.
4-yr FRSO +6%....... 4-yr FRSO -12%.
4-yr JRSR +3%....... 4-yr JRSR -8%.
GRAD No change...... GRAD No change.
------------------------------------------------------------------------
[[Page 54804]]
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 7--Accounting Statement: Classification of Estimated Expenditures
[in millions]
------------------------------------------------------------------------
------------------------------------------------------------------------
Category Benefits
------------------------------------------------------------------------
Clarification of terms and processes
related to establishing programs and
administering title IV aid to encourage
development of new programs............ Not Quantified
------------------------------------------------------------------------
Net Reduction in Paperwork Burden on 7% 3%
Institutions, primarily due to
elimination of Net Present Value
calculation related to the 90/10 rule..
------------------------------------------------------------------------
$-0.30 $-0.30
-------------------------------
Not Quantified
------------------------------------------------------------------------
Category Costs
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Increased transfers of Pell Grants...... 7% 3%
$101.2 $109.6
Increased transfers of loans to students $-6.9 $-6.1
in additional programs established, in
part, due to the regulations...........
------------------------------------------------------------------------
Alternatives Considered
Several proposals were considered on various sections of the
regulations as the negotiated rulemaking committee moved toward
consensus. Some key alternatives that were considered are summarized in
Table 76.
Table 8--Key Alternatives Considered
------------------------------------------------------------------------
Topic Alternative proposal Reasons rejected
------------------------------------------------------------------------
Definition of Credit Hour... Eliminate time-based Retain definition
requirements. for some
consistency across
higher education.
Subscription-based programs. Disbursement based Concern for
on attempted potential abuse
programs, not leading to paying
completed ones. title IV aid for
Include a competency same course twice.
in student's
enrollment status
more than once if
it overlapped more
than one
subscription period.
Written Arrangement......... No limitation on Goal was to
percentage of facilitate
program that could partnerships with
be provided by organizations using
written arrangement trade experts in
with ineligible workplace
entity. environment.
Committee found
sufficient
flexibility with
existing limit and
changes would call
into question
whether the
eligible
institution was
really offering the
program.
Program Length.............. Allow limiting Concern that changes
program length to would encourage
100 percent of the institutions to add
requirements in any hours beyond what
State and then 100 is necessary for
percent required student to become
for licensure in an employed.
adjoining State.
------------------------------------------------------------------------
Regulatory Flexibility Act Analysis
These final regulations are expected to have a significant impact
on institutions, many of which are considered to be small entities. The
analysis presented below evaluates the impact of the final regulations
on these small entities.
Description of the Reasons That Action by the Agency Is Being
Considered
The Department is regulating to reflect the development in
postsecondary education delivery models, including those facilitated by
technology and those that are based on the demonstration of
competencies rather than seat time, to help institutions understand
regulatory requirements for such programs and to facilitate further
innovations in such areas. The regulations provide or clarify
definitions of terms such as correspondence course, distance education,
subscription-based program, and clock hour, where the HEA provides no
definition.
The regulations send a signal to the higher education community
that the Department is committed to supporting educational innovations
such as subscription-based and direct assessment programs as well as
new technology-driven delivery mechanisms, such as adaptive learning.
The regulations also seek to clarify definitions used to differentiate
between distance education and correspondence courses, while at the
same time preserving student protections and title IV financial aid
distribution.
[[Page 54805]]
Succinct Statement of the Objectives of, and Legal Basis for, the
Regulations
These final regulations amend the Institutional Eligibility
regulations issued under the HEA, related to distance education and
innovation in 34 CFR part 600. In addition, these regulations amend the
Student Assistance General Provisions regulations issued under the HEA
in 34 CFR parts 602 and 668. The changes to part 600 are authorized by
20 U.S.C. 1001, 1002, 1003, 1088, 1091, 1094, 1099b, and 1099c. The
change to part 602, removing the definition of ``Distance education''
(now defined in part 600), is authorized by 20 U.S.C. 1099b while the
changes to part 668 are authorized by 20 U.S.C. 1001-1003, 1070a,
1070g, 1085, 1087b, 1087d, 1087e, 1088, 1091, 1092, 1094, 1099c, 1099c-
1, 1221e-3, and 3474.
Through the final regulations, we attempt to remove barriers that
institutions face when trying to create and implement new and
innovative ways of providing education to students, and also provide
sufficient flexibility to ensure that future innovations we cannot yet
anticipate have an opportunity to move forward.
The regulations are also designed to protect students and taxpayers
from unreasonable risks. Inadequate consumer information could result
in students enrolling in programs that will not help them meet their
goals. In addition, institutions adopting innovative methods of
educating students may expend taxpayer funds in ways that were not
contemplated by Congress or the Department, resulting in greater risk
to the taxpayers of waste, fraud, and abuse and to the institution of
undeserved negative program review findings. These regulations attempt
to limit risks to students and taxpayers resulting from innovation by
delegating various oversight functions to the bodies best suited to
conduct that oversight--States and accreditors. This delegation of
authority through the higher education regulatory triad entrusts
oversight of most consumer protections to States, assurance of academic
quality to accrediting agencies, and protection of taxpayer funds to
the Department.
Description of and, Where Feasible, an Estimate of the Number of Small
Entities to Which the Regulations Will Apply
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 8. We described this size
classification in the NPRM published in the Federal Register on July
31, 2018 for the 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 most
accurately reflects a common basis for determining size categories that
is linked to the provision of educational services.
Table 9 \61\--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
----------------------------------------------------------------------------------------------------------------
The regulations would provide needed clarity around title IV
eligibility for distance education, correspondence courses,
subscription-based programs, and direct assessment programs. They would
also provide greater clarity regarding how the Department determines
whether a program is of reasonable length. The effect on small entities
would vary by the extent they currently participate in such programs or
that they choose to do so going forward. Introducing competency-based
programs in areas with strong demand could be an opportunity for some
small entities to maintain or expand their business. On the other hand,
small entities could be vulnerable to competition from other
institutions, large or small, that are capturing an increasing share of
the postsecondary market with distance or competency-based programs.
Developing and implementing new programs and delivery models, and
especially those that require sophisticated technology, may be
impractical for small institutions that cannot distribute the cost
among a population of enough size to result in favorable return-on-
investment. We expect that the development of the first direct
assessment program at an institution would be a multi-stage and multi-
year process involving choosing the subject areas appropriate for this
model, developing competencies, modifying course materials and teaching
approaches, reaching out to potential future employers to build
acceptance of the credential, and getting approval from accreditors and
the Department, and recruiting students. The Department does not have a
detailed understanding of the costs and timeframe involved with
establishing these programs, especially for small entities and we
welcome such information. Small institutions may be more inclined to
rely on consortia arrangements with other, larger institutions, to make
distance learning and competency-based education available to their
students. The regulations would remove many barriers to innovation that
currently restrain institutions, including small ones, and may
accelerate innovations, but these innovations were likely to take place
in postsecondary education anyway given the call for new, more
efficient delivery models for the growing population of non-traditional
students and the likelihood that adults will be engaged in
postsecondary education throughout their lifetime.
---------------------------------------------------------------------------
\61\ U.S. Department of Education analysis of IPEDs 2015-16
enrollment data.
---------------------------------------------------------------------------
[[Page 54806]]
Description of the Projected Reporting, Recordkeeping, and Other
Compliance Requirements of the Regulations, Including an Estimate of
the Classes of Small Entities That Will Be Subject to the Requirement
and the Type of Professional Skills Necessary for Preparation of the
Report or Record
The Department provides additional detail related to burden
estimates in the Paperwork Reduction Act section of this final rule.
Overall, the Department estimates $300,288 in reduced paperwork burden
associated with the elimination of the net present value calculation
related to the 90/10 rule. This affects proprietary institutions, of
which approximately 85 percent are considered small according to Table
8 (2,572/3,021), so most of that burden reduction ($300,288*85 percent
= $255,245) will be enjoyed by small entities. The Department is unable
to estimate the effect of this change on the profits of institutions,
including those considered to be small entities. No mechanism exists to
track profits at institutions. The only way to obtain data on profits
would be through a manual review of financial statements submitted by
each institution. Even with that information, the effect of this change
on profits could not be estimated with any degree of accuracy. First,
it would be necessary to determine which schools used (NPV), which was
optional per our regulations. Second, it would have to be known, for
the period that an institution used NPV, what revenue from
institutional loans would have been had that revenue included only loan
payments received by the institution during the fiscal year. Also,
despite the estimated cost savings due to paperwork burden reduction,
the full time equivalent of those employees who calculated NPV most
likely remains a salary expense. Finally, any savings identified that
would benefit profits would have to be offset by the corresponding
reduction in revenue resulting from no longer being able to apply NPV.
Regarding overall economic impact, it would be negligible given that
total savings of $255,245 is spread over 85% of the nearly 3,000
participating for-profit institutions. There are also some small
increases in burden related to reporting about direct assessment
programs that is expected to increase burden on small entities by
approximately 10 hours, a small increase for those small institutions
that choose to participate in direct assessment programs or written
arrangements.
Identification, to the Extent Practicable, of All Relevant Federal
Regulations That May Duplicate, Overlap, or Conflict With the
Regulations
The regulations are unlikely to conflict with or duplicate existing
Federal regulations.
Alternatives Considered
As described above, the Department participated in negotiated
rulemaking when developing the regulations and considered several
options for some of the provisions. These included: (1) Eliminating
time-based requirements for credit hours; (2) no limitation on the
percentage of a program that could be offered through written
arrangement with an ineligible entity; (3) allowing limiting program
length to 100 percent of the requirements in any State and then 100
percent required for licensure in an adjoining State, (4) disbursing
funds in subscription-based programs based on attempted competencies,
not completed ones; and (5) including a competency that overlaps
subscription periods in a student's enrollment status more than once.
In proposing to remove limits on the portion of a program that may be
offered through a written arrangement with an ineligible entity, the
Department sought to make a wider range of occupationally-related
educational resources available to students than could be reasonably
provided by the institutions they attend. It was the Department's
belief that this change would particularly benefit smaller institutions
whose resources are typically more limited than those of larger
entities.
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.
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.
Section 600.21--Updating Application Information
Requirements: The regulations in Sec. 600.21 require the
institution to only report the addition of a second or subsequent
direct assessment program without the review and approval of the
Department when it previously has such approval. The regulations also
require an institution to report the establishment of a written
arrangement between the eligible institution and an ineligible
institution or organization in which the ineligible institution or
organization will provide more than 25 percent of a program. We also
intend to request that institutions report additional information
related to the use of asynchronous distance education in clock hour
programs and would incorporate this change in the Department's system
for reporting information related to the eligibility of academic
programs. We would meet all applicable Paperwork Reduction Act of 1995
(44 U.S.C. 3501-3520) requirements before collecting this information.
Burden Calculation: We believe that the reporting of written
arrangements will impose burden on institutions. We estimate that 36
institutions will need to report such activities. We anticipate that an
institution will require an average of .5 hours (30 minutes) to report
such activities for a total estimated burden of 18 hours under OMB
Control Number 1845-NEW1.
We estimate that there are 12 proprietary institutions that will be
required to report this information for 6 burden hours (12 institutions
x .5 hours = 6 hours). We estimate that there are 11 private
institutions that will be required to report this information for 5
burden hours (11 institutions x .5 hours = 5 hours). We estimate that
there are 13 public institutions that will be required to report this
information for 7 burden hours (13 institutions x .5 hours = 7 hours).
[[Page 54807]]
600.21--Updating Application Information--1845-NEW1
----------------------------------------------------------------------------------------------------------------
Time factor
Institution type Respondents Responses (hours) Burden hours Cost $106.94
----------------------------------------------------------------------------------------------------------------
Proprietary..................... 12 12 .5 6 $642
Private......................... 11 11 .5 5 538
Public.......................... 13 13 .5 7 749
-------------------------------------------------------------------------------
Total....................... 36 36 .............. 18 1,926
----------------------------------------------------------------------------------------------------------------
Section 668.5--Written Arrangements To Provide Education Programs
Requirements: The proposed regulations in Sec. 668.5 which
required an eligible institution to demonstrate how an ineligible
institution has the experience in the delivery and assessment of the
program or portions thereof that the ineligible institution would be
contracted to deliver under the terms of the written arrangement has
been removed from the final rule.
Burden Calculation: The proposed burden of 120 hours in the
information collection 1845-NEW2 is being withdrawn.
Section 668.28--Non-Title IV Revenue (90/10)
Requirements: The regulations in Sec. 668.28 remove the Net
Present Value calculation currently in the regulations.
Burden Calculation: This regulatory language change will remove
burden from the institution. Based on the explanation provided in the
preamble, the regulations in Sec. 668.28(b) no longer applies to the
calculation of the treatment of revenue. Therefore, the current burden
applied under OMB Control Number 1845-0096 will be eliminated. Upon the
effective date of these regulation, the currently assessed 2,808 burden
hours will be discontinued.
Section 668.28--Non-Title IV Revenue (90/10)--1845-0096
----------------------------------------------------------------------------------------------------------------
Time factor Cost savings
Institution type Respondents Responses (hours) Burden hours $106.94/hour
----------------------------------------------------------------------------------------------------------------
Proprietary..................... -936 -936 2 -1,872 $-200,192
Proprietary..................... -936 -936 1 -936 -100,096
-------------------------------------------------------------------------------
Total....................... -1,872 -1,872 .............. -2,808 -300,288
----------------------------------------------------------------------------------------------------------------
The estimated cost to institutions is $53.47 per hour based on the
2018 mean hourly information from the Bureau of Labor Statistics
Occupational Employment Statistics for Postsecondary Education
Administrators \62\ x 2 to account for benefits and expenses for a
total per hour cost of $106.94. As 85 percent of for-profit
institutions are considered to be small entities, most of the reduction
and corresponding cost savings will accrue to those institutions.
---------------------------------------------------------------------------
\62\ www.bls.gov/oes/current/oes119033.htm.
----------------------------------------------------------------------------------------------------------------
OMB control No. &
Regulatory section Information collection estimated burden Estimated costs
(change in burden) $106.94/hour
----------------------------------------------------------------------------------------------------------------
Sec. 600.21 Updating application The regulations in Sec. 1845-NEW1--18 hours.... $1,926
information. 600.21 require the
institution to only report
the addition of a second or
subsequent direct assessment
program without the review
and approval of the
Department when it
previously been awarded such
approval. The regulations
also require an institution
to report the establishment
of a written arrangement
between the eligible
institution and an
ineligible institution or
organization in which the
ineligible institution or
organization would provide
more than 25 percent of a
program.
Sec. 668.5--Written arrangements to The regulations in Sec. 1845-NEW2--0 hours..... 0
provide education programs. 668.5 requiring the eligible
institution to demonstrate
how the ineligible
institution has the
experience in the delivery
and assessment of the
program or portions thereof
that the ineligible
institution would be
contracted to deliver under
the terms of the written
arrangement has been removed
from the final rule and this
estimated burden is
withdrawn.
Sec. 668.28 Non-title IV revenue The regulations in Sec. -2,808................. (300,288)
(90/10). 668.28 removes the Net
Present Value calculation
currently in the regulations.
----------------------------------------------------------------------------------------------------------------
[[Page 54808]]
Collection of Information
The total burden hours and change in the burden hours associated
with each OMB control number affected by the regulations follows:
----------------------------------------------------------------------------------------------------------------
OMB control No. Total burden hours Change in burden hours
----------------------------------------------------------------------------------------------------------------
1845-NEW1..................................................... + 18 + 18
1845-NEW2..................................................... 0 0
1845-0096..................................................... -2,808 -2,808
-------------------------------------------------
Total..................................................... -2,790 -2,790
----------------------------------------------------------------------------------------------------------------
Intergovernmental Review
These regulations are not subject to Executive Order 12372 and the
regulations in 34 CFR part 79.
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 parts 600 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 the person 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, Grant programs-education, Loan programs-
education, Reporting and recordkeeping requirements, Student aid,
Vocational education.
34 CFR Part 602
Colleges and universities, Vocational education.
34 CFR Part 668
Administrative practice and procedure, Colleges and universities,
Consumer protection, Grant programs-education, Loan programs-education,
Reporting and recordkeeping requirements, Student aid, Vocational
education.
Betsy DeVos,
Secretary of Education.
For the reasons discussed in the preamble, the Secretary amends
parts 600, 602, and 668 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 ``Academic
engagement''.
0
b. Revising the definitions of ``Clock hour'', ``Correspondence
course'', ``Credit hour'', ``Distance education'', and ``Incarcerated
student''.
0
c. Adding, in alphabetical order, a definition for ``Juvenile justice
facility''.
0
d. Revising the definition ``Nonprofit institution''.
0
e. Removing the authority citation at the end of the section.
The additions and revisions read as follows:
Sec. 600.2 Definitions.
* * * * *
Academic engagement: Active participation by a student in an
instructional activity related to the student's course of study that--
(1) Is defined by the institution in accordance with any applicable
requirements of its State or accrediting agency;
(2) Includes, but is not limited to--
(i) Attending a synchronous class, lecture, recitation, or field or
laboratory activity, physically or online, where there is an
opportunity for interaction between the instructor and students;
(ii) Submitting an academic assignment;
(iii) Taking an assessment or an exam;
(iv) Participating in an interactive tutorial, webinar, or other
interactive computer-assisted instruction;
(v) Participating in a study group, group project, or an online
discussion that is assigned by the institution; or
(vi) Interacting with an instructor about academic matters; and
(3) Does not include, for example--
(i) Living in institutional housing;
(ii) Participating in the institution's meal plan;
(iii) Logging into an online class or tutorial without any further
participation; or
(iv) Participating in academic counseling or advisement.
* * * * *
Clock hour: (1) A period of time consisting of--
(i) A 50- to 60-minute class, lecture, or recitation in a 60-minute
period;
(ii) A 50- to 60-minute faculty-supervised laboratory, shop
training, or internship in a 60-minute period;
(iii) Sixty minutes of preparation in a correspondence course; or
[[Page 54809]]
(iv) In distance education, 50 to 60 minutes in a 60-minute period
of attendance in--
(A) A synchronous or asynchronous class, lecture, or recitation
where there is opportunity for direct interaction between the
instructor and students; or
(B) An asynchronous learning activity involving academic engagement
in which the student interacts with technology that can monitor and
document the amount of time that the student participates in the
activity.
(2) A clock hour in a distance education program does not meet the
requirements of this definition if it does not meet all accrediting
agency and State requirements or if it exceeds an agency's or State's
restrictions on the number of clock hours in a program that may be
offered through distance education.
(3) An institution must be capable of monitoring a student's
attendance in 50 out of 60 minutes for each clock hour under this
definition.
Correspondence course: (1) A course provided by an institution
under which the institution provides instructional materials, by mail
or electronic transmission, including examinations on the materials, to
students who are separated from the instructors. Interaction between
instructors and students in a correspondence course is limited, is not
regular and substantive, and is primarily initiated by the student.
(2) If a course is part correspondence and part residential
training, the Secretary considers the course to be a correspondence
course.
(3) A correspondence course is not distance education.
Credit hour: Except as provided in 34 CFR 668.8(k) and (l), a
credit hour is an amount of student work defined by an institution, as
approved by the institution's accrediting agency or State approval
agency, that is consistent with commonly accepted practice in
postsecondary education and that--
(1) Reasonably approximates not less than--
(i) One hour of classroom or direct faculty instruction and a
minimum of two hours of out-of-class student work each week for
approximately fifteen weeks for one semester or trimester hour of
credit, or ten to twelve weeks for one quarter hour of credit, or the
equivalent amount of work over a different period of time; or
(ii) At least an equivalent amount of work as required in paragraph
(1)(i) of this definition for other academic activities as established
by the institution, including laboratory work, internships, practica,
studio work, and other academic work leading to the award of credit
hours; and
(2) Permits an institution, in determining the amount of work
associated with a credit hour, to take into account a variety of
delivery methods, measurements of student work, academic calendars,
disciplines, and degree levels.
* * * * *
Distance education: (1) Education that uses one or more of the
technologies listed in paragraphs (2)(i) through (iv) of this
definition to deliver instruction to students who are separated from
the instructor or instructors and to support regular and substantive
interaction between the students and the instructor or instructors,
either synchronously or asynchronously.
(2) The technologies that may be used to offer distance education
include--
(i) The internet;
(ii) One-way and two-way transmissions through open broadcast,
closed circuit, cable, microwave, broadband lines, fiber optics,
satellite, or wireless communications devices;
(iii) Audio conference; or
(iv) Other media used in a course in conjunction with any of the
technologies listed in paragraphs (2)(i) through (iii) of this
definition.
(3) For purposes of this definition, an instructor is an individual
responsible for delivering course content and who meets the
qualifications for instruction established by an institution's
accrediting agency.
(4) For purposes of this definition, substantive interaction is
engaging students in teaching, learning, and assessment, consistent
with the content under discussion, and also includes at least two of
the following--
(i) Providing direct instruction;
(ii) Assessing or providing feedback on a student's coursework;
(iii) Providing information or responding to questions about the
content of a course or competency;
(iv) Facilitating a group discussion regarding the content of a
course or competency; or
(v) Other instructional activities approved by the institution's or
program's accrediting agency.
(5) An institution ensures regular interaction between a student
and an instructor or instructors by, prior to the student's completion
of a course or competency--
(i) Providing the opportunity for substantive interactions with the
student on a predictable and scheduled basis commensurate with the
length of time and the amount of content in the course or competency;
and
(ii) Monitoring the student's academic engagement and success and
ensuring that an instructor is responsible for promptly and proactively
engaging in substantive interaction with the student when needed on the
basis of such monitoring, or upon request by the student.
* * * * *
Incarcerated student: A student who is serving a criminal sentence
in a Federal, State, or local penitentiary, prison, jail, reformatory,
work farm, juvenile justice facility, or other similar correctional
institution. A student is not considered incarcerated if that student
is in a half-way house or home detention or is sentenced to serve only
weekends. For purposes of Pell Grant eligibility under 34 CFR
668.32(c)(2)(ii), a student who is incarcerated in a juvenile justice
facility, or in a local or county facility, is not considered to be
incarcerated in a Federal or State penal institution, regardless of
which governmental entity operates or has jurisdiction over the
facility, including the Federal Government or a State, but is
considered incarcerated for the purposes of determining costs of
attendance under section 472 of the HEA in determining eligibility for
and the amount of the Pell Grant.
Juvenile justice facility: A public or private residential facility
that is operated primarily for the care and rehabilitation of youth
who, under State juvenile justice laws--
(1) Are accused of committing a delinquent act;
(2) Have been adjudicated delinquent; or
(3) Are determined to be in need of supervision.
* * * * *
Nonprofit institution: An institution that--
(1)(i) Is owned and operated by one of more nonprofit corporations
or associations, no part of the net earnings of which benefits any
private shareholder or individual;
(ii) Is legally authorized to operate as a nonprofit organization
by each State in which it is physically located; and
(iii) Is determined by the U.S. Internal Revenue Service to be an
organization to which contributions are tax-deductible in accordance
with section 501(c)(3) of the Internal Revenue Code (26 U.S.C.
501(c)(3)); or
(2) For a foreign institution--
(i) An institution that is owned and operated only by one or more
nonprofit corporations or associations; and
(ii)(A) If a recognized tax authority of the institution's home
country is recognized by the Secretary for purposes
[[Page 54810]]
of making determinations of an institution's nonprofit status for title
IV purposes, is determined by that tax authority to be a nonprofit
educational institution; or
(B) If no recognized tax authority of the institution's home
country is recognized by the Secretary for purposes of making
determinations of an institution's nonprofit status for title IV
purposes, the foreign institution demonstrates to the satisfaction of
the Secretary that it is a nonprofit educational institution.
* * * * *
0
3. Section 600.7 is amended by:
0
a. Redesignating paragraph (b)(2) as (b)(3).
0
b. Adding a new paragraph (b)(2).
0
c. Removing the authority citation at the end of the section.
The addition reads as follows:
Sec. 600.7 Conditions of institutional eligibility.
* * * * *
(b) * * *
(2) Calculating the number of correspondence students. For purposes
of paragraph (a)(1)(ii) of this section, a student is considered
``enrolled in correspondence courses'' if the student's enrollment in
correspondence courses constituted more than 50 percent of the courses
in which the student enrolled during an award year.
* * * * *
0
4. Section 600.10 is amended by revising paragraph (c)(1)(iii) and
removing the authority citation at the end of the section to read as
follows:
Sec. 600.10 Date, extent, duration, and consequence of eligibility.
* * * * *
(c) * * *
(1) * * *
(iii) For a first direct assessment program under 34 CFR 668.10,
the first direct assessment program offered at each credential level,
and for a comprehensive transition and postsecondary program under 34
CFR 668.232, obtain the Secretary's approval.
* * * * *
0
5. Section 600.20 is revised to read as follows:
Sec. 600.20 Notice and application procedures for establishing,
reestablishing, maintaining, or expanding institutional eligibility and
certification.
(a) Initial eligibility application. (1) An institution that wishes
to establish its eligibility to participate in any HEA program must
submit an application to the Secretary for a determination that it
qualifies as an eligible institution under this part. The Secretary
must ensure prompt action is taken by the Department on any materially
complete application required under this section.
(2) If the institution also wishes to be certified to participate
in the title IV, HEA programs, it must indicate that intent on the
application, and submit all the documentation indicated on the
application to enable the Secretary to determine that it satisfies the
relevant certification requirements contained in 34 CFR part 668,
subparts B and L.
(3) A freestanding foreign graduate medical school, or a foreign
institution that includes a foreign graduate medical school, must
include in its application to participate--
(i)(A) A list of all medical school educational sites and where
they are located, including all sites at which its students receive
clinical training, except those clinical training sites that are not
used regularly, but instead are chosen by individual students who take
no more than two electives at the location for no more than a total of
eight weeks; and
(B) The type of clinical training (core, required clinical
rotation, not required clinical rotation) offered at each site listed
on the application in accordance with paragraph (a)(3)(i)(A) of this
section; and
(ii) Whether the school offers--
(A) Only post-baccalaureate/equivalent medical programs, as defined
in Sec. 600.52;
(B) Other types of programs that lead to employment as a doctor of
osteopathic medicine or doctor of medicine; or
(C) Both; and
(iii) Copies of the formal affiliation agreements with hospitals or
clinics providing all or a portion of a clinical training program
required under Sec. 600.55(e)(1).
(b) Reapplication. (1) A currently designated eligible institution
that is not participating in the title IV, HEA programs must apply to
the Secretary for a determination that the institution continues to
meet the requirements in this part if the Secretary requests the
institution to reapply. If the institution chooses to be certified to
participate in the title IV, HEA programs, it must submit an
application to the Secretary and must submit all the supporting
documentation indicated on the application to enable the Secretary to
determine that it satisfies the relevant certification requirements
contained in subparts B and L of 34 CFR part 668.
(2)(i) A currently designated eligible institution that
participates in the title IV, HEA programs must apply to the Secretary
for a determination that the institution continues to meet the
requirements in this part and in 34 CFR part 668 if the institution
chooses to--
(A) Continue to participate in the title IV, HEA programs beyond
the scheduled expiration of the institution's current eligibility and
certification designation;
(B) Reestablish eligibility and certification as a private
nonprofit, private for-profit, or public institution following a change
in ownership that results in a change in control as described in Sec.
600.31; or
(C) Reestablish eligibility and certification after the institution
changes its status as a proprietary, nonprofit, or public institution.
(ii) The Secretary must ensure prompt action is taken by the
Department on any materially complete application required under
paragraph (a)(2)(i) of this section.
(3) A freestanding foreign graduate medical school, or a foreign
institution that includes a foreign graduate medical school, must
include in its reapplication to participate--
(i)(A) A list of all of the foreign graduate medical school's
educational sites and where they are located, including all sites at
which its students receive clinical training, except those clinical
training sites that are not used regularly, but instead are chosen by
individual students who take no more than two electives at the location
for no more than a total of eight weeks; and
(B) The type of clinical training (core, required clinical
rotation, not required clinical rotation) offered at each site listed
on the application in accordance with paragraph (b)(3)(i)(A) of this
section; and
(ii) Whether the school offers--
(A) Only post-baccalaureate/equivalent medical programs, as defined
in Sec. 600.52;
(B) Other types of programs that lead to employment as a doctor of
osteopathic medicine or doctor of medicine; or
(C) Both; and
(iii) Copies of the formal affiliation agreements with hospitals or
clinics providing all or a portion of a clinical training program
required under Sec. 600.55(e)(1).
(c) Application to expand eligibility. A currently designated
eligible institution that wishes to expand the scope of its eligibility
and certification and disburse title IV, HEA Program funds to students
enrolled in that expanded scope must apply to the Secretary and wait
for approval to--
(1) Add an educational program or a location at which the
institution offers or will offer 50 percent or more of an educational
program if one of the
[[Page 54811]]
following conditions applies, otherwise it must report to the Secretary
under Sec. 600.21:
(i) The institution participates in the title IV, HEA programs
under a provisional certification, as provided in 34 CFR 668.13.
(ii) The institution receives title IV, HEA program funds under the
reimbursement or cash monitoring payment method, as provided in 34 CFR
part 668, subpart K.
(iii) The institution acquires the assets of another institution
that provided educational programs at that location during the
preceding year and participated in the title IV, HEA programs during
that year.
(iv) The institution would be subject to a loss of eligibility
under 34 CFR 668.188 if it adds that location.
(v) The Secretary notifies, or has notified, the institution that
it must apply for approval of an additional educational program or a
location under Sec. 600.10(c).
(2) Increase its level of program offering (e.g., adding graduate
degree programs when it previously offered only baccalaureate degree
programs);
(3) Add an educational program if the institution is required to
apply to the Secretary for approval under Sec. 600.10(c);
(4) Add a branch campus at a location that is not currently
included in the institution's eligibility and certification
designation;
(5) For a freestanding foreign graduate medical school, or a
foreign institution that includes a foreign graduate medical school,
add a location that offers all or a portion of the foreign graduate
medical school's core clinical training or required clinical rotations,
except for those locations that are included in the accreditation of a
medical program accredited by the Liaison Committee on Medical
Education (LCME) or the American Osteopathic Association (AOA); or
(6) Convert an eligible location to a branch campus.
(d) Notice and application--(1) Notice and application procedures.
(i) To satisfy the requirements of paragraphs (a), (b), and (c) of this
section, an institution must notify the Secretary of its intent to
offer an additional educational program, or provide an application to
expand its eligibility, in a format prescribed by the Secretary and
provide all the information and documentation requested by the
Secretary to make a determination of its eligibility and certification.
(ii)(A) An institution that notifies the Secretary of its intent to
offer an educational program under paragraph (c)(3) of this section
must ensure that the Secretary receives the notice described in
paragraph (d)(2) of this section at least 90 days before the first day
of class of the educational program.
(B) If an institution does not provide timely notice in accordance
with paragraph (d)(1)(ii)(A) of this section, the institution must
obtain approval of the additional educational program from the
Secretary for title IV, HEA program purposes.
(C) If an additional educational program is required to be approved
by the Secretary for title IV, HEA program purposes under paragraph
(d)(1)(ii)(B) of this section, the Secretary may grant approval, or
request further information prior to making a determination of whether
to approve or deny the additional educational program.
(D) When reviewing an application under paragraph (d)(1)(ii)(C) of
this section, the Secretary will take into consideration the following:
(1) The institution's demonstrated financial responsibility and
administrative capability in operating its existing programs.
(2) Whether the additional educational program is one of several
new programs that will replace similar programs currently provided by
the institution, as opposed to supplementing or expanding the current
programs provided by the institution.
(3) Whether the number of additional educational programs being
added is inconsistent with the institution's historic program
offerings, growth, and operations.
(4) Whether the process and determination by the institution to
offer an additional educational program that leads to gainful
employment in a recognized occupation is sufficient.
(E)(1) If the Secretary denies an application from an institution
to offer an additional educational program, the denial will be based on
the factors described in paragraphs (d)(1)(ii)(D)(2) and (3) of this
section, and the Secretary will explain in the denial how the
institution failed to demonstrate that the program is likely to lead to
gainful employment in a recognized occupation.
(2) If the Secretary denies the institution's application to add an
additional educational program, the Secretary will permit the
institution to respond to the reasons for the denial and request
reconsideration of the denial.
(2) Notice format. An institution that notifies the Secretary of
its intent to offer an additional educational program under paragraph
(c)(3) of this section must at a minimum--
(i) Describe in the notice how the institution determined the need
for the program and how the program was designed to meet local market
needs, or for an online program, regional or national market needs.
This description must contain any wage analysis the institution may
have performed, including any consideration of Bureau of Labor
Statistics data related to the program;
(ii) Describe in the notice how the program was reviewed or
approved by, or developed in conjunction with, business advisory
committees, program integrity boards, public or private oversight or
regulatory agencies, and businesses that would likely employ graduates
of the program;
(iii) Submit documentation that the program has been approved by
its accrediting agency or is otherwise included in the institution's
accreditation by its accrediting agency, or comparable documentation if
the institution is a public postsecondary vocational institution
approved by a recognized State agency for the approval of public
postsecondary vocational education in lieu of accreditation; and
(iv) Provide the date of the first day of class of the new program.
(e) Secretary's response to applications. (1) If the Secretary
receives an application under paragraph (a) or (b)(1) of this section,
the Secretary notifies the institution--
(i) Whether the applicant institution qualifies in whole or in part
as an eligible institution under the appropriate provisions in
Sec. Sec. 600.4 through 600.7; and
(ii) Of the locations and educational programs that qualify as the
eligible institution if only a portion of the applicant qualifies as an
eligible institution.
(2) If the Secretary receives an application under paragraph (a) or
(b) of this section and that institution applies to participate in the
title IV, HEA programs, the Secretary notifies the institution--
(i) Whether the institution is certified to participate in those
programs;
(ii) Of the title IV, HEA programs in which it is eligible to
participate;
(iii) Of the title IV, HEA programs in which it is eligible to
apply for funds;
(iv) Of the effective date of its eligibility to participate in
those programs; and
(v) Of the conditions under which it may participate in those
programs.
(3) If the Secretary receives an application under paragraph (b)(2)
of this section, the Secretary notifies the institution whether it
continues to be certified, or whether it reestablished its
[[Page 54812]]
eligibility and certification to participate in the title IV, HEA
programs and the scope of such approval.
(4) If the Secretary receives an application under paragraph (c)(1)
of this section for an additional location, the Secretary notifies the
institution whether the location is eligible or ineligible to
participate in the title IV, HEA programs, and the date of eligibility
if the location is determined eligible.
(5) If the Secretary receives an application under paragraph (c)(2)
of this section for an increase in the level of program offering, or
for an additional educational program under paragraph (c)(3) of this
section, the Secretary notifies the institution whether the program
qualifies as an eligible program, and if the program qualifies, the
date of eligibility.
(6) If the Secretary receives an application under paragraph (c)(4)
or (5) of this section to have a branch campus certified to participate
in the title IV, HEA programs as a branch campus, the Secretary
notifies the institution whether that branch campus is certified to
participate and the date that the branch campus is eligible to begin
participation.
0
6. Amend Sec. 600.21 by revising paragraph (a)(11) and adding
paragraphs (a)(12) and (13) and removing the authority citation at the
end of the section to read as follows:
Sec. 600.21 Updating application information.
(a) * * *
(11) For any program that is required to provide training that
prepares a student for gainful employment in a recognized occupation--
(i) Establishing the eligibility or reestablishing the eligibility
of the program;
(ii) Discontinuing the program's eligibility;
(iii) Ceasing to provide the program for at least 12 consecutive
months;
(iv) Losing program eligibility under Sec. 600.40; or
(v) Changing the program's name, CIP code or credential level.
(12) Its addition of a second or subsequent direct assessment
program.
(13) Its establishment of a written arrangement for an ineligible
institution or organization to provide more than 25 percent of a
program pursuant to 34 CFR 668.5(c).
* * * * *
0
7. Section 600.52 is amended by revising the definition of ``Foreign
institution'' and removing the authority citation at the end of the
section to read as follows:
Sec. 600.52 Definitions.
* * * * *
Foreign institution: (1) For the purposes of students who receive
title IV aid, an institution that--
(i) Is not located in the United States;
(ii) Except as provided with respect to clinical training offered
under Sec. 600.55(h)(1), Sec. 600.56(b), or Sec. 600.57(a)(2)--
(A) Has no U.S. location;
(B) Has no written arrangements, within the meaning of 34 CFR
668.5, with institutions or organizations located in the United States
for those institutions or organizations to provide a portion of an
eligible program, as defined under 34 CFR 668.8, except for written
arrangements for no more than 25 percent of the courses required by the
program to be provided by eligible institutions located in the United
States; and
(C) Does not permit students to complete an eligible program by
enrolling in courses offered in the United States, except that it may
permit students to complete up to 25 percent of the program by--
(1) Enrolling in the coursework, research, work, or special studies
offered by an eligible institution in the United States; or
(2) Participating in an internship or externship provided by an
ineligible organization as described in 34 CFR 668.5(h)(2);
(iii) Is legally authorized by the education ministry, council, or
equivalent agency of the country in which the institution is located to
provide an educational program beyond the secondary education level;
and
(iv) Awards degrees, certificates, or other recognized educational
credentials in accordance with Sec. 600.54(e) that are officially
recognized by the country in which the institution is located.
(2) Notwithstanding paragraph (1)(ii)(C) of this definition,
independent research done by an individual student in the United States
for not more than one academic year is permitted, if it is conducted
during the dissertation phase of a doctoral program under the guidance
of faculty, and the research is performed only in a facility in the
United States.
(3) If the educational enterprise enrolls students both within the
United States and outside the United States, and the number of students
who would be eligible to receive title IV, HEA program funds attending
locations outside the United States is at least twice the number of
students enrolled within the United States, the locations outside the
United States must apply to participate as one or more foreign
institutions and must meet all requirements of paragraph (1) of this
definition, and the other requirements of this part. For the purposes
of this paragraph (3), an educational enterprise consists of two or
more locations offering all or part of an educational program that are
directly or indirectly under common ownership.
* * * * *
0
8. Section 600.54 is amended by revising paragraph (c) and removing the
authority citation at the end of the section to read as follows:
Sec. 600.54 Criteria for determining whether a foreign institution is
eligible to apply to participate in the Direct Loan Program.
* * * * *
(c)(1) Notwithstanding 34 CFR 668.5, written arrangements between
an eligible foreign institution and an ineligible entity are limited to
those under which--
(i) The ineligible entity is an institution that meets the
requirements in paragraphs (1)(iii) and (iv) of the definition of
``foreign institution'' in Sec. 600.52; and
(ii) The ineligible foreign institution provides 25 percent or less
of the educational program.
(2) For the purpose of this paragraph (c), written arrangements do
not include affiliation agreements for the provision of clinical
training for foreign medical, veterinary, and nursing schools.
* * * * *
PART 602--THE SECRETARY'S RECOGNITION OF ACCREDITING AGENCIES
0
9. The authority citation for part 602 continues to read as follows:
Authority: 20 U.S.C. 1099b, unless otherwise noted.
0
10. Section 602.3 is amended by:
0
a. Adding periods at the ends of paragraphs (a)(1) through (14).
0
b. Redesignating paragraphs (a)(6) through (14) as paragraphs (a)(7)
through (15).
0
c. Adding a new paragraph (a)(6).
0
d. In paragraph (b), removing the definition of ``Distance education.''
0
e. Removing the authority citation at the end of the section.
The addition reads as follows:
Sec. 602.3 What definitions apply to this part?
(a) * * *
(6) Distance education.
* * * * *
[[Page 54813]]
PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS
0
11. 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, 1099c-1, 1221-3, and 1231a, unless otherwise noted.
Section 668.14 also issued under 20 U.S.C. 1085, 1088, 1091,
1092, 1094, 1099a-3, 1099c, and 1141.
Section 668.41 also issued under 20 U.S.C. 1092, 1094, 1099c.
Section 668.91 also issued under 20 U.S.C. 1082, 1094.
Section 668.171 also issued under 20 U.S.C. 1094 and 1099c and
section 4 of Pub. L. 95-452, 92 Stat. 1101-1109.
Section 668.172 also issued under 20 U.S.C. 1094 and 1099c and
section 4 of Pub. L. 95-452, 92 Stat. 1101-1109.
Section 668.175 also issued under 20 U.S.C. 1094 and 1099c.
0
12. Section 668.1 is amended by revising paragraph (b) introductory
text and removing the authority citation at the end of the section to
read as follows:
Sec. 668.1 Scope.
* * * * *
(b) As used in this part, an ``institution,'' unless otherwise
specified, includes--
* * * * *
0
13. Section 668.2 is amended by:
0
a. Designating the undesignated words and phrases in paragraph (a) as
paragraphs (a)(1) through (26).
0
b. Adding periods at the ends of newly designated paragraphs (a)(1)
through (26).
0
c. Removing newly designated paragraph (a)(26).
0
d. Further redesignating newly designated paragraphs (a)(7) through
(23), (24), and (25) as paragraphs (a)(8) through (24), (26), and (27),
respectively.
0
e. Adding new paragraphs (a)(7) and (25) and paragraphs (a)(28) through
(31).
0
f. In paragraph (b):
0
i. Removing the definition of ``Academic Competitiveness Grant (ACG)
Program'' and the authority citation following the definition;
0
ii. Revising the definition of ``Full-time student'' and removing the
authority citation following the definition;
0
iii. Adding in alphabetical order the definition of ``Subscription-
based program''; and
0
iv. In the definition of ``Third-party servicer'', revising paragraph
(1)(i)(D) and removing the authority citation at the end of the
definition.
The additions and revisions read as follows:
Sec. 668.2 General definitions.
(a) * * *
(7) Direct assessment program.
* * * * *
(25) Religious mission.
* * * * *
(28) Teach-out.
(29) Teach-out agreement.
(30) Teach-out plan.
(31) Title IV, HEA program.
(b) * * *
Full-time student: An enrolled student who is carrying a full-time
academic workload, as determined by the institution, under a standard
applicable to all students enrolled in a particular educational
program. The student's workload may include any combination of courses,
work, research, or special studies that the institution considers
sufficient to classify the student as a full-time student. For a term-
based program that is not subscription-based, the student's workload
may include repeating any coursework previously taken in the program;
however, the workload may not include more than one repetition of a
previously passed course. For an undergraduate student, an
institution's minimum standard must equal or exceed one of the
following minimum requirements, based on the type of program:
(1) For a program that measures progress in credit hours and uses
standard terms (semesters, trimesters, or quarters), 12 semester hours
or 12 quarter hours per academic term.
(2) For a program that measures progress in credit hours and does
not use terms, 24 semester hours or 36 quarter hours over the weeks of
instructional time in the academic year, or the prorated equivalent if
the program is less than one academic year.
(3) For a program that measures progress in credit hours and uses
nonstandard-terms (terms other than semesters, trimesters, or quarters)
the number of credits determined by--
(i) Dividing the number of weeks of instructional time in the term
by the number of weeks of instructional time in the program's academic
year; and
(ii) Multiplying the fraction determined under paragraph (3)(i) of
this definition by the number of credit hours in the program's academic
year.
(4) For a program that measures progress in clock hours, 24 clock
hours per week.
(5) A series of courses or seminars that equals 12 semester hours
or 12 quarter hours in a maximum of 18 weeks.
(6) The work portion of a cooperative education program in which
the amount of work performed is equivalent to the academic workload of
a full-time student.
(7) For correspondence coursework--
(i) A full-time course load must be commensurate with the
requirements listed in paragraphs (1) through (6) of this definition;
and
(ii) At least one-half of the coursework must be made up of non-
correspondence coursework that meets one-half of the institution's
requirement for full-time students.
(8) For a subscription-based program, completion of a full-time
course load commensurate with the requirements in paragraphs (1), (3),
and (5) through (7) of this definition.
* * * * *
Subscription-based program: A standard or nonstandard-term program
in which the institution charges a student for each term on a
subscription basis with the expectation that the student completes a
specified number of credit hours (or the equivalent) during that term.
Coursework in a subscription-based program is not required to begin or
end within a specific timeframe in each term. Students in subscription-
based programs must complete a cumulative number of credit hours (or
the equivalent) during or following the end of each term before
receiving subsequent disbursements of title IV, HEA program funds. An
institution establishes an enrollment status (for example, full-time or
half-time) that will apply to a student throughout the student's
enrollment in the program, except that a student may change his or her
enrollment status no more often than once per academic year. The number
of credit hours (or the equivalent) a student must complete before
receiving subsequent disbursements is calculated by--
(1) Determining for each term the number of credit hours (or the
equivalent) associated with the institution's minimum standard for the
student's enrollment status (for example, full-time, three-quarter
time, or half-time) for that period commensurate with paragraph (8) in
the definition of ``full-time student,'' adjusted for less than full-
time students in light of the definitions of ``half-time student'' and
``three-quarter time student,'' and adjusted to at least one credit (or
the equivalent) for a student who is enrolled less than half-time; and
(2) Adding together the number of credit hours (or the equivalent)
determined under paragraph (1) for each term in which the student was
enrolled in and attended that program, excluding
[[Page 54814]]
the current and most recently attended terms.
* * * * *
Third-party servicer: (1) * * *
(i) * * *
(D) Originating loans;
* * * * *
0
14. Section 668.3 is amended by revising paragraphs (b)(2) and (3) and
removing the authority citation at the end of the section to read as
follows:
Sec. 668.3 Academic year.
* * * * *
(b) * * *
(2) A week of instructional time is any week in which--
(i) At least one day of regularly scheduled instruction or
examinations occurs, or, after the last scheduled day of classes for a
term or payment period, at least one day of study for final
examinations occurs; or
(ii)(A) In a program offered using asynchronous coursework through
distance education or correspondence courses, the institution makes
available the instructional materials, other resources, and instructor
support necessary for academic engagement and completion of course
objectives; and
(B) In a program using asynchronous coursework through distance
education, the institution expects enrolled students to perform
educational activities demonstrating academic engagement during the
week; and
(3) Instructional time does not include any scheduled breaks and
activities not included in the definition of ``academic engagement'' in
34 CFR 600.2, or periods of orientation or counseling.
* * * * *
0
15. Section 668.5 is amended by:
0
a. Revising paragraphs (a), (c), and (d)(1).
0
b. Adding paragraphs (f), (g), and (h).
0
c. Removing the authority citation at the end of the section.
The revisions and additions read as follows:
Sec. 668.5 Written arrangements to provide educational programs.
(a) Written arrangements between eligible institutions. (1) Except
as provided in paragraph (a)(2) of this section, if an eligible
institution enters into a written arrangement with another eligible
institution, or with a consortium of eligible institutions, under which
the other eligible institution or consortium provides part of the
educational program to students enrolled in the first institution, the
Secretary considers that educational program to be an eligible program
if the educational program offered by the institution that grants the
degree, certificate, or other recognized educational credential
otherwise satisfies the requirements of Sec. 668.8.
(2) If the written arrangement is between two or more eligible
institutions that are owned or controlled by the same individual,
partnership, or corporation, the Secretary considers the educational
program to be an eligible program if the educational program offered by
the institution that grants the degree, certificate, or other
recognized educational credential otherwise satisfies the requirements
of Sec. 668.8.
* * * * *
(c) Written arrangements between an eligible institution and an
ineligible institution or organization. Except as provided in paragraph
(d) of this section, if an eligible institution enters into a written
arrangement with an institution or organization that is not an eligible
institution under which the ineligible institution or organization
provides part of the educational program of students enrolled in the
eligible institution, the Secretary considers that educational program
to be an eligible program if--
(1) The ineligible institution or organization has not--
(i) Had its eligibility to participate in the title IV, HEA
programs terminated by the Secretary;
(ii) Voluntarily withdrawn from participation in the title IV, HEA
programs under a termination, show-cause, suspension, or similar type
proceeding initiated by the institution's State licensing agency,
accrediting agency, or guarantor, or by the Secretary;
(iii) Had its certification to participate in the title IV, HEA
programs revoked by the Secretary;
(iv) Had its application for recertification to participate in the
title IV, HEA programs denied by the Secretary; or
(v) Had its application for certification to participate in the
title IV, HEA programs denied by the Secretary;
(2) The educational program offered by the institution that grants
the degree, certificate, or other recognized educational credential
otherwise satisfies the requirements of Sec. 668.8; and
(3)(i) The ineligible institution or organization provides 25
percent or less of the educational program, including in accordance
with 34 CFR 602.22(b)(4); or
(ii)(A) The ineligible institution or organization provides more
than 25 percent but less than 50 percent of the educational program, in
accordance with 34 CFR 602.22(a)(1)(ii)(J);
(B) The eligible institution and the ineligible institution or
organization are not owned or controlled by the same individual,
partnership, or corporation; and
(C) The eligible institution's accrediting agency or, if the
institution is a public postsecondary vocational educational
institution, the State agency listed in the Federal Register in
accordance with 34 CFR part 603 has specifically determined that the
institution's arrangement meets the agency's standards for executing a
written arrangement with an ineligible institution or organization.
(d) Administration of title IV, HEA programs. (1) If an institution
enters into a written arrangement as described in paragraph (a), (b),
or (c) of this section, or provides coursework as provided in paragraph
(h)(2) of this section, except as provided in paragraph (d)(2) of this
section, the institution at which the student is enrolled as a regular
student must determine the student's eligibility for the title IV, HEA
program funds, and must calculate and disburse those funds to that
student.
* * * * *
(f) Workforce responsiveness. Nothing in this or any other section
in this part prohibits an institution utilizing written arrangements
from aligning or modifying its curriculum or academic requirements in
order to meet the recommendations or requirements of industry advisory
boards that include employers who hire program graduates, widely
recognized industry standards and organizations, or industry-recognized
credentialing bodies, including making governance or decision-making
changes as an alternative to allowing or requiring faculty control or
approval or integrating industry-recognized credentials into existing
degree programs.
(g) Calculation of percentage of program. When determining the
percentage of the program that is provided by an ineligible institution
or organization under paragraph (c) of this section, the institution
divides the number of semester, trimester, or quarter credit hours,
clock hours, or the equivalent that are provided by the ineligible
organization or organizations by the total number of semester,
trimester, or quarter credit hours, clock hours, or the equivalent
required for completion of the program. A course is provided by an
ineligible institution or organization if the organization with which
the institution has a written arrangement has authority over the
design, administration, or instruction in the course, including, but
not limited to--
[[Page 54815]]
(1) Establishing the requirements for successful completion of the
course;
(2) Delivering instruction in the course; or
(3) Assessing student learning.
(h) Non-applicability to other interactions with outside entities.
Written arrangements are not necessary for, and the limitations in this
section do not apply to--
(1) Acceptance by the institution of transfer credits or use of
prior learning assessment or other non-traditional methods of providing
academic credit; or
(2) The internship or externship portion of a program if the
internship or externship is governed by accrediting agency standards,
or, in the case of an eligible foreign institution, the standards of an
outside oversight entity, such as an accrediting agency or government
entity, that require the oversight and supervision of the institution,
where the institution is responsible for the internship or externship
and students are monitored by qualified institutional personnel.
0
16. Section 668.8 is amended by revising paragraphs (e)(1)(iii),
(k)(2), and (l) and removing the authority citation at the end of the
section to read as follows:
Sec. 668.8 Eligible program.
* * * * *
(e) * * * (1) * * *
(iii) The institution can demonstrate reasonable program length, in
accordance with Sec. 668.14(b)(26); and
* * * * *
(k) * * *
(2) Each course within the program is acceptable for full credit
toward completion of an eligible program offered by the institution
that provides an associate degree, bachelor's degree, professional
degree, or equivalent degree as determined by the Secretary, provided
that--
(i) The eligible program requires at least two academic years of
study; and
(ii) The institution can demonstrate that least one student
graduated from the program during the current award year or the two
preceding award years.
(l) Formula. For purposes of determining whether a program
described in paragraph (h) of this section satisfies the requirements
contained in paragraph (c)(3) or (d) of this section, and the number of
credit hours in that educational program for the purposes of the title
IV, HEA programs--
(1) A semester or trimester hour must include at least 30 clock
hours of instruction; and
(2) A quarter hour must include at least 20 clock hours of
instruction.
* * * * *
17. Section 668.10 is revised to read as follows:
Sec. 668.10 Direct assessment programs.
(a)(1) A direct assessment program is a program that, in lieu of
credit or clock hours as the measure of student learning, utilizes
direct assessment of student learning, or recognizes the direct
assessment of student learning by others. The assessment must be
consistent with the accreditation of the institution or program
utilizing the results of the assessment.
(2) Direct assessment of student learning means a measure of a
student's knowledge, skills, and abilities designed to provide evidence
of the student's proficiency in the relevant subject area.
(3) An institution must establish a methodology to reasonably
equate each module in the direct assessment program to either credit
hours or clock hours. This methodology must be consistent with the
requirements of the institution's accrediting agency or State approval
agency.
(4) All regulatory requirements in this chapter that refer to
credit or clock hours as a measurement apply to direct assessment
programs according to whether they use credit or clock hour
equivalencies, respectively.
(5) A direct assessment program that is not consistent with the
requirements of the institution's accrediting agency or State approval
agency is not an eligible program as provided under Sec. 668.8. In
order for any direct assessment program to qualify as an eligible
program, the accrediting agency must have--
(i) Evaluated the program based on the agency's accreditation
standards and criteria, and included it in the institution's grant of
accreditation or preaccreditation; and
(ii) Reviewed and approved the institution's claim of each direct
assessment program's equivalence in terms of credit or clock hours.
(b)(1) An institution that wishes to offer a direct assessment
program must apply to the Secretary to have its direct assessment
program or programs determined to be eligible programs for title IV,
HEA program purposes. Following the Secretary's initial approval of a
direct assessment program, additional direct assessment programs at an
equivalent or lower academic level may be determined to be eligible
without further approvals from the Secretary except as required by 34
CFR 600.10(c)(1)(iii), 600.20(c)(1), or 600.21(a), as applicable, if
such programs are consistent with the institution's accreditation or
its State approval agency.
(2) The institution's direct assessment application must provide
information satisfactory to the Secretary that includes--
(i) A description of the educational program, including the
educational credential offered (degree level or certificate) and the
field of study;
(ii) A description of how the direct assessment program is
structured, including information about how and when the institution
determines on an individual basis what each student enrolled in the
program needs to learn and how the institution excludes from
consideration of a student's eligibility for title IV, HEA program
funds any credits or competencies earned on the basis of prior
learning;
(iii) A description of how learning is assessed and how the
institution assists students in gaining the knowledge needed to pass
the assessments;
(iv) The number of semester, trimester, or quarter credit hours, or
clock hours, that are equivalent to the amount of student learning
being directly assessed for the certificate or degree;
(v) The methodology the institution uses to determine the number of
credit or clock hours to which the program or programs are equivalent;
and
(vi) Documentation from the institution's accrediting agency or
State approval agency indicating that the agency has evaluated the
institution's offering of direct assessment program(s) and has included
the program(s) in the institution's grant of accreditation and approval
documentation from the accrediting agency or State approval agency
indicating agreement with the institutions methodology for determining
the direct assessment program's equivalence in terms of credit or clock
hours.
(vii) Notwithstanding paragraphs (a) and (b) of this section, no
program offered by a foreign institution that involves direct
assessment will be considered to be an eligible program under Sec.
668.8.
(c) A direct assessment program may use learning resources (e.g.,
courses or portions of courses) that are provided by entities other
than the institution providing the direct assessment program without
regard to the limitations on contracting for part of an educational
program in Sec. 668.5(c)(3).
(d) Title IV, HEA program funds may be used to support instruction
provided, or overseen, by the institution, except for the portion of
the program that the student is awarded based on prior learning.
[[Page 54816]]
(e) Unless an institution has received initial approval from the
Secretary to offer direct assessment programs, and the institution's
offering of direct assessment coursework is consistent with the
institution's accreditation and State authorization, if applicable,
title IV, HEA program funds may not be used for--
(1) The course of study described in Sec. 668.32(a)(1)(ii) and
(iii) and (a)(2)(i)(B), if offered using direct assessment; or
(2) Remedial coursework described in Sec. 668.20, if offered using
direct assessment.
(f) Student progress in a direct assessment program may be measured
using a combination of--
(1) Credit hours and credit hour equivalencies; or
(2) Clock hours and clock hour equivalencies.
0
18. Section 668.13 is amended by:
0
a. Redesignating paragraph (a)(1) as paragraph (a)(1)(i).
0
b. Adding paragraph (a)(1)(ii).
0
c. Adding paragraph (b)(3).
0
d. Removing the word ``or'' at the end of paragraph (c)(1)(i)(D).
0
e. Removing the period and adding in its place ``; or'' at the end of
paragraph (c)(1)(i)(E).
0
f. Adding paragraph (c)(1)(i)(F).
0
g. Removing the word ``facsimile'' and adding in its place the word
``electronic'' in paragraphs (d)(3)(i) and (d)(3)(ii)(C).
0
h. Revising paragraph (d)(3)(iii).
0
i. Removing paragraph (d)(3)(iv).
0
j. Revising paragraph (d)(5).
0
k. Removing the authority citation at the end of the section.
The additions and revisions read as follows:
Sec. 668.13 Certification procedures.
(a) * * * (1)(i) * * *
(ii) On application from the institution, the Secretary certifies a
location of an institution that meets the requirements of Sec.
668.13(a)(1)(i) as a branch if it satisfies the definition of
``branch'' in 34 CFR 600.2.
* * * * *
(b) * * *
(3) In the event that the Secretary does not make a determination
to grant or deny certification within 12 months of the expiration of
its current period of participation, the institution will automatically
be granted renewal of certification, which may be provisional.
(c) * * * (1)(i) * * *
(F) The institution is a participating institution that has been
provisionally recertified under the automatic recertification
requirement in paragraph (b)(3) of this section.
* * * * *
(d) * * *
(3) * * *
(iii) Documents filed by electronic transmission must be
transmitted to the Secretary in accordance with instructions provided
by the Secretary in the notice of revocation.
* * * * *
(5) The mailing date of a notice of revocation or a request for
reconsideration of a revocation is the date evidenced on the original
receipt of mailing from the U.S. Postal Service or another service that
provides delivery confirmation for that document.
* * * * *
0
19. Section 668.14 is amended by revising paragraphs (b)(10), (26), and
(31) introductory text to read as follows:
Sec. 668.14 Program participation agreement.
* * * * *
(b) * * *
(10) In the case of an institution that advertises job placement
rates as a means of attracting students to enroll in the institution,
the institution will make available to prospective students, at or
before the time that those students apply for enrollment--
(i) The most recent available data concerning employment
statistics, graduation statistics, and any other information necessary
to substantiate the truthfulness of the advertisements; and
(ii) Relevant State licensing requirements of the State in which
the institution is located for any job for which the course of
instruction is designed to prepare such prospective students, as
provided in Sec. 668.43(a)(5)(v);
* * * * *
(26) If an educational program offered by the institution is
required to prepare a student for gainful employment in a recognized
occupation, the institution must--
(i) Demonstrate a reasonable relationship between the length of the
program and entry level requirements for the recognized occupation for
which the program prepares the student. The Secretary considers the
relationship to be reasonable if the number of clock hours provided in
the program does not exceed the greater of--
(A) One hundred and fifty percent of the minimum number of clock
hours required for training in the recognized occupation for which the
program prepares the student, as established by the State in which the
institution is located, if the State has established such a
requirement, or as established by any Federal agency; or
(B) The minimum number of clock hours required for training in the
recognized occupation for which the program prepares the student as
established in a State adjacent to the State in which the institution
is located; and
(ii) Establish the need for the training for the student to obtain
employment in the recognized occupation for which the program prepares
the student;
* * * * *
(31) The institution will submit a teach-out plan to its
accrediting agency in compliance with 34 CFR 602.24(c) and the
standards of the institution's accrediting agency. The institution will
update its teach-out plan upon the occurrence of any of the following
events:
* * * * *
0
20. Section 668.22 is amended by:
0
a. Removing the word ``or'' at the end of paragraph (a)(2)(i)(B).
0
b. Revising paragraph (a)(2)(i)(C).
0
c. Adding paragraph (a)(2)(i)(D).
0
d. Revising paragraph (a)(2)(ii).
0
e. Removing the word ``nonterm'' and adding in its place the word
``non-term'' in paragraph (a)(2)(iii)(B).
0
f. Revising paragraph (a)(3).
0
g. Removing the citation ``Sec. 668.164(g)'' at the end of paragraph
(a)(5) and adding in its place the citation ``Sec. 668.164(i)''.
0
h. Revising paragraphs (a)(6)(ii)(A), (d)(1)(vii), and (i).
0
i. Removing the citation ``Sec. 668.164(g)'' in paragraph (l)(1) and
adding in its place the citation ``Sec. 668.164(j)''.
0
j. Removing the citation ``Sec. 668.164(g)(2)'' in paragraph (l)(4)
and adding in its place the citation ``Sec. 668.164(j)(2)''.
0
k. Revising paragraphs (l)(6) and (7).
0
l. Adding paragraph (l)(9).
0
m. Removing the authority citation at the end of the section.
The additions and revisions read as follows:
Sec. 668.22 Treatment of title IV funds when a student withdraws.
(a) * * *
(2)(i) * * *
(C) For a student in a standard or nonstandard-term program,
excluding a subscription-based program, the student is not scheduled to
begin another course within a payment period or period of enrollment
for more than 45 calendar days after the end of the module the student
ceased attending, unless the student is on approved leave of absence,
as defined in paragraph (d) of this section; or
(D) For a student in a non-term program or a subscription-based
program, the student is unable to
[[Page 54817]]
resume attendance within a payment period or period of enrollment for
more than 60 calendar days after ceasing attendance, unless the student
is on an approved leave of absence, as defined in paragraph (d) of this
section.
(ii)(A) Notwithstanding paragraph (a)(2)(i) of this section--
(1) A student who completes all the requirements for graduation
from his or her program before completing the days or hours in the
period that he or she was scheduled to complete is not considered to
have withdrawn;
(2) In a program offered in modules, a student is not considered to
have withdrawn if the student successfully completes--
(i) One module that includes 49 percent or more of the number of
days in the payment period, excluding scheduled breaks of five or more
consecutive days and all days between modules;
(ii) A combination of modules that when combined contain 49 percent
or more of the number of days in the payment period, excluding
scheduled breaks of five or more consecutive days and all days between
modules; or
(iii) Coursework equal to or greater than the coursework required
for the institution's definition of a half-time student under Sec.
668.2 for the payment period;
(3) For a payment period or period of enrollment in which courses
in the program are offered in modules--
(i) A student is not considered to have withdrawn if the
institution obtains written confirmation from the student at the time
that would have been a withdrawal of the date that he or she will
attend a module that begins later in the same payment period or period
of enrollment; and
(ii) For standard and nonstandard-term programs, excluding
subscription-based programs, that module begins no later than 45
calendar days after the end of the module the student ceased attending;
(4) For a subscription-based program, a student is not considered
to have withdrawn if the institution obtains written confirmation from
the student at the time that would have been a withdrawal of the date
that he or she will resume attendance, and that date occurs within the
same payment period or period of enrollment and is no later than 60
calendar days after the student ceased attendance; and
(5) For a non-term program, a student is not considered to have
withdrawn if the institution obtains written confirmation from the
student at the time that would have been a withdrawal of the date that
he or she will resume attendance, and that date is no later than 60
calendar days after the student ceased attendance.
(B) If an institution has obtained the written confirmation of
future attendance in accordance with paragraph (a)(2)(ii)(A) of this
section--
(1) A student may change the date of return that begins later in
the same payment period or period of enrollment, provided that the
student does so in writing prior to the return date that he or she had
previously confirmed;
(2) For standard and nonstandard-term programs, excluding
subscription-based programs the later module that he or she will attend
begins no later than 45 calendar days after the end of the module the
student ceased attending; and
(3) For non-term and subscription-based programs, the student's
program permits the student to resume attendance no later than 60
calendar days after the student ceased attendance.
(C) If an institution obtains written confirmation of future
attendance in accordance with paragraph (a)(2)(ii)(A) of this section
and, if applicable, paragraph (a)(2)(ii)(B) of this section, but the
student does not return as scheduled--
(1) The student is considered to have withdrawn from the payment
period or period of enrollment; and
(2) The student's withdrawal date and the total number of calendar
days in the payment period or period of enrollment would be the
withdrawal date and total number of calendar days that would have
applied if the student had not provided written confirmation of a
future date of attendance in accordance with paragraph (a)(2)(ii)(A) of
this section.
* * * * *
(3) For purposes of this section, ``title IV grant or loan
assistance'' includes only assistance from the Direct Loan, Federal
Pell Grant, Iraq and Afghanistan Service Grant, TEACH Grant, and FSEOG
programs, not including the non-Federal share of FSEOG awards if an
institution meets its FSEOG matching share by the individual recipient
method or the aggregate method.
* * * * *
(6) * * *
(ii)(A) If outstanding charges exist on the student's account, the
institution may credit the student's account up to the amount of
outstanding charges in accordance with Sec. 668.164(c) with all or a
portion of any--
(1) Grant funds that make up the post-withdrawal disbursement; and
(2) Loan funds that make up the post-withdrawal disbursement only
after obtaining confirmation from the student, or parent in the case of
a parent PLUS loan, that they still wish to have the loan funds
disbursed in accordance with paragraph (a)(6)(iii) of this section.
* * * * *
(d) * * * (1) * * *
(vii) Except for a clock hour or non-term credit hour program, or a
subscription-based program, upon the student's return from the leave of
absence, the student is permitted to complete the coursework he or she
began prior to the leave of absence; and
* * * * *
(i) Order of return of title IV funds--(1) Loans. Unearned funds
returned by the institution or the student, as appropriate, in
accordance with paragraph (g) or (h) of this section respectively, must
be credited to outstanding balances on title IV loans made to the
student or on behalf of the student for the payment period or period of
enrollment for which a return of funds is required. Those funds must be
credited to outstanding balances for the payment period or period of
enrollment for which a return of funds is required in the following
order:
(i) Unsubsidized Federal Direct Stafford loans.
(ii) Subsidized Federal Direct Stafford loans.
(iii) Federal Direct PLUS received on behalf of the student.
(2) Remaining funds. If unearned funds remain to be returned after
repayment of all outstanding loan amounts, the remaining excess must be
credited to any amount awarded for the payment period or period of
enrollment for which a return of funds is required in the following
order:
(i) Federal Pell Grants.
(ii) Iraq and Afghanistan Service Grants.
(iii) FSEOG Program aid.
(iv) TEACH Grants.
* * * * *
(l) * * *
(6) A program is ``offered in modules'' if the program uses a
standard term or nonstandard-term academic calendar, is not a
subscription-based program, and a course or courses in the program do
not span the entire length of the payment period or period of
enrollment.
(7)(i) ``Academic attendance'' and ``attendance at an academically-
related activity'' must include academic engagement as defined under 34
CFR 600.2.
(ii) A determination of ``academic attendance'' or ``attendance at
an academically-related activity'' must be
[[Page 54818]]
made by the institution; a student's certification of attendance that
is not supported by institutional documentation is not acceptable.
* * * * *
(9) A student in a program offered in modules is scheduled to
complete the days in a module if the student's coursework in that
module was used to determine the amount of the student's eligibility
for title IV, HEA funds for the payment period or period of enrollment.
* * * * *
Sec. 668.28 [Amended]
0
21. Section 668.28 is amended by removing and reserving paragraph (b)
and removing the authority citation at the end of the section.
0
22. Section 668.34 is amended by:
0
a. Revising paragraph (a)(5).
0
b. Revising paragraph (1) in the definition for ``Maximum timeframe''
in paragraph (b).
0
c. Removing the authority citation at the end of the section.
The revisions read as follows:
Sec. 668.34 Satisfactory academic progress.
(a) * * *
(5) The policy specifies--
(i) For all programs, the maximum timeframe as defined in paragraph
(b) of this section; and
(ii) For a credit hour program using standard or nonstandard terms
that is not a subscription-based program, the pace, measured at each
evaluation, at which a student must progress through his or her
educational program to ensure that the student will complete the
program within the maximum timeframe, calculated by either dividing the
cumulative number of hours the student has successfully completed by
the cumulative number of hours the student has attempted or by
determining the number of hours that the student should have completed
by the evaluation point in order to complete the program within the
maximum timeframe. In making this calculation, the institution is not
required to include remedial courses;
* * * * *
(b) * * *
Maximum timeframe. * * *
(1) For an undergraduate program measured in credit hours, a period
that is no longer than 150 percent of the published length of the
educational program, as measured in credit hours, or expressed in
calendar time;
* * * * *
Sec. 668.111 [Amended]
23. Section 668.111 is amended by adding the phrase ``issuance by
the Department of and'' after the phrase ``establishes rules governing
the'' in the first sentence of paragraph (a) and removing the authority
citation at the end of the section.
0
24. Section 668.113 is amended by:
0
a. Removing the word ``shall'' and adding in its place the word
``must'' in both instances it is used in paragraph (c) introductory
text.
0
b. Redesignating paragraphs (d)(1) and (2) as paragraphs (d)(2) and
(3).
0
c. Adding a new paragraph (d)(1).
0
d. Removing the authority citation at the end of the section.
The addition reads as follows:
Sec. 668.113 Request for review.
* * * * *
(d)(1) If the final audit determination or final program review
determination in paragraph (a) of this section results from the
institution's classification of a course or program as distance
education, or the institution's assignment of credit hours, the
Secretary relies upon the requirements of the institution's accrediting
agency or State approval agency regarding qualifications for
instruction and whether the amount of work associated with the
institution's credit hours is consistent with commonly accepted
practice in postsecondary education, in applying the definitions of
``distance education'' and ``credit hour'' in 34 CFR 600.2.
* * * * *
0
25. Section 668.164 is amended by:
0
a. Adding the phrase ``that is not a subscription-based program'' after
the phrase ``equal in length'' in paragraphs (i)(1)(i) and (ii).
0
b. Removing the word ``or'' at the end of paragraph (i)(1)(i).
0
c. Removing the period and adding in its place ``; or'' in paragraph
(i)(1)(ii)(B).
0
d. Adding paragraph (i)(1)(iii).
The addition reads as follows:
Sec. 668.164 Disbursing funds.
* * * * *
(i)(1) * * *
(iii) If the student is enrolled in a subscription-based program,
the later of--
(A) Ten days before the first day of classes of a payment period;
or
(B) The date the student completed the cumulative number of credit
hours associated with the student's enrollment status in all prior
terms that the student attended under the definition of a subscription-
based program in Sec. 668.2.
* * * * *
0
26. Section 668.171 is amended by:
0
a. Removing the word ``or'' at the end of paragraph (i)(1).
0
b. Removing the period and adding in its place ``; or'' in paragraph
(i)(2).
0
c. Adding paragraph (i)(3).
The addition reads as follows:
Sec. 668.171 General.
* * * * *
(i) * * *
(3) Deny the institution's application for certification or
recertification to participate in the title IV, HEA programs.
0
27. Section 668.174 is amended by:
0
a. Revising paragraph (b)(1)(i) introductory text.
0
b. Adding the phrase ``ownership or'' after the word ``substantial''
and removing the word ``or'' at the end of paragraph (b)(1)(i)(A).
0
c. Redesignating paragraph (b)(1)(i)(B) as paragraph (b)(1)(i)(C).
0
d. Adding a new paragraph (b)(1)(i)(B).
0
e. Adding ``entity,'' after the phrase ``That person,'' in paragraph
(b)(1)(ii).
0
f. Adding the phrase ``or entity'' after the word ``person'' in
paragraphs (b)(2)(i) and (ii).
0
g. Adding ``entity,'' after the phrase ``owes the liability by that''
in paragraph (b)(2)(ii)(A).
0
h. Adding ``entity,'' after the phrase ``owes the liability that the''
in paragraph (b)(2)(ii)(B).
0
i. Adding the phrase ``or entity'' after the phrase ``The person'' in
paragraphs (b)(2)(iv)(A) and (B).
0
j. Adding the phrase ``or entity'' after both uses of the word
``person'' in paragraph (c)(3) introductory text.
0
k. Removing the authority citation at the end of the section.
The revisions and additions read as follows:
Sec. 668.174 Past performance.
* * * * *
(b) Past performance of persons or entities affiliated with an
institution. (1)(i) Except as provided in paragraph (b)(2) of this
section, an institution is not financially responsible if a person or
entity who exercises substantial ownership or control over the
institution, as described under 34 CFR 600.31, or any member or members
of that person's family alone or together--
* * * * *
(B) Exercised substantial ownership or control over another
institution that closed without a viable teach-out plan or agreement
approved by the institution's accrediting agency and faithfully
executed by the institution; or
* * * * *
[FR Doc. 2020-18636 Filed 9-1-20; 8:45 am]
BILLING CODE 4000-01-P