[Federal Register Volume 89, Number 142 (Wednesday, July 24, 2024)]
[Proposed Rules]
[Pages 60256-60286]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-16102]



[[Page 60255]]

Vol. 89

Wednesday,

No. 142

July 24, 2024

Part V





Department of Education





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34 CFR Parts 600, 643, 644, et al.





Program Integrity and Institutional Quality: Distance Education, Return 
of Title IV, HEA Funds, and Federal TRIO Programs; Proposed Rule

  Federal Register / Vol. 89 , No. 142 / Wednesday, July 24, 2024 / 
Proposed Rules  

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DEPARTMENT OF EDUCATION

34 CFR Parts 600, 643, 644, 645, and 668

[Docket ED-2024-OPE-0050]
RIN 1840-AD68, 1840-AD85, and 1840-AD92


Program Integrity and Institutional Quality: Distance Education, 
Return of Title IV, HEA Funds, and Federal TRIO Programs

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Secretary is proposing to amend the Student Assistance 
General Provisions regulations governing participation in the student 
financial assistance programs authorized under title IV of the Higher 
Education Act of 1965, as amended (HEA), to promote program integrity 
and institutional quality. These regulations would clarify, update, and 
consolidate certain provisions that apply to distance education; the 
return of title IV, HEA funds; and the Federal TRIO programs. A brief 
summary of the proposed rule is available at www.regulations.gov/docket/ED-2024-OPE-0050.

DATES: We must receive your comments on or before August 23, 2024.

ADDRESSES: Comments must be submitted via the Federal eRulemaking 
Portal at regulations.gov. Information on using Regulations.gov, 
including instructions for finding a rule on the site and submitting 
comments, is available on the site under ``FAQ.'' If you require an 
accommodation or cannot otherwise submit your comments via 
regulations.gov, please contact one of the program contact persons 
listed under FOR FURTHER INFORMATION CONTACT. The Department will not 
accept comments submitted by fax or by email or comments submitted 
after the comment period closes. To ensure that the Department does not 
receive duplicate copies, please submit your comment only once. 
Additionally, please include the Docket ID at the top of your comments.
    Privacy Note: The Department's policy is to generally make comments 
received from members of the public available for public viewing at 
https://www.regulations.gov. Therefore, commenters should include in 
their comments only information about themselves that they wish to make 
publicly available. Commenters should not include in their comments any 
information that identifies other individuals or that permits readers 
to identify other individuals. If, for example, your comment describes 
an experience of someone other than yourself, please do not identify 
that individual or include information that would facilitate readers 
identifying that individual. The Department reserves the right to 
redact at any time any information in comments that identifies other 
individuals, includes information that would facilitate readers 
identifying other individuals, or includes threats of harm to another 
person.

FOR FURTHER INFORMATION CONTACT: Gregory Martin, U.S. Department of 
Education, Office of Postsecondary Education, 400 Maryland Avenue SW, 
5th floor, Washington, DC 20202. Telephone: (202) 205-4595. Email: 
ed.gov">NegRegNPRMHelp@ed.gov.
    If you are deaf, hard of hearing, or have a speech disability and 
wish to access telecommunications relay services, please dial 7-1-1.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Abbreviations
II. Executive Summary
III. Summary of Major Provisions
IV. Invitation To Comment
V. Authority for This Regulatory Action
VI. Background
VII. Public Participation
VIII. Negotiated Rulemaking
IX. Significant Proposed Regulations
    A. Distance Education
    B. Return of Title IV Funds
    C. Federal TRIO Programs
X. Regulatory Impact Analysis

I. Abbreviations

CFR: Code of Federal Regulations
CIP Code: Classification of Instructional Programs code
EOC: Educational Opportunity Centers
FFEL: Federal Family Education Loan program
FSA: Federal Student Aid
Freely Associated States: the Republic of Palau, the Federated 
States of Micronesia, and the Republic of the Marshall Islands
HEA: Higher Education Act of 1965, as amended
HHS: the United States Department of Health and Human Services
LEA: Local educational agency
PEP: Eligible prison education program
PRWORA: Personal Responsibility and Work Opportunity Reconciliation 
Act
R2T4: Return of title IV funds
RIA: Regulatory Impact Analysis
SEA: State educational agency
Title IV, HEA Programs: Student financial assistance programs 
authorized under title IV of the HEA
TRIO: Federal outreach and student services programs designed to 
identify and provide services for individuals from disadvantaged 
backgrounds
TS: Talent Search
UB: Upward Bound

II. Executive Summary

    These proposed regulations address three substantive areas: 
distance education, return of title IV funds (R2T4), and the Federal 
TRIO programs (TRIO). The Department is addressing these areas in an 
effort to help ensure students are well served by the institutions of 
higher education they attend, increase access to postsecondary 
education for disadvantaged students, and ensure that Federal Student 
Aid programs work in the best interests of students. As the three 
distinct topics are structured and addressed independently in this 
proposed rule, the Department generally intends the rule's provisions 
to be severable from each other. The Department expects to provide 
additional detail on severability in the final rule once we consider 
public comments and finalize the regulatory language.
    The proposed distance education regulations would help the 
Department better measure and account for student outcomes, improve 
oversight over distance education, and ensure students are receiving 
effective education by expanding the definition of an additional 
location to include virtual locations for programs offered entirely 
online or through correspondence, adding a definition of ``distance 
education course,'' requiring institutions to report their students' 
distance education status, and disallowing asynchronous distance 
education in clock-hour programs for title IV, HEA purposes. The 
proposed R2T4 regulations would help withdrawn students repay 
outstanding Direct Loan credit balances, increase the accuracy and 
simplicity of performing R2T4 calculations, address unique 
circumstances for what constitutes a withdrawal, clarify that distance 
education programs are attendance taking, and codify longstanding 
policies into regulation. The proposed changes to TRIO would expand 
student eligibility and provide greater access to postsecondary 
education for disadvantaged students under three programs that offer 
student services in a pre-postsecondary education setting--the Talent 
Search program, the Educational Opportunity Centers program, and the 
Upward Bound program by expanding participant eligibility to include 
all students who have enrolled in or who seek to enroll in a high 
school in the United States, territories, or Freely Associated States.

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III. Summary of the Major Provisions

    As specifically set forth in each of the areas identified below, 
the proposed regulations would:

Distance Education (Sec. Sec.  600.2, 668.3, 668.41)

     Amend Sec.  600.2 to: (1) include in the definition of 
additional location virtual locations where 100 percent of an 
educational program is provided through distance education or 
correspondence courses; (2) revise the definition of clock hour to 
reflect that, for title IV, HEA purposes, coursework delivered via 
distance education cannot be asynchronous; and (3) add a definition for 
distance education course.
     Amend the academic year definition in Sec.  668.3 to 
specify that, for purposes of the title IV, HEA definition of an 
academic year, asynchronous coursework offered through distance 
education could only be offered in credit-hour programs.
     Amend Sec.  668.41 to require institutions to report 
student enrollment in distance education or correspondence courses, 
using a procedure that would be determined by the Department.

Return of Title IV Funds (Sec. Sec.  668.21, 668.22)

     Amend Sec.  668.21 to allow a student who received a loan 
disbursement as part of a title IV credit balance, but never began 
attendance in a payment period or period of enrollment, to repay loan 
funds they received under the terms of their promissory note.
     Amend Sec.  668.22 to exempt institutions from performing 
an R2T4 calculation in the event that (1) a student is treated as never 
having begun attendance; (2) the institution returns all title IV aid 
disbursed to the student for that payment period or period of 
enrollment; (3) the institution refunds all institutional charges to 
the student for that payment period or period of enrollment; and (4) 
the institution writes off or cancels any current year balance owed by 
the student to the institution due to the institution's return of title 
IV funds to the Department.
     Amend Sec.  668.22 to codify that an institution that is 
required to take attendance must, within 14 days of a student's last 
date of attendance, document the student's withdrawal date.
     Amend Sec.  668.22 to require an institution to take 
attendance for each course offered entirely through distance education, 
except for dissertation research courses that are part of a doctoral 
program.
     Amend Sec.  668.22 to allow a confined or incarcerated 
individual, in a term-based setting, to not have to come back from a 
leave of absence to where the student left off, and instead, allow the 
individual to return at a different point in their prison education 
program (PEP).
     Amend Sec.  668.22 to streamline and make consistent 
institutions' calculation of the percentage of the payment period 
completed for a clock-hour program.
     Amend Sec.  668.22 to consider a module part of the 
payment period used in the denominator of the R2T4 calculation only 
when a student begins attendance in the module.

Federal TRIO Programs (Sec. Sec.  643.3, 644.3, 645.3)

     Amend Sec.  643.3 to expand who would be able to 
participate in a Talent Search project. Eligibility would be extended 
to an individual who is enrolled in or seeks to enroll in a high school 
in the United States, territories, or Freely Associated States.
     Amend Sec.  644.3 to expand who would be able to 
participate in an Educational Opportunity Centers project. Eligibility 
would be extended to an individual who is enrolled in or seeks to 
enroll in a high school in the United States, territories, or Freely 
Associated States.
     Amend Sec.  645.3 to expand who would be able to 
participate in a Regular or a Math and Science Upward Bound project. 
Eligibility (other than for direct cash stipends) would be extended to 
an individual who is enrolled in or seeks to enroll in a high school in 
the United States, territories, or Freely Associated States.

Costs and Benefits

    As further detailed in the Regulatory Impact Analysis, the 
Department estimates present value net benefits of $1,434,537,761 over 
ten years at a 2 percent discount rate. This is equivalent to an 
annualized net benefits of $159,702,107 over ten years. Additionally, 
we estimate annualized quantified costs of $9,423,657 related to 
paperwork burden.

IV. Invitation To Comment

    We invite you to submit comments regarding these proposed 
regulations. To ensure that your comments have maximum effect in 
developing the final regulations, we urge you to clearly identify the 
specific section or sections of the proposed regulations that each of 
your comments addresses and to arrange your comments in the same order 
as the proposed regulations. The Department will not accept comments 
submitted after the comment period closes. To ensure that we do not 
receive duplicate copies, please submit your comments only once.
    The following tips are meant to help you prepare your comments and 
provide a basis for the Department to respond to issues raised in your 
comments in the notice of final regulations (NFR):
     Be concise but support your claims.
     Explain your views as clearly as possible and avoid using 
profanity.
     Refer to specific sections and paragraphs of the proposed 
regulations throughout your comments, particularly in any headings that 
are used to organize your submission.
     Explain why you agree or disagree with the proposed 
regulatory text and support these reasons with data-driven evidence, 
including the depth and breadth of your personal or professional 
experiences.
     Where you disagree with the proposed regulatory text, 
suggest alternatives, including regulatory language, and your rationale 
for the alternative suggestion.
     Do not include personally identifiable information (PII), 
such as Social Security numbers or loan account numbers, for yourself 
or for others in your submission. Should you include any PII in your 
comment, such information may be posted publicly.
    Mass Writing Campaigns: In instances where individual submissions 
appear to be duplicates or near duplicates of comments prepared as part 
of a writing campaign, the Department will post one representative 
sample comment along with the total comment count for that campaign to 
Regulations.gov. The Department will consider these comments along with 
all other comments received.
    In instances where individual submissions are bundled together 
(submitted as a single document or packaged together), the Department 
will post all of the substantive comments included in the submissions 
along with the total comment count for that document or package to 
Regulations.gov. A well-supported comment is often more informative to 
the agency than multiple form letters.
    Public Comments: The Department invites you to submit comments on 
all aspects of the proposed regulatory language specified in this NPRM 
in Sec. Sec.  600.2, 643.3, 644.3, 645.3, 668.3, 668.21, 668.22, and 
668.41, and in the Regulatory Impact Analysis and Paperwork Reduction 
Act sections.
    The Department may, at its discretion, decide not to post or to 
withdraw certain comments and other materials that are computer-
generated. Comments containing the promotion of commercial

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services or products and spam will be removed.
    We may not address comments outside of the scope of these proposed 
regulations in the NFR. Generally, comments that are outside of the 
scope of these proposed regulations are comments that do not discuss 
the content or impact of the proposed regulations or the Department's 
evidence or reasons for the proposed regulations, which includes topics 
negotiated but not included in this NPRM.
    Comments that are submitted after the comment period closes will 
not be posted to Regulations.gov or addressed in the NFR.
    Comments containing personal threats will not be posted to 
Regulations.gov and may be referred to the appropriate authorities.
    We invite you to assist us in complying with the specific 
requirements of Executive Orders 12866, 13563, and 14094 and their 
overall requirement of reducing regulatory burden that might result 
from these proposed regulations. Please let us know of any further ways 
we could reduce potential costs or increase potential benefits while 
preserving the effective and efficient administration of the 
Department's programs and activities.
    During and after the comment period, you may inspect public 
comments about these proposed regulations by accessing Regulations.gov.
    Assistance to Individuals with Disabilities in Reviewing the 
Rulemaking Record: On request, we will provide an appropriate 
accommodation or auxiliary aid to an individual with a disability who 
needs assistance to review the comments or other documents in the 
public rulemaking record for these proposed regulations. If you want to 
schedule an appointment for this type of accommodation or auxiliary 
aid, please contact one of the persons listed under FOR FURTHER 
INFORMATION CONTACT.

Clarity of the Regulations

    Executive Order 12866 and the Presidential memorandum ``Plain 
Language in Government Writing'' require each agency to write 
regulations that are easy to understand. The Secretary invites comments 
on how to make the regulation easier to understand, including answers 
to questions such as the following:
     Are the requirements in the proposed regulations clearly 
stated?
     Do the proposed regulations contain technical terms or 
other wording that interferes with their clarity?
     Does the format of the proposed regulations (grouping and 
order of sections, use of headings, paragraphing) aid or reduce its 
clarity?
     Would the proposed regulations be easier to understand if 
we divided them into more (but shorter) sections? (A ``section'' is 
preceded by the symbol ``Sec.  '' and a numbered heading; for example, 
Sec.  668.2 General definitions.)
     Could the description of the proposed regulations in the 
SUPPLEMENTARY INFORMATION section of this preamble be more helpful in 
making the proposed regulations easier to understand? If so, how?
     What else could we do to make the proposed regulation 
easier to understand?
    To send any comments that concern how the Department could make 
these proposed regulations easier to understand, see the instructions 
in the ADDRESSES section.

V. Authority for This Regulatory Action

    The legal basis for these proposed regulations is title IV of the 
Higher Education Act of 1965, as amended (HEA), which authorizes the 
Federal government's major student financial aid programs that are the 
primary source of direct Federal support to students pursuing 
postsecondary education. 20 U.S.C. 1070-1099d (sections 400-499 of the 
HEA). Institutions participating in title IV programs must satisfy 
certain threshold and ongoing requirements, see id., and the Secretary 
is given broad authority to carry out program requirements. 20 U.S.C. 
1070(b) (section 400(b) of the HEA). As part of its oversight 
responsibilities under title IV, the Department seeks to promote 
program integrity and institutional quality. See generally 20 U.S.C. 
1099c, 1099c-1, 1099c-2 (sections 498, 498A, and 498B of the HEA). To 
this end, the Department's student assistance general provisions 
regulations establish threshold requirements for institutions to 
participate and to continue participation in student financial 
assistance programs. See generally 34 CFR parts 600-603, 642-647, 668, 
673-676, 682-694. This proposed rule would update, consolidate, and 
revise requirements in three distinct title IV areas: the return of 
title IV, HEA funds; distance education; and the Federal TRIO programs, 
impacting 34 CFR parts 600, 643-645, and 668. The Department's specific 
legal authority to propose regulations in these areas is set forth 
below.
    Distance Education. Section 103(7) of the HEA defines ``distance 
education,'' and section 484(l) sets forth rules relating to courses 
offered through distance education. Among other things, section 103(7) 
requires that distance education support regular and substantive 
interaction between students and the instructor, and the modifications 
we propose in this NPRM would give the Department the tools to ensure 
such programs satisfy this requirement.
    Return of Title IV, HEA Funds. Section 484B of the HEA outlines the 
process that an institution must follow if a title IV aid recipient 
withdraws from the institution during a payment period or period of 
enrollment (also known as R2T4). The Department proposes various 
clarifying changes to the R2T4 regulations that would benefit both 
institutions and students.
    Federal TRIO Programs. Section 402A of the HEA outlines the 
application process, permissible services, awarding process, and grant 
limitations for TRIO. This proposed rule would clarify the scope of 
qualified individuals who are eligible to participate in certain TRIO 
programs.

VI. Background

Distance Education (Sec. Sec.  600.2, 668.3, 668.41)

    The definition of ``distance education'' in Sec.  600.2 lists the 
technologies that allow for instruction to occur between instructors 
and students who are separated. It also requires that such education 
must include regular and substantive interaction between the two 
parties and explains what such interaction must entail. With the 
development of the technology that supports distance learning and 
particularly in the wake of the pandemic, the Department observed that 
the use of distance education at eligible institutions has increased 
and is likely to continue to do so. However, as the Department noted in 
the distance education issue paper and during the negotiated rulemaking 
on this issue, we have been hampered in the ability to fully understand 
students' participation in distance education, account for differences 
in outcomes and conduct oversight, accurately measure taxpayer 
expenditures on distance education programs, and gauge the success of 
such education.\1\ The proposed changes will assist the Department with 
these issues.
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    \1\ https://www2.ed.gov/policy/highered/reg/hearulemaking/2023/program-integrity-and-institutional-quality-session-1-issue-paper-distance-education-final.pdf.
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    The other distance education issue the Department seeks to address 
with this rulemaking involves clock-hour programs, which traditionally 
have required considerable hands-on

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instruction to properly prepare students for employment in their field 
of study. In the September 2, 2020, final rule on distance education, 
the Department was persuaded that allowing for asynchronous instruction 
in clock-hour programs was sensible as long as it was adequately 
tracked through appropriate technology (85 FR 54742).\2\ However, after 
additional review of the issue during its oversight and compliance 
activities, and based on complaints received from students, the 
Department believes this expansion puts students and taxpayers at risk. 
Consequently, the Department is proposing to eliminate asynchronous 
instruction for clock-hour programs.
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    \2\ https://www.federalregister.gov/documents/2020/09/02/2020-18636/distance-education-and-innovation.
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Return of Title IV Funds (Sec. Sec.  668.21, 668.22)

    The R2T4 regulations govern the process institutions must conduct 
when a title IV recipient ceases attendance during a payment period 
(term) or a period of enrollment. Title IV funds are awarded to a 
student under the assumption that the student will attend school for 
the entire period for which the funds were awarded. When a student 
withdraws, they may no longer be eligible for the full amount of title 
IV funds that they were originally scheduled to receive and that the 
institution disbursed. After an institution completes an R2T4 
calculation, funds that were awarded to the student may need to be 
returned to the Department.
    R2T4 is consistently in the Department's top 10 compliance findings 
for schools and yields complex and challenging questions. The 
Department proposed the regulatory changes in this section to address 
some of the issues in the regulations that have been identified in 
these findings.\3\ Through these proposed R2T4 regulations, the 
Department seeks to: (1) help withdrawn students repay outstanding 
Direct Loan credit balances; (2) increase the accuracy and simplicity 
of performing R2T4 calculations; (3) address unique circumstances for 
what constitutes a withdrawal; and (4) codify longstanding policies 
into regulation.
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    \3\ Program Reviews--https://studentaid.gov/data-center/school/fines-and-findings; Annual Top Ten School Findings--https://studentaid.gov/data-center/school/program-reviews.
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Federal TRIO Programs (Sec. Sec.  643.3, 644.3, 645.3)

    The TRIO programs are Federal outreach and student services 
programs designed to identify and provide services for individuals from 
disadvantaged backgrounds. Individuals from disadvantaged backgrounds 
include low-income individuals, first-generation college students, 
students with disabilities, students with limited English proficiency, 
students experiencing homelessness, and students in foster care. The 
TRIO programs are designed to help students from disadvantaged 
backgrounds progress through the academic pipeline from middle school 
to postbaccalaureate programs.
    Current regulations limit TRIO programs to an individual that is a 
citizen or national of the United States, a permanent resident of the 
United States, a permanent resident of Guam, the Northern Mariana 
Islands, the Trust Territory of the Pacific Islands (Palau), or a 
resident of the Freely Associated States (the Federated States of 
Micronesia or the Republic of the Marshall Islands). See Sec. Sec.  
643.3(a)(1)(i) through (v), 644.3(a)(1)(i) through (v), and 645.3(a)(1) 
through (5). An individual is also currently eligible to participate in 
the TRIO programs if they are in the United States for other than a 
temporary purpose and provide evidence from the Immigration and 
Naturalization Service (currently Department of Homeland Security) of 
his or her intent to become a permanent resident (i.e., conditional 
resident aliens, conditional entrants, self-petitioners under the 
Violence Against Women Act (battered immigrants), refugees, asylees, 
victims of human trafficking, Cuban-Haitian entrants, persons paroled 
into the U.S. for at least one year and Jay Treaty students).
    The Department's proposed changes would impact the three TRIO 
programs that serve students in a pre-postsecondary education context: 
the Upward Bound program, the Talent Search program, and the 
Educational Opportunity Centers program. The Upward Bound program 
prepares high school students for college while the Talent Search 
program encourages participants to complete secondary and postsecondary 
education. The Educational Opportunity Centers program provides 
financial and academic counseling to qualified individuals, generally 
over the age of 19, though individuals under 19 are eligible to receive 
program services if they meet the requirements of current 34 CFR 
644.3(a)(2)(ii), who want to enter or continue a postsecondary 
education program. The Department proposes to broaden participation in 
these three programs by expanding eligibility to all disadvantaged 
individuals who have enrolled in or who seek to enroll in a high school 
in the United States, territories, or Freely Associated States, which 
are the geographic areas served by the TRIO programs. This proposal 
would allow the three TRIO programs that serve students in the pre-
postsecondary education context to serve students who are already 
receiving or seek to receive public educational services from middle 
and high schools.
    The McNair Scholars program, the Student Support Services program 
and the Training Program for Federal TRIO Programs would not be 
impacted by these proposed changes. The Department proposes to limit 
this eligibility expansion to the three TRIO programs that serve 
students in the pre-postsecondary context, because the Department 
believes that all who attend high school in the United States should 
have the same access to TRIO services. The TRIO provisions would 
additionally eliminate the operational burden of separating out 
students who are enrolled in public schools but not eligible for TRIO 
services under the current rule, enabling a greater focus on delivering 
educational services to all students. The proposed rule change would 
assist students on their path to and attainment of postsecondary 
education.

VII. Public Participation

    The Department has significantly engaged the public in developing 
this NPRM, as described here and below in the Negotiated Rulemaking 
section.
    On March 24, 2023, The Department announced public hearings at 
which interested parties could comment on the topics suggested by the 
Department or suggest additional topics for consideration.\4\ The 
Department conducted virtual public hearings on April 11 and 12, 2023. 
The Department considered the advice and recommendations submitted by 
individuals and organizations in these public hearings in developing 
initial proposed regulatory provisions for consideration by the Program 
Integrity and Institutional Quality Committee (Committee). You may view 
transcripts of the public hearings at https://www2.ed.gov/policy/highered/reg/hearulemaking/2023/index.html.
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    \4\ 88 FR 17777.
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    The Department also accepted written comments on possible 
regulatory provisions that were submitted to the Department by 
interested parties and organizations as part of the public hearing 
process. You may view the written comments submitted in response to the 
March 23, 2023, Federal Register notice on the Federal

[[Page 60260]]

eRulemaking Portal at www.regulations.gov, within docket ID ED-2023-
OPE-0039. Instructions for finding comments are also available on the 
site under ``FAQ.''
    On November 29, 2023, the Department published a notice in the 
Federal Register (88 FR 83365) announcing the intent to establish a 
negotiated rulemaking committee to prepare proposed regulations on: (1) 
The Secretary's recognition of accrediting agencies under 34 CFR part 
602 and related parts; (2) Institutional eligibility under 34 CFR 
600.2, including State authorization as a component of such eligibility 
under 34 CFR 600.9; (3) The requirements for distance education under 
34 CFR 600.2 that pertain to clock-hour programs and reporting for 
students who enroll primarily online; (4) Return of Title IV funds, to 
address requirements for participating institutions to return unearned 
title IV funds in a manner that protects students and taxpayers while 
easing the administrative burden for institutions of higher education 
under 34 CFR 668.22; (5) Cash management, to address timely student 
access to disbursements of title IV, HEA Federal student financial 
assistance and provisions related to credit balances, escheatment, and 
loss of such funds under 34 CFR part 668, subpart K; and (6) The 
eligibility requirements for participants in TRIO.

VIII. Negotiated Rulemaking

    Section 492 of the HEA requires the Secretary to obtain public 
involvement in the development of proposed regulations affecting 
programs authorized by title IV of the HEA. After obtaining extensive 
input and recommendations from the public, including individuals and 
representatives of groups involved in the title IV, HEA programs, the 
Department, in most cases, must engage in the negotiated rulemaking 
process before publishing proposed regulations in the Federal Register. 
If negotiators reach consensus on the proposed regulations, the 
Department agrees to publish without substantive alteration a defined 
group of proposed regulations on which the negotiators reached 
consensus--unless the Secretary reopens the process or provides a 
written explanation to the participants stating why the Secretary has 
decided to depart from the agreement reached during negotiations. You 
can find further information on the negotiated rulemaking process at: 
www2.ed.gov/policy/highered/reg/hearulemaking/2023/index.html.
    On November 29, 2023, the Department published a notice in the 
Federal Register (88 FR 83365) announcing its intention to establish a 
Committee, the Program Integrity and Institutional Quality Committee, 
to prepare proposed regulations for the title IV, HEA programs. The 
notice set forth a schedule for Committee meetings, requested 
nominations for individual negotiators to serve on the negotiating 
Committee, and announced the topics that Committee would address.
    The Committee included the following members, representing their 
respective constituencies:
     Business Officers from Institutions of Higher Education: 
Joe Weglarz, Marist College, and Dom Chase (alternate), Ivy Tech 
Community College of Indiana.
     Civil Rights Organizations and Consumer Advocates: Carolyn 
Fast, The Century Foundation, and Magin Misael Sanchez (alternate), 
UnidosUS.
     Financial Aid Administrators: JoEllen Price, San Jacinto 
College, and Zack Goodwin (alternate), University of Nevada, Las Vegas.
     Historically Black Colleges and Universities, Tribal 
Colleges and Universities, and Minority-serving Institutions 
(institutions of higher education eligible to receive Federal 
assistance under title III, parts A and F, and title V of the HEA): 
Charles B. W. Prince, Dillard University, and D'Angelo Sands 
(alternate), Texas A&M University-Corpus Christi.
     Institutional Accrediting Agencies Recognized by the 
Secretary: Jamienne S. Studley, WASC Senior College and University 
Commission, and Michale McComis (alternate), Accrediting Commission of 
Career Schools and Colleges.
     Legal Assistance Organizations: Robyn Smith, Legal Aid 
Foundation of Los Angeles and National Consumer Law Center, and Sophie 
Laing (alternate), Pine Tree Legal Assistance.
     Private Nonprofit Institutions of Higher Education: Erika 
Linden, Des Moines University, and Scott Dolan (alternate), Excelsior 
University.
     Programmatic accrediting agencies recognized by the 
Secretary, to include State agencies recognized for the approval of 
nurse education: Laura Rasar King, Council on Education for Public 
Health, and Amy Ackerson (alternate), Missouri State Board of Nursing.
     Proprietary Institutions of Higher Education: Jillian 
Klein, Strategic Education, Inc., and David Cohen (alternate), Five 
Towns College and APC Board of Directors.
     Public Four-Year Institutions of Higher Education: Jason 
Lorgan, University of California, Davis, and Alyssa Dobson (alternate), 
Slippery Rock University.
     Public Two-Year Institutions of Higher Education: Jo Alice 
Blondin, Clark State College, and Michael Cioce (alternate), Rowan 
College at Burlington County.
     State Attorneys General: Diana Hooley, Massachusetts 
Attorney General's Office.
     State Officials, including State higher education 
executive officers, State authorizing agencies, and State regulators of 
institutions of higher education: John Ware, Ohio State Board of Career 
Colleges and Schools, and Robert Anderson (alternate), State Higher 
Education Executive Officers Association.
     Students or borrowers, including currently enrolled 
borrowers, or groups representing them: Jessica Morales, American 
University--Washington School of Law, and Emmett Blaney (alternate), 
Young Invincibles.
     U.S. military service members, veterans, or groups 
representing them: Barmak Nassirian, Veterans Education Success, and 
Ashlynne Haycock-Lohmann (alternate), Tragedy Assistance Program for 
Survivors.
     Federal Negotiator: Gregory Martin, U.S. Department of 
Education.
    The Department also invited nominations for a Federal TRIO Programs 
Subcommittee (Subcommittee). The Subcommittee members were not voting 
members of the Committee unless otherwise designated to represent a 
constituency; however, they provided a recommendation for TRIO and 
served as a resource to the Committee. The Subcommittee members were:
     Current or former participants in a Federal TRIO Program: 
Wade Williams, Crowder College Foundations.
     Institutions of Higher Education: D'Angelo Sands, Texas 
A&M University-Corpus Christi.
     Public or private agencies or organizations, including 
community-based organizations with experience in serving disadvantaged 
youth: Emalyn Lapus, Japanese Community Youth Council.
     Secondary schools, including local educational agencies 
with secondary schools: Geof Garner, Multnomah Education Service 
District.
     State Officials, including State Higher Education 
Executive Officers, State Authorizing Agencies, and State Regulators of 
Institutions of Higher Education: Michael P. Meotti,

[[Page 60261]]

Washington Student Achievement Council.
     U.S. Department of Education: Aaron Washington, Office of 
Postsecondary Education, and Hannah Hodel, Office of General Counsel.
    The Committee met for three rounds of negotiations, each of which 
was held over four days between January and March 2024. The 
Subcommittee met on January 12 and February 9. At its first meeting, 
the Committee reached agreement on its protocols and proposed agenda. 
The protocols provided, among other things, that the Committee would 
operate by consensus. The protocols defined consensus as no dissent by 
any member of the Committee and noted that consensus checks would be 
taken issue by issue.
    The Committee reviewed and discussed the Department's drafts of 
regulatory language, as well as alternative language and suggestions 
proposed by Committee members. During each negotiated rulemaking 
session, provided opportunities for public comment at the end of each 
day. Additionally, during and between each negotiated rulemaking 
session, non-Federal negotiators obtained feedback from their 
stakeholders that they shared with the negotiating committee.
    At the meeting on March 4, 2024, the Committee reached consensus on 
the Department's proposed regulations on TRIO. The Department has 
published the proposed TRIO amendatory language in this NPRM without 
substantive alteration to the agreed-upon proposed regulations. The 
Committee did not reach consensus on the other issues considered.
    For more information on the negotiated rulemaking sessions please 
visit www2.ed.gov/policy/highered/reg/hearulemaking/2023/index.html.

IX. Significant Proposed Regulations

    We discuss substantive issues under the sections of the proposed 
regulations to which they pertain. Generally, we do not address 
proposed regulatory provisions that are technical or otherwise minor in 
effect.

A. Distance Education

Definitions (Sec.  600.2)
    Current Regulations: The current definition of additional location 
in Sec.  600.2 includes two categories: the traditional physical 
facilities that are geographically separate from the main campus of the 
institution and correctional institutions where students receive 
postsecondary educational instruction.
    Proposed Regulations: The Department proposes to add a third 
category to this definition: virtual locations, through which 
institutions offer 100 percent of an educational program by distance 
education or correspondence courses, notwithstanding mandatory on-
campus or residential periods of 90 days or less.
    Reasons: Under the current regulations and Department processes, 
there is no distinction between an institution's on-campus programs and 
programs offered entirely online or in a hybrid format. For example, 
institutions may have online programs related to on-campus programs 
with the same Classification of Instructional Programs (CIP) code, 
sometimes with a different curriculum. If they have the same CIP code, 
however, the Department is unable to distinguish between the two 
programs for many purposes including program oversight, audits, looking 
at outcome metrics, and College Scorecard program-level data, including 
debt, earnings, and completion. The Department is also unable to 
determine the precise amount of title IV funds being expended in 
distance education programs or determine the State where the student is 
located while enrolled.
    Establishing a virtual location as a type of additional location 
would distinguish programs offered entirely through distance education 
from those that occur fully or partially at a physical facility of the 
school or at a correctional institution. The proposed changes would 
help the Department measure and better understand student outcomes and 
the amount of title IV program funds being expended in each setting and 
conduct more accurate program oversight including through better 
tailored program reviews. The proposed changes would also improve the 
Department's ability to determine the States where title IV, HEA 
recipients are located and allow the Department to provide this 
information to State oversight entities and the public. This additional 
information would improve the ability of State oversight entities to 
oversee distance education programs and better assess the risk that 
such programs may pose to individuals residing in their States.
    In addition, having distinct virtual locations would allow the 
Department to account for situations in which an institution ends its 
online offerings irrespective of what is occurring at a school's brick-
and-mortar campus or if an institution ended its brick-and-mortar 
offerings but continued its online offerings. This would allow the 
Department to monitor an institution's compliance with close-out 
requirements, consistent with the monitoring done for closures of 
brick-and-mortar institutions and locations. Separately identifying 
virtual locations would also provide greater protection for students if 
an institution offering both distance education and in-person 
instruction suspends coursework in one modality but maintains the 
other. Students whose modality has been discontinued and who may not 
wish to, or may not be able to, continue in the alternative modality, 
would be eligible for closed school discharges. For example, students 
that enrolled in an on-campus program may have done so with the 
expectation that they would be instructed in person, and they may not 
have otherwise chosen an online program. Similarly, a student who 
enrolled in an online program may not be inclined or able to move into 
an on-campus program for a number of reasons, such as preference for a 
flexible schedule, not living near the physical campus, or a preference 
for online instruction. This regulatory change will provide a clear 
mechanism for providing relief.
    Although the definition of a virtual location refers primarily to 
programs offered entirely through distance education, the Department 
proposes to include in the definition an exception for programs that 
have limited requirements for students to attend on campus activities, 
including preparation activities and residential periods of instruction 
of 90 days or less. These exceptions are intended to prevent 
institutions from circumventing the requirement to report an additional 
location by requiring a minimal amount of on-campus or residential 
activities.
    The Department notes that the proposed concept of a virtual 
additional location would not require additional oversight by States or 
accrediting agencies; instead, the Department would approve an 
institution's virtual locations if its oversight entities approved or 
authorized the institution to offer distance education.
    Current Regulations: The current definition of clock hour in Sec.  
600.2 allows for distance education in which a synchronous or 
asynchronous class, recitation, or lecture provides direct interaction 
between students and instructors and for asynchronous learning 
activities in which students interact with technology that can monitor 
and document the time that they participate in the activity.
    Proposed Regulations: The Department proposes removing these 
asynchronous options using distance education under the definition of a 
clock-hour.
    Reasons: The definition of a ``clock hour'' describes the types of 
coursework

[[Page 60262]]

and the conditions under which the coursework is offered that may apply 
to a student's eligibility for title IV, HEA funds. Coursework that 
does not meet this definition may still be conducted in a clock-hour 
program but cannot be counted toward a student's eligibility for title 
IV, HEA funds, in particular the ability to receive a second or 
subsequent disbursement of such funds. Since the very first time that 
the Department defined ``clock hour'' for the Basic Educational 
Opportunity Grant (BEOG) program, which later became the Pell Grant 
program, the Department has defined a ``clock hour'' as a period of 
time in which a student is either in a class, lecture, or recitation 
with an instructor, or engaged with other types of coursework that are 
supervised by an instructor (45 FR 48494). Although the Department 
defines a ``clock hour'' differently for correspondence coursework, 
such coursework is associated with other significant limitations and 
requirements that limit waste, fraud, and abuse.
    The Department has long had concerns about allowing clock hours 
offered through distance education to count toward a student's 
eligibility for title IV, HEA funds, particularly regarding an 
institution's ability to adequately identify true engagement with 
academic coursework and monitor how long that engagement took place. 
However, in the September 2, 2020, final rule on distance education, 
the Department was persuaded that clock hours completed through 
asynchronous instruction could be permitted to count toward a student's 
title IV eligibility as long as each clock hour offered asynchronously 
was adequately tracked through appropriate technology (85 FR 54742).\5\ 
Since that time, the Department's experiences with asynchronous 
coursework through interactions with institutions and students during 
program reviews and other oversight activities have frequently 
demonstrated that its original concerns were well-founded: such 
coursework often consists of limited or no engagement between 
instructors and students, and even when engagement does happen, 
institutions have difficulty adequately monitoring the amount of time 
that students spend on asynchronous activities.
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    \5\ https://www.federalregister.gov/documents/2020/09/02/2020-18636/distance-education-and-innovation.
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    Asynchronous learning activities often require a level of 
technology that schools lack or fail to meet, resulting in substandard 
education consisting of students having to learn material on their own. 
For example, the Department has found during program reviews and from 
speaking to students that asynchronous learning in clock-hour programs 
has often consisted of playing videos, reading assignments or scrolling 
through pages, without the meaningful interaction with the coursework 
or instructors that is necessary for mastery in hands-on job training 
programs and the development of important skills such as critical 
thinking and effective communication. The National Accrediting 
Commission of Career Arts and Sciences (NACCAS), a Department-
recognized accreditor of cosmetology schools, shows another example in 
its definition of asynchronous learning, which includes ``scrolls 
through reading material'' and ``works on assignments'' as a learning 
activity.\6\ The Department is concerned that these kinds of learning 
activities, while helpful for students, would not meet the definition 
of a ``clock hour'' because scrolling through materials and working on 
assignments are activities that are more comparable to homework than 50 
to 60 minutes of in-class or faculty-supervised instruction or 
training.
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    \6\ See the 2024 NACCAS handbook here (as of June 13, 2024): 
https://naccas.org/naccas-handbook.
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    Asynchronous instruction in clock-hour programs also does not 
foster direct interaction between students and instructors, which can 
make it difficult for students to receive the training necessary for 
the types of occupations for which clock-hour programs train students. 
Students have repeatedly informed the Department during program reviews 
and oversight activities that the lack of direct engagement with 
instructors hampered their ability to obtain the skills necessary to 
pass certification exams or obtain a job in their field. The 
Department's observations during its compliance work are consistent 
with studies performed on the issue. As explained in the Regulatory 
Impact Analysis, surveys and evaluations of job training programs that 
are typically offered in clock hours have shown general concerns that 
distance education is not sufficient to provide learners with the type 
of ``hands-on'' experience that they need and expect in those kinds of 
programs.\7\ One recent study of a technical program found that 
students had greater clarity in understanding and confidence to solve 
exam questions after synchronous, rather than asynchronous, 
instruction.\8\ The same study found that students had significantly 
higher exam scores in topics taught through synchronous instruction 
compared to asynchronous instruction.\9\ Eliminating the asynchronous 
option for clock-hour programs would provide a more effective 
education, which would better prepare students for the kinds of 
occupations that have traditionally required more hands-on instruction 
and training, and which, in many cases, require passing a licensure or 
certification exam in order to obtain employment. The Department notes 
that this does not prevent institutions from using asynchronous 
activities to supplement a student's program of study, but those 
activities cannot be counted toward clock hours used for title IV 
purposes, just as assigned reading outside of classroom hours does not 
count for that purpose.
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    \7\ https://www.heldrich.rutgers.edu/sites/default/files/2022-06/Process_Evaluation_of_the_Integration_of_Title_I_and_Title_II.pdf;
 https://www.newamerica.org/education-policy/reports/five-things-policymakers-should-know-about-short-term-credentials/5-students-think-hands-on-training-is-useful-but-few-adults-with-short-term-certificates-receive-this-training.
    \8\ https://journals.lww.com/jehp/fulltext/2021/10000/why_people_are_becoming_addicted_to_social_media_.223.aspx.
    \9\ https://journals.lww.com/jehp/fulltext/2021/10000/why_people_are_becoming_addicted_to_social_media_.223.aspx.
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    Current Regulations: None.
    Proposed Regulations: We propose to add a definition of distance 
education course that would include courses that are offered 
exclusively through distance education, notwithstanding in-person non-
instructional requirements, including orientation, testing, academic 
support services, or residency experiences.
    Reasons: As with the addition of virtual location as a type of 
additional location, the proposed addition of a definition for distance 
education course would enable the Department to better assess the 
effectiveness of distance education and compare its outcomes with those 
of traditional in-person instruction. The proposed definition also 
would help clarify a term about which there has been some confusion 
between institutions and students, as pointed out by negotiators, and 
would facilitate determinations of whether institutions are in 
compliance with the requirement to acquire additional accreditor 
approval when they pass the 50 percent threshold for the number of 
classes they offer via distance education, as explained in Dear 
Colleague Letter GEN-23-09.\10\
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    \10\ https://fsapartners.ed.gov/knowledge-center/library/dear-colleague-letters/2023-05-18/accreditation-and-eligibility-requirements-distance-education.
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    The Department proposes to define a ``distance education course'' 
as comprising only distance education as

[[Page 60263]]

defined under 34 CFR 600.2 for several reasons. First, we intend for 
the definition to be as consistent as possible with the definition of 
``distance education'' currently used for the Integrated Postsecondary 
Education Data System (IPEDS). We also wish to provide clarity 
regarding an institution's calculation of the 50 percent threshold for 
distance education courses described above as well as proposed 
requirements for institutions to provide student-specific reporting of 
distance education coursework described below under Sec.  668.41. It is 
not the Department's intent to capture in this definition coursework 
that is offered primarily on campus but that includes online components 
such as a learning management system where assignments or homework are 
maintained or submitted.
Academic Year (Sec.  668.3)
    Current Regulations: Current Sec.  668.3(b) sets forth certain 
definitions applicable to the title IV programs, and within the 
definition of a week of instructional time in Sec.  668.3(b)(2)(ii), 
there are two sub-paragraphs stating that institutions offering 
asynchronous coursework through distance education must make available 
to students the resources necessary for academic engagement, and they 
must expect students to perform educational activities demonstrating 
academic engagement during the week.
    Proposed Regulations: We propose to amend Sec.  668.3(b)(2)(ii)(A) 
and (B) to limit asynchronous coursework that can count toward an 
institution's definition of an academic year to coursework offered in 
credit-hour programs.
    Reasons: These edits are necessary to conform the regulations in 
Sec.  668.3 with the Department's proposal regarding asynchronous 
education in clock-hour programs in Sec.  600.2.
Reporting and Disclosure of Information (Sec.  668.41)
    Current Regulations: Current Sec.  668.41 lists institutional 
reporting and disclosure requirements.
    Proposed Regulations: We propose, in new paragraph (h), to require 
institutions to report their enrollment in distance education or 
correspondence courses.
    Reasons: As requested by many of the negotiators, the Department 
proposes to add a requirement in Sec.  668.41 to report each recipient 
of title IV, HEA assistance by enrollment status in distance education 
or correspondence courses. We believe this will provide the Department 
with expanded information to better answer questions about college 
access, persistence, completion, and success, and to better inform 
student-centered policies for distance education. This reporting 
requirement would also improve the Department's ability to determine 
whether institutions have reached the 50 percent threshold for distance 
education enrollment announced in Dear Colleague Letter GEN-23-09.\11\ 
When institutions enroll at least 50 percent of their students in 
distance education, offer at least 50 percent of their courses or 50 
percent of a program via distance education, they must obtain further 
accreditor approval beyond the initial approval to deliver distance 
education programs.
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    \11\ https://fsapartners.ed.gov/knowledge-center/library/dear-colleague-letters/2023-05-18/accreditation-and-eligibility-requirements-distance-education.
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    During negotiations, non-Federal negotiators proposed collecting 
student-level distance education information. While the Department did 
not take the proposal as written, this change would effectuate the 
intent of the proposal, and we would explain the details of this 
reporting in guidance pertaining to the operation of the Department's 
systems.
    The Department proposes to implement this provision no earlier than 
July 1, 2026, given the significant amount of change that would be 
required in Federal Student Aid (FSA)'s systems. This will also provide 
institutions with sufficient time to make any necessary changes to 
their own systems and prepare to report the additional information to 
the Department. Institutions already report information regarding 
distance education enrollment at the aggregate level for IPEDS, however 
the Department understands that this requirement may require 
institutions to update their systems for reporting distance education 
enrollment on a student-by-student basis.

B. Return of Title IV Funds

Treatment of Title IV Grant and Loan Funds if the Recipient Does Not 
Begin Attendance at the Institution (Sec.  668.21)
    Current Regulations: Currently, under section Sec.  
668.21(a)(2)(ii), when a disbursement of title IV aid is made to a 
student, but the student does not begin attendance in the payment 
period or period of enrollment, the loan servicer issues a final demand 
letter, in accordance with 34 CFR 685.211, requiring the student to 
immediately return all Direct Loan funds directly received that are 
associated with the payment period or period of enrollment.
    Proposed Regulations: The Department proposes to amend Sec.  
668.21(a)(2)(ii) by removing ``will issue a final demand letter to the 
borrower in accordance with 34 CFR 682.412 or 34 CFR 685.211, as 
appropriate'' and replacing it with ``will initiate borrower repayment 
under the terms of their promissory note.''
    Reasons: The Department believes the proposed change would help 
students repay loan amounts that were provided to them as credit 
balances. Because loan disbursement regulations permit a school to 
credit a student's account 10 days before the start of classes, 
students who do not actually begin attendance can receive a loan 
disbursement. While the part of the disbursement credited to the school 
gets returned, the student must repay the funds they received directly. 
Currently, students who receive a loan disbursement but never start 
attendance receive a final demand letter from the servicer for any 
funds not credited to the school. That amount must be repaid in full 
immediately. If the student does not or cannot repay the loan funds, 
the loan will go into default. If students have spent those funds 
already on other necessary expenses, such as housing, they could be 
forced to turn to private lenders to repay their loans or end up in 
default. To help students repay these credit balances, the Department 
proposes, allowing students to repay the loan funds they received under 
the terms of their promissory note, rather than requiring immediate 
repayment in full. This would provide the student with a formal grace 
period and allow the student to repay over time pursuant to a repayment 
plan that best meets their needs.
Treatment of Title IV Funds When a Student Withdraws (Sec.  668.22)
    Current Regulations: Current Sec.  668.22 addresses treatment of 
title IV, HEA funds when a student withdraws.
    Proposed Regulations: The Department proposes to add a new Sec.  
668.22(a)(2)(ii)(A)(6) that would establish that a student is not 
considered to have withdrawn if: (1) the institution's records treat a 
student as having never attended courses for that payment period or 
period of enrollment; (2) the institution returns all the title IV aid 
disbursed to the student for that payment period or period of 
enrollment; (3) the institution refunds all institutional charges to 
the student for the payment period or period of enrollment; and (4) the 
institution writes off or cancels any current year balance owed by the 
student to the institution due to the institution's

[[Page 60264]]

returning of title IV, HEA funds to the Department.
    Reasons: Current R2T4 regulations under 34 CFR 668.22(a)(1) state 
that if a student begins attendance in the payment period, even if only 
for one day, an institution must determine the amount of title IV aid 
that the student earned as of their withdrawal date. If a student has 
not earned all disbursed aid, the unearned portion must be returned to 
the Department. This requires an institution to complete an R2T4 
calculation for a student even if it has refunded 100 percent of that 
student's tuition and fees.
    The Department proposes to change these requirements to allow a 
school to treat a student as having never attended during a payment 
period or period of enrollment if the institution: (1) Treats the 
student as never having begun attendance; (2) Returns all of a 
student's title IV, HEA funds for that period; (3) Refunds all the 
student's institutional charges for that period; and (4) Writes off or 
cancels any current year balance owed to the institution that results 
from the return of title IV funds. This would permit institutions that 
wish to maintain generous tuition refund policies to be exempt from 
performing an R2T4 calculation in cases where students are made 
financially whole after withdrawing. This would also result in these 
withdrawn students having greater Pell Grant lifetime eligibility and 
reduce the likelihood of these students owing a debt to the Department 
or the institution because the institution would be required to write 
off or cancel any current year balance owed to the institution that 
resulted from the return of title IV funds.
    The proposed changes would address unique circumstances that 
currently constitute a withdrawal and may trigger return of funds by 
the school or student. While the Department does not have the authority 
to prohibit an institution from collecting a debt owed by a student, 
the Department seeks to incentivize institutions to not collect debts 
resulting from a student withdrawal by providing flexibility in 
conducting R2T4 calculations when certain conditions are met. The 
Department is aware that some institutions maintain policies that allow 
students to receive full tuition and fee refunds in certain 
circumstances, for example, if the student attended only a few days 
during a payment period or withdrew for medical reasons. These policies 
allow students who withdraw to avoid institutional debts and make it 
easier for those students to eventually re-enroll and complete their 
programs, whether at the same institution or elsewhere.
    Use of these generous tuition refund policies would be at the 
discretion of the institution. The Department, however, intends for the 
reduced burden resulting from this exemption from the R2T4 process to 
serve as encouragement for institutions to develop and maintain these 
generous refund policies for their students.
    Current Regulations: Currently, under Sec.  668.22(b)(2), an 
institution that is required to take attendance must document a 
student's withdrawal date and maintain the documentation as of the date 
of the institution's determination that the student withdrew.
    Proposed Regulations: The Department proposes to amend Sec.  
668.22(b)(2) to require an institution to document a withdrawal date 
within 14 days of the student's last date of attendance. The Department 
also proposes to remove the cross-reference to paragraph (l)(3) at the 
end of the paragraph.
    Reasons: The Department proposes to codify in regulation its 
longstanding sub-regulatory guidance requiring schools that are 
required to take attendance to determine the date that a student 
withdrew within 14 days from the student's last day of attendance. The 
Department believes that 14 days is an ample amount of time to document 
a student's withdrawal date when taking attendance, and therefore, we 
propose to codify the time frame in regulation.
    Current paragraph (l)(3) defines the ``date of the institution's 
determination that the student withdrew'' for an institution that is 
not required to take attendance. Because the proposed provision in 
Sec.  668.22 applies only to institutions that are required to take 
attendance, the Department proposes to remove the inapplicable cross-
reference.
    Current Regulations: Current Sec.  668.22 treats some institutions 
as required to take attendance if certain conditions are met but does 
not specifically mandate that distance education courses be attendance-
taking for purposes of the title IV return requirements.
    Proposed Regulations: The Department proposes to add a new Sec.  
668.22(b)(3)(ii) that would require an institution to take attendance, 
for purposes of the title IV return calculation, for each course 
offered entirely through ``distance education'' as defined in the 
proposed changes to Sec.  600.2, except for doctoral dissertation 
research courses.
    Reasons: Accurate withdrawal dates are critical to the title IV 
return calculations to ensure that unearned funds are returned. In the 
Department's experience, students in distance education courses 
generally do not formally withdraw, so it is critical that an 
institution establish an accurate withdrawal date. Under current 
regulations, when students withdraw without notification, a school that 
is not required to take attendance may use as a withdrawal date either 
the last date of a student's academically related activity that it has 
on record or the midpoint of the payment period. This can lead to 
institutions failing to report an accurate date, or using the date that 
allows the institution to keep the most money. From its compliance work 
on reviewing distance education, the Department has determined that 
institutions can often easily determine when students stop attending a 
distance education course, because institutional systems are already 
monitoring when students submit assignments or interact with 
instructors and students during lectures and course discussions. In 
fact, this monitoring is necessary for an institution to establish that 
it is meeting the distance education requirement of regular and 
substantive interaction. In addition, some institutions with online 
courses are already required to take attendance in certain situations 
described under 34 CFR 668.22(b)(3).
    The Department believes it is illogical to not require an 
institution to use a student's actual last date of attendance as a 
withdrawal date when the institution already has the mechanism in place 
for making that determination. Consequently, to increase the accuracy 
of return calculations in distance education courses, the Department 
proposes to require institutions to take attendance in such courses for 
R2T4 purposes. Schools would be required to use actual attendance data 
to determine a withdrawal date for students enrolled entirely in online 
courses for a particular payment period or period of enrollment. 
Institutions will be able to document the withdrawal date by 
documenting ``academic attendance'' as required under Sec.  
668.22(b)(1). Under Sec.  668.22(l)(7)(i), academic attendance must 
include academic engagement as defined in Sec.  600.2. This would 
increase the accuracy of R2T4 calculations for such students, limit 
instances of inaccurate calculations and the potential for gaming R2T4 
provisions by schools, and better protect student and taxpayer funds.
    During negotiations the Department heard that dissertation research 
courses for doctoral candidates have a unique format and are structured 
in such a way that it would be difficult for an institution to meet an 
attendance-taking

[[Page 60265]]

requirement in an online setting. While we note that all distance 
education courses are still required to provide regular and substantive 
interaction, we believe that dissertation research courses are unique 
and are not as likely as other distance education courses to frequently 
produce data on academic engagement. For this reason, the Department 
proposes to distinguish any academic coursework offered entirely 
through distance education that occurs prior to the dissertation 
research portion of a doctoral program, where attendance-taking would 
be required, from the dissertation research coursework of such program, 
where attendance taking would not be required.
    Current Regulations: Under Sec.  668.22(d)(1)(vii), an institution 
does not have to treat an approved leave of absence as a withdrawal. A 
leave of absence is approved if several requirements are met, including 
if upon return from leave the student is permitted to complete the 
coursework he or she began prior to the leave of absence, but clock-
hour, non-term credit hour program, and subscription-based programs are 
exempt from this requirement.
    Proposed Regulations: We propose to add an ``eligible prison 
education program'' to the list of exceptions in Sec.  
668.22(d)(1)(vii) that includes clock-hour, non-term, and subscription-
based programs.
    Reasons: On July 1, 2023, the Department published final 
regulations that detailed Pell eligibility for confined or incarcerated 
individuals in PEPs.\12\ These regulations did not address incarcerated 
students who face involuntary interruptions to their academic programs. 
For example, an entire correctional facility may be locked down due to 
a security issue, interrupting a student's progress in their PEP. In 
Sec.  668.22(d), we propose to provide that an incarcerated student 
does not have to return from a leave of absence to where the student 
left off and, instead, may return to a different point in their PEP. 
This would apply to programs of any structure, including term-based 
programs. This change would increase flexibility for institutions and 
would help boost student retention in PEPs.
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    \12\ https://www.federalregister.gov/documents/2022/10/28/2022-23078/pell-grants-for-prison-education-programs-determining-the-amount-of-federal-education-assistance.
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    Current Regulations: Currently, under Sec.  668.22(f)(1)(ii)(A), 
for clock-hour programs, the percentage of the payment period or period 
of enrollment completed is determined by dividing the total number of 
clock hours in the payment period or period of enrollment into the 
number of clock hours scheduled to be completed as of the student's 
withdrawal date.
    Proposed Regulations: In Sec.  668.22(f)(1)(ii)(A), we propose to 
add that, for clock-hour programs, the institution would divide the 
total number of clock hours in the payment period or period of 
enrollment into the number of clock hours scheduled to be completed 
``since the student began attendance in the payment period or period of 
enrollment'' as of the student's withdrawal date.
    Reasons: The Department believes this change would increase 
accuracy and simplicity in performing R2T4 calculations. Currently, 
because the regulations are silent on a specific procedure, for an R2T4 
calculation in a clock-hour program performed for a student who has 
withdrawn after successfully completing the first payment period of the 
program, an institution may use two methods to determine the percentage 
of the payment period completed: cumulative and by payment period. Both 
methods are based on ``scheduled hours,'' which are the hours a student 
was scheduled to complete within a payment period or period of 
enrollment as of their withdrawal date. This means an institution 
returns funds based on the amount of training that would have been 
completed, not necessarily how many hours the student actually 
attended. These methods differ significantly when a program contains 
two or more payment periods, which leads to widely varying 
calculations. The cumulative method considers the scheduled hours a 
student would have completed cumulatively across multiple payment 
periods, while the payment period method only considers the scheduled 
hours that have elapsed during a payment period since the student began 
attendance in that payment period.
    The Department has observed that, when an institution uses the 
cumulative method, many times the percentage of funds earned by the 
institution is much larger than the time actually attended, because the 
institution is permitted to carry the student into the next payment 
period and use those additional scheduled hours. This results in a much 
smaller return of title IV funds, which ultimately hurts a student who 
had to withdraw from a program. The Department does not believe this is 
a desirable result. In addition, in its compliance efforts, the 
Department has seen this as an area of abuse in which some institutions 
carry students who are not attending into a subsequent payment period 
to lower the amount of title IV aid they have to return.
    To promote consistency across all calculations, the Department 
proposes to change how institutions determine the percentage of the 
payment period completed for a clock-hour program by using only the 
payment period method. Providing one consistent way to calculate the 
percentage of the payment period completed would simplify R2T4 policy, 
reduce complexity and confusion, ensure that students are treated 
consistently, and eliminate an area of potential abuse.
    Current Regulations: Under 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' eligibility for title IV, HEA funds from the 
payment period or period of enrollment.
    Proposed Regulations: The Department proposes to revise Sec.  
668.22(l)(9) to provide that a student in a program offered in modules 
is scheduled to complete the days in a module only when a student 
begins attendance in the module.
    Reasons: In 2021 final regulations, the Department made several 
changes to R2T4 and modules.\13\ In response, the Department was asked 
how an institution determines whether the days in a module are included 
in the R2T4 calculation. The Department's response was complex, and 
depended on whether the institution uses an R2T4 freeze date and the 
types of title IV, HEA aid the student was eligible for during the 
payment period or period of enrollment. An R2T4 freeze date is an 
optional policy that uses the student's enrollment schedule at a fixed 
point to determine the number of days the student is scheduled to 
attend during the period for R2T4 purposes. The R2T4 freeze date can 
coincide with other dates--for example census dates or Pell 
recalculation dates--or the R2T4 freeze date can be a separate date. 
Currently, institutions may use multiple R2T4 freeze dates for multiple 
modules.
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    \13\ https://www.federalregister.gov/documents/2020/09/02/2020/18636/distance-education-and-innovation.
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    The ``freeze date'' concept is important under current requirements 
because without this date, schools would find it very difficult to 
determine the denominator of the R2T4 calculation using the exact 
coursework a student was scheduled to attend at the time of their 
withdrawal. Currently, regulations

[[Page 60266]]

do not describe this concept; but sub-regulatory guidance outlines what 
schools should consider when determining the number of days in a period 
when R2T4 is required for a program offered in modules. Audit and 
program review findings show that schools often make errors in R2T4 
calculations involving modules.
    The Department proposes in Sec.  668.22(l)(9) to simplify the 
determination by only including the days in a module in the denominator 
of the calculation if the student actually attends the module. The 
Department believes this will reduce complexity and errors. 
Institutions would no longer need to use a freeze date or differentiate 
between Pell and Direct loan recipients.
    The change would provide consistency across title IV programs, 
simplify when and how to count scheduled days in a modular setting, and 
reduce burden for institutions and the Department by eliminating the 
need for a ``freeze date'' concept.

C. Federal TRIO Programs

Who is eligible to participate in a Talent Search project? (Sec.  
643.3)
    Current Regulations: Current Sec.  643.3(a)(1)(i) through (v) allow 
individuals who are citizens or nationals of the United States, 
permanent residents of the United States, permanent residents of Guam, 
the Northern Mariana Islands, the Trust Territory of the Pacific 
Islands (Palau), or residents of the Freely Associated States (the 
Federated States of Micronesia or the Republic of the Marshall Islands) 
to participate in a Talent Search project. An individual is also 
currently eligible to participate in a Talent Search project if they 
are in the United States for other than a temporary purpose and provide 
evidence from the Immigration and Naturalization Service (currently 
Department of Homeland Security) of his or her intent to become a 
permanent resident (i.e., conditional resident aliens, conditional 
entrants, self-petitioners under the Violence Against Women Act 
(battered immigrants), refugees, asylees, victims of human trafficking, 
Cuban-Haitian entrants, persons paroled into the U.S. for at least one 
year and Jay Treaty students).
    Proposed Regulations: The Department proposes to add a new 
paragraph Sec.  643.3(a)(1)(vi) that would allow individuals who are 
enrolled in or seek to enroll in a high school in the United States, 
territories, or Freely Associated States to participate in a Talent 
Search project, if they do not satisfy any of the other eligibility 
categories in this section.
    Reasons: K-12 public schools must be open to all students 
regardless of their immigration status. As such, the Department 
believes that all children who attend high school in the United States 
should have the same access to TRIO services to assist their pathway 
into postsecondary education. This proposal would also align TRIO 
programs that serve students in the elementary or secondary context 
with other Federal K-12 spending programs that allow recipients (such 
as State educational agencies (SEAs) and local educational agencies 
(LEAs)) to spend funds on K-12 students without regard to immigration 
status, such as the Title I and Title IV programs under the Elementary 
and Secondary Education Act. Providing TRIO services to students 
without immigration status (students without status) previously 
ineligible will additionally eliminate the operational burden of 
separating out students who are enrolled in public schools but not 
eligible for TRIO services under the current rule, enabling a greater 
focus on delivering educational services to all students.
    The Talent Search program focuses on completing high school and 
increasing postsecondary education attainment. The Department's 
proposal to expand eligibility to all individuals who are enrolled in 
or seek to enroll in high school would align with the statutory goal of 
TRIO serving individuals from disadvantaged backgrounds in order to 
``prepare them for a program of postsecondary education.'' This 
expansion of eligibility would also better enable grantees to serve 
students from groups that are traditionally underrepresented in 
postsecondary education, such as students from low-income backgrounds 
who would be first-generation college students, which is among the 
statutory goals of the Talent Search program (section 402B of the HEA). 
In addition, the Committee reached consensus on this provision.
Who is eligible to participate in an Educational Opportunity Centers 
project? (Sec.  644.3)
    Current Regulations: Current Sec.  644.3(a)(1)(i) through (v) 
allows individuals who are citizens or nationals of the United States, 
permanent residents of the United States, permanent residents of Guam, 
the Northern Mariana Islands, the Trust Territory of the Pacific 
Islands (Palau), or residents of the Freely Associated States (the 
Federated States of Micronesia or the Republic of the Marshall Islands) 
to participate in an Educational Opportunity Centers project. An 
individual is also currently eligible to participate in an Educational 
Opportunity Centers project if they are in the United States for other 
than a temporary purpose and provide evidence from the Immigration and 
Naturalization Service (currently Department of Homeland Security) of 
his or her intent to become a permanent resident (i.e., conditional 
resident aliens, conditional entrants, self-petitioners under the 
Violence Against Women Act (battered immigrants), refugees, asylees, 
victims of human trafficking, Cuban-Haitian entrants, persons paroled 
into the U.S. for at least one year and Jay Treaty students).
    Proposed Regulations: The Department proposes to add a new 
paragraph Sec.  644.3(a)(1)(vi) that would allow individuals who are 
enrolled in or seek to enroll in a high school in the United States, 
territories, or Freely Associated States to participate in an 
Educational Opportunity Centers project, if they do not satisfy any of 
the other eligibility categories in this section.
    Reasons: K-12 public schools must be open to all students 
regardless of their immigration status. As such, the Department 
believes that all children who attend high school in the United States 
should have the same access to TRIO services to assist in their 
achievement toward the path of postsecondary education. This proposal 
would also align TRIO programs that serve students in the elementary or 
secondary context with other Federal K-12 spending programs that allow 
recipients (such as SEAs and LEAs) to spend funds on K-12 students 
without regard to immigration status. This provision, much like with 
the other two TRIO provisions addressed in this NPRM, would eliminate 
the administrative burden of separating out students who are enrolled 
in public schools but not eligible for TRIO services under the current 
rule.
    Although the Educational Opportunity Centers program is primarily 
focused on increasing the number of adult participants who enroll in 
postsecondary education institutions, the program also supports high 
school seniors who are transitioning into college. The Department's 
proposal to expand eligibility to individuals who are enrolled in or 
seek to enroll in high school would align with the statutory goal of 
TRIO serving individuals from disadvantaged backgrounds on the path 
toward postsecondary education. This expansion of eligibility would 
also better enable grantees to serve students from groups that are 
traditionally

[[Page 60267]]

underrepresented in postsecondary education such as students from low-
income backgrounds who would be first generation college students, 
which is among the statutory goals of the Educational Opportunity 
Centers program (section 402F of the HEA). In addition, the Committee 
reached consensus on this provision.
Who is eligible to participate in an Upward Bound project? (Sec.  
645.3)
    Current Regulations: Section 645.3(a)(1) through (5) allows 
individuals who are citizens or nationals of the United States, 
permanent residents of the United States, permanent residents of Guam, 
the Northern Mariana Islands, the Trust Territory of the Pacific 
Islands (Palau), or residents of the Freely Associated States (the 
Federated States of Micronesia or the Republic of the Marshall Islands) 
to participate in an Upward Bound project. An individual is also 
currently eligible to participate in an Upward Bound project if they 
are in the United States for other than a temporary purpose and provide 
evidence from the Immigration and Naturalization Service (currently 
Department of Homeland Security) of his or her intent to become a 
permanent resident (i.e., conditional resident aliens, conditional 
entrants, self-petitioners under the Violence Against Women Act 
(battered immigrants), refugees, asylees, victims of human trafficking, 
Cuban-Haitian entrants, persons paroled into the U.S. for at least one 
year and Jay Treaty students).
    Proposed Regulations: In new paragraph Sec.  645.3(a)(6), the 
Department proposes to provide that individuals who are enrolled in or 
seek to enroll in a high school in the United States, territories, or 
Freely Associated States may participate in an Upward Bound project, if 
they do not satisfy any of the other eligibility categories in this 
section, but that such individuals are not eligible for a direct cash 
stipend.
    Reasons: K-12 public schools must be open to all students 
regardless of their immigration status. As such, the Department 
believes that all children who attend high school in the United States 
should have the same access to TRIO services to assist in their path 
towards postsecondary education. This change would also align TRIO 
programs that serve students in the elementary or secondary context 
with other Federal K-12 spending programs that allow recipients (such 
as SEAs and LEAs) to spend funds on K-12 students without regard to 
immigration status.
    Although the Upward Bound program is primarily focused on preparing 
participants for college, a precursor to enter college is obtaining a 
high school diploma. The Department proposes to expand eligibility to 
individuals who are enrolled in or seek to enroll in high school, 
without regard to their citizenship status, to align the eligibility 
requirements with the statutory goal of TRIO serving individuals from 
disadvantaged backgrounds on the path toward postsecondary education. 
This expansion of eligibility would also better enable grantees to 
serve students from groups that are traditionally underrepresented in 
postsecondary education such as students from low-income backgrounds 
and who would be first-generation college students, which is among the 
statutory goals of the Upward Bound program (section 402C of the HEA). 
In addition, the Committee reached consensus on this provision.
    The Department's proposed expansion of student services for the 
Upward Bound program would not include providing direct cash stipends 
to individuals who do not meet the requirements of Sec.  645.3(a)(1) 
through (5) because that would be contrary to Federal statute. The 
Personal Responsibility and Work Opportunity Reconciliation Act of 1996 
(PRWORA) prohibits ``Federal public benefits'' from being awarded to 
persons who are not able to demonstrate certain types of eligible 
noncitizen statuses as a ``qualified alien'' under 8 U.S.C. 1641(b). 
PRWORA defines a ``Federal public benefit'' to include ``any 
retirement, welfare, health, disability, public or assisted housing, 
postsecondary education, food assistance, unemployment benefit, or any 
other similar benefit for which payments or assistance are provided to 
an individual, household, or family eligibility unit by an agency of 
the United States or by appropriated funds of the United States.'' 8 
U.S.C. 1611(c)(1)(B). As stated within the Department of Health and 
Human Services (HHS) Interpretation of ``Federal Public Benefit,'' 63 
FR 41658 (Aug. 4, 1998), these enumerated benefits exclude ``non-
postsecondary education programs, such as Head Start and elementary and 
secondary education.'' The 1998 HHS interpretation also contemplates 
that not all benefits or services provided under certain programs would 
be considered ``Federal public benefits.'' Id. Therefore, the 
Department believes that TRIO grant programs providing student support 
services in the secondary context constitute the type of ``incentive 
for illegal immigration provided by the availability of public 
benefits'' that PRWORA was enacted to discourage. 8 U.S.C. 1601(6).
    However, in the context of Upward Bound, the Department has 
determined that direct cash stipends provided to program participants 
under Sec.  645.42 represent a ``similar benefit'' to those enumerated 
benefits under 8 U.S.C. 1611(c)(1)(B) for which, where payment is 
provided to an ``individual, household, or family eligibility unit[,]'' 
falls under the restrictions of PRWORA. Because an individual who fails 
to meet the requirements of current Sec.  645.3(a)(1) through (5) would 
generally not be a ``qualified alien,'' the Department proposes to 
clarify in Sec.  645.3(a)(6) that individuals who qualify for program 
participation solely as a result of high school enrollment are not 
eligible for a direct cash stipend under this program.

X. Regulatory Impact Analysis

Executive Orders 12866, 13563, and 14094

Regulatory Impact Analysis
    Under Executive Order 12866, the Office of Management and Budget 
(OMB) must determine 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, as 
amended by Executive Order 14094, 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 $200 million or more 
(adjusted every three years by the Administrator of the Office of 
Information and Regulatory Affairs (OIRA) for changes in gross domestic 
product); or adversely affect in a material way the economy, a sector 
of the economy, productivity, competition, jobs, the environment, 
public health or safety, or State, local, territorial, or Tribal 
governments or communities;
    (2) Create serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impacts of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues for which centralized review 
would meaningfully further the President's priorities, or the 
principles set forth in the Executive Order, as specifically authorized 
in a timely manner by the Administrator of OIRA in each case.
    This proposed regulatory action is a significant regulatory action 
subject to review by OMB under section 3(f)(4) of Executive Order 
12866, as amended by

[[Page 60268]]

Executive Order 14094. The Department estimates present value net 
benefits of $1,434,537,761 over ten years at a 2 percent discount rate. 
This is equivalent to an annualized net benefits of $159,702,107 over 
ten years. Additionally, we estimate annualized quantified costs of 
$9,423,657 related to paperwork burden. Notwithstanding this 
determination, based on our assessment of the potential costs and 
benefits (quantitative and qualitative), the Department has determined 
that the benefits of this proposed regulatory action would justify the 
costs.
    The Department has also reviewed the regulations under Executive 
Order 13563, which supplements and explicitly reaffirms the principles, 
structures, and definitions governing regulatory review established in 
Executive Order 12866. To the extent permitted by law, Executive Order 
13563 requires that an agency--
    (1) Propose or adopt regulations only on a reasoned determination 
that their benefits justify their costs (recognizing that some benefits 
and costs are difficult to quantify);
    (2) Tailor its regulations to impose the least burden on society, 
consistent with obtaining regulatory objectives and taking into 
account--among other things and to the extent practicable--the costs of 
cumulative regulations;
    (3) In choosing among alternative regulatory approaches, select 
those approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity);
    (4) To the extent feasible, specify performance objectives, rather 
than the behavior or manner of compliance a regulated entity must 
adopt; and
    (5) Identify and assess available alternatives to direct 
regulation, including economic incentives--such as user fees or 
marketable permits--to encourage the desired behavior, or provide 
information that enables the public to make choices.
    Executive Order 13563 also requires an agency ``to use the best 
available techniques to quantify anticipated present and future 
benefits and costs as accurately as possible.'' The Office of 
Information and Regulatory Affairs of OMB has emphasized that these 
techniques may include ``identifying changing future compliance costs 
that might result from technological innovation or anticipated 
behavioral changes.''
    The Department issues these proposed regulations only on a reasoned 
determination that their benefits would justify their costs. In 
choosing among alternative regulatory approaches, the Department 
selected those approaches that maximize net benefits. Based on the 
analysis that follows, the Department believes that these regulations 
are consistent with the principles in Executive Order 13563.
    The Department has also determined that this regulatory action does 
not unduly interfere with State, local, territorial, or Tribal 
governments in the exercise of their governmental functions.
    As required by OMB Circular A-4, the Department compared the 
proposed regulations to the current regulations. In this regulatory 
impact analysis, the Department discusses the need for regulatory 
action, potential costs and benefits, and the regulatory alternatives 
we considered.
    Elsewhere in this section under Paperwork Reduction Act of 1995, 
the Department identifies and explains burdens specifically associated 
with information collection requirements.
1. Need for Regulatory Action
    The Department has identified a significant need for regulatory 
action to address inequities and inadequate protections for students 
and taxpayers in the current regulations.
Distance Education
    The HEA and the Department's regulations provide that institutions 
of higher education may offer programs through distance education. 
Currently, however, the Department has only very limited data about 
students enrolled in distance education, which limits the Department's 
ability to answer important questions about student pathways and 
outcomes through in-person, distance, and hybrid education. For 
example, an institution may offer a program that is provided on campus 
and a related program of the same CIP code that is provided online. The 
Department is currently unable to distinguish between those two 
programs in the data it currently receives, which limits its capacity 
to provide helpful and reliable information--such as College Scorecard 
program-level data, including debt, earnings, and completion--to 
students, families, institutions, and the public. This reporting 
requirement would also improve the Department's ability to determine 
whether institutions have reached the 50 percent threshold for distance 
education enrollment announced in Dear Colleague Letter GEN-23-09.\14\ 
When institutions enroll at least 50 percent of their students in 
distance education, offer at least 50 percent of their courses, or 50 
percent of a program via distance education, they must obtain further 
accreditor approval beyond the initial approval to deliver distance 
education programs.
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    \14\ https://fsapartners.ed.gov/knowledge-center/library/dear-colleague-letters/2023-05-18/accreditation-and-eligibility-requirements-distance-education.
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    Additionally, because of these limitations, students may be denied 
relief in the form of closed school discharges that they should be 
entitled to under the HEA in instances in which an institution ends 
either on-campus or online learning generally. In such cases, when an 
institution closes a program, it closes the entire modality through 
which it has provided students instruction. While some students may be 
satisfied learning under a different modality, others may have 
enrolled, at least in part, specifically to access learning through 
that particular modality. If an institution abruptly closes, under 
certain conditions, borrowers become eligible for discharges under the 
HEA. However, the Department is currently unable to provide relief to 
students whose institution remains open even though the modality of 
instruction they agreed to when they enrolled has ended.
    The proposed regulations would create a ``virtual location'' for 
institutions that includes all students who are being instructed 
primarily through distance education. The proposed regulations also 
would change institutional reporting requirements to specify a 
student's distance education status. These changes would enable the 
Department to obtain better data and more meaningfully compare the 
outcomes of students, particularly for those who are enrolled in 
similar programs that are delivered using different modalities. These 
provisions would also allow borrowers to receive closed school 
discharge if schools end either their online or on-campus operations. 
Finally, the additional reporting would allow the Department to better 
monitor and oversee the aid programs and institutional accrediting 
agencies by ensuring institutions are receiving appropriate review and 
approval of distance education offerings.\15\
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    \15\ https://fsapartners.ed.gov/knowledge-center/library/dear-colleague-letters/2023-05-18/accreditation-and-eligibility-requirements-distance-education.
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    We further propose, with respect to distance education, revisions 
to the definition of a clock hour that would improve the integrity of 
the title IV, HEA programs and better align how programs award clock 
hours with the requirement in the HEA that distance

[[Page 60269]]

education support regular and substantive interaction between students 
and instructors. Under current regulations the definition of a clock 
hour includes asynchronous learning. Specifically, changes to the 
definition of a ``clock hour'' in Sec.  600.2 that went into effect in 
2020 provide that asynchronous learning may be offered in clock-hour 
programs if it involves ``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.'' Though at the 
time the Department believed this change was appropriate because of a 
perceived need for greater institutional and student flexibility with 
regard to the time and place that coursework is completed, the 
Department's enforcement experience since that time has shown that 
unintended consequences outweighed any benefits. First, the Department 
has found that the level of engagement necessary to meet the definition 
of a clock hour is difficult to monitor because it requires technical 
expertise that many clock-hour institutions are unable or unwilling to 
obtain. Through program reviews, the Department is also aware of 
instances in which clock-hour programs offered through distance 
education have not complied with the requirement to ensure that the 
technology used documents 50-60 minutes of instruction for each clock 
hour in a student's program of study. Lack of such safeguards can 
contribute to an overall academic environment in which students do not 
receive the quality training necessary for obtaining a job post-
completion.
    Further, as a result of its enforcement efforts, the Department is 
concerned that asynchronous learning does not sufficiently meet the 
requirements of a clock-hour program. Through its program reviews, the 
Department has come to better understand that asynchronous instruction 
time that has been occurring in clock-hour programs is more similar to 
preparation in a correspondence course, where students essentially have 
to learn on their own, than time spent with an instructor in a class, 
lecture, recitation or in faculty-supervised laboratory, shop training, 
or internship. The Department is also concerned that asynchronous 
instruction may not provide the appropriate training for the types of 
occupations and fields for which clock-hour programs are designed to 
train students. Surveys and evaluations of job training programs that 
are typically offered in clock hours show that there are concerns 
generally that distance education is not sufficient for these types of 
programs to provide learners with the type of ``hands-on'' experience 
that they need and expect.\16\ This survey data is consistent with 
information obtained from student interviews conducted during program 
reviews. While some students may prefer asynchronous instruction due to 
the need for flexible schedules, studies of technical programs have 
shown that students had greater clarity in understanding and confidence 
to solve exam questions after synchronous instruction.\17\ Students 
also had significantly higher exam scores in topics covered through 
synchronous instruction than those taught through asynchronous 
instruction.\18\
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    \16\ https://www.heldrich.rutgers.edu/sites/default/files/2022/06/Process_Evaluation_of_the_Integration_of_Title_I_and_Title_II.pdf; 
https://www.newamerica.org/education-policy/reports/five-things-policymakers-should-know-about-short-term-credentials/.
    \17\ https://journals.lww.com/jehp/fulltext/2021/10000/why_people_are_becoming_addicted_to_social_media_.223.aspx.
    \18\ https://journals.lww.com/jehp/fulltext/2021/10000/why_people_are_becoming_addicted_to_social_media_.223.aspx.
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    Finally, the use of asynchronous clock hours allows a student to 
receive credit for clock hours that do not involve regular and 
substantive interaction between the student and an instructor, which is 
a fundamental requirement in the HEA for all distance education 
programs. The Department remains concerned that as clock-hour programs 
increasingly shift toward the use of asynchronous clock hours, the 
likelihood that distance education programs offered using clock hours 
will not meet the statutory requirements for regular and substantive 
interaction. Eliminating the use of asynchronous clock hours for title 
IV, HEA purposes, while continuing to allow synchronous clock hours 
involving direct instruction provides greater assurance that the 
statutory requirements for distance education in clock hour programs 
are met.
R2T4
    The R2T4 regulations govern the process institutions must conduct 
when a title IV, HEA recipient ceases attendance during a payment 
period or a period of enrollment. An R2T4 calculation determines, based 
on the proportion of a payment period or period of enrollment a student 
completed, whether funds must be returned by the school and/or student, 
or whether the student is eligible for a post-withdrawal disbursement. 
R2T4 calculations differ based on academic calendars and program 
format, including the use of clock hours or credit hours and the use of 
module courses within terms. R2T4 consistently ranks among the top ten 
compliance findings for institutions, is the subject of an entire 
volume of sub-regulatory guidance in the FSA Handbook and yields 
complex and challenging questions; therefore, the Department believes 
that there is a need to take regulatory action immediately to update 
and clarify the regulations.
Final Demand Letter
    Currently, when a disbursement of Direct Loan funds is made to a 
student, but the student does not begin attendance in the payment 
period or period of enrollment, the loan servicer issues a final demand 
letter requiring the student to immediately return all Direct Loan 
funds directly received associated with the payment period or period of 
enrollment. Some students may not be able to return all Direct Loan 
funds because they have already used those funds to pay for various 
noninstitutional educationally related expenses, such as housing. The 
Department believes there is a need to provide an alternative solution 
to the final demand letter. Therefore, the Department proposes that a 
student be able to repay their loans under the terms of their 
promissory note (e.g., through an income-driven repayment plan).
Withdrawal Exemption
    For some institutions, the R2T4 process is filled with errors, 
including issues such as incorrectly determining the withdrawal date or 
the number of days in a payment period. To simplify the process for 
institutions, the Department is proposing a withdrawal exemption in 
which an institution would not need to conduct an R2T4 calculation if 
the following conditions are met: (1) the student is treated as never 
having begun attendance; (2) the institution returns all title IV, HEA 
aid disbursed to the student for that payment period or period of 
enrollment; (3) the institution refunds all institutional charges to 
the student for that payment period or period of enrollment; and (4) 
the institution writes off or cancels any current year balance owed by 
the student to the institution due to the institution's return of title 
IV funds to the Department.
    The proposed withdrawal exemption would reduce the likelihood that 
a student owes money back to the school, allow the student to not 
exhaust annual and aggregate subsidized aid, including Pell Grants, and 
reduce the likelihood the student will have a loan balance

[[Page 60270]]

associated with a program they may not finish.
Last Date of Attendance
    The Department's longstanding guidance has been that institutions 
required to take attendance must, within 14 days of a student's last 
date of attendance, document the student's withdrawal date. The 
Department believes that fourteen days is an ample amount of time to 
document a student's withdrawal date when taking attendance. 
Enforcement by the Department is hampered because it is not currently 
codified in regulation. Therefore, to support the Department's 
enforcement efforts, it is necessary to codify the time frame in 
regulation.
Attendance Taking and Distance Education
    Accurate withdrawal dates are key to understanding if and how much 
aid needs to be repaid in the event of a student withdrawal. But 
students in distance education programs might not formally withdraw 
since they are not on campus. Currently, courses offered entirely 
through distance education are not required to take attendance unless 
the institution is required to do so under Sec.  668.22(b)(2). However, 
the very nature of distance education requires regular and substantive 
interaction between the student and instructor, and for title IV, HEA 
purposes, institutions are required to monitor a student's academic 
engagement when a student is learning through distance education. To 
determine actual withdrawal dates and produce the most accurate R2T4 
calculations, the Department believes it is necessary to require 
courses offered entirely through distance education to take attendance.
Leave of Absence
    On July 1, 2023, the Department published final regulations that 
detailed Pell Grant eligibility for confined or incarcerated 
individuals in PEPs.\19\ These regulations did not address students who 
are incarcerated and who face involuntary interruptions to their 
academic programs. For example, an entire correctional facility may be 
locked down due to a security issue, interrupting a student's progress 
in their PEP.
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    \19\ https://www.federalregister.gov/documents/2022/10/28/2022-23078/pell-grants-for-prison-education-programs-determining-the-amount-of-federal-education-assistance.
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    The Department proposes to make changes to the regulations 
governing leave of absence to allow a student who is incarcerated to 
not have to return from the leave of absence where the student left 
off, and instead, the individual could return to a different point in 
their PEP. This would apply to programs of any structure, including 
term-based programs. This change would increase flexibility for 
institutions, and would help boost student retention in PEPs.
Clock-Hour Programs
    As a part of the R2T4 calculation, institutions must determine the 
percentage of the payment period or period of enrollment the student 
completed based on scheduled clock hours if enrolled in a clock-hour 
program. There are currently two ways that institutions can make this 
determination: the payment period method and the cumulative method. The 
cumulative method (as described in the Significant Proposed Regulations 
section) usually results in a significant amount of aid earned by the 
student compared to the actual time the student attended during the 
payment period. The Department believes it is necessary to streamline 
this calculation so that the payment period method is standardized 
across all clock-hour programs.
R2T4 and Modules
    In 2021, the Department published final regulations outlining 
several changes to R2T4 and modules.\20\ The regulations immediately 
raised a question about how an institution determines whether the days 
in a module are included in the R2T4 calculation. The answer is complex 
and depends on several variables, including whether the institution 
uses an R2T4 freeze date and the type(s) of title IV, HEA aid for which 
the student was eligible during the payment period or period of 
enrollment.
---------------------------------------------------------------------------

    \20\ Distance Education and Innovation--final regulations: 
https://www.federalregister.gov/documents/2020/09/02/2020-18636/distance-education-and-innovation.
---------------------------------------------------------------------------

    The Department believes it is necessary to simplify the 
determination by only including days in the module if the student 
actually attends the module. This change would reduce complexity and 
errors and institutions would no longer need to use a freeze date or 
differentiate between Pell Grant and Direct loan recipients.
Federal TRIO Programs
    The TRIO programs are Federal outreach and student services 
programs designed to identify and provide services for individuals from 
disadvantaged backgrounds. TRIO programs serve and assist low-income 
individuals, first-generation college students, students with 
disabilities, students with limited English proficiency, students 
experiencing homelessness, and students in foster care to progress 
through the academic pipeline from middle school to postbaccalaureate 
programs. Limitations in the current regulations do not allow TRIO 
programs to reach all students in the geographic areas that the 
programs were meant to serve.
    The Department proposes to expand participation in three TRIO 
programs that serve students in pre-postsecondary education to all 
disadvantaged individuals who are enrolled in or seek to enroll in a 
high school in the United States, territories, or Freely Associated 
States. K-12 public schools must be open to all students regardless of 
their immigration status. As such, the Department believes that all 
disadvantaged children who attend high school in the United States 
should have the same access to TRIO services to assist in their 
achievement toward the path of postsecondary education. This proposal 
would also align TRIO programs that serve students in the elementary or 
secondary context with other Federal K-12 spending programs that allow 
recipients (such as SEAs and LEAs) to spend funds on K-12 students 
without regard to immigration status. The provisions in Sec. Sec.  
643.3, 644.3, and 645.3 would eliminate the administrative burden of 
separating out students who are enrolled in public schools but not 
eligible for TRIO services under the current rule.
2. Summary

[[Page 60271]]



----------------------------------------------------------------------------------------------------------------
                                             Regulatory
                Provision                      section               Description of proposed provision
----------------------------------------------------------------------------------------------------------------
                                               Distance Education
----------------------------------------------------------------------------------------------------------------
Definitions..............................    Sec.   600.2  Would add virtual locations to the definition of
                                                            ``additional location''; remove from the definition
                                                            of ``clock hour'' asynchronous distance education
                                                            options; and add a definition of ``distance
                                                            education course.''
Academic year............................    Sec.   668.3  Would make conforming changes to reflect that
                                                            asynchronous coursework via distance education can
                                                            only occur in credit-hour programs.
Reporting information....................   Sec.   668.41  Would establish a requirement for institutions to
                                                            report to the Department students' enrollment in
                                                            distance education and correspondence coursework.
----------------------------------------------------------------------------------------------------------------
                                                      R2T4
----------------------------------------------------------------------------------------------------------------
Treatment of title IV grant and loan        Sec.   668.21  Would allow a student who received a loan
 funds if the recipient does not begin                      disbursement but never began attendance in a payment
 attendance.                                                period or period of enrollment to repay loans funds
                                                            they received under the terms of a promissory note.
Withdrawal Exemption.....................   Sec.   668.22  Would exempt institutions from performing a return of
                                                            title IV funds (R2T4) calculation in the event that
                                                            (1) a student is treated as never having begun
                                                            attendance; (2) the institution returns all tile IV
                                                            aid disbursed to the student for that payment period
                                                            or period of enrollments; (3) the institution
                                                            refunds all institutional charges to the student for
                                                            that payment period or period of enrollment; and
                                                            (4)the institution writes off or cancels any current
                                                            year balance owed by the student to the institutions
                                                            due to the institution's return of title IV funds to
                                                            the Department.
Last Date of Attendance..................   Sec.   668.22  Would codify that an institution that is required to
                                                            take attendance must, within 14 days of a student's
                                                            last date of attendance, document the student's
                                                            withdrawal date.
Attendance Taking for Distance Education.   Sec.   668.22  Would require that an institution is required to take
                                                            attendance for each course offered entirely through
                                                            distance education, except for doctoral dissertation
                                                            research courses.
Leave of Absence for Confined or            Sec.   668.22  Would allow a confined or incarcerated individual, in
 Incarcerated Individuals.                                  a term-based setting, to not have to return from the
                                                            leave of absence to where the student left off, and
                                                            instead, the individual could return to a different
                                                            point in their PEP.
Percentage of Payment Period Completed      Sec.   668.22  Would streamline how institutions determine the
 for Clock-Hour Programs.                                   percentage of the payment period completed for a
                                                            clock-hour program.
R2T4 and Modules.........................   Sec.   668.22  Would modify the regulations to consider a module
                                                            part of the payment period (the denominator of the
                                                            R2T4 calculation) so long as a student attends the
                                                            module.
----------------------------------------------------------------------------------------------------------------
                                              Federal TRIO programs
----------------------------------------------------------------------------------------------------------------
Talent Search program....................            Sec.  Would extend program eligibility to individuals who
                                                643.3(vi)   are enrolled in or seek to enroll in a high school
                                                            in the United States, territories, or Freely
                                                            Associated States.
Educational Opportunity Centers program..            Sec.  Would extend program eligibility to individuals who
                                                644.3(vi)   are enrolled in or seek to enroll in a high school
                                                            in the United States, territories, or Freely
                                                            Associated States.
Upward Bound program.....................            Sec.  Would extend program eligibility to individuals who
                                                 645.3(6)   are enrolled in or seek to enroll in a high school
                                                            in the United States, territories, or Freely
                                                            Associated States. These individuals would not be
                                                            eligible for direct cash stipends.
----------------------------------------------------------------------------------------------------------------

3. Discussion of Costs, Benefits, and Transfers
    The Department has analyzed the costs and benefits of complying 
with the proposed regulations. Although many of the associated costs 
and benefits are not easily quantifiable, the Department currently 
believes that the benefits derived from the proposed regulations 
outweigh the associated costs, as discussed in sections 3.B. and 3.C. 
below.
    The proposed regulations, which would apply to over 6,000 
postsecondary institutions, would help ensure students are well served 
by the institutions of higher education they attend, increase access to 
postsecondary education for disadvantaged students, and ensure that the 
Federal Student Aid programs work in the best interests of students.
    Due to the large number of affected recipients (6,003, as discussed 
more fully in the discussion of Establishing the Baseline (Section 
3.A)), the variation in likely responses to any regulatory change, and 
the limited information available about current practices, the 
Department is not able to precisely estimate the likely costs, 
benefits, and other effects of the proposed regulations. Despite these 
limitations and based on the best available evidence as explained in 
the discussion of Establishing a Baseline (Section 3.A), the Department 
estimates present value net benefits of $148,421,308 over ten years at 
a 2 percent discount rate. This is equivalent to an annualized net 
benefit of $16,523,227 over ten years. The proposed regulations are 
expected to result in estimated costs of $128,216,509 in the first year 
following publication of the proposed regulations and yield significant 
benefits beginning in year five as set forth in the below table.\21\
---------------------------------------------------------------------------

    \21\ For this ten-year table, a positive figure indicates a cost 
while a negative figure indicates net benefits.

------------------------------------------------------------------------
                                                            Net annual
                          Year                                 costs
------------------------------------------------------------------------
Year 1..................................................    $128,216,509
Year 2..................................................     109,169,616
Year 3..................................................      55,133,908
Year 4..................................................      55,133,908
Year 5..................................................    (26,004,836)
Year 6..................................................    (52,009,672)
Year 7..................................................    (78,014,508)
Year 8..................................................   (104,019,344)
Year 9..................................................   (130,024,180)
Year 10.................................................   (156,029,016)
                                                         ---------------
    Total Net Present Value (NPV), 2 percent............   (148,421,308)
    Annualized, 2 percent...............................    (16,523,227)
------------------------------------------------------------------------


[[Page 60272]]

    As discussed in the Cost Estimates section (Section 3.B), the Year 
1 costs include one-time costs associated with reviewing and making 
necessary changes to policies, procedures, and training to implement 
the proposed regulations. In addition to these estimated costs, the 
Department estimates benefits, which arise from the expanded 
eligibility for TRIO programs and ensuing long-term benefits to TRIO 
participants that would result from the proposed rule.
    The assumptions, data, methodology, and other relevant materials, 
as applicable, on which the Department relied in developing its 
estimates are described throughout this Regulatory Impact Analysis 
(RIA).
3.A. Establishing a Baseline
3.A.1. Number of Affected Entities
    Institutions of higher education would be subject to the proposed 
regulations. For purposes of establishing a baseline, this includes the 
number of institutions of higher education participating in programs 
under title IV of the HEA (such as Direct Loans, Federal Work Study, 
and Pell grants).
    For purposes of this analysis, the Department bases its analysis of 
``postsecondary entities'' on ``institutions of higher education'' as 
defined in section 102 of the HEA. It is assumed that 6,003 
postsecondary institutions would be impacted by the proposed 
regulations. Among postsecondary institutions, institutions range from 
small, private, professional schools with fewer than 5 students 
enrolled in the fall of 2022 to large, public research universities 
with enrollments of more than 71,000 students and institutions 
operating mostly virtually with enrollments in excess of 156,000 
students.
    It is important to note that, across postsecondary institutions, 
there is wide variation in the number of students served, the number of 
employees, administrative structure, and annual revenue. This wide 
variation makes estimating the effects of the proposed regulations 
challenging, and the Department notes that the estimates provided are 
intended to reflect the average burden across the full spectrum of 
affected entities. As a result, estimates may be lower than the actual 
burden realized by, for example, larger institutions or institutions 
with more complex administrative structures, and larger than those 
actually realized by smaller institutions with less complex 
administrative structures.
3.A.2. Wage Rates
    Unless otherwise specified, the Department's model uses mean hourly 
wages for personnel employed in the education sector as reported by the 
Bureau of Labor Statistics (BLS) \22\ and a loading factor of 2.0 to 
account for the employer cost of employee compensation and benefits and 
indirect costs (e.g., physical space, equipment, technology costs). 
When appropriate, the Department identifies the specific occupation 
used by the BLS in its tables to support the reader's analysis. The 
Department assumes that inflation-adjusted wage rates remain constant 
for the duration of the time horizon.
---------------------------------------------------------------------------

    \22\ U.S. Bureau of Labor Statistics, May 2023 National 
Industry-Specific Occupational Employment and Wage Estimates, Sector 
61-Educational Services, https://www.bls.gov/oes/current/oes_nat.htm 
(last modified Apr. 3, 2024).
---------------------------------------------------------------------------

3.A.3. Other Information
    In addition, throughout this RIA, some described calculations have 
results that are fractions. To improve readability, the Department 
presents these results as rounded totals in the text (e.g., 1.95 or 
3,450 instead of 1.9478 or 3,449.6786), but retains the unrounded value 
for purposes of its underlying calculations.
    The Department invites comment on all estimates provided herein to 
ensure that they accurately reflect realistic assumptions about average 
burdens the proposed regulations would impose on the full range of 
affected entities.
3.B. Costs of the Proposed Regulations
    In this section, the Department estimates monetized cost burdens 
associated with the proposed regulations. To assist the public in 
reviewing these estimates, the Department has subdivided this analysis, 
when appropriate, into the relevant subparts. As described below, the 
Department estimates a first-year cost of $19,046,893, with no 
estimated costs in subsequent years. The Department estimates proposed 
changes would result in a total annualized cost of $2,078,849.
    The Department estimates that, upon promulgation of the proposed 
regulations, all affected entities would need time to read and 
understand the rule. Based on the Department's administrative 
experience, we assume this would require, on average, six hours from an 
education administrator (educational administrator (postsecondary), 
loaded wage rate of $117.32/hour) and six hours from a lawyer 
(postsecondary, loaded wage rate of $172.76/hour) for each of the 6,003 
IHEs. For loan servicers, we assume this would require, on average, six 
hours from an education administrator (business administrator (Business 
Operations Specialists loaded wage rate of $85.70/hour)) and six hours 
from a lawyer (finance sector, loaded wage rate of $197.84/hour) for 
each of the seven loan servicers. In total, the Department estimates 
that reading and understanding the proposed rule will have a one-time 
cumulative cost of approximately $10,458,957 across all institutions of 
higher education.
Distance Education--Reporting and Disclosure of Information
    As a result of proposed changes to Sec.  668.41 to require 
institutions to report the enrollment status of students in distance 
education or correspondence courses, the Department estimates that each 
IHE will need to review and revise reporting policies and procedures. 
At the IHE level, we assume this would require half an hour from the 
education administrator and 1 hour from an administrative assistant 
(loaded wage rate of $43.58/hour) for each of the 3,732 IHEs that 
reported offering at least one distance education course. In total, the 
Department estimates reviewing and revising these procedures will cost 
approximately $381,560 in the first year across all impacted IHEs.
Distance Education--Definition of Clock-Hour Program
    The proposed changes to the definitions in Sec.  600.2 would remove 
asynchronous learning from clock-hour programs offered through distance 
education. The Department believes that there are very few institutions 
with clock-hour programs that use distance learning to provide portions 
of the program, because there are few State or professional licensing 
boards that permit distance learning for clock-hour programs. Based on 
data available to the Department, there are approximately 8,000 clock-
hour programs operating at approximately 1,700 institutions. The 
Department does not have data available on how many of these 
institutions or programs are offered through asynchronous learning to 
estimate costs, and requests comment on these effects.
Return of Title IV Funds When Student Does not Begin Attendance
    Proposed changes to Sec.  668.21 would allow students that do not 
begin attendance at an institution to repay any disbursed loan funds 
directly received according to the terms of their master promissory 
note. Under current regulations, borrowers in this situation would 
receive a demand letter from the

[[Page 60273]]

Department and be required to immediately repay the loan balance in 
full. The Department would require the Department's seven loan 
servicers to update their policies and procedures to align with the 
proposed requirements. The Department estimates that the proposed 
change would require two hours from a lawyer and half an hour from a 
business administrator (Business Operations Specialists $85.70/hour) 
for each loan servicer for a total first year cost of approximately 
$2,719 across all loan servicers. The Department would ultimately 
realize these additional costs through increased contractual costs.
Return of Title IV Funds When Student Withdraws
    The proposed addition of Sec.  668.22(a)(2)(ii)(A)(6) would 
potentially incentivize institutions to not collect debts resulting 
from a student withdrawal by providing flexibility in conducting R2T4 
calculations when certain conditions are met. The Department assumes 
that IHEs would need to review and revise their R2T4 policies and 
procedures. The Department estimates that the proposed change would 
require eight hours from an education administrators and two hours from 
a lawyer for each IHE for a total first year cost of approximately 
$7,708,332 across all institutions.
    Any institution that used the cumulative method to determine the 
percentage of the payment period completed for a clock-hour program 
would be required to update their procedures and policies to only use 
the payment period method. The Department does not believe that many 
institutions use the cumulative method, however, for those that do, the 
Department believes costs would be negligible because institutions 
would have until July 1, 2025, to update policies. For more information 
on both methods, please see the applicable ``reasons'' discussion in 
the Significant Proposed Regulations section.
    Institutions that offer programs with modules would need to update 
their policies and procedures to account for adjustments in how to 
determine the denominator in R2T4 calculations. The Department believes 
this would result in overall cost savings because institutions would no 
longer need to navigate a complex set of Department rules to determine 
whether or not the days in a module should be included in an R2T4 
calculation. However, the Department does not maintain comprehensive 
information on the use of modules at eligible postsecondary 
institutions and therefore cannot estimate the scope of these effects.
    Institutions that currently participate in the Second Chance Pell 
experimental site and that offer eligible PEPs in a term-based setting 
would need to update policies and procedures to allow more flexibility 
when students return from a leave of absence. The Department believes 
the cost would be negligible.
Federal TRIO Programs--Talent Search (TS), Educational Opportunity 
Centers (EOC), Upward Bound (UB) Participant eligibility
    Proposed changes to Sec. Sec.  643.3, 643.4, and 643.5 would expand 
eligibility for TS, EOC, and UB to any individual who is enrolled in or 
seeks to enroll in a high school located in the United States, 
territories, or Freely Associated States. The Department believes that 
these proposed changes would require current TS, EOC, and UB grantees 
to review and revise their participant recruitment and enrollment 
policies and procedures. At the grantee level, the Department assumes 
this would require two hours from an education administrator for each 
of the 2,111 grantees administering TS, EOC, or UB TRIO projects. In 
total, the Department estimates that revising project procedures would 
cost approximately $495,325.
    The proposed regulations would impose minimal additional costs to 
TRIO grant recipients under TS, EOC, and UB. While it would increase 
the number of students who are eligible to participate, the effect is 
only distributional as the funds provided from Congress and to grantees 
would be distributed across grantees. This could mean different or 
additional participants receive the benefits of TRIO services, but it 
would not affect the overall appropriations.
    Eligible grantees that offer the Talent Search program, the 
Educational Opportunity Centers program, and the Upward Bound program 
would be required to update their applications to account for students 
who have enrolled in or who seek to enroll in a high school in the 
United States, territories, or Freely Associated States. The Department 
believe costs would be negligible because grantees already have an 
application process for students to participate in these programs, and 
we request comment on any costs in this area.
3.C. Benefits of the Proposed Regulations
    The Department believes that these proposed regulations would 
likely have a wide range of benefits both for students, parents and 
caregivers, and the public at large. The discussion that follows 
discusses the benefits the Department has attempted to quantify and 
monetize.
3.C.1. Monetized Benefits
    In this section, the Department discusses monetizable benefits 
likely to result from the proposed regulations. In total, the 
Department estimates, after accounting for anticipated costs resulting 
from enrolling in postsecondary education, annualized benefits from the 
proposed regulations of $17,664,756 over the next ten years.

------------------------------------------------------------------------
                                                        Annual costs and
                         Year                             benefits \23\
------------------------------------------------------------------------
Year 1 Cost...........................................      $109,696,616
Year 2 Cost...........................................       109,696,616
Year 3 Cost...........................................        55,133,908
Year 4 Cost...........................................        55,133,908
Year 5 Benefit........................................      (26,004,836)
Year 6 Benefit........................................      (52,009,672)
Year 7 Benefit........................................      (78,014,508)
Year 8 Benefit........................................     (104,019,344)
Year 9 Benefit........................................     (130,024,180)
Year 10 Benefit.......................................     (156,029,016)
                                                       -----------------
    Annualized, 2%....................................      (17,664,756)
    Total NPV, 2%.....................................     (158,675,187)
------------------------------------------------------------------------

Federal TRIO Programs (TS, EOC, UB) Expanded Eligibility
---------------------------------------------------------------------------

    \23\ For this ten-year table, a positive figure indicates a cost 
while a negative figure indicates net benefits.
---------------------------------------------------------------------------

    Benefits arise from increased earnings from improved educational 
attainment of students without status previously ineligible to receive 
TRIO program services higher levels of educational attainment and 
associated higher wages. The Department believes expanding TS, EOC, and 
UB eligibility to students previously ineligible to receive TRIO 
program services would result in a net benefit to the public due to the 
capacity within TS, EOC, and UB projects to enroll additional 
participants.
    The Department assumes that the approximately 500,000 elementary 
and secondary students without status previously ineligible to receive 
TRIO program services are evenly distributed across each high school 
grade level (i.e., \1/4\ of the population is currently in each of the 
9th through 12th grades). According to data from the Migration Policy 
Institute,\24\ only 78 percent of students without status graduate from 
high school within four years, compared with 87 percent of all public 
high school students. As a result, the Department estimates that, in 
the absence of the proposed regulations, approximately 98,000 students 
without status previously ineligible to receive TRIO

[[Page 60274]]

program services would graduate from high school each year.
---------------------------------------------------------------------------

    \24\ How Many Unauthorized Immigrants Graduate from U.S. High 
Schools Annually? (migrationpolicy.org).
---------------------------------------------------------------------------

    For the 2021-2022 reporting period, TS, UB, and EOC projects that 
did not meet their enrollment targets had the capacity to serve an 
additional 104,111 participants. According to data from the Migration 
Policy Institute, fifteen States (See Table 1 footnote) account for 81 
percent of all high school graduates without status.\25\ For the 
purpose of this analysis and to ensure that we do not overstate the 
capacity of these TRIO programs to enroll students without status, the 
Department limits the pool of potential enrollees to TRIO projects 
operating in these fifteen States.
---------------------------------------------------------------------------

    \25\ How Many Unauthorized Immigrants Graduate from U.S. High 
Schools Annually? (migrationpolicy.org)

                              Table 1--2021-22 TS, UB, and EOC Participation Rates
----------------------------------------------------------------------------------------------------------------
                                                                                                    Capacity to
                                                                                    Capacity to        serve
                     Program                         Funded to     Actual served       serve        additional
                                                       serve                        additional    students in 15
                                                                                   students \26\    states \27\
----------------------------------------------------------------------------------------------------------------
TS..............................................         338,427         287,019          54,416          36,628
UB \28\.........................................          82,391          79,590           5,175           2,652
EOC.............................................         209,735         167,576          44,520          16,473
                                                 ---------------------------------------------------------------
    Total.......................................         630,553         534,185         104,111          55,753
----------------------------------------------------------------------------------------------------------------

    For the purposes of this analysis, the Department assumes that TS, 
UB, and EOC projects could enroll a maximum of 55,753 participants 
without status as a result of this proposed rule and utilizes this 
figure as the universe of potential participants.
---------------------------------------------------------------------------

    \26\ This calculation of additional capacity excludes projects 
that met or exceeded their enrollment goals (`funded to serve'' 
column figures).
    \27\ California, Texas, Florida, New York, New Jersey, Illinois, 
Georgia, North Carolina, Virginia, Arizona, Maryland, Washington, 
Colorado, Nevada, and Massachusetts.
    \28\ Includes Upward Bound Math & Science.

Table 2--Sensitivity Analysis of Potential Number of TRIO Enrollments Resulting From Proposed Rule Using 2021-22
                                       TS, UB, and EOC Participation Rates
----------------------------------------------------------------------------------------------------------------
                                                    Capacity to   Sensitivity analysis--potential number of TRIO
                                                       serve         enrollments resulting from proposed rule
                     Program                        additional   -----------------------------------------------
                                                     students           1%              5%              10%
----------------------------------------------------------------------------------------------------------------
TS..............................................          36,628             366           1,831           3,663
UB..............................................           2,652              27             133             265
EOC.............................................          16,473             165             824           1,647
                                                 ---------------------------------------------------------------
    Total.......................................          55,753             558           2,788           5,575
----------------------------------------------------------------------------------------------------------------

    The Department conducted a sensitivity analysis of the possible 
impact of the proposed rule on TS, UB, or EOC enrollment. We assume 
that 55,753 is the maximum number of students without status that could 
potentially enroll in TS, UB, or EOC as a result of the proposed rule. 
The Department assumes that there are a variety of reasons that a 
student that would be otherwise eligible as a result of the proposed 
rule would ultimately not enroll in TS, UB, or EOC. Therefore, the 
Department conducted a sensitivity analysis that analyzed program 
enrollment rates of 1, 5, or 10 percent of the universe of eligible 
participants. As described below, the benefits of the rule grow as the 
size of the TRIO enrollment effect increases. For the purposes of this 
RIA we estimate that 5 percent, or 2,788 students without status, would 
enroll in TS, UB, or EOC as a result of this rule.
    The Department therefore estimates that of the 55,753 estimated 
capacity of TS, UB, and EOC projects in States likely to serve students 
without status, 1,831 would enroll in TS, 133 would enroll in UB 
(including UBMS), and 824 would enroll in EOC. In total, the Department 
estimates that this proposed rule would result in 2,788 additional high 
school students without status previously ineligible to receive TRIO 
services enrolling in TS, UB, or EOC. For the purposes of this analysis 
the Department assumes that the 2,788 included as part of this analysis 
are students that would not have otherwise graduated from postsecondary 
education. The Department invites comments on this assumption.

                 Table 3--Estimated Additional TRIO Program Participants Based on Proposed Rule
----------------------------------------------------------------------------------------------------------------
                                                               TRIO program     Postsecondary     Postsecondary
                           Program                             participants    enrollment rate      enrollees
----------------------------------------------------------------------------------------------------------------
TS..........................................................            1831                68              1245
UB..........................................................             133                75                99
EOC.........................................................             824                57               469
                                                             ---------------------------------------------------

[[Page 60275]]

 
    Total...................................................           2,788  ................             1,813
----------------------------------------------------------------------------------------------------------------

    According to data from NCES,\29\ in 2020, approximately 43 percent 
of high school completers immediately enrolled in a 4-year college or 
university and an additional 20 percent immediately enrolled in a 2-
year program. In comparison, according to data from TRIO performance 
reports for 2022, 68 percent of TS participants enrolled in college, 75 
percent of UB (including UBMS and VUB) participants enrolled in 
college, and 57 percent of EOC participants enrolled in college. EOC 
enrollment rates are typically lower than TS and UB as EOC participants 
include adults who are not connected to formal education systems.\30\ 
Therefore, the Department estimates that a total of 1,813 students 
without status would enroll in postsecondary education as a result of 
their participation in TS, UB, or EOC.
---------------------------------------------------------------------------

    \29\ Instit. of Educ. Sci., Nat'l Ctr. for Educ. Statistics, 
Postsecondary Education, Immediate College Enrollment Rate, https://nces.ed.gov/programs/coe/indicator/cpa (last updated May 2023).
    \30\ According 2018-2019 data, 36% of EOC participants were 
between the age of 19 and 27 and 37% of EOC participants were 28 
years or older.
---------------------------------------------------------------------------

    For those 1,813 additional students that would enroll in 
postsecondary education, the Department assumes that these students 
would earn at least some college credit from a 2- or 4-year 
institution. Among the 2012 UB cohort, 35 percent of UB participants 
that enrolled in postsecondary education earned a degree at a 4-year 
IHE while 7 percent of UB participants earned a degree at a 2-year IHE. 
For the purposes of this analysis, and due to lack of data, the 
Department assumes that postsecondary graduation rates are comparable 
between TS, UB, and EOC. We request comment on this assumption. 
Therefore, we assume that 58 percent of UB participants did not 
complete a bachelor's degree, associate's degree, or certificate within 
six years of initial enrollment. For our analysis we identify those 
that did not complete a degree or certificate as earning some college 
credit.

Table 4--Estimated Additional Postsecondary Completers Based on Proposed
                                  Rule
------------------------------------------------------------------------
                                                             Estimated
                Postsecondary completers                    completers
------------------------------------------------------------------------
Some College............................................           1,052
Certificate/Associate's Degree..........................             126
Bachelor's Degree.......................................             635
                                                         ---------------
    Total...............................................           1,813
------------------------------------------------------------------------

    For several analyses, the Department relies on estimated wages by 
educational attainment. For these analyses, the Department relies on 
data from BLS \31\ regarding earnings differences across individuals 
with different educational attainment. The relevant data are reproduced 
in Table 5. Estimated Weekly Earnings of Postsecondary Enrollees by 
Highest Level of Attainment, below for easier reference.
---------------------------------------------------------------------------

    \31\ Earnings and unemployment rates by educational attainment, 
2023. ``Education pays'': U.S. Bureau of Labor Statistics (bls.gov).

    Table 5--Estimated Weekly Earnings of Postsecondary Enrollees by Highest Level of Educational Attainment
----------------------------------------------------------------------------------------------------------------
                                                                                                       Total
                                                                   Median usual    Unemployment      estimated
          Highest education attainment              Individuals       weekly         rate (%)         weekly
                                                                     earnings                      earnings \32\
----------------------------------------------------------------------------------------------------------------
HS Diploma......................................               0             899             3.9             n/a
Some College....................................           1,052             992             3.3       1,008,864
Certificate/Associate's Degree..................             126           1,058             2.7         130,134
Bachelor's Degree...............................             635           1,493             2.2         927,153
                                                 ---------------------------------------------------------------
    Total.......................................           1,813             n/a             n/a       2,066,151
----------------------------------------------------------------------------------------------------------------

    The Department estimates that these proposed regulations would 
directly result in an additional 1,813 students enrolling in and 
completing as least some postsecondary education. In addition, the 
Department assumes that affected individuals would have average 
earnings and employment rates equal to those at high school diploma 
level in the baseline, and average earnings and employment rates equal 
to their new educational attainment level following implementation of 
the rule. The Department estimates that the total weekly earnings of 
these students if they had only earned a high school diploma would be 
$1,566,058. These students' enrollment in postsecondary education would 
result in total weekly earnings of $2,066,151, an increase of $500,093 
per week
---------------------------------------------------------------------------

    \32\ This total is calculated by subtracting the unemployment 
rate from the number of individuals and multiplying that figure by 
the median weekly earnings. IE. (1052-35) * $992 = 1,008,864.
---------------------------------------------------------------------------

    Based on the earnings and unemployment information described in 
Earnings and unemployment rates by educational attainment from the U.S. 
Bureau of Labor Statistics,\33\ the Department estimates that the 
additional 1,813 students enrolled in postsecondary education could 
annually earn, in total, $26,004,836 more than they would have had they 
not enrolled in postsecondary education. We request comment on the 
assumptions leading to this result. The Department assumes that these 
benefits would not accrue until Year 5 and then would annually

[[Page 60276]]

compound in future years as additional cohorts of students without 
status previously ineligible to receive TRIO services graduate at 
higher rates. To the extent that additional individuals complete 
postsecondary education before Year 5, this assumption will 
underestimate actual benefits from the proposed regulations.
---------------------------------------------------------------------------

    \33\ Earnings and unemployment rates by educational attainment, 
2023. ``Education pays'': U.S. Bureau of Labor Statistics (bls.gov).
---------------------------------------------------------------------------

    The Department estimates that the benefits of the proposed rule 
described above would outweigh costs resulting from lost wages from 
delaying entry into the workforce and tuition costs.
    Under the proposed changes to Sec. Sec.  643.3, 643.4, and 643.5, 
the Department estimates that newly eligible recipients that enroll 
postsecondary education would realize an opportunity cost from the loss 
of wages they would otherwise receive as a high school graduate 
immediately entering into the workforce. The Department estimates that 
an additional 1,813 students without status would enroll in 
postsecondary education each year as a result of the proposed rule. The 
Department assumes that of these students, 1,742 would find employment 
and earn a median wage of $899 per week as a high school graduate for 
total weekly earnings of $1,566,058. The Department estimates that 
annual costs of $81,435,016 during the first two years after the 
implementation of the proposed rule to account for students enrolled in 
both four-year and two-year postsecondary education. The Department 
assumes for the purposes of this analysis that 50 percent of these 
students are enrolled at a four-year IHE and therefore will realize an 
opportunity cost of $40,717,508 in years three and four. The Department 
requests comment on these assumptions.
    In addition, under the proposed changes to Sec. Sec.  643.3, 643.4, 
and 643.5, the Department estimates that newly eligible recipients that 
enroll postsecondary education would realize postsecondary tuition 
costs. Due to a lack of available data, the Department assumes that the 
1,813 students without status estimated to enroll in postsecondary 
education each year as a result of the proposed rule will be equally 
divided across four-year public IHEs, four-year private nonprofit IHEs, 
two-year public IHEs, and two-year private nonprofit IHEs. The 
Department requests comment on these assumptions. Based on NCES 
data,\34\ the Department assumes that the average net price to enrolled 
students of $11,000 for students at four-year public IHEs, $20,800 for 
students at four-year private nonprofit IHEs,\35\ $8,300 for students 
at two-year public IHEs, and 21,100 for students at two-year private 
IHEs.
---------------------------------------------------------------------------

    \34\ Price of Attending an Undergraduate Institution (ed.gov).
    \35\ Average net price of attendance is calculated as the 
average total cost of attendance minus average grant and scholarship 
aid.

----------------------------------------------------------------------------------------------------------------
                                                                                   Net price to
                           Type of IHE                               Students         student          Total
----------------------------------------------------------------------------------------------------------------
Four-year public IHE............................................             454          11,000       4,994,000
Four-year private nonprofit IHE.................................             453          20,800       9,422,400
Two-year public IHE.............................................             453           8,300       3,759,900
Two-year private IHE............................................             453          21,100       9,558,300
                                                                 -----------------------------------------------
    Total.......................................................           1,813  ..............      27,734,600
----------------------------------------------------------------------------------------------------------------

    The Department estimates that annual costs of $27,734,600 during 
the first two years after the implementation of the proposed rule to 
account for students enrolled in both four-year and two-year 
postsecondary education. The Department assumes for the purposes of 
this analysis that 50 percent of these students are enrolled at a four-
year IHE and therefore will realize tuition costs of $14,416,400 in 
years three and four. The Department requests comment on these 
assumptions.
3.C.2 Non-Monetized Benefits
Distance Education
    Changes proposed to provide better data on student outcomes for 
students enrolled in distance education would provide benefits for 
students in allowing reporting and evaluations of outcomes for students 
depending on their enrollment in distance education, traditional on-
site instruction, or a combination of the two. Such analysis is 
increasingly advantageous to determine the educational and cost 
effectiveness of postsecondary instruction as it becomes more available 
at a distance.
    Students can also benefit from the change to only allow synchronous 
instruction in clock-hour programs offered through distance education. 
Because studies have shown better student outcomes when comparing 
synchronous and asynchronous instruction, students would likely have 
greater persistence and completion, and would also likely benefit from 
improved labor market outcomes.\36\
---------------------------------------------------------------------------

    \36\ https://journals.lww.com/jehp/fulltext/2021/10000/why_people_are_becoming_addicted_to_social_media_.223.aspx.
---------------------------------------------------------------------------

R2T4
Benefits to Students
    Students would benefit from these regulations under several of the 
proposed regulations. If institutions choose to implement the optional 
withdrawal exemption, students who withdraw would not owe any balance 
related to any returned title IV, HEA aid to the Department or the 
institution. This would alleviate students from the burden of having to 
repay title IV, HEA dollars or owing an institutional debt related to a 
payment period or period of enrollment that they did not complete.
    If a school chooses not to implement the optional withdrawal 
exemption, students that received a Direct Loan but did not begin 
attendance in their program would be able to repay their loans under 
the terms of a promissory note as opposed to the current practice of 
receiving a demand letter for the full payment. Students would be able 
to benefit from an income-driven repayment plan, or standard payment 
plans with payments that could potentially be paid over 30 years.
    Students who are incarcerated at times may need to (or be forced 
to) take a break in their PEP, including activities out of their 
control such as prison-wide lockdowns or involuntary transfers to other 
facilities. The proposed regulations would benefit incarcerated 
students allowing them to not have to come back from the leave of 
absence where they left off (as current regulations require), and 
instead, the student could come back at a different point in their 
eligible prison education program, affording greater flexibility in 
their academic progression.
Benefits to Institutions
    Institutions would benefit under several of these proposed 
regulations. Currently, an institution offering clock-

[[Page 60277]]

hour programs may use two methods to determine the percentage of the 
payment period completed: cumulative, and by payment period. The 
proposed regulations would require institutions to use the payment 
period method when calculating the number of scheduled hours completed 
in clock-hour programs. This change would reduce the complexity of the 
R2T4 calculations and the inconsistency in the manner in which the 
calculation is done for clock-hour programs at different institutions.
    Currently institutions implement complex sub-regulatory guidance to 
determine the number of days in the payment period for a program 
offered in modules, even if the student did not attend the module. The 
proposed regulations would benefit institutions through the requirement 
that the student actually attend the module for the days in the module 
to be included in the payment period. It would also eliminate the need 
for a ``freeze date'' (explained in the discussion section), further 
reducing complexity.
Benefits to the Taxpayer
    Overall, we believe that the more accurate calculations and 
reductions in complexity would benefit the taxpayer by reducing errors 
in R2T4 calculations, resulting in more accurate amounts being returned 
to the Department and further supporting the integrity of the title IV, 
HEA programs. R2T4 consistently ranks in the Top 10 compliance 
findings,\37\ costing the Federal government time and money to provide 
assistance through training and conducting program reviews in an effort 
to identify and correct R2T4 errors committed by institutions. We 
believe the proposed changes would also help alleviate some compliance 
issues related to R2T4.
---------------------------------------------------------------------------

    \37\ Annual Top Ten School Findings and School Fine Reports: 
https://studentaid.gov/data-center/school/fines-and-findings.
---------------------------------------------------------------------------

    For example, we have proposed a requirement that schools that offer 
distance education courses entirely online begin taking attendance for 
those courses. As a result, we anticipate more accurate calculations 
through the use of actual withdrawal dates from attendance records, 
thus providing taxpayers a more accurate accounting of title IV, HEA 
funds returned.
TRIO
    As discussed above, the proposed changes to TRIO would align TRIO 
programs that serve students in the elementary or secondary context 
with other Federal K-12 spending programs that allow recipients (such 
as SEAs and LEAs) to spend funds on K-12 students without regard to 
immigration status. This would eliminate the administrative burden of 
separating out students who are enrolled in public schools but not 
eligible for TRIO services under the current rule.
4. Accounting Statement
    As required by OMB Circular A-4, the Department has prepared an 
accounting statement showing the classification of the expenditures 
associated with the provisions of these regulations. This table 
provides the best estimate of the changes in annual monetized benefits 
and costs of these proposed regulations.

------------------------------------------------------------------------
                                                              Annualized
                         Provision                             benefits
------------------------------------------------------------------------
                                                             2% discount
                                                                    rate
------------------------------------------------------------------------
TRIO Expanded eligibility--Postsecondary earnings..........  $17,664,756
------------------------------------------------------------------------
                                                              Annualized
                                                                   costs
                                                            ------------
                                                             2% discount
                                                                    rate
------------------------------------------------------------------------
Reading and Understanding the New Rule.....................   $1,141,529
Distance Education--Reporting and disclosure of information       41,645
R2T4--Student does not begin attendance....................          297
R2T4--Student withdrawal...................................      841,316
TRIO Expanded Eligibility..................................   35,105,062
------------------------------------------------------------------------

5. Alternatives Considered
    As part of the development of these proposed regulations, the 
Department engaged in a negotiated rulemaking process in which we 
received comments and proposals from non-Federal negotiators 
representing numerous impacted constituencies. These included higher 
education institutions, consumer advocates, students, financial aid 
administrators, accrediting agencies, and State attorneys general. Non-
Federal negotiators submitted a variety of proposals relating to the 
issues under discussion. Information about these proposals is available 
on our negotiated rulemaking website at www2.ed.gov/policy/highered/reg/hearulemaking/2023/index.html.
5.1 Distance Education
    During negotiations there was no disagreement with the Department's 
proposal to amend the definition of ``additional location'' to 
separately identify virtual locations and to define ``distance 
education course'' (which was based on a negotiator suggestion), so 
there was little discussion on these topics.
    The negotiators also did not disagree with the general idea of 
requiring institutions to report students' enrollment in distance 
education. There were suggestions about what that reporting should 
entail, including more detailed data about the extent of students' 
enrollment in distance education and not just whether they are in-
person or distance education students. The discussion settled on 
reporting students as having one of three statuses: fully in-person, 
fully at a distance, or a hybrid of the two. This would be a simple 
determination for schools that would also provide sufficient 
information for the Department. Because specific details about this 
reporting are yet to be determined, the proposed regulation establishes 
the general requirement and notes that reporting will be in accordance 
with procedures to be established by the Secretary.
    Some negotiators disagreed with the proposed elimination of 
asynchronous distance education in the definition of clock-hour 
programs in Sec.  600.2. Negotiators representing various institutional 
sectors contended that instruction in clock-hour programs need not be 
entirely hands-on, that there is a didactic component that lends itself 
to asynchronous instruction, and that schools have been able to master 
the technology necessary for close accounting of student academic 
engagement. These negotiators suggested limiting the amount of a clock-
hour program that can occur asynchronously to 50 percent. Based on our 
review of clock-hour programs that delivered substandard education with 
little direct instructor interaction, we disagree that schools have the 
technology and resources to adequately monitor student academic 
engagement, as discussed in the section above on the proposed revisions 
to distance education. Allowing 50 percent of instruction to be 
asynchronous would still permit substandard education to occur. We thus 
reaffirmed that elimination of asynchronous distance education in 
clock-hour programs would be appropriate.
5.2 R2T4
Confined or Incarcerated Individuals and R2T4
    The Department initially proposed to exempt confined or 
incarcerated individuals from R2T4 if the students withdrew from a 
program due to circumstances outside of their control, such as a 
correctional facility-wide lockdown or an involuntary transfer to a 
different facility. Upon further review, we determined that we do not 
have the legal authority to waive R2T4

[[Page 60278]]

requirements for a targeted group of students. In addition, the 
Department heard concerns from several negotiators that confined or 
incarcerated individuals may reach their Pell grant lifetime 
eligibility used (LEU) faster under this proposal without obtaining an 
academic credential. And finally, the Department heard from some 
additional negotiators that some postsecondary institutions have 
already established policies that account for involuntary breaks in 
PEPs, such as waiving all charges related to the affected payment 
period, and our initial proposal might have caused institutions to 
revise or remove beneficial student polices already in place.
    To address the negotiators' concerns, the Department instead 
proposed a new condition under the leave of absence provisions (Sec.  
668.22(d)), targeted at confined or incarcerated individuals that take 
a break from their PEP due to events at their correctional facility, 
which would give students and institutions, especially in term-based 
settings, more flexibility when students return from a leave of 
absence. In term-based settings, the proposal would allow a confined or 
incarcerated individual to not have to come back from the leave of 
absence resuming where the student left off, and instead, the 
individual could resume at a different point in their PEP. The 
postsecondary institution would still have to adhere to all other 
requirements of a leave of absence as we propose they remain unchanged.
Direct Assessment Programs and R2T4
    The Department considered exempting direct assessment programs 
offered through distance education from the proposed requirement under 
Sec.  668.22(b)(3)(i)(D) that would require an institution to take 
attendance for each course offered entirely through distance education. 
A negotiator stated three concerns: (1) requiring an R2T4 calculation 
that is artificially based on dates of attendance, in a program 
structure that is not designed around seat time, would disincentivize 
progression and punish students who complete program requirements more 
quickly than anticipated; (2) requiring attendance in direct assessment 
programs would not increase the accuracy of R2T4 calculations, because 
the amount of funds earned by these students is not correlated to time 
and an attendance-based calculation does not accurately reflect the 
actual amount of coursework completion for students who take advantage 
of self-paced instruction; and (3) to offset these negative effects, 
institutions may feel compelled to add pedagogically unnecessary 
content or participation requirements to courses in order to increase 
the frequency of attendance-taking opportunities. The negotiator argued 
that doing so would undermine the advantages of self-paced direct 
assessment programs and could unnecessarily increase program length and 
cost.
    The Department is not persuaded by these arguments, because all 
distance education courses are still required to provide regular and 
substantive interaction. Direct assessment programs offered through 
distance education do not pose unique attendance-based challenges that 
justify exemption from the requirement. Direct assessment programs, 
like all other programs, are required to determine a withdrawal date, 
which is the last date of academic attendance as determined by the 
institution's academic records. The Department believes that 
institutions that offer direct assessment programs through distance 
education already have systems in place that sufficiently monitor 
academic engagement and thus can easily determine attendance and, by 
extension, a student's withdrawal date.
Withdrawal Exemptions and R2T4
    As part of our 2019 negotiated rulemaking, the Department adopted a 
withdrawal exemption for programs offered in modules that treat a 
student as not withdrawn if the student successfully completes one or 
more modules that make up 49 percent or more of the number of days in 
the payment period. The Department's initial proposal with negotiators 
suggested removing the 49 percent withdrawal exemption, which, for 
students that do not qualify for another withdrawal exemption, would 
mean that more money would be returned to the Department and students 
would not exhaust their aid eligibility as quickly. The Department also 
believed that removing the 49 percent withdrawal exemption would 
eliminate observed confusion between this figure and the 60 percent 
completion requirement under the R2T4 calculation, and eliminate the 
continued need for significant guidance and training on how to 
determine whether a student qualifies for the exemption.
    Many negotiators disagreed with the elimination of the 49 percent 
withdrawal exemption. Negotiators stated that their institutions had 
already updated systems and policies to account for the exemption and 
that it was serving students well. Negotiators also pointed out that 
the exemption has only been in regulation since 2021 and, instead of 
eliminating the exemption, the Department should provide more guidance 
and training to assist those institutions that may be having some 
difficulty implementing this regulatory requirement. In light of these 
negotiator concerns and suggestions, the Department decided to retain 
this exemption.
5.3 TRIO
Expanding the Eligibility Proposal to All TRIO Programs
    The current proposal for the Upward Bound Program, the Educational 
Opportunity Centers, and the Talent Search program would allow an 
individual to participle in these programs if they are enrolled in, or 
seek to enroll in, high school in the United States. All of these three 
TRIO programs serve students at the secondary school level. The 
Department also considered, at the suggestion of a negotiator, 
expanding the eligibility proposal to Student Support Services and the 
McNair Scholars Program, which are postsecondary level TRIO programs.
    The Department determined to limit eligibility expansion to the 
three identified secondary school programs based on our belief that all 
children who attend high school in the United States should have the 
same access to public TRIO services to assist in their path toward 
postsecondary education. This proposal also aligns TRIO with the 
treatment of students in other Federal K-12 spending programs, which 
allow recipients (such as State education agencies and local education 
agencies) to spend funds on K-12 students without regard to immigration 
status.
    The TRIO programs have limited resources, with the TRIO programs 
currently serving less than 10 percent of the eligible population. The 
Department is proposing to expand eligible participants to focus on the 
most vulnerable population: children who do not yet have the basic 
education that comes from high school completion, which is a necessary 
step toward postsecondary education.
Not Regulating TRIO
    The Department considered not regulating, but as noted in the 
previous section, K-12 public schools are open to students regardless 
of their immigration status. As such, the Department believes that all 
children who attend high school in the United States should have the 
same access to TRIO services to assist their pathway into postsecondary 
education.

[[Page 60279]]

6. Regulatory Flexibility Act
    This section considers the effects that the proposed regulations 
may have on small entities in the educational sector as required by the 
Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq. The purpose of 
the RFA is to establish as a principle of regulation that agencies 
should tailor regulatory and informational requirements to the size of 
entities, consistent with the objectives of a particular regulation and 
applicable statutes. The RFA generally requires an agency to prepare a 
regulatory flexibility analysis of any rule subject to notice and 
comment rulemaking requirements under the Administrative Procedure Act 
or any other statute unless the agency certifies that the rule will not 
have a ``significant impact on a substantial number of small 
entities.'' As noted in the RIA, the Department does not expect that 
the regulatory action will have a significant budgetary impact, but 
there are some costs to small institutions that are described in this 
Initial Regulatory Flexibility Analysis.
Description of the Reasons for Agency Action
    The Secretary is proposing new regulations to ensure students are 
well served by the institutions of higher education they attend, 
increase access to postsecondary education for disadvantaged students, 
and ensure that Federal Student Aid programs work in the best interests 
of students. Proposed regulations for distance education would help the 
Department better measure and account for student outcomes, improve 
oversight over distance education, and ensure students are receiving 
effective education by requiring additional reporting of programs 
offered entirely through online education, requiring students' distance 
education enrollment status, and disallowing asynchronous distance 
education in clock-hour programs for title IV, HEA purposes. The 
proposed R2T4 regulations would help withdrawn students repay 
outstanding Direct Loan credit balances, increase the accuracy and 
simplicity of performing R2TV calculations, add additional clarity to 
institutions on reporting, and codify longstanding policies. The 
proposed TRIO regulations would expand student eligibility and provide 
greater access to postsecondary education for disadvantaged students 
who have enrolled or seek to enroll in a high school in the United 
States, territories, or Freely Associated States.
Succinct Statement of the Objectives of, and Legal Basis for, the 
Regulations
    Through the proposed regulations, the Department aims to address 
inequities and inadequate protections for students to ensure the 
Federal Student Aid programs work to accomplish postsecondary access 
and completion. This includes ensure the Department, students, and 
families have the information needed to answer important questions 
about enrollment in and success with distance education, the ability 
provide closed school discharges where a program closes, that students 
that withdraw are able to repay their debt, and that disadvantaged 
students have the opportunity to access and succeed in postsecondary 
education.
    The Department's authority to the proposed regulations stems 
primarily from multiple statutory enactments: first, 20 U.S.C. 1070-
1099d (sections 400-499 of the HEA) which authorizes the Federal 
government's major student financial aid programs; second, 20 U.S.C. 
1070(b) (section 400(b) of the HEA) which outline the Secretary's broad 
authority to carry out program requirements; and third, the sections 
that govern the Department's oversight responsibility under title IV 20 
U.S.C. 1099c, 1099c-1, 1099c-2 (sections 498, 498A, and 498B of the 
HEA). The specific statutory sources of this authority are detailed in 
the Authority for This Regulatory Action section above.
    Description of and, Where Feasible, an Estimate of the Number of 
Small Entities to Which the Regulations Will Apply as noted above, SBA 
defines small proprietary institutions of higher education (IHEs) based 
on revenue. These regulations apply, however, to all IHEs, which cannot 
be compared across institutions and sectors using the SBA revenue size 
standard because the RFA does not measure non-profit and public sector 
IHEs based on revenue. As a result, for purposes of the proposed 
regulations, the Department defines ``small entities'' by reference to 
enrollment, as it has done in other rulemakings, to allow meaningful 
comparison of regulatory impact across all types of IHEs in the for-
profit, non-profit, and public sectors.\38\ The Department notes that 
enrollment and revenue are correlated for all IHES and that IHEs with 
higher enrollment tend to have the resources and infrastructure in 
place to more easily comply with the Department's regulations in 
general and the proposed regulations in particular. Since enrollment 
data is more readily available to the Department for all IHEs, the 
Department has used enrollment as the basis to identify small IHEs in 
prior rulemakings and continues to use enrollment to identify small 
IHEs in the proposed regulations. This approach also allows the 
Department to use the same metric to identify small IHEs across the 
for-profit, non-profit, and public sectors, and it treats public IHEs 
operated at the behest of jurisdictions with a population of more than 
50,000 but with low enrollment as small, which the SBA's standard would 
not treat as small. Lastly, the North American Industry Classification 
System (NAICS), under which SBA's revenue standards in 13 CFR 121.201 
are generally established, set different revenue thresholds for IHEs 
that provide different areas of instruction (e.g., cosmetology, 
computer training, and similar programs) and there is no existing data 
that aligns those different revenue standards to the different types of 
regulated IHEs. Similarly, where an institution provides instruction in 
several of these areas, it is unclear which revenue threshold to apply 
for purposes of the Department's RFA analysis.
---------------------------------------------------------------------------

    \38\ For additional background on the Department's justification 
for using an enrollment-based size standard, see ``Student 
Assistance General Provisions, Federal Perkins Loan Program, Federal 
Family Education Loan Program, and William D. Ford Federal Direct 
Loan Program'' proposed rule, published in the Federal Register on 
July 31, 2018, 83 FR 37242, and final rule, published in the Federal 
Register on September 23, 2019, 84 FR 49788; and ``Gainful 
Employment'' final rule published in the Federal Register on July 1, 
2019, 84 FR 31392. The Department notes that the alternative size 
standards that are used in this NPRM are identical to the 
alternative size standards used in the GE regulations published in 
the Federal Register on October 10, 2023. See 88 FR 70175.
---------------------------------------------------------------------------

    As explained above, the enrollment-based size standard remains the 
most relevant standard for identifying all IHEs subject to the proposed 
regulations. Therefore, instead of the SBA's revenue-based size 
standard, which applies only to proprietary IHEs, the Department has 
defined ``small IHE'' as (1) a less-than-two-year institution with an 
enrollment of fewer than 750 students, or (2) an at-least two-year but 
less-than-four-year institution, or a four-year institution, with 
enrollment of fewer than 1,000 students.\39\ As a result

[[Page 60280]]

of discussions with the SBA Office of Advocacy, this is an update from 
the standard used in some prior rules, such as the ``Financial Value 
Transparency and Gainful Employment (GE), Financial Responsibility, 
Administrative Capability, Certification Procedures, Ability to Benefit 
(ATB),'' published in the Federal Register on May 19, 2023, 88 FR 
32300, ``Improving Income Driven Repayment for the William D. Ford 
Federal Direct Loan Program and the Federal Family Education Loan 
(FFEL) Program, published in the Federal Register on July 10, 2023, 88 
FR 43820, and the proposed regulations, ``Pell Grants for Prison 
Education Programs; Determining the Amount of Federal Education 
Assistance Funds Received by Institutions of Higher Education (90/10); 
Change in Ownership and Change in Control,'' published in the Federal 
Register on October 28, 2022. 87 FR 65426. Those prior regulations 
applied an enrollment standard for a small two-year institution of less 
than 500 full-time-equivalent (FTE) students and for a small 4-year 
institution, less than 1,000 FTE students.\40\ The Department consulted 
with the SBA Office of Advocacy on the alternative standard for this 
rulemaking. 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 and that it captures 
a similar universe of small entities as the SBA's revenue standard. In 
accordance with section 601 of the RFA, the Department seeks comment on 
the appropriateness of this alternative size standard as it relates to 
this rule.
---------------------------------------------------------------------------

    \39\ In regulations prior to 2016, the Department categorized 
small businesses based on tax status. Those regulations defined 
``nonprofit organizations'' as ``small organizations'' if they were 
independently owned and operated and not dominant in their field of 
operation, or as ``small entities'' if they were institutions 
controlled by governmental entities with populations below 50,000. 
Those definitions resulted in the categorization of all private 
nonprofit organizations as small and no public institutions as 
small. Under the previous definition, proprietary institutions were 
considered small if they are independently owned and operated and 
not dominant in their field of operation with total annual revenue 
below $7,000,000. Using FY 2017 IPEDs finance data for proprietary 
institutions, 50 percent of 4-year and 90 percent of 2-year or less 
proprietary institutions would be considered small. By contrast, an 
enrollment-based definition applies the same metric to all types of 
institutions, allowing consistent comparison across all types.
    \40\ In those prior rules, at least two-year but less-than-four-
years institutions were considered in the broader two-year category. 
In this proposed rule, after consulting with the SBA Office of 
Advocacy, we separate this group into its own category. Based on 
this consultation, we have also increased the enrollment threshold 
for less-than-two-year institutions from 500 to 750 in order to 
treat a similar number of institutions as small under the 
alternative enrollment standard as would be captured under a revenue 
standard.
---------------------------------------------------------------------------

    We note that the Department's revised alternative size standard and 
the SBA's revenue standard identify a similar number of total 
proprietary IHEs, with greater than 93 percent agreement between the 
two standards. Using the Department's revised alternative size 
standard, approximately 61 percent of all IHEs would be classified as 
small for these purposes. Based on data from NCES, in 2022, small IHEs 
had an average enrollment of approximately 289 students. In contrast, 
all other IHEs had an average enrollment of approximately 5,509 
students.

                         Table 1--Number of Small IHEs Under Enrollment-Based Definition
----------------------------------------------------------------------------------------------------------------
                                                                                   Less than  2-
                                                      4-year          2-year           year            Total
----------------------------------------------------------------------------------------------------------------
Not Small.......................................           1,548             639              84           2,271
Small...........................................           1,219             936           1,577           3,732
                                                 ---------------------------------------------------------------
    Total.......................................           2,767           1,575           1,661           6,003
----------------------------------------------------------------------------------------------------------------
Source: 2022 IPEDS data reported to the Department.

    In addition, the following tables show the breakdown of this 93 
percent agreement, using institutional-level data relating to the 2,334 
private for-profit IHEs that were identified using 2022 IPEDS data.\41\ 
The enrollment size standard identifies 2,073 for-profit IHEs as small, 
and the revenue size standard identifies 2,044 for-profit IHEs as 
small, with a core of the same 1,917 for-profit IHEs identified as 
small under both standards. There are 156 IHEs that are only identified 
as small under the enrollment standard and 127 IHEs that are only 
identified as small under the revenue standard. Below are descriptive 
statistics of those for-profit IHEs identified as small by only one of 
the measures.
---------------------------------------------------------------------------

    \41\ 2022 IPEDS downloaded from https://nces.ed.gov/ipeds/datacenter/DataFiles.aspx.
---------------------------------------------------------------------------

    Table 2 shows the distribution of revenues and the average 
enrollments of the 156 for-profit IHEs identified as small under only 
the enrollment size standard. A large majority of these for-profit IHEs 
do not have revenue data available in IPEDS. The average enrollment for 
this group with no revenue data available is 210 students.

         Table 2--Small IHEs Under Enrollment Size Standard Only
------------------------------------------------------------------------
                                                              Average
            Revenue category              Number of IHEs    enrollment
------------------------------------------------------------------------
No Data.................................             149             210
$35-40 million..........................               4             580
$41-55 million..........................               2             696
Above $55 million.......................               1             320
                                         -------------------------------
    Total...............................             156             226
------------------------------------------------------------------------

    Table 3 shows the distribution of enrollments and the average 
revenues of the 127 for-profit IHEs identified as small under only the 
revenue size standard. Six of these 127 IHEs do not have enrollment 
data available through IPEDS. There are 57 IHEs in the bin of ``1,000-
1,249 students'', which is closest to the enrollment threshold for for-
profits, and average revenue for these IHEs is $13.3 million. To the 
extent that the proposed alternative size standard covers for-profit 
IHEs that would not otherwise be covered (and the revenue standard 
covers for-profit

[[Page 60281]]

IHEs that would not be covered by the enrollment standard), the 
Department proposes to treat certain for-profit IHEs as small and 
others as not small because of the reasons for proposing an alternative 
size standard explained in this section above.

          Table 3--Small IHEs Under Revenue Size Standard Only
------------------------------------------------------------------------
                                                              Average
           Enrollment category            Number of IHEs      revenue
------------------------------------------------------------------------
No Data.................................               6      $1,206,508
1,000-1,249 students....................              57      13,269,753
1,250-1,499 students....................              23      19,122,831
1,500-1,749 students....................              13      19,247,730
1,750-1,999 students....................              14      23,287,464
Above 2,000 students....................              14      23,527,952
                                         -------------------------------
    Total...............................             127      16,606,901
------------------------------------------------------------------------

    Tables 4 and 5 show the distribution of institution levels for for-
profit IHEs identified as small by the enrollment size standard only 
and by the revenue size standard only, respectively.

     Table 4--Level of For-Profit IHEs Identified as Small Under the
                      Enrollment Size Standard Only
------------------------------------------------------------------------
                          Level                           Number of IHEs
------------------------------------------------------------------------
Less than 2 years (below associate).....................              73
At least 2 but less than 4 years........................              45
Four or more years......................................              38
                                                         ---------------
    Total...............................................             156
------------------------------------------------------------------------


 Table 5--Level of For-Profit IHEs Identified as Small Under the Revenue
                           Size Standard Only
------------------------------------------------------------------------
                          Level                           Number of IHEs
------------------------------------------------------------------------
Less than 2 years (below associate).....................              50
At least 2 but less than 4 years........................              50
Four or more years......................................              27
                                                         ---------------
    Total...............................................             127
------------------------------------------------------------------------

    Notably, the five states with the most IHEs that are identified as 
small under only the enrollment standard are California (34), Texas 
(15), Florida (13), New Jersey (7), and Puerto Rico (7). The five 
states with the most IHEs that are identified as small under only the 
revenue standard are California (28), Florida (18), Texas (11), Arizona 
(8), and Illinois (6).
Description of the Projected Reporting, Recordkeeping, and Other 
Compliance Requirements of the Regulations, Including 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
    Based on the model described in the discussion of RIA, an IHE would 
see a minimum net increase in costs of approximately $3,361 in year 1 
for all IHEs, as explained in more detail in the 3.B. COSTS OF THE 
PROPOSED REGULATIONS section of this Regulatory Impact Analysis and 
included in the table below:

                Table 6--Estimated Net Increase in Costs
------------------------------------------------------------------------
             Category                   Year 1
------------------------------------------------------------------------
Reading and Understanding the New           $1,740  Total cost of
 Rule.                                               $10,458,957 divided
                                                     by the total
                                                     institutions
                                                     effected
Distance Education--Reporting and              102  Total cost of
 Disclosure of Information.                          $381,560 divided by
                                                     the total
                                                     institutions
                                                     offering distance
                                                     education
Return of Title IV Funds When                1,284  Total cost of
 Student Withdraws.                                  $7,708,332 divided
                                                     by the total
                                                     institutions
                                                     effected
TRIO Expanded Eligibility.........             235  Total cost of
                                                     $495,325 divided by
                                                     total grantees
                                                     impacted
                                   -------------------------------------
    Total.........................           3,361  ....................
------------------------------------------------------------------------

    For purposes of assessing the impacts on small entities, the 
Department defines a ``small IHE'' as a less than two-year IHE with an 
enrollment of less than 750 FTE and two-year or four-year IHEs with an 
enrollment of less than 1,000 FTE, based on official 2022 FTE 
enrollment. According to data from the IPEDS, in FY 2022, small IHEs 
had, on average, total revenues of approximately $8,691,634.\42\ 
Therefore, the Department estimates that the proposed regulations could 
generate a net cost for small IHEs equal to approximately 0.04 of 
annual revenue.
---------------------------------------------------------------------------

    \42\ Based on data reported for FY 2022 for ``total revenue and 
other additions'' for public institutions and ``total revenues and 
investment return'' for private not-for-profit and private for-
profit institutions.

[[Page 60282]]



                                    Table 7--Estimated Net Increase in Costs
----------------------------------------------------------------------------------------------------------------
                                                                     Number of     Average total     Net cost
                       Entities by sector                          institutions       revenue      percentage  %
----------------------------------------------------------------------------------------------------------------
Private for-profit, 2-year......................................             431      $4,282,808            0.08
Private for-profit, 4-year or above.............................             238       9,747,215            0.03
Private for-profit, less-than 2-year............................           1,304       1,751,544            0.19
Private not-for-profit, 2-year..................................             121       3,980,612            0.08
Private not-for-profit, 4-year or above.........................             821      14,778,833            0.02
Private not-for-profit, less-than 2-year........................              55       1,907,257            0.18
Public, 2-year..................................................             365      23,541,752            0.01
Public, 4-year or above.........................................             109      33,836,210            0.01
Public, less-than 2-year........................................             218       4,215,979            0.08
                                                                 -----------------------------------------------
    Grand Total.................................................           3,662       8,691,634            0.04
----------------------------------------------------------------------------------------------------------------

    According to data from IPEDS, approximately 458 small IHEs had 
total reported annual revenues of less than $597,100 for which the 
costs estimated above will potentially exceed 1 percent of total 
revenues. The average enrollment across these 458 small IHEs was 48 
students.
Identification, to the Extent Practicable, of All Relevant Federal 
Regulations That May Duplicate, Overlap, or Conflict With the 
Regulations
    The regulations will not conflict with or duplicate existing 
Federal regulations.
Alternatives Considered
    As described in section 5 in the Regulatory Impact Analysis above, 
``Alternatives Considered'', the Department considered several 
alternative provisions and approaches but rejected those alternatives 
for the reasons considered above. Most relevant to small entities were 
the alternatives to limit proposed changes. For example, under distance 
education, the Department considered exempting direct assessment 
programs offered through distance education from the proposed 
requirement under Sec.  668.22(b)(3)(i)(D) that would require an 
institution to take attendance for each course offered entirely through 
distance education. However, the Department rejected this consideration 
in part because it ultimately would not reduce burden including to 
small entities since all distance education courses are still required 
to provide regular and substantive interaction and believes that 
institutions that offer direct assessment programs through distance 
education already have systems in place to monitor academic engagement.
    Similarly, under R2T4, the Department proposed removing the 49 
percent withdrawal exemption, which would in part eliminate observed 
confusion between this figure and the 60 percent completion requirement 
under the R2T4 calculation and eliminate the continued need for 
significant guidance and training on how to determine whether a student 
qualifies for the exemption, thereby reducing institutional burden. 
Negotiators, however, disagreed stating that institutions had already 
updated systems and policies to account for the exemption and that it 
was serving students well. As a result, the Department eliminated the 
proposal.
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.
    Proposed Sec. Sec.  668.22 and 668.41 contain information 
collection requirements. Under the PRA, the Department has or will at 
the required time submit a copy of these sections and Information 
Collection requests to OMB for its review. A Federal agency may not 
conduct or sponsor a collection of information unless OMB approves the 
collection under the PRA and the corresponding information collection 
instrument displays a currently valid OMB control number. 
Notwithstanding any other provision of law, no person is required to 
comply with, or is subject to penalty for failure to comply with, a 
collection of information if the collection instrument does not display 
a currently valid OMB control number. In the final regulations, we 
would display the control numbers assigned by OMB to any information 
collection requirements proposed in this NPRM and adopted in the final 
regulations.
    Section 668.22 Treatment of title IV funds when a student 
withdraws.
    Requirements: Proposed Sec.  668.22(b)(3)(ii) would require 
institutions to take attendance in distance education courses, which 
would require schools to use actual attendance data to determine a 
student's withdrawal date for students enrolled entirely in online 
courses for a particular payment period or period of enrollment. The 
requirement would not apply to dissertation research courses that are 
part of a doctoral program. The Department believes that this change 
would improve Return of title IV funds (R2T4) calculations, limit 
instances of inaccurate calculations by schools, and better protect 
student and taxpayer funds. Regarding distance education courses, 
institutions can often easily determine when students stop attending 
because a school's systems can often identify when students submit 
assignments or interact with instructors and students during lectures 
and course discussions, and students are often continuously monitored 
to track academic engagement. Also, some institutions with online 
courses are already required to take attendance in certain situations 
as described under 34 CFR 668.22(b)(3).
    Burden Calculation: The proposed regulatory change would add a 
burden for institutions. The Award Year 2022 IPEDS reporting has 3,732 
institutions offering one or more distance education courses. The 
Department estimates that each of the institutions would be required to 
do an initial review of their distance education system to ensure that 
attendance is being collected and potentially develop or add attendance

[[Page 60283]]

taking to the system. The Department expects that this would require an 
average of 10 hours per institution as a one-time burden. The 
Department estimates it would take 684 Proprietary institutions 6,840 
hours to perform this review function (684 institutions x 10 hours = 
6,840 hours). The Department estimates it would take 1,414 Private 
institutions 14,140 hours to perform this review function (1,414 x 10 
hours = 14,140). The Department estimates it would take 1,634 Public 
institutions 16,340 hours to perform this review function (1,634 x 10 
hours = 16,340).
    Due to the highly automated delivery of these types of courses, and 
the availability of such coursework on a daily basis, the Department 
estimates half of the institutions offering distance education courses 
would already be performing this task. Therefore, the Department 
estimates it would take the remaining fifty percent of institutions 
offering distance education about 10 minutes on a daily basis to 
capture attendance information for their records. The Department 
estimates it would take 342 Proprietary institutions 21,221 hours 
annually to perform this recordkeeping function (684/2 institutions x 
365 days x .17 (10 minutes) = 21,221 hours). The Department estimates 
it would take 707 Private institutions 43,869 hours annually to perform 
this recordkeeping function (1,414/2 x 365 x .17 (10 minutes) = 
43,869). The Department estimates it would take 817 Public institutions 
50,695 hours annually to perform this recordkeeping function (1,634/2 x 
365 x .17 (10 minutes) = 50,695). The total estimated burden to be 
added to OMB Control Number 1845-0022 is 153,105 hours.

                                Student Assistance General Provisions--1845-0022
----------------------------------------------------------------------------------------------------------------
                                                                                                    Cost $49.33
                 Affected entity                    Respondent       Responses     Burden hours     per entity
----------------------------------------------------------------------------------------------------------------
Proprietary.....................................             684         125,514          28,061      $1,384,249
Private non-profit..............................           1,414         259,469          58,009       2,861,584
Public..........................................           1,634         299,839          67,035       3,306,836
                                                 ---------------------------------------------------------------
    Total.......................................           3,732         684,822         153,105       7,552,669
----------------------------------------------------------------------------------------------------------------

    Section 668.41 Reporting and disclosure of information.
    Requirements: The Department proposes adding a new paragraph Sec.  
668.41(h) that would require institutions to report their enrollment in 
distance education or correspondence courses. The Department expects 
that this provision would be implemented no earlier than July 1, 2026. 
This change would provide the Department with expanded information to 
better answer questions about college access, persistence, and success, 
and to better inform student-centered policies. This reporting 
requirement also would improve the Department's ability to determine 
whether institutions have reached the 50 percent threshold for distance 
education enrollment. When institutions enroll at least 50 percent of 
their students in distance education, offer at least 50 percent of 
their courses, or 50 percent of a program via distance education, they 
must obtain further accreditor approval beyond the initial approval to 
deliver distance education programs.
    Burden Hours: The proposed regulatory change would add a burden for 
institutions. Because we expect to delay implementation of this new 
requirement until at least July 1, 2026, we are not estimating the 
implementation burden at this time. As development of the reporting 
mechanism progresses, a separate information collection will be 
submitted for full public comment closer to implementation of the data 
collection, incorporating more useful and specific information.
    Consistent with the discussions above, the following chart 
describes the sections of the proposed regulations involving 
information collections, the information being collected and the 
collections that the Department would submit to OMB for approval and 
public comment under the PRA, and the estimated costs associated with 
the information collections. The monetized net cost of the increased 
burden for institutions, lenders, guaranty agencies and students, using 
wage data developed using Bureau of Labor Statistics (BLS) data. For 
institutions the Department is using the median hourly wage for 
Education Administrators, Postsecondary, $49.33 per hour according to 
BLS. https://www.bls.gov/oes/current/oes119033.htm.

                                            Collection of Information
----------------------------------------------------------------------------------------------------------------
                                                                                                  Estimated cost
       Regulatory section              Information collection          OMB control number and       $49.33 per
                                                                          estimated burden            entity
----------------------------------------------------------------------------------------------------------------
Sec.   668.22..................  Proposed Sec.   668.22(b)(3)(ii)   1845-0022; 153,105 hours....      $7,552,669
                                  would require institutions with
                                  distance education courses to
                                  take attendance for each course
                                  offered entirely through
                                  distance education, except for
                                  dissertation research courses
                                  that are part of a doctoral
                                  program.
Sec.   668.41..................  The Department proposes adding a   None--will develop closer to  ..............
                                  new paragraph (h) that would       implementation.
                                  require institutions to report
                                  their enrollment in distance
                                  education or correspondence
                                  courses. The Department plans to
                                  implement this provision no
                                  earlier than July 1, 2026.
----------------------------------------------------------------------------------------------------------------


[[Page 60284]]


 Total Burden Hours and Change in Burden Hours Associated With Each OMB
    Control Number Affected by the Proposed Regulations in 1845-0022
------------------------------------------------------------------------
                                           Total burden      Change in
               Control No.                     hours       burden hours
------------------------------------------------------------------------
1845-0022...............................       2,738,785        +153,105
                                         -------------------------------
    Total...............................       2,738,785        +153,105
------------------------------------------------------------------------

    The Department has prepared the Information Collection Request for 
the information collection requirement. If you wish to review and 
comment on the Information Collection Requests, please follow the 
instructions in the ADDRESSES section of this notification.
    In preparing your comments, you may want to review the Information 
Collection Request, including the supporting materials, in 
www.regulations.gov by using the Docket ID number specified in this 
notification Docket ED-2024-OPE-0050. This proposed collection is 
identified as proposed collection, 1845-0022.
    Note: The Office of Information and Regulatory Affairs in OMB and 
the Department review all comments posted at www.regulations.gov.
Intergovernmental Review
    This program is subject to Executive Order 12372 and the 
regulations in 34 CFR part 79. One of the objectives of the Executive 
Order is to foster an intergovernmental partnership and a strengthened 
Federalism. The Executive order relies on processes developed by State 
and local governments for coordination and review of proposed Federal 
financial assistance.
    This document provides early notification of our specific plans and 
actions for this program.
Assessment of Education Impact
    In accordance with section 411 of the General Education Provisions 
Act, 20 U.S.C. 1221e-4, the Secretary particularly requests comments on 
whether these proposed regulations would 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 provide 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. The proposed regulations do not have Federalism 
implications.
    Accessible Format: On request to one of the program contact persons 
listed under FOR FURTHER INFORMATION CONTACT, individuals with 
disabilities can obtain this document in an accessible format. The 
Department will provide the requestor with an accessible format that 
may include Rich Text Format (RTF) or text format (txt), a thumb drive, 
an MP3 file, braille, large print, audiotape, compact disc, or other 
accessible format.
    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 Department documents published in the 
Federal Register, in text or in Portable Document Format (PDF). To use 
PDF you must have Adobe Acrobat Reader, which is available at no cost 
to the user at the site.
    You may also access Department documents published in the Federal 
Register by using the article search feature at 
www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department.

List of Subjects

34 CFR Part 600

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

34 CFR Parts 643 and 644

    Colleges and universities, Education of disadvantaged, Elementary 
and secondary education, Grant programs--education, Reporting and 
recordkeeping requirements, Student aid.

34 CFR Part 645

    Colleges and universities, Education of disadvantaged, Elementary 
and secondary education, Grant programs--education, Reporting and 
recordkeeping requirements, Veterans.

34 CFR Part 668

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

Miguel A. Cardona,
Secretary of Education.

    For the reasons discussed in the preamble, the Secretary of 
Education proposes to amend parts 600, 643, 644, 645, 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. In the definition of Additional location, adding paragraph (3).
0
b. In the definition of Clock hour, revising paragraph (1)(iv).
0
c. Adding, in alphabetical order, a definition of Distance education 
course.
    The revision and additions read as follows:


Sec.  600.2  Definitions.

* * * * *
    Additional location:
* * * * *
    (3) A virtual location through which the institution offers 100 
percent of an educational program through distance education or 
correspondence courses, notwithstanding requirements for students to 
complete on-campus or residential periods of 90 days or less.
* * * * *

[[Page 60285]]

    Clock hour:
    (1) * * *
    (iv) In distance education, 50 to 60 minutes in a 60-minute period 
of attendance in a synchronous class, lecture, or recitation where 
there is opportunity for direct interaction between the instructor and 
students.
* * * * *
    Distance education course: A course in which instruction takes 
place exclusively as described in the definition of distance education 
in this section notwithstanding in-person non-instructional 
requirements, including orientation, testing, academic support 
services, or residency experiences.
* * * * *

PART 643--TALENT SEARCH

0
3. The authority citation for part 643 continues to read as follows:

    Authority:  20 U.S.C. 1070a-11 and 1070a-12, unless otherwise 
noted.

0
4. Section 643.3 is amended by:
0
a. Removing the word ``or'' at the end of paragraph (a)(1)(iv).
0
b. Removing the period at the end of paragraph (a)(1)(v) and adding, in 
its place, ``; or''.
0
c. Adding paragraph (a)(1)(vi).
    The addition reads as follows:


Sec.  643.3  Who is eligible to participate in a project?

    (a) * * *
    (1) * * *
    (vi) If an individual does not meet the requirements of paragraph 
(a)(1)(i) through (v) of this section, then the individual is enrolled 
in or seeks to enroll in a high school in the United States, 
territories, or Freely Associated States.
* * * * *

PART 644--EDUCATIONAL OPPORTUNITY CENTERS

0
5. The authority citation for part 644 continues to read as follows:

    Authority:  20 U.S.C. 1070a-11 and 1070a-16, unless otherwise 
noted.

0
6. Section 644.3 is amended by:
0
a. Removing the word ``or'' at the end of paragraph (a)(1)(iv).
0
b. Removing the period at the end of paragraph (a)(1)(v) and adding, in 
its place, ``; or''.
0
c. Adding paragraph (a)(1)(vi).
    The addition reads as follows:


Sec.  644.3  Who is eligible to participate in a project?

    (a) * * *
    (1) * * *
    (vi) If an individual does not meet the requirements of paragraph 
(a)(1)(i) through (v) of this section, then the individual is enrolled 
in or seeks to enroll in a high school in the United States, 
territories, or Freely Associated States.
* * * * *

PART 645--UPWARD BOUND PROGRAM

0
7. The authority citation for part 645 continues to read as follows:

    Authority:  20 U.S.C. 1070a-11 and 1070a-13, unless otherwise 
noted.

0
8. Section 645.3 is amended by:
0
a. Removing the periods at the end of paragraphs (a)(1) through (4) and 
adding semicolons in their place.
0
b. Removing the period at the end of paragraph (a)(5) and adding, in 
its place, ``; or''.
0
c. Adding paragraph (a)(6).
    The addition reads as follows:


Sec.  645.3  Who is eligible to participate in an Upward Bound project?

* * * * *
    (a) * * *
    (6) If an individual does not meet the requirements of paragraph 
(a)(1) through (5) of this section, then the individual is enrolled in 
or seeks to enroll in a high school in the United States, territories, 
or Freely Associated States, and provided that such individual is not 
eligible for a direct cash stipend.
* * * * *

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

0
9. 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, 1221e-3, and 1231a, unless otherwise noted.


Sec.  668.3  [Amended]

0
10. Section 668.3 is amended by:
0
a. Adding ``credit-hour'' before ``program'' in paragraph 
(b)(2)(ii)(A).
0
b. Removing ``program'' and adding, in its place, ``credit-hour program 
offered'' in paragraph (b)(2)(ii)(B).
0
11. Section 668.21 is amended by revising paragraph (a)(2)(ii) to read 
as follows:


Sec.  668.21  Treatment of title IV grant and loan funds if the 
recipient does not begin attendance at the institution.

    (a) * * *
    (2) * * *
    (ii) For remaining amounts of FFEL or Direct Loan funds disbursed 
directly to the student for that payment period or period of 
enrollment, including funds that are disbursed directly to the student 
by the lender for a study-abroad program in accordance with Sec.  
682.207(b)(1)(v)(C)(1) or for a student enrolled in a foreign school in 
accordance with Sec.  682.207(b)(1)(v)(D), the institution is not 
responsible for returning the funds, but must immediately notify the 
lender or the Secretary, as appropriate, when it becomes aware that the 
student will not or has not begun attendance so that the lender or 
Secretary will initiate borrower repayment under the terms of their 
promissory note; and
* * * * *
0
12. Section 668.22 is amended by:
0
a. Removing ``and'' at the end of paragraph (a)(2)(ii)(A)(4).
0
b. Removing the period at the end of paragraph (a)(2)(ii)(A)(5) and 
adding, in its place, ``; and''.
0
c. Adding new paragraph (a)(2)(ii)(A)(6).
0
d. Revising paragraph (b)(2).
0
e. Redesignating paragraphs (b)(3)(ii) through (iv) as paragraphs 
(b)(3)(iii) through (v).
0
f. Adding a new paragraph (b)(3)(ii).
0
g. Revising paragraphs (d)(1)(vii), (f)(1)(ii)(A), and (l)(9).
    The revisions and addition read as follows:


Sec.  668.22  Treatment of title IV funds when a student withdraws.

    (a) * * *
    (2) * * *
    (ii) * * *
    (A) * * *
    (6) A student is not considered to have withdrawn if--
    (i) The institution's records treat a student as having never 
attended courses for that payment period or period of enrollment;
    (ii) The institution returns all the title IV grant or loan 
assistance disbursed to the student for that payment period or period 
of enrollment;
    (iii) The institution refunds all institutional charges to the 
student for the payment period or period of enrollment; and
    (iv) The institution writes off or cancels any current year balance 
owed by the student to the institution due to the institution's 
returning of title IV funds to the Department.
* * * * *
    (b) * * *
    (2) An institution must, within 14 days of a student's last date of 
attendance, document a student's withdrawal date determined in 
accordance with paragraph (b)(1) of this section and maintain the 
documentation as of the date of the institution's determination that 
the student withdrew.
    (3) * * *

[[Page 60286]]

    (ii) An institution must take attendance for each course offered 
entirely through distance education as defined in 34 CFR 600.2, except 
for dissertation research courses that are part of a doctoral program.
* * * * *
    (d) * * *
    (1) * * *
    (vii) Except for a clock-hour or non-term credit hour program, a 
subscription-based program, or an eligible prison education 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
* * * * *
    (f) * * *
    (1) * * *
    (ii) (A) In the case of a program that is measured in clock hours, 
by dividing the total number of clock hours in the payment period or 
period of enrollment into the number of clock hours scheduled to be 
completed since the student began attendance in the payment period or 
period of enrollment as of the student's withdrawal date.
* * * * *
    (l) * * *
    (9) A student in a program offered in modules is scheduled to 
complete the days in a module only when a student begins attendance in 
the module.
0
13. Amend Sec.  668.41 by adding paragraph (h) to read as follows:


Sec.  668.41  Reporting and disclosure of information.

* * * * *
    (h) Reporting of student enrollment in distance education or 
correspondence courses. For each recipient of title IV, HEA assistance 
at the institution, the institution must report to the Secretary, in 
accordance with procedures established by the Secretary, the 
recipient's enrollment in distance education or correspondence courses.

[FR Doc. 2024-16102 Filed 7-23-24; 8:45 am]
BILLING CODE 4000-01-P