Analysis: ED's Final Institutional Eligibility, General Provisions, Byrd Scholarship Program Regulations

By Megan Walter, NASFAA Policy & Federal Relations Staff

Editor's Note: On November 1, the Department of Education (ED) released its final rules regarding accreditation, state authorization of distance education, and student assistance general provisions. The rules become effective July 1, 2020. This article is the second in a series of three analyzing the rules, and will focus on institutional eligibility, general provisions, and the Robert C. Byrd Scholarship program. 

These rules are the culmination of the work of 2018-19 negotiated rulemaking sessions, which also included discussions on faith-based entities, the Teacher Education Assistance for College and Higher Education (TEACH) Grant program, and distance learning — none of which have seen proposed rules published for public comment. As a reminder, negotiators reached consensus during those rulemaking sessions, which meant that ED was obligated to publish the consensus regulatory language in its proposed regulations, which were released in June. Changes from the proposed rules reflect ED’s incorporation of public comments. See all of NASFAA’s coverage of the rulemaking process. 

Institutional Eligibility 

ED added a definition of "additional location" as a facility geographically apart from an institution's main campus where the institution offers at least 50% of a program. ED also created a revision of the definition of "branch campus" to note that a branch campus is considered an additional location under the new definition of that term.

The final rules would keep the proposed changes to the regulatory language from June’s Notice of Proposed Rulemaking (NPRM), which adds a definition of "teach-out" as a period of time during which a program, institution, or location engages in an orderly closure, or, following closure, when another institution provides the opportunity for students to complete their program. In addition, the final rules would further clarify that a “teach-out” is an activity, rather a period of time. 

The final teach-out definition will include language stating that eligible borrowers should not be prevented from accessing a closed school discharge in lieu of a teach-out, and that institutions are prohibited from misrepresenting the nature of teach-out plans, teach-out agreements, and credit transfer. The teach-out definition will precede the existing definitions of teach-out agreement and teach-out plan, which will all be moved from 34 CFR 602.3 to 600.2, along with the definition for pre-accreditation, for consistency. Finally, the teach-out plan and teach-out agreement definitions are updated to include not only closures, but also plans to cease operations.

A definition of religious mission is proposed to ensure that accrediting agencies can properly distinguish between institutions with only historical connections to religious orders and those with ongoing religious missions, to ensure that accreditors do not consider an institution's religious mission-based activities as a negative factor in applying and enforcing standards.

Multiple Accreditation Flexibility

Under the final rules, ED does not recognize the existing accreditation or pre-accreditation of an institution if it is in the process of changing accrediting agencies, unless it provides ED with materials related to its prior accreditation, and demonstrates reasonable cause for changing accreditor. The rules tighten language to require not only the provision of the above materials to ED, but also to require ED's approval. The rules also add the specific causes that ED would not consider reasonable for changing accreditation, which include the institution having had its accreditation revoked, or having been subject to probation, show cause order, or suspension within the previous two years. Exceptions would apply in cases in which the accrediting agency failed to: provide the institution its due process rights, apply standards consistently, or respect institutional mission.

Multiple accreditation could be permitted under the rules in instances in which the institution's primary reason for seeking multiple accreditation was based on the agency's geographic area, program area focus, or mission.

Additional Locations

The final rules would amend current regulations that require a two-year waiting period for institutions to gain eligibility for additional locations in cases in which the additional location was acquired after a closure, and the closed institution owes a liability for a violation of a Higher Education Act (HEA) program requirement. Currently, the exception to the two-year rule applies only when the acquiring institution agrees to be liable for all improperly expended or unspent Title IV funds received by the closed institution. With these rules, ED would limit the acquiring institution's liability for improperly expended HEA funds to only those funds received during the current academic year and up to one academic year prior. This would apply only in instances in which the applicant institution and the original institution are not related parties and have no commonality of ownership, control, or management.

Student Assistance General Provisions

ED upheld the language from the NPRM that would permit institutions under certain circumstances to continue to award and disburse Title IV aid for 120 days after ending participation in the Title IV aid programs. ED's goal is to permit institutions to teach-out their own students who are near completion of their programs of study to minimize disruption for those students. ED revised section 668.26(e)(1) of the rules to clarify that the provision for continued participation in Title IV programs for up to 120 days must precede the point at which the secretary of education terminates the institution’s program participation agreement. ED also clarified that only students who are currently enrolled and completing the institution’s teach-out plan, or those who are taking credit for the purpose of transferring to another institution may receive Title IV aid during the extended 120 day period. No new students would be able to be enrolled during this period. 

Related to this provision, ED emphasized in the final rules that an institution is prohibited from misrepresenting the nature of its teach-out plans, teach-out agreements, and transfer of credit, and that any such misrepresentation may provide the basis for a borrower’s claim of defense to repayment. 

ED removed from 34 CFR 668.41 the requirement that schools disclose internally-calculated placement rates, replacing it with one that requires disclosure only when that rate is published or used in advertising.

Several disclosures related to institutional information under 34 CFR 668.43 are changed or added. The regulations add a requirement for institutions to disclose whether programs meet licensure or certification requirements for each state, or to disclose that they had not made a determination about whether the program met state requirements. In addition to the public disclosures, direct disclosure to prospective students would be required if an institution determined that a program didn't meet state licensure or certification requirements, or if the institution hadn't determined whether the program met those requirements, based on the state where the student is located. For currently enrolled students, institutions would have 14 days to directly disclose that they had made a determination that a program did not meet state licensure or certification requirements for the state in which the student is located. These requirements apply to all programs offered via all modalities (distance education and not) that are designed to meet educational requirements for a specific professional license or certification that is required for employment in an occupation, or is advertised as meeting such requirements.

The final rules would add to the existing credit transfer disclosure requirement that institutions must now disclose the institutions or sources of credit that they will not accept for transfer. Institutions would also be required to disclose how they evaluate credit for prior learning. Also added are requirements to disclose whether and why an institution is required by its accreditor to maintain a teach-out plan, and whether it is aware of any ongoing legal action related to academic quality, misrepresentation, fraud, or other severe matters.

Final rules would also mandate that institutions disclose enforcement actions or prosecutions by law enforcement agencies that could result in an adverse action by an accrediting agency, or suspension, limitation, or termination of Title IV eligibility. 

Lastly, ED removed all language in 34 CFR 654 related to the Robert C. Byrd Honors Scholarship Program, citing lack of appropriations for the program since fiscal year 2012 and the unlikelihood of it receiving future funding.

While the final rules will officially go into effect July 1, 2020, ED has authorized optional early implementation for final rules related to state authorization, definitions, and disclosures for institutions.


Publication Date: 11/7/2019

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