P&P Guidance Updates and Changes: Summary of Changes Effective July 1

The Policies & Procedures (P&P) Builder, a module of NASFAA’s Compliance Engine, guides you step-by-step through the creation of a centralized, accessible policies and procedures manual. Due to the timing of the release of the P&P Builder template each year, the U.S. Department of Education (ED) may provide new guidance which affects the existing template. In response, updates will be made to the P&P Builder template.

The new P&P Builder template for the 2020-21 award year will be released in early August. It will provide references to guidance related to the COVID-19 national emergency, as well as any regulatory changes effective July 1, 2020. Here are the regulatory changes in summary:

  • Federal Register, 7/1/19 – Program Integrity: Gainful Employment
    • These regulations rescinded the gainful employment rules located in 34 CFR 668.6, as well as the regulations in 668, Subpart Q and Subpart R. Schools had the option for early implement as early as July 1, 2019. Schools which opted not to early implement were responsible for gainful employment reporting for the 2018-19 award year which was due on October 1, 2019. For additional information, see Gainful Employment Electronic Announcement #122 and Gainful Employment Electronic Announcement #123.
    • Under 600.10(c)(1)(iii), undergraduate programs that are at least 300 clock hours in length, but less than 600 clock hours that admit regular students without the equivalent of an associate degree must be approved by ED under 668.8(d)(3).
  • Federal Register, 9/23/19 – Student Assistance General Provisions, Federal Family Education Loan Program, and William D. Ford Federal Direct Loan Program
    • These are the final borrower defense rules, which provides protection and recourse for students who have been victims of different types of institutional misconduct and provides an avenue for students to have federal student loans forgiven. The regulations went through delays and lawsuits before the renegotiated rules were released on September 23, 2019 and became final on July 1, 2020.
    • 668.14(b)(30)(ii)(C), which is part of the Program Participation Agreement regulations, now has an “and” at the end of it that links it directly to 668.14(b)(31).
    • 668.14(b)(32) was removed.
    • 668.41(h) was stricken and replaced with the current language in NASFAA’s Compiled Regulations, which begins with “Enrolled students, prospective students, and the public—disclosure of an institution’s use of pre-dispute arbitration agreements and/or class action waivers as a condition of enrollment for students receiving title IV Federal student aid.”
    • 668.41(i) was removed.
    • 668.91(a)(3)(ii) refers to 668.14(b)(18) now and removed the reference to 668.82(d)(1).
    • 668.91(a)(3)(ii) had the following change, with the red text was added and the struck text deleted:
      • (iii) In If an action brought against an institution or third-party servicer that involves its failure to provide a letter of credit, or financial protection under Sec. 668.15 or Sec. 668.171(c) or (d)through (g), the hearing official finds that the amount of the letter of credit or other financial protection established by the Secretary under Sec. 668.175(f)(4) is appropriate, unless the institution can demonstrates that the amount was not warranted because—
    • 668.91(a)(3)(ii)(A)-(B) had the following changes made:
      • (A) For financial protection demanded based on events or conditions described in Sec. 668.171(c) or (d)through (f), the events or conditions no longer exist, or have been resolved, or the institution demonstrates that it has insurance that will cover all potential the debts and liabilities that arise from the triggering event or condition., or, for a condition or event described in Sec. 668.171(c)(1)(iii) (teach out) or (iv) (gainful employment eligibility loss), the amount of educationally related expenses reasonably attributable to the programs or location is greater than the amount calculated in accordance with Appendix C of subpart L of this part. The institution can demonstrate it has that insurance that covers risk by presenting the Department with a copy of the insurance policy that makes clear the institution’s coverage. statement from the insurer that the institution is covered for the full or partial amount of the liability in question;
      • (B) For financial protection demanded based on the grounds identified in Sec. 668.171(d), the action or event does not and will not have a material adverse effect on the financial condition, business, or results of operations of the institution; a suit described in Sec. 668.171(c)(1)(i) that does not state a specific amount of relief and on which the court has not ruled on the amount of relief, the institution demonstrates that, accepting the facts alleged as true, and assuming the claims asserted are fully successful, the action pertains to a period, program, or location for which the maximum potential relief is less than the amount claimed or the amount determined under Sec. 668.171(c)(2)(ii);
    • 668.91(a)(3)(iii)(C) had text stricken and replaced with new text, reflected in the current Compiled Regulations on our website.
    • 668.171 refers to the financial responsibility institutions take on when participating in the Title IV programs. It was significantly altered by the borrower defense rules, with a few of those changes highlighted.
      • 668.171(b)(3) identifies the circumstances under which an institution is not meeting its financial or administrative obligations: “(3) The institution is able to meet all of its financial obligations and otherwise provide the administrative resources necessary to comply with title IV, HEA program requirements. An institution may not be able to meet its financial or administrative obligations if it is subject to an action or event described in paragraph (c), (d), (e), (f), or (g) of this section. The Secretary considers those actions or events in determining whether the institution is financially responsible only if they occur on or after July 1, 2017; and An institution is not deemed able to meet its financial or administrative obligations if—
        (i) It fails to make refunds under its refund policy or return title IV, HEA program funds for which it is responsible under Sec. 668.22

        (ii) It fails to make repayments to the Secretary for any debt or liability arising from the institution’s participation in the title IV, HEA programs; or
        (iii) It is subject to an action or event described in paragraph (c) of this section (mandatory triggering events), or an action or event that the Secretary determines is likely to have a material adverse effect on the financial condition of the institution under paragraph (d) of this section (discretionary triggering events); and
  • 668.171(c) through 668.171(i) had existing text struck and replaced. The changes are listed below.
  • 668.171(c) lists mandatory triggering events in which the ED will look deeper into an institution’s ability to meet financial and administrative obligations.
  • 668.171(d) lists discretionary triggering events for further investigation by ED.
  • 668.171(e) provides how ED will recalculate an institution’s composite score.
  • 668.171(f) lays out new reporting requirements.
  • 668.171(g) provides the conditions under which a public institution is considered to be financially responsible.
  • 668.171(h) provides information on how ED will review audit opinions and disclosures as part of the process of determining if an institution is financially responsible.
  • 668.171(i) codifies administrative actions ED may take in the event a school is found not to be financially responsible.
  • 668.171(j)-(k) were removed.
  • 668.175(h) was replaced with the current text in the Compiled Regulations.

For more information on the borrower defense regulations and the changes made to federal regulations as a result, please see the Federal Register as well as the NASFAA Policy page, Borrower Defense, which provides links to other NASFAA and ED resources.

  • Federal Register, 11/1/19 – Student Assistance General Provisions, The Secretary’s Recognition of Accrediting Agencies, The Secretary’s Recognition Procedures for State Agencies
    • These regulations revised several components of requirements for accrediting agencies in their supervision of institutions and programs. The regulations provide greater flexibility to accrediting agencies and revised the criteria ED uses to recognize accrediting agencies as well as the process for recognition and review. The new rules also provide more information on the role and responsibility of both schools and accrediting changes regarding teach-out programs. The final rule also revised the state authorization requirements for schools which offer correspondence and distance education courses. It also removed regulations related to the Robert C. Byrd Honors Scholarship Program. Institutions and agencies had the option to early implement 600.2, 600.9, 668.43, and 668.50 on November 1, 2019.
    • Several of the changes to the regulations are highlighted.
      • 600.2 added several new terms and definitions, which include “Additional location,” “Preaccreditation,” “Religious mission,” “State authorization reciprocity agreement,” and “Teach-out.”
      • 600.9(b) and (c) were new with this Federal Register, and are reflected in the Compiled Regulations.
      • 600.11(a) had the following changes: (a) Change of accrediting agencies. (1) For purposes of Secs. 600.4(a)(5)(i), 600.5(a)(6), and 600.6(a)(5)(i), the Secretary does not recognize the accreditation or preaccreditation of an otherwise eligible institution if that institution is in the process of changing its accrediting agency, unless the institution provides the following to the Secretary and receives approval:
        (i)All materials related to its prior accreditation or preaccreditation.
        (ii) Materials demonstrating reasonable cause for changing its accrediting agency. The Secretary will not determine such cause to be reasonable if the institution—
        (A) Has had its accreditation withdrawn, revoked, or otherwise terminated for cause during the preceding 24 months, unless such withdrawal, revocation, or termination has been rescinded by the same accrediting agency; or
        (B) Has been subject to a probation or equivalent, show cause order, or suspension order during the preceding 24 months.
        (2) Notwithstanding paragraph (a)(1)(ii) of this section, the Secretary may determine the institution’s cause for changing its accrediting agency to be reasonable if the agency did not provide the institution its due process rights as defined in Sec. 602.25, the agency applied its standards and criteria inconsistently, or if the adverse action or show cause or suspension order was the result of an agency’s failure to respect an institution’s stated mission, including religious mission.
        (1) All materials related to its prior accreditation or preaccreditation; and
        (2) Materials demonstrating reasonable cause for changing its accrediting agency.
      • 600.11(b)(2) now contains (i) and (ii).
      • 600.12, Severability, is new.
      • 600.33, Severability, is new.
      • 600.42, Severability, is new.
      • 668.26(e) contains new regulatory text.
      • 668.29, Severability, is new.
      • Changes were made 668.41(a), in the definition of “Undergraduate students” with the addition of the words ‘‘at or’’ before ‘‘below’’, and the word ‘‘level’’ after ‘‘baccalaureate.”
      • 668.43(a)(5)(v) contains new regulatory text.

A helpful quick reference is NASFAA’s 2019 State Authorization Federal Regulations chart.

  • Federal Register, 11/26/19 – Total and Permanent Disability Discharge of Loans Under Title IV of the Higher Education Act
    • These regulations made it easier for veterans to receive a total and permanent disability discharge of their Title IV loans, by removing the requirement to provide additional documentation, as ED now is able to communicate directly with the VA. Changes were made to  the following regulations:
  • Federal Register, 6/17/20 - Eligibility of Students at Institutions of Higher Education for Funds Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act
    • Effective immediately on June 17, 2020, this interim final rule codified which students are eligible for emergency grant funds under the CARES Act, specifically only students who are also eligible for Title IV aid.
    • It added the definition under 668.2(b),”Student, for purposes of the phrases "grants to students" and "emergency financial aid grants to students" in sections 18004(a)(2), (a)(3), and (c) of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, is defined as an individual who is, or could be, eligible under section 484 of the HEA, to participate in programs under title IV of the HEA.”

Check out our new P&P Builder Template Updates and Guidance Changes page to stay informed.


Publication Date: 8/3/2020

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