# Student Assistance General Provisions, The Secretary's Recognition of Accrediting Agencies, The Secretary's Recognition Procedures for State Agencies > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2019-23129 ## Record - **Collection:** Federal Register - **Document type:** Rule - **Published:** November 1, 2019 - **Citation:** 84 FR 58834 ## Text DEPARTMENT OF EDUCATION 34 CFR Parts 600, 602, 603, 654, 668, and 674 RIN 1840-AD36, 1840-AD37 [Docket ID ED-2018-OPE-0076] Student Assistance General Provisions, The Secretary's Recognition of Accrediting Agencies, The Secretary's Recognition Procedures for State Agencies AGENCY: Office of Postsecondary Education, Department of Education. ACTION: Final regulations. SUMMARY: The Secretary amends the regulations governing the recognition of accrediting agencies, certain student assistance general provisions, and institutional eligibility, as well as makes various technical corrections. DATES: These regulations are effective July 1, 2020. Implementation date: For the implementation dates of the included regulatory provisions, see the Implementation Date of These Regulations section of this document. FOR FURTHER INFORMATION CONTACT: For further information related to recognition of accrediting agencies, Herman Bounds at herman.bounds@ed.gov or (202) 453-7615 or Elizabeth Daggett at elizabeth.daggett@ed.gov or (202) 453-6190. For further information related to State authorization, Scott Filter at scott.filter@ed.gov or (202) 453-7249 or Sophia McArdle at sophia.mcardle@ed.gov or (202) 453-6318. For all other information related to this document, Barbara Hoblitzell at barbara.hoblitzell@ed.gov or (202) 453-7583 or Annmarie Weisman at annmarie.weisman@ed.gov or (202) 453-6712. If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service (FRS), toll-free, at (800) 877-8339. SUPPLEMENTARY INFORMATION: Executive Summary Purpose of This Regulatory Action: Through this regulatory action, the Department of Education (Department or we): (1) Strengthens the regulatory triad by more clearly defining the roles and responsibilities of accrediting agencies, States, and the Department in oversight of institutions participating in the Federal Student Aid programs authorized under title IV of the Higher Education Act of 1965, as amended (title IV, HEA programs); (2) establishes “substantial compliance” with regard to recognition criteria as the standard for agency recognition; (3) increases academic and career mobility for students by eliminating artificial regulatory barriers to work in a profession; (4) provides greater flexibility for institutions to engage in innovative educational practices more expeditiously and meet local and national workforce needs; (5) protects institutional autonomy, honors individual campus missions, and affords institutions the opportunity to build campus communities based upon shared values; (6) modifies “substantive change” requirements to provide greater flexibility to institutions to innovate and respond to the needs of students and employers, while maintaining strict agency oversight in instances of more complicated or higher risk changes in institutional mission, program mix, or level of credential offered; (7) clarifies the Department's accrediting agency recognition process, including accurate recognition of the geographic area within which an agency conducts business; (8) encourages and enables accrediting agencies to support innovative practices, and provides support to accrediting agencies when they take adverse actions; and (9) modifies the requirements for State authorization to clarify the responsibilities of institutions and States regarding students enrolled in distance education programs and students enrolled in programs that lead to licensure and certification. Summary of the Major Provisions of This Regulatory Action These regulations— • Revise the requirements for accrediting agencies in their oversight of member institutions and programs to be less prescriptive and provide greater autonomy and flexibility to facilitate agility and responsiveness and promote innovation; • Revise the criteria used by the Secretary to recognize accrediting agencies to focus on education quality and allow competition; • Revise the Department's process for recognition and review of accrediting agencies; • Clarify the core oversight responsibilities among each entity in the regulatory triad—accrediting agencies, States, and the Department—to hold institutions accountable; • Establish the roles and responsibilities of institutions and accrediting agencies in the teach-out process; • Establish that the Department recognizes an institution's legal authorization to operate postsecondary educational programs when it is exempt from State authorization under the State constitution or by State law as a religious institution with a religious mission; • Revise the State authorization requirements for institutions offering distance education or correspondence courses; and • Remove the regulations related to the Robert C. Byrd Honors Scholarship Program, which has not received funding in many years. Authority for this Regulatory Action: Section 410 of the General Education Provisions Act provides the Secretary with authority to make, promulgate, issue, rescind, and amend rules and regulations governing the manner of operations of, and governing the applicable programs administered by, the Department. 20 U.S.C. 1221e-3. Furthermore, under section 414 of the Department of Education Organization Act, the Secretary is authorized to prescribe such rules and regulations as the Secretary determines necessary or appropriate to administer and manage the functions of the Secretary or the Department. 20 U.S.C. 3474. These authorities, together with the provisions in the HEA, permit the Secretary to disclose information about title IV, HEA programs to students, prospective students, and their families, the public, taxpayers, the Government, and institutions. Further, section 431 of the Department of Education Organization Act provides authority to the Secretary, in relevant part, to inform the public about federally supported education programs and collect data and information on applicable programs for the purpose of obtaining objective measurements of the effectiveness of such programs in achieving their intended purposes. 20 U.S.C. 1231a. Costs and Benefits: As further detailed in the Regulatory Impact Analysis, the benefits of these regulations include increasing transparency and improving institutional access for students, honoring the autonomy and independence of agencies and institutions, restoring focus and clarity to the Department's agency recognition process, integrating risk-based review into the recognition process, improving teach-outs for students at closed or closing institutions, allowing accrediting agencies to focus greater attention on student learning and the student experience, and restoring public trust in the rigor of the accreditation process and the value of postsecondary education. These regulations reduce regulatory burden on institutions that wish to develop and implement innovative programs and on accrediting agencies because of greater flexibility to make low-risk decisions at the staff level. In addition, these regulations significantly reduce the regulatory burden associated with preparing and submitting accrediting agency petitions for recognition or renewal of recognition since some of this review will now occur through a site visit, thereby eliminating the need to upload perhaps thousands of pages of documents. The potential costs associated with the regulations include some burden associated with required disclosures and the need for accrediting agencies to develop new polices for accreditation decision-making, enforcement of standards, and substantive change reporting requirements. While not the anticipated or desired outcome, it is also possible that agencies would avail themselves of reduced regulatory burden without redeploying resources towards greater oversight of program quality, student learning, and the student experience at institutions and programs; or some agencies could lower their standards. It is, therefore, incumbent on the Department and National Advisory Committee on Institutional Quality and Integrity (NACIQI or Advisory Committee) to use new accountability and oversight tools provided for in these regulations to properly mitigate these risks and monitor agencies to ensure they are upholding their mission-based standards for educational quality. Implementation Date of These Regulations: Section 482(c) of the HEA requires that we publish regulations affecting programs under title IV of the HEA in final form by November 1, prior to the start of the award year (July 1) to which they apply. However, that section also permits the Secretary to designate any regulation as one that an entity subject to the regulations may choose to implement earlier and the conditions for early implementation. The Secretary is exercising her authority under section 482(c) of the HEA to designate the following new regulations at title 34 of the Code of Federal Regulations included in this document for early implementation beginning on November 1, 2019, at the discretion of each institution, or each agency, as appropriate: (1) Section 600.2. (2) Section 600.9. (3) Section 668.43. (4) Section 668.50. The final regulations included in this document are effective July 1, 2020. Public Comments: In response to our invitation in the notice of proposed rulemaking (NPRM) published in the Federal Register on June 12, 2019 (84 FR 27404), we received 195 comments on the proposed regulations. We do not discuss comments or recommendations that are beyond the scope of this regulatory action or that would require statutory change. Analysis of Comments and Changes We developed these regulations through negotiated rulemaking. Section 492 of the HEA requires that, before publishing any proposed regulations to implement programs under title IV of the HEA, the Secretary must obtain public involvement in the development of the proposed regulations. After obtaining advice and recommendations, the Secretary must conduct a negotiated rulemaking process to develop the proposed regulations. The negotiated rulemaking committee reached consensus on the proposed regulations that we published on June 12, 2019. The Secretary invited comments on the proposed regulations by July 12, 2019, and 195 parties submitted comments. An analysis of the comments and of the changes in the regulations since publication of the NPRM follows. We group major issues according to subject, with appropriate sections of the regulations referenced in parentheses. We discuss other substantive issues under the sections of the regulations to which they pertain. Generally, we do not address minor, non-substantive changes, recommended changes that the law does not authorize the Secretary to make, or comments pertaining to operational processes. We also do not address comments pertaining to issues that were not within the scope of the NPRM. General Comments Comments: Several commenters supported the Department's proposals to amend the regulations governing the recognition of accrediting agencies, certain student assistance general provisions, and institutional eligibility. Specific support was conveyed regarding regulations that advance innovation, strengthen student protections through enhanced disclosures and teach-out requirements, preserve State reciprocity agreements, and mitigate the unjustified stigma that has been associated with attending nationally accredited institutions and the impact that has had on the transferability of credits students earned at these institutions. One commenter opined that trade schools, community colleges, apprenticeships, and other programs that are significantly shorter and less costly than a traditional bachelor's degree are alternative pathways for students' financial stability and success. The commenter stated that these programs deserve the same respect as programs at prestigious institutions, and that the proposed regulations would make dramatic steps forward for this often-overlooked form of higher education. Discussion: We appreciate the commenters' support. Changes: None. Comments: Many commenters expressed general opposition to the proposed regulations, suggesting that the Department was weakening both its oversight of accrediting agencies and the accrediting agencies' oversight of institutions, reducing transparency, and putting students and taxpayers at risk. Others stated that we should withdraw the proposed regulations. The commenters were concerned that the proposed changes would erode the value of accreditation, make it difficult for prospective students to assess the quality of an institution of higher education, render postsecondary credentials and degrees meaningless, and negatively impact the competitiveness of the United States in the global economy. Discussion: In response to the commenters requesting that the proposed regulations be strengthened, completely revised, or withdrawn, we believe these final regulations strike the right balance between our goals of encouraging innovation and ensuring accountability, transparency, clarity, and ease of administration, while providing sufficient oversight of accrediting agencies and institutions and, at the same time, protecting students, the Federal government, and taxpayers. These regulations enable accrediting agencies and institutions to be nimbler and more responsive to changing economic conditions and workforce demands, and they permit agencies to convey their intention to take negative action earlier by providing a period of time during which an institution may remain accredited and still participate in title IV programs in order to graduate students near the end of their programs or help students transfer to new institutions. The changes to the criteria used by the Secretary to recognize accrediting agencies by placing increased focus on education quality strengthen the value and effectiveness of accreditation. Additional tools available to accrediting agencies to hold institutions and programs accountable will also increase the value of accreditation. We believe that the regulations are in the best interest of students, consumers, and taxpayers, and will improve the quality of the education offered at institutions by ensuring that all institutions and programs meet a threshold of quality. Finally, we have taken heed of the Academy of Arts and Sciences recommendation in The Future of Undergraduate Education, that “while the most vigorous critique of regulation has focused on federal rules, state agencies and accrediting bodies should also engage in a thoughtful review to identify regulations and other policy barriers that may impede the spread of innovation across colleges and universities. We should review and roll back, where possible, regulations that do not contribute to protecting students by insisting that providers meet rigorous quality standards. Conversely, we should direct greater regulatory attention and compliance at institutions that are chronically poor performers. A better relationship between important regulatory protections and the promotion of innovation can be achieved through thoughtful action at the State, Federal, accreditation, and institutional level.” 1 This sentiment is endorsed by the Task Force on Federal Regulation of Higher Education, a group of college and university presidents and chancellors, created by a bipartisan group of U.S. Senators, who recently released an analysis recommending that regulation not related directly to institutional quality and improvement be identified and, where possible, eliminated. 2 1 amacad.org/sites/default/files/academy/multimedia/pdfs/publications/researchpapersmonographs/CFUE_Final-Report/Future-of-Undergraduate-Education.pdf . 2 acenet.edu/news-room/Documents/Higher-Education-Regulations-Task-Force-Report.pdf . Changes: None. Comments: Several commenters stated that the negotiated rulemaking process, by which we developed the proposed regulations, was flawed. Many commenters opined that condensing an expansive agenda with over a dozen topics into a single negotiated rulemaking provided inadequate time for the full negotiated rulemaking committee to meaningfully discuss the complete scope of regulatory changes. Some commenters objected to the Department's decision to use subcommittees, with some objecting specifically to the use of a subcommittee to develop definitions that informed the proposed changes to the accreditation regulations. Others objected to the simultaneous scheduling of subcommittee meetings, asserting that this made it impossible for negotiators to physically attend all meetings, and opined that the subcommittee meetings were not open to the public, as required by the HEA. Another commenter wrote in support of the Department's use of subcommittees, noting that they served to provide a foundation on the issues for which the negotiating committee was able to thoughtfully consider and develop the language found in the proposed regulations. Discussion: We disagree with the commenters who said that the Department's rulemaking process was flawed. It is not uncommon for the Department to address multiple topics with a single negotiated rulemaking committee, 3 nor was this the first time that the Department utilized non-voting subcommittees to delve more deeply into a specific topic and provide recommendations to the main committee. The recommendations of the subcommittees were not binding on the members of the main committee who were free to discuss the issues in as much detail as they required to come to agreement. For example, the members of the main committee discussed in detail and made edits to the recommended definitions of terms provided to them by the subcommittee before reaching consensus. 3 www.federalregister.gov/documents/2013/11/20/2013-27850/negotiated-rulemaking-committee-negotiator-nominations-and-schedule-of-committee-meetings-title-iv and www.federalregister.gov/documents/2014/12/19/2014-29734/negotiated-rulemaking-committee-negotiator-nominations-and-schedule-of-committee-meetings-william-d . Although the subcommittee meetings were scheduled simultaneously, the negotiators and the public were provided both live-streamed and recorded access to the subcommittees' deliberations, fulfilling the legal requirements of HEA section 492. Finally, we believe that there was enough time for the full negotiated rulemaking committee to meaningfully discuss the complete scope of regulatory changes. Specifically, the committee voted to extend the meeting times of each of the four days in the third session by two hours. The committee also voted to extend negotiations to include a fourth session of four additional days, which also included extended hours. Changes: None. Comments: Some commenters expressed concern that States lacked adequate representation on the negotiating committee, noting that a representative from the State Higher Education Executive Officers (SHEEO) was added following self-nomination, and that the Department cast the sole dissenting vote on the self-nomination of a representative of State attorneys general (AGs), suggesting that a critical consumer protection and State enforcement voice was omitted from the discussion. A group of commenters echoed this complaint, adding that the omission of State AGs prevented a critical voice for protecting students from being heard. Other commenters asserted that the interests of students, student veterans, and consumers were not adequately represented. Another commenter stated that no single member of the committee had expertise on all topics under consideration, asserting that section 492 of the HEA, 20 U.S.C. 1098a(b)(1), requires negotiators to have expertise in all subjects under negotiation. Discussion: The negotiated rulemaking process ensures that we consider a broad range of interests in the development of regulations. Specifically, negotiated rulemaking is designed to enhance the rulemaking process through the involvement of all parties significantly affected by the topics for which we will develop the regulations. Accordingly, section 492(b)(1) of the HEA, 20 U.S.C. 1098a(b)(1), requires that the Department choose negotiators from groups representing many different constituencies. The Department selects individuals with demonstrated expertise or experience in the relevant subjects under negotiation, reflecting the diversity of higher education interests and stakeholder groups, large and small, national, State, and local. In addition, the Department selects negotiators with the goal of providing adequate representation for the affected parties while keeping the size of the committee manageable. Students, student veterans, and consumers were all ably represented by non-Federal negotiators on the negotiating committee with primary and alternate representatives for each of these constituencies, as well as in the subcommittees. The Department's decision to not include a representative of State AGs on the main committee was predicated on the fact that the topics for negotiation did not include issues that are specifically related to their work. In addition, several negotiators commented that adding a State AG to the full committee would have created conflicts and perhaps even silenced discussion, since some negotiators were the subject of one or more State AG inquiries or investigations. In fact, there were multiple members of the committee who rejected the idea of adding a State AG to the committee during the first two attempts to vote on the self-nomination of a State AG. In some prior rulemakings, the Department has determined that State AGs were an affected constituency. In those cases, the Department has included them as negotiators. However, the Department did not believe that State AGs were a particularly relevant constituency group for this rulemaking effort and determined that SHEEOs were the more appropriate representative of State interests, especially with regard to the topics negotiated. However, at the request of an AG who nominated himself and an additional AG, the committee voted to add a representative of State AGs to the Distance Education and Innovation subcommittee and provided the opportunity for that representative to contribute to the deliberations that informed the main committee's work. It would be highly unusual for any individual negotiator to have expertise on all the topics under consideration in any negotiated rulemaking. The Department relies upon the collective expertise of the non-Federal negotiators to inform the discussions and deliberations, recognizing that some members of the committee will be more knowledgeable about certain topics or elements of topics than others based on their area of expertise and the constituency they represent. The HEA does not require the Department to select specific entities or individuals to be on the committee, nor does it require non-Federal negotiators be an expert in all areas under discussion, but rather, that they are “individuals with demonstrated expertise or experience in the relevant subjects under negotiation, reflecting the diversity in the industry, representing both large and small participants, as well as individuals serving local areas and national markets.” 4 Non-Federal negotiators representing students, student veterans, and consumers, for example, provide important perspectives on this and other negotiated rulemaking committees, but are unlikely to have the same kind of expertise as financial aid administrators. The Department agrees that it overlooked an important member of the triad by inadvertently neglecting to include a representative of the SHEEOs as one of the categories of negotiators required for this rulemaking. The Department appreciates the nomination of a representative of this constituency and the support of the other negotiators to include him as a non-Federal negotiator. 4 HEA section 492, 20 U.S.C. 1098a(b)(1). Changes: None. Comments: A group of commenters stated that the negotiated rulemaking process failed to provide students and consumers with enough opportunity to be heard. Discussion: We believe that the negotiated rulemaking process provided students and consumers with sufficient opportunity to be heard. The negotiated rulemaking committee included primary and alternate negotiators representing students, student veterans, and consumer advocates. Moreover, the Department conducted three public hearings before the negotiated rulemaking began and provided time for public comment on each of the 12 days the main committee met. Changes: None. Comments: Several commenters asserted that the Department failed to provide evidence to support the need for the proposed regulatory changes during the negotiated rulemaking. Several commenters objected to the proposed changes that affect religious institutions of higher education, asserting that the Department had failed to adequately substantiate the need for such changes. Another commenter stated that the Department failed to present enough evidence that accreditation is a barrier to innovation. One commenter petitioned for correction and disclosure under the Information Quality Act (IQA), arguing that the Department failed to disclose underlying sources or methodologies to support our policy proposals. Discussion: We disagree with the commenters who stated that the Department failed to provide data or evidence to support the need for the proposed regulatory changes during the negotiated rulemaking. We acknowledge that the Department was unable to fulfill several of the specific data requests made by negotiators because they sought information that is not available. The changes to the regulations are based on many factors, including feedback we received from the public, studies conducted by higher education associations, and emerging trends in postsecondary education. Specifically, the Department developed a list of proposed regulatory provisions based on advice and recommendations submitted by individuals and organizations as testimony in a series of three public hearings in September of 2018, as well as written comments submitted directly to the Department. Department staff also identified topics for discussion and negotiation. We developed the proposed regulations that we negotiated during negotiated rulemaking with specific objectives for improvement, including updating the requirements for accrediting agencies in their oversight of member institutions or programs; establishing requirements for accrediting agencies to honor institutional mission; revising the criteria used by the Secretary to recognize accrediting agencies, emphasizing criteria that focus on educational quality; encouraging accrediting agencies and States that collect job placement data to do so using publicly available administrative datasets to increase their reliability and comparability; simplifying the Department's process for recognition and review of accrediting agencies; and promoting greater access for students to high-quality, innovative programs. Changes: None. Comments: An association and other commenters asserted that the decision to publish three separate NPRMs, rather than a single NPRM encompassing the entirety of the consensus language, made it impossible to submit informed comments on the partial provisions included because the public is unaware of other changes the Department intends to propose to related provisions on the agenda from this rulemaking. Another commenter asserted that there is no guarantee that the Department will propose the remaining regulations from the negotiation's consensus, suggesting that this would prevent the proposed regulations from functioning coherently. Discussion: It is possible for members of the public to submit informed comments on the provisions that we included in the NPRM. We discussed and negotiated the topics in the proposed regulations included in the NPRM in their entirety during negotiated rulemaking. As the rulemaking sessions considered numerous topics, we separated the subject matter into groups. We included one set of topics in the first NPRM and plan to publish two additional NPRMs including the remaining topics within the next few months. Moreover, because the negotiated rulemaking committee reached consensus, the totality of the proposed regulatory changes was available to the public at the conclusion of the negotiations. We appreciate commenters' concerns about how these regulations would function without the other regulatory pieces moving forward. However, since we achieved consensus on all topics included in negotiated rulemaking, we anticipate that the other regulations that were part of this rulemaking effort will similarly become final regulations soon. The preparation of the NPRM included a review of other regulations in the consensus language that were dependent on the accreditation regulations, and those sections of the amended regulations were included in this regulatory package. These included any regulatory changes to definitions and regulations pertaining to State authorization of institutions and programs. Changes: None. Comments: One commenter noted that the final vote occurred with little time left to negotiate, rushing a consensus vote. Discussion: The final vote in negotiated rulemaking frequently occurs at the end of the last day of negotiations. Negotiators who are not satisfied with the proposed regulations when the final vote occurs may vote against consensus or withhold their support. Changes: None. Comments: Some commenters alleged that negotiators who opposed the Department's proposed regulations were coerced into reaching consensus by other negotiators who suggested that, absent consensus, the Department would propose regulations that were less reflective of the negotiators' interests. Discussion: The Department acknowledges that negotiated rulemaking can be a stressful endeavor, as each member of the committee works hard to represent the best interests of their constituency, and, by virtue of its design, consensus requires a give-and-take from all parties. However, primary committee members have independent authority to vote and should do so in keeping with their assessment of the proposed regulatory changes. Although it is true that, absent consensus, the Department may propose regulations that differ from the language developed by the negotiating committee, those proposed regulations would still be subject to public comment and could change based on that input. Changes: None. Comments: Some commenters opined that the public comment period was too short and did not permit a meaningful opportunity to comment, noting that when a proposed regulation—such as this one—is classified as “economically significant” and “major” by the Office of Information and Regulatory Affairs, section 6(a) of Executive Order 12866 requires the Department to “afford the meaningful opportunity to comment on any proposed regulation, which in most cases should include a comment period of not less than 60 days.” These commenters noted that the comment period included a Federal holiday and eight weekend days. Discussion: We believe that the 30-day public comment period was an adequate time period for interested parties to submit comments. Because we reached consensus during negotiated rulemaking, the proposed regulatory language was available to the public at the conclusion of the final negotiating session, which afforded interested parties additional time to begin formulating their comments. Prior to issuing the proposed regulations, the Department conducted two public hearings and four negotiated rulemaking sessions, where stakeholders and members of the public had an opportunity to weigh in on the development of much of the language reflected in the proposed regulations. In addition, we believe that the 30-day public comment period was necessary to allow us to meet the HEA's master calendar requirements. Under those requirements, the Department must publish final regulations by November 1, 2019, for them to be effective on July 1, 2020. The recognition process for accrediting agencies is lengthy and the changes to these regulations will require significant planning and coordination on the part of agencies and Department staff. Delaying the effective date of these regulations would unnecessarily delay the realization of the benefits associated with these changes. Changes: None. Institutional Eligibility Definitions (§ 600.2) Comments: Several commenters expressed support for the Department's proposed addition of a definition of “additional location” and its proposed revision of the term “branch campus,” indicating that the clarifications provided in those definitions resolved confusion regarding the two terms. Several other commenters expressed support for the student protections included in the proposed definitions of “teach-out” and “teach-out agreement,” including prohibitions on misrepresentation of the nature of teach-out plans, teach-out agreements, and transfer of credit. The commenters also supported the proposed stipulation in the definition of “teach-out” that we should always permit a student to access a closed school discharge if the student chooses not to pursue the teach-out option. Discussion: The Department thanks the commenters for their support. After further review, the Department is making minor clarifications to the definition of “teach-out” in § 600.2. First, we are clarifying that a teach-out is a process rather than a time period. Because teach-outs can continue for years to allow every enrolled student the opportunity to complete his or her program, it is important to clarify that it is the set of activities that define a teach-out, not necessarily the period of time. We are also removing from the definition language that asserts that a student who chooses at the time of the teach-out announcement to leave the school and pursue a closed school loan discharge is able to do so, as this is not a definitional issue. Students who withdraw from a closing school may still be eligible for a closed school loan discharge when the formal teach-out is not completed until well after the 180 days generally associated with closed school loan forgiveness. Section 685.214(c) affirms that a borrower may be eligible for a closed school loan discharge when the borrower's school closes and the borrower does not complete the program of study or a comparable program through a teach-out at another school or by transferring academic credits or hours earned at the closed school to another school. While not a change, we are emphasizing in § 668.26(e)(2) that an institution is prohibited from misrepresenting the nature of its teach-out plans, teach-out agreements, and transfer of credit, and that any such misrepresentation may provide the basis for a borrower's claim of defense to repayment. Changes: We have modified the wording of the definition of “teach-out” in § 600.2 to clarify that it is an activity, rather than a period of time. The teach-out activity may be conducted by the closing institution in order to provide an opportunity to enrolled students to complete their programs or may be conducted by other institutions who permit students from the closing or closed institution to complete their programs at their institution. Comments: Several commenters requested additional clarification regarding the definition of “additional location,” indicating that confusion remained regarding how to apply the definition to an urban campus where buildings are located close together, but not directly adjacent to one another. One commenter noted as an example that some buildings on an urban campus might be on the same city block, others might be nearby, while still others could be a 30-minute drive or more. The commenter offered another example of a location that was in a different State than the main campus yet separated from the main campus by only a few miles. The commenter stated that it was unclear whether the Department would consider any of those locations a “facility that is geographically apart” from the main campus. Another commenter noted that the regulations did not require State authorizing agencies to adopt similar definitions of the terms “branch campus” and “additional location” and noted that any such requirements could have significant impacts on States' authorizing and approval processes. Discussion: The Department relies upon the reasonable judgment of the institution and its accrediting agency to determine whether a facility is “geographically apart” from the institution's main campus. The Department agrees that its regulations do not require State authorizing agencies to define “branch campus” or “additional location” the same way the defines Department defines those terms. The Department does not have the authority to impose its definitions for these terms on States but encourages States to adopt conforming definitions to reduce confusion. Changes: None. Comments: One commenter requested that the Department explain the connection between an institution's main campus and a “branch campus.” The commenter noted that the definition contains many requirements that are characteristic of an independent institution, including an independent fundraising and corporate structure, and stated that it was therefore unclear what relationship such a campus should have with its parent institution. Discussion: A “branch campus” is a type of additional location that meets specific criteria, including retaining permanence and autonomy with respect to faculty, administration, and budgetary and hiring authority. The Department does not require any specific type of connection between a main campus and a branch campus except that both campuses must be accredited as a single entity and both must share the fiduciary responsibility for administration of the title IV, HEA programs. We consider a campus that is separately accredited to be a standalone institution for purposes of eligibility for the title IV, HEA programs. Coordination between a main campus and a branch campus remains at the institution's discretion and is subject to any applicable standards set by its accrediting agency or State authorizing agency. Changes: None. Comments: One commenter objected to the proposed definitions of “additional location” and “branch campus” on the grounds that the Department has failed to provide any examples of “occasional inconsistent usage,” or any data about the problems caused by such usage that would warrant making these revisions to current regulations. Discussion: As explained in the preamble to the NPRM (page 27411), the Department's reason for adding a definition of “additional location” and revising the definition of “branch campus” was to avoid confusion caused by inconsistent usage among the Department, States, and various accrediting agencies. Clear definitions of “additional location” and “branch campus” will promote consistency, improve the efficiency of Department, State, and accrediting agency review of applications to add additional locations or branch campuses, and ensure fair and equitable treatment of those applications. Regarding the commenter's assertion that the Department should provide examples of where inconsistencies in the review of additional locations or branch campuses occurred, as well as other unspecified data, the Department does not characterize specific eligibility decisions related to additional locations and branch campuses as “inconsistencies” for inclusion on a database (or other list) that we could query for this purpose. However, we are aware of accrediting agencies that use the term “branch campus” for campuses that the Department considers to be additional locations, though we are not sure how many campuses this impacts. Notwithstanding the absence of such data, we do not believe a report such as the one requested by the commenter is necessary to justify these proposed revisions, which will codify long-established Department practices. We further seek to promote consistency in terminology, as accrediting agency use of these terms varies. Changes: None. Comments: One commenter recommended we revise the proposed definition of “teach-out” to limit access to a closed school discharge, as provided in § 685.214, to eligible borrowers who are not afforded the opportunity or are unable to avail themselves of teach-out options to complete their programs. The commenter argued that it is important for the Department to clarify that the best policy course when closing an institution is for the institution's leadership to take all appropriate steps to provide a student with a soft landing and clear path to completion. In the commenter's opinion, permitting borrowers who attended an institution that offered a proper teach-out to seek a closed school discharge disincentivizes institutions from offering teach-outs. Discussion: We agree with the commenter that it is in the best interest of students for a closing institution to provide a well-designed teach-out structured to offer a clear path to program completion. However, while those borrowers who accept a teach-out are not then eligible for a closed school discharge under the provisions of § 685.214, the mere availability of a teach-out, however robust, is not a disqualifying factor for such a discharge. Although the Department is firmly committed to the concept of teach-outs as the best option for students affected by an impending school closure to complete their programs of study, we believe it is appropriate that the choice to accept a teach-out in lieu of a closed school discharge rest with each student and that our regulations make clear the availability of that choice. However, we also agree that when an institution commits the time and expense required to conduct an orderly teach-out, a student who chooses to participate in that teach-out is not also eligible for a closed school loan discharge unless the institution fails to provide a teach-out that is materially consistent with what is described in the teach-out plan. Changes: None. Comments: One commenter asserted that the Department has failed to explain the reasoning associated with proposed revisions to the definition of “teach-out plan” and “teach-out agreement.” Citing as an example in the current § 668.14(b)(31), requiring an institution to submit a “teach-out plan” to an accrediting agency in compliance with § 602.24(c) upon the occurrence of certain events, the commenter further contended that the Department has failed to explain how the modified definition of “teach-out plan” will impact other regulations that presently use that term. Finally, the commenter questioned whether the Department has considered the ramifications of amending the definition of “teach-out plan,” including whether it will have a positive, negative, or neutral impact on students and suggests that, taken together, this has deprived the public of a meaningful opportunity to comment on the Department's proposals. Discussion: We disagree that the Department has failed to explain its proposal to revise the definitions of “teach-out plan” and “teach-out agreements.” In the preamble to the June 12, 2019 NPRM (page 27411) the Department explained its proposal to revise the definition of “teach-out plan” to clearly distinguish a teach-out plan from a teach-out agreement and to clarify that teach-outs can be conducted by the closing institution as well as another continuing institution. A teach-out agreement is a written contract between two or more institutions; a teach-out plan is developed by an institution and may or may not include agreements with other institutions. The Department also believes that the definition of “teach-out plan” should include plans for teaching-out students during orderly closures in which an institution plans to cease operating but has not yet closed. We are uncertain of the commenter's point in suggesting that the Department has failed to explain how the modified definition of “teach-out plan” will impact other regulations that presently use that term. In the example cited by the commenter, per § 668.14(b)(31), where an institution must submit a “teach-out plan” to an accrediting agency in compliance with § 602.24(c) upon the occurrence of certain events, the teach-out plan submitted by the institution must, upon the effective date of these final regulations, meet the revised definition of “teach-out plan.” The same logic applies throughout the regulations wherever we reference the term “teach-out plan.” With regard to whether the Department considered the ramifications of amending the definition of “teach-out plan,” we carefully considered the potential ramifications, including the impact on students, and this was in the forefront both in the development stage of the proposed regulations and during negotiated rulemaking. We believe that students are best served when their institution engages in an orderly closure that permits students who are close to completing their programs an opportunity to do so. Students who are close to completing their programs may find it particularly challenging to transfer all of their credits to another institution because receiving institutions may require that a student completes a minimum number of credits at the institution awarding the credential. We also believe an orderly teach-out provides more opportunities for students to complete the term in which the teach-out announcement is made and receive assistance from the institution, the State, or the Department to find a new institution to attend. Finally, we disagree with the commenter's conclusion that we failed to justify proposed revisions to the definitions in § 600.2 and, accordingly, deprived the public of a meaningful opportunity to comment on the Department's proposals. We have provided our rationale in the NPRM for all changes the Department proposed to part 600 of the current regulations. Changes: None. Comments: One commenter stated that the Department has failed to explain why it proposes to move the definitions of “teach-out agreement” and “preaccreditation” from the accreditation regulations in part 602 to § 600.2 rather than inserting a cross-reference to those definitions in parts 600 and 668. The commenter further noted that the Department failed to propose changes to the current cross-references to those definitions in part 602. Discussion: The Department explained its proposal to move the definitions of “teach-out agreement” and “preaccreditation” to § 600.2 in the June 12, 2019 NPRM (page 27411) where we stated, “The Department proposes to move the definitions of “teach-out agreement” and “preaccreditation” from the accreditation regulations in § 602.3 to the institutional eligibility regulations in § 600.2 for consistency, and because the use of those terms extends to regulations in §§ 600 and 668.” With respect to the commenter's assertion that the Department failed to propose changes to the current cross-references in part 602, we note that the amendatory text in § 602.3 states, “The following definitions are contained in the regulations for Institutional Eligibility under the Higher Education Act of 1965, as amended, 34 CFR part 600.” “Teach-out agreement” and “preaccreditation” are included among the definitions listed in this section. Changes: None. Comments: Several commenters stated that the definition of “religious mission” is overly broad and would prohibit accrediting agencies from enforcing any provisions, including well-established standards and nondiscrimination protections, against religious institutions. Commenters indicated that the definition, in combination with other provisions in the regulations, would allow an institution to overcome barriers to accreditation by including a reference to religion in its mission statement. One commenter indicated that religious missions are no more important than secular missions and that we should not elevated them to a higher status under the law. Another commenter indicated that this definition will undermine the separation of religion and government. Several commenters speculated that these regulations will encourage secular institutions to adopt religious missions and for religious institutions to expand the religious components of their missions to avoid scrutiny by accrediting agencies. Commenters also indicated that institutions will be allowed to adopt discriminatory practices and policies, especially towards LGBTQ students and women, which are justified by the institution's religious mission, even if their accrediting agencies have standards barring such practices. Commenters noted that the Department failed to provide evidence of an institution denied accreditation because of its adherence to its religious mission, and that there is therefore no legitimate reason to include the proposed definition. Discussion: In light of the United States Supreme Court decision in Trinity Lutheran Church of Columbia, Inc. v. Comer, and the United States Attorney General's October 7, 2017 Memorandum on Federal Law Protections for Religious Liberty pursuant to Executive Order 13798, the Department believes that it should provide protection for faith-based institutions in situations in which their ability to participate in Federal student aid programs may be curtailed due to their religious mission or policies, practices, and curricular decisions that enact or are consistent with the tenets of the faith. Allowing accrediting agencies to make negative decisions because of the institution's exercise of religion could violate the Free Exercise Clause of the United States Constitution. In addition, under the Religious Freedom Restoration Act of 1993 (RFRA) the government may only substantially burden a person's exercise of religion if the application of that burden to the person is the least restrictive means of furthering a compelling governmental interest. If access to Federal student aid depends upon accreditation decisions that do not respect the religious mission of an institution, the religious institution's exercise of religion could be substantially burdened, and removing Federal aid may not be the least restrictive means of furthering a compelling governmental interest. Thus, both the Constitution and RFRA protect religious activities in ways that they do not protect other institutional missions. Based on recent Supreme Court decisions, the Department believes that protections such as the ones in these regulations are advisable given the Free Exercise Clause and RFRA and that the Establishment Clause of the Constitution does not prohibit them. Institutions will continue to be subject to anti-discrimination laws, unless they are otherwise exempt. While we do not believe that institutions will change their missions to evade oversight by accrediting agencies, we believe that it would raise constitutional concerns if the Federal government were to decide whether a religious mission is legitimate or whether the reason that an institution decides to exercise its religious rights is appropriate. Changes: None. State Authorization Reciprocity Agreement (§ 600.2) Comments: Commenters generally supported the Department's proposal to maintain the definition of a “State authorization reciprocity agreement” as promulgated in the Program Integrity and Improvement regulations published in the Federal Register on December 19, 2016 (81 FR 92232). However, commenters had differing views regarding the part of the definition that requires reciprocity agreements to permit a member State to enforce its own statutes and regulations, whether general or specifically directed at all or a subgroup of educational institutions. Some commenters felt that this language supports the States' consumer protection role in the triad and enables States to provide the same protections to online students in their States as they provide to students attending brick-and-mortar institutions. Commenters noted that allowing for reciprocity agreements that do not protect the State's authority would undermine the regulatory triad and create a race to the bottom in consumer protections and that the Department should stress that online institutions are subject to a State's consumer protection laws. Other commenters were concerned that the language undermines reciprocity agreements by allowing a State to enforce additional requirements regardless of an agreed-upon set of requirements established in a reciprocity agreement and that we should not allow States to override a reciprocity agreement's regulations. Some of these commenters recommended that the regulations provide that a State authorization reciprocity agreement may require a State to meet requirements and terms of that agreement so that the State could participate in that agreement. A couple of commenters stated that if the concern about a State authorization reciprocity agreement is that it could be interpreted to supplant all of a State's laws, then the most direct way to prevent this from happening would be to revise the definition of “State authorization reciprocity agreement” to provide that the agreement cannot prohibit any member State of the agreement from enforcing its own general-purpose State laws and regulations outside of the State authorization of distance education. Commenters suggested that their proposed definition of “State authorization reciprocity agreement” referencing “general-purpose State laws and regulations” should replace the language in the current definition that maintains a member State's authority to enforce its own statutes and regulations, whether general or specifically directed at all or a subgroup of educational institutions, while still maintaining a State's authority to enforce its other, non-State authorization related, statutes and regulations. The commenters stated that failure to streamline the definition in this way would continue to cause confusion about the definition, and since the Department has recognized State authorization reciprocity agreements as a method by which State authorization distance education requirements can be met, adjusting the definition in their proposed way is a needed clarification. In addition, the commenters said that, with respect to the concern that the scope of a State reciprocity agreement could be interpreted to extend beyond the scope of State authorization of distance education and impact a State's exercise of its other general oversight activities, by clarifying that States could continue to enforce their general purpose laws—those that do not relate to the State authorization of distance education programs—in addition to the reciprocity agreement, those concerns should be alleviated. One commenter stated that there needs to be an appropriate due process in place when a State authorization reciprocity organization acts against an institution and this should be a factor that the Department considers regarding the acceptance of reciprocity agreements. Discussion: The Department appreciates the comments in support of the proposal to maintain the definition of “State authorization reciprocity agreement.” However, we are persuaded by the commenters who suggested that we modify the definition to clarify that such an agreement cannot prohibit any member State of the agreement from enforcing its own general-purpose State laws and regulations outside of the State authorization of distance education. A reciprocity agreement may supersede a State's own requirements related to State authorization of distance education and may prohibit a State voluntarily participating in that agreement from adding additional requirements on institutions that also participate in the agreement. It would not be acceptable, for example, for a State to participate in a reciprocity agreement in order to advantage its own public institutions and yet apply additional or alternate requirements related to State authorization of distance education to institutions that participate in the reciprocity agreement but may be located in a different State. Adopting this suggestion will alleviate confusion about the definition, clarify that the scope of a State authorization reciprocity agreement cannot be interpreted to extend beyond the scope of State authorization of distance education or to impact a State's exercise of its other general oversight activities, and permit a member State of the agreement to enforce its own general-purpose State laws and regulations outside of the State authorization of distance education, while replacing the confusing and potentially conflicting language in the current definition that maintains a member State's authority to enforce its own statutes and regulations, whether general or specifically directed at all or a subgroup of educational institutions. We decline the recommendation regarding due process when a State authorization reciprocity organization acts against an institution, as we believe that this is a function of the reciprocity agreement, and thus, the members of the reciprocity agreement should address it. In addition, we note that the definition of “State authorization reciprocity agreement” was unintentionally omitted from the NPRM. At the time, this definition had not been added to the U.S. Code of Federal Regulations due to the delayed implementation of the Department's 2016 State Authorization regulations. However, the 2016 definition of a State reciprocity agreement was published in the Federal Register on July 29, 2019 (84 FR 36471) and was discussed during the negotiated rulemaking that led to this final regulation. The comments we received on this definition indicate that the public was aware of the proposed definition based on the consensus language made available to the public on the Department's website. In the proposed regulations, as part of the amendments to the State authorization regulations under § 600.9(c), we removed the concept of a student's “residence” and replaced it with “location” (see discussion under State authorization in the preamble to the NPRM and under § 600.9(c) below). To ensure consistency between these amendments to § 600.9(c) and the definition of “State authorization reciprocity agreement,” which also refers to students “residing” in other States, we are making a conforming change to the “State authorization reciprocity agreement” definition and replacing the word “residing” with “located.” Changes: We revised the definition of “State authorization reciprocity agreement” in § 600.2 to define a State authorization reciprocity agreement to be an agreement between two or more States that authorizes an institution located and legally authorized in a State covered by the agreement to provide postsecondary education through distance education or correspondence courses to students located in other States covered by the agreement. We further revised this definition to provide that it does not prohibit any member State of the agreement from enforcing its own general-purpose State laws and regulations outside of the State authorization of distance education. Finally, we have replaced the word “residing” with the word “located.” Institution of Higher Education, Proprietary Institution of Higher Education, and Postsecondary Vocational Institution (§§ 600.4, 600.5, and 600.6) Comments: One commenter supported the Department's proposed clarification of initial arbitration requirements but stipulated that, in the interest of transparency, arbitration proceedings should be public. Discussion: We appreciate the support of the commenter. However, we do not agree that the Department should require that arbitration take place in public and such a requirement is not contained in HEA section 496(e), 20 U.S.C. 1099b(e), the statutory section to which this regulatory provision is closely tied. As we explained in the NPRM, although arbitration hearings are less transparent than court proceedings, the Department believes that existing and proposed requirements for notice to students and the public in §§ 602.26 and 668.43 will ensure both are timely made aware of accreditation disputes and their resolutions. Changes: None. Comments: Two commenters expressed opposition to proposed changes regarding initial arbitration. One of those commenters asserted that by relying on arbitration, the Department potentially “extends the clock” for a problem institution, because that arbitration may be followed by a likely costly lawsuit, and suggested that the Department has failed to show evidence either that institutions have routinely not followed the statutory requirement of initial arbitration prior to initiating any other legal action, or that initial arbitration, when used, has resulted in fewer lawsuits. The commenter expressed the opinion that it is incumbent upon the Department to present evidence based on data acquired from agencies on the frequency of arbitration in the event of adverse actions, the percentage of lawsuits that have occurred without first going through arbitration, the percentage of lawsuits that have occurred after arbitration, and the relative costs of both arbitration and lawsuits to agencies. Additionally, the commenter requested that the Department explain how the final rule will ensure that institutions and agencies are meeting the requirements under this section. Finally, the commenter asked that the Department protect students by placing restrictions on enrollment or receipt of Federal financial aid in the event of arbitration proceedings, since the accrediting agency has already ruled the institution should not be accredited at all. Another commenter asserted that current initial arbitration requirements do not adequately account for issues and concerns raised by the United Negro College Fund (UNCF) about the fairness of the accreditation review process in a May 9, 2019 white paper ( Biases in Quality Assurance: A Position Paper on Historically Black Colleges and Universities and SACSCOC ). 5 Specifically, they noted the lack of black peer reviewers, the lack of transparent or unambiguous financial standards, a faulty peer reviewer selection process, and problems with inter-reviewer reliability and bias among peer reviewers. Arguing that proposed changes to §§ 600.4, 600.5, and 600.6 would exclude the litigation option as the only means of redress available to Historically Black Colleges and Universities (HBCUs) in the face of the bias inherent in the accreditation review process, the commenter asked that these changes not be made until such time as the issues identified in the UNCF white paper can be addressed. 5 uncf.org/wp-content/uploads/Biases-in-Quality-Assurance_UNCF-Accreditation-White-Paper-Updated.pdf . Discussion: HEA section 496(e) provides that the Secretary may not recognize the accreditation of any institution of higher education unless it agrees to submit any dispute involving the final denial, withdrawal, or termination of accreditation to initial arbitration prior to any other legal action. As a result, the proposed changes need not be substantiated with data from accreditation agencies indicating the exact number of initial arbitration proceedings or the number of adverse actions that resulted in litigation without recourse to initial arbitration. We made these changes to align with statutory requirements. Current regulations in §§ 600.4(c), 600.5(d), and 600.6(d), consistent with the HEA, already require institutions to submit to initial arbitration before initiating any other legal action. The proposed regulations establish no additional requirements with respect to initial arbitration. As we explained in the NPRM, the statutory requirement has not changed; however, the Department's regulations heretofore have neglected to fully implement the statutory requirement, which we are correcting with these final regulations. Through the final regulations, the Department seeks to highlight the initial arbitration requirement to raise awareness of it and to clarify the current regulations. Concerning the question of what additional measures the Department might take to ensure that institutions and agencies comply with the requirements of this section, the Department does not intend to establish a new compliance or enforcement protocol. As previously noted, the statute and current regulations already require institutions to enter initial arbitration with their accrediting agencies before taking additional legal action. We expect institutions and agencies to comply with those requirements. Certainly, when we know an institution or accrediting agency ignored or refused to comply with applicable statutory and regulatory guidelines relevant to initial arbitration, the Department will act under its current authority. We do not believe that restricting student enrollment at an institution involved in initial arbitration or limiting an institution's access to title IV, HEA funds is either appropriate or beneficial to students. Such measures would constitute an adverse action against the institution before it has had the benefit of due process with respect to the potential revocation of its accreditation. In response to the commenter who expressed concerns over the fairness of the accreditation review process as it has been applied to HBCUs, the Department does not, in any way, dismiss the issues raised in the UNCF white paper on this matter cited by the commenter. We believe that where bias is shown to have been a factor in any aspect of the accreditation process, including initial arbitration, it should be brought to the Department's attention. Moreover, the use of arbitration could prove to be a lower-cost and quicker way for an institution that believes it was treated unfairly by its accrediting agency to seek and achieve resolution. However, the breadth of what the UNCF white paper addressed far exceeds the largely procedural issue of initial arbitration discussed among negotiators and clarified in these regulations. Finally, it is not the case, as suggested by the commenter, that the regulations would restrict or foreclose any of the legal options available to institutions in opposing adverse actions taken by an accrediting agency. Changes: None. Comments: Regarding the proposed changes to the definition of a “program leading to a baccalaureate degree in liberal arts” in § 600.5(e), one commenter expressed concern that the definition would allow the Department to bypass accrediting agencies, making it possible for institutions to designate as “liberal arts programs” those composed partially of courses that are not taught by faculty. Specifically, the commenter cited a Bachelor of General Studies program offered at a public four-year university, the requirements of which permit students to earn credits by passing College Level Examination (CLEP) or similar exams in lieu of attending classes taught by faculty. Another commenter contended that the Department has not offered adequate explanation or justification for the proposed changes, in violation of the Administrative Procedure Act (APA). The commenter elaborated that the Department proposes to substitute its own judgment, as well as remove a descriptive list of the categories of “general instructional program[s]” that typically qualify, including programs in the “liberal arts subjects, the humanities disciplines, or the general curriculum.” Discussion: One commenter may have misinterpreted the context and applicability of § 600.5(e). The commenter opposed the proposed changes to the definition of a “program leading to a baccalaureate degree in liberal arts,” based on concerns that the revised definition will facilitate the introduction of liberal arts programs at the baccalaureate level that permit alternative means of earning credits (including successful completion of a test). This definition applies only to the extent that a liberal arts program offered by a proprietary institution of higher education may potentially be an exception to the general requirement that all programs offered by this type of institution lead to gainful employment in a recognized occupation. The change does not expand the ability of proprietary institutions to offer liberal arts programs; rather, it more clearly defines the breadth of programs that a proprietary institution could not offer without first qualifying for the statutory exception. A program leading to a degree at a public or private not for profit institution, such as the one cited by the commenter, would not be subject to the definition of a “program leading to a baccalaureate degree” in current or proposed § 600.5(e). The applicability of § 600.5(e) notwithstanding, whether a student may earn credits through testing, life experience, or some other alternative means, or how many, is not subject to regulation by the Department. We disagree with the commenter who believed the Department has violated the APA by failing to provide an adequate justification for proposing changes to § 600.5(e). As explained in the NPRM, in § 600.5(e), we propose to clarify the definition of “program leading to a baccalaureate degree in liberal arts” to establish the Department's responsibility for determining what types of programs qualify, and to tighten up the regulatory definition of the term, while maintaining and respecting the grandfathering requirements in the statute. The proposed changes meet this stated objective. We further disagree with the commenter that in establishing its responsibility for determining what types of programs qualify, the Department is substituting its judgment for what is in the current regulations. The proposed regulations merely eliminate in this section the redundant requirement that an institution's accrediting agency determine a liberal arts program to fall within the generally accepted instructional categories. Contrary to the assertions of the commenter, we retained this requirement in proposed §§ 600.5(e)(1) through (4). Changes: None. State Authorization (§ 600.9) State Authorization—Religious Institution (§ 600.9(b)) Comments: Some commenters agreed with the proposed changes to the definition of “religious institution” used for purposes of § 600.9(b). Others opined that the Department did not provide sufficient justification for removing the current definition. Commenters expressed concern that removing the Federal definition of “religious institution” would create an inconsistent standard and would leave each State to define the term independently, thus allowing institutions with very little religious connection to qualify for favored treatment under one State's definition while institutions in other States could be held to a stricter definition under which they might not qualify as a “religious institution.” In another vein, commenters expressed concern that classification as a religious institution in a State could allow the institution to evade consumer protection requirements. Other commenters believed that the Department should not eliminate the current regulations because they are limited enough in scope to safeguard the separation of church and State (First Amendment Establishment Clause), as well as prevent abuse of exemptions while protecting students. Discussion: The Department appreciates all comments in support of the proposed regulations. We disagree, however, that we should maintain the current definition. With respect to concerns expressed by commenters who contended we should keep the current definition, the current Federal definition of a religious institution for State authorization purposes may conflict with a State's definition for the same, which is troubling because State authorization is the mechanism by which States oversee institutions and perform their role within the triad. This disconnect has further required such institutions to seek an alternative way to meet State authorization requirements. The Department believes that, if the institution is physically located in or operating in a given State, the State has the authority to determine, for the purpose of State authorization, how that institution will be authorized by the State. Furthermore, to meet State authorization requirements and be legally authorized by a State, a religious institution is subject to the requirements under 34 CFR 600.9(a)(1) that require the State to have a process to review and appropriately act on complaints concerning the institution, which would provide consumer protection. As States define “religious institution” in varied ways, we believe that the most effective approach to ensure our State authorization regulations are aligned with the First Amendment is to require States to meet the requirements based on their existing definitions, rather than create a new one. We believe that, for the purpose of State authorization, States have the right to make their own decisions regarding whether an institution is a religious institution or not. States continue to have an incentive to protect their students, and students will have access to a State complaint process. Changes: None. State Authorization (§ 600.9(c)) Student Location and Determinations of a Student's Location Comments: Most commenters generally supported the proposed change that specifies that institutions should determine which State's authorization laws are applicable to an institution based on a student's location and not a student's residence. Commenters noted that using a student's location rather than residency was more appropriate because this framework matches the approach that States take. While residency requirements vary by State, a State's authorization jurisdiction is based upon the location of the educational activity. Commenters also felt that this change would allow students who have not established a legal or permanent residency in a State to benefit from State requirements for an institution to offer distance education in that State. Some commenters noted, however, that there is a risk that, because institutions already have to do more than the proposed regulations would require to meet State or National Council for State Authorization Reciprocity Agreements (NC-SARA) reporting requirements, an institution would solely follow the Federal standard, believing this standard supersedes State requirements, and could thus be found to be out of compliance in a State or with NC-SARA. On the other hand, other commenters felt that their existing process and procedures allow them to comply with State and NC-SARA reporting requirements. Commenters generally supported the proposal to require institutions to have policies or procedures to make determinations about the States in which its students are located. Many commenters also agreed with having policies and procedures that set how the institution will determine a student's location at the time of initial enrollment, as well as for updating its records if a student's location changes, in order to ensure that the correct State authorization is obtained. Commenters believed the proposed requirements would reduce confusion about where the student is located for State authorization distance education purposes. Many commenters noted their appreciation that the proposed regulations allow institutions to develop the process for determining location that is best suited to their organization and the student population they serve. One commenter was concerned that the Department's proposal would grant institutions the authority to determine a student's location based on undefined policies or procedures, and that since there is no mechanism for students or States to learn how institutions determine which State laws apply, this could result in institutions minimizing their regulatory burdens. The commenter believed that the States alone should determine which State laws apply, rather than rely on institutions to do so. Another commenter believed that, instead of leaving it up to an institution's discretion, there should be a definition for the concept of “location” but did not propose what the definition should be. Yet another commenter felt the Department should require an institution to determine a location for all enrolled students not less than annually and that the institution update its determination of a student's location when the institution should reasonably know about the change. Many commenters believed that the proposed regulations simplify the institutional processes needed to establish and document a student's location at the time of initial enrollment and later through a formal notification process for student change of address. Some commenters sought clarification on how to determine “time of enrollment” for determining a student's location because there could be a time lag between when a student enrolls at a location and where the student is located once the course begins. Other commenters also asked for clarification on what constitutes a “formal receipt of information.” One commenter asked for clarification about whether the Department would expect that institutions use a uniform location-reporting procedure in all instances across all individual units within a single institution. Discussion: The Department appreciates the comments in support of the proposed regulations. Regarding the concern that, because institutions already have to do more than the proposed regulations would require to meet State or NC-SARA reporting requirements, an institution would solely follow the Federal standard, believing this standard supersedes State requirements, and could thus be found to be out of compliance in a State or with NC-SARA, these final regulations do not absolve institutions from complying with State laws nor do they require participation in reciprocity agreements or override the requirements of such agreements. Furthermore, we disagree with the comment that the States should determine which State laws apply rather than institutions. It is an institution's responsibility to determine in which State a student is located at the time of initial enrollment, and based on this information, the institution determines which State's authorization requirements apply. We also disagree that an institution determines a student's location completely at its discretion. The institution determines the student's location at the time of initial enrollment based on the information provided by the student, and upon receipt of information from the student that their location has changed, in accordance with the institution's procedures. Institutions may, however, develop procedures for determining student location that are best suited to their organization and the student population they serve. For instance, institutions may make different determinations for different groups of students, such as undergraduate versus graduate students. We also do not believe it is necessary to determine location for all enrolled students annually, but rather believe that determination at the time of a student's initial enrollment and upon a formal notification by the student of his or her change of address to another State, in accordance with the institution's procedures, is sufficient to ensure that students will receive information they need while not being overly burdensome or costly to institutions. As discussed in the preamble to the NPRM, we believe that we should avoid subjecting an institution to unrealistic and burdensome expectations of investigating and acting upon any information about a student's whereabouts that might come into its possession. It is in the interest of both institutions and students to have understandable, explicit policies that pertain to the maintenance of student location determinations. With respect to determining “time of enrollment” for determining a student's location, we specify in the NPRM that the location is determined at the time of a student's initial enrollment in a program (as opposed to the time of a student's initial application to the institution). We did not attach any further conditions to this determination. We also provided that, with respect to a “formal receipt of information” regarding change of location, this information would come from the student to the institution in accordance with the institution's procedures for changing their location to another State. The institution would need to establish or maintain and document the change of address process. Finally, as we discuss in the preamble to the NPRM, we expect institutions to consistently apply their policies and procedures regarding student location to all students, including students enrolled in “brick-and-mortar” programs. Changes: None. State Requirements Comments: Many commenters supported the requirement that distance education programs should be required to meet any State authorization requirements in States where they do not maintain a physical presence but enroll students. Some commenters asked that the Department define what an institution must do to meet the requirement in § 600.9(c)(1)(i) that an institution must meet any of that State's requirements for it to be legally offering postsecondary distance education or correspondence courses in that State, as well as what documentation is required. A couple of commenters were concerned about the impact on the reciprocity agreement of the proposed requirement in § 600.9(c)(1)(ii), under which an institution would be “subject to any limitations in that agreement and to any additional requirements of the State” because, if States are able to require institutions to meet State requirements outside of the reciprocity agreement, these requirements could contradict or go beyond the scope of existing NC-SARA provisions and institutions would have to engage in research and fulfill any additional requirements, which would undermine a key purpose of the reciprocity agreement. One commenter felt that the Department should recognize a State's prerogative to establish exemptions from formal approval and to consider exempt institutions as authorized to offer distance education. Discussion: The Department appreciates the comments in support of the proposed regulations. Institutions are required to know what State requirements exist for an educational program to be offered to a student in a particular State, and the required approvals that constitute what is needed for the program to be authorized by that State. Documentation should reflect that the institution has met these applicable State requirements, which could include evidence that a State waives direct authorization of the particular institution or institutions of its type. These requirements would not have any bearing on reciprocity agreements. As we stated in the preamble of the December 19, 2016, final regulations (81 FR 92232), each State in which an institution is offering distance education remains the ultimate authority for determining whether an institution is operating lawfully in that State, regardless of whether a non-State entity administers the agreement, including whether an institution in a reciprocity agreement is operating in that State outside the limitations of that agreement. The regulations further provide that an institution offering distance education in a State in which the institution is not physically located or in which the institution is otherwise subject to a State's jurisdiction, as determined by the State, must meet any of that State's requirements to be legally offering distance education in that State. However, even if the State does not have any specific approval requirements for an institution to be offering distance education in that State, § 600.9(a)(1) requires that, for an institution that has physical presence in a State, that State must offer a process to review and appropriately act on complaints concerning the institution, including enforcing applicable State laws, for the institution to meet the State authorization requirements. We agree with commenters that it is important to revise § 600.9(c)(1)(ii) for consistency with the revised definition of the term “State authorization reciprocity agreement,” in which we provide that a reciprocity agreement does not prohibit any member State of the agreement from enforcing its own general-purpose State laws and regulations outside of the State authorization of distance education. Accordingly, we have revised the provision to provide that, in the case of an institution covered by a reciprocity agreement, the institution is considered to meet State requirements for it to be legally offering postsecondary distance education or correspondence courses in the State, subject to any limitations in that agreement and to any additional requirements of the State not relating to authorization of distance education. Changes: We have revised § 600.9(c)(1)(ii) to provide that, for an institution covered by a reciprocity agreement, the institution is considered to meet State requirements for it to be legally offering postsecondary distance education or correspondence courses in the State, subject to any limitations in that agreement and to any additional requirements of the State not relating to authorization of distance education. State Complaint Process Comments: Some commenters supported eliminating the State complaint process requirement to protect the eligibility of students who are located in States that do not offer a complaint process to receive title IV, HEA assistance to attend distance education programs, agreeing that § 600.9(a)(1) already addresses the State complaint process and that the State complaint process requirement under § 600.9(c)(2) is duplicative of the requirements under § 668.43(b). Other commenters believed that the State complaint process requirement is not redundant because, even though the Department states that eliminating the requirement would allow students to receive Federal student aid even if the State they are located in does not have a State complaint process, this change would conflict with the definition of “State authorization” under § 600.9(a)(1), which provides that State authorization requirements include that the State have “a process to review and appropriately act on complaints concerning the institution, including enforcing applicable State laws.” Since the only entity that can enforce a specific State's laws is that State, institutions would not be able to comply with the State authorization requirements if there is not a complaint process available to students in their own States. The commenter argued that the final regulations should reflect a State's authority to accept, investigate, and act on complaints both from students located in that State and from students enrolled at institutions physically located in that State. In a similar vein, another commenter opined that nothing in § 668.43(b) requires that, as a condition of State authorization, an institution only be permitted to operate in a jurisdiction in which there is a complaint process. The commenter also indicated that States should collect complaint records and make these publicly available in a central database. Another commenter recommended that the Department require States in which an institution is located to share a copy of complaints with other States whose residents are enrolled in that institution. Discussion: The Department appreciates the comments in support of the proposed regulations. With respect to the other comments, nothing in the regulations prevents a State from providing a State complaint process that an institution offering distance education would have to comply with in order to operate in that State, unless the State and institution have joined a reciprocity agreement that provides an alternate means for addressing student complaints. Furthermore, with respect to the disclosures under § 668.43(b), it follows that for an institution to provide a student or a prospective student with contact information for filing complaints with its State approval or licensing entity and any other relevant State official or agency that would appropriately handle a student's complaint, the institution would need to have such information to provide or it would be out of compliance with the regulations. Regarding the suggestion that States collect complaint records and house them in a publicly available central database and that States in which an institution is located share a copy of complaints with other States whose residents are enrolled in that institution, we decline this suggestion. Such complaints generally fall under the jurisdiction of the States and the accrediting agencies. Additionally, the Federal Trade Commission maintains a database of consumer complaints. While the Department declines to take these recommendations, nothing in these regulations prevents States from taking these actions if they wish to do so. The Department clarifies that the contact information provided may be for whichever entity or entities the State designates to receive and act upon student complaints. Contact information is not necessarily required for each of the following: A State approval entity, a State licensing entity, and another relevant State official or agency. If the State has only designated one of these types of entities, contact information for that one entity is sufficient. Changes: We have included an amendatory instruction to remove the text of current § 600.9(c)(2). We also have redesignated proposed § 600.9(c)(1)(ii)(A), (B), and (C) as § 600.9(c)(2)(i), (ii), and (iii). Special Rules Regarding Institutional Accreditation or Preaccreditation (§ 600.11) Comments: One commenter expressed concern that the proposed changes to the regulations would permit institutions to more easily switch to a new accrediting agency or maintain a back-up agency, enabling them to skirt enforcement. The commenter opined that this change is inconsistent with the statutory requirement in HEA section 496(h), 20 U.S.C. 1099b(h), that the Secretary not recognize the accreditation of an institution seeking to change accrediting agencies, unless the institution can demonstrate reasonable cause and submits all relevant materials; as well as the statutory requirement in HEA section 496(i), 20 U.S.C. 1099b(i), that the Secretary not recognize the accreditation of an institution that maintains accreditation from more than one agency unless the institution demonstrates reasonable cause and submits all relevant materials, and designates one agency as its accrediting agency for title IV purposes. Discussion: We disagree with the commenter that the changes to § 600.11 are inconsistent with the statutory requirements of HEA section 496(h) and (i). HEA section 496(h) provides that “The Secretary shall not recognize the accreditation of any otherwise eligible institution of higher education if the institution is in the process of changing its accrediting agency or association, unless the eligible institution submits to the Secretary all materials relating to the prior accreditation, including material demonstrating reasonable cause for changing the accrediting agency or association.” The new regulations in § 600.11(a) continue to require an eligible institution to submit to the Secretary all materials related to its prior accreditation or preaccreditation. Moreover, the new regulations require additional documentation, including substantiation of reasonable cause for the change. The “dual accreditation rule” provision in HEA section 496(i) states that “The Secretary shall not recognize the accreditation of any otherwise eligible institution of higher education if the institution of higher education is accredited, as an institution, by more than one accrediting agency or association, unless the institution submits to each such agency and association and to the Secretary the reasons for accreditation by more than one such agency or association and demonstrates to the Secretary reasonable cause for its accreditation by more than one agency or association. If the institution is accredited, as an institution, by more than one accrediting agency or association, the institution shall designate which agency's accreditation shall be utilized in determining the institution's eligibility for programs under this chapter.” The new regulations in § 600.11(b) continue to require the eligible institution to submit to the Secretary all materials related to its prior accreditation or preaccreditation, and clarify the conditions under which the Secretary would not determine the institution's cause for multiple accreditation to be reasonable, including when the institution has had its accreditation withdrawn, revoked, or otherwise terminated in the prior two-year period and when the institution has been subject to a probation or equivalent, show cause order, or suspension. The new regulation does provide that the Secretary may consider an institution's interest in obtaining multiple accreditation to be reasonable if it is based on geographic area, program-area focus, or mission, but the institution must provide evidence to explain or substantiate its request. Changes: None. Comments: Two commenters objected to the provisions in this section, arguing that they create a loophole in violation of the HEA and are contrary to law and in excess of the Department's statutory jurisdiction within the meaning of section 706 of the APA. The commenters note that under HEA section 496(j), an institution “may not be certified or recertified” for purposes of title IV if the institution has had its “accreditation withdrawn, revoked, or otherwise terminated for cause,” unless such action has been “rescinded by the same accrediting agency.” One commenter opined that the Department failed to provide sufficient evidence to support this change. One commenter suggested that, in the event an institution seeks multiple accreditations and has been subject to any kind of action, the Department should require that a problem raised by one agency should trigger automatic review by the other agency with a higher evidentiary bar to show why a similar sanction should not be applied. Discussion: We disagree with commenters that § 600.11 creates a loophole that would violate the HEA and is contrary to law and in excess of the Department's statutory jurisdiction within the meaning of section 706 of the APA. As discussed above, the new provisions are consistent with HEA section 496(h) and (i). HEA section 496(j) addresses the impact on an institution from the loss of accreditation. Again, as described above, we continue to hold institutions to the limitations imposed when accreditation has been withdrawn, revoked, or otherwise terminated for cause during the preceding 24 months pursuant to § 600.11(a)(1)(ii)(B). We further disagree with the commenter who asserted that the Department has failed to provide enough evidence to support this change. As explained in the NPRM (84 FR 27414), the proposed regulation seeks to maintain guardrails to ensure that struggling institutions cannot avoid the consequences of failing to meet their current accrediting agency's standards by attaining accreditation from another agency, while maintaining recourse for institutions that have been treated unfairly or have legitimate reasons for seeking multiple accreditation unrelated to findings or allegations of noncompliance with the quality standards of its current accrediting agency. The potential for an institution to face loss of its accreditation without being afforded its due process rights as defined in § 602.25, or as the result of an agency's failure to respect the institution's stated mission, supports the need for this change. Regarding the suggestion from a commenter that, where an institution seeking multiple accreditations has been subject to any kind of action, the Department should require the problem raised by one to trigger an automatic review by the other agency to show why a similar sanction should not be applied, we believe such a requirement would be superfluous. The applicable amendatory language as proposed already stipulates that the Secretary will not determine the cause for seeking accreditation from a different or second accrediting agency to be reasonable if the institution has had its accreditation withdrawn, revoked, or otherwise terminated for cause during the preceding 24 months or has been subject to a probation or equivalent, show cause order, or suspension order during the preceding 24 months. Any action initiated by the institution's current agency would necessarily be reviewed by the Department and, unless found to be related lack of due process, inconsistently applied standards or criteria, or failure to respect the institution's stated mission not considered reasonable cause to seek additional accreditation. At that point, we would not recognize the additional accreditation. We also disagree with the commenters who stated that the Department failed to provide data or evidence to support the need for the proposed regulatory changes during the negotiated rulemaking. As we stated previously in this preamble, the changes to the regulations are based on many factors, including feedback we received from the public, studies conducted by higher education associations, and emerging trends in postsecondary education. For example, concerns have been raised about the lack of innovation in accreditation, the challenges that new agencies have in gaining recognition, and the difficulties that new institutions have in becoming accredited and gaining access to title IV funds. 6 One challenge new accrediting agencies face in gaining recognition is the need to serve as a Federal gatekeeper for at least one institution or program. Accredited institutions or programs are unlikely to leave a well-established accrediting agency, thereby risking their access to title IV funds, even if a new agency may be more appropriate to the mission of the institution, support educational innovation at lower cost, have higher standards for academic excellence, or enable an institution to meet the needs of its students. This regulatory change to permit dual accreditation will allow institutions to have greater choice in selecting an accrediting agency that best aligns with the institution's mission, demonstrates educational excellence to potential students, peer institutions, or employers, and supports innovative pedagogical approaches. In addition, in order for new accrediting agencies to have the ability to become recognized, they need to be able to attract respected institutions to their membership, which is unlikely if an institution is required to abandon its current agency first. Finally, as we eliminated geography from an accrediting agency's scope, it is important to permit dual accreditation during the period in which an institution is undergoing review to change its agency. 6 https://www.educationnext.org/college-accreditation-explained-ednext-guide-how-it-works-whos-responsible/ . Furthermore, the Department developed a list of proposed regulatory provisions based on advice and recommendations submitted by individuals and organizations as testimony in a series of three public hearings in September of 2018, as well as written comments submitted directly to the Department. Department staff also identified issues for discussion and negotiation. We developed the proposed regulations that we negotiated during negotiated rulemaking with specific objectives for improvement, including addressing the requirements for accrediting agencies in their oversight of member institutions or programs; establishing requirements for accrediting agencies to honor institutional mission; revising the criteria used by the Secretary to recognize accrediting agencies, emphasizing criteria that focus on educational quality; developing a single definition for purposes of measuring and reporting job placement rates; simplifying the Department's process for recognition and review of accrediting agencies; and promoting greater access for students to high-quality, innovative programs. We believe the changes to the regulations in this section align with these objectives. We do not think it is appropriate for the Department to require that an action taken by one agency should trigger automatic review by another agency, with a higher evidentiary standard, to show why a similar sanction should not be applied, since our current regulations do not require this and an institution could be compliant with the standards of one agency even if not compliant with the standards of another. Currently, § 602.28 requires an agency to investigate an institution if another accrediting agency subjects it to any adverse action or places it on probation. A higher evidentiary standard is not appropriate. Changes: None. Comments: One commenter suggested that a provision be added to this section to permit an accrediting agency to prohibit its recognized institutions from maintaining accreditation by more than one recognized agency. Discussion: We disagree with the commenter's suggestion to permit an accrediting agency to prohibit its recognized institutions from maintaining accreditation by more than one recognized agency as it could have an anticompetitive impact and prevent innovative changes in higher education delivery. We will serve institutions and students better when accrediting agency standards align with the institution's educational objectives and stated mission. In some cases, this may require an institution to seek accreditation from more than one accrediting agency or to change accrediting agencies. Changes: None. Special Rules Regarding Institutional Accreditation or Preaccreditation (§ 600.11) Multiple Accreditation (§ 600.11(b)) Comments: One commenter opined that the changes to § 600.11(b) provide too much discretion to determine that an accrediting agency acted improperly and allows an institution to seek alternate accreditation when the institution does not meet its original accrediting agency's standards. The commenter agreed that we should permit an institution to select a comprehensive institutional accrediting agency as its title IV gatekeeper and seek mission-based institutional accreditation as well. Discussion: We disagree with the commenter that the changes to § 600.11(b) provide too much discretion for the Department to determine that an accrediting agency acted improperly or to allow an institution to seek a new accrediting agency when the institution does not meet its original accrediting agency's standards. The institution seeking a change of accrediting agencies or multiple accreditation must demonstrate to the Secretary a good reason for seeking accreditation by a different or additional agency in order for that request to be approved. Moreover, the regulations limit the ability of institutions that have been subject to a probation or equivalent, show cause order, or suspension order or that have had their accreditation withdrawn, revoked, or otherwise terminated for cause during the preceding 24 months, from making such a change. We thank the commenter for support of the provision that enables an institution to select a comprehensive institutional accrediting agency as its title IV gatekeeper and seek accreditation from a mission-based institutional accrediting agency. Changes: None. Comments: Two commenters objected to the provisions of § 600.11(b)(2)(i)(B) that enable the Secretary to determine an institution's justification for seeking multiple accreditation or preaccreditation to be reasonable if the institution's primary interest in seeking multiple accreditation is based on its mission. The commenters asserted that this grants exemptions for institutions with a “religious mission” from rules preventing agency-shopping if the institution claims an accrediting agency was not respecting its religious mission. Discussion: The proposed regulations provide latitude to the Secretary to determine that an institution's interest in seeking multiple accreditation is reasonable if it seeks accreditation by more than one accrediting agency as a result of its mission, geographic area, pedagogical focus, or program area focus. The Secretary will not be required to make such a determination. An institution seeking multiple accreditation would need to convince the Secretary of the reasonableness of its request. If an institution appears to be avoiding compliance with its current accrediting agency's standards by seeking accreditation from a new or additional accrediting agency, the Secretary could determine that the agency's request is not reasonable and deny that request. Changes: None. Severability (§ 600.12) Comments: None. Discussion: We have added § 600.12 to clarify that if a court holds any part of the regulations for part 600, subpart A, invalid, whether an individual section or language within a section, the remainder would still be in effect. We believe that each of the provisions discussed in this preamble serve one or more important, related, but distinct, purposes. Each provision provides a distinct value to the Department, the public, taxpayers, the Federal government, and institutions separate from, and in addition to, the value provided by the other provisions. Changes: We have added § 600.12 to clarify that we designed the regulations to operate independently of each other and to convey the Department's intent that the potential invalidity of one provision should not affect the remainder of the provisions. Change in Ownership Resulting in a Change in Control for Private Nonprofit, Private For-Profit, and Public Institutions (§ 600.31) Comments: One commenter expressed support for the changes to § 600.31 that clarify the terms of a change of ownership or ownership interest. Another commenter suggested that we clarify that the term “ownership” is meant to include changes in management or control of public institutions. Discussion: We thank the commenter who supported the changes to this section. Further, we agree with the commenter who suggested that the term “ownership” as defined in § 600.31 requires clarification with respect to public institutions. Accordingly, we clarify that “change in ownership” as applied in this section includes changes in management or control of public institutions. Such a change in management could include instances in which public institutions are merged into a new system or merged with another institution, or instances when boards of trustees are merged to provide joint oversight of more than one institution, among other things. This does not include instances when a new president or chancellor is hired or appointed, or when there is a change in the individual who holds the position of SHEEO. Changes: None. Eligibility of Additional Locations (§ 600.32) Comments: Several commenters objected to the proposed change that would allow an entity acquiring a closing location to be liable only for improperly spent title IV funds and unpaid refunds from the prior and current academic years. Some argued that the Department is attempting to solve the problem of institutions closing without sufficient resources to repay outstanding liabilities by reducing the requirement for these institutions to make students, the Department, and taxpayers whole, rather than fulfilling its enforcement responsibility by requiring institutions to post letters of credit in certain circumstances to protect the Federal fisc. Others asserted that the change could result in students being duped into thinking they are being offered a new educational opportunity, while potentially losing access to closed school loan discharges in the process. The commenters requested that the Department require that purchasers accept all past liabilities for the locations they acquire, except as determined by the Secretary on the strength of the purchaser's change of ownership application with the Department, 7 arguing that such action would enable the Department to retain some discretion to prevent inappropriate or high-risk purchases. 7 Application for Approval to Participate in Federal Student Financial Aid Programs is available at eligcert.ed.gov/ows-doc/eapp.htm . Discussion: We disagree that § 600.32 should be amended to require purchasers to accept all past liabilities for the school locations they acquire, except as determined by the Secretary on the strength of the purchaser's application. We believe it is reasonable to require new owners to accept liability for all financial aid credit balances (See § 685.216 regarding unpaid refunds) owed to students who received title IV, HEA program funds and for all improperly expended or unspent title IV, HEA program funds received during the current academic year and up to one academic year prior by the institution that has closed or ceased to provide educational programs. This timeline mirrors the period of time during which the Department typically conducts program reviews, which includes the current year and the prior year. Program reviews focus on the current and prior year because they provide a more accurate picture of the institution's current administrative strength and function. This provision provides the same window to an outside entity to evaluate the extent to which potential liability exists due to the actions of a prior, unrelated owner, or to secure financing. There may be cases when the acquisition of a closing school by a new owner or entity serves the best interest of students, the local community, and taxpayers. Limiting the potential liability for which a new owner or entity is responsible does not relieve the past owner or entity of its liability for funds owed to the Department as a result of past actions, insufficiencies, or borrower defense to repayment claims. We also disagree that the changes to this section would “dupe” students into thinking they are being offered a new educational opportunity and deprive them of a closed school loan discharge. While it is true that this regulatory change may precipitate fewer school closings and, as a result, fewer closed school loan discharges, students will have the option of completing their program or transferring to a new institution to do so, rather than losing the time and effort they have invested at one institution by starting over, repeating classes, or earning additional credits elsewhere. This regulation does not interfere with a borrower's right or ability to submit a borrower defense to repayment claim and seek relief from the Department in the event that misrepresentations occurred under prior ownership; however, it does limit the liability that a new owner assumes for actions that the prior owners took or failed to take. Changes: None. Severability (§ 600.33) Comments: None. Discussion: We have added § 600.33 to clarify that if a court holds any part of the regulations for part 600, subpart C, invalid, whether an individual section or language within a section, the remainder would still be in effect. We believe that each of the provisions discussed in this preamble serve one or more important, related, but distinct, purposes. Each provision provides a distinct value to the Department, the public, taxpayers, the Federal government, and institutions separate from, and in addition to, the value provided by the other provisions. Changes: We have added § 600.33 to make clear that the regulations are designed to operate independently of each other and to convey the Department's intent that the potential invalidity of one provision should not affect the remainder of the provisions. Termination and Emergency Action Proceedings (§ 600.41) Comments: Several commenters favored the changes to § 600.41. These commenters did not provide additional details other than to note their support. Discussion: We thank the commenters for their support to delete an outdated reference formerly located in § 600.41(a)(1)(ii)(B) that allowed for termination of an institution's eligibility under a show-cause hearing, if the institution's loss of eligibility resulted from the institution's having previously qualified as eligible under the transfer of credit alternative to accreditation. This alternative has not been possible since its repeal in 1992. We further thank the commenters for their support of updating the terminology in § 600.41(d) that changes the word “certify” to “originate,” which is used in the Direct Loan Program, the only program under which the Department currently makes loans. Changes: None. Severability (§ 600.42) Comments: None. Discussion: We have added § 600.42 to clarify that if a court holds any part of the regulations for part 600, subpart D, invalid, whether an individual section or language within a section, the remainder would still be in effect. We believe that each of the provisions discussed in this preamble serve one or more important, related, but distinct, purposes. Each provision provides a distinct value to the Department, the public, taxpayers, the Federal government, and institutions separate from, and in addition to, the value provided by the other provisions. Changes: We have added § 600.42 to make clear that the regulations are designed to operate independently of each other and to convey the Department's intent that the potential invalidity of one provision should not affect the remainder of the provisions. The Secretary's Recognition of Accrediting Agencies What definitions apply to this part? (§ 602.3) Comments: Two commenters opposed the proposed changes in § 602.3(b) that permit accrediting agencies to retain recognition if they meet a newly proposed definition of “substantial compliance,” rather than requiring them to be fully compliant with all applicable standards. The commenters asserted that this proposed definition is inconsistent with HEA section 496 and makes it virtually impossible for the Department to hold an agency accountable when it fails to perform. Discussion: We disagree with the commenters that the proposed definition of “substantial compliance” is inconsistent with the statute and makes it virtually impossible for the Department to hold an agency accountable when it fails to perform. For many years the Department relied on the “substantial compliance” standard in making recognition determinations and, currently, some accrediting agencies already recognize “substantial compliance” in their own standards. 8 The statute requires the accrediting agency or association to demonstrate the ability and experience necessary to operate as an accrediting agency or association. It does not require that the accrediting agency demonstrate that it has applied each and every one of its standards, as evidenced by the fact that an accrediting agency must accredit or preaccredit only one institution prior to petitioning the Department for recognition. It also does not require the Department to deny recognition to an otherwise well-performing accrediting agency simply because of minor administrative omissions or errors, or because the agency had to make a minor exception to its regular policies in order to serve the needs of students. We see a significant difference between “substantial compliance,” which means that an agency is essentially compliant with the purpose or objective of the regulations, versus a finding of failing to perform or being noncompliant, for which the Department would make a finding of noncompliance. 8 www.wscuc.org/book/export/html/924 . In fact, by providing for “substantial compliance” and a process for monitoring institutional improvement, the Department may address minor concerns before they become major concerns and ensure that they are resolved quickly and appropriately. The monitoring report will afford accrediting agencies that are in substantial compliance with the criteria for recognition the opportunity to implement corrected policies or update policies to align with compliant practices. The monitoring report provides the Department with an additional oversight tool to ensure integrity in accreditation, in cases where the accrediting agency deficiency does not rise to the level of non-compliance or a full compliance report. Changes: None. Comments: One commenter suggested that we could improve the definition of “programmatic accrediting agency” by beginning with the word “usually” or adding the phrase, “this does not include agencies which accredit freestanding institutions offering a specific educational program.” The commenter asserted that the proposed definition does not address situations in which closely related educational programs enable students to enter a broad spectrum of graduate and professional schools, and to embark on a variety of careers. Another commenter remarking on the definition of “programmatic accrediting agency” encouraged the Department to ensure that programmatic accrediting agencies have the autonomy to focus on institutional quality. Discussion: While we recognize that some programmatic agencies accredit schools with programs that prepare students to enter a broad spectrum of graduate and professional schools, and to embark on a variety of careers, we believe the definition does not preclude them from continuing to do so, nor does it require that a program lead to only one career pathway or option. The Department appreciates the commenter's request that we ensure programmatic accrediting agencies have the autonomy to focus on quality, especially when programmatic accrediting agencies also serve as institutional accrediting agencies at institutions that offer a single program or closely related programs that align with the programmatic accrediting agency's mission. We are confident that these regulations provide that autonomy. Changes: None. Comments: Several commenters requested additional time to come into compliance with the change from national and regional accreditation to institutional accreditation. The commenters did not object to this change but noted that entities that distinguish between national and regional accreditation in some of their policies will need to amend those policies. They cited, for example, some State laws and regulations that distinguish between national and regional accreditation and reported that those State regulators would need time to amend those laws and adjust the procedures in implementing those laws. Some commenters noted that the legislature in their State is not slated to meet again until 2021. Discussion: We appreciate the commenters' support and believe the State policies referenced provide further evidence for the need to eliminate the artificial distinction between regional and national accreditation because some of those policies deny opportunities for successful students to enter certain fields, it is incumbent upon State regulators to ensure the laws pertaining to an academic institution's required accreditation to qualify graduates for licensure and the procedures used to implement those laws do not disadvantage students who enroll in and complete programs at institutionally accredited institutions. While we cannot compel a State to act, we hope that States will recognize the Department's revised accrediting agency designations and make the necessary changes in their own laws or regulations. Changes: None. Severability (§ 602.4) Comments: None. Discussion: We have added § 602.4 to clarify that if a court holds any part of the regulations for part 602, subpart A, invalid, whether an i [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2019-23129. Public record. Not legal advice.