Secretary's Procedures and Criteria for Recognition of Accrediting Agencies; Proposed Rule DEPARTMENT OF EDUCATION

SUMMARY: The Secretary proposes to amend the regulations governing the

Secretary's recognition of accrediting agencies. The proposed

regulations are needed to implement provisions added to the Higher

Education Act of 1965 (HEA) by the Higher Education Amendments of 1992.

The purpose of the Secretary's recognition of accrediting agencies is

to assure that those agencies are, for HEA and other Federal purposes,

reliable authorities as to the quality of education or training offered

by the institutions of higher education or higher education programs

they accredit.

DATES: Comments must be received on or before March 21, 1994.

ADDRESSES: All comments concerning these proposed regulations should be

addressed to Karen W. Kershenstein, U.S. Department of Education, 400

Maryland Avenue, SW., room 3036, ROB-3, Washington, DC 20202-5244.

A copy of any comments that concern information collection

requirements should also be sent to the Office of Management and Budget

at the address listed in the Paperwork Reduction Act section of this

preamble.

FOR FURTHER INFORMATION CONTACT: Karen W. Kershenstein. Telephone:

(202) 708-7417. Individuals who use a telecommunications device for the

deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-

800-877-8339 between 8 a.m. and 8 p.m., Eastern time, Monday through

Friday.

SUPPLEMENTARY INFORMATION: In order to approve a postsecondary

education institution to participate in the student financial

assistance (SFA) programs authorized under Title IV of the HEA and many

other Federal programs, the Secretary must determine, in part, that the

institution satisfies the statutory definition of an ``institution of

higher education.'' Under the HEA and other Federal statutes, one

element of that definition requires an eligible institution of higher

education to be accredited or preaccredited by an accrediting agency

recognized by the Secretary as a reliable authority as to the quality

of the education or training provided by the institution. Another

element requires an eligible institution to be legally authorized to

provide an educational program beyond the secondary level in the State

in which it is located. Thus, the statutory definition of an

institution of higher education provides the framework for a shared

responsibility among accrediting agencies, States, and the Federal

government to ensure that the ``gate'' to SFA programs is opened to

only those institutions that provide students with quality education or

training worth the time, energy, and money they invest in it. The three

``gatekeepers'' sharing this responsibility have traditionally been

referred to as ``the triad.'' While the concept of a triad of entities

responsible for gatekeeping has had a long history, the triad has not

always worked as effectively as it should to ensure educational

quality, nor has it served as an effective deterrent to abuse by

institutions participating in SFA programs.

For several years, certain institutions participating in SFA

programs have failed to provide students with education or training of

an acceptable level of quality; they have also failed to treat students

fairly. In addition, they have failed to meet acceptable standards of

financial responsibility and administrative capability and to

adequately protect the SFA program funds entrusted to them. The

institutions that have engaged in these abusive practices are not

restricted to a particular sector of higher education. Rather, the

abuses have been found in all types of institutions participating in

SFA programs, including those in the private non-profit and public

sectors of higher education as well as those in the proprietary sector.

At the same time, gatekeeping functions have not been carried out

effectively. For example, some accrediting agencies have not taken

sufficient care to ensure the quality of the education or training

provided by the institutions or programs they accredit or to protect

student interests when they accredit particular institutions or

programs. Moreover, some States have also not taken sufficient care to

ensure the quality of the education or training provided by the

institutions they authorize or license to operate in the State or to

protect student interests. Finally, the Federal government's management

of its responsibilities to determine eligibility and to certify

institutions to participate in SFA programs has not always been

adequate to prevent abusive practices at institutions that participate

in SFA programs.

Consequently, in the Higher Education Amendments of 1992, Public

Law 102-325, Congress amended the HEA to provide for a new part H of

Title IV entitled ``Program Integrity Triad.'' Under that part, States

and accrediting agencies are required to assume major new oversight

responsibilities, and States, accrediting associations, and the

Secretary are linked to create a stronger and more coordinated

evaluation of institutions that participate or wish to participate in

the SFA programs. The Secretary believes that the most appropriate

approach to this coordinated evaluation of institutions by the three

components of the triad is a complementary one with each component

focusing its evaluation on its obligations within the context of the

HEA. Thus, the focus for accrediting agencies is the quality of

education or training provided by the institutions or programs they

accredit. For States, which already had responsibility for determining

that institutions have the legal authority to operate within the State,

the HEA added a new focus: reviewing institutions that meet certain

statutory review criteria. The focus of the Secretary's evaluation of

institutions is the administrative and financial capacity of those

institutions to participate in the SFA programs.

The statute allocates legal responsibility among the entities that

compose the program integrity triad. While specific statutory

responsibilities for the three triad entities may overlap, when viewed

as a whole the triad brings together in a coordinated fashion three

different but very important aspects of institutional review. Within

this statutory scheme, the Secretary has sought to assure that the

gatekeeping system operates as efficiently as possible, with maximum

integration among the three triad entities and without unnecessary

burden on postsecondary institutions. In order to assist the Secretary

in designing a final regulation that achieves these goals, the

Secretary specifically requests comment on the following questions:

(1) In several areas, the statute specifically requires each triad

entity to evaluate an institution under the same or similar standards.

For example, a SPRE and an accrediting agency may establish different

standards for evaluating the financial responsibility of an institution

or for evaluating the success of an institution's educational program.

Thus, a reviewed institution would need to satisfy the SPRE's and the

accrediting agency's standards even though those standards address the

same areas. How should final regulations be structured to both reduce

the burden on institutions and enable the triad entities to carry out

effectively their statutory functions?

(2) Should the final regulations be more explicit in identifying

levels, characteristics, or definitions for any of the assessment or

review criteria that a triad entity is expected to consider in its

evaluation of an institution?

Subpart 1 of part H establishes a State Postsecondary Review

Program under which each State designates a single State postsecondary

review entity that is responsible for reviewing institutions of higher

education that the Secretary identifies as meeting certain review

criteria and for determining whether those institutions should continue

to participate in the SFA programs. Subpart 3 specifies the procedures

the Secretary uses to determine whether an institution meets the

eligibility requirements and has the administrative capacity and

financial responsibility to administer the SFA programs.

In subpart 2 of part H, the Secretary is charged with making a

comprehensive and careful evaluation of an accrediting agency before

recognizing that agency as a reliable authority as to the quality of

the education or training offered by institutions or programs that the

agency accredits. Moreover, as part of this evaluation, the Secretary

is charged with establishing recognition standards that must include

``an appropriate measure or measures of student achievement.''

Accordingly, the standards that the Secretary proposes in this notice

of proposed rulemaking require an accrediting agency to make a detailed

and careful evaluation of the institutions or programs it accredits and

to include in that evaluation ``appropriate measure or measures of

student achievement.''

These proposed regulations were subject to the negotiated

rulemaking process set forth in section 492 of the HEA. Under that

process, the Secretary convened four regional meetings in September,

1992 to obtain public involvement in the development of these proposed

regulations. The meetings were held in San Francisco, Atlanta, New

York, and Kansas City. Before convening the meetings, the Secretary

held a meeting in Washington, DC in August 1992 to invite comments from

interested parties as to the key issues that should be addressed at the

regional meetings.

At the four regional meetings, the Secretary provided attendees

with a list of issues that needed to be addressed in these proposed

regulations. A summary of the responses of the attendees is contained

in Appendix A to these proposed regulations.

Individuals and groups who attended the regional meetings nominated

individuals to participate in the negotiated rulemaking process. The

Secretary selected negotiators from the list of nominees to reflect all

the groups that are involved in the SFA programs. With regard to these

proposed regulations, the Secretary chose negotiators who reflected the

diversity of the accrediting community as well as the interests of

States, higher education institutions, and students.

In accordance with section 492(b) of the HEA, the Secretary

prepared a draft proposed regulation and negotiated the provisions of

that draft with the negotiators. Two negotiating sessions were held:

one in January 1993 and one in February 1993. During those sessions,

consensus was reached on several of the provisions that are included in

this notice of proposed rulemaking. On the remaining provisions,

however, the negotiators agreed to disagree. Where agreement was not

reached on a particular provision, that fact is noted in the discussion

that follows.

On several issues that were negotiated, there was general

discussion on various approaches to take with regard to those issues.

The Secretary believes those issues are important enough to include in

this preamble possible alternative approaches in order to give the

public a fuller understanding of the issues and the available potential

solutions. Finally, on most issues where consensus was reached, the

negotiators also reached general agreement on the language of a

proposed regulatory provision. However, the Secretary wishes to

reiterate the remarks of the Federal negotiators that the agreed-to

language with regard to a specific provision would be subject to change

in the proposed regulations for technical reasons but the substance of

the provision would remain unchanged, wherever possible. Where a

substantive change was made in a particular provision, that fact is

noted in the discussion that follows, and an explanation of the reasons

for the change is provided.

Significant Changes Proposed by the Regulations

The following discussion reflects proposed significant changes to

the existing regulations governing the Secretary's Procedures and

Criteria for Recognition of Accrediting Agencies. The changes are

discussed in the order in which they appear in the proposed

regulations. If a provision applies to more than one section or is

included in more than one section, it is discussed the first time it

appears with an appropriate cross-reference to its other appearances.

The general format for the discussion of each section is to state the

appropriate statutory provision for that section and to explain any

provisions that interpret or clarify the statute that the Secretary

believes are necessary to implement the statutory provision through

regulation.

In developing these proposed regulations, the Secretary has

regulated as little as possible. He has regulated narrowly to the law,

except where the Secretary deems further interpretation is necessary.

In these cases, either the proposed regulations include the specific

language agreed to by negotiators during negotiated rulemaking, if an

agreement was reached, or the Secretary proposes language where

agreement was not reached. In both cases, the Secretary solicits

comments on the clarifications and interpretations included in the

proposed regulations.

Subpart A--General Provisions

Section 602.1 Purpose

Current regulations permit the Secretary to recognize any

accrediting agency the Secretary determines to be a reliable authority

as to the quality of postsecondary education or training provided by

the institutions or programs it accredits. However, section 496(m) of

the HEA now authorizes the Secretary to recognize only those agencies

that accredit institutions of higher education or higher education

programs for the purpose of enabling those institutions or programs to

establish eligibility to participate in programs administered either by

the Secretary or by other Federal agencies. In Sec. 602.1 of the

proposed regulations, the Secretary reiterates the statutory provision.

Section 602.2 Definitions

Most of the definitions included in the proposed regulations are

self-explanatory. Three, however, warrant additional comment based on

the discussions that took place during the negotiated rulemaking

sessions.

Institution of higher education. In the proposed regulations, the

Secretary defines an institution of higher education to be an

educational institution that qualifies or may qualify as an eligible

institution under 34 CFR part 600, Institutional Eligibility under the

Higher Education Act of 1965, as amended. Some of the non-Federal

negotiators, however, pointed out that it is not clear that this

definition includes certain types of hospitals and health care

facilities. For this reason, the Secretary wishes to make clear that a

hospital or health care facility may qualify as an eligible institution

of higher education if the hospital or facility satisfies any

definition of that term, i.e., a ``public or nonprofit private

institution of higher education,'' a ``proprietary institution of

higher education,'' or a ``postsecondary vocational institution.''

Prebaccalaureate vocational education programs and vocational

education programs.

In Sec. 602.2, the Secretary proposes to define the term

``vocational education program'' based upon the statutory provision

included in the definition of various types of eligible institutions of

higher education. Thus, the Secretary defines a vocational education

program as a program that ``prepares students for gainful employment in

a recognized occupation.'' (See, for example, section 481(b)(1) of the

HEA for a ``proprietary institution of higher education;'' section

481(c)(1) for a ``postsecondary vocational institution;'' and the

second sentence of section 1201(a) of the HEA for a ``public and

private nonprofit institution of higher education.'')

This definition, if read literally, could be viewed as including

all postsecondary programs. To avoid this overreaching conclusion, the

Secretary proposes that the vocational education programs that trigger

actions under these regulations are prebaccalaureate vocational

education programs. See, for example, Sec. 602.24(c). This latter term

is defined as a vocational education program that leads to a

certificate, degree, or other education credential that is less than a

bachelor's degree. The Secretary invites comment on these definitions,

as well as alternative definitions, in light of the fact that the non-

Federal negotiators could not agree among themselves as to the

acceptability of these definitions.

One alternative definition for prebaccalaureate vocational

education that the Secretary is considering is ``undergraduate

vocational education that leads to a certificate or other educational

credential but not to a degree.'' The Secretary is considering this

definition in order to ease the burden on institutions whose vocational

education programs leading to an associate degree would also trigger

special action under the proposed regulations.

If this alternative definition were to be adopted, however, the

Secretary is concerned that some institutions might try to stretch

their non-degree programs into associate-degree programs simply to

avoid the additional requirements that, as a result of these proposed

regulations, accrediting agencies will have to impose on institutions

that provide prebaccalaureate vocational education. The Secretary

invites comments on the alternative definition of prebaccalaureate

vocational education and suggestions for preventing unwarranted course

or program stretching, should the alternative definition be adopted.

The Secretary also wishes to know if commenters believe there are other

risks associated with adopting the alternative definition that might

outweigh any benefits derived by the degree-granting sector of the

higher education community through its adoption.

The Secretary acknowledges that the definition of ``vocational

education'' in these proposed regulations differs from the definition

of ``vocational program'' as that term is defined in the proposed

regulations for the State Postsecondary Review Program (``an

educational program below the baccalaureate degree level, that is not

classified as a professional program, that prepares students for

gainful employment in a recognized profession''). The Secretary

requests specific comment on whether the same definition should be used

in both regulations and, if so, what that definition should be.

Section 602.3 Organization and Membership

Section 496(a) of the HEA requires accrediting agencies whose

accreditation enables the institutions they accredit to participate in

programs authorized under the HEA to be administratively and

financially separate from and independent of any related, associated,

or affiliated trade association or membership organization. The term

``separate and independent'' is defined in section 496(b) of the HEA.

In Sec. 602.3 (a), (b), and (c) of the proposed regulations, the

Secretary reiterates the statutory requirement and definition.

During the negotiated rulemaking sessions, non-Federal negotiators

expressed concern that the ``separate and independent'' requirement

would prevent any joint use of personnel, services, equipment, or

facilities by an accrediting agency and a related, associated, or

affiliated trade association or membership organization, a practice

that is fairly common among accrediting agencies and helps reduce the

cost of accreditation. To address this concern, in Sec. 602.3(d) the

Secretary proposes conditions that accrediting agencies must meet

regarding the joint use of personnel, services, equipment, or

facilities if that use is not to be considered a violation of the

``separate and independent'' requirement. The Secretary believes this

approach respects the intent of Congress yet eases the financial burden

on agencies to implement the new requirement.

Section 496(a) of the HEA permits the Secretary to waive the

``separate and independent'' requirement if the agency is one that, for

purposes of determining eligibility for SFA programs, either conducts

accreditation through a voluntary membership organization of

individuals participating in a profession or has as its principal

purpose the accreditation of programs within institutions that are

accredited by another agency recognized by the Secretary. In

Sec. 602.3(e) of the proposed regulations, the Secretary proposes

conditions under which the Secretary may waive the ``separate and

independent'' requirement. Specifically, the Secretary proposes to

grant an agency's request for a waiver if the agency demonstrates to

the Secretary's satisfaction that the existing relationship between the

agency and the trade association or membership organization has not

compromised the independence of its accreditation process.

In providing comments with regard to this section, the Secretary

advises commenters that only the type of accrediting agency described

in Sec. 602.3(b)(4) may seek a waiver of the separate and independent

requirement under the law. Thus, the Secretary is precluded by statute

from waiving this requirement for any other type of accrediting agency.

Finally, the Secretary wishes to note that the language in

Sec. 602.3(c)(2) specifying that no less than one-seventh of an

agency's decision-making body must consist of representatives of the

public is derived from language in the Conference Report stating that

the House agrees to the requirement in the Senate bill that ``at least

one out of every seven members of an accreditation association's board

be members of the general public.''

Section 602.4 Submission of Information to the Secretary by Recognized

Accrediting Agencies

Section 496 does not specifically address the type of information

that a recognized accrediting agency must submit to the Secretary to

enable the Secretary to evaluate whether the agency continues to comply

with the requirements for recognition throughout its recognition

period. In Sec. 602.4 (a),(b), (c), (d), and (f) of the proposed

regulations, the Secretary proposes various types of information that

recognized agencies must routinely submit to the Secretary during their

recognition period. All of the items on the list were agreed to by the

negotiators, who did not perceive them to be particularly burdensome to

agencies to provide.

Of particular note is the requirement in Sec. 602.4(e) that

accrediting agencies must submit to the Secretary, upon request,

information to assist the Secretary in resolving problems with any

institution or program accredited by the agency, provided the

Secretary's request does not conflict with the agency's policies on

confidentiality with respect to its records on its institutions or

programs. This provision reflects the agreement of negotiators.

However, the Secretary has reconsidered the ``confidentiality'' aspect

of this provision because of a concern that certain information that

the Secretary may need to resolve a problem with a particular

institution or program may not be obtainable from an agency because of

its confidentiality policies. The Secretary believes this situation is

untenable because it allows agencies to withhold information that the

Secretary may need to carry out the Secretary's responsibilities under

the Act, such as determining whether an institution or program

accredited by the agency should remain eligible to participate in SFA

programs. The Secretary seeks suggestions for resolving this dilemma in

a manner that respects both the agency's need for confidentiality and

the Secretary's need for information.

The Secretary also is considering adding to this section a

requirement that an accrediting agency must refer to the Department's

Office of Inspector General any fraudulent activities it discovers on

the part of an institution or program that it accredits, if the

institution or program participates in Department programs. The

Secretary invites comments on this possible additional requirement and

alternative approaches to sharing information among members of the

triad concerning suspected fraudulent activity by an institution or

program.

Subpart B--Recognition and Termination Procedures

Section 496(o) of the HEA requires the Secretary to provide, by

regulation, the procedures the Secretary uses for recognizing

accrediting agencies. In the proposed regulations, the Secretary

proposes to specify procedures for recognizing accrediting agencies in

far greater detail than in current or previous regulations. The

Secretary believes this greater detail is necessary to ensure that all

agencies applying for recognition, as well as other interested parties,

have a clear understanding of the entire process.

The Secretary acknowledges that the application for recognition

constitutes a significant burden on agencies seeking recognition by the

Secretary. For this reason, the Secretary is considering ways to

minimize the burden. One approach under consideration is to allow an

agency to provide a simple statement of assurance, along with

supporting documentation, that it meets certain requirements for

recognition. The Secretary estimates that at least two-thirds of the

requirements in the proposed regulations are amenable to this type of

approach, and the resultant savings in time, effort, and cost to

prepare an application for recognition would be significant. The

Secretary invites comments on this approach and alternative methods for

minimizing the burden on agencies of the application process without

adversely affecting the Secretary's ability to conduct a thorough

evaluation of the agency.

The recognition process, as described in subpart B of the proposed

regulations, consists of an application to the Secretary by the agency,

an analysis of the application by a designated Department official, an

opportunity for a written response to that analysis by the applicant

agency, a review of the agency's application by the National Advisory

Committee on Institutional Quality and Integrity (Advisory Committee),

a recommendation to the Secretary by the Advisory Committee with regard

to that application, an opportunity to contest the Advisory Committee's

recommendation by either the agency or the designated Department

official, and, finally, a decision on that application by the

Secretary. The analysis of an agency's application by the designated

Department official includes publication of a notice of the agency's

application in the Federal Register inviting comment on the agency's

compliance with the requirements for recognition and a review by the

designated Department official of any public comment received. The

Secretary believes the new procedures for recognition allow an agency a

full and fair review of its application.

Additional appeal procedures. The proposed regulations add two key

new steps to the recognition process. First, in Sec. 602.11(b) the

Secretary gives an accrediting agency seeking recognition by the

Secretary an opportunity to respond in writing to the designated

Department official's analysis of its application for recognition

before the application is reviewed by the Advisory Committee. Second,

in Sec. 602.13(b), after the Advisory Committee completes its review of

the agency's application and makes a recommendation to the Secretary on

the agency's application, the Secretary gives both the agency and the

designated Department official an opportunity to contest the Advisory

Committee's recommendation. The contesting party, however, may not

submit any evidence to the Secretary that it did not submit to the

Advisory Committee. This restriction is to ensure that the Advisory

Committee's authority is not circumvented. The Secretary believes that

in general the only reasonable grounds for contesting an Advisory

Committee recommendation would be if the contesting party could

demonstrate that the Advisory Committee either misunderstood or did not

take into proper account certain information presented by the

contesting party.

The negotiators reached consensus during the negotiated rulemaking

sessions on the first step. The Secretary added the second step after

the negotiated rulemaking sessions ended to address the non-Federal

negotiators' concerns about the lack of sufficient appeal mechanisms

for agencies prior to the Secretary's final decision. The Secretary

believes that these two new steps in the proposed recognition process

provide agencies with sufficient opportunity to present any concerns

they might have regarding the recommendation of either the designated

Department official or the Advisory Committee before the Secretary

reaches a decision on the agency's application.

Announced and unannounced site visits by the Secretary. Section

496(n) of the HEA requires the Secretary to conduct an independent

analysis of an agency's application for recognition, which must include

a site visit to the accrediting agency and may, at the Secretary's

discretion, include site visits to representative institutions or

programs accredited by the agency. Section 496(n) of the HEA also

provides that the site visits may be unannounced, as appropriate.

Accordingly, both Sec. 602.10(b) and Sec. 602.11(b) of the proposed

regulations provide for unannounced site visits. Specifically, the

Secretary proposes to conduct unannounced site visits only, where

necessary in the judgment of the Secretary, to obtain information to

verify the agency's compliance with the requirements for recognition

and the information would not be forthcoming in an announced site

visit. The Secretary wishes to make it clear that this Secretarial

judgment is not subject to challenge by an accrediting agency.

In Sec. 602.11(b), the Secretary also proposes that the Secretary's

evaluation of an agency may include a review of information directly

related to the institutions or programs accredited by the agency, as

this information relates to the institution's or program's compliance

with the agency's standards, the effectiveness of those standards, or

the agency's application of those standards. The Secretary believes

that the inclusion of this language in the proposed regulations, which

was agreed to by negotiators, provides the agency, the institutions and

programs it accredits, and the general public with a clear

understanding of the scope of the Secretary's evaluation of an agency.

In sum, to implement section 496(n) of the HEA, the proposed

regulations make it clear that in evaluating an agency's application

for recognition, the Secretary may not and does not depend solely on

written submissions from the accrediting agency or on announced visits

to the agency or its member institutions or programs. The Secretary

makes a more thorough and independent evaluation of an agency's

application for recognition, including, where appropriate, unannounced

visits to ensure that information available to the designated

Department official is comprehensive, accurate, and unbiased, and to

ensure that the agency is actually carrying out its stated policies and

procedures.

Scope of recognition requirements. Under Sec. 602.10(b) of the

current regulations, in order for an accrediting agency to be

recognized by the Secretary, the agency has to meet each recognition

criterion taken as a whole unless it can demonstrate to the Secretary's

satisfaction that one or more criteria should not be applied. In

Sec. 602.13(c) of the proposed regulations, the Secretary requires an

agency to meet each of the requirements contained in this part.

However, in Sec. 602.13(e) the Secretary proposes that the Secretary

may exercise discretion and grant recognition to an agency that does

not comply with each requirement if the Secretary determines that the

agency's effectiveness is not impaired by its noncompliance. Such

discretion might, for example, be exercised if an accrediting agency is

unable to conduct an unannounced site visit, as required by

Sec. 602.24, because the program being evaluated is offered on a

military installation that requires prior approval before any visitors

are permitted on the installation. The Secretary believes that

Secretarial discretion provides the desired flexibility that non-

Federal negotiators sought during the negotiated rulemaking sessions.

Consensus was reached by negotiators regarding the elements to be

included in the scope of recognition the Secretary grants to an agency,

i.e., geographic area, the degrees or certificates awarded, the types

of courses or programs offered, and the length of the recognition

period. In the proposed regulations, the Secretary has clarified that

an agency's scope of recognition does not automatically extend to any

preaccreditation status it offers. Rather, when an agency formally

applies for recognition, it must include the types of preaccreditation

status for which it seeks recognition, and the Secretary grants

recognition to an agency for each preaccreditation status if the agency

complies with all the requirements for recognition with regard to that

preaccreditation status.

Section 602.14 Limitation, Suspension, or Termination of Recognition.

Section 496(l) of the HEA permits the Secretary to limit, suspend,

or terminate the Secretary's recognition of an accrediting agency

before the completion of the agency's recognition period if the

Secretary determines that the agency has failed to meet any of the

requirements of part 602. In Sec. 602.14 of the proposed regulations,

the Secretary establishes the procedures to be followed before the

Secretary may limit, suspend, or terminate an agency's recognition. The

proposed procedures allow the agency to request a hearing to contest

that action.

The Secretary proposes that, if an agency requests a hearing, the

hearing will be conducted by the Advisory Committee. However, the

Secretary further proposes that the hearing may be conducted by a

subcommittee of the Advisory Committee, consisting of three members of

the Advisory Committee, if the schedule of the full Advisory Committee

would not permit a hearing to be held in a timely manner. After

evaluating the evidence presented before it, the Advisory Committee or

subcommittee makes a recommendation to the Secretary as to whether the

sanction proposed by the designated Department official, no sanction,

or another sanction is warranted. Any hearing held under this section

is open to the public.

After the negotiated rulemaking sessions, in response to non-

Federal negotiators' concerns about the lack of sufficient appeal

mechanisms, the Secretary added to this section a provision that either

party in a hearing may appeal the Advisory Committee's or

subcommittee's recommendation to the Secretary.

Section602.15 Requests for Reconsideration of the Secretary's Decision

Section 496(o) of the HEA requires the Secretary to provide in

regulation the procedures to be followed by an accrediting agency for

the appeal of the Secretary's decision regarding its application for

recognition. Accordingly, in Sec. 602.15 of the proposed regulations,

the Secretary permits an agency to request reconsideration of a final

decision of the Secretary regarding either the agency's application for

recognition or the limitation, suspension, or termination of the

agency's recognition. However, Sec. 602.15(a)(2) proposes that a

request for reconsideration may be made only under limited conditions.

Under these limited conditions, the agency may request reconsideration

only if it demonstrates that it has new information that could not have

been presented previously and that the information is likely to result

in reversal of the Secretary's decision.

While, as noted by the non-Federal negotiators at the negotiated

rulemaking sessions, the grounds for reconsideration are narrow, the

Secretary believes the narrow grounds are appropriate. Adverse

decisions regarding an agency's application for recognition are made by

the Advisory Committee and forwarded to the Secretary. Under

Sec. 602.13, the agency may appeal the Advisory Committee's

recommendation to the Secretary. Similarly, under Sec. 602.14, the

agency may appeal an adverse Advisory Committee or subcommittee

recommendation to the Secretary under a limitation, suspension or

termination proceeding. Therefore, the Secretary believes that

reconsideration requests should be narrowly circumscribed. The

Secretary notes that non-Federal negotiators requested opportunities

for agencies to request reconsideration in cases where the Secretary

had not established appeal procedures. Given the provisions for appeal

that are now in the proposed regulations, the Secretary requests public

comment on whether reconsideration procedures are necessary.

The Secretary wishes to make clear that any agency that fails to

notify the Secretary of its intent to file a written request for

reconsideration within the 10-day time frame specified in the

regulations forfeits its right to reconsideration. Additionally, the

Secretary wishes to reiterate that, in general, any failure to meet a

required deadline date in any appeal to the Secretary results in a

forfeiture of that appeal right.

While consensus was reached during the negotiated rulemaking

sessions that an agency should have 45 days to submit its written

request for reconsideration, the Secretary questions whether a shorter

period--30 days--is sufficient for the agency to prepare an adequate

request, given the fact that 30 days is the usual time frame specified

by the Department for other types of appeals to the Secretary. The

Secretary requests comments on the shorter period.

Because requests for reconsideration are restricted to instances

where the Secretary's decision involves denial, limitation, suspension,

or termination of an agency's recognition, it is anticipated that, due

to the extensive material that must be reviewed, the Secretary will

require more than 30 days to reach a final decision on an agency's

request for reconsideration. Non-Federal negotiators were concerned

that there be some time limit imposed to bring the issue to closure.

Accordingly, the Secretary is proposing a 60-day time frame for

reaching a final decision on an agency's request for reconsideration.

Section 602.16. Appeals Procedures.

As mentioned in Sec. 602.15, section 496(o) of the HEA requires the

Secretary to provide for the appeal of the Secretary's decision

regarding an accrediting agency's application for recognition. In

Sec. 602.16 of the proposed regulations, the Secretary provides for an

appeal to the Federal courts of all final decisions of the Secretary

regarding an agency's application for recognition. During the

negotiated rulemaking sessions, non-Federal negotiators urged an

appeals procedure other than through the courts, as, for example,

through an administrative law judge. However, the Secretary believes

that there can be no administrative appeal within the Department of a

Secretarial decision since the Secretary, as head of the Department of

Education, makes all final decisions on behalf of the Department. It

should be noted, however, that in response to the non-Federal

negotiators' concerns, the Secretary has modified the proposed

recognition procedures to include an opportunity for an agency to

appeal an Advisory Committee's recommendation to the Secretary before

the Secretary reaches a final decision on the agency's application. The

proposed limitation, suspension, and termination procedures also have

been modified to provide for an appeal to the Secretary of an Advisory

Committee or subcommittee recommendation.

Subpart C--Criteria for Secretarial Recognition

Section 602.22 Demonstration of Accreditation Experience

Section 496(a)(1) of the HEA requires accrediting agencies to

demonstrate experience in operating as an accrediting agency as a

condition for recognition. In Sec. 602.22 of the proposed regulations,

the Secretary defines what a demonstration of accrediting experience

must include, basically reiterating the requirements for experience set

forth in Sec. 602.14 of the current regulations. However, Sec. 602.22

does not contain the requirement set forth in Sec. 602.14(c) of the

current regulations that agencies must demonstrate that their policies,

evaluation methods, and decisions are accepted throughout the United

States by recognized accrediting agencies. The Secretary is aware, as

argued by the non-Federal negotiators, that this requirement is an

important indicator of an agency's acceptance. On the other hand, this

requirement has been subject to criticism by persons and institutions

interested in forming new accrediting agencies. These individuals and

agencies have often expressed concern to the Secretary that this

requirement imposes unfair hurdles for them and unduly stifles

competition among accrediting agencies. The Secretary proposes to

eliminate this requirement because the Secretary believes that it is

inappropriate to require acceptance by recognized agencies as a

condition for recognition even though evidence of acceptance by

recognized accrediting agencies provides some measure of an agency's

reliability.

Section 602.23 Application of Standards

Current regulations require accrediting agencies to maintain a

systematic program of review designed to assess the validity and

reliability of their criteria, procedures, and standards and their

relevance to the educational and training needs of affected students.

As this requirement is fundamental to sound accrediting practice, there

was consensus among negotiators that it should continue to be part of

any regulations governing the accrediting agency recognition process.

However, the language of the requirement has been changed in the

proposed regulations from the language of the current regulations in

response to the non-Federal negotiators' concerns about various

technical interpretations of the words ``validity and reliability.''

The substance of the requirement, as expressed in Sec. 602.23(b)(5), is

unchanged. The Secretary wishes to emphasize the importance of this

requirement, which is fundamental to the establishment of sound

standards for the accreditation process and the determination of

educational quality.

Section 602.24 Accreditation Processes

Section 496(c)(1) of the HEA requires that, in addition to the

announced on-site review that is part of the regular accreditation

process, an accrediting agency whose accreditation enables the

institutions it accredits to participate in programs authorized under

the HEA must conduct, some time during any accreditation or

preaccreditation period, at least one unannounced on-site review at

each institution that provides vocational education or training.

Accordingly, in Sec. 602.24(c) of the proposed regulations, the

Secretary requires unannounced site visits by these accrediting

agencies. However, as noted in the discussion of Sec. 602.2, if the

term ``vocational education'' is interpreted literally, it could be

viewed as including all postsecondary education, and, under this

interpretation, accrediting agencies would have to conduct unannounced

site visits to all institutions. To avoid this outcome, in

Sec. 602.24(c) of the proposed regulations, the Secretary limits the

type of vocational education programs that trigger unannounced visits

to the prebaccalaureate level. As non-Federal negotiators were divided

among themselves as to the definition of vocational education, they did

not reach consensus on this point.

As mentioned in the discussion under Sec. 602.2, the Secretary is

considering an alternative definition of prebaccalaureate vocational

education that would not require unannounced site visits to degree-

granting institutions whose prebaccalaureate vocational programs lead

to the associate degree. This would minimize the burden of the new

requirement for unannounced visits, hopefully without any adverse

consequences. The Secretary invites comments on this approach and

suggestions for alternative ways of reducing the burden without

eliminating from review those institutions offering vocational

education that have abused the Title IV program.

Section 602.25 Additions to or Substantive Changes in Educational

Programs

Section 496(a) of the HEA authorizes the Secretary to recognize

accrediting agencies that are reliable authorities as to the quality of

the education or training provided by the institutions or programs they

accredit. Section 496 does not specifically address the manner in which

accrediting agencies evaluate either new programs begun by institutions

after their last grant of accreditation or preaccreditation or programs

that are substantially changed after the institution is accredited or

preaccredited. However, the Secretary believes that an agency cannot be

a reliable authority as to the quality of education or training offered

by an institution if the agency does not assess those new or

substantively changed programs. Accordingly, in Sec. 602.25 of the

proposed regulations, the Secretary establishes the framework for a

policy that accrediting agencies must have to address additions to and

substantive changes in educational programs. Specifically, in

Sec. 602.25(a) the Secretary proposes that an accrediting agency may

include within its previous grant of accreditation or preaccreditation

an educational program that an institution initially offers or

substantively changes after that grant of accreditation or

preaccreditation only if the agency specifically evaluates and approves

the program. The Secretary proposes this requirement based upon the

past actions of some accrediting agencies.

Certain accrediting agencies that accredit institutions offering

specific prebaccalaureate vocational education programs have, on

occasion, extended their accreditation to additional programs that

these institutions offered after being accredited, without evaluating

the quality of those additional programs, even though the additional

programs were totally unrelated to the programs initially accredited.

For example, an accrediting agency that accredited an institution that

offered cosmetology courses extended its accreditation to additional

programs that the institution subsequently offered in jet airplane

mechanics and air conditioning and refrigeration without ever

evaluating the quality of those additional programs. The Secretary

believes that this practice violates the purpose of accreditation.

On the other hand, the Secretary believes that prior approval of

programs is not necessary in all circumstances, a belief shared by

negotiators, although no consensus was reached as to the circumstances.

In Sec. 602.25(b) the Secretary proposes an exception to this

requirement if the institution notifies the accrediting agency of the

new or substantially changed program before it is offered, and the new

or substantially changed program does not provide prebaccalaureate

vocational education. The Secretary proposes this exception because the

Secretary believes that new bachelor and higher degree programs are

thoroughly reviewed by a variety of entities before they may be

offered. Most institutional accrediting agencies, for example, require

institutions to have thorough internal reviews of all new degree

programs by curriculum committees, governing boards, and other

appropriate units within the institution and to obtain appropriate

state authorization for those new degree programs before they are

offered. However, even though an accrediting agency may not be required

by these proposed regulations to evaluate a new or substantially

changed program before it is offered under Sec. 602.25(b), accrediting

agencies are certainly free, and encouraged, to do so under their own

policies.

The Secretary acknowledges that the task of deciding which programs

should require preapproval by accrediting agencies is a difficult one

and seeks suggestions from commenters. For commenters who suggest that

preapproval be allowed for prebaccalaureate vocational education

programs that are ``related'' to a previously accredited program, the

Secretary requests specific suggestions on how to determine whether the

new or substantially changed program is ``related'' to the other

program.

The Secretary notes that most accrediting agencies already have a

definition of ``substantive change'' but observes that there is

considerable variation among agencies as to what this term means. Most

agencies' definitions generally include the following kinds of changes:

a substantial change in the length of a program, its content, or both,

as, for example, when a secretarial program increases from 1200 clock

hours to 1600 clock hours to provide a 400-hour component in office

automation; a change from a traditional 15-week semester format to an

alternate weekend format; and a change from a certificate program to an

associate degree program. The Secretary seeks to require preapproval

for these and similar types of changes and proposes that an agency's

definition of a substantive change in an educational program include,

at a minimum, a substantial change in the number of clock or credit

hours, the number of weeks, or the content of a program, a change in

the type of program offered, a change in the credential awarded for

completion of the program, and a change in the manner in which the

institution measures the educational quantity of the program from clock

hours to credit hours. The Secretary invites comments on this approach

as well as suggestions for alternative approaches to defining which

types of programs require preapproval.

Finally, the Secretary acknowledges that the proposed requirement

for a substantive change policy may result in increased costs to

agencies and, in turn, institutions. However, for the reasons noted

above, the Secretary believes the benefits far outweigh the costs. The

Secretary also wishes to note that there was general consensus among

non-Federal negotiators about the appropriateness of including a

substantive change requirement in the proposed regulations. However,

not all of the negotiators agreed that the approach proposed by the

Secretary was appropriate.

Section 602.26 Required Accreditation Standards

Section 496 of the HEA authorizes the Secretary to recognize

accrediting agencies that are reliable authorities as to the quality of

the education or training provided by the institutions or programs only

if the agencies satisfy standards established by the Secretary. Section

496(a) specifically requires the Secretary to establish standards and

requires the standards to include ``an appropriate measure or measures

of student achievement.''

Section 496(a)(5) of the HEA provides that the Secretary's

standards for recognition of accrediting agencies must require that an

accrediting agency establish accreditation standards that assess 12

areas pertaining to the institutions or programs it accredits. These

areas are: (1) Curricula; (2) faculty; (3) facilities, equipment and

supplies; (4) fiscal and administrative capacity as appropriate to the

specified scale of operation; (5) student support services; (6)

recruiting and admissions practices, academic calendars, catalogs,

publications, grading and advertising; (7) program length and tuition

and fees in relation to the subject matters taught and the objectives

of the degrees or credentials offered; (8) measures of program length

in clock hours or credit hours; (9) success with respect to student

achievement in relation to the institution's mission; (10) default

rates in student loan programs under Title IV of the HEA; (11) record

of student complaints received by, or available to, the accrediting

agency; and (12) the institution's compliance with its program

responsibilities under title IV of the HEA. However, under section

496(a)(5), accrediting agencies that have as their principal purpose

the accrediting of institutions of higher education or higher education

programs to enable them to participate in Federal programs not

authorized under the HEA are exempt from the requirement to have

standards for the areas listed in (7), (8), (9), (10), and (12).

The Secretary notes that most accrediting agencies already have

standards addressing many of these areas. However, to the extent that

an agency does not have standards for all of them, there is an

increased cost to that agency to develop and implement the new

standards. The Secretary believes that the proposed regulations

minimize the increased cost by allowing agencies maximum flexibility to

set their standards to best suit their needs and the needs of the

institutions or programs they accredit.

If the ultimate purpose of section 496 is to authorize the

Secretary to recognize accrediting agencies that are reliable

authorities as to the quality of the education or training provided by

the institutions or programs they accredit, so that recognized agencies

only accredit institutions or programs of demonstrated quality, then

the Secretary believes that each agency's standard for a particular

area listed in section 496(a)(5) must evaluate the quality of the

effort the institution or program is making in that area.

Accordingly, in Sec. 602.26 of the proposed regulations, the

Secretary requires accrediting agencies to have standards assessing the

12 areas cited in section 496(a)(5) of the HEA. In Sec. 602.26(a)(3),

the Secretary exempts accrediting agencies whose accreditation enables

their institutions or programs to participate only in Federal programs

not authorized under the HEA from having to establish standards for the

areas listed under (7), (8), (10), and (12). However, the Secretary

does not exempt these agencies from the requirement to establish

standards that assess success with respect to student achievement. The

Secretary believes that the standards specified in Sec. 602.26(b)(9)

fulfill the requirement in section 496(a) of the HEA that the Secretary

recognize accrediting agencies that meet the Secretary's standards,

which must include ``an appropriate measure or measures of student

achievement.'' Furthermore, the Secretary believes that any

determination by an accrediting agency that the program or institution

it accredits provides quality education or training must be based, in

part, on an assessment of the achievement of students enrolled in the

institution or program. The Secretary notes that the exemption provided

in section 496(a)(5) of the HEA for certain standards was not discussed

during negotiated rulemaking because it was added as a technical

legislative amendment after the negotiations took place.

Each of the 12 required standards is discussed below. The title for

each standard is based on the statutory language used in section

496(a)(5) for that standard. Unless otherwise noted, consensus was

reached among negotiators as to language for each of the standards.

The proposed regulatory language in Sec. 602.26(b) for standards

addressing areas (1), (2), (3), and (5) follows the recommendations of

negotiators and simply restates the law. These four provisions require

that, to be recognized by the Secretary, an accrediting agency must

adopt standards under which it evaluates the quality of an

institution's or program's curricula; faculty; facilities, equipment,

and supplies; and student support services. The Secretary has

reexamined the manner in which these four standards are described in

the proposed regulations and believes that it may be more useful to

provide guidance as to the manner in which quality may or should be

discussed under these standards than to simply restate the law. The

Secretary requests comment on this matter. To assist commenters in this

regard, for each of the four areas, the Secretary examined the

standards of several accrediting agencies to determine how these

agencies addressed quality standards for those areas and presents the

results of that examination under the appropriate topic. The Secretary

invites comments on those approaches and additional suggestions for

focusing on quality assessment.

Section 602.26(b)(1) Curricula. The Secretary found that the

standards most accrediting agencies have adopted to evaluate an

institution's or program's curricula relate to the overall quality of

the curricula, its appropriateness in light of an institution's or

program's educational objectives and the specific degrees or

certificates awarded, and the mechanisms the institution or program

uses to evaluate the curricula and make modifications. The Secretary

considers all of these to be elements of good practice in the

assessment of an institution's or program's curricula. Accordingly, the

Secretary requests specific comment as to whether the manner in which

these agencies handle standards for curricula would be a useful

addition to these regulations. The Secretary also invites additional

comments regarding other elements that the Secretary should include in

the evaluation of accrediting agencies for compliance with this

requirement.

Section 602.26(b)(2) Faculty. The Secretary found that the

standards most accrediting agencies have adopted to evaluate an

institution's or program's faculty relate to the overall quality of the

faculty, the extent to which the institution or program relies on part-

time faculty to teach students, and the effectiveness of the teaching

provided by all faculty. Some agencies also include in their standards

an assessment of the procedures an institution or program uses for the

hiring, promotion, evaluation, and professional development of faculty,

while other agencies merely examine these issues in light of whether

the institution's or program's policies provide for the fair and

equitable treatment of faculty. The Secretary considers all of these to

be elements of good practice in the assessment of an institution's or

program's faculty. Accordingly, the Secretary requests specific comment

as to whether the manner in which these agencies handle standards for

faculty would be a useful addition to these regulations. The Secretary

also invites additional comments regarding other elements that the

Secretary should include in the evaluation of accrediting agencies for

compliance with this requirement.

Section 602.26(b)(3) Facilities, equipment, and supplies. The

Secretary found that the standards most accrediting agencies have

adopted to evaluate an institution's or program's facilities,

equipment, and supplies relate to the overall quality of these support

areas. Specifically, the Secretary found that most accrediting agencies

assess, in light of an institution's or program's educational

objectives, the adequacy and appropriateness of: libraries, learning

resource centers, and other academic and instructional support

facilities; the equipment and supplies that support the instructional

program; and any other physical resources the institution or program

uses to achieve its educational objectives. The Secretary considers all

of these elements to be good practices for the assessment of

facilities, equipment, and supplies. Accordingly, the Secretary

requests specific comment as to whether the manner in which these

agencies handle standards for this area would be a useful addition to

these regulations. The Secretary also invites additional comments

regarding other elements that the Secretary should include in the

evaluation of accrediting agencies for compliance with this

requirement.

Section 602.26(b)(4) Fiscal and administrative capacity as

appropriate to the specified scale of operations. Section 496(a)(5)(D)

requires an accrediting agency to have standards that address the

fiscal and administrative capacity of an institution or program in

relation to its scale of operation. It is the Secretary's view that the

purpose of this requirement is to enable the agency to determine

whether the institution or program is fiscally and administratively

sound and will likely remain so for a future period. Because the

financial condition of an institution is subject to change, the

Secretary proposes that an agency must make this determination each

time it grants accreditation, preaccreditation, or reaccreditation. The

Secretary also proposes that an agency must examine each institution's

financial capacity in sufficient depth on an annual basis to determine

if the financial capacity of the institution threatens the ability of

the institution or program to continue to meet the agency's standards

and, if so, to take appropriate follow-up action. The Secretary invites

comments as to whether this follow-up action should include notifying

the Secretary of the institution's financial condition.

The Secretary believes that the enhanced financial monitoring by

accrediting agencies that is required by these proposed regulations

will provide increased protection to students with regard to problems

arising from an institution's financial instability.

Section 602.26(b)(5) Student support services. The Secretary found

that the standards most accrediting agencies have adopted to evaluate

an institution's or program's student support services relate to the

overall quality and extent of the services provided and their

appropriateness in light of the institution's or program's mission and

the types of students it admits. The Secretary considers all of these

elements to be good practices for the assessment of student support

services. Accordingly, the Secretary requests specific comment as to

whether the manner in which these agencies handle standards for this

area would be a useful addition to these regulations. The Secretary

also invites additional comments regarding other elements that the

Secretary should include in the evaluation of accrediting agencies for

compliance with this requirement.

Section 602.26(b)(6) Recruiting and admission practices; and

academic calendars, catalogs, publications, grading, and advertising.

Section 496(a)(5)(F) requires an accrediting agency to have standards

that address an institution's or program's recruiting and admissions

practices, as well as its academic calendars, catalogs, publications,

grading, and advertising. The Secretary believes this statutory

provision contains two different standards. One standard relates to the

appropriateness of the institution's or program's recruiting and

admission practices. Under this standard, the agency must determine

whether an institution's practices are reasonable in light of the

institution's or program's educational mission.

The other standard relates to the institution's academic calendars,

catalogs, publications, grading, and advertising. Under that standard,

which is in the nature of consumer protection, the agency must evaluate

whether those items are accurate, complete, and consistent with the

institution's actual practice.

Section 602.26(b)(7) Program length and tuition and fees in

relation to the subject matters taught and the objectives of the

degrees or credentials offered. Section 496(a)(5)(G) requires an

accrediting agency to have standards that address program length and

tuition and fees in relation to the subject matters taught and the

objectives of the degree or credential offered. It is the Secretary's

view that one of the purposes of this requirement is to eliminate

certain abuses that have been discovered at institutions participating

in Title IV, HEA programs.

These abusive practices fall into three main categories. One

category involves accredited institutions that offer prebaccalaureate

vocational programs and charge an excessive amount of tuition and fees

for programs that lead to dead end or very low-paying jobs. In some

cases, the tuition and fees for a short-term program to prepare

students for a particular job exceeded the annual income that a person

employed in that job could expect to earn.

Another category involves accredited institutions that offer

prebaccalaureate vocational education programs and inflate either the

clock or credit hours for the program or the length of the program

without educational justification, simply to increase the amount of SFA

funds these institutions may receive. The third category involves

accredited institutions that offer prebaccalaureate vocational

education that are simply too short to be able to provide training that

has any value in the workplace.

The Secretary proposes to address the statutory requirement for

standards related to program length and tuition and fees by requiring

an accrediting agency to establish minimum and maximum program lengths

for prebaccalaureate vocational programs. In this context, program

length means both the number of clock hours or credit hours in a

program and the number of weeks that a program is offered. The

Secretary invites specific comments with regard to this requirement.

The topic of standards for establishing minimum and maximum program

lengths was not discussed during the negotiated rulemaking sessions,

and the Secretary invites comments on this topic as well.

During the negotiated rulemaking sessions, consensus was reached on

various factors that should be considered when an agency establishes

its standard for program length in relation to tuition and fees. These

factors are listed under Sec. 602.26(b)(7) (i), (ii), (iii), and (iv).

The Secretary has reconsidered this matter and now proposes two

additional factors. The first concerns any applicable Federal statutes

and regulations. The Secretary does not believe the addition of a

requirement for agencies to take into account applicable statutes and

regulations when developing their standards goes beyond the intent of

the HEA because it does not require agencies to adopt the Federal

policies but simply to take them into account. The second factor

concerns the relationship between tuition and fees for a

prebaccalaureate vocational program and the remuneration that a

graduate of that program can reasonably be expected to receive. The

Secretary is concerned about this issue for this type of program

because the very purpose of a prebaccalaureate vocational program is to

prepare a student for gainful employment in a recognized occupation.

Moreover, the Secretary is concerned that tuition and fees being

charged for prebaccalaureate vocational programs may be excessive given

the type of job for which a graduate of the program qualifies.

Accordingly, the Secretary requests specific comment regarding

standards that address tuition and fee charges for a prebaccalaureate

vocational program vis-a-vis the remuneration that graduates of a

program may receive.

The Secretary requests comments on the various factors proposed for

standards that assess program length and tuition and fees. In calling

for comments with regard to this standard, the Secretary wishes to

remind commenters that a violation of a standard does not necessarily

preclude an agency from accrediting an institution or program. The

violation would, however, at least require the institution to justify

its tuition and fee charges to the agency.

The Secretary acknowledges that the development of standards for

this area involves very complex issues. For the purpose of stimulating

discussion in this area, the Secretary offers the following possible

approaches to the development of standards. Under one approach, the

standard might require that annualized tuition and fees for a program

not exceed a percentage of the annualized minimum wage. Under another

approach, the standard might require that annualized tuition and fees

for a program not exceed a percentage of the program's graduates'

average earnings for their first year of employment. Under still

another approach, annualized tuition and fees for a program could not

exceed a percentage of the average annualized wages, as reported by the

U.S. Bureau of Labor Statistics, in occupations for which the program

prepares students. In suggesting possible approaches to the

establishment of standards for this area, the Secretary reminds

commenters of the difficulty in obtaining employment information,

including salaries and wages, from graduates of an institution for

periods beyond the first year after graduation.

The Secretary is considering establishing in other regulations

requirements governing program length and tuition and fees for programs

that are eligible to participate in the SFA programs. Accordingly, if

those regulatory requirements are established, the Secretary would

consider requiring an accrediting agency to notify the Secretary if it

knows that an institution's program is too long or too short under that

requirement, or if it knows that an institution's tuition and fee

charges violate that other requirement. The Secretary invites comments

about the feasibility of adding this notification requirement or any

alternative method of obtaining this information.

Finally, the Secretary notes that the requirement to establish a

standard for program length and tuition and fees applies only to those

accrediting agencies whose accreditation enables the institutions they

accredit to participate in programs authorized under the HEA.

Section 602.26(b)(8) Measures of program length in clock hours or

credit hours. Section 496(a)(5)(H) requires an accrediting agency to

have standards that address measures of program length in clock or

credit hours. It is the Secretary's view that the purpose of this

requirement is to enable the agency to determine if an institution take

into proper account, as appropriate, factors such as program objectives

and content, the types and locations of instructional delivery, and the

knowledge and skills necessary for students to reach competence in the

field being taught when determining the length of its programs in clock

or credit hours. General agreement was reached by negotiators with

regard to the substance of this standard. However, the Secretary has

reconsidered this matter and now proposes an additional factor: any

applicable Federal statutes and regulations. The Secretary does not

believe the addition of a requirement for agencies to take into account

applicable statutes and regulations when developing their standards

goes beyond the HEA because it does not require agencies to adopt the

Federal policies but simply to take them into account. The Secretary

invites comments on this proposed addition.

To the extent that the Secretary regulates this area in other

regulations governing the SFA programs, these regulations may need to

be modified. Moreover, as indicated with regard to Sec. 602.26(b)(7),

if those other regulations are established, the Secretary may consider

requiring an accrediting agency to notify the Secretary if it knows

that an institution's measure of the number of credits hours in its

programs does not satisfy that other regulatory requirement. The

Secretary invites comments about the feasibility of adding this

notification requirement or on alternative methods of obtaining this

information.

The Secretary notes that the requirement to establish a standard

for measures of program length in clock or credit hours applies only to

those accrediting agencies whose accreditation enables the institutions

they accredit to participate in programs authorized under the HEA.

Section 602.26(b)(9) Success with respect to student achievement in

relation to mission. Section 496(a)(5)(I) of the HEA requires an

accrediting agency to have standards that address success with respect

to student achievement in relation to mission, including, as

appropriate, consideration of course completion rates, pass rates on

State licensing examinations, and job placement rates. It is the

Secretary's view that standards for student achievement are the most

important of all accreditation standards because the true success of an

institution or program is measured by the success of its students. For

institutions that offer prebaccalaureate vocational programs, the

Secretary proposes to require agencies to establish minimum

quantitative standards for completion rates, job placement rates, and

pass rates on State licensing examinations for those programs, since

gainful employment is the purpose of those programs. The Secretary

proposes this additional requirement for institutions offering

prebaccalaureate vocational education programs because, as noted in the

discussion under Sec. 602.26(b)(7), these institutions have often

engaged in abusive practices. The Secretary notes that the concept of

minimum quantitative standards, even when restricted to

prebaccalaureate vocational education, was not supported by non-Federal

negotiators.

The Secretary acknowledges that there are many possible approaches

to the establishment of the standards for measuring success in

prebaccalaureate vocational programs, both in terms of the information

collected and the minimum standard selected. For example, if an

institution's students are mainly first-time, full-time students in

short-term programs, agencies could use data collected by institutions

under the Student Right-to-Know and Campus Security Act of 1990 for

calculating completion rates. Minimum job placement rate standards

might be developed using three-year moving averages, adjusted for

regional unemployment rates as computed by the Bureau of Labor

Statistics of the U.S. Department of Labor. Further, a job placement

rate could be calculated only for those jobs in the areas for which

training was offered, all jobs obtained by graduates, or a combination

of the two.

The Secretary specifically invites suggestions for standards in

this area. Further, the Secretary understands that developing

appropriate standards in these areas is not easy and requests

suggestions with regard to specific rates for the standards in these

areas. The Secretary suggests as a reference point for completion and

placement rates the statutory requirement, contained in section

481(e)(2) of the HEA, that, to be an eligible short-term vocational

program under the SFA programs, a program must have a 70 percent

completion and a 70 percent placement rate.

Section 602.26(b)(10) Default rates in the student loan programs

established under Title IV of the HEA. Section 496(a)(5)(J) of the HEA

requires an accrediting agency to have standards that address an

institution's default rates in the student loan programs established

under Title IV of the HEA. It is the Secretary's view that the purpose

of this requirement is to enable the agency to determine if an

institution is out of compliance with its accrediting standards when

the institution's latest cohort default rate under the Federal Family

Education Loan (FFEL) programs exceeds a certain threshold or has

increased significantly over its previous rate. The Secretary proposes

to require an agency to conduct a review if an institution's latest

cohort default rate equals or exceeds 25 percent. The Secretary

establishes this rate as the trigger for review because that is the

rate, beginning in fiscal year 1994, i.e. October 1, 1993, at which an

institution will be disqualified from participating in the FFEL

programs. An accrediting agency is free, of course, to set its trigger

for review at a default rate below 25 percent.

The Secretary also is concerned that a significant change in an

institution's default rate could be an indication of other serious

problems that may affect the institution's compliance with an agency's

standards. For this reason, the Secretary proposes to require an agency

to conduct a review when the institution's latest cohort default rate

increases significantly over its rate the previous year. The Secretary

does not propose to define the term ``significant increase'' in the

proposed regulations but invites comments on an appropriate definition.

One possibility that the Secretary is considering is to require an

agency to conduct a review when the institution's default rate

increases by more than 50 percent from its previous rate, provided that

previous rate exceeds 10 percent. The Secretary believes that a cohort

default rate below 10 percent is not necessarily an indication that the

institution may be in violation of its accrediting agency's standards.

Therefore, this provision would apply only if the institution's latest

cohort default rate exceeds 15 percent and has increased by more than

50 percent from its previous rate. The Secretary invites comments on

this approach and other approaches that will provide guidance to

agencies on what constitutes a significant increase in default rate.

The Secretary notes that the requirement to establish a standard

for this area applies only to those accrediting agencies whose

accreditation permits the institutions they accredit to participate in

programs authorized under the HEA.

Section 602.26(b)(11) Record of student complaints received by, or

available to, an agency. Section 496(a)(5)(K) of the HEA requires an

accrediting agency to have standards that address the record of student

complaints received by, or available to, an agency concerning an

institution or program it accredits. It is the Secretary's view that

the purpose of this requirement is to enable an agency to focus its

evaluation of the institution or program on the matters that gave rise

to the student complaints when the agency undertakes its next

evaluation of the institution or program.

Section 602.26(b)(12) Compliance with an institution's program

responsibilities under Title IV of the Act. Section 496(a)(5)(L) of the

HEA requires an accrediting agency to have standards that address an

institution's compliance with its program responsibilities under Title

IV of the Act. It is the Secretary's view that an institution's failure

to comply with its Title IV responsibilities should be a factor in an

accrediting agency's determination as to whether that institution

should continue to be accredited by the agency. The Secretary

recognizes that accrediting agencies do not have the responsibility,

expertise, personnel, or time to evaluate, on a routine basis, whether

the institutions they accredit are in compliance with their Title IV

responsibilities. On the other hand, agencies may not ignore

information provided to them regarding the lack of compliance of those

institutions. Accordingly, the Secretary proposes that, in assessing an

institution's compliance under this standard, the agency relies on

documentation forwarded to it by the Secretary. The Secretary wishes to

make it clear that this section of the proposed regulations does not

require accrediting agencies to review an institution to determine

whether the institution is fulfilling its responsibilities under the

SFA programs, as, for example, by verifying that an institution is

calculating Pell distributions properly. Rather, the Secretary expects

agencies to use the information provided by the Secretary on the

institution to trigger a review of the institution for compliance with

agency standards if the documentation provided by the Secretary

indicates a problem that is related to one or more of the agency's

standards.

The Secretary notes that the requirement to establish standards for

this area applies only to those accrediting agencies whose

accreditation enables the institutions they accredit to participate in

programs authorized under the HEA.

Section 602.26(b)(13) The institution's practice of making refunds

to students. Under section 484B of the HEA, an institution

participating in the SFA programs must have a fair and equitable refund

policy. An institution's refund policy is judged to be fair and

equitable if it provides a refund in an amount of at least the largest

of the amounts provided under ``(1) the requirements of applicable

State law; (2) the specific refund requirements established by the

institution's nationally recognized accrediting agency and approved by

the Secretary; or (3) the pro rata refund calculation'' described

elsewhere in section 484B. To permit an institution to satisfy the fair

and equitable refund requirement using this criterion, the Secretary

proposes not to recognize an accrediting agency unless the agency has a

refund policy that provides for a fair and equitable refund to a

student of tuition, fees, and other institutional charges. Thus, the

Secretary's recognition of an agency means that the Secretary has

approved that agency's refund policy. Non-Federal negotiators objected

to the inclusion of this requirement in the proposed regulations on the

grounds that section 496(g) of the HEA explicitly states that the

Secretary may not establish standards for accrediting agencies that are

not required by section 496. The Secretary believes, however, that the

inclusion of a requirement for a standard addressing an institution's

refund policy in the proposed regulations is necessary to comply with

section 484B of the HEA.

Section 602.26(c) Time limit on correcting deficiencies. In

Sec. 602.26(c), the Secretary proposes that, when an institution or

program fails to meet an agency standard, the agency may permit the

institution or program a period, which may not exceed 18 months, during

which time it must take corrective action to bring itself back into

compliance with the standard. The agency is free to set the time frame

for coming into compliance at less than 18 months. If the institution

or program fails to bring itself into compliance during the specified

period, the agency must take adverse action, unless it finds that the

time frame for achieving compliance should be extended for cause. Of

course, the agency may take adverse action against an institution or

program, either immediately or in less than 18 months, without offering

the institution or program the opportunity to take corrective action if

the agency believes that the adverse action is necessary.

The Secretary believes that the 18-month time frame is necessary to

ensure that institutions and programs make serious efforts to improve

the quality of their offerings and to ensure that accrediting agencies

take adverse actions when institutions fail to make those efforts.

Accordingly, the Secretary anticipates that extensions beyond 18 months

for cause will not be routinely granted. Additionally, the Secretary

anticipates that for violations that are easily correctable, the

appropriate period will be significantly less than 18 months.

The Secretary is considering adding to this section a requirement

that an accrediting agency must take action not only if it determines

that an institution or program is not in compliance with a standard but

also if it determines that an institution or program may currently meet

the standard but is unlikely to be able to continue to meet the

standard. The Secretary invites comments on this possible addition to

the section.

Section 602.27 Required Operating Procedures

Section 496(c) of the HEA requires accrediting agencies whose

accreditation enables institutions to participate in Title IV, HEA

programs to take special action whenever institutions establish new

branch campuses or undergo changes in ownership that result in changes

in control. Accordingly, in Sec. 602.27 of the proposed regulations,

the Secretary reiterates the requirement for special action set forth

in that section. For purposes of this section, the Secretary notes that

the term ``branch campus'' includes any ``additional location,'' which

the Secretary defines to be a location that is geographically apart

from the main campus, that has its own separate administrative

structure, services, and facilities, and at which the institution plans

to offer a complete educational program. The Secretary believes the

inclusion of additional locations in this requirement is consistent

with the intent of Congress. The close scrutiny of branch campuses and

additional locations includes the requirement contained in sections

496(c)((2) and (3) to approve a business plan for a branch prior to its

opening; to extend accreditation to the branch only after determining

that it has sufficient educational, financial, operations, management,

and physical resources to provide education or training consistent with

the accreditation standards; and to conduct on-site reviews within six

months for all new branches and all institutions that change ownership

that results in a change in control.

Another requirement of section 496(c) of the HEA is that any

institution participating in Title IV, HEA programs that enters into a

teach-out agreement with another institution must agree to submit to

its accrediting agency for approval a teach-out agreement that is

consistent with applicable standards and regulations. In Sec. 602.27(b)

of the proposed regulations, the Secretary reiterates this requirement.

Section 602.28 Due Process for Institutions and Programs

Section 496(a)(6) of the HEA requires an accrediting agency seeking

recognition by the Secretary to use procedures throughout its

accreditation process that satisfy due process requirements.

Accordingly, in Sec. 602.28 of the proposed regulations, the Secretary

sets out this due process requirement. Specifically, in Sec. 602.28 the

Secretary requires an agency to set forth in writing all of its

procedures governing its accreditation and preaccreditation processes,

including its processes for the appeal of an adverse action it takes

against an institution or program, to notify an institution or program

in writing of any adverse action the agency takes against it, and to

afford the institution or program the opportunity to appeal the adverse

action. In accordance with section 496(a)(6)(D) of the HEA, in

Sec. 602.28(b)(5) the Secretary specifically requires that an agency

permit an institution or program the right to representation by counsel

during an appeal of an adverse action.

The Secretary acknowledges that the cost to an agency when an

institution or program appeals an adverse action can be substantial. To

minimize this cost, the Secretary has included in Sec. 602.28(b)(5) a

provision, suggested by non-Federal negotiators, that agencies be given

the discretion to determine when an appeal may be made only in writing.

Section 602.29 Notification of Accrediting Decisions

Section 496(a)(7) of the HEA requires accrediting agencies to

notify the Secretary, the appropriate State postsecondary review

entities, and the public of any final adverse accrediting action

regarding an institution or program. Accordingly, in Sec. 602.29(a) of

the proposed regulations, the Secretary establishes this notification

requirement. The Secretary proposes an additional requirement in

Sec. 602.29(a) that is not specified in the law: that accrediting

agencies notify other appropriate accrediting agencies of all final

adverse actions. The Secretary believes this additional notification

requirement, which was suggested after the negotiated rulemaking

sessions by one of the non-Federal negotiators, is necessary because of

the requirement, implied in section 496(l)(2) of the HEA, that an

accrediting agency must take into account the adverse accrediting

actions of other accrediting agencies in making its own accrediting

decisions.

Section 496(a)(8) of the HEA requires accrediting agencies to make

available to the Secretary, the appropriate State postsecondary review

entity and, upon request, the public a brief statement supporting any

decision to deny, withdraw, suspend, or terminate the accreditation or

preaccreditation of an institution or program, together with the

comments of the affected institution or program concerning that

decision. Accordingly, in Sec. 602.29 of the proposed regulations, the

Secretary establishes this requirement. To ensure that the statement is

made available in a timely fashion, the Secretary proposes to require

that the statement be made available within 60 days of an agency's

final decision.

The Secretary is considering adding to this section a requirement

that agencies notify the Secretary prior to taking final adverse action

against an institution when the information that caused the agency to

take the adverse action may relate to the institution's continued

participation in Title IV, HEA programs, as, for example, in the case

of fraud or gross mismanagement of Federal funds. The Secretary is

considering this additional notification requirement because of the

length of time it often takes agencies to reach a final adverse

decision, due to an institution's rights under due process, even when

circumstances indicate a gross violation of agency standards. The

Secretary invites comments on this additional requirement and

alternative approaches to notifying the Secretary when an agency has

such serious concerns about an institution that it initiates an adverse

action.

Finally, the Secretary is considering adding to this section a

requirement that an accrediting agency must notify the Secretary and

the appropriate State postsecondary review entity of any final adverse

accrediting action at the same time the agency notifies the institution

of this action. The Secretary believes this addition would prevent

excessive draw-down of SFA funds by an institution after it loses

accreditation. The Secretary notes that, while this topic was not

discussed during negotiated rulemaking, many negotiators have told

Department staff that this additional requirement would not present an

undue hardship to their agencies. The Secretary invites comments on

this proposed additional requirement and suggestions for alternative

approaches to prevent unwarranted expenditure of SFA funds by

institutions that have lost accreditation.

Section 602.30 Regard for Decisions of States and Other Accrediting

Agencies

Section 496(l)(2) of the HEA implies that accrediting agencies are

responsible for knowing what actions other recognized accrediting

agencies have taken against an institution. The Secretary addresses

this issue in Sec. 602.30 by proposing that all agencies, including

those that accredit only programs, take into account the decisions of

States and other accrediting agencies when making any accreditation or

preaccreditation decision involving an institution or program. The

Secretary believes the inclusion of programmatic accrediting agencies

in this requirement is essential to ensure that the problems that

caused a programmatic accrediting agency to take adverse action against

a program within an institution are promptly reviewed by the

institutional accrediting agency that accredits the institution to

determine if the institution is still in compliance with the latter

agency's standards.

In Sec. 602.30(a)(3) of the proposed regulations, the Secretary

requires that agencies routinely share with other appropriate

recognized accrediting agencies and State agencies information about

any actions they have taken regarding an institution's or programs's

accreditation or preaccreditation. The Secretary is considering adding

to this section a requirement that agencies share information about

actions they are taking or are about to take regarding an institution's

or program's accreditation or preaccreditation. The Secretary invites

comments on this additional requirement and alternative approaches to

sharing information with the other members of the triad regarding

actions either under way or planned by the agency with respect to an

institution or program.

Finally, in Sec. 602.30(b) the Secretary proposes that agencies are

subject to the requirements in Sec. 602.30(a) if they ``knew, or should

have known,'' of the actions being taken by another recognized

accrediting agency or State agency. The Secretary believes that it is

reasonable to expect an agency to have known of these actions if there

is evidence that the other agencies have sent information concerning

these actions to the agency.

Other Issues

The following discussion addresses other issues either discussed by

negotiators or raised by the Secretary after the negotiations. None of

the issues, however, involves a significant change from the current

policies and procedures governing the accrediting agency recognition

process, and thus none warrants inclusion in the previous section.

Section 602.2 Definitions

Accrediting agency. While the definition in the proposed

regulations eliminates the language in the current regulations

describing the type of entity that may comprise an agency, the

Secretary wishes to make clear that the legal entity that is an

accrediting agency may be an association, council, commission, or

corporation.

Designated Department official. While this term is not used in the

current regulations, the Secretary proposes to use it in subpart B on

recognition and termination procedures to describe much of what has, in

fact, been the Department's practice with respect to the accrediting

agency recognition process. For example, the Assistant Secretary for

Postsecondary Education has, on occasion, presented the summary of the

preliminary analysis of an accrediting agency to the Advisory

Committee; on other occasions, the Assistant Secretary has delegated

that responsibility to a member of the Assistant Secretary's staff.

After the Advisory Committee meeting, the Assistant Secretary has

routinely forwarded to the Secretary the Advisory Committee's

recommendation on an agency's application for recognition, along with

the Assistant Secretary's recommendation. Finally, the Assistant

Secretary has routinely advised the Secretary on issues related to the

recognition of agencies. The Secretary believes that the inclusion of

the term ``designated Department official'' and its use throughout

subpart B clarifies the longstanding involvement of individuals other

than the Secretary in the accrediting agency recognition process.

Representative of the public. The Secretary wishes to make clear

that under an agency's policy on conflicts of interest, a

representative of the public may not participate in any accrediting

decisions pertaining to an institution or program with which he or she

may have any direct or indirect affiliation.

Section 602.21 Administrative and Fiscal Responsibility

Consensus was reached by negotiators regarding the provisions

specified in this section for demonstrating that an accrediting agency

has the necessary administrative and fiscal resources to carry out its

accrediting responsibilities. However, the Secretary is concerned that

the provisions contained in this section do not adequately address

whether an agency's personnel and fiscal resources will continue to be

adequate during any recognition period granted. The Secretary invites

suggestions on how to address this concern.

Executive Order 12866

These proposed regulations have been reviewed in accordance with

Executive Order 12866. An assessment of the potential costs and

benefits of the various requirements contained in the proposed

regulations has been incorporated into the relevant sections of this

preamble. The Secretary notes that, as these proposed regulations were

subject to negotiated rulemaking, the costs and benefits of the various

requirements were discussed thoroughly by negotiators. The resultant

consensus reached on a particular requirement reflected agreement on

the best possible approach to that requirement in terms of cost and

benefit.

Regulatory Flexibility Act Certification

The Secretary certifies that these proposed regulations would not

have a significant economic impact on a substantial number of small

entities. The small number of entities that would be affected by these

proposed regulations are accrediting agencies that apply for

recognition by the Secretary. The regulations would not have a

significant economic impact on the institutions affected because the

regulations would not impose excessive regulatory burdens or require

unnecessary Federal supervision. The regulations would impose the

minimum requirements needed to ensure the proper implementation of the

Secretary's statutory mandate to recognize accrediting agencies.

Paperwork Reduction Act of 1980

Sections 602.4, 602.10, 602.26, and 602.27 contain information

collection requirements. In addition, section 602.21(b)(7) contains

specific record retention requirements. As required by the Paperwork

Reduction Act of 1980, the Department of Education will submit a copy

of these sections to the Office of Management and Budget for its

review. (44 U.S.C. 3504(h))

These proposed regulations contain substantial information

collection requirements for accrediting agencies applying for

recognition by the Secretary, as well as additional requirements for

recognized agencies during their recognition period. The Department

needs and uses the information collected to determine whether an agency

seeking recognition by the Secretary meets the requirements for

recognition and whether, if the agency is recognized, it continues to

operate in compliance with the requirements for recognition throughout

its recognition period.

Organizations and individuals desiring to submit comments on the

information collection requirements should direct them to the Office of

Information and Regulatory Affairs, OMB, room 3002, New Executive

Office Building, Washington, DC 20503; Attention: Daniel J. Chenok.

Invitation to Comment

Interested persons are invited to submit comments and

recommendations regarding these proposed regulations.

All comments submitted in response to these proposed regulations

will be available for public inspection, during and after the comment

period, in room 3069, ROB-3, 7th & D Streets, SW., Washington, DC,

between the hours of 8:30 a.m. and 4 p.m., Monday through Friday of

each week except Federal holidays.

To assist the Department in complying with the specific

requirements of Executive Order 12866, the Secretary invites comments

on whether there may be further opportunities to reduce any potential

costs or increase potential benefits resulting from these proposed

regulations without impeding the effective and efficient administration

of the accrediting agency recognition process.

Assessment of Educational Impact

The Secretary particularly requests comments on whether the

proposed regulations in this document would require transmission of

information that is being gathered by or is available from any other

agency or authority of the United States.

List of Subjects in 34 CFR Part 602

Colleges and universities, Education, Reporting and recordkeeping

requirements.

[Catalog of Federal Domestic Assistance Number does not apply.]

Dated: January 14, 1994.

Richard W. Riley,

Secretary of Education.

The Secretary proposes to amend title 34 of the Code of Federal

Regulations by revising part 602 to read as follows:

PART 602--SECRETARY'S PROCEDURES AND CRITERIA FOR THE RECOGNITION

OF ACCREDITING AGENCIES

Subpart A--General Provisions

Sec.

602.1 Purpose.

602.2 Definitions.

602.3 Organization and membership.

602.4 Submission of information to the Secretary by recognized

accrediting agencies.

Subpart B--Recognition and Termination Procedures

602.10 Application for recognition.

602.11 Preliminary review by the Secretary.

602.12 Review by the National Advisory Committee on Institutional

Quality and Integrity.

602.13 Review and decision by the Secretary.

602.14 Limitation, suspension, or termination of recognition.

602.15 Requests for reconsideration of the Secretary's decisions.

602.16 Appeals procedures.

602.17 Publication of list of recognized agencies.

Subpart C--Criteria for Secretarial Recognition

602.20 Geographic scope of accrediting activities.

602.21 Administrative and fiscal responsibility.

602.22 Accreditation experience.

602.23 Application of standards.

602.24 Accreditation processes.

602.25 Additions to or substantive changes in educational programs.

602.26 Required accreditation standards.

602.27 Additional required operating procedures.

602.28 Due process for institutions and programs.

602.29 Notification of accrediting agency decisions.

602.30 Regard for decisions of States and other accrediting

agencies.

Authority: 20 U.S.C. 1058, 1061, 1085, 1088, 1099b, 1141, 1401,

2471, and 3381, unless otherwise noted.

Subpart A--General Provisions

Sec. 602.1 Purpose.

(a)(1) This part establishes procedures and criteria for the

Secretary's recognition of accrediting agencies. The purpose of the

Secretary's recognition of agencies is to assure that these agencies

are, for the purposes of the Higher Education Act of 1965, as amended

(HEA), or for other Federal purposes, reliable authorities as to the

quality of education or training offered by the institutions of higher

education or the higher education programs they accredit.

(2) The Secretary's recognition of an accrediting agency is based

on the Secretary's determination that the agency satisfies the

requirements of this part.

(b) The Secretary grants recognition only to those agencies that--

(1) Accredit institutions of higher education for the purpose of

enabling them to establish eligibility to participate in HEA programs;

or

(2) Accredit institutions of higher education or higher education

programs for the purpose of enabling them to establish eligibility to

participate in other programs administered by the Department or by

other Federal agencies.

(Authority: 20 U.S.C. 1099b)

Sec. 602.2 Definitions.

The following definitions apply to terms used in this part:

Accreditation means the status of public recognition that an

accrediting agency grants to an educational institution or program that

meets the agency's established qualifications and standards.

Accrediting agency or agency means a legal entity, or that part of

a legal entity, that conducts accrediting activities through voluntary,

non-Federal peer evaluations and makes decisions concerning the

accreditation or preaccreditation status of institutions, programs, or

both.

Act means the Higher Education Act of 1965, as amended.

Adverse accrediting action means the denial, withdrawal,

suspension, or termination of accreditation or preaccreditation, or any

comparable accrediting action an agency may take against an institution

or program, except that placing an institution or program on probation

or issuing a show cause order against an institution or program is not

an adverse accrediting action unless it is so defined by the

accrediting agency.

Advisory Committee means the National Advisory Committee on

Institutional Quality and Integrity.

Branch campus means a location of an institution of higher

education that is geographically apart from and independent of the main

campus of the institution. The Secretary considers a location of an

institution to be independent of the main campus if the location (1) is

permanent in nature; (2) offers courses in educational programs leading

to a degree, certificate, or other recognized educational credential;

(3) has its own faculty and administrative or supervisory organization;

and (4) has its own budgetary and hiring authority.

Designated Department official means the official in the Department

of Education to whom the Secretary has delegated the responsibilities

indicated in this part.

Institution of higher education or institution means an educational

institution that qualifies or may qualify as an eligible institution

under 34 CFR part 600.

Institutional accrediting agency means an agency that accredits

institutions of higher education.

Nationally recognized accrediting agency, nationally recognized

agency, or recognized agency means an accrediting agency that is

recognized by the Secretary under this part.

Part means part 602 of title 34 of the Code of Federal Regulations

governing the Secretary's procedures and criteria for the recognition

of accrediting agencies.

Preaccreditation means the status of public recognition that an

accrediting agency grants to an institution or program for a limited

period of time that signifies that the agency has determined that the

institution or program is progressing towards accreditation and is

likely to attain accreditation within a reasonable period of time.

Prebaccalaureate vocational education means vocational education

that leads to a certificate, degree, or other credential that is less

than a bachelor's degree.

Program means a postsecondary educational program offered by an

institution that leads to an academic or professional degree,

vocational certificate, or other recognized educational credential.

Programmatic accrediting agency means an agency that accredits

specific educational programs that prepare students for entry into a

profession, occupation, or vocation.

Representative of the public means a person who is not (1) an

employee, member of the governing board, owner, or shareholder of, or

consultant to, an institution or program that either is accredited by

the agency or has applied for accreditation; or (2) a member of any

trade association or membership organization related to, affiliated

with, or associated with the accrediting agency.

Secretary means the Secretary of the U.S. Department of Education

or any official or employee of the Department acting for the Secretary

under a delegation of authority.

State means a State of the Union, American Samoa, the Commonwealth

of Puerto Rico, the District of Columbia, Guam, the Trust Territory of

the Pacific Islands, the Virgin Islands, and the Commonwealth of the

Northern Mariana Islands.

Teach-out agreement means a written agreement between accredited

institutions that provides for the equitable treatment of students if

one of those institutions stops offering an educational program before

all students enrolled in that program complete the program.

Title IV, HEA program means any of the programs set forth in 34 CFR

668.1(c).

Vocational education means education or training that prepares

students for gainful employment in a recognized occupation.

(Authority: 20 U.S.C. 1099b)

Sec. 602.3 Organization and membership.

(a) The Secretary recognizes only the accrediting agencies

described in paragraph (b) of this section that--

(1) Accredit institutions of higher education or higher education

programs for the purpose described in Sec. 601.1(b); and

(2) Satisfy the criteria for Secretarial recognition contained in

subpart C of this part.

(b) The accrediting agencies referred to in paragraph (a) of this

section are--

(1) A State agency that--

(i) Has as a principal purpose the accrediting of institutions of

higher education, higher education programs, or both; and

(ii) Has been listed by the Secretary as a nationally recognized

accrediting agency on or before October 1, 1991;

(2) An accrediting agency that--

(i) Has a voluntary membership of institutions of higher education;

(ii) Has as a principal purpose the accrediting of institutions of

higher education to enable them to participate in programs authorized

under this Act; and

(iii) Satisfies the ``separate and independent'' requirements

contained in paragraph (c) of this section;

(3) An accrediting agency that--

(i) Has a voluntary membership; and

(ii) Has as its principal purpose the accrediting of higher

education programs, or higher education programs and institutions of

higher education to enable them to participate in Federal programs not

authorized under this Act; and

(4) An accrediting agency that, for purposes of determining

eligibility for Title IV, HEA programs--

(i)(A) Has a voluntary membership of individuals participating in a

profession; or

(B) Has as its principal purpose the accrediting of programs within

institutions that are accredited by another nationally recognized

accrediting agency; and

(ii)(A) Satisfies the ``separate and independent'' requirements

contained in paragraph (c) of this section; or

(B) Obtains a waiver from the Secretary under paragraph (e) of this

section of the ``separate and independent'' requirements contained in

paragraph (c) of this section.

(c) For purposes of this section, ``separate and independent''

means that--

(1) The members of the agency's decision-making body--who make its

accrediting decisions, establish its accreditation policies, or both--

are not elected or selected by the board or chief executive officer of

any related, associated, or affiliated trade association or membership

organization;

(2) At least one member of the agency's decision-making body is a

representative of the public, with no less than one-seventh of the body

consisting of representatives of the public;

(3) The agency has established and implemented guidelines for each

member of the decision-making body to avoid conflicts of interest in

making decisions;

(4) The agency's dues are paid separately from any dues paid to any

related, associated, or affiliated trade association or membership

organization; and

(5) The agency's budget is developed and determined by the agency

without review by or consultation with any other entity or

organization.

(d) The Secretary considers that any joint use of personnel,

services, equipment, or facilities by an accrediting agency and a

related, associated, or affiliated trade association or membership

organization does not violate the provisions of paragraph (c) of this

section if--

(1) The agency pays the fair market value for its proportionate

share of the joint use; and

(2) The joint use does not compromise the independence and

confidentiality of the accreditation process.

(e)(1) Upon request of an accrediting agency described in paragraph

(b)(4) of this section, the Secretary waives the ``separate and

independent'' requirements of this section if the agency demonstrates

that--

(i) The agency has been listed by the Secretary as a nationally

recognized agency on or before October 1, 1991; and

(ii) The existing relationship between the agency and the related,

associated, or affiliated trade association or membership organization

does not compromise the independence of the accreditation process.

(2) To demonstrate that the existing relationship between the

agency and the related, associated, or affiliated trade association or

membership organization does not compromise the independence of the

accreditation process, the agency must show that--

(i) The related, associated, or affiliated trade association or

membership organization plays no role in making or ratifying the

accreditation decisions of the agency;

(ii) The agency has sufficient budget and administrative autonomy

to carry out its accrediting functions; and

(iii) The agency provides to the related, associated, or affiliated

trade association or membership organization only information it makes

available to the public.

(Authority: 20 U.S.C. 1099b)

Sec. 602.4 Submission of information to the Secretary by recognized

accrediting agencies.

Each accrediting agency recognized by the Secretary shall submit to

the Secretary--

(a) Reports of final accrediting actions taken by the agency with

respect to the institutions and programs it accredits;

(b) A copy of any annual report prepared by the agency;

(c) A copy, updated annually, of the agency's directory of

accredited institutions and programs;

(d) A summary of the agency's major accrediting activities during

the previous year (an annual data summary), if so requested by the

Secretary to carry out the Secretary's responsibilities related to this

part;

(e) Upon request, information to assist the Secretary in resolving

problems with any institution or program accredited by the agency,

provided that the request does not conflict with the agency's policies

on confidentiality with respect to its records on those institutions or

programs; and

(f) Any proposed change that might alter the agency's--

(1) Scope of recognition; or

(2) Compliance with the requirements of this part.

(Authority: 20 U.S.C. 1099b)

Subpart B--Recognition and Termination Procedures

Sec. 602.10 Application for recognition.

(a) An accrediting agency seeking initial or renewed recognition by

the Secretary as a nationally recognized accrediting agency submits a

written application to the Secretary. The application for recognition

consists of--

(1) A statement of the agency's requested scope of recognition;

(2) An analysis of the agency's compliance with the criteria for

recognition set forth in this part; and

(3) Supporting documentation.

(b)(1) An accrediting agency's application for recognition

constitutes a grant of authority to the Secretary to conduct site

visits and to gain access to agency records, personnel, and facilities

on an announced or unannounced basis.

(2) The Secretary conducts an unannounced site visit only, where

necessary in the judgment of the Secretary, to obtain information to

verify that the agency is in compliance with the requirements of this

part and the information cannot be obtained or substantiated in an

announced site visit.

(c) The Secretary does not make available to the public any

confidential agency materials examined by Department personnel or the

Secretary as part of the evaluation of an accrediting agency's

application for recognition.

(Authority: 20 U.S.C. 1099b)

Sec. 602.11 Preliminary review by the Secretary.

(a) Upon receipt of an accrediting agency's application for

recognition, the Secretary--

(1) Establishes a schedule for the review of the agency by the

designated Department official, the National Advisory Committee on

Institutional Quality and Integrity, and the Secretary; and

(2) Publishes a notice of the agency's application in the Federal

Register inviting public comment on the agency's compliance with the

requirements for recognition.

(b)(1) The designated Department official analyzes the accrediting

agency's application to determine whether the agency satisfies the

requirements of this part, taking into account all available relevant

information concerning the compliance of the agency with the

requirements for recognition. The analysis includes--

(i) Site visits, on an announced or unannounced basis, to the

agency and, at the Secretary's discretion, representative institutions

or programs it accredits;

(ii) Review of public comment and other third-party information

solicited by the Secretary, as well as any other information provided

to the Secretary, concerning the performance of the agency in relation

to the requirements of this part; and

(iii) Review of complaints or legal actions involving the agency.

(2) The designated Department official's evaluation may also

include a review of information directly related to institutions or

programs accredited or preaccredited by the agency, relative to their

compliance with the accrediting agency's standards, the effectiveness

of the agency's standards, or the agency's application of those

standards.

(c) The designated Department official--

(1) Prepares a written analysis of the accrediting agency;

(2) Sends the analysis and all supporting documentation, including

all third-party comments received by the Secretary, to the agency in

advance of the Advisory Committee meeting; and

(3) Specifies a time period before the Advisory Committee meeting

during which the agency may provide the designated Department official

with any written comments on the analysis.

(d) The accrediting agency provides any written comments it chooses

to make to the designated Department official before the expiration of

the time period specified in paragraph (c)(3) of this section.

(e) The designated Department official provides the Advisory

Committee with the accrediting agency's application and supporting

documentation, the designated Department official's analysis of the

application, all information relied upon in developing the analysis,

any response by the agency to the analysis, any Department rebuttal to

the agency's response, and any third-party information the Secretary

receives regarding the agency.

(f) The designated Department official provides the agency with a

copy of any Department rebuttal provided to the Advisory Committee

under paragraph (e) of this section.

(Authority: 20 U.S.C. 1099b)

Sec. 602.12 Review by the National Advisory Committee on Institutional

Quality and Integrity.

(a)(1) The Advisory Committee considers an accrediting agency's

application at a public meeting and invites the designated Department

official, the agency, and other interested parties to make oral

presentations at the meeting.

(2) The designated Department official arranges for a transcript to

be made of the Advisory Committee meeting.

(b) At the conclusion of the meeting, the Advisory Committee

recommends that the Secretary approve or deny recognition of the

accrediting agency or defer a decision on the agency's application.

(c)(1) If the Advisory Committee recommends recognition, the

Advisory Committee also recommends the scope of recognition for the

agency and a recognition period.

(2) If the Advisory Committee recommends recognition despite

finding that the agency failed to comply with each of the requirements

of this part, the Advisory Committee provides the Secretary with a

detailed explanation as to why it believes the agency's failure to

comply with the particular requirement(s) does not require denial or

deferral.

(3) If the Advisory Committee recommends denial of recognition, the

Advisory Committee specifies the reasons for the recommendation and the

requirements of this part that the agency failed to meet.

(4) If the Advisory Committee recommends deferral of a decision on

the agency's application, the Advisory Committee specifies the reasons

for the recommendation, the requirements of this part that it believes

the agency has not met, and a recommended deferral period.

(d) After the meeting, the Advisory Committee forwards its written

recommendations concerning recognition to the Secretary.

(Authority: 20 U.S.C. 1099b, 1145)

Sec. 602.13 Review and decision by the Secretary.

(a) The Secretary determines whether to grant national recognition

to an applicant accrediting agency based on the Advisory Committee's

recommendation and the full record of the agency's application,

including all oral and written presentations to the Advisory Committee

by the agency, the designated Department official, and interested third

parties.

(b)(1) Before making a final decision, the Secretary affords both

the designated Department official and the accrediting agency an

opportunity to contest, in writing, the Advisory Committee's

recommendation. If either the agency or the designated Department

official wishes to contest the recommendation, that party shall notify

the Secretary and the other party no later than 10 days after the

Advisory Committee meeting.

(2) If the party contesting the Advisory Committee's recommendation

wishes to make a written submission to the Secretary, the Secretary

must receive that submission no later than 30 days after the Advisory

Committee meeting. However, the contesting party may not submit any

evidence to the Secretary that it did not submit to the Advisory

Committee. The contesting party shall simultaneously provide a copy of

its submission to the other party.

(3) If the noncontesting party wishes to respond in writing to the

Secretary, the Secretary must receive that submission no later than 30

days after the noncontesting party receives the contesting party's

submission. However, the noncontesting party may not submit any

evidence to the Secretary that it did not submit to the Advisory

Committee. The noncontesting party shall simultaneously provide a copy

of its response to the contesting party.

(4) If the Advisory Committee's recommendation is contested, the

Secretary renders a final decision after taking into account the two

parties' written submissions, if any.

(c) The Secretary approves the accrediting agency for national

recognition if the Secretary determines that the agency satisfies each

of the requirements contained in this part.

(d) The Secretary approves the accrediting agency for national

recognition even if the agency does not satisfy each of the

requirements contained in this part if the Secretary determines that

the agency's effectiveness is not impaired by the noncompliance.

(e) If the Secretary approves the accrediting agency for national

recognition, the Secretary defines-

(1) The scope of recognition, which may include the--

(i) Geographic area;

(ii) Degrees and certificates awarded;

(iii) Types of institutions the agency may accredit;

(iv) Types of programs the agency may accredit; and

(v) Preaccreditation status(es), if any, that the Secretary

approves for recognition; and

(2) The recognition period, which does not exceed five years.

(f)(1) If the Secretary denies recognition to the accrediting

agency or grants recognition for a scope narrower than that requested

by the agency, the Secretary indicates in writing the reasons for that

decision.

(2) The agency described in paragraph (f)(1) of this section may

request that the Secretary reconsider the decision under the provisions

of Sec. 602.15.

(g) If the Secretary defers a decision on the accrediting agency's

application, the Secretary--

(1) Indicates in writing the reasons for the deferral and the

deferral period; and

(2) Automatically extends any previously granted recognition period

until the Secretary reaches a decision on the renewal application.

(h) If the Secretary does not reach a final decision on an

accrediting agency's application for renewal of recognition before the

expiration of the agency's recognition period, the Secretary

automatically extends the previously granted recognition period until

the Secretary reaches a decision on the renewal application.

(Authority: 20 U.S.C. 1099b)

Sec. 602.14 Limitation, suspension, or termination of recognition.

(a)(1) The Secretary may limit, suspend, or terminate the

recognition of an accrediting agency before completion of its

previously granted recognition period if the Secretary determines,

after notice and opportunity for a hearing, that the agency fails or

has failed to satisfy any of the requirements of this part.

(2) If the agency requests a hearing--

(i) The hearing is conducted by the Advisory Committee or by a

subcommittee of three members of the Advisory Committee, appointed by

the Secretary, if the Secretary determines that a more timely hearing

is necessary than can be accommodated by the schedule of the full

Advisory Committee; and

(ii) The designated Department official arranges for a transcript

to be made of the hearing.

(b) The designated Department official begins a limitation,

suspension, or termination proceeding against an accrediting agency by

sending the agency a notice that--

(1) Informs the agency of the Secretary's intent to limit, suspend,

or terminate its recognition;

(2) Identifies the alleged violations of the governing regulations

that constitute the basis for the action;

(3) Describes the limits to be imposed if the Secretary seeks to

limit the accrediting agency;

(4) Specifies the effective date of the limitation, suspension, or

termination; and

(5) Informs the agency that it may--

(i) Submit to the designated Department official a written response

to the notice no later than 30 days after it receives the notice; and

(ii) Request a hearing, which shall take place in Washington, DC,

before the Advisory Committee or subcommittee if the agency submits a

hearing request to the designated Department official no later than 30

days after it receives the notice.

(c)(1) As part of its response to the limitation, suspension, or

termination notice or its hearing request, if any, the accrediting

agency shall identify the issues and facts in dispute and its position

with regard to those issues and facts.

(2) After receipt of the agency's response and hearing request, if

any, the designated Department official--

(i) Transmits the limitation, suspension, or termination notice and

the agency's response, if any, to that notice to the Advisory Committee

or subcommittee; and

(ii) Establishes the date and time of any hearing before the

Advisory Committee or subcommittee.

(d)(1) Except as provided in paragraph (d)(2) of this section, if a

hearing is held, the Advisory Committee or subcommittee shall allow the

designated Department official, the accrediting agency, and any

interested party to make an oral or written presentation. That

presentation may include the introduction of written and oral evidence.

(2) If the designated Department official and the accrediting

agency each agree, the Advisory Committee or subcommittee review shall

be based solely on the written materials submitted to it under

paragraph (c)(2)(i) of this section.

(e)(1) After the Advisory Committee or subcommittee reviews the

presentations, it shall issue an opinion in which it--

(i) Makes findings of fact based upon the evidence presented;

(ii) Recommends whether a limitation, suspension, or termination of

the agency's recognition is warranted; and

(iii) Provides the reasons for that recommendation.

(2) The Advisory Committee or subcommittee shall--

(i) Transmit its written opinion to the Secretary; and

(ii) Provide a copy of its opinion to the designated Department

official and the accrediting agency.

(f)(1) After receiving the Advisory Committee's recommendation, the

Secretary issues a decision on whether to limit, suspend, or terminate

the agency's recognition, based upon the recommendation of the Advisory

Committee and the full record before the Advisory Committee.

(2) Either the accrediting agency or the designated Department

official may appeal the Advisory Committee's recommendation by filing a

notice of appeal with the Secretary within 10 days of receipt of the

Advisory Committee's or subcommittee's recommendation. If either party

files an appeal with the Secretary, that party shall simultaneously

provide a copy of the notice of appeal to the other party.

(3) The party appealing the Advisory Committee's or subcommittee's

recommendation has 30 days after its receipt of the recommendation to

make a written submission to the Secretary challenging the

recommendation. However, the appealing party may not submit any

evidence that was not submitted to the Advisory Committee or

subcommittee. The appealing party shall simultaneously provide a copy

of the submission to the other party.

(4) The nonappealing party has 30 days from the date it receives

the appealing party's submission to file a written response to the

Secretary regarding the submissions of the appealing party and shall

simultaneously provide the appealing party with a copy of its response.

The nonappealing party may not submit any evidence that was not

submitted to the Advisory Committee or subcommittee.

(5) If the Advisory Committee's or subcommittee's recommendation is

appealed, the Secretary renders a final decision after taking into

account that recommendation and the parties' written submissions on

appeal.

(g) If the Secretary limits, suspends, or terminates an accrediting

agency's recognition during its recognition period, the agency may

request that the Secretary reconsider this decision under Sec. 602.15.

(Authority: 20 U.S.C. 1099b)

Sec. 602.15 Requests for reconsideration of the Secretary's decisions.

(a)(1) An accrediting agency may request a reconsideration of a

Secretarial decision if the Secretary--

(i) Denies its application for recognition;

(ii) Does not grant its requested scope of recognition; or

(iii) Limits, suspends, or terminates the agency's recognition

during its recognition period.

(2) The agency may request reconsideration only if the agency

demonstrates that--

(i) It has new information that could not have been presented

previously; and

(ii) The new information is likely to result in reversal of the

Secretary's decision.

(b) To request a reconsideration, the accrediting agency shall--

(1) Notify the Secretary of its intent no later than 10 days after

its receipt of the Secretary's decision; and

(2) Submit its written request for reconsideration and the reasons

for that request no later than 45 days after receipt of the Secretary's

decision.

(c)(1) Within 60 days after receipt of the accrediting agency's

written request for reconsideration, the Secretary renders a final

decision based on the information contained in the agency's request and

the entire record before both the Advisory Committee or subcommittee

and the Secretary.

(2) The Secretary may request the opinion of the designated

Department official, the Advisory Committee, or the subcommittee before

rendering a final decision.

(Authority: 20 U.S.C. 1099b)

Sec. 602.16 Appeals procedures.

An accrediting agency may appeal the Secretary's final decision

under this part regarding the agency's recognition to the Federal

courts as a final decision in accordance with applicable Federal law.

(Authority: 20 U.S.C. 1099b)

Sec. 602.17 Publication of list of recognized agencies.

(a) The Secretary periodically publishes in the Federal Register a

list of recognized accrediting agencies and each agency's scope of

recognition.

(b) If the Secretary denies recognition to a previously recognized

accrediting agency, or limits, suspends, or terminates its recognition

during a previously granted recognition period, the Secretary publishes

a notice of that action in the Federal Register and makes available to

the public, upon request, the Secretary's determination.

(Authority: 20 U.S.C. 1099b)

Subpart C--Criteria for Secretarial Recognition

Sec. 602.20 Geographic scope of accrediting activities.

To be listed by the Secretary as a nationally recognized

accrediting agency, an accrediting agency must demonstrate to the

Secretary that the geographical scope of its accrediting activities

covers--

(a) A State, if the agency is a component of a State government;

(b) A region of the United States that includes at least three

States that are contiguous or in close geographical proximity to one

another; or

(c) The United States.

(Authority: 20 U.S.C. 1099b)

Sec. 602.21 Administrative and fiscal responsibility.

(a) To be listed by the Secretary as a nationally recognized

accrediting agency, an accrediting agency must demonstrate to the

Secretary that it has the administrative and fiscal capability to carry

out its accreditation activities in light of its requested scope of

recognition.

(b) The Secretary considers that an accrediting agency meets the

requirements of paragraph (a) of this section if it has, and will

likely continue to have--

(1) Adequate administrative staff to--

(i) Carry out its accrediting responsibilities effectively; and

(ii) Manage its finances effectively;

(2) Competent and knowledgeable individuals, qualified by

experience and training, responsible for on-site evaluation, policy-

making, and decision-making regarding accreditation and

preaccreditation status;

(3) Representation on its evaluation, policy, and decision-making

bodies of--

(i) For an institutional accrediting agency, both academic and

administrative personnel; and

(ii) For a programmatic accrediting agency, both educators and

practitioners;

(4) Representation of the public on all decision-making bodies;

(5) Clear and effective controls against conflicts of interest or

the appearance of conflicts of interest by the agency's board members,

commissioners, evaluation team members, consultants, administrative

staff, and other agency representatives;

(6) Adequate financial resources to carry out its accrediting

responsibilities, taking into account the funds required to conduct the

range of accrediting activities specified in the requested scope of

recognition and the income necessary to meet the anticipated costs of

its activities in the future; and

(7) Complete and accurate records of--

(i) Its last two full accreditation or preaccreditation reviews of

each institution or program, including self-study reports, on-site

evaluation team reports, institution or program responses to on-site

reports, periodic review reports, and any reports of special review

conducted by the agency between regular reviews; and

(ii) Its decisions with respect to all preaccreditation and

accreditation actions, including all adverse actions.

(Authority: 20 U.S.C. 1099b)

Sec. 602.22 Accreditation experience.

(a) To be listed by the Secretary as a nationally recognized

accrediting agency, an accrediting agency must demonstrate to the

Secretary that it has adequate experience in accrediting institutions,

programs, or both.

(b) The Secretary considers that an accrediting agency satisfies

the requirements of paragraph (a) of this section if it has--

(1) Granted accreditation or preaccreditation status to

institutions or programs in the geographical area for which it seeks

recognition;

(2) Conducted accreditation activities covering the range of the

specific degrees, certificates, and programs for which it seeks

recognition, including--

(i) Granting accreditation or preaccreditation status; and

(ii) Providing technical assistance related to accreditation to

institutions, programs, or both; and

(3) Policies, evaluative criteria, and procedures, and has made

evaluative decisions, that are accepted throughout the United States

by--

(i) Educators and educational institutions; and

(ii) Licensing bodies, practitioners, and employers in the

professional or vocational fields for which the educational

institutions or programs within the agency's jurisdiction prepare their

students.

(Authority: 20 U.S.C. 1099b)

Sec. 602.23 Application of standards.

(a) To be listed by the Secretary as a nationally recognized

accrediting agency, an accrediting agency must demonstrate to the

Secretary that it consistently applies and enforces written standards

that ensure that the education or training offered by an institution or

program is of sufficient quality to achieve, for the duration of any

accreditation period granted by the agency, the stated objective for

which it is offered.

(b) The Secretary considers that an accrediting agency meets the

requirements of paragraph (a) of this section if--

(1) The agency's written standards and procedures for accreditation

and preaccreditation, if that latter status is offered, comply with the

requirements of this part;

(2) The agency's preaccreditation standards, if offered, are

appropriately related to the agency's accreditation standards, with a

limit on preaccreditation status of no more than five years for any

institution or program;

(3) The agency's organizations, functions, and procedures include

effective controls against the inconsistent application of its criteria

and standards;

(4) The agency bases its decisions regarding accreditation or

preaccreditation on its published criteria; and

(5) The agency maintains a systematic program of review designed to

ensure that its criteria and standards are appropriate and sufficiently

comprehensive to evaluate the quality of the education or training

provided by the institutions or programs it accredits and are relevant

to the education or training needs of affected students.

(Authority: 20 U.S.C. 1099b)

Sec. 602.24 Accreditation processes.

(a)(1) To be listed by the Secretary as a nationally recognized

accrediting agency, an accrediting agency must demonstrate to the

Secretary that it has effective mechanisms for evaluating compliance

with its standards and those mechanisms cover the full range of an

institution's or program's offerings, including those offerings

conducted at branch campuses and additional locations.

(2) The Secretary considers that an accrediting agency meets the

requirements of paragraph (a) of this section if it meets the

requirements contained in paragraphs (b) through (f) of this section.

(b)(1) In determining whether to grant initial or renewed

accreditation, the accrediting agency evaluates whether an institution

or program--

(i) Maintains clearly specified educational objectives consistent

with its mission and appropriate in light of the degrees or

certificates it awards;

(ii) Is successful in achieving its stated objectives;

(iii) Maintains degree and certificate requirements that at least

conform to commonly accepted standards; and

(iv) Complies with the agency's criteria.

(2) In reaching its determination to grant initial or renewed

accreditation, the accrediting agency--

(i) Requires an in-depth self-study by each institution or program

in accordance with guidance provided by the agency, with particular

focus on the assessment of educational quality and the continuing

improvement of educational quality;

(ii) Conducts at least one on-site review of the institution or

program at which the agency obtains sufficient information to enable it

to determine if the institution or program complies with the agency's

criteria;

(iii) Conducts its own analyses and evaluations of the self-study

and supporting documentation furnished by the institution or program,

and any other appropriate information from other sources, to determine

whether the institution or program complies with the agency's

standards; and

(iv) Provides to the institution or program a detailed written

report on its review assessing--

(A) The institution's or program's compliance with the agency's

standards, including areas needing improvement; and

(B) The institution's or program's performance with respect to

student achievement.

(c) In addition to the on-site visit described in paragraph

(b)(2)(ii) of this section, an institutional accrediting agency whose

accreditation enables the institutions it accredits to seek eligibility

to participate in Title IV, HEA programs conducts--during the interval

between the agency's award of accreditation or preaccreditation to the

institution or program and the expiration of the accreditation or

preaccreditation period--at least one unannounced on-site review at

each institution that provides prebaccalaureate vocational education or

training for the purpose of determining the institution's or program's

continued compliance with the agency's standards.

(d) The accrediting agency--

(1) Monitors institutions or programs throughout the accreditation

or preaccreditation period to ensure continuing compliance with the

agency's standards or criteria; and

(2) Conducts special evaluations, site visits, or both, as

necessary.

(e) The accrediting agency regularly reevaluates institutions or

programs that have been granted accreditation or preaccreditation.

(Authority: 20 U.S.C. 1099b)

Sec. 602.25 Additions to or substantive changes in educational

programs.

(a) To be listed by the Secretary as a nationally recognized

accrediting agency, an accrediting agency must demonstrate to the

Secretary that, except as provided in paragraph (b) of this section, it

includes within its previous grant of accreditation or preaccreditation

to an institution an educational program that an institution initially

offers, or substantively changes after that grant of accreditation or

preaccreditation, only after--

(1) The institution notifies the accrediting agency of the addition

of the new program or the substantive change in the existing program;

and

(2) The accrediting agency evaluates the new or substantively

changed program and determines that it does not adversely affect the

institution's capacity to meet the agency's standards.

(b) An accrediting agency may extend accreditation to an

educational program that an institution initially offers or

substantively changes after it received the agency's last grant of

accreditation or preaccreditation without specifically evaluating and

approving that program if--

(1) The institution notifies the agency of that program; and

(2) The program does not provide prebaccalaureate vocational

education.

(c) For purposes of this section, an accrediting agency defines a

substantive change in an educational program, but the definition must

include--

(1) A substantial change in the number of clock or credit hours,

the number of weeks, and the content of that program;

(2) A change in the type of program offered;

(3) A change in the credential awarded for the successful

completion of the program; and

(4) A change from clock hours to credit hours or vice versa.

(Authority: 20 U.S.C. 1099b)

Sec. 602.26 Required accreditation standards.

(a)(1) To be listed by the Secretary as a nationally recognized

accrediting agency, an accrediting agency must demonstrate to the

Secretary that its accreditation or preaccreditation standards, or

both, are sufficiently rigorous to ensure that the agency is a reliable

authority as to the quality of the education or training provided by

the institutions or programs it accredits.

(2) For a programmatic accrediting agency that does not serve as an

institutional accrediting agency for any of the programs it accredits,

the standards must address the areas contained in paragraph (b) of this

section in terms of the type and level of the program rather than in

terms of the institution.

(3) If none of the institutions an agency accredits participates in

any Title IV, HEA program, or if the agency only accredits programs

within institutions accredited by an accrediting agency recognized by

the Secretary, the accrediting agency is not required to have the

standards described in paragraphs (b)(7), (b)(8), (b)(10), (b)(12), and

(b)(13) of this section.

(b) In order to assure that an accrediting agency is a reliable

authority as to the quality of the education or training provided by an

institution or program it accredits, the agency must have standards

that effectively address the quality of an institution or program in

the following areas:

(1) Curricula.

(2) Faculty.

(3) Facilities, equipment, and supplies.

(4) Fiscal and administrative capacity as appropriate to the

specified scale of operations. The agency shall--

(i) Have standards addressing the institution's or program's

finances and management that enable it to assess an institution's or

program's fiscal and administrative capacity, as appropriate to its

scale of operations, for the purpose of determining whether--

(A) The institution or program appears able to continue to be an

ongoing, economically viable entity; and

(B) The finances of the institution or program appear to be

sufficient for it to continue to meet the agency's standards;

(ii) Make a determination under this standard--

(A) When it initially evaluates an institution or program for

accreditation or preaccreditation; and

(B) When it periodically reevaluates the institution or program for

accreditation or preaccreditation;

(iii) Require an institution or program to submit on an annual

basis sufficient financial information, which may include the annual

audited financial statement the institution or program submits to the

Secretary under the Title IV, HEA programs, to enable the agency to

determine if the financial capacity of the institution threatens the

ability of the institution or program to continue to meet the agency's

standards; and

(iv) Review, as appropriate on an annual basis, the information

obtained under paragraph (b)(4)(iii) of this section to determine if

there is reason to take any follow-up action based on a reduced

financial capacity.

(5) Student support services.

(6) Recruiting and admissions practices, academic calendars,

catalogs, publications, grading, and advertising. The agency shall have

standards that enable it to assess an institution's or program's

recruiting and admissions practices, academic calendars, catalogs,

publications, grading, and advertising in terms of--

(i) Whether the institution's or program's academic calendar,

catalogs, publications, and advertising are accurate, complete, and

consistent with actual practice and agency standards, particularly with

respect to costs, financial obligations, refunds, graduation rates,

employment prospects, and other statements regarding educational

effectiveness; and

(ii) Whether the institution's or program's admissions policies and

standards are reasonable in light of the institution's or program's

educational mission.

(7) Program length and tuition and fees in relation to the subject

matters taught and the objectives of the degrees or credentials

offered. The agency shall have standards that establish minimum and

maximum program lengths for prebaccalaureate vocational education

programs and have other standards to enable the agency to assess an

institution's or program's length of program and tuition and fee

charges. In developing these standards, the agency shall take into

account such factors as--

(i) Program objectives and content;

(ii) The types and locations of instructional delivery;

(iii) The knowledge and skills necessary for students to reach

competence in the field being taught;

(iv) Generally accepted practices in higher education;

(v) Any applicable Federal statutes or regulations; and

(vi) For any prebaccalaureate vocational education program,

consideration of the remuneration that can reasonably be expected by

students who complete the program.

(8) Measures of program length in clock hours or credit hours. The

agency shall have standards that enable it to assess an institution's

or program's measurement of program length. In developing these

standards, the agency shall take into account such factors as--

(i) Program goals, objectives, and content;

(ii) The types and combinations of instructional methodologies and

delivery systems, including outside preparation as appropriate;

(iii) The knowledge and skills necessary for students to reach

competence in the field being taught;

(iv) Generally accepted practices in higher education; and

(v) Any applicable Federal statutes or regulations.

(9) Success with respect to student achievement in relation to

mission. The agency shall have standards that enable it to assess an

institution's or program's success with respect to student achievement.

Under these standards, the agency shall--

(i) Require the institution or program to document and assess the

educational achievement of students in verifiable and consistent ways,

such as--

(A) Student grades, grade point averages, theses, or portfolios;

(B) Results of admissions tests for graduate or professional school

or other standardized tests;

(C) Transfer rates to institutions offering higher level programs;

and

(D) Job placement rates, completion rates, results of licensing

examinations, evaluations by employers, follow-up studies of alumni,

and other recognized measures of educational outcomes;

(ii) Require the institution or program to use effectively the

information obtained under paragraph (b)(9)(i) of this section to

improve student achievement with respect to the degrees or certificates

offered;

(iii) Systematically monitor institutional or program performance

with respect to student achievement to determine if performance is

consistent with both the institution's or program's mission and

objectives and the agency's objective measures of performance of

student achievement; and

(iv) For any prebaccalaureate vocational education program

accredited by the agency or provided by an institution the agency

accredits, establish minimum quantitative standards for--

(A) Completion rates;

(B) Job placement rates; and

(C) Pass rates on State licensing examinations or other appropriate

measures of occupational competency.

(10) Default rates in the student loan programs established under

Title IV of the Act, based on the most recent data provided by the

Secretary. The agency shall have standards that require it to evaluate

an institution to determine whether the institution is out of

compliance with its accrediting standards if the institution's latest

cohort default rate under the Federal Stafford Loan or Federal

Supplemental Loans for Students program--

(i) Equals or exceeds 25 percent; or

(ii) Has increased significantly in relation to its rate in the

previous year.

(11) Record of student complaints received by, or available to, the

agency. The agency shall have standards that enable it to assess an

institution's or program's record of student complaints received by or

made available to the agency. Under these standards, the agency shall--

(i) Review student complaints that relate to the agency's

standards;

(ii) Take appropriate follow-up action with regard to those

complaints;

(iii) If considered necessary by the agency, refer complainants to

appropriate Federal, State, and other agencies if the complaints do not

relate to the agency's standards; and

(iv) Require institutions or programs to make available to students

the agency's mailing address or telephone number for complaints.

(12) Compliance with the institution's program responsibilities

under Title IV of the Act. The agency shall have standards that require

institutions to be in compliance with their responsibilities under the

Title IV, HEA programs. The agency's assessment under these standards

shall be based on program reviews, financial and compliance audits,

audited financial statements, and any other information that the

Secretary provides.

(13) The institution's practice of making refunds to students. The

agency shall have--

(i) A refund policy, that must be approved by the Secretary, that

provides for a fair and equitable refund to a student of tuition, fees,

and other institutional charges; and

(ii) Standards that enable it to assess whether an institution

complies with its refund policy.

(c)(1) An accrediting agency shall take appropriate action if its

review of an institution or program under any standard indicates that

the institution or program is not in compliance with that standard.

(2) If the agency believes that the institution or program is not

in compliance with the standards, the agency shall--

(i) Take prompt adverse action against the institution or program;

or

(ii) Require the institution or program to take appropriate action

to bring itself into compliance, or to ensure its continued compliance,

with the agency's standards within a time frame specified by the

agency.

(3) The accrediting agency has sole discretion to determine the

time frame specified in paragraph (c)(2)(ii) of this section for the

institution or program to bring itself into compliance with agency

standards. However, except as indicated in paragraph (c)(4) of this

section, the specified period may not exceed 18 months.

(4) If the institution or program does not bring itself into

compliance within the specified period, the agency must take adverse

action unless the agency extends the period for achieving compliance

for good cause.

(d) An accrediting agency shall have a reasonable basis for

determining that the information it relies on for making the

assessments described in paragraphs (b) and (c) of this section is

accurate.

(e) An accrediting agency that has established and applies the

standards in paragraph (b) of this section may establish any additional

accreditation standards as it deems appropriate.

(Authority: 20 U.S.C. 1091, 1099b)

Sec. 602.27 Additional required operating procedures.

(a) To be listed by the Secretary as a nationally recognized

accrediting agency, an accrediting agency must demonstrate to the

Secretary that it satisfies the procedural requirements contained in

other provisions of this part and the additional requirements contained

in paragraphs (b) through (h) of this section.

(b) If the accrediting agency accredits institutions and that

accreditation enables those institutions to seek eligibility to

participate in Title IV, HEA programs--

(1) The agency requires the institution to--

(i) Notify the agency if the institution plans to establish a

branch campus or an additional location; and

(ii) Submit a business plan described in paragraph (b)(2) of this

section if the institution plans to operate a branch campus or

additional location--

(A) That is geographically apart from the main campus;

(B) That has its own separate administrative structure, services,

and facilities, and

(C) At which the institution plans to offer a complete educational

program;

(2) The business plan that an institution submits under paragraph

(b)(1)(ii) of this section must contain a description of--

(i) The educational program to be offered at the branch campus or

location;

(ii) The projected revenues and expenditures and cash flow at the

branch campus or location; and

(iii) The operation, management, and physical resources at the

branch campus or location;

(3) The agency extends accreditation to the branch campus or

additional location only after evaluating the business plan and taking

other necessary actions to permit the agency to determine that the

branch campus or additional location has sufficient educational,

financial, operational, management, and physical resources to satisfy

the accrediting agency's standards for accreditation;

(4) The agency undertakes a site visit of the branch campus or

additional location as soon as practicable, but no later than six

months after the establishment of that branch campus or additional

location;

(5) The agency undertakes a site visit of an institution that has

undergone a change of ownership that resulted in a change of control as

soon as practicable, but no later than six months after the change of

ownership; and

(6) The agency requires any institution it accredits that enters

into a teach-out agreement with another institution to submit to the

accrediting agency for approval a teach-out agreement that is

consistent with applicable standards and regulations.

(c) The accrediting agency maintains and makes publicly available

written materials describing--

(1) Each type of accreditation and preaccreditation granted by the

agency;

(2) Its procedures for applying for accreditation or

preaccreditation;

(3) The criteria and procedures used by the agency for determining

whether to grant, reaffirm, reinstate, deny, restrict, revoke, or take

any other action related to each type of accreditation and

preaccreditation that the agency grants;

(4) The names, academic and professional qualifications, and

relevant employment and organizational affiliations of the members of

the agency's policy and decisionmaking bodies as well as the agency's

principal administrative staff; and

(5) The institutions or programs that the agency currently

accredits or preaccredits and the date when the agency will review or

reconsider the accreditation or preaccreditation of each institution or

program.

(d) In accordance with agency policy, the accrediting agency

publishes the year when an institution or program subject to its

jurisdiction is being considered for accreditation or preaccreditation

and provides an opportunity for public comment concerning the

institution's or program's qualifications for accreditation or

preaccreditation.

(e) The accrediting agency provides advance public notice of

proposed new or revised criteria, giving interested parties adequate

opportunity to comment on these proposals prior to their adoption.

(f) The accrediting agency--

(1) Reviews any complaint against an accredited institution or

program, or the agency itself, that is related to the agency's

standards, criteria, or procedures; and

(2) Resolves the complaint in a timely, fair, and equitable manner.

(g) The accrediting agency ensures that if an institution or

program elects to make a public disclosure of its accreditation or

preaccreditation status granted by the agency, the institution or

program discloses that status accurately, including the specific

academic or instructional programs covered by that status.

(h) The accrediting agency provides for the public correction of

incorrect or misleading information about--

(1) The accreditation status of an accredited or preaccredited

institution or program;

(2) The contents of reports of site team visitors; and

(3) The agency's accrediting actions.

(Authority: 20 U.S.C. 1099b)

Sec. 602.28 Due process for institutions and programs.

(a) To be listed by the Secretary as a nationally recognized

accrediting agency, an accrediting agency must demonstrate to the

Secretary that the procedures it uses throughout the accrediting

process satisfy due process requirements.

(b) The Secretary considers that an accrediting agency's procedures

satisfy due process requirements if--

(1) The agency sets forth in writing its procedures governing its

accreditation or preaccreditation processes;

(2) The agency's procedures afford an institution or program a

reasonable period of time to comply with agency requests for

information and documents;

(3) The agency notifies the institution or program in writing of

any adverse accrediting action;

(4) The agency's notice describes with particularity the basis for

any adverse accrediting action;

(5) The agency permits the institution or program the opportunity

to appeal an adverse accrediting action, and the right to

representation by counsel during an appeal, except that the agency, at

its sole discretion, may limit the appeal to a written appeal; and

(6) The agency notifies the applicant in writing of the result of

the appeal and the basis for that result.

(Authority: 20 U.S.C. 1099b)

Sec. 602.29 Notification of accrediting agency decisions.

(a) To be listed by the Secretary as a nationally recognized

accrediting agency, an accrediting agency must demonstrate to the

Secretary that its written policies, procedures, and practices require

it to notify the Secretary, the appropriate State postsecondary review

entity, the appropriate accrediting agencies, and the public of the

following types of decisions, no later than 30 days after a decision is

made:

(1) A decision by the agency to award initial accreditation or

preaccreditation to an institution or program.

(2) A final decision by the agency to--

(i) Deny, withdraw, suspend, or terminate the accreditation or

preaccreditation of an institution or program; or

(ii) Take other adverse action against an institution or program.

(3) A decision by the agency to place an institution or program on

probation.

(4) A decision by an accredited institution or program to withdraw

voluntarily from accreditation or formal preaccreditation status.

(5) A decision by an accredited institution or program to let its

accreditation or preaccreditation lapse.

(b) No later than 60 days after a final decision, the accrediting

agency makes available to the Secretary, the appropriate State

postsecondary review entity, and the public upon request, a brief

statement supporting the agency's determination to deny, withdraw,

suspend, or terminate the accreditation or preaccreditation of an

institution or program and the comments of the affected institution or

program with regard to that decision.

(Authority: 20 U.S.C. 1099b)

Sec. 602.30 Regard for decisions of States and other accrediting

agencies.

(a) To be listed by the Secretary as a nationally recognized

accrediting agency, an a

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