General and Non-Loan Programmatic Issues

DEPARTMENT OF EDUCATION

[Docket ID ED-2009-OPE-0005]

34 CFR Parts 600, 668, 675, 686, 690, and 692

RIN 1840-AC99

General and Non-Loan Programmatic Issues

AGENCY:

Office of Postsecondary Education, Department of Education.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The Secretary proposes to implement various general and non-loan provisions that were added to the Higher Education Act of 1965, as amended (HEA), by the Higher Education Opportunity Act of 2008 (HEOA) by amending the regulations for Institutional Eligibility Under the Higher Education Act of 1965, the Student Assistance General Provisions, the Federal Work-Study (FWS) Programs, the Teacher Education Assistance for College and Higher Education (TEACH) Grant Program, the Federal Pell Grant Program, and the Leveraging Educational Assistance Partnership Program (LEAP).

DATES:

We must receive your comments on or before September 21, 2009.

ADDRESSES:

Submit your comments through the Federal eRulemaking Portal or via postal mail, commercial delivery, or hand delivery. We will not accept comments by fax or by e-mail. Please submit your comments only one time, in order to ensure that we do not receive duplicate copies. In addition, please include the Docket ID at the top of your comments.

•

Federal eRulemaking Portal:

Go to

http://www.regulations.gov

to submit your comments electronically. Information on using Regulations.gov, including instructions for accessing agency documents, submitting comments, and viewing the docket, is available on the site under “How To Use This Site.”

•

Postal Mail, Commercial Delivery, or Hand Delivery.

If you mail or deliver your comments about these proposed regulations, address them to Jessica Finkel, U.S. Department of Education, 1990 K Street, NW., room 8031, Washington, DC 20006-8502.

Privacy Note:

The Department's policy for comments received from members of the public (including those comments submitted by mail, commercial delivery, or hand delivery) is to make these submissions available for public viewing in their entirety on the Federal eRulemaking Portal at

http://www.regulations.gov

. Therefore, commenters should be careful to include in their comments only information that they wish to make publicly available on the Internet.

FOR FURTHER INFORMATION CONTACT:

For general information or information related to the non-Title IV revenue requirement (90/10), John Kolotos. Telephone: (202) 502-7762 or via the Internet at:

John.Kolotos@ed.gov

.

For information related to all Federal Pell Grant Program issues and the LEAP/GAP Program, Fred Sellers and Jacquelyn Butler. Telephone: (202) 502-7502 and (202) 502-7890, respectively, or via the Internet at:

Fred.Sellers@ed.gov

or

Jacquelyn.Butler@ed.gov

.

For information related to the provisions for readmission for servicemembers, teach-outs, peer-to-peer file sharing, baccalaureate in liberal arts, and institutional plans for improving the academic program, Wendy Macias. Telephone: (202) 502-7526 or via the Internet at:

Wendy.Macias@ed.gov

.

For information related to all Federal Work-Study Program issues, Nikki Harris and Harold McCullough. Telephone: (202) 219-7050 and (202) 377-4030, respectively, or via the Internet at

Nikki.Harris@ed.gov

or

Harold.McCullough@ed.gov

.

For information related to the provisions for fire safety standards, missing students procedures, hate crime reporting, emergency response and evacuation, and students with intellectual disabilities, Jessica Finkel. Telephone: (202) 502-7647 or via the Internet at:

Jessica.Finkel@ed.gov

.

For information related to the provisions for extenuating circumstances under the TEACH Grant Program, Jacquelyn Butler. Telephone: (202) 502-7890, or via the Internet at:

Jacquelyn.Butler@ed.gov

.

For information related to the consumer information requirements, Brian Kerrigan. Telephone: (202) 219-7058, or via the Internet at:

Brian.Kerrigan@ed.gov

.

If you use a telecommunications device for the deaf, call the Federal Relay Service (FRS), toll free, at 1-800-877-8339.

Individuals with disabilities can obtain this document in an accessible format (

e.g.

, Braille, large print, audiotape, or computer diskette) on request to one of the contact persons listed under

FOR FURTHER INFORMATION CONTACT

.

SUPPLEMENTARY INFORMATION:

Invitation to Comment

As outlined in the section of this notice entitled

Negotiated Rulemaking

, significant public participation, through six public hearings and three negotiated rulemaking sessions, has occurred in developing this notice of proposed rulemaking (NPRM). In accordance with the requirements of the Administrative Procedure Act, the Department invites you to submit comments regarding these proposed regulations on or before September 21, 2009. To ensure that your comments have maximum effect in developing the final regulations, we urge you to identify clearly the specific section or sections of the proposed regulations that each of your comments addresses and to arrange your comments in the same order as the proposed regulations. Note that enactment as final regulations of any and all provisions of these proposed regulations is subject to the availability of sufficient administrative savings and any provision may be removed from the final rules if sufficient savings do not materialize.

We invite you to assist us in complying with the specific requirements of Executive Order 12866, including its overall requirements to assess both the costs and the benefits of the proposed regulations and feasible alternatives, and to make a reasoned determination that the benefits of these proposed regulations justify their costs. Please let us know of any further opportunities we should take to reduce potential costs or increase potential benefits while preserving the effective and efficient administration of the programs.

As noted elsewhere in the NPRM, two of the Department's negotiated rulemaking committees were to a minor extent involved in the proposed revisions to 34 CFR 668.184(a)(1) (Determining cohort default rates for institutions that have undergone a change in status) in part 668, subpart M of the Student Assistance General Provisions. Team V-General and Non-Loan Programmatic Issues (Team V), was the negotiating committee responsible for the regulations regarding the treatment of cohort default rates for institutions that conduct teach-outs of closed institutions. Team II-Loans-School-based Issues (Team II), negotiated all other changes to cohort default rates.

We have included the proposed change to 34 CFR 668.184(a)(1) in this NPRM as well as in the notice of proposed rulemaking that we are publishing as a result of the negotiations of Team II. The proposed change is simply a cross-reference in 34 CFR 668.184(a)(1) to 34 CFR 600.32(d) which provides that under certain circumstances the cohort default rate of a closed institution does not transfer in any way to the institution that conducts

a teach-out at the site of the closed institution. We ask that when submitting any comments on the proposed changes to §§ 600.32(d) or 668.184(a)(1), you submit the comments in the docket for this NPRM (Docket ID ED-2009-OPE-0005).

During and after the comment period, you may inspect all public comments about these proposed regulations by accessing Regulations.gov. You may also inspect the comments, in person, in room 8031, 1990 K Street, NW., Washington, DC, between the hours of 8:30 a.m. and 4 p.m., Eastern time, Monday through Friday of each week except Federal holidays.

Assistance to Individuals With Disabilities in Reviewing the Rulemaking Record

On request, we will supply an appropriate aid, such as a reader or print magnifier, to an individual with a disability who needs assistance to review the comments or other documents in the public rulemaking record for these proposed regulations. If you want to schedule an appointment for this type of aid, please contact one of the persons listed under

FOR FURTHER INFORMATION CONTACT

.

Negotiated Rulemaking

Section 492 of the HEA requires the Secretary, before publishing any proposed regulations for programs authorized by Title IV of the HEA, to obtain public involvement in the development of the proposed regulations. After obtaining advice and recommendations from the public, including individuals and representatives of groups involved in the Federal student financial assistance programs, the Secretary must subject the proposed regulations to a negotiated rulemaking process. All proposed regulations that the Department publishes on which the negotiators reached consensus must conform to final agreements resulting from that process unless the Secretary reopens the process or provides a written explanation to the participants stating why the Secretary has decided to depart from the agreements. Further information on the negotiated rulemaking process can be found at:

http://www.ed.gov/policy/highered/leg/hea08/index.html

.

On December 31, 2009, the Department published a notice in the

Federal Register

(73 FR 80314) announcing our intent to establish five negotiated rulemaking committees to prepare proposed regulations. One committee would focus on issues related to lender and general loan issues (Team I—Loans—Lender General Loan Issues). A second committee would focus on school-based loan issues (Team II—Loans—School-based Loan Issues). A third committee would focus on accreditation (Team III—Accreditation). A fourth committee would focus on discretionary grants (Team IV—Discretionary Grants). A fifth committee would focus on general and non-loan programmatic issues (Team V—General and Non-Loan Programmatic Issues). The notice requested nominations of individuals for membership on the committees who could represent the interests of key stakeholder constituencies on each committee.

Team V—General and Non-Loan Programmatic Issues (Team V) met to develop proposed regulations during the months of March 2009, April 2009, and May 2009. Team V agreed to establish five subcommittees to facilitate the discussion of the issues and expedite the development of the proposed regulations. The subcommittees included some of non-Federal negotiators and their alternates, outside experts regarding the particular issues addressed by a subcommittee, ED staff, and other interested parties. The subcommittees were:

(1) Campus Safety, responsible for issues relating to Fire Safety Standards, Missing Student Procedures, Hate Crime Reporting, and Emergency Response and Evacuation Procedures.

(2) Peer-to-Peer File Sharing, responsible for issues relating to illegal downloading of copyrighted materials.

(3) Intellectual Disabilities, responsible for issues relating to establishing title IV eligible educational programs for students with intellectual disabilities.

(4) LEAP/GAP, responsible for issues relating to LEAP and GAP programs.

(5) 90/10, responsible for issues relating to the requirement that a proprietary institution must derive at least 10 percent of its revenue from sources other than funds from the title IV, HEA programs.

In this NPRM we propose regulations for a variety of provisions, stemming from the work of the subcommittees and main committee, relating to the Federal grant and work-study programs, campus safety, educational programs for students with intellectual disabilities, copyright infringement, teach-outs, readmission of servicemembers, and non-Title IV revenue.

The Department developed a list of proposed regulatory provisions based on the provisions contained in the HEOA and from advice and recommendations submitted by individuals and organizations as testimony to the Department in a series of six public hearings held on:

• September 19, 2008, at Texas Christian University in Fort Worth, Texas;

• September 29, 2008, at the University of Rhode Island, in Providence, Rhode Island;

• October 2, 2008, at Pepperdine University, in Malibu, California;

• October 6, 2008, at Johnson C. Smith University, in Charlotte, North Carolina;

• October 8, 2008, at the U.S. Department of Education in Washington, DC; and

• October 15, 2008, at Cuyahoga Community College, in Cleveland, Ohio.

In addition, the Department accepted written comments on possible regulatory provisions submitted directly to the Department by interested parties and organizations. A summary of all comments received orally and in writing is posted as background material in the docket for this NPRM. Transcripts of the regional meetings can be accessed at

http://www.ed.gov/policy/highered/leg/hea08/index.html

.

Staff within the Department also identified issues for discussion and negotiation.

At its first meeting, Team V reached agreement on its protocols. These protocols provided that for each community of interest identified as having interests that were significantly affected by the subject matter of the negotiations, the non-Federal negotiators would represent the organizations listed after their names in the protocols in the negotiated rulemaking process.

Team V included the following members:

• Clais Daniels-Edwards, University of California Student Association, and Serena Unrein (alternate), Arizona Students Association, representing students.

• David Baime, American Association of Community Colleges, and Dr. Karla Leach (alternate), Western Wyoming Community College, representing two-year public institutions.

• John Curtice, State University of New York, and Karen Fooks (alternate), University of Florida, representing four-year public institutions.

• Scott Fleming, Georgetown University, and Suzanne Day (alternate), Harvard University, representing private, non-profit institutions.

• Elaine Neely, Kaplan Higher Education Corp., and Mark Pelesh (alternate), Corinthian Colleges, Inc., representing private, for-profit institutions.

• Ray Testa, Empire Education Group, and Dr. Richard Dumaresq

(alternate), Pennsylvania Association of Private School Administrators, representing cosmetology schools.

• David Tipton, Berea College, and Ian Robertson (alternate), Warren Wilson College, representing work colleges.

• Dr. Ray Keck, Texas A&M International University, and Karl Brockenbrough (alternate), Bowie State University, representing minority-serving institutions.

• David Gelinas, Davidson College, and David Smedley (alternate), George Washington University, representing financial aid administrators.

• Sandy Tallman, Ross Education LLC, and Diane Fleming (alternate), Central Michigan University, representing financial aid administrators.

• Karen McCarthy, NASFAA, and Joan Berkes (alternate), NASFAA, representing financial aid administrators.

• Maureen Laffey, Delaware Higher Education Commission, and Dr. Alan Edwards (alternate), State Council of Higher Education for Virginia, representing State student grant agencies.

• Dr. Nick Bruno, University of Louisiana System, and John Higgins (alternate), Purdue University, representing business officers and bursars.

• Dr. John Cavanaugh, Pennsylvania State Systems of Higher Education, representing State higher education executive officers.

• S. Daniel Carter, Security on Campus, Inc., and Jonathan Kassa (alternate), Security on Campus, Inc., representing campus safety advocates.

• Brendan McCluskey, UMDJ Office of Emergency Management, and Dr. John Petrie (alternate), George Washington University, representing campus safety administrators.

• Ed Comeau, Campus Firewatch, and Phil Hagen (alternate) Georgetown University, representing fire safety advocates and administrators.

• Paul D. Martin, Center for Campus Fire Safety, representing fire safety advocates.

• Michael Lieberman, Anti-Defamation League, and Cristina Finch (alternate), Human Rights Campaign, representing human rights advocates.

• Delores Stafford, George Washington University, and Lisa Phillips (alternate), IACLEA, representing law enforcement.

• Stephanie Smith Lee, NDSS, and Madeleine C. Will (alternate), representing individuals with intellectual disabilities.

• Gregory Jackson, The University of Chicago, and Matthew Arthur (alternate), representing institutions on peer-to-peer file sharing.

• David Green, NBC Universal, and Jennifer Jacobsen (alternate), Sony Music Entertainment, representing digital content owners on peer-to-peer file sharing.

• Brian Kerrigan, U.S. Department of Education, representing the Federal Government.

These protocols also provided that, unless agreed to otherwise, consensus on all of the amendments in the proposed regulations had to be achieved for consensus to be reached on the entire NPRM. Consensus means that there must be no dissent by any member.

During the meetings, Team V reviewed and discussed drafts of proposed regulations. At the final meeting in May 2009, Team V did not reach consensus on the proposed regulations in this document.

Summary of Proposed Changes

These proposed regulations would implement general and non-Loan provisions of the HEA, as amended by the HEOA, including:

• Establishing requirements under which students may receive up to two Federal Pell Grant Scheduled Awards during a single award year (see section 401(b)(5)(A) of the HEA);

• Providing the maximum Federal Pell Grant eligibility to a student whose parent was in the armed forces and died in Iraq or Afghanistan if the student was under 24 years old or enrolled in an institution of higher education at the time the parent died (see section 401(F)(4) of the HEA);

• Establishing extenuating circumstances under which a TEACH Grant recipient may be excused from fulfilling all or part of his or her service obligation (see section 420N(d)(2) of the HEA);

• Expanding the use of FWS funds to permit institutions to compensate students employed in projects that teach civics in school, raise awareness of government functions or resources, or increase civic participation (see section 443 of the HEA);

• Allowing institutions located in major disaster areas to make FWS payments to disaster-affected students (see section 445(d) of the HEA).

• Revising definitions and terms relating to work colleges (see section 448 of the HEA).

• Establishing new requirements for determining how proprietary institutions calculate the amount and percent of revenue derived from sources other than title IV, HEA program funds (see section 487(d) of the HEA).

• Expanding the information that institutions must make available to prospective and enrolled students to include information on: The employment and placement of students, the retention rates of first-time, full-time undergraduate students, and completion and graduation rate data that is disaggregated by gender, race, and grant or loan assistance (see section 485(a) of the HEA).

• Establishing requirements for institutions that maintain on-campus housing facilities to publish annually a fire safety report, maintain a fire log, and report fire statistics to the Department (see section 485(i) of the HEA).

• Requiring institutions that provide on-campus housing facilities to develop and make available a missing student notification policy and allow students who reside on campus to confidentially register contact information (see section 485(j) of the HEA).

• Expanding the list of crimes that institutions must include in the hate crimes statistics reported to the Department (see section 485(f) of the HEA).

• Requiring institutions to include in the annual security report a statement of emergency response and evacuation procedures (see section 485(f) of the HEA).

• Expanding the eligibility for Federal Pell Grant, FWS, and FSEOG Program funds to students with intellectual disabilities (see sections 484(s) and 760 of the HEA).

• Establishing requirements under which an institution must readmit servicemembers to the same academic status they had when they last attended the institution (see section 484C of the HEA).

• Providing that an institution that conducts a teach-out at a site of a closed institution may, under certain conditions, establish that site as an additional location (see sections 487(f) and 498 of the HEA).

• Amending the definition of “proprietary institution of higher education” to include institutions that provide a program leading to a baccalaureate degree in liberal arts, if the institution provided that program since January 1, 2009, and has been accredited by a regional accrediting agency since October 1, 2007, or earlier (see section 102(b)(1)(A) of the HEA).

• Providing that an institution must certify that it has plans to effectively combat unauthorized distribution of copyrighted material and will offer alternatives to illegal downloading or peer-to-peer distribution of intellectual

property (see sections 485(a)(1) and 487(a) of the HEA).

• Expanding the information that an institution must make available to prospective and enrolled students to include a description of any plans the institution has to improve its academic program (see section 485(a) of the HEA).

• Providing that the non-Federal share of student grants or work-study jobs under the LEAP Program must be State funds and that the non-Federal share no longer has to come from a direct appropriation of State funds (see section 415C(b)(10) of the HEA).

• Requiring the State program to notify students that grants are LEAP Grants that are funded by the Federal Government, the State, and for LEAP Grants to students under the new Grants for Access and Persistence (GAP) Program, other contributing partners (see section 415C(b) of the HEA).

• Establishing the activities, awards, allotments to States, matching funds requirements, consumer information requirements, application requirements, and other requirements needed to begin and continue participating in the GAP Program (see sections 415B and 415E of the HEA).

Significant Proposed Regulations

We group major issues according to subject, with appropriate sections of the proposed regulations referenced in parentheses. We discuss other substantive issues under the sections of the proposed regulations to which they pertain. Generally, we do not address proposed regulatory provisions that are technical or otherwise minor in effect.

Part 600 Institutional Eligibility Under the Higher Education Act of 1965, as Amended

Definition of Baccalaureate Liberal Arts Programs Offered by Proprietary Institutions (§ 600.5)

Statute:

Effective July 1, 2010, the HEOA amends the definition of

proprietary institution of higher education

in section 102(b)(1)(A) of the HEA to include an institution that provides a program leading to a baccalaureate degree in liberal arts that the institution has provided since January 1, 2009, so long as the institution has been accredited by a recognized regional accreditation agency or organization since October 1, 2007, or earlier. As the language in section 102(b)(1)(A)(i) of the HEA is not new, this change does not affect the eligibility of current programs or alter the method used by the Department in determining that a program of training prepares students for gainful employment in a recognized occupation.

Current Regulations:

Section 600.5(a)(5) defines a

proprietary institution of higher education

as one that provides an eligible program of training, defined in § 668.8, to prepare students for gainful employment in a recognized occupation.

Proposed Regulations:

The proposed change to § 600.5(a)(5) would add to the definition of

proprietary institution of higher education,

an institution that provides a program leading to a baccalaureate degree in liberal arts that the institution has provided since January 1, 2009, so long as the institution has been accredited by a recognized regional accreditation agency or organization since October 1, 2007, or earlier. In addition, a new paragraph (e) would be added to § 600.5 to include a definition of a

program leading to a baccalaureate degree in liberal arts.

The definition would require that the institution's recognized regional accreditation agency or organization determine that the program is a general instructional program in the liberal arts subjects, the humanities disciplines, or the general curriculum, falling within one or more generally accepted instructional categories comprising such programs, but including only instruction in regular programs, and excluding independently designed programs, individualized programs, and unstructured studies. The generally accepted instructional categories would be:

• A program that is a structured combination of the arts, biological and physical sciences, social sciences, and humanities, emphasizing breadth of study;

• An undifferentiated program that includes instruction in the general arts or general science;

• A program that focuses on combined studies and research in the humanities subjects as distinguished from the social and physical sciences, emphasizing languages, literatures, art, music, philosophy and religion; and

• Any single instructional program in liberal arts and sciences, general studies and humanities not listed above.

Reasons:

The regulations are amended to reflect the changes made by the HEOA. The regulations would require that an institution's accrediting agency determine that a program is a liberal arts program as defined in this section in order to ensure that a program meets a generally accepted standard for liberal arts programs. The proposed definition of a

program leading to a baccalaureate degree in liberal arts

is from the U.S. Department of Education's National Center for Education Statistics' (NCES) Classification of Instructional Programs (CIP), the Federal government statistical standard on instructional program classifications. Specifically, the instructional categories are from the description of CIP 24, Liberal Arts and Sciences, General Studies, and Humanities, which would ensure that a program meets a generally accepted standard for liberal arts programs. The definition excludes independently-designed programs, individualized programs, and unstructured studies as the Department believes that, to meet the statutory requirement that an institution offer a program, it must be an organized program of study that is essentially the same for all students, except that it could include some elective courses.

Institutional Requirements for Teach-Outs and Eligibility and Certification Procedures (§§ 600.2, 600.32, 668.14)

Statute:

The HEOA added paragraph (f) to section 487 of the HEA to provide that, whenever the Department initiates an action to limit, suspend, or terminate (LS&T) an institution's participation in any Title IV program or initiates an emergency action against an institution, the institution must prepare a teach-out plan for submission to its accrediting agency. The teach-out plan must be prepared in accordance with section 496(c)(6) of the HEA (mistakenly cited as section 496(c)(4) in the HEA) and any applicable title IV, HEA program regulations or accrediting agency standards. A

teach-out plan

is defined as a written plan that provides for equitable treatment of students if an institution ceases to operate before all students have completed their program of study, and may include, if required by the institution's accrediting agency, a teach-out agreement.

The HEOA also added section 498(k) of the HEA to provide that a location of a closed institution is eligible as an additional location of another institution for the purpose of conducting a teach-out if the teach-out is approved by the institution's accrediting agency. The institution that conducts the teach-out under this provision is permitted to establish a permanent additional location at the closed institution without having to satisfy the requirements for additional locations in sections 102(b)(1)(E) and 102(c)(1))(C) of the HEA—

i.e.,

that a proprietary institution or a postsecondary vocational institution must have been in existence for two years to be eligible—and without assuming the liabilities of the closed institution.

One of the four new accrediting agency operating procedures added by the HEOA as section 496(c)(3) of the HEA requires accrediting agencies to approve teach-out plans submitted by institutions they accredit if the Department notifies the agency of an action against an institution in accordance with section 487(f) of the HEA, if the institution's accreditation is withdrawn, terminated or suspended, or if the institution intends to cease operations. This provision was negotiated by Team III—Accreditation and will be reflected in the NPRM developed to implement accreditation issues (Docket ID ED-2009-OPE-). Because of the overlap in these three provisions, the development of proposed regulatory language was coordinated between the two negotiating committees.

Current Regulations:

Section 600.32 provides that an additional location is eligible to participate in the title IV, HEA programs if it meets the requirements for institutional eligibility in (1) § 600.4 (eligibility requirements for an institution of higher education), § 600.5 (eligibility requirements for a proprietary institution), or § 600.6 (eligibility requirements for a postsecondary vocational institution); (2) § 600.8 (treatment of a branch campus), and (3) § 600.10 (date, extent, duration, and consequences of eligibility). However, to qualify as an eligible additional location, a location is not required to have been in existence for two years unless (1) the location was a facility of another institution that has closed or ceased to provide educational programs for a reason other than a normal vacation period or a natural disaster that directly affects the institution or the institution's students; (2) the applicant institution acquired, either directly from the institution that closed or ceased to provide educational programs, or through an intermediary, the assets at the location; and (3) the institution from which the applicant institution acquired the assets of the location owes a liability for a violation of an HEA program requirement and is not making payments in accordance with an agreement to repay that liability. An additional location that must meet the two-year rule for these reasons, nevertheless, is exempt from the two-year rule if it agrees (1) to be liable for all improperly expended or unspent title IV program funds received by the institution that has closed or ceased to provide educational programs; (2) to be liable for all unpaid refunds owed to students who received title IV program funds; and (3) to abide by the policy of the institution that has closed or ceased to provide educational programs regarding refunds of institutional charges to students in effect before the date of the acquisition of the assets of the additional location for the students who were enrolled before that date.

Proposed Regulations:

Section 600.2 would define a

teach-out plan

as a written plan developed by an institution that provides for the equitable treatment of students if an institution, or an institutional location that provides 100 percent of at least one program, ceases to operate before all students have completed their program of study, and may include, if required by the institution's accrediting agency, a teach-out agreement between institutions.

Section 668.14 would be amended to include in the program participation agreement the requirement in section 487(f) of the HEA. In addition to requiring an institution to submit a teach-out plan to its accrediting agency whenever the Department initiates an LS&T, or an emergency action against the institution, as required by statute, proposed § 668.14(b)(31) would require an institution to submit a teach-out plan when (1) the institution's accrediting agency acts to withdraw, terminate, or suspend the accreditation or preaccreditation of the institution; (2) the institution's State licensing or authorizing agency revokes the institution's license or legal authorization to provide an educational program; (3) the institution intends to close a location that provides 100 percent of at least one program; or (4) the institution otherwise intends to cease operations.

Proposed § 600.32(d) would implement section 498(k) of the HEA to provide that an institution that conducts a teach-out for a closed institution whenever the Department initiates an LS&T, or an emergency action against the institution, may apply to have that site approved as an additional location, if the teach-out plan was approved by the closed institution's accrediting agency. If the Department approves the institution to add the additional location, the “two-year rule” would not apply to the additional location. In addition, the institution would not assume the liabilities of the closed institution, and the institution would not assume the cohort default rate of the closed institution, provided the institutions are not related parties and there is no commonality of ownership or management between the institutions, as described in proposed 34 CFR 668.188(b) and 34 CFR 668.207(b) (these sections address the determination of cohort default rates for institutions that have undergone a change in status). An institution that accepts responsibility for conducting a teach-out of students under such an arrangement would still have to comply with § 600.32(c)(3), which requires the additional location to abide by the policy of the institution that has closed or ceased to provide educational programs regarding refunds of institutional charges to students in effect before the date of the acquisition of the assets of the additional location for the students who were enrolled before that date. As a condition for approval of the additional location, the Department may require that payments from the institution conducting the teach-out to the owners of the closed institution, or related parties, be used to pay any liabilities owed by the closed institution.

Reasons:

The regulations are amended to reflect the changes made by the HEOA.

In proposed § 668.14(b)(31), the circumstances under which an institution would be required to submit a teach-out plan to its accrediting agency would be expanded beyond the circumstances listed in the statute to specifically address other situations where the Department believes the potential closure will put significant numbers of students at risk of being unable to complete their program, including the closure of a location that provides 100 percent of at least one program. This list of circumstances would conform with proposed changes in §§ 602.3 and 602.24 of the Team III—Accreditation NPRM (Docket ID ED-2009-OPE-) for implementing section 496(c)(3) of the HEA, which directs accrediting agencies to require institutions to submit a teach-out plan for approval upon the occurrence of certain events. As a result, the definition of a

teach-out plan

would apply to an institutional location that provides 100 percent of at least one program, and would be the same definition used in 34 CFR part 602 for the Secretary's Recognition of Accrediting Agencies.

Proposed § 600.32(d) would be consistent with statutory intent to encourage an institution to conduct a teach-out of a closed institution and our view that the cohort default rate of a closed institution could be a potential impediment that could dissuade another institution from conducting the teach-out if its default rate would be adversely affected by the closed institution's default rate. However, the proposed regulations would ensure that this provision is not used by an owner to circumvent an undesirable cohort

default rate or liabilities for one institution by having it become an additional location of another institution under the same, or related, ownership. Preserving the Department's right to require that payments from the institution conducting the teach-out to the owners of the closed institution, or related parties, be used to pay any liabilities owed by the closed institution, provides the benefit to the institution that conducts the teach-out of not assuming any liabilities owed by the closed school, while ensuring that any funds paid to the owners of the closed school are applied against any title IV program liabilities owed by that institution.

No changes are proposed to the applicability of § 600.32(c)—that the institution opening the additional location must continue to apply the refund policy for the students from the institution that has closed or ceased to provide educational programs. This obligation to protect the students by keeping the same refund policy in place continues because it is different from the pre-existing liabilities that the institution is not required to assume under this provision.

Some non-Federal negotiators felt that, in keeping with proposed 34 CFR 668.14(b)(31), proposed § 600.32(d) should be expanded to allow the exemptions from the two-year rule, the assumption of liabilities, and the assumption of the cohort default rate, to apply when an institution conducts a teach-out at an institution that closes for reasons other than those listed in section 498(k) of the HEA—

i.e.

, the initiation of a limitation, suspension, or termination of the institution, or an emergency action against the institution by the Department. The Department would limit the availability of this procedure (allowing an institution to conduct a teach-out of a closed institution without the imposition of customary restrictions to discourage institutions not subject to an LS&T, or emergency action from arranging a closure and sale of the institution) without liabilities in situations where a buyer would otherwise purchase the institution and assume the institution's liabilities under existing change of ownership rules.

Part 668 Student Assistance General Provisions

Readmission Requirements for Servicemembers (§ 668.18)

Statute:

The HEOA added new section 484C to the HEA to address institutional readmission requirements for servicemembers. Section 484C of the HEA provides that an institution of higher education may not deny readmission to a servicemember of the uniformed services for reasons relating to that service. In addition, a student who is readmitted to an institution under this section must be readmitted with the same academic status as the student had when he or she last attended the institution. An affected servicemember is any individual who is a member of, applies to be a member of, or performs, has performed, applies to perform, or has the obligation to perform, service in the uniformed services. This requirement applies to service in the uniformed services, whether voluntary or involuntary, on active duty in the Armed Forces, including service as a member of the National Guard or Reserve, for a period of more than 30 days under a call or order to active duty of more than 30 days.

Any student whose absence from an institution of higher education is necessitated by reason of service in the uniformed services is entitled to readmission if:

• The student (or an appropriate officer of the Armed Forces or official of the Department of Defense) gives advance written or verbal notice of such service to the appropriate official at the institution;

• The cumulative length of the absence and of all previous absences from that institution of higher education by reason of service in the uniformed services does not exceed five years; and

• Except as otherwise provided in this section, the student submits a notification of intent to reenroll in the institution.

However, no advance notice by the student is required if the giving of such notice is precluded by military necessity, such as a mission, operation, exercise, or requirement that is classified; or a pending or ongoing mission, operation, exercise, or requirement that may be compromised or otherwise adversely affected by public knowledge. In addition, any student (or an appropriate officer of the Armed Forces or official of the Department of Defense) who did not give advance notice of service to the appropriate official at the institution may meet the notice requirement by submitting, at the time the student seeks readmission, an attestation to the student's institution that the student performed service in the uniformed services that necessitated the student's absence from the institution.

When determining the cumulative length of the student's absence for service, the period of service does not include any service:

• That is required, beyond five years, to complete an initial period of obligated service;

• During which the student was unable to obtain orders releasing the student from a period of service in the uniformed services before the expiration of the five-year period and the inability to obtain those orders was through no fault of the student; or

• That is performed by a member of the Armed Forces (including the National Guard and Reserves) who is—

◦ Ordered to or retained on active duty under section 688, 12301(a), 12301(g), 12302, 12304, or 12305 of Title 10, U.S.C., or under section 331, 332, 359, 360, 367, or 712 of Title 14, U.S.C.;

◦ Ordered to or retained on active duty (other than for training) under any provision of law because of a war or national emergency declared by the President or the Congress;

◦ Ordered to active duty (other than for training) in support of an operational mission for which personnel have been ordered to active duty under section 12304 of Title 10, U.S.C.;

◦ Odered to active duty in support of a critical mission or requirement of the Armed Forces (including the National Guard or Reserve); or

◦ Called into Federal service as a member of the National Guard under chapter 15 of Title 10, U.S.C., or section 12406 of Title 10, U.S.C.

An affected servicemember must, upon the completion of a period of service in the uniformed services, notify the institution of his or her intent to return to the institution not later than three years after the completion of the period of service. However, a student who is hospitalized for or convalescing from an illness or injury incurred in or aggravated during the performance of service in the uniformed services must notify the institution of his or her intent to return to the institution not later than two years after the end of the period that is necessary for recovery from such illness or injury. A student who fails to apply for readmission within the required period does not automatically forfeit eligibility for readmission to the institution, but is subject to the institution's established leave of absence policy and general practices.

A student who submits an application for readmission to an institution must provide to the institution documentation to establish that:

• The student has not exceeded the specified service limitations; and

• The student's eligibility for readmission has not been terminated.

An institution may not delay or attempt to avoid a readmission of a student under this section by demanding documentation that does not exist, or is not readily available, at the time of readmission.

A student's eligibility for readmission to an institution under this section by reason of such student's service in the uniformed services terminates upon the occurrence of any of the following events:

• A separation of such person from the Armed Forces (including the National Guard and reserves) with a dishonorable or bad conduct discharge;

• A dismissal of such person permitted under section 1161(a) of Title 10, U.S.C.; or

• A dropping of such person from the rolls pursuant to section 1161(b) of Title 10, U.S.C.

Current Regulations:

None.

Proposed Regulations:

General

Section 668.18(a) would include the general requirements of the statute that an institution may not deny readmission to a servicemember, but must readmit the servicemember with the same academic status as the student had when the student was last admitted to the institution. The proposed regulations would clarify that the requirements of this section also apply to a student who was admitted to an institution, but did not begin attendance because of service in the uniformed services. The proposed regulations would specify that the institution must promptly readmit a student, and would define “promptly readmit” as readmitting a student into the next class or classes in the student's program unless the student requests a later date of admission, or unusual circumstances require the institution to admit the student at a later date.

Section 668.18(a)(2)(iii) would specify that to readmit a person with the “same academic status” means that the institution admits the student:

• To the same program to which he or she was last admitted by the institution or, if that program is no longer offered, the program that is most similar, unless the student requests or agrees to admission to a different program;

• At the same enrollment status that the student last held at the institution, unless the student requests or agrees to admission at a different enrollment status;

• With the same number of credit hours or clock hours completed previously by the student, unless the student is readmitted to a different program to which the completed credit hours or clock hours are not transferable;

• With the same academic standing (

e.g.,

with the same satisfactory academic progress status) the student previously had;

• If the student is readmitted to the same program, for the first academic year in which the student returns, by assessing the same institutional charges that the student was or would have been assessed for the academic year during which the student left the institution;

• If the student is admitted to a different program, and for subsequent academic years for a student admitted to the same program, by assessing no more than the institutional charges that other students in the program are assessed for that academic year; and

• Waiving charges for equipment required in lieu of equipment the student paid for when the student was previously enrolled.

In the case of a student who is not prepared to resume the program at the point where he or she left off or will not be able to complete the program, § 668.18(a)(2)(iv) would require the institution to make reasonable efforts to help the student become prepared or to enable the student to complete the program including, but not limited to, providing refresher courses at no extra cost and allowing the student to retake a pretest at no extra cost. The institution would not be required to readmit the student if, after reasonable efforts by the institution, the student is still not prepared to resume the program at the point where he or she left off, or is still unable to complete the program. In addition, an institution would not be required to readmit a student if there are no reasonable efforts the institution can take to prepare the student to resume the program, or to enable the student to complete the program.

The proposed regulations would define “reasonable efforts” as actions that do not place an undue hardship on the institution. An “undue hardship” would be defined as requiring significant difficulty or expense to the institution. An institution would carry the burden to prove by a preponderance of the evidence that the student is not prepared to resume the program with the same academic status at the point where the student left off, or that the student will not be able to complete the program.

Section 668.18(a)(3) would make clear that the requirements of this section apply to an institution even if that institution has undergone a change of ownership since the student ceased attendance.

Finally, § 668.18(a)(4) would make clear that the provisions of this section supersede any State law or other requirement that reduce, limit, or eliminate any right or benefit provided by this section.

Service in the Uniformed Services

Section 668.18(b) would delineate what service in the uniformed services means for purposes of this section. This section would expand upon the statutory language to clarify that service in the uniformed services includes active duty for training and full-time National Guard duty under Federal authority (

i.e.,

not National Guard service under authority of State law). In addition, the regulations would specify that qualifying service must be for more than 30

consecutive

days under a call or order to active duty of more than 30

consecutive

days.

Readmission Procedures

Section 668.18(c) would list the statutory conditions under which an institution must readmit a servicemember. In addition, § 668.18(c)(2)(i) would require an institution to designate one or more offices for the purpose of receiving advance notice from students of their absence from the institution necessitated by service in the uniformed services, and notice from students of an intent to return to the institution. Section 668.18(c)(1)(i) would make clear that advance notice must be provided by the student as far in advance as is reasonable under the circumstances. However under § 668.18(c)(2)(ii) and (iii), such notice would not need to follow any particular format, nor would a student have to indicate as part of the notice whether the student intends to return to the institution. Also, the regulations would make clear that an institution may not set a brightline deadline for submission of any such notice, but must judge the timeliness of submission by the facts of a particular case. As such notice may be provided by an appropriate officer of the Armed Forces, § 668.18(c)(2)(iv) would clarify who an “appropriate officer” is. The regulations would also provide that a student's notice of intent to return may be provided orally or in writing and would not need to follow any particular format. Section 668.18(c)(1)(ii) would make clear that the cumulative length of all previous absences by an affected student from the institution would include only the time the student spends actually performing service in the uniformed services. A period of absence from the institution before or after performing service in the

uniformed services would not count against the five year limit. For example, after the individual completes a period of service in the uniformed services, he or she is provided a certain amount of time to return to the institution. The period between completing the uniformed service and returning to the institution would not count against the five-year limit.

Exceptions to Advance Notice

Section 668.18(d) would restate the statutory language for exceptions to advance notice.

Cumulative Length of Absence

Section 668.18(e) would restate the statutory types of service that are not included in the cumulative length of the student's absence, including a brief description of the types of services referenced in titles 10 and 14 of the United States Code.

Notification of Intent to Reenroll

Section 668.18(f) would restate the statutory provision providing that a student who fails to apply for readmission within the required periods does not automatically forfeit eligibility for readmission to the institution, but is subject to the institution's established leave of absence policy and general practices.

Documentation

Section 668.18(g) would list the documentation required by the statute that a student must submit with an application for readmission. The regulations would list several specific types of documentation that satisfy the statutory documentation requirements, making clear that the types of documentation available or necessary will vary from case to case.

Termination of Readmission Eligibility

Section 668.18(h) would list the circumstances listed in the statute under which a student's eligibility for readmission to an institution would be terminated, including a brief description of the types of circumstances referenced in title 10 of the United States Code.

Reasons:

The regulations are amended to reflect the changes made by the HEOA. The statutory provisions for readmission of servicemembers to institutions of higher education were based on the provisions of the Uniformed Services Employment and Reemployment Rights Act (USERRA) (38 U.S.C. 4301-4334), which established the process for servicemembers to return to employment after serving on active duty. Therefore, in developing these proposed regulations, the Department sought to be as consistent as possible with the regulations implementing the USERRA. The Department believes that the purpose of these provisions, as with the USERRA, is to minimize the disruption to the lives of persons performing service in the uniformed services, allowing a student to return to an institution without penalty for having left because of service in the uniformed services.

General

Because the statute refers to “readmission” of servicemembers, the Department believes that the statute was intended to apply not just to a student who began attendance at an institution and left because of service in the uniformed services, but also to a student who was admitted to an institution, but did not begin attendance because of service in the uniformed services.

In line with the goal of minimizing the disruption to the lives of persons performing service in the uniformed services and to prevent an institution from unduly delaying an individual's readmission, the proposed regulations would require an institution to promptly readmit a student, and would define “promptly readmit” as readmitting a student into the next class or classes in the student's program unless the student requests a later date of admission, or unusual circumstances require the institution to admit the student at a later date. If, for example, an institution must make efforts to help the student become prepared to resume the program, and such efforts would not be completed in time for the student to begin the next class, a later date of admission would be justified.

The proposed requirements in § 668.18(a)(2)(iii) for readmitting a person with the “same academic status” are consistent with USERRA regulations (20 CFR 1002.191 and 1002.192), which require an employer to employ a returning servicemember in the same position he or she left, so as to not penalize the individual for having left to serve in the uniformed services. The Department has chosen to focus only on the readmission of a servicemember by requiring that, if the student is readmitted to the same program, for the first academic year in which the student returns, the institution would have to assess the same institutional charges that the student had or would have been assessed for the academic year during which the student left the institution. However, this protection would not apply to subsequent years, when the institution could assess the institutional charges that other students in the program are assessed for that academic year.

To address concerns voiced by non-Federal negotiators that the regulations would not allow an institution to readmit a student with a different academic status, even if the student wanted the change, the regulations would make clear that the institution may admit the student with a different academic status if the student requests or agrees to the change.

Consistent with USERRA regulations (20 CFR 1002.198) which require an employer to make reasonable efforts, if necessary, to help an employee become qualified for the reemployment position, § 668.18(a)(2)(iv) would require the institution to make reasonable efforts, if necessary, to help a returning student become prepared or to enable the student to complete the program including, but not limited to, providing refresher courses at no extra cost and allowing the student to retake a pretest at no extra cost. The Department believes requiring an institution to make such an effort is in line with the goal of allowing a student to return to an institution without penalty for having left because of service in the uniformed services. To ensure that such an effort does not unduly burden the institution financially or administratively, the proposed regulations would use the USERRA regulations definitions of “reasonable efforts”—actions that do not place an undue hardship on the institution and “undue hardship”—requiring significant difficulty or expense to the institution.

In addition, as USERRA regulations (20 CFR 1002.139) provide an employer with a degree of flexibility in meeting its reemployment obligations by not requiring an employer to reemploy an individual under very limited circumstances, so would § 668.18(a)(2)(iv)(B) provide institutions with some flexibility to not readmit a student if, (1) after reasonable efforts by the institution, the student is still not prepared to resume the program at the point where he or she left off, or is still unable to complete the program; or (2) if there are no reasonable efforts the institution can take to prepare the student to resume the program, or to enable the student to complete the program. Consistent with USERRA regulations (20 CFR 1002.139), an institution would carry the burden to prove by a preponderance of the evidence that the student is not prepared to resume the program with the same academic status at the point where the student left off, or that the student will not be able to complete the program.

Consistent with the Department's practice of treating an institution that has undergone a change of ownership as the same institution, § 668.18(a)(3) provides that the requirements of this section would apply to an institution even if that institution has undergone a change of ownership since the student ceased attendance.

As with USERRA regulations (20 CFR 1002.7(b)), § 668.18(a)(4) would make clear that the provisions of this section supersede any State law or other requirement that reduces, limits, or eliminates any right or benefit provided by this section. This provision would make it possible, for example, to readmit a servicemember into a class for a semester even if that class was at the maximum enrollment level set by the institution's State. The preemption only applies when it is the admission of the returning servicemember that would be prevented by the State law or other requirement. The institution is expected to take other steps to come into compliance with the State law or other requirements for future periods of enrollment. As with USERRA regulations, these regulations would not supersede, nullify or diminish any Federal or State law (including any local law or ordinance), contract, agreement, policy, plan, practice, or other matter that establishes an individual's right or benefit that is more beneficial than, or is in addition to, a right or benefit provided under the HEA.

Service in the Uniformed Services

Section 668.18(b) clarifies that service in the uniformed services includes active duty for training, because it is a form of active duty in the Armed Forces. Consistent with USERRA regulations (20 CFR 1002.57), service in the uniformed services would include full-time National Guard duty under Federal authority, but not National Guard service under authority of State law, which is not considered to be service in the uniformed services for purposes of these provisions. As explained in 20 CFR 1002.57 of the USERRA regulations:

The National Guard has a dual status. It is a Reserve component of the Army, or, in the case of the Air National Guard, of the Air Force. Simultaneously, it is a State military force subject to call-up by the State Governor for duty not subject to Federal control, such as emergency duty in cases of floods or riots. National Guard members may perform service under either Federal or State authority, but only Federal National Guard service is covered by USERRA.

In addition, the regulations would specify that qualifying service must be for more than 30

consecutive

days under a call or order to active duty of more than 30

consecutive

days. This would exclude shorter periods of Reserve and National Guard service from being added together to trigger this provision.

Readmission Procedures

Section 668.18(c) would list the statutory conditions under which an institution must readmit a servicemember. An institution would be required to designate one or more offices for the purpose of receiving advance notice from students of their absence from the institution necessitated by service in the uniformed services, and notice from students of an intent to return to the institution to ease administrative burden for institutions and to assist students in directing their notice to the appropriate individuals.

Also, consistent with USERRA regulations (20 CFR 1002.85), to ease administrative burden for institutions, a student would have to provide notice that he or she is leaving as far in advance as is reasonable under the circumstances. However, also consistent with USERRA regulations (20 CFR 1002.85 and 1002.88), to ensure that a student's advance notice is not subject to unreasonable requirements by an institution: (1) Such notice would not need to follow any particular format; (2) an institution would have to judge the timeliness of submission by the facts of a particular case; and (3) a student would not have to indicate as part of the notice whether the student intends to return to the institution. For the same reason, the regulations would also provide that a student's notice of intent to return may be provided orally or in writing and would not need to follow any particular format (consistent with USERRA regulations section 1002.118).

Consistent with USERRA regulations (20 CFR 1002.100), § 668.18(c)(1)(ii) would make clear that the cumulative length of all previous absences by an affected student from the institution would include only the time the student spends actually performing service in the uniformed services. This means that the time a servicemember spent away from the institution either before, after, or in-between periods of service in the uniformed services does not count toward the maximum amount of time the servicemember may spend in active service before losing the protections in this provision.

Documentation

The list of specific types of documentation was included to assist students and institutions in identifying documents that satisfy the statutory documentation requirements.

Non-Title IV Revenue Requirement (90/10)

Institutional Eligibility and Sanctions (§§ 668.14(b)(16), 668.28(c), and 668.13(c))

Statute:

The HEOA moved the requirement that a proprietary institution derive at least 10 percent of its revenue from sources other than title IV, HEA program funds from the institutional eligibility provisions in section 102(b) of the HEA to the general provisions in section 487(d) of the HEA. As a result, a proprietary institution that does not satisfy the 90/10 revenue requirement for a fiscal year, no longer loses its eligibility to participate in the title IV, HEA programs. Instead, as provided in section 487(d)(2) of the HEA, the institution's participation becomes provisional for two fiscal years. If the institution does not satisfy the 90/10 revenue requirement for two consecutive fiscal years, it loses its eligibility to participate in the title IV, HEA programs for at least two fiscal years.

During the two fiscal years the institution is provisionally certified because it failed to satisfy the 90/10 revenue requirement for a fiscal year, the institution's provisional certification terminates on the expiration date of its program participation agreement or the date it loses its eligibility to participate because it failed to satisfy the requirement for two consecutive fiscal years. To regain eligibility, the institution must demonstrate that it complied with all eligibility and certification requirements under section 498 of the HEA for a minimum of two fiscal years after the fiscal year it became ineligible.

Current Regulations:

The regulations in 34 CFR 600.5(a)(8), (e), (f), and (g), identify the requirements for, and consequences of failing, the 90/10 revenue provision.

Proposed Regulations:

In general, the proposed regulations would remove all of the 90/10 revenue provisions from 34 CFR 600.5 and relocate those provisions, as amended by the HEOA, to subpart B of part 668. Accordingly, proposed § 668.14(b)(16) would amend the program participation agreement to specify that a proprietary institution must derive at least 10 percent of its revenue for each fiscal year from sources other than title IV, HEA program funds. If an institution does not satisfy the 90/10 requirement, the proposed regulations in § 668.28(c) would incorporate the statutory consequences and require the institution to notify the Secretary no later than 45 days after the end of its

fiscal year that it failed the 90/10 requirement. Also, and in keeping with the provisional certification requirement in the statute, § 668.13(c) would be amended by adding proposed paragraph (1)(ii) to provide that a proprietary institution's certification automatically becomes provisional if it fails the 90/10 requirement for any fiscal year.

Reasons:

The proposed regulations reflect the statutory requirements. The provision under which an institution would notify the Department that it failed the 90/10 requirement no later than 45 after its fiscal year, parallels, but would shorten, the current 90-day timeframe in 34 CFR 600.5(f). An institution at risk of failing the 90/10 requirement is expected to monitor its revenue sources and amounts carefully throughout the year, and is expected to know if it failed shortly after the end of its fiscal year. Consequently, we believe that 45 days provides ample time for the institution to confirm on-going assessments of its compliance with this requirement.

Calculating the Revenue Percentage (§ 668.28(a))

Statute:

Section 487(d) of the HEA prescribes the requirements that proprietary institutions must follow in calculating their 90/10 revenue percentage. Under these requirements, an institution must—

(1) Use the cash basis of accounting, except for certain loans made by the institution;

(2) Consider as revenue only those funds generated by the institution from:

• Tuition, fees, and other institutional charges for students enrolled in eligible programs.

• Activities conducted by the institution that are necessary for the education and training of the institution's students, if those activities are conducted on campus or at a facility under the control of the institution, are performed under the supervision of a member of the institution's faculty, and are required to be performed by all students in a specific educational program at the institution.

• Funds paid by a student, or on behalf of a student by a party other than the institution, for an education or training program that is not eligible for title IV, HEA program funds, if the program is approved or licensed by the appropriate State agency, is accredited by an accrediting agency recognized by the Department, or provides an industry-recognized credential or certification;

(3) Presume that any title IV, HEA program funds are disbursed or delivered to or on behalf of a student will be used to pay the student's tuition, fees, or other institutional charges, regardless of whether the institution credits those funds to the student's account or pays those funds directly to the student, except to the extent that the student's tuition, fees, or other institutional charges are satisfied by:

• Grant funds provided by non-Federal public agencies or private sources independent of the institution;

• Funds provided under a contractual arrangement with a Federal, State, or local government agency for the purpose of providing job training to low-income individuals who are in need of that training;

• Funds used by a student from savings plans for educational expenses established by or on behalf of the student and which qualify for special tax treatment under the Internal Revenue Code of 1986; or

• Institutional scholarships.

(4) Include institutional aid as revenue to the school only as follows:

• For loans made by the institution on or after July 1, 2008 and prior to July 1, 2012, the net present value (NPV) of those loans made by the institution during the applicable institutional fiscal year accounted for on an accrual basis and estimated in accordance with generally accepted accounting principles and related standards and guidance, if the loans are bona fide as evidenced by enforceable promissory notes; are issued at intervals related to the institution's enrollment periods; and are subject to regular loan repayments and collections.

• For loans made by the institution on or after July 1, 2012, only the amount of loan repayments received during the applicable institutional fiscal year, excluding repayments on loans made and accounted for which the NPV was used.

• For scholarships provided by the institution, only those scholarships provided by the institution in the form of monetary aid or tuition discounts based upon the academic achievements or financial need of students, disbursed during each fiscal year from an established restricted account, and only to the extent that funds in that account represent designated funds from an outside source or from income earned on those funds.

(5) For each student who receives a loan on or after July 1, 2008, and prior to July 1, 2011, that is authorized under section 428H of the HEA or that is a Federal Direct Unsubsidized Stafford Loan, treat as revenue received by the institution from sources other than funds received under this title, the amount by which the disbursement of the loan received by the institution exceeds the limit on such loan in effect on the day before the date of enactment of the Ensuring Continued Access to Student Loans Act (ECASLA) of 2008; and

(6) Exclude from revenues—

• The amount of funds the institution received under part C (Federal Work Study), unless the institution used those funds to pay a student's institutional charges.

• The amount of funds the institution received under subpart 4 of part A (LEAP, SLEAP, or GAP).

• The amount of funds provided by the institution as matching funds for a title IV, HEA program.

• The amount of title IV, HEA program funds provided by the institution that are required to be refunded or returned.

• The amount charged for books, supplies, and equipment, unless the institution includes that amount as tuition, fees, or other institutional charges.

Current regulations:

The regulations in 34 CFR 600.5 address many, but not all, of the statutory requirements for calculating the 90/10 revenue percentage. However, as discussed previously, the regulations in this section would be removed.

Section 668.23(d)(4) requires a proprietary institution to report its 90/10 ratio in a footnote to its audited financial statements.

Proposed regulations:

Proposed § 668.28(a) incorporates the statutory requirements.

We propose to implement the statutory provision relating to counting revenue from non-title IV eligible programs by providing that these programs may prepare students to take an examination for an industry-recognized credential or certificate issued by an independent third-party, provide training needed for students to maintain State licensing requirements, or provide additional training for practitioners.

An institution would continue to report the revenue percentages in a footnote to its audited financial statements, but the revisions in proposed § 668.23(d)(4) would require the institution to identify in that footnote the non-Federal and Federal revenues by category.

With regard to institutional loans for which an NPV would be calculated, the proposed regulations establish that institutional loans would have to be credited in-full to the student's account, be evidenced by standalone repayment agreements between students and the institution, and be separate from

enrollment contracts signed by students. Loans made to students by third parties but subsequently acquired by the institution would not meet this definition of institutional loans, and could not be included in either of the NPV calculations. Moreover, all payments from the institution to acquire the loans would be counted against any non-Federal revenues from the loan proceeds the institution received.

For the purpose of counting revenue from loan funds in excess of the loan limits in effect prior to ECASLA, we propose that institutions count the excess amount on a payment-period basis.

Finally, in proposed appendix C to subpart B of part 668 we illustrate how an institution calculates its 90/10 revenue percentage.

Reasons:

To a large extent, the proposed regulations adopt the statutory provisions which, also to a large extent, reflect current regulations and practice. However, we are incorporating suggestions from some of the non-Federal negotiators in implementing three of the new provisions for non-Federal sources of revenue that may be included in the 90/10 calculation. First, we would identify the types of non-title IV eligible programs from which an institution could count, as revenue, the funds paid for students taking those programs. We believe this eliminates much of the ambiguity regarding whether the revenue from a non-title IV eligible program offered by an institution could be counted for 90/10 purposes. Second, for purposes of the 90/10 calculation, we are identifying the elements that will distinguish an institutional loan from other types of student account receivables. Third, the regulations would allocate the excess loan funds that are treated as non-Federal revenue to each payment period to simplify the 90/10 calculation. This will minimize some complexities that may result if the excess funds were only counted after all of the pre-ECASLA loan funds were provided to a student, particularly if the disbursements for a loan are received by an institution in two different fiscal years.

An institution would continue to report its 90/10 ratio in a footnote included with the institution's annual audited financial statements. Given the additional revenues that may be counted as non-Federal funds in this calculation, and that Federal funds may be treated as non-Federal funds (i.e., loan amounts in excess of the pre- ECASLA limits), we believe it is necessary for the institution to report in that footnote the amounts of the revenues, by category, derived from Federal and non-Federal funds that are included in its 90/10 calculation. The certified public accountant that prepares the institution's audited financial statements will be required to review that information and test the institution's calculation. On a case by case basis, Department staff will continue to review the accountant's work papers when more information is needed to determine if the calculation is correct.

Some of the non-Federal negotiators suggested that the regulations permit tuition discounts given to students be counted for 90/10 purposes, since tuition discounts are mentioned in the HEA, along with monetary aid provided to students, as types of scholarships provided by a proprietary institution. The HEA also requires that these scholarships be disbursed to a student's account from an established restricted account at the institution holding funds from an outside source, or income earned on those funds. The proposed regulations implement the statutory provision that institutions may pay scholarships with tuition discounts that are credited from such restricted accounts.

Net Present Value (NPV) (§ 668.28(c))

Statute:

For loans an institution makes to students on or after July 1, 2008 and prior to July 1, 2012, section 497(d)(1)(D)(i) of the HEA requires an institution to count as revenue the NPV of the loans it makes during a fiscal year.

Current regulations:

There are no current regulations regarding NPV, however 34 CFR 600.5(d)(3)(i) allows an institution to count as revenue the amount of loan repayments it receives on institutional loans during its fiscal year.

Proposed regulations:

In proposed § 668.28(b), the Department defines the NPV as the sum of the discounted cash flows R

t

/(1+i)

t

. The variable “i” is the discount rate, which would, for 90/10 purposes, be the most recent annual inflation rate. The variable “t” is the time or period of the cash flow, in years, starting from the time the loan entered repayment. The variable “R

t

” is the net cash flow at time or period t.

If the institution's loans made during the fiscal year have substantially the same repayment period, the proposed regulations provide that an institution may use that repayment period for those loans to set the range of values of variable “t” in the NPV formula. However, if an institution's loans have different repayment periods, the institution would group the loans by repayment period and use the repayment period for each group to set the range of values for variable “t”. For each group of loans, as applicable, the institution would multiply the total annual payments due on the loans by the institution's collection rate (the total amount of payments collected divided by the total amount of payments due). The resulting amount is the cash flow used for variable “R” in each period “t” for each group of loans for which an NPV is calculated. Proposed appendix C to subpart B of part 668 illustrates this NPV calculation.

As a simpler alternative to performing the NPV calculation, the proposed regulations allow an institution the option to use 50 percent of the total amount of loans it made during the fiscal year as the NPV. However, if the institution chooses to use this alternative, it may not sell any of the associated loans until they have been in repayment for at least two years.

Reasons:

The Department would implement the statutory requirement to establish the net present value of an institution's loans by adopting the formula—NPV = sum of the discounted cash flows R

t

/(1+i)

t

. However, this formula is generally intended for, and used primarily, in making investment decisions. Nevertheless, the discount rate “i” is the rate of return that could be earned on an investment in the financial markets with similar risk, or more generally, the rate of return sought or expected by the investor. Translating this for 90/10 purposes, the formula determines the NPV of institutional loans by taking into consideration the discounted value caused by inflation.

The proposed regulations define the expected cash flows represented by variable “R” to be the annual payments due on the loans (i.e., the scheduled payments) multiplied by the institution's loan collection rate (the total amount of payments collected on loans for a fiscal year divided by the total amount of payments due on those loans for that year). In this way, the expected cash flows are adjusted to take into account loans that are not collected or loan payments that are not collected timely. The institution's loan collection rate should be based on the institution's own loan collection history, and may be a prior annual rate or historical rate covering several years. We seek public comment on other ways that an institution may establish a loan collections rate. In any case, the institution would need to document that rate and the institution's auditor would examine that information as a part of the institution's annual financial statement audit.

With regard to the alternative provision that allows an institution to use 50 percent of the total amount of loans it made during the fiscal year as the NPV, we propose this option as an administrative convenience for institutions that either prefer a simpler method to establish the NPV or who do not need the additional non-Federal revenues that might be counted if the formula were used. This option provides a conservative, simple calculation for the NPV that is intended to be a fair compromise in exchange for choosing not to perform the NPV calculations. However, if the institution chooses this option, it may not sell the loans associated with the 50 percent calculation until those loans have been in repayment for two years. As provided in section 487(d)(1)(D)(i)(III) of the HEA, institutional loans are subject to regular loan repayment and collections. The regular NPV formula would use the institution's own collection rate, but the alternative formula would not. To make sure that alternative formula institutional loans are legitimate, the institution may not sell them until they have been in repayment for two years. This will permit the Department, or another oversight entity, to determine whether these loans were subject to regular loan repayment and collection as required by the statute. Moreover, we wish to avoid an outcome where an institution would sell the loans in the short term for less than the 50 percent amount it claimed for 90/10 purposes.

Institutional Plans for Improving the Academic Program (§ 668.43(a))

Statute:

As part of the required information on its academic program that an institution must make available to prospective and enrolled students under section 485(a) of the HEA, the HEOA adds the requirement that an institution make available any plans the institution has for improving that academic program.

Current Regulations:

Section 668.43(a)(5) requires an institution to make readily available to enrolled and prospective students information on the academic program of the institution, including (1) the current degree programs and other educational and training programs; (2) the instructional, laboratory, and other physical facilities that relate to the academic program; and (3) the institution's faculty and other instructional personnel.

Proposed Regulations:

Section 668.43(a)(5) would be amended to add to the information on the academic program of the institution that an institution must make readily available to enrolled and prospective students any plans by the institution for improving the academic program of the institution. An institution would be allowed to determine what a “plan” is, including when a plan becomes a plan.

Reasons:

The regulations are amended to reflect the changes made by the HEOA.

Peer-to-Peer File Sharing and Copyrighted Material (§§ 668.14(b) and 668.43(a))

Statute:

The HEOA added a new requirement to section 487 of the HEA (Program Participation Agreement) under which an institution must certify that it has developed plans to effectively combat the unauthorized distribution of copyrighted material (including through the use of a variety of technology-based deterrents) and will, to the extent practicable, offer alternatives to illegal downloading or peer-to-peer distribution of intellectual property, as determined by the institution in consultation with the chief technology officer or other designated officer of the institution.

In addition, as part of the required information an institution must make available to prospective and enrolled students, the HEOA added new subparagraph (P) to section 485(a)(1) of the HEA to require a description of institutional policies and sanctions related to the unauthorized distribution of copyrighted material. This description includes (1) an annual disclosure that explicitly informs students that unauthorized distribution of copyrighted material, including peer-to-peer file sharing, may subject the students to civil and criminal liabilities; (2) a summary of the penalties for violation of Federal copyright laws; and (3) the institution's policies with respect to unauthorized peer-to-peer file sharing, including disciplinary actions that are taken against students who engage in unauthorized distribution of copyrighted materials using the institution's information technology system.

Current Regulations:

Section 668.41(c) requires an institution to provide to enrolled students an annual notice containing a list and brief description of the consumer information it must disclose and the procedures for obtaining this consumer information. The term

notice

is defined in § 668.41(a) as a means of notification of the availability of information an institution is required to disclose on a one-to-one basis through a direct individual notice to each enrolled student. This notice must be made through an appropriate mailing or publication, including direct mailing through the U.S. Postal Service, campus mail or electronic mail. Posting on Internet or Intranet Web sites does not constitute notice. If the institution discloses the consumer information listed in § 668.41(c) by posting the information on a Web site, it must include in the notice the exact electronic address at which the information is posted, and a statement that the institution will provide a paper copy of the information on request.

Section 668.41(a) defines a

prospective student

as an individual who has contacted an eligible institution requesting information concerning admission to that institution.

Proposed Regulations:

Program Participation Agreement (PPA)

Section 668.14(b)(30)(i) would implement section 487(a)(29)(A) of the HEA to require an institution, as a condition of participation in a title IV, HEA program, to agree that it has developed and implemented written plans to effectively combat the unauthorized distribution of copyrighted material by users of the institution's network without unduly interfering with the educational and research use of the network.

An institution would have to include in its plan:

• The use of one or more technology-based deterrents;

• Mechanisms for educating and informing its community about appropriate versus inappropriate use of copyrighted material. The written plan would include the information contained in proposed § 668.43(a)(10). These mechanisms could include any additional information and approaches determined by the institution to contribute to the effectiveness of the plan, such as including pertinent information in student handbooks, honor codes, and codes of conduct in addition to e-mail and/or paper disclosures.

• Procedures for handling unauthorized distribution of copyrighted material, including disciplinary procedures; and

• Procedures for periodically reviewing the effectiveness of the plans to combat the unauthorized distribution of copyrighted materials by users of the institution's network using relevant assessment criteria. It would be left to each institution to determine what relevant assessment criteria are.

The regulations would make clear that no particular technology measures are favored or required for inclusion in an institution's plans, and each institution retains the authority to determine what its particular plans for compliance will

be, including those that prohibit content monitoring.

Proposed § 668.14(b)(30)(ii) would implement section 487(a)(29)(B) of the HEA by requiring that an institution, in consultation with the chief technology officer or other designated officer of the institution, to the extent practicable, offer legal alternatives to illegal downloading or otherwise acquiring copyrighted material, as determined by the institution. The proposed regulations would also require that institutions (1) be required to periodically review the legal alternatives for downloading or otherwise acquiring copyrighted material and (2) make the results of the review available to their students through a Web site or other means.

Consumer Information

Proposed § 668.43(a)(10) would implement section 485(a)(1)(P) of the HEA. Information regarding institutional policies and sanctions related to the unauthorized distribution of copyrighted material would be included in the list of institutional information provided upon request to prospective and enrolled students. This information would be required to (1) explicitly inform its students that unauthorized distribution of copyrighted material, including peer-to-peer file sharing, may subject a student to civil and criminal liabilities; (2) include a summary of the penalties for violation of Federal copyright laws; and (3) describe the institution's policies with respect to unauthorized peer-to-peer file sharing, including disciplinary actions that are taken against students who engage in illegal downloading or unauthorized distribution of copyrighted materials using the institution's information technology system. The Department will work with representatives of copyright holders and institutions to develop a summary of the civil and criminal penalties for violation of Federal copyright laws to include as part of the

Federal Student Aid Handbook

that an institution may use to meet this requirement.

As current § 668.41(c) requires an institution to provide to enrolled students an annual notice containing a list and brief description of the consumer information it must disclose and the procedures for obtaining this consumer information, an institution would be required to add to this list the fact that it must make readily available information regarding institutional policies and sanctions related to the unauthorized distribution of copyrighted material. Consistent with the current definition of

notice

in § 668.41(a), an institution would be required to provide this annual notice on a one-to-one basis through a direct individual notice to each enrolled student. This notice must be made through an appropriate mailing or publication, including direct mailing through the U.S. Postal Service, campus mail or electronic mail. Posting on Internet or Intranet Web sites does not constitute notice. If the institution discloses the consumer information by posting the information on a Web site, it must include in the notice the exact electronic address at which the information is posted, and a statement that the institution will provide a paper copy of the information on request.

The current definition of

prospective student

in § 668.41(a) would be used—i.e., an individual who has contacted an eligible institution requesting information concerning admission to that institution.

Reasons:

The regulations are amended to reflect the changes made by the HEOA.

These proposed regulations reflect the work of a subcommittee of representatives of institutions, digital content owners, and Department staff that was formed by the larger committee to address copyright issues. The members of the subcommittee were able to successfully reconcile vastly disparate viewpoints on several contentious parts of the statute to develop proposed regulatory language that was then presented to, and tentatively agreed upon by, the full committee. The Department has chosen to preserve the compromises made by all sides on this issue by including the proposed regulatory language on which tentative agreement was reached. The Department believes that the proposed regulations provide enough specificity to emphasize that institutions must take seriously their role in combating unauthorized distribution of copyrighted materials by users of their network, while providing enough flexibility to institutions in how they combat any unauthorized distribution to acknowledge the differences among institutions and their networks, as well as variances in the scope of the problem of unauthorized distribution of copyrighted material.

Program Participation Agreement

The Department believes the intent of the statute was to require institutions to actively combat the unauthorized distribution of copyrighted material. Accordingly, § 668.14(b)(30)(i) would require an institution to agree as part of its program participation agreement that it not only has developed a plan to do so, but has also implemented that plan. In recognition that there must be a balance between network security and the functioning of a network for its intended use, § 668.14(b)(30)(i) would also make clear that an institution is not required to take measures to effectively combat the unauthorized distribution of copyrighted material that would unduly interfere with the educational and research use of the network. The Department believes that all institutions can achieve this balance, given the flexibility provided by the proposed regulations allowing individual institutions to determine how to best effectively combat such unauthorized distribution. Institutions should not view this provision as a justification for not effectively combating the unauthorized distribution of copyrighted material. Although there was some discussion of requiring an institution to effectively combat the unauthorized distribution of copyrighted material by only student users of the institution's network, the regulatory language on which tentative agreement was reached would apply the requirement more broadly to “users.” This approach ensures that institutions will be more likely to deter and prevent downloads of copyrighted material by employees and members of the public that may use computers at a school library, for example, and also allow them to identify illegal downloads being made by students who are not accessing the computer systems using their student accounts. The Department believes that this approach meets the intent of the statute that institutions secure their networks from misuse by individuals who are given access to the networks.

In recognition of the diversity among institutions and how technology is continuously evolving, § 668.14(b)(30)(i)(A) would leave it up to an institution's discretion to determine how many and what type of technology-based deterrents it uses as a part of its plan—although every institution must employ at least one. The Statement of Managers in the Conference Report for the HEOA discusses this issue on pages 547-549 (H. R. Conf. Rep. No. 110-803, at 547-549 (2008)), and provides context and clarification to this requirement as follows:

Experience shows that a technology-based deterrent can be an effective element of an overall solution to combat copyright infringement, when used in combination with other internal and external solutions to educate users and enforce institutional policies.

Effective technology-based deterrents are currently available to institutions of higher education through a number of vendors. These approaches may provide an institution with the ability to choose which one best meets its needs, depending on that institution's own unique characteristics, such as cost and scale. These include bandwidth shaping, traffic monitoring to identify the largest bandwidth users, a vigorous program of accepting and responding to Digital Millennium Copyright Act (DMCA) notices, and a variety of commercial products designed to reduce or block illegal file sharing.

Rapid advances in information technology mean that new products and techniques are continually emerging. Technologies that are promising today may be obsolete a year from now and new products that are not even on the drawing board may, at some point in the not too distant future, prove highly effective. The Conferees intend that this Section be interpreted to be technology neutral and not imply that any particular technology measures are favored or required for inclusion in an institution's plans. The Conferees intend for each institution to retain the authority to determine what its particular plans for compliance with this Section will be, including those that prohibit content monitoring. The Conferees recognize that there is a broad range of possibilities that exist for institutions to consider in developing plans for purposes of complying with this Section.

The Department believes that some institutions may be able to effectively combat the unauthorized distribution of copyrighted material using only one of the four types of technology-based deterrents (bandwidth shaping, traffic monitoring, accepting and responding to DMCA notices, or a commercial product designed to reduce or block illegal file sharing) while others may need to employ a combination of such deterrents.

The additional proposed components of an effective plan in § 668.14(b)(30)(i)(B) and (C) reflect general agreement by the committee that a plan to effectively combat the unauthorized distribution of copyrighted material by users of the institution's network should include an educational component and a description of the institution's procedures for handling the unauthorized distribution of copyrighted material to provide a deterrent by ensuring that users are made aware that the unauthorized distribution of copyrighted material is illegal, what actions constitute illegal distribution of copyrighted material, and the potential penalties for the unauthorized distribution of copyrighted materials.

The final component of the plan, in proposed § 668.14(b)(30)(i)(D), would require an institution to periodically review its plan to evaluate whether it is working. One of the most controversial aspects of the proposed regulations was the evaluation of whether a plan was effectively combating the unauthorized distribution of copyrighted material. There was extensive discussion over how a plan should be reviewed to determine its effectiveness, and how much discretion institutions should be given in this area. Ultimately, tentative agreement was reached on a provision requiring an institution to periodically review its plan using relevant assessment criteria, permitting an institution discretion to determine the most appropriate criteria. As the specifics of a plan will be determined by an institution, the Department believes that the institution is in the best position to determine the appropriate criteria to assess its plan. In some cases, appropriate assessment criteria might be process-based, so long as the institution's information system information does not contradict such a determination. Such process-based criteria might look at whether the institution is following best practices, as laid out in guidance worked out between copyright owners and institutions or as developed by similarly situated institutions that have devised effective methods to combat the unauthorized distribution of copyrighted material. In other cases, assessment criteria might be outcome-based. The criteria might look at whether there are reliable indications that a particular institution's plans are effective in combating the unauthorized distribution of copyrighted material. Among such indications may be “before and after” comparisons of bandwidth used for peer-to-peer applications, low recidivism rates, and reductions (either in absolute or in relative numbers) in the number of legitimate electronic infringement notices received from rights holders. The institution is expected to use the assessment criteria it determines are relevant to evaluate how effective its plans are in combating the unauthorized distribution of copyrighted materials by users of the institution's networks.

In addition to reflecting the statute requiring that institutions, to the extent practicable, offer legal alternatives to illegal downloading or otherwise acquiring copyrighted material, proposed § 668.14(b)(30)(ii) reflects general agreement that institutions should periodically review the legal alternatives, and make available the results of the review to its students through a Web site or other means, as such legal alternatives are likely to change over time. Based on the discussions of the subcommittee, the Department anticipates that individual institutions, national associations, and commercial entities will develop and maintain up-to-date lists that may be referenced for compliance with this provision.

Consumer Information

For consistency, § 668.43(a)(10) would implement the consumer information portion of the statute within the existing framework and using the definitions found in current regulations. The committee discussed whether the statutorily required annual disclosure should be a one-to-one notice provided directly to each student by the institution. However, as the statute requires that most institutional information in this section of the HEA instead be made readily available to prospective and enrolled students, the information regarding institutional policies and sanctions related to the unauthorized distribution of copyrighted material would be handled in the same manner (i.e., included in the list of institutional information that an institution must make available pursuant to § 668.43). The Department believes that the required disclosure of institutional policies and sanctions related to the unauthorized distribution of copyrighted materials can be met without imposing the burden of a one-to-one notification on institutions.

There was some discussion by the committee of extending the statutory provision to require an institution to disclose the required information to employees of the institution in addition to students. As the statute does not require disclosure of this information to employees, this would not be mandated in the regulations. The Department believes that employees of an institution are more likely to be aware that unauthorized distribution of copyrighted material is illegal and does not believe that the benefit of such disclosure would justify the potential added burden to the institution. However, we encourage institutions to make such information available to employees and the general public if they believe it will be beneficial.

Consumer Information (§§ 668.41 and 668.45)

Statute:

Section 485(a) of the HEA lists the types of information that institutions are required to make available to prospective and enrolled students. Section 488 of the HEOA expands the list of consumer information requirements in section 485(a)(1) of the HEA, and from that

expanded list, Team V discussed a number of the requirements, including the following:

• The placement and types of employment obtained by graduates of the institution's degree or certificate programs;

• The types of graduate and professional education in which graduates of the institution's four-year degree programs enrolled; and

• The retention rates of the certificate or degree seeking, first-time, full-time, undergraduate students entering the institution.

Note that the information required by section 485(a)(1) of the HEA addressing “institutional policies and sanctions that relate to copyright infringements” and “the fire safety report” (that is prepared by the institution pursuant to section 485(i) of the HEA) is discussed elsewhere in this preamble.

Section 488 of the HEOA also amends the calculation procedures for completion and graduation rates in section 485(a)(4) of the HEA that address situations in which students leave school to serve in the Armed Forces, on official church missions, or with a recognized foreign aid service of the Federal Government. Section 488 of the HEOA also adds section 485(a)(7) to the HEA, which directs an institution to disaggregate its completion and graduation rate information by gender, by each major racial and ethnic subgroup, and by recipients of several types of Federal title IV aid—if the number of students in each such subgroup or with each such status is sufficient to yield statistically reliable information and reporting this information will not reveal personally identifiable information about an individual student.

Current Regulations:

Section 668.41 lists the types of information that an institution must make available to enrolled and prospective students (and in some cases, employees, prospective employees, prospective student-athletes, the public, and others). This information includes:

• Financial assistance available to students;

• The institution's completion and graduation rate;

• An annual security report (including institutional security policies and crime statistics that are described in § 668.46);

• The completion and graduation rates for student-athletes;

• Athletic program participation rates and financial support data; and

• Institutional information (including the cost to attend the institution, its academic programs and faculty, etc.).

Section 668.45 specifies how an institution must prepare the annual completion or graduation rate for its certificate- or degree-seeking, full-time, undergraduate students. It also addresses how an institution must prepare a transfer-out rate if the institution's mission includes providing substantial preparation for students to enroll in another institution. An institution must make its completion or graduation rate, and if applicable, its transfer-out rate available by July 1 following the 12-month period ending August 31 during which 150 percent of the normal time for completion or graduation has elapsed for the students on which the institution bases its calculations.

Proposed Regulations:

In proposed § 668.41(d), we would add retention rate information, placement rate information, and information on the types of graduate and professional education in which graduates of the institution's four-year degree programs enroll, to the types of information that an institution must provide to its enrolled and prospective students. When reporting its retention rate, proposed § 668.41(d) would require an institution to disclose the institution's retention rate as reported to the Integrated Postsecondary Education Data System (IPEDS). We have adopted IPEDS' definition of “retention rate” in proposed § 668.41(a) for this purpose. For its placement information, the institution may use various sources of information (such as State data systems, surveys, or other relevant sources). However, if it calculates an actual placement rate, it must disclose that rate. For the types of graduate and professional education in which graduates of the institution's four-year degree programs enroll, the institution also may use various sources of information (such as State data systems, surveys, or other relevant sources). For both placement information and the types of graduate and professional education in which graduates of the institution's four-year degree programs enroll, the institution would have to identify the source of the information it discloses, as well as the time frames and methodology associated with that information.

In addressing the requirement for an institution to make certain information available to students or prospective students (and sometimes the public), we have removed the words “on request” in proposed § 668.41(d) and (g)(1)(i). Similar words have been deleted from proposed § 668.43(a) and (b).

Under proposed § 668.45, an institution's completion and graduation rate information must be disaggregated by gender, by each major racial and ethnic subgroup, and by whether or not the institution's students received certain types of Federal student aid. The disaggregation by receipt of aid is categorized by whether students were—

• Recipients of a Federal Pell Grant;

• Recipients of a Federal Family Education Loan or a Federal Direct Loan (other than an Unsubsidized Stafford Loan); and

• Recipients of neither a Federal Pell Grant nor a Federal Family Education Loan or a Federal Direct Loan (other than an Unsubsidized Stafford loan).

The institution would report its completion and graduation rate information in a disaggregated manner only if the number of students in each category is sufficient to yield statistically reliable information, and doing so would not reveal personally identifiable information about an individual student. Otherwise, the institution would note that it enrolled too few students in the affected category to disclose the information with confidence and confidentiality.

In calculating its completion and graduation rate, an institution normally counts students as completing or graduating if they have completed or graduated by the end of the 12-month period ending August 31 during which 150 percent of the normal time for completion or graduation from the program has elapsed. However, as proposed, if 20 percent or more of the certificate- or degree-seeking, full-time, undergraduate students at the institution left school to serve in the Armed Forces, to serve on official church missions, or to serve with a foreign aid service of the Federal Government (such as the Peace Corps), then the institution may recalculate the completion or graduation rate of those students by adding to the 150 percent time frame they normally have to complete or graduate, the time period the students were not enrolled due to their service in one of these specified categories.

Reasons:

The proposed changes in §§ 668.41 and 668.45 would implement statutory changes to section 485 of the HEA made by section 488 of the HEOA. As specified in § 668.41(d), institutions are allowed to use various sources to compile information on placements and on the types of graduate and professional education in which graduates of the institution's four-year degree programs enroll. A number of the non-Federal negotiators noted that this latitude to compile information from various sources should not be compromised or otherwise qualified by

requiring institutions to disclose methodologies used in compiling the data. However, because the information can come from any number of sources and may not be comparable to similar-looking information at another institution, the Department believes it is important that the institution disclose the source of the information, as well as the time frames and methodology associated with it, when the institution discloses that information to its enrolled and prospective students. This will allow the student and prospective student recipients of the information to make more informed decisions regarding their educational choices.

Since the statute is silent about requiring an institution to calculate an actual placement rate, or to disseminate that rate if it calculates one, a number of non-Federal negotiators argued that the regulations should remain silent in that regard. However, the Department believes that disclosing placement rate information would be beneficial to students and prospective students. If the institution makes available placement rates that it has, students and especially prospective students will be able to make more informed decisions about enrollment in various programs at the institution. Therefore, when a placement rate is voluntarily calculated by the institution, proposed § 668.41(d) would require the institution to disclose that rate along with other placement information.

The words “on request” (or “upon request”) were removed from §§ 668.41(d), 668.41(g)(1)(i), and 668.43(a) and (b) because the Department believes that they do not reflect how institutions currently operate in terms of making various types of information available to their students, prospective students, and sometimes the public. While it is true that an individual may not receive information unless he or she asks about it, institutions, in essence, are considered to “make their information available” by having it on a Web site or in printed material without regard to whether any one individual requests it or not. When an individual inquires about the information in question, the institution would direct him or her to the appropriate source.

The requirement in proposed § 668.45 for an institution to disaggregate its completion and graduation rate information by gender, by each major racial and ethnic subgroup, and by receipt or nonreceipt of certain types of Federal student aid is from section 485 of the HEA. All of the negotiators agreed that the Department should use the IPEDS racial and ethnic categories for this purpose, but several of them raised the issue of how institutions should disaggregate the information by receipt or nonreceipt of student aid. For example, should a student be considered to have received aid if the student received it at any time during his enrollment, or only during the student's first year, or for some other period of time? The Department and the non-Federal negotiators ultimately agreed that the question of receipt of aid for this determination should be based on whether the student received the aid during the time period when the student entered the institution that is associated with the cohort of students the student is a part of for purposes of the institution's calculation of completion or graduation, retention, and transfer out rates. For institutions with a predominate number of programs based on semesters, trimesters, or quarters, this would be the fall term of the year the student's cohort of certificate- or degree-seeking, first-time, full-time undergraduate students first entered the institution. For other institutions, this would be the period between September 1 of one year and August 31 of the following year when the student's cohort of certificate- or degree-seeking, first-time, full-time undergraduate students first entered the institution.

It is possible that an institution could have a significant number of its students interrupt their education to serve in the Armed Forces, on church missions, or with a foreign aid service of the Federal Government (

e.g.,

the Peace Corps). Were that to occur, the normal calculation of the institution's completion or graduation rate would result in a misleadingly smaller rate. Thus, consistent with section 485 of the HEA, when 20 percent or more of the certificate- or degree-seeking, full-time, undergraduate students at the institution leave school to serve in one of the ways listed in § 668.45(d)(1)(i) through (iii), the institution may recalculate its completion or graduation rate to take that fact into consideration. That is, when the institution calculates its completion or graduation rate, it may add the time period the students were not enrolled due to their service time to the 150 percent time frame that students normally have to complete or graduate.

Campus Safety Provisions

Hate Crime Reporting (§ 668.46(c)(3))

Statute:

Section 488(e)(1)(c) of the HEOA amended section 485(f) of the HEA to expand the list of hate crimes that institutions must report to the Department to include larceny-theft, simple assault, intimidation, and destruction, damage, or vandalism of property.

Current Regulations:

Section 668.46(c)(3) of the Department's regulations currently requires institutions to report as hate crimes the occurrence of criminal homicide, sex offenses, robbery, aggravated assault, burglary, motor vehicle theft, arson, and any other crime involving bodily injury reported to local police agencies or a campus security authority if there is manifest evidence that the victim was intentionally selected on the basis of certain characteristics.

Proposed Regulations:

We propose to revise § 668.46(c)(3) to add the crimes of “larceny-theft,” “simple assault,” “intimidation,” and “destruction/damage/vandalism of property” to the crimes that must be reported in hate crime statistics. Additionally, we would update the definitions of the terms “Weapons: carrying, possessing, etc.,” “Drug abuse violations,” and “Liquor law violations” in appendix A to subpart D of 34 CFR part 668, which are excerpted from the Federal Bureau of Investigation's Uniform Crime Reporting Program, to reflect changes made by the FBI.

Reasons:

The proposed regulations would implement the statutory changes made by the HEOA by using the FBI's Hate Crime Data Collection Guidelines in the Uniform Crime Reporting Handbook (available at

http://www.fbi.gov/ucr/hatecrime.pdf

) to define the hate crimes to be reported.

Definition of Test (§ 668.46(a))

Statute:

Section 488(e)(1)(D) of the HEOA amended section 485(f) of the HEA to require institutions to include a statement of policy regarding their emergency response and evacuation procedures in the annual security report. As part of this policy statement an institution must describe how it will test its emergency response and evacuation procedures on an annual basis.

Current Regulations:

Section 668.46(a) contains definitions that apply to the requirements for institutional security policies and the reporting of crime statistics.

Proposed Regulation:

Under proposed § 668.46(a), we would define

test

for purposes of the emergency response and evacuation procedures as “regularly scheduled drills, exercises, and appropriate follow-through activities, designed for assessment and evaluation of emergency plans and capabilities.”

Reasons:

This definition would clarify the meaning of

test

for the purposes of complying with the statutory requirement that an institution test its emergency response and evacuation

procedures. Following a recommendation from some of the non-Federal negotiators, the definition of the term was drawn from the Emergency Management Accreditation Program (EMAP) Standard, which was designed to serve as a set of standards defining a quality emergency management program and was collaboratively developed by numerous organizations involved in emergency management and response.

Annual Security Report—Emergency Response and Evacuation Procedures (§ 668.46(b))

Statute:

Section 485(f) of the HEA outlines the elements that must be included in an institution's annual security report. Section 488(e)(1)(D) of the HEOA added to section 485(f) of the HEA a requirement that an institution must include a statement of policy regarding emergency response and evacuation procedures in its annual security report. This statement must describe how the institution will immediately notify the campus community upon the confirmation of a significant emergency or dangerous situation involving an immediate threat to the health or safety of students or staff occurring on the campus, unless the notification will compromise efforts to contain the emergency.

Current Regulations:

Section 668.46(b) delineates the elements that must be included in an institution's annual security report.

Proposed Regulations:

Proposed § 668.46(b)(13) would require institutions to include a statement of policy regarding their emergency response and evacuation procedures in the annual security report. Institutions must satisfy this requirement beginning with the annual security report distributed by October 1, 2010.

Reasons:

These new provisions implement the new statutory requirement. We would require this statement of policy for the October 1, 2010 report because it is the first report due after these regulations would go into effect. As institutions are expected to make a good faith effort to comply with the statute in the absence of regulations, institutions should be gathering this information in preparation for the 2010 report.

Timely Warning and Emergency Notification (§ 668.46(e))

Statute:

Section 485(f)(3) of the HEA requires institutions to make timely warnings to the campus community on crimes considered to be a threat to students and employees that are reported to campus security or local police agencies. Section 488(e)(1)(D) of the HEOA added section 485(f)(1)(J) to the HEA to require institutions to have a policy for emergency notification of the campus community upon the confirmation of a significant emergency or dangerous situation involving an immediate threat to the health or safety of students or staff occurring on the campus, unless the notification will compromise efforts to contain the emergency.

Current Regulations:

Section 668.46(e) describes the situations in which an institution must send a timely warning to the campus community to report on crimes that are considered by the institution to represent a threat to students and employees.

Proposed Regulations:

Proposed § 668.46(e)(3) would clarify the difference between the existing timely warning requirement and the new requirement for an emergency notification policy. While a timely warning must be issued in response to crimes specified in § 668.46(c)(1) and (3), an emergency notification is required in the case of an immediate threat to the health or safety of students or employees occurring on campus, as described in proposed § 668.46(g). The proposed language would clarify that an institution that follows its emergency notification procedures is not required to issue a timely warning based on the same circumstances; however, the institution must provide adequate follow-up information to the community as needed.

Reasons:

Many of the non-Federal negotiators requested that the regulations clearly explain the difference between a timely warning circumstance and an emergency notification circumstance. The emergency notification requirement applies to a wider range of threats, such as crimes, gas leaks, highly contagious viruses, or hurricanes. Many non-Federal negotiators also asked that the Department make it clear that institutions may satisfy a timely warning requirement with an emergency notification in appropriate circumstances to avoid inundating students and employees with messages that may become ineffective. On the other hand, some non-Federal negotiators also expressed concern that providing insufficient information could jeopardize the safety of the campus community, for instance, in a situation in which the emergency or investigation is still developing.

To address these concerns, we are proposing to require an institution that uses its emergency notification system to provide follow-up information to the community as needed. The phrase “as needed” was used to address the wide variety of threats that might occur.

Annual Security Report—Emergency Response and Evacuation Procedures (§ 668.46(g))

Statute:

Section 485(f)(1)(J) of the HEA, added by the HEOA, requires institutions to include a statement of policy regarding emergency response and evacuation procedures in the annual security report. This policy statement must describe how the institution will immediately notify the campus community upon the confirmation of a significant emergency or dangerous situation involving an immediate threat to the health or safety of students or staff occurring on the campus, unless the notification will compromise efforts to contain the emergency.

Current Regulations:

None.

Proposed Regulations:

Proposed § 668.46(g) would set out the following elements that an institution must include in its statement of policy describing its emergency response and evacuation procedures in its annual security report:

• Procedures to immediately notify the campus community upon the confirmation of a significant emergency or dangerous situation involving an immediate threat to the health or safety of students or employees occurring on the campus.

• A description of the process that the institution will use to (1) confirm that there is a significant emergency or dangerous situation, (2) determine the appropriate segment or segments of the campus community to receive a notification, (3) determine the content of the notification, and (4) initiate the notification system.

• A statement that the institution will, without delay, and taking into account the safety of the community, determine the content of the notification and initiate the notification system, unless issuing the notification will, in the professional judgment of responsible authorities, compromise efforts to assist a victim or to contain, respond to, or otherwise mitigate the emergency.

• A list of the titles of the persons or organizations responsible for carrying out the actions in proposed § 668.46(g)(2).

• Procedures for disseminating emergency information to the larger community.

• Procedures for testing its emergency response and evacuation procedures on at least an annual basis. Such tests could be announced or unannounced, would be publicized in conjunction with at least one test per calendar year,

and would be documented, including a description of the exercise, the date, time, and whether it was announced or announced.

Reasons:

The proposed regulations are intended to ensure that institutions have sufficiently prepared for an emergency situation on campus, that they are testing these procedures to identify and improve weaknesses, and that they have considered how they will inform the campus community and other individuals, such as parents. While the non-Federal negotiators generally agreed with these goals, some of them expressed concern that institutions need to have flexibility to appropriately respond to situations while maintaining a level of accountability in the system.

To allow appropriate flexibility in the system, the Department has not specified that institutions use a particular mode of communication, but notes that institutions may and should have multiple methods of communication with the campus community. For example, in the case of a gas leak, an institution may determine that the most effective mode of communication is a fire alarm, whereas in other situations it might be best to use a text message system. The Department encourages institutions to consider overlapping means of communication in case one method fails or malfunctions. Additionally, institutions have the flexibility to alert only the appropriate segment or segments of the population that they determine to be at risk; for instance, only notifying individuals in the building where there is a gas leak. This provision is intended to guard against the possibility that too many emergency notifications would lead some members of the campus community to begin to ignore the notices, thus dampening its response to a potentially dangerous situation. Institutions also have the flexibility to list the organizations that may be best equipped to respond to different situations, for instance, the health department may best respond to an outbreak of a virus. Further, institutions would have a great deal of flexibility in designing tests of the emergency notification system, as a

test,

as defined in the proposed changes to § 668.46(a), could be done in many ways, such as by a tabletop exercise or a test conducted on a campus-wide scale.

Parents and students affected by the shootings at the Virginia Polytechnic Institute and State University in 2007 attended part of the negotiations and discussed their experiences and opinions regarding how the Department should regulate in this area. They emphasized the need for institutions to keep parents and families informed in the case of an emergency. Some non-Federal negotiators suggested that institutions be encouraged to use Web sites, radio, and television stations to keep the larger community apprised of emergency situations. Additionally, in the case of an institution that uses a texting system to relay emergency notification information, several non-Federal negotiators suggested allowing parents to sign up to receive texts along with students and employees.

Some non-Federal negotiators were concerned that an institution could misinterpret these proposed regulations to mean that, as part of its procedures, it should disclose all of the details of how it would respond to any of a variety of situations. The negotiators noted that this approach could potentially hamper law enforcement efforts to address or investigate an emergency. In response, we note that the proposed regulations would not require institutions to publish in great detail how they would respond to specific emergencies. Finally, many non-Federal negotiators raised concerns that institutions consider the needs of students with disabilities in developing emergency response and evacuation policies and procedures. The Department expects an institution to consider the diverse needs of all members of the campus community in developing or revising an emergency plan.

Definition of On-Campus Student Housing Facility (§ 668.41(a))

Statute:

Section 488(g) of the HEOA added section 485(j) to the HEA to require an institution that maintains an on-campus student housing facility to establish, for students who reside in on-campus student housing, a missing student notification policy that allows students to confidentially register a contact person, and procedures to notify that contact person if the student is missing for more than 24 hours.

Current Regulations:

Section 668.41(a) contains definitions that apply to 34 CFR part 668, subpart D.

Proposed Regulations:

The proposed regulations would add a definition of the term

on-campus student housing facility

to § 668.41(a) to mean a dormitory or other residential facility for students that is located on an institution's campus, as defined in § 668.46(a).

Reasons:

The proposed definition would be added to clarify what is meant by

on-campus student housing facility

and to link the meaning of “on-campus” to the existing regulatory definition of

campus

in § 668.46(a), which is used for crime reporting under § 668.46(c). For the purposes of the fire safety reporting requirements under proposed § 668.49 and the missing student notification policies and procedures requirements under proposed § 668.46, a student housing facility that is on property owned by an institution, even if the building is owned and maintained by a student organization or other party, would be considered an on-campus student housing facility. If neither the property nor the building is owned by the institution, then the student housing facility would not be covered by this definition. While

on-campus student housing facility

is used in the statute in reference to the new fire safety and missing student notification provisions, the definition of

on-campus student housing facility

would also apply to the existing crime reporting requirements in § 668.46. The Department believes this approach will minimize confusion and create less administrative burden for institutions.

Annual Security Report—Missing Student Notification Policy (§ 668.46(b) and (h))

Statute:

Section 485(f) of the HEA, as amended by the section 488(g) of the HEOA, requires institutions that maintain an on-campus student housing facility to establish, for students who reside in an on-campus student housing facility, both a missing student notification policy that allows students to confidentially register a contact person, and procedures for notifying a missing student's contact person.

Current Regulations:

Section 668.46(b) delineates the elements that must be included in an institution's annual security report.

Proposed Regulations:

The proposed changes in § 668.46(b)(14) would require an institution to include its missing student notification policy and procedures in its annual security report. This would be required beginning with the annual security report distributed by October 1, 2010.

Reasons:

Some non-Federal negotiators felt that an institution should have the flexibility to decide how and when to distribute its missing student policies and procedures. The Department considered this suggestion but agrees with other negotiators who argued that having the information in the annual security report would enable students and parents to more easily compare policies across institutions. We propose to require that these policies and procedures be included in the institution's annual security report, but note that institutions may also distribute

these policies and procedures at other appropriate times, such as during a new student orientation. This policy statement must be included in the report that must be distributed by October 1, 2010 because it is the first report due after these regulations go into effect. Institutions must make a good faith effort to comply with the statute in the absence of regulations; therefore, institutions should be gathering this information in preparation for the 2010 report.

Missing Student Notification Policy (§ 668.46(h))

Statute:

Section 485 of the HEA, as amended by section 488 of the HEOA, requires an institution that maintains an on-campus student housing facility to establish, for students who reside in on-campus student housing, a missing student notification policy that includes notifying students that they can confidentially register an individual to be contacted if the student is determined to be missing. The statute requires an institution to advise students who are under 18 years old and not emancipated that a custodial parent or guardian must be notified if the student is determined to be missing. Further, all students residing in an on-campus student housing facility must be advised that, regardless of whether they register a contact person, the local law enforcement agency will be notified in the event that the student is determined to be missing.

Current Regulations:

None.

Proposed Regulations:

Proposed § 668.46(h)(1) implements the new statutory requirements, specifying that an institution's statement of policy regarding missing student notification for students residing in on-campus student housing facilities must include:

• A list of the titles of the persons or organizations to which students, employees, or other individuals should report that a student has been missing for 24 hours;

• A requirement that any official missing student report be immediately referred to the institution's police or campus security department or to the local law enforcement agency with jurisdiction in the area;

• The option for each student to identify a contact person to be notified if the student is determined missing by the institutional police or campus security department, or the local law enforcement agency; and

• A disclosure that contact information will be registered and maintained confidentially.

Proposed § 668.46(h)(1) would further require an institution to advise students who are under 18 and not emancipated that if the student is missing it will notify a custodial parent or guardian in addition to any contact person designated by the student. All students must also be advised that, regardless of whether they name a contact person, the institution must notify the local law enforcement agency that the student is missing, unless the local law enforcement was the entity that determined that the student is missing.

Reasons:

These new provisions would implement the statutory requirements. Like the existing crime reporting regulations and the proposed fire reporting regulations, these proposed regulations require institutions to include a list of the titles of the persons or organizations to which a student should be reported missing.

These regulations provide that only authorized campus officials, and law enforcement officers in furtherance of a missing person investigation, may have access to the confidential contact information and that it may not be disclosed to others. This limit was proposed in order to protect the privacy rights and safety of the student.

Missing Student Notification Procedures (§ 668.46(h))

Statute:

Section 485 of the HEA, as amended by section 488(g) of the HEOA, requires an institution that maintains an on-campus student housing facility to establish procedures that the institution will follow if a student who resides in on-campus student housing is determined to be missing. The statute specifies time frames during which certain actions must occur. When a student is reported missing, the institution has 24 hours to inform the local law enforcement agency with jurisdiction in the area where the student has been reported missing. After the law enforcement agency determines that the student is missing, the institution has 24 hours to notify the student's contact person, if applicable.

Current Regulations:

None.

Proposed Regulations:

Proposed § 668.46(h)(2) reflects the statutory requirements.

Reasons:

The proposed regulations reflect the new statutory requirements. These regulations do not preclude the institution from contacting the student's contact person or the parent immediately upon determination that the student has been missing for 24 hours.

Annual Fire Safety Report (§ 668.41(e))

Statute:

Section 488(g) of the HEOA amended section 485 of the HEA to require institutions that maintain on-campus student housing facilities to publish a fire safety report each year and provide a copy of the report to the Secretary.

Current Regulations:

None.

Proposed Regulations:

Proposed § 668.41(e) would provide that institutions that maintain an on-campus student housing facility must distribute an annual fire safety report, as described in proposed § 668.49(b). In addition, we propose to revise § 668.41(e) to create publication requirements for the annual fire safety report that are similar to the long-standing regulations for the annual security report.

The proposed regulations would allow an institution to publish the annual security report and the annual fire safety report together, as long as the title of the document clearly states that it contains both the annual security report and the annual fire safety report. If an institution chooses to publish the reports separately, it would have to include information in each of the two reports about how to directly access the other report.

Reasons:

We are proposing to require the same distribution method for both the annual fire safety report and the annual security report to reduce administrative burden and to make it easier for students and parents to access the information. The Department believes that providing one source for this information best ensures that students and parents will find and review the material. Under the proposed regulations, institutions would have the flexibility to choose whether to combine the two reports; however, if the reports are combined, the title of the combined document must make it clear that both the annual fire safety report and the annual security report are included to give both reports equal emphasis and to clarify that the fire safety provisions are separate from the crime provisions. An institution that chooses to publish the reports separately must provide information in each report about how to directly access the other report to aid students and parents in locating and comparing information across institutions.

Annual Fire Safety Report—Definitions of Terms (§ 668.49(a))

Statute:

Section 485(i)(1) of the HEA, as amended by section 488(g) of the HEOA, specifies that the annual fire safety report must contain statistics concerning the number of fires in the institution's on-campus housing facilities; the cause of each fire; the number of injuries and deaths related to each fire; and the value of property damage caused by each fire.

Additionally, the annual fire safety report must include a description of each on-campus student housing facility fire safety system and the number of regular mandatory supervised fire drills.

Current Regulations:

None.

Proposed Regulations:

We are proposing to add new § 668.49(a) to define the following terms relevant to the fire safety reporting requirements:

•

Cause of fire:

The factor or factors that give rise to a fire. The causal factor may be, but is not limited to, the result of an intentional or unintentional action, mechanical failure, or act of nature.

•

Fire:

Any instance of open flame or other burning in a place not intended to contain the burning or in an uncontrolled manner.

•

Fire drill:

A supervised practice of a mandatory evacuation of a building for a fire.

•

Fire-related injury:

Any instance in which a person is injured as a result of a fire, including an injury sustained from a natural or accidental cause, while involved in fire control, attempting rescue, or escaping from the dangers of a fire. The term “person” may include students, faculty, staff, visitors, firefighters, or any other individuals.

•

Fire-related death:

Any instance in which a person (1) is killed as a result of a fire, including death resulting from a natural or accidental cause while involved in fire control, attempting rescue, or escaping from the dangers of a fire; or (2) dies within one year of injuries sustained as a result of a fire.

•

Fire-safety system:

Any mechanism or system related to the detection of a fire, the warning resulting from a fire, or the control of a fire. This may include sprinkler systems or other fire extinguishing systems; fire detection devices; stand-alone smoke alarms; devices that alert one to the presence of a fire, such as horns, bells, or strobe lights; smoke-control and reduction mechanisms; and fire doors and walls that reduce the spread of a fire.

•

Value of property damage:

The estimated value of the loss of the structure and contents, in terms of the cost of replacement in like kind and quantity. This estimate should include contents damaged by fire, and related damages caused by smoke, water, and overhaul; however, it does not include indirect loss, such as business interruption.

Reasons:

We have added these definitions to enable comparability across institutions of the statistics that institutions are required to report under section 485(i)(1) of the HEA. The definitions for

cause of fire, fire-related injury,

fire-related death,

and

value of property damage

were drawn largely from the National Fire Incident Reporting System (NFIRS), a standard national reporting system used by U.S. fire departments to report fires and other incidents. The non-Federal negotiators recommended, and we agreed, that we should use the NFIRS definitions to remain consistent with definitions already used in the field. The definition of

fire drill

was developed to capture the HEA requirement that institutions report regular, mandatory, supervised fire drills. Further, the definition of fire safety system was developed through collaboration with experts in the fire safety field, who advised that the definition should include the variety of systems and mechanisms used to detect and alert someone to the presence of a fire, reduce the spread of fire, and control and reduce the amount of smoke from a fire.

The committee discussed the definition of

fire

at length. Generally, the negotiators agreed that the critical elements of a reportable fire are that it occurs in a place not intended to contain the fire or involves any burning that is not under control. For instance, under these proposed regulations, a fire in a trash can would count as a fire for reporting purposes, even if the fire was still under control, because a trash can is not intended to contain a fire. A lit candle, by contrast, while possibly against the institution's policies for candles in dorms, would not generally be considered a reportable fire, as it is in a place intended to contain the fire and is under control. However, if the flame from a lit candle were to spread and become uncontrolled, it would be considered a reportable fire. The definition of

fire

is also intended to capture situations in which there is burning (not necessarily an open flame) that might easily become a fire, such as a smoldering couch. Burning or other flames can easily become a fire, at great risk to students and other individuals.

Annual Fire Safety Report—Statistics (§ 668.49(b) and (c))

Statute:

Section 485(i)(1), as amended by section 488(g) of the HEOA, requires an institution to include in its annual fire safety report statistics on the number of fires and the cause of each fire; the number of injuries related to a fire that resulted in treatment at a medical facility; the number of deaths related to a fire; and the value of property damage caused by a fire. Section 485(i)(2) of the HEA requires that an institution report these statistics to the Secretary.

Current Regulations:

None.

Proposed Regulations:

Proposed § 668.49(b)(1) would require an institution to report the statistics that it submits to the Department in its annual fire safety report. The institution would have to provide data for the three most recent calendar years for which data are available. Proposed § 668.49(c) would delineate the statutorily required statistics.

Reasons:

The proposed regulations would implement the statutory requirements. The majority of the committee supported the position that institutions should report statistics for the three most recent calendar years to remain consistent with current reporting requirements for crime statistics under § 668.46(c). Moreover, the three year time frame will better enable consumers to compare statistics across institutions while helping to identify trends in the data. This reporting requirement would be phased in beginning with the collection of statistics for calendar year 2009 in the October 1, 2010 Annual Fire Safety Report. Data would be collected for three subsequent calendar years until three years are represented. The first report to contain the full three years of data would be the report due on October 1, 2012.

Annual Fire Safety Report—Description of Policies (§ 668.49(b))

Statute:

Section § 485(i)(1) of the HEA, as amended by section 488(g) of the HEOA, requires that, in its annual fire safety report, an institution must include a description of each on-campus student housing facility fire safety system, including fire sprinkler systems; the number of regular mandatory supervised fire drills; the institution's policies on portable electrical appliances, smoking, and open flames; procedures for evacuation; fire safety education and training program policies; and plans for future improvements in fire safety, if applicable.

Current Regulations:

None.

Proposed Regulations:

Proposed § 668.49(b) would outline the elements that an institution must disclose in its annual fire safety report, including:

• The fire statistics required by paragraph 485(i)(1)(A) of the HEA;

• A description of each on-campus student housing facility fire safety system;

• The number of fire drills held during the previous calendar year;

• Policies or rules on portable electrical appliances, smoking, and open flames in student housing facilities;

• Procedures for evacuation of student housing facilities in the case of a fire;

• Policies on fire safety education and training programs provided to students, faculty, and staff, including a description of the procedures that students and employees should follow in the case of a fire;

• For purposes of including a fire in the statistics in the annual fire safety report, a list of the titles of each person or organization to which students and employees should report that a fire has occurred; and

• Plans for future improvements in fire safety, if determined necessary by the institution.

Reasons:

These proposed regulations would implement the statutory requirements for the annual fire safety report, and specify that an institution must include: (1) A description of the procedures that students and employees should follow in the case of a fire, and (2) procedures for reporting fires that do not require a call to the fire department, for instance, those that are discovered after the fact and are no longer a threat to safety. In response to concerns expressed by some negotiators that all fires, even those that have already been put out, should be included in reported statistics, the proposed regulations would require institutions to provide a list of the titles of each person or organization to which such fires should be reported.

Fire Log (§ 668.49(d))

Statute:

Section 485(i)(3) of the HEA, as amended by section 488(g) of the HEOA, requires an institution that maintains an on-campus student housing facility to maintain a log of all fires that occur in on-campus student housing facilities, including the nature, date, time, and general location of each fire. An institution must make annual reports to the campus community on such fires.

Current Regulations:

None.

Proposed Regulations:

Proposed § 668.49(d) would specify that an institution that maintains an on-campus student housing facility must maintain a written and easily understood fire log that records, by the date that the fire was reported, any fire that occurred in an on-campus student housing facility. The log would have to include the nature, date, time, and general location of each fire. Further, the proposed regulations would specify that additions or changes to the log must be made within two business days of the receipt of the information, and require that the log be available for public inspection for the most recent 60-day period. Any portion of the log older than 60 days must be made available within two business days of a request for inspection. Finally, the proposed regulations would also implement the statutory requirement that an institution make an annual report to the campus community on the fires recorded in the fire log; however, the proposed regulations specify that this requirement may be satisfied by the annual fire safety report described in proposed § 668.49(b).

Reasons:

The proposed regulations would implement the statutory requirement that an institution record all reportable fires in a fire log. Many of the negotiators recommended that institutions have flexibility in maintaining this log. Therefore, we have not specified a format for the log, and we would allow institutions to determine whether to combine the annual report to the campus community on the fires in the fire log with the annual fire safety report. Many negotiators also recommended, and we agreed, that the fire log follow the requirements for the crime log. As a result, we have specified requirements for how information in the fire log should be updated, in accordance with the long-standing requirements for the crime log described in § 668.46(f).

Financial Assistance for Students With Intellectual Disabilities

Intellectual Disabilities

Institutional Eligibility and Eligible Program (§§ 600.2, 600.4, 600.5, 600.6, and 668.8)

Statute:

Section 485(a)(8) of the HEOA added section 484(s) to the HEA to provide that a student with intellectual disabilities who enrolls in a comprehensive transition and postsecondary program is eligible to receive title IV, HEA program funds under the Federal Pell Grant, FSEOG, and FWS programs. Under the newly added provision, the student does not have to be a high school graduate (or have obtained a GED, or have passed an ability-to-benefit test) and does not have to be enrolled in a program that leads to a degree or certificate.

Current Regulations:

Section 600.2 defines an

educational program

as a legally authorized postsecondary program of organized instruction or study that, in part, leads to an academic, professional, or vocational degree, or certificate, or other recognized educational credential.

Under the definitions of an

institution of higher education

(§ 600.4(a)(2)),

proprietary institution of higher education

(§ 600.5(a)(3)), and

postsecondary vocational institution

(§ 600.6(a)(2)), the institution is required to admit as regular students, as defined in § 600.2, only those persons who have a high school diploma or its equivalent. In addition, in §§ 600.4(a)(4), 600.5(a)(5), 600.6(a)(4), and the definition of an eligible program under § 668.8(c)(1) and (d)(1)(iii), the institution must provide an educational program for which it awards a degree, certificate, or other recognized credential or that prepares students for gainful employment in a recognized occupation.

Proposed Regulations:

Proposed §§ 600.2 (paragraph (1)(i) of the definition of

educational program

), 600.4(a)(4), 600.5(a)(5), and 600.6(a)(4) would provide that an institution may provide a comprehensive transition and postsecondary program for students with intellectual disabilities. In addition, proposed § 668.8(n) would define a comprehensive transition and postsecondary program as an eligible program if it is approved by the Secretary.

Reasons:

The proposed regulations would implement the statutory requirements by making it clear that an institution does not jeopardize its participation in the title IV, HEA programs by admitting students with intellectual disabilities who do not have a high school diploma or its equivalent, or admitting students with intellectual disabilities into non-degree or non-certificate programs. In addition, the proposed regulations would specify that a comprehensive transition and postsecondary program approved by the Secretary qualifies as an eligible program.

Scope and Purpose (§ 668.230)

Statute:

Section 485(a) of the HEOA added section 484(s) to the HEA authorizing the Secretary to develop regulations allowing students with intellectual disabilities to be eligible for funds under the Federal Pell Grant, FSEOG, and FWS programs. New section 484(s)(3) of the HEA authorizes the Secretary to waive any statutory provision applicable to these programs, except needs analysis provisions, or waive any institutional eligibility provisions, to ensure that students with intellectual disabilities who enroll in comprehensive transition and postsecondary programs remain eligible for this assistance.

Current Regulations:

None.

Proposed Regulations:

The proposed regulations would specify that students with intellectual disabilities who enroll in comprehensive transition and postsecondary programs are eligible for

assistance under the Federal Pell Grant, FSEOG, and FWS programs, and would restate the Secretary's waiver authority by providing that, except for provisions related to needs analysis, the Secretary may waive any title IV, HEA program requirement related to these programs or institutional eligibility.

Reasons:

The proposed regulations would implement the statutory provisions, and clarify that the Secretary's waiver authority may be used to ensure that students with intellectual disabilities remain eligible for Federal Pell Grant, FSEOG, and FWS program funds.

Definition of a Comprehensive Transition and Postsecondary Program (§ 668.231)

Statute:

Section 709 of the HEOA added section 760 to the HEA to define a

comprehensive transition and postsecondary program

as a degree, certificate, or non-degree program that—

• Is offered by an institution of higher education;

• Is designed to support students with intellectual disabilities who are seeking to continue academic, career and technical, and independent living instruction at an institution to prepare for gainful employment;

• Includes an advising and curriculum structure; and

• Requires students with intellectual disabilities to participate on not less than a half-time basis, as determined by the institution, with that participation focusing on academic components and occurring through one or more of the following activities:

• Regular enrollment in credit-bearing courses with students without disabilities.

• Auditing or participating in courses with students without disabilities for which the student does not receive regular academic credit.

• Enrollment in non-credit-bearing, nondegree courses with students without disabilities.

• Participation in internships or work-based training in settings with students without disabilities.

Current Regulations:

None.

Proposed Regulations:

Proposed § 668.231 would define a

comprehensive transition and postsecondary program

by incorporating the statutory provisions, but would add a provision that the program would have to be delivered to students physically attending the institution. The proposed regulations would also clarify that the program must provide opportunities for students with intellectual disabilities to participate in coursework and other activities with students without disabilities.

Reasons:

Proposed § 668.231 would incorporate the statutory requirements from section 760 of the HEA except for the proposed addition and clarification described in the preceding

Proposed Regulations

section. Some of the non-Federal negotiators initially opposed the proposed requirement that a comprehensive transition and postsecondary program must be delivered to students physically attending the institution. The negotiators argued that students should have the option of taking distance courses because they might be unable to commute to a campus or because some courses might only be offered online. Other negotiators and experts in the field argued that Congress intended for students with intellectual disabilities to be integrated into campus life as much as possible and did not want to allow distance education to be the sole or main delivery method. The Department does not wish to regulate to preclude all distance courses for students with intellectual disabilities and may permit a limited number of courses to be delivered via distance, as long as the institution explains why it believes the course is applicable to, and benefits, students with intellectual disabilities. Similarly, we wish to clarify that a comprehensive transition and postsecondary program may include an internship for students or other activities that are located off-campus—the physically-attending requirement does not exclude these activities.

With regard to students participating in one or more of the identified activities with students without disabilities, an institution has the flexibility to determine the activity or combination of activities that is best aligned with student needs and interests, as long as students with intellectual disabilities participate in these activities for at least half the time that they are enrolled in the program.

Some non-Federal negotiators suggested that comprehensive transition and postsecondary programs might offer multiple ways for students with intellectual disabilities to participate in campus life beyond those that are delineated in the statute. In response, we propose that a program provide students with opportunities to participate in coursework and other activities with students without disabilities, such as student government, clubs, social events, and sports.

Definition of a Student With an Intellectual Disability (§ 668.231)

Statute:

Section 709 of the HEOA added section 760 of the HEA to define

student with an intellectual disability

as a student:

• With mental retardation or a cognitive impairment characterized by significant limitation in intellectual and cognitive functioning and adaptive behavior as expressed in conceptual, social, and practical adaptive skills; and

• Who is currently, or was formerly, eligible for a free appropriate public education (FAPE) (i.e., special education and related services) under the Individuals with Disabilities Education Act (IDEA).

Current Regulations:

None.

Proposed Regulations:

Proposed § 668.231 would define

student with an intellectual disability

as set forth in the statute, but clarify that a student who was determined eligible for services under the IDEA but was home-schooled or attended private school would also meet this part of this definition.

Reasons:

P

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