detc webinar on final regulations on program integrity provisions sharon h. bob, ph.d. powers pyles...

DETC WebinarDETC Webinaronon

Final Regulations on Program Integrity ProvisionsFinal Regulations on Program Integrity Provisions

Sharon H. Bob, Ph.D.Sharon H. Bob, Ph.D.

Powers Pyles Sutter & Verville PCPowers Pyles Sutter & Verville PC

December 14, 2010December 14, 2010

1

Negotiated Rulemaking Ends Without Reaching Consensus on Program Integrity Issues

Public Hearings: Summer 2009 Neg Reg: Fall 2009 NPRM: June 18, 2010; Final Regulations: 10/29/2010 Effective Date: 7/1/2011 (with exceptions) NPRM: July 26, 2010 (Gainful Employment) Final Regulations: Early 2011

(Per ED announcement 9/24/2010) Effective Date: 7/1/2012

2

ED Holds Negotiated Rulemaking Sessions on 14 Program Integrity Issues – ED says Current Regulations Cause Fraud and Abuse

In December 2009, ED introduced 14 issues subject to Neg Reg. The issues are:

Definition of High School Diploma (Yes) Ability-to-Benefit (Yes) Misrepresentation of Information to

Students and Prospective Students (Yes) Definition of a Credit Hour (Yes) Agreements between Institutions of

Higher Education (Yes) Verification of Information included on

Student Aid Applications (Yes)

3

ED Holds Negotiated Rulemaking Sessions on 14 Program Integrity Issues – ED says Current Regulations Cause Fraud and Abuse, cont. Satisfactory Academic Progress (Yes) Retaking Coursework (Yes) Disbursements of Title IV Funds (Yes) Incentive Compensation (No) State Authorization as a Component

of Institutional Eligibility (No) Employment in a Recognized Occupation (No) Return of Title IV Funds, Term-Based Programs

with Modules or Compressed Courses (No) Return of Title IV Funds, Taking Attendance (No)

4

Final Regulations Addressing 13 out of the 14 Program Integrity Issues Published on October 29, 2010 On June 18, 2010, a Notice of Proposed

Rulemaking (NPRM) on the 13 out of 14 program integrity issues that were the subject of negotiations during the months of November 2009 through January 2010 was published in the Federal Register. The NPRM only partially addresses the 14th issue of “gainful employment”

The Department published final regulations on October 29, 2010 with an effective date of July 1, 2011, with some exceptions.

5

Gainful Employment in a Recognized Occupation (§§ 600.2, 600.4, 600.6, 668.6, and 668.8) Current Rules: A proprietary institution of higher

education, and a postsecondary vocational school, and one-year programs at institutions of higher education must provide eligible programs of training that prepare students for “gainful employment in a recognized occupation.” A “recognized occupation” is listed in the “occupational division” of the latest edition of the Dictionary of Occupational Titles. Gainful employment is not defined.

6

Gainful Employment in a Recognized Occupation (§§ 600.2, 600.4, 600.6, 668.6, and 668.8), cont. Final Rules: A “recognized occupation” is re-

defined by a Standard Occupational Classification (SOC) code established by the Office of Management and Budget (OMB) or an Occupational Information Network O* NET-SOC code established by the Department of Labor and available at: http://online.onetcenter.org

7

Gainful Employment in a Recognized Occupation (§§ 600.2, 600.4, 600.6, 668.6, and 668.8), cont. An institution must annually submit to ED

information regarding students enrolled in a program during an award year that leads to gainful employment in a recognized occupation, including: Identifying information about each student who

enrolled in the program: The Classification of Institutional Program (CIP) code for

the program. Identifying information about each student who

completed the program during an award year: The Classification of Instructional Program (CIP) code for

the program; The Date the student completed the program;

8

Gainful Employment in a Recognized Occupation (§§ 600.2, 600.4, 600.6, 668.6, and 668.8), cont.

The amounts the student received from private educational loans and institutional financing plans that are owed after completing the program; and

Whether the student matriculated to a higher credential program at the institution, or if available, transferred to a higher credentialed program at another institution; and

For each program, by name and CIP code, offered by the institution, the total number of students that are enrolled in the program at the end of each award year and identifying information for those students.

An institution must report the information: No later than October 1, 2011 for information from the

2006-2007 award year to the extent that the information is available;

9


No later than October 1, 2011 for information from the 2007-2008 through 2009-2010 award years; and

No earlier than September 30, but no later than the date published in the Federal Register for information from the most recently completed award year.

If information is not available, the institution must provide an explanation.

10

Gainful Employment in a Recognized Occupation (§§ 600.2, 600.4, 600.6, 668.6, and 668.8), cont. An institution is required to disclose the following

information prominently on its program website: The specific occupations (by names and SOC

codes) that its programs prepare students to enter, along with links to occupational profiles on the Department of Labor’s O*NET;

The on-time graduation rate (normal time per catalog) of students entering a program;

The cost of each program including tuition and fees, room and board, and typical costs for books and supplies (plus information or link to other costs);

11


Beginning July 1, 2011, the placement rate for students completing each of those programs as determined by state, accrediting agency or NCES, when available; and

The median loan debt incurred by students who completed each program in the preceding three years, identified separately as Title IV loan debt and debt from private educational loans and institutional financing plans.

This disclosures must be available on all promotional materials and on its website (homepage of its program website).

12

Gainful Employment in a Recognized Occupation (§§ 600.2, 600.4, 600.6, 668.6, and 668.8), cont. Reasons: The Department plans to use this

information to assess the outcomes of programs that lead to gainful employment in a recognized occupation.

13

Gainful Employment

The following provision is included with the final regulations published on 10/29/2010, and goes into effect 7/1/2011 as a placeholder:Additional programs: Before an institution offers an additional program, the institution must provide:

Notice to the Secretary when introducing a new program at least 90 days before the first day of class:

Demand for program; Wage analysis information; Program review approval process; and Demonstrate approval by accreditor.

If the Department has concerns, additional information will be requested. Otherwise, the school may proceed to offer the program. 14

Definition of Credit Hour (§§ 600.2, 602.24(f), 603.24, 668.8)

Current Rules: There is no definition of “credit hour” in current regulations.

Final Rules: Provides that a credit hour is an institutionally established equivalency of amount of work that reasonably approximates not less than the measures in the definition for federal funding purposes.

Credit hour is defined as follows: One hour of classroom or direct faculty instruction and a

minimum of two hours of out of class student work each week for approximately 15 weeks for one semester or trimester of credit, or 10 to 12 weeks for one quarter credit;

15

Definition of Credit Hour (§§ 600.2, 602.24(f), 603.24, 668.8), cont.

Credit hour is defined as follows (cont.): At least an equivalent amount of work as required in

the first paragraph for other academic activities including laboratory work, internships, practica, studio work, and other academic work leading to the award of credit hours; or

Institutionally established reasonable equivalencies for the amount of work required in the first paragraph for the credit hours awarded, including as represented in intended learning outcomes and verified by evidence of student achievement and in accordance with accreditation standards.

16


Clock-to-Credit-Hour Conversion: Required for non-degree programs if each course does

not transfer into degree programs. Except in certain cases discussed below, the method

of converting clock-to-credit hour would be modified under the proposal using 900 clock hours as the minimum (currently ED uses 720 clock hours). Therefore, a semester hour would be based on 37.5 clock hours and a quarter hour would be based on 25 clock hours.

17


The regulations require certain credit-hour programs to be considered clock hour programs for Title IV purposes if: The program is required to measure student progress in

clock hours when receiving federal or state approval or licensure to offer the program; or

The program is required to measure student progress in clock hours when completing clock hours is a requirement for graduates to apply for licensure or the authorization to practice the occupation that the student is intending to pursue; or

The credit hours awarded are not in compliance with the proposed definition found in 34 CFR 600.2.

18


The institution’s conversions to establish a minimum number of clock hours of instruction per credit may be less than 37.5 or 25 clock hours if neither the accrediting agency nor the state agency for participation in Title IV programs has identified deficiencies with the institution’s policies and procedures or their implementation, for determining clock hours as defined in 34 CFR 600.2 so long as: The institution’s students’ work outside of class combined

with the clock hours of instruction meet or exceed the numeric requirements in the conversion formula; and:

A semester or a trimester hour must include at least 30 clock hours of instruction; and

A quarter hour must include at least 20 clock hours of instruction.

19


The responsibilities of an accrediting agency are to conduct an effective review and evaluation of an institution’s policies and procedures for the assignment of credit hours and the institution’s application of its policies and procedures in assigning credits. The accrediting agency meets the requirement if it reviews each institution’s: Policies and procedures for determining credit hours that the

institution awards for courses and programs; Application of the institution’s policies and procedures to its

courses and programs; Makes a reasonable determination of whether the institution’s

assignment of credit hours conforms to commonly accepted practice in higher education;

20


The accrediting agency may make use of sampling or other methods in the evaluation;

The accrediting agency must take appropriate actions to address any deficiencies;

If an agency finds systemic noncompliance, the agency must promptly notify ED; and

Accreditation reviews occur for initial or renewal of accreditation; however, during interim, an institution is held responsible and accountable for meeting definition.

Reasons: A credit hour is a unit of measure that gives value to the level of instruction, academic rigor, and time requirements for a course taken at an institution. It is necessary for measuring eligibility for federal funding.

21

DETC Comments on Credit Hours

Purpose: quantify academic activity for purposes of determining Federal funding

In response to some schools’ abuse of inflating credit hour designations to maximize funding

Amount of work represented in intended learning outcomes and verified by evidence of student achievement

Modeled on the Carnegie Unit as classically used Must equal one hour of classroom or direct faculty

instruction and a minimum of two hours of out of class student work each week for approximately 15 weeks for one semester or trimester of credit

22

DETC Comments on Credit Hours, cont.

At least an equivalent amount of work as required above for other academic activities including laboratory work, internships, practica, studio work, etc.

Does not limit how institutions may assign credits to their courses for academic purposes

Credit hour assignments will be reviewed by DETC No requirement for institutions to assign additional

credit to courses

23


DETC subject specialists will evaluate the assignment of credit hours in reviewing curricula

Schools must declare and document how they make credit hour assignments

DETC credit hours: achieved through 45 hours of student study per one semester hour

Comparable credit assignments to those of accredited resident courses

Content must be similar in nature and level to accredited resident curricula

24


Evaluators will ask: Are “semester” hours equivalent to the commonly-accepted and traditionally defined units of academic measurement in an appropriately accredited institutions?

When submitting curricula for DETC reviews, include a description of how credit hours have been assigned and explain how you can document or defend the assignments that students have taken 45 hours per credit hour assigned

25

State Authorization (§§ 600.4(a)(3), 600.5(a)(4), 600.6(a)(3), and 600.9)

Current Rules: To be Title IV eligible, an institution must be legally authorized to provide postsecondary educational programs in a State.

Final Rules: An institution is legally authorized by a State through a charter, license, approval, or other document issued by a State government agency or State entity if it is authorized by name that affirms or conveys the authority to the institution to operate educational programs beyond secondary education.

26

State Authorization (§§ 600.4(a)(3), 600.5(a)(4), 600.6(a)(3), and 600.9), cont.

The Secretary would consider an institution to be legally authorized by a State if: The authorization is given to the institution specifically to

offer programs beyond secondary education but not merely to do business in the state;

The authorization is subject to adverse action by the State; and

The State has a process to review and appropriately act on complaints concerning the institution and enforces State laws.

An institution may be exempt by means of accreditation if it is authorized to offer postsecondary educational programs. 27

State Authorization (§§ 600.4(a)(3), 600.5(a)(4), 600.6(a)(3), and 600.9), cont.

If an institution is offering postsecondary education through distance or correspondence in a state in which it is not physically located, the institution must meet any state rules for it to be legally offering postsecondary education in that state.

Reasons: State oversight of postsecondary education plays an important role in protecting students.

28

DETC Comments on State Authorization

Title IV institutions offering distance education to students in States where they are not physically located must meet “ any State requirements for it to be legally offering postsecondary distance or correspondence education in that State”

Must be able to document a “State’s approval” to the Department “upon request”

Applies only to Title IV participating schools Still many unanswered questions on what the

regulation means DETC has established a task force to prepare a

Council-wide approach 29

DETC Comments on State Authorization, cont.

ED does not intend to pre-empt or overturn existing State laws

Laws that provide for exemptions for accredited schools not disturbed

Laws that require a “physical presence” to be subject to licensure not disturbed

Schools must meet any State requirements that a State may assert

Has many unintended and negative consequences for online education

30

DETC Comments on State Authorization, cont.

Federal auditors may ask for documentation from schools to show compliance

It places a task on the school to ensure it is in compliance with applicable laws

States may be asked to respond to questions from many institutions outside their borders

Creates an incentive for states to form regional compacts and have uniform rules and reciprocity

Provides a rationale for re-invigorating the TRIAD of State, Federal and Accreditor cooperation.

31

Student Assistance General Provisions (§ 668.2)

Current Rules: None. Final Rules: The definition of “full-time student” is amended to

allow repeated coursework to count towards a student’s enrollment status in term-based programs, unless: There is more than one repetition of repeated course; or Any repetition of a previously passed course is due to student's

failure of other course-work. Reasons: Current policy provides that a student may not be paid

for repeating a course unless the student will receive credit for the coursework. ED decided to include the provision in the regulation to provide that repeated courses would count toward enrollment status and the student would be eligible for Title IV for term-based programs. (This does not apply to nonterm programs.)

32

Written Arrangements (§§ 668.5 and 668.43)

Current Rules: An eligible institution may enter into a written agreement or consortium agreement with another eligible institution without any limitations.

Current rules limit the arrangement between an eligible institution and an ineligible institution.

Final Rules: The provision makes such an arrangement consistent with the definition of “educational program” by specifying that if a written arrangement is between two or more eligible institutions that are owned or controlled by the same individual, partnership, or corporation, the institution that grants the degree or certificate must provide more than 50% of the educational program.

33

Written Arrangements (§§ 668.5 and 668.43), cont.

The final regulations also require institutions to make available to students information about written arrangements.

Reasons: Per the DOE, written agreements between institutions with common ownership could be circumventing the regulations governing default rates and 90/10.

34

Incentive Compensation (§ 668.14)

Current Rules: In accordance with the HEA provision, an institution is prohibited from making any commission, bonus, or other incentive payments based directly or indirectly on success in securing enrollments or financial aid to any persons or entities involved in student recruiting or admissions activities, or in making decisions about the award of student financial assistance. It also states that the prohibition does not apply to the recruitment of foreign students who are not eligible for financial aid. Current rules specify 12 “safe harbors” that an institution may carry out without violating the provision.

35

Incentive Compensation (§ 668.14), cont.

Final Rules: The Department aligns the regulation more closely with the statute and delete the 12 safe harbors. The Department clarifies that “eligible institutions and their contractors may make merit-based adjustments to employee compensation, provided that such adjustments are not based directly or indirectly upon success in securing enrollments or the award of financial aid.”

Reasons: ED believes that the regulatory language is clear and the elimination of the safe harbors best effectuate congressional intent.

36


Institutions can determine if a payment compensation plan is permissible by analyzing: “Whether it is a commission, bonus, or other incentive

payment, defined as an award of a sum of money or something of value paid to or given to a person or entity for services rendered; and

Whether the commission, bonus, or other incentive payment is provided to any person based directly or indirectly upon success in securing enrollments or the award of financial aid, which are defined as activities engaged in for the purpose of the admission or matriculation of students for any period of time or the award of financial aid.”

37


If the answer is “yes,” to each item, the commission, bonus, or incentive payment would not be permitted under the statute.

The following definitions are included in the final regulations: Commission, bonus or other incentive payment: A sum of

money or something of value, other than a fixed salary or wages, paid to or given to a person or an entity for services rendered.

38


Securing enrollments or the award of financial aid means activities that a person or entity engages in at any point in time through completion of an educational program for the purpose of the admission or matriculation of students for any period of time or the award of financial aid to students.

These activities include contact in any form with a prospective student, such as preadmission or advising activities, scheduling an appointment to visit the enrollment office or any other office at the institution, attendance at such appointment, or involvement in a prospective student’s signing of an enrollment agreement or financial aid application.

39


These activities do not include making a payment to a third-party for “the provision of student contact information for prospective students provided that such payment is not based on: “(i) Any additional conduct or action by the third party or the

prospective students, such as participation in preadmission or advising activities, scheduling an appointment to visit the enrollment office or any other office of the institution or attendance at such an appointment, or the signing, or being involved in the signing, of a prospective student’s enrollment agreement or financial aid application; or

(ii) The number of students (calculated at any point in time of an educational program) who apply for

40


enrollment, are awarded financial aid, or are enrolled for any period of time, including through completion of an educational program.”

Entity or person engaged in any student recruitment or admission activity or in making decisions about the award of financial aid means— “(1) With respect to an entity engaged in any student

recruitment or admission activity or in making decisions about the award of financial aid, any institution or organization that undertakes the recruiting or the admitting of students or that makes decisions about and awards title IV, HEA program funds; and

41


(2) With respect to a person engaged in any student recruitment or admission activity or in making decisions about the award of financial aid, any employee who undertakes recruiting or admitting of students or who makes decisions about and awards title IV, HEA program funds, and any higher level employee with responsibility for recruitment or admission of students, or making decisions about awarding title IV, HEA program funds.”

Enrollment means the admission or matriculation of a student into an eligible institution.

42

How Does the Removal of the Safe Harbors Impact Non-Title IV Programs?

“We believe that retaining this safe harbor (compensation based on enrollment in non-title IV programs) would continue to allow institutions to manipulate the system by initially enrolling students in non-Title IV, HEA eligible programs so that the institutions pay incentive compensation to recruiters based on such enrollments, only to later enroll the same students in Title IV, HEA eligible programs.” The only exception is compensation based on the recruitment of foreign students.

43

Misrepresentation (Subpart F of Part 668)

Current Rules: This section sets forth the types of consumer information statements and communications that constitute misrepresentation.

Final Rules: The changes strengthen ED’s regulatory enforcement authority against eligible institutions that engage in substantial misrepresentation and to expand the type of information that the DOE would consider subject to misrepresentation.

Reasons: ED has received complaints from students that they were victims of false promises and other forms of deception.

44

Scope and Special Definitions (§ 668.71)

Current Rules: The rules and standards address the standards should an institution make any substantial misrepresentations regarding the nature of its educational program, its financial charges, or the employability of its graduates.

Final Rules: The rules clarify that “misrepresentation” is any false, erroneous, or misleading statement that an eligible institution, one of its representatives, or any ineligible organization, or person with whom the eligible institution has an agreement makes directly or indirectly to a student, prospective student or any member of the public, or to an accrediting agency, to a State agency, or the Secretary.

45

Scope and Special Definitions (§ 668.71), cont.

“Misleading statement” would be any statement made in writing, visually, orally, or through other means that has the “capacity, likelihood, or tendency to deceive or confuse.”

“Substantial misrepresentation” is any misrepresentation in which the person to whom it was made could reasonably be expected to rely, or has reasonably relied, to that person’s detriment.

Misrepresentation includes the dissemination of a student endorsement or testimonial that a student gives under duress or because it is required by the institution to participate in the program.

46

Scope and Special Definitions (§ 668.71), cont.

“ED will look at many factors including whether misrepresentation was intentional or inadvertent.

Reasons: ED believes that it is appropriate to hold the eligible institution accountable when a related person or entity makes a substantial misrepresentation.

47

Ability to Benefit (§ 668.32 and Subpart J of Part 668)Student Eligibility (§ 668.32(e))

Current Rules: To be eligible for financial aid, a student must have a high school diploma or equivalent, have obtained a passing score on an ATB test, have been enrolled in an eligible institution that participates in a State process approved by the Secretary, or have obtained a secondary credential from a home school or, if the State law does not require such a credential, have completed a secondary school education in a home school setting that qualifies as an exemption from compulsory school attendance under State law.

48

Ability to Benefit (§ 668.32 and Subpart J of Part 668)Student Eligibility (§ 668.32(e)), cont.

Final Rules: Consistent with changes to the HEA in 2008, ED adds a new paragraph that would allow a student to be eligible if he/she completed 6 semester, trimester, or quarter credits or 225 clock hours that are applicable toward a degree or certificate offered by the institution.

Reasons: This provision was added with the enactment of the HEOA.

49

Scope (§ 668.151)

Current Rules: The description of Subpart J is provided which is the approval of independently administered tests.

Final Rules: The rules would provide references to the test approval process including the process for test publishers and States to identify and follow-up on test score irregularities.

Reasons: This section would be aligned with the changes to the test approval process.

50

Disbursements (§§ 668.164(i), 685.102(b), 685.301(e), 686.2(b), and 686.37(b))

Current Rules: Institutions are required to disburse Title IV funds (except FWS) on a payment period basis.

Final Rules: An institution would have to provide a way for a Federal Pell Grant eligible student to obtain or purchase required books and supplies by the seventh day of a payment period under certain conditions. An institution would have to comply with this requirement only if the school is on the advance system of payment and the student would have a credit balance under 34 CFR 668.164(e).

51

Disbursements (§§ 668.164(i), 685.102(b), 685.301(e), 686.2(b), and 686.37(b)), cont.

Final Rules (cont.): The amount the institution must provide to the student for books and supplies would be the lesser of the presumed credit balance or the amount needed by the student, as determined by the institution. In determining the amount needed by the student, the institution may use the actual costs of books and supplies or the allowance for books and supplies used by the student’s cost of attendance for the payment period.

52

Disbursements (§§ 668.164(i), 685.102(b), 685.301(e), 686.2(b), and 686.37(b)), cont.

Reasons: Even though the Pell Grant rules permit institutions to disburse Pell Grant funds and other Title IV funds in a manner that best meets the needs of students, ED has identified low-cost institutions that delay disbursing funds for an extended period of

time or make partial disbursements to cover tuition and fees. As a result, students either have to pay for books and supplies that would otherwise be paid from Title IV by obtaining loans or do without books and supplies until the funds are available. The rules would eliminate the disbursement delays.

53

Satisfactory Academic Progress (§§ 668.16(e), 668.32(f), 668.34)

Current Rules: The DOE maintains published minimum requirements for satisfactory academic progress (SAP) policies.

Final Rules: The SAP requirements are restructured. 34 CFR 668.16(e) is revised to include only the requirement that an institution establish, publish and apply SAP standards. The remainder of the current provision that outlines the elements that should be included in a satisfactory academic progress policy is moved to 34 CFR 668.34. 34 CFR 668.34 specifies the elements an institution’s policy must contain to be a reasonable policy.

54

Satisfactory Academic Progress (§§ 668.16(e), 668.32(f), 668.34), cont.

The most significant changes to the rules are 1) that schools that monitor SAP on a payment period or term basis would be permitted to place students on an academic warning status automatically (without appeal from the student) and students could still avail themselves of a probationary period thereafter, and 2) that schools will need to implement more detailed appeal procedures.

Reasons: Recent questions from institutions and reviews of institution’s satisfactory academic progress policies have raised concerns at the DOE regarding schools using as long as 24 months for a probationary period.

55

Evaluating the Validity of High School Diplomas (§ 668.16(p))

Current Rules: There is no definition of high school diploma.

Final Rules: An institution must develop and follow procedures to evaluate the validity of a student’s high school completion if the institution or the Secretary has reason to believe that the high school diploma is not valid or was not obtained from an entity that provides secondary school education.

56

Evaluating the Validity of High School Diplomas (§ 668.16(p)), cont.

Reasons: This proposal is designed to ensure that students who report having a high school diploma have a valid high school diploma. The Department agreed to establish and maintain a list of secondary schools against which high school diplomas will be matched. Beginning with the 2011-2012 award year, two questions will be added to the FAFSA (there will be a drop down box): What is the name of the secondary school or entity that

provided the student’s secondary school program of study?

What is the State that awarded the student’s high school diploma?

57

Return of Title IV HEA Funds – Treatment of Title IV, HEA Program Funds When a Student Withdraws from Term-Based Programs with Modules or Compressed Courses (§ 668.22(a) and (f))

Current rules: The regulations do not address the treatment of term-based programs in which courses are less than the length of the term. ED established the policy in a Dear Colleague letter (GEN-00-24), which states that when a student who completes only one module or compressed course within a term in which he/she was expected to complete additional coursework, the student is not considered to have withdrawn under the return calculation.

58

Return of Title IV HEA Funds – Treatment of Title IV, HEA Program Funds When a Student Withdraws from Term-Based Programs with Modules or Compressed Courses (§ 668.22(a) and (f)), cont.

Final Rules: A student is considered to have withdrawn from a payment period or period of enrollment if he/she does not complete all the days in the payment period or period of enrollment for programs that are measured in credit hours or clock hours for programs measured in clock hours that the student was scheduled to complete prior to withdrawing.

Reasons: Per the DOE, the changes ensure more equitable treatment between students who withdraw from programs that are measured in credit hours, regardless of whether these programs span the full length of the terms or are programs with modules or compressed courses.

59

Withdrawal Date for a Student who Withdraws From an Institution that is Required to Take Attendance (§ 668.22(b)) Current Rules: An institution is required to take

attendance if an outside entity (such as an accrediting agency or a State agency) requires the institution to take attendance. If required to take attendance, an institution must use the last date of academic attendance as the withdrawal date.

60

Withdrawal Date for a Student who Withdraws From an Institution that is Required to Take Attendance (§ 668.22(b)), cont. Final Rules: The Department expands the

categories of institutions required to take attendance. Institutions will be required to take attendance if required by an outside entity, or the institution itself has a requirement that its instructors take attendance, or if the institution or an outside entity has a requirement that can only be met by taking attendance or a comparable process, including but not limited to, requiring students in a program to demonstrate attendance in the classes of that program or a portion of that program.

61

Withdrawal Date for a Student who Withdraws From an Institution that is Required to Take Attendance (§ 668.22(b)), cont. ED does not believe that documenting that a

student has logged in with no participation is demonstrating attendance. “Clicking” does not count as attendance. Institution must demonstrate participation.

Reasons: The Department believes that these changes would provide a more accurate determination of how much Title IV aid a student earned who withdrew during a period when an instructor or another employees was required to take attendance.

62

Verification and Updating of Student Aid Application Information (Subpart E of Part 668) Selection of FAFSA Information for Verification (§ 668.54)

Current Rules: An institution is not required to verify more than 30% of its applicants for Title IV funds. In addition, the Secretary excludes certain categories from verification (e.g., an applicant who is incarcerated).

Final Rules: Institutions will have to verify all applicants selected and the Secretary would publish an annual Federal Register notice that would describe the information that an institution and the applicant may be required to verify for those applicants selected for verification. The exclusions from verification would be restructured.

63

Verification and Updating of Student Aid Application Information (Subpart E of Part 668) Selection of FAFSA Information for Verification (§ 668.54), cont.

Reasons: The final changes are needed to align this section with the modifications to be made to the verification process.

Effective date: July 1, 2012 (2012-2013 award year).

64

Updating Information – Changes in Dependency Status (§ 668.55(c))

Current Rules: Applicants are required to update their dependency status on the FAFSA at any time throughout the award year except for a change in dependency status change as a result of a change in marital status.

Final Rules: Applicants will be required to update all changes in dependency status that occur throughout the award year.

Reasons: This will simplify the process and ensure that the amount of assistance received by an applicant is based on the best available information.

65

Information to be Verified (§ 668.56)

Current Rules: Five items must be verified when an applicant is selected: Adjusted Gross Income; U.S. income tax paid; Number of family members in the household; Number of family members in the household

enrolled at least half-time in postsecondary educational institutions; and

Untaxed income and benefits.

66

Information to be Verified (§ 668.56), cont.

Final Rules: These items are eliminated. Each award year, the Secretary would publish in the Federal Register the FAFSA information and documentation that an institution and an applicant may be required to verify.

Reasons: The Department will be implementing a targeted approach to verification.

67

Consequences of a Change in an Applicant’s FAFSA Information (§ 668.59)

Current Rules: If as a result of verification, changes need to be made to the FAFSA, an applicant must submit corrected information to ED, except if the errors do not change the Expected Family Contribution (EFC) or the errors in the dollar amount are within the $400 tolerance.

Final Rules: All tolerances are removed. All corrections will have to be submitted to ED.

Reasons: The DOE believes that decisions should be made on the best available information.

68

ED Releases NPRM on Gainful Employment on 7/26/2010

ED would define whether a program successfully prepares students for gainful employment using a two tests. Comments were due: 9/9/2010 (Over 80,000) ED notice 9/25/2010 announced delay in publication

of final regulations until early 2011. Effective date: 7/1/2012 as planned.

ED estimates that: 5% of all programs would not be eligible; and 55% of all programs would be required to warn their

students about high debt-to-earnings ratios.

69

ED Releases NPRM on Gainful Employment on 7/26/2010, cont.

Based on these two tests, a program may be eligible, have restricted eligibility, or be ineligible: “Fully eligible programs” would need to have at least

45% of their former students paying down the principal on their federal loans OR their graduates would need to have a debt-to-earnings ratio of less than 20% of discretionary income OR 8% of average annual earnings. The programs would have to disclose their repayment rates and debt-to-earnings ratios unless they pass both these tests;

70


“Ineligible programs” would have less than 35% of their former students paying down the principal of their federal loans AND their graduates would have a debt-to-earnings ratio above 30% of discretionary income AND 12% of average annual earnings. An ineligible program may not offer student aid to new students and can provide one additional year of aid to current students, provided that it warns them about the high debt-to-earnings ratio;

“Restricted programs” are programs that are not fully eligible or ineligible. Restricted programs are subject to limits on enrollment growth and the institutions must demonstrate employer support for the program and warn consumers and current students of high debt levels.

71


The use of two measures is a “balanced approach that gives institutions flexibility in how to demonstrate that they prepare students for gainful employment.” The debt-to-income ratio provides a measure of program completers’ ability to repay their loans. The use of discretionary income recognizes that borrowers with higher incomes can afford to use a larger share of their income to loan repayments, while the use of annual income would benefit programs whose borrowers have lower earnings. The loan repayment rate is a measure of whether program enrollees are repaying their loans, regardless of whether they completed the program.

72


73


Debt-to-Income ratio A 3-year Period (3YP) – Period covering the 3 most

recently completed award years prior to the earnings year;

Earnings year – most recent calendar year; and Discretionary income – difference between average

annual earnings and 150% of the Poverty Guideline for a single person.

74


Loan Repayment Rate =

OOPB of LPF plus OOPB of RPL

OOPB of all loans for students attending the program

Original Outstanding Principal Balance (OOPB) is the amount of the outstanding balance on FFEL or Direct Loans owed by students who attended program including capitalized interest on the date loans entered repayment. OOPB of all loans that entered repayment for the prior four fiscal years;

75


Loans Paid in Full (LPF) is the amount of loans to students who attended program that have been paid in full. A loan paid off in consolidation is not counted as paid in full until the consolidation loan is paid in full. The OOPB of LPF in the numerator of the ratio is the total amount of OOPB for these loans;

Reduced Principal Loan (RPL) is the loan where payments made by a borrower during the most recently completed FY reduced the outstanding principal balance of that loan from the beginning of that FY. Loans whose payments for the FY qualified for the Public Service Loan Forgiveness program are included. The OOPB of the RPL in the numerator of the ratio is the total amount of OOPB for these loans;

76


Exclusions: The following are excluded from the numerator and denominator:

The OOPB Of borrowers on an in-school deferment or a military-related deferment status; and

The OOPS of borrowers entering repayment after March 31 of the most recent FY.

77


Debt Measures: The Secretary determines annually for each program whether the annual loan payment is less than the discretionary income and earnings threshold: Annual loan repayment: The Secretary determines

the median loan debt of students who completed the program at the institution during the 3YP and uses this amount to calculate an annual loan repayment based on a 10-year repayment schedule and the current annual interest rate on Direct Unsubsidized Loans. If data are available, the Secretary will also calculate the median loan debt of students who completed the program during the P3YP.

78


In general, loan debt includes Title IV loans other than Parent PLUS loans and any private educational loans or debt obligations arising from institutional financing plans. Loan debt does not include any debt obligations arising from student attendance at prior or subsequent institutions unless under common ownership or control.

Average annual earnings: The Secretary obtains this information from a Federal agency of the students who completed the program during the 3YP. P3YP data are used if the institution can show that the students completing the program experience a significant increase in earnings after an initial employment.

79


Debt warning disclosure: On or after July 1, 2012, an institution must provide a warning if the loan repayment rate is less than 45% AND the debt-to-income ratio is greater than 20% of discretionary income or 8% of average annual earnings. The Secretary will notify the institution that it must include a prominent warning in its promotional, enrollment, registration, and in all other materials, and in all admissions meetings with prospective students, and disclose to current and prospective students the most recent loan repayment rate and most recent debt measures.

80


Restricted programs: If an institution’s program(s) is placed on restricted status, it must annually provide to the Secretary employer affirmations and make the debt warning disclosures to its students.

81

Questions??

Sharon H. Bob, Ph.D. – [email protected]

Powers Pyles Sutter & Verville PC

1501 M Street NW, Seventh Floor | Washington, DC 20005

tel 202.466.6550 | fax 202.785.1756

December 14, 2010

82

Sharon H. Bob, Ph.D.

83

Sharon H. Bob, Ph.D., Higher Education Specialist on Policy and Regulation, is a member of the Education Group at the Washington, D.C. law firm of Powers Pyles Sutter & Verville, P.C. Dr. Bob advises all sectors of higher education regarding strategic issues pertaining to their participation in the federal student financial assistance programs, accreditation, licensure, education tax benefits, and related regulatory matters.

Dr. Bob advises public and private colleges and universities, as well as private and publicly-traded companies. In this role, she provides clients with detailed technical guidance related to compliance with applicable statute and regulations. She regularly assists postsecondary educational institutions on issues relating to institutional eligibility, program eligibility, student eligibility, financial responsibility and administrative capability standards, changes of ownership, adding locations and programs, program reviews and compliance audits, and institutional responsibilities for the education tax benefits. Through training seminars and on-site reviews, she assists clients in complying with the federal requirements for administering federal student financial assistance. Dr. Bob has authored numerous articles on federal financial aid issues for The Greentree Gazette, NASFAA's Journal of Student Financial Aid, NASFAA's Student Aid Transcript, the Career College Link, and other higher education publications and frequently speaks at meetings of college officials and student aid administrators.

Dr. Bob received her undergraduate degree summa cum laude from the State University of New York at Buffalo and was elected to Phi Beta Kappa. She received her doctorate from the University of Maryland.

Powers Pyles Sutter & Verville is a Washington, D.C.-based law firm that focuses on health care, education, and the law of tax-exempt organizations.

Practice Areas:• Education• Title IV Eligibility & Compliance• Program Reviews and IG Audits• Accreditation • Mergers & Acquisitions• Public Policy & Government

Relations• State Licensing• Education PolicyMember:• NASFAA• CCAEducation:• Ph.D., University of Maryland,

1976• BA, State University of Buffalo,

1971, summa cum laude

detc webinar on final regulations on program integrity provisions sharon h. bob, ph.d. powers pyles...

Documents