Program Integrity Rules

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66832 Federal Register / Vol. 75, No. 209 / Friday, October 29, 2010/ Rules and Regulations

DEPARTMENT OF EDUCATION

34 CFR Parts 600, 602, 603, 668, 682,685, 686, 690, and 691

[Docket ID ED2010OPE0004]

RIN 1840AD02

Program Integrity Issues

AGENCY : Office of PostsecondaryEducation, Department of Education.ACTION : Final regulations.

SUMMARY : The Secretary is improvingintegrity in the programs authorizedunder title IV of the Higher EducationAct of 1965, as amended (HEA), byamending the regulations forInstitutional Eligibility Under the HEA,the Secretarys Recognition of Accrediting Agencies, the SecretarysRecognition Procedures for StateAgencies, the Student Assistance

General Provisions, the Federal FamilyEducation Loan (FFEL) Program, theWilliam D. Ford Federal Direct LoanProgram, the Teacher EducationAssistance for College and HigherEducation (TEACH) Grant Program inpart 686, the Federal Pell GrantProgram, and the AcademicCompetitiveness Grant (AGC) andNational Science and MathematicsAccess to Retain Talent Grant (NationalSmart Grant) Programs.DATES : These regulations are effective

July 1, 2011 with the exception of therevision of subpart E of part 668,

Verification and Updating of StudentAid Application Information. Revisedsubpart E of part 668 is effective July 1,2012. The incorporation by reference of certain publications listed in the rule isapproved by the Director of the FederalRegister as of July 1, 2011.FOR FURTHER INFORMATION CONTACT : Forinformation related to the provisions onhigh school diplomas and verification of information on the Free Application forFederal Student Aid (FAFSA),

Jacquelyn Butler. Telephone: (202) 5027890 or via the Internet at:

[email protected].

For information related to the returnof title IV, HEA funds calculationprovisions for term-based modules ortaking attendance, Jessica Finkel orWendy Macias. Telephone: (202) 5027647 or via the Internet at:

[email protected]. Telephone: (202)5027526 or via the Internet at:[email protected].

For information related to theprovisions on retaking coursework,Vanessa Freeman. Telephone: (202)5027523 or via the Internet at:[email protected].

For information on the provisionsrelated to incentive compensation,Marty Guthrie. Telephone: (202) 2197031 or via the Internet at:[email protected].

For information related to theprovisions on satisfactory academicprogress, Marty Guthrie or MariannaDeeken. Telephone: (202) 2197031 orvia the Internet at:[email protected]. Telephone: (206)6152583 or via the Internet at:[email protected].

For information related to theprovisions on ability to benefit, DanKlock. Telephone: (202) 3774026 or viathe Internet at [email protected].

For information related to gainfulemployment in a recognizedoccupation, John Kolotos. Telephone:(202) 5027762 or via the Internet at:

[email protected]. For information related to the

provisions for written agreements

between institutions, CarneyMcCullough. Telephone: (202) 5027639 or via the Internet at:[email protected].

For information related to theprovisions on misrepresentation, CarneyMcCullough or Vanessa Freeman.Telephone: (202) 5027639 or via theInternet at: [email protected]. Telephone: (202) 5027523 or via theInternet at: [email protected].

For information related to theprovisions on timeliness and method of disbursement, Harold McCullough.Telephone: (202) 3774030 or via theInternet at: [email protected].

For information related to theprovisions related to the definition of credit hour, Fred Sellers. Telephone:(202) 5027502 or via the Internet at:[email protected].

For information related to provisionson State authorization, Fred Sellers.Telephone: (202) 5027502 or via theInternet at: [email protected].

If you use a telecommunicationsdevice for the deaf (TDD), call theFederal Relay Service (FRS), toll free, at18008778339.

Individuals with disabilities canobtain this document in an accessibleformat ( e.g., braille, large print,audiotape, or computer diskette) onrequest to one of the contact personslisted under FOR FURTHER INFORMATION CONTACT .SUPPLEMENTARY INFORMATION : On June18, 2010, the Secretary published anotice of proposed rulemaking (NPRM)for program integrity issues in theFederal Register (75 FR 34806).

In the preamble to the NPRM, theSecretary discussed on pages 34808through 34848 the major regulations

proposed in that document tostrengthen and improve theadministration of programs authorizedunder the HEA. These proposedregulations included the following:

Requiring institutions to developand follow procedures to evaluate thevalidity of a students high schooldiploma if the institution or theSecretary has reason to believe that thediploma is not valid or was not obtainedfrom an entity that provides secondaryschool education;

Expanding eligibility for title IV,HEA program assistance to studentswho demonstrate they have the abilityto benefit by satisfactorily completingsix credits of college work, or theequivalent amounts of coursework, thatare applicable toward a degree orcertificate offered by an institution;

Amending and adding definitionsof terms related to ability to benefittesting, including assessment center,

independent test administrator,

individual with a disability, test, test administrator, and testpublisher ;

Consolidating into a singleregulatory provision the approvalprocesses for ability to benefit testsdeveloped by test publishers and States;

Establishing requirements underwhich test publishers and States mustprovide descriptions of processes foridentifying and handling test scoreabnormalities, ensuring the integrity of the testing environment, and certifyingand decertifying test administrators;

Requiring test publishers and Statesto describe any accommodationsavailable for individuals withdisabilities, as well as the process a testadministrator would use to identify andreport to the test publisher instances inwhich these accommodations wereused;

Revising the test approvalprocedures and criteria for ability to

benefit tests, including proceduresrelated to the approval of tests forspeakers of foreign languages andindividuals with disabilities;

Revising the definitions andprovisions that describe the activities

that constitute substantialmisrepresentation by an institution of the nature of its educational program, itsfinancial charges, or the employabilityof its graduates;

Removing the safe harbor

provisions related to incentivecompensation for any person or entityengaged in any student recruitment oradmission activity, including makingdecisions regarding the award of title IV,HEA program assistance;

Clarifying what is required for aninstitution of higher education, a

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66833Federal Register / Vol. 75, No. 209 / Friday, October 29, 2010/ Rules and Regulations

proprietary institution of highereducation, and a postsecondaryvocational institution to be consideredlegally authorized by the State;

Defining a credit hour andestablishing procedures that certaininstitutional accrediting agencies musthave in place to determine whether aninstitutions assignment of a credit houris acceptable;

Modifying provisions to clarifywhether and when an institution mustaward student financial assistance basedon clock or credit hours and thestandards for credit-to-clock-hourconversions;

Modifying the provisions related towritten arrangements between two ormore eligible institutions that are ownedor controlled by the same person orentity so that the percentage of theeducational program that may beprovided by the institution that does notgrant the degree or certificate under the

arrangement may not exceed 50 percent; Prohibiting written arrangements

between an eligible institution and anineligible institution that has had itscertification to participate in title IV,HEA programs revoked or itsapplication for recertification denied;

Expanding provisions related to theinformation that an institution with awritten arrangement must disclose to astudent enrolled in a program affected

by the arrangement, including, forexample, the portion of the educationalprogram that the institution that grantsthe degree or certificate is not providing;

Revising the definition of unsubsidized student financial aid programs to include TEACH Grants,Federal PLUS Loans, and Direct PLUSLoans;

Codifying current policy that aninstitution must complete verification

before the institution may exercise itsprofessional judgment authority;

Eliminating the 30 percentverification cap;

Retaining the ability of institutionsto select additional applicants forverification;

Replacing the five verification itemsfor all selected applicants with atargeted selection from items includedin an annual Federal Register noticepublished by the Secretary;

Allowing interim disbursementswhen changes to an applicants FAFSAinformation would not change theamount that the student would receiveunder a title IV, HEA program;

Codifying the Departments IRSData Retrieval System Process, whichallows an applicant to import incomeand other data from the IRS into anonline FAFSA;

Requiring the processing of changesand corrections to an applicants FAFSAinformation;

Modifying the provisions related toinstitutional satisfactory academicprogress policies and the impact thesepolicies have on a students eligibilityfor title IV, HEA program assistance;

Expanding the definition of full-time student to allow, for a term-basedprogram, repeated coursework taken inthe program to count towards a full-timeworkload;

Clarifying when a student isconsidered to have withdrawn from apayment period or period of enrollmentfor the purpose of calculating a returnof title IV, HEA program funds;

Clarifying the circumstances underwhich an institution is required to takeattendance for the purpose of calculating a return of title IV, HEAprogram funds;

Modifying the provisions for

disbursing title IV, HEA program fundsto ensure that certain students canobtain or purchase books and supplies

by the seventh day of a payment period; Updating the definition of the term

recognized occupation to reflect currentusage;

Establishing requirements forinstitutions to submit information onstudents who attend or completeprograms that prepare students forgainful employment in recognizedoccupations; and

Establishing requirements forinstitutions to disclose on their Web siteand in promotional materials toprospective students, the on-timecompletion rate, placement rate, medianloan debt, program cost, and otherinformation for programs that preparestudents for gainful employment inrecognized occupations.

Implementation Date of TheseRegulations

Section 482(c) of the HEA requiresthat regulations affecting programsunder title IV of the HEA be publishedin final form by November 1 prior to thestart of the award year (July 1) to whichthey apply. However, that section also

permits the Secretary to designate anyregulation as one that an entity subjectto the regulation may choose toimplement earlier and to specify theconditions under which the entity mayimplement the provisions early.

The Secretary has not designated anyof the provisions in these finalregulations for early implementation. Asindicated in the DATES section, theregulations contained in subpart E of part 668, Verification and Updating of Student Aid Application Informationare effective July 1, 2012.

While the Secretary has designatedamended 600.9(a) and (b) as beingeffective July 1, 2011, we recognize thata State may be unable to provideappropriate State authorizations to itsinstitutions by that date. We areproviding that the institutions unable toobtain State authorization in that Statemay request a one-year extension of theeffective date of these final regulationsto July 1, 2012, and if necessary, anadditional one-year extension of theeffective date to July 1, 2013. To receivean extension of the effective date of amended 600.9(a) and (b) forinstitutions in a State, an institutionmust obtain from the State anexplanation of how a one-year extensionwill permit the State to modify itsprocedures to comply with amended 600.9.Analysis of Comments and Changes

The regulations in this documentwere developed through the use of negotiated rulemaking. Section 492 of the HEA requires that, before publishingany proposed regulations to implementprograms under title IV of the HEA, theSecretary must obtain publicinvolvement in the development of theproposed regulations. After obtainingadvice and recommendations, theSecretary must conduct a negotiatedrulemaking process to develop theproposed regulations. The negotiatedrulemaking committee did not reachconsensus on the proposed regulationsthat were published on June 18, 2010.The Secretary invited comments on theproposed regulations by August 2, 2010.Approximately 1,180 parties submittedcomments, a number of which weresubstantially similar. An analysis of thecomments and of the changes in theregulations since publication of theNPRM follows.

We group major issues according tosubject, with appropriate sections of theregulations referenced in parentheses.We discuss other substantive issuesunder the sections of the regulations towhich they pertain. Generally, we donot address minor, nonsubstantivechanges, recommended changes that the

law does not authorize the Secretary tomake, or comments pertaining tooperational processes. We also do notaddress comments pertaining to issuesthat were not within the scope of theNPRM.General Comments

Comment: We received a significantnumber of comments that expressedsupport for the Secretarys proposedregulations. Many of the commentersnoted that the proposed regulationswould protect taxpayer investments in



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higher education by helping to curtailfraud and abuse and would protect theinterests of a diverse population of students who are seeking highereducation for personal and professionalgrowth. Some of the commenters alsostated that the Secretarys proposedregulations would provide a levelplaying field that benefits the majorityof institutions of higher education thatare committed to sound academic andadministrative practices.

Discussion: The Departmentappreciates the numerous comments wereceived in support of the proposedregulations.

Changes: None.Comment: Several commenters

disagreed with the process by which theDepartment developed the proposedregulations. The commenters believethat the Department did not negotiate ingood faith and did not follow faithfullythe Federal negotiated rulemakingprocess. These commenters believedthat the Department excluded importantmembers of the proprietary schoolsector from the process and failed toprovide adequate time for review of andcomment on the proposed regulations.Because of the complexity of theproposed regulations, these samecommenters also requested that theDepartment delay the effective date forimplementation of the final regulations.Several other commenters believed that

before negotiating proposed regulationswith such a broad scope, theDepartment should have conducted

studies to assess the impact theproposed regulations would have onaffected institutions. Lastly, onecommenter expressed the view that theDepartment began negotiations withoutpresenting examples of abuse or datathat supported additional regulation andthat many of the Departments concernsabout program integrity could have been

better addressed by enforcing currentregulations.

Discussion: We disagree with thecommenters who said that theDepartment did not act in good faith innegotiating the proposed regulations or

that we did not follow the negotiatedrulemaking process. In conducting thenegotiated rulemaking for theseproposed regulations, the Departmentfollowed the requirements in section492 of the HEA, which govern thenegotiated rulemaking process andrequire the Department to choose non-Federal negotiators from the groupsinvolved in the student financialassistance programs authorized by titleIV of the HEA. As addressed earlier inthis preamble, all of these groups wererepresented during the negotiations.

We believe that the 45-day publiccomment period was an adequate periodof time for interested parties to submitcomments, especially in light of the factthat prior to issuing the proposedregulations, the Department conductedpublic hearings and three negotiatedrulemaking sessions, wherestakeholders and members of the publichad an opportunity to weigh in on thedevelopment of much of the languagereflected in the proposed regulations. Inaddition, we believe that the 45-daypublic comment period is necessary inlight of the HEAs master calendarrequirements. Under thoserequirements, the Department mustpublish final regulations by November1, 2010, in order for them to be effectiveon July 1, 2011. The Department mustadhere to the master calendar set forth

by Congress and does not have thestatutory authority to amend it.

We also do not agree that, except for

certain provisions of the regulationssuch as those that may involve systemschanges that require adequate lead timeto make, implementation of the finalregulations should be delayed. Forexample, the proposed regulations onFAFSA verification cannot beimplemented by the July 1, 2011effective date because the changeswould require system updates that willnot be in place by that date. We discussthe implementation delay of regulationsthat involve these system changeselsewhere in this preamble. Absentthese system-related or similar issues,however, we believe a delay inimplementing the final regulations willundermine the Departments goal of protecting taxpayers and students byensuring the integrity of the title IV,HEA programs.

Lastly, we disagree with thecommenters who stated that theDepartment should have conducted astudy to assess the impact of theproposed regulations on institutions of higher education before negotiating theproposed changes and thosecommenters who stated that theDepartment did not present examples of abuse or data to support the proposed

regulations. The Departments decisionto improve program integrity bystrengthening the regulations was basedon many factors, including feedback wereceived from the public. Specifically,the Department developed a list of proposed regulatory provisions based onadvice and recommendations submitted

by individuals and organizations astestimony in a series of three publichearings in June of 2009, as well aswritten comments submitted directly tothe Department. Department staff alsoidentified issues for discussion and

negotiation. The proposed regulationsthat were negotiated during negotiatedrulemaking and included in theproposed regulations were developedfor one or more of the following reasons:

To implement provisions of theHEA, as amended by the HigherEducation Opportunity Act of 2008(HEOA).

To update current regulations thathad not been updated in some time sothat they more accurately reflect thestate of the law as well as theDepartments current practices andpolicies ( e.g., aligning the regulationswith the Departments FAFSAsimplification initiative).

To respond to problems identified by students and financial aid advisorsabout the aggressive sales tactics used

by some institutions. To respond to a report from the

United States GovernmentAccountability Office published inAugust of 2009 that raised concernsabout proprietary institutions andrecommended stronger Departmentoversight to ensure that only eligiblestudents receive Federal student aid.

We believe that all of these factorsprovided ample support for theDepartment to immediately proposestronger regulations to protect studentsand prevent fraud and abuse in the titleIV, HEA programs.

Changes: None.Comment: Many commenters

expressed concern about what theyargued would be a negative impact of the proposed regulations on institutions

of higher education, particularlyproprietary institutions. Thesecommenters stated that the proposedregulations are too complex and too

broad in scope and that, as a result, theywould disproportionately impose

burdens on the institutions that servemany of the students who need the mostfinancial assistance. Other commentersstated that, in these trying economictimes, institutions simply do not havethe resources to administer thedisclosure, reporting, andimplementation requirements includedin the proposed regulations. Some of

these commenters stated that theyfeared that the cost of compliance withthese regulations, which many arguedwere ambiguous or inconsistent, woulddrive their small proprietary institutionsout of business.

Several commenters stated that theproposed regulations target the entireproprietary school sector of highereducation, while the actions of only afew proprietary institutions are causefor concern. These commenters decriedthe Departments one-size-fits-all

approach to ensuring program integrity.



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Lastly, one commenter requested thatthe Department indicate in each sectionof the final regulations the types of institutions to which that specificsection applies.

Discussion: The Department is awarethat some institutions may have limitedresources to implement some provisionsof the final regulations and is committedto assisting these institutions in everyway possible to ensure that allinstitutions can comply with programrequirements. Several of the changes areto discrete areas of existing regulationsrather than wholly new requirements.As such, institutions wishing tocontinue to participate in the title IV,HEA programs have already absorbedmany of the administrative costs relatedto implementing these final regulations.Any additional costs are primarily dueto new procedures that, while possiblysignificant in some cases, are a cost of continued program participation.

The Department believes that the benefits of these regulations forstudents, consumers, and taxpayersjustify the burdens of institutionalcompliance, as discussed, in theRegulatory Impact Analysis inAppendix A. These regulationsstrengthen the Federal student aidprograms by protecting students fromaggressive or misleading recruitingpractices and clarifying State oversightresponsibilities, providing consumerswith better information about theeffectiveness of career colleges andtraining programs, and ensuring thatonly eligible students or programsreceive aid.We do not believe it is necessary tospecifically indicate in each sectionwhich institutions are covered by aparticular regulation because allprovisions of these regulations apply toall postsecondary institutions, unlessotherwise specified.

Changes: None.Comment: A number of commenters

stated that the proposed regulationswould harm students who are alreadydisadvantaged, underserved, and notadequately represented inpostsecondary institutions because they

would limit their choice of educationalprograms and their chances of getting aquality education. Other commentersnoted that the proposed regulationscould become a barrier to access forneedy students, as well as adultstudents who work full-time, becauseaid may be discontinued for programsthat do not meet new regulatoryrequirements. Finally, one commenterurged the Department to ensure that thefinal regulations further the objectives of student access and success, andpromote quality educational programs.

Discussion: We are confident that theregulations strengthening programintegrity are in the best interest of students, consumers, and taxpayers, andwill improve the quality of the programsoffered at institutions by ensuring thatall programs meet a threshold of quality.We believe that students, particularlydisadvantaged, high-need students whoare the most vulnerable, are not wellserved by enrollment in programs thatleave them with limited or low-payingjob prospects and with crushing debtthat they are unable to repay. Studentswho complete their educationalprograms should not expect results thatleave them in a worse situation thanwhen they began their educationalprograms. We believe the regulationswill hold institutions accountable andensure that students can haveconfidence in the quality of theeducational programs in which theyinvest their time, energy, and money.

The Department has a fiscalresponsibility to American taxpayers toensure the value of education provided

by all institutions and programs that areeligible for Federal student aid,regardless of whether they are public,private nonprofit, or proprietaryinstitutions, and these regulations willaid the Department in achieving the bestpossible return on taxpayersinvestment.

Changes: None.

Gainful Employment in a RecognizedOccupation (600.2, 600.4, 600.5,600.0, 668.6, and 668.8) GainfulEmployment Reporting and DisclosureRequirements ( 668.6)

General Comment: Many commenters believed

that the proposed reporting anddisclosure requirements should apply toall programs, regardless of the type of institution or credential awarded, orwhether the programs are otherwisesubject to the gainful employmentprovisions. Alternatively, othercommenters maintained that since theserequirements were targeted to preventknown abuses in the for-profit sector,

they should apply only to thoseinstitutions.A number of commenters supported

the proposed requirements and Web- based disclosure approach. Some of thecommenters urged the Department torequire institutions to provide theinformation under 668.6(b) in a clear,prominent, user-friendly, and easilyunderstood manner. The commentersalso recommended that this information

be given directly to prospective studentsprior to enrolling or making a verbal orwritten commitment to enroll. Other

commenters made similar suggestionsincluding making the informationavailable in a prominent, clear, andconspicuous location in the firstpromotional materials conveyed toprospective students. Anothercommenter believed that disclosurescould be helpful if they are offered earlyin the process and are clear andconspicuous. However, the commenteropined that there is virtually noevidence that disclosures impactconsumer decision making in ameaningful way. The commenter furtherstated that the fiction that disclosuresare sufficient to regulate markets isespecially apparent for low-literateconsumers, citing an example where aclient was pressured to enroll in amedical assisting program at a for-profitinstitution even though she dropped outof school in the 9th grade and had a 6thgrade reading level. The student did notcomplete the program, never found

work, and defaulted on her loans. Thecommenter concluded that disclosuresare not an adequate counterweight toschool overreaching and are useful onlyin conjunction with substantivestandards.

Discussion: As we noted in the NPRMfor these regulations (75 FR 3480834809), the reporting and disclosurerequirements in 668.6 apply only toprograms that prepare students forgainful employment, as provided undersections 102(b) and (c) and 101(b)(1) of the HEA.

With regard to the comments on howan institution should disclose on itsWeb site the information required in 668.6(b), and when it would be most

beneficial to students to receive thisinformation, we expect institutions toabide by the intent of the provisionsto enable students to make an informedchoice about a programby making thedisclosures in a clear, timely, andmeaningful manner. To this end, and tohelp ensure that the disclosures areeasily accessible, an institution mustprominently provide the requiredinformation on the home page of itsprogram Web site and provide aprominent and direct link to this page

on any other Web page about a program.The information displayed must be inan open format that can be retrieved,downloaded, indexed, and searched bycommonly used Web searchapplications. An open format is one thatis platform-independent, is machine-readable, and is made available to thepublic without restrictions that wouldimpede the reuse of that information.

In addition, we agree with thesuggestion that an institution should berequired to make this informationavailable in the promotional materials



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conveyed to prospective students. Topromote the goal of facilitating informedchoice, the disclosure must be simpleand meaningful.

The Department intends to develop inthe future a disclosure form and will beseeking public comment about thedesign of the form through theinformation collection process underthe Paperwork Reduction Act of 1995(PRA). While the form will bedeveloped through that process, theregulations require institutions toprovide clear and prominent notice,delivered to students at appropriatetimes and in promotional materialsprior to enrollment. Until a form isdeveloped and approved under the PRAprocess, institutions must comply withthese disclosure requirementsindependently. In addition, we agreewith the comments that disclosuresalone are likely to be inadequate andhave proposed to establish program

performance standards in our NPRM onProgram IntegrityGainful Employmentthat was published in the FederalRegister on July 26, 2010 (75 FR 43616).

Changes: Section 668.6(b) has beenrevised to provide that an institutionmust prominently provide theinformation it is required to discloseabout a program in a simple andmeaningful manner on the home page of its program Web site, and provideprominent and direct links to this pageon any other Web page containinggeneral, academic, or admissionsinformation about the program. Therevised provision also states that aninstitution must use the disclosure formdeveloped by the Secretary when it

becomes available and the disclosureinformation must be displayed on theinstitutions Web site in an open formatthat can be retrieved, downloaded,indexed, and searched by commonlyuse Web search applications. An openformat is one that is platform-independent, is machine-readable, andis made available to the public withoutrestrictions that would impede the reuseof that information.

Finally, 668.6(b) has been revised toprovide that an institution must make

the information available in thepromotional materials conveyed toprospective students.Placement Rates

Comment: Many commenters objectedto using the placement rate calculationin 668.8(g) arguing that it is overly

burdensome and administrativelycomplex. The commenters opined thattracking a student for 180 days aftergraduation for a period of 13 weeks wastoo long and believed that it would bevirtually impossible for the Department

or any other auditor to affirm theaccuracy of the placement data becausethe tracking period represents nothingmore than a snap-shot of how manystudents were employed for 13 weeks atthe time the data was collected. Thecommenters asserted that if theDepartment requires placementinformation to be disclosed to students,the information that an institutioncurrently provides to its accreditingagency, which routinely assesses thatinformation, would be more accurate. Inaddition, the commenters wereconcerned about potential conflicts withthe misrepresentation provisions insubpart F of part 668 on the groundsthat any placement rate disclosed tostudents would be obsolete as soon asit was posted to an institutions Website. Some of the same commentersobjected to the proposed alternative of relying on State-sponsored workforcedata systems arguing that there is no

consistency between the States thatmaintain employment outcome data,and that in many cases the datacollected fails to provide a full andaccurate depiction of the demand,growth, and earnings of keyoccupations.

A number of commenters opposedusing the placement rate calculation in 668.8(g) arguing that it is a highlyrestrictive measure developed solely forextremely short programs offered by afew institutions. The commenters notedthat an institution is already requiredunder 668.41(d)(5) to disclose anyplacement rates it calculates and that itwould be confusing to students todisclose any additional rates beyondthose that it is required to calculateunder accrediting agency or Staterequirements. Some of thesecommenters suggested that in caseswhere an institution is not required byits accrediting agency to calculateplacement rates, the institution shouldcalculate the rates using a methodologyfrom a national accrediting agency orthe State in which the institution isauthorized to operate. Under either theagency or State methodology, thecommenters requested flexibility in

determining the rates for degreeprograms because employmentopportunities for graduates of degreeprograms are much more diverse thanfor graduates of occupationally specifictraining programs.

One commenter stated that itsinstitutions mission of educatingworking adults is at odds with theconcept of placement ratesmany of the institutions students are alreadyemployed and enroll to enhance theircareers through further education. Inaddition, the commenter stated that it

would be impractical to administer a jobplacement regime for students takingonline programs who reside throughoutthe world. The commenterrecommended that placement rates becalculated in accordance with aninstitutions accrediting agency or Staterequirements, but that the proposeddisclosures should not apply wherethere are no agency or Staterequirements. As an alternative, thecommenter suggested that regionallyaccredited institutions, which are notrequired to track employment outcomes,conduct post graduation surveys askingprogram graduates if they are working intheir field. An affirmative responsewould count as a placement even if the graduate maintained the sameemployment he or she had whileattending the institution. Along thesame lines, another commentersuggested that the Department allow aninstitution that is not required by an

outside agency to calculate placementrates, to develop and implement amethod that best reflects the make-up of its student body, including surveys,collecting employer documentation, orother methods.

One commenter objected to using theplacement rate calculation intended forshort-term programs in 668.8(g)

because all of its programs were at orabove the baccalaureate level. While thecommenter stated that requiring publicdisclosure of relevant outcomes putspressure on an institution to ensure thatit is providing a good education to itsstudents, the commenter suggested thatunless an institutions accreditingagency or State requires it to discloseplacement rates, the institution shouldonly disclose rates that it calculates onan annual basis for internal purposes orany employment or placementinformation it receives from surveyingits students. Another commenter madethe same suggestions and asked theDepartment to clarify that placementrates would only need to be updatedannually.

Another commenter argued that theplacement rate methodology in 668.8(g) was never intended for

gainful employment purposes and madeseveral recommendations including:(1) Excluding from the total number of

students who completed a programduring an award year, the students whoare unable to seek employment due toa medical condition, active militaryduty, international status, continuingeducation, incarceration, or death. Inaddition, an institution could excludethose graduates who certify they are notseeking employment or those that it isunable to locate. The commenterspecified the documentation an



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institution would have to obtain foreach of these exclusions.

(2) Removing the requirement in 668.8(g)(1)(iii) that a student must beemployed, or have been employed, for13 weeks and allowing students to findemployment within 6 months from thelast graduation date in the award year.

(3) Replacing the employercertification, income tax form, andSocial Security provisions in 668.8(g)(3) with other ways that aninstitution would verify that a studentobtained gainful employment.

Several commenters suggested usingthe methodology developed by anational accrediting agency because theproposed method in 668.8(g) does nottake into consideration circumstancesthat would prevent graduates fromseeking employment, such as healthissues, military deployment orcontinuing education, or practical issuesrelated to the employment of international or foreign students.

Several commenters stated it would be difficult, if not impossible, for theseinstitutions to obtain the data needed tocalculate placement rates. Some of thesecommenters supported the use of State-sponsored workforce data systems, butcautioned that many communitycolleges would not be able to obtainsufficiently detailed placementinformation through data matches withthese systems to satisfy the proposedrequirements. Other commenters notedthat some States do not have workforcedata systems, so institutions in those

States would have to use the nonpreferred placement rate methodologyunder 668.8(g). Many of thecommenters believed the requirement todocument employment on a case-by-case basis under 668.8(g)(2) would beoverly burdensome and labor intensive.Others opined that the placementprovisions are counterproductive,claiming that a substantial number of community colleges eschewedparticipating in programs under theWorkforce Investment Act because of placement rate requirements. On theother hand, another commenter

supported the placement rate provisionsand recommended that all institutionsin a State participate in a workforce datasystem, if the State has one. Thecommenter asked the Department toclarify how the data obtained from aworkforce data system would be used tomeet the placement rate requirementsand the timeline for reporting thoserates. In addition, the commentersuggested revising the placement rateprovisions in 668.8(g) to more closelyalign those provisions with practicesused by State data systems.

One commenter stated that in order toreceive Federal funding under the CarlD. Perkins Career and TechnicalEducation Act, a program must receiveState approval that entails a review of documentation requiring that theprogram be high demand, high wage orin an emerging field. As part of the Statereview, the institution providesdocumentation of potential placement.The commenter recommended that theDepartment waive the gainfulemployment provisions for allcertificate programs approved by theState under this review process.

A commenter supported disclosingplacement rate data, but noted that theinstitution would only be able to reporton graduates who are employed in theState or continued their education. Theinstitution would not be able to provideoccupationally specific placement data,or data about graduates who findemployment outside the State, because

the States labor data base only tracks (1)the type of business a graduate isemployed by, not the occupation of thegraduate, and (2) graduates who areemployed in the State.

Several other commenters supportedthe proposed placement ratedisclosures, but believed that theprovisions in 668.8(g) wereinadequate. The commenters madeseveral suggestions, including:

(1) Expanding the category of studentswho complete a program (currently in 668.8(g)(1)(i)) to include students whoare eligible for a degree or certificate.The commenters stated they are awareof institutions that delay providing thedegree or certificate to students, whichomits these students from the placementrate calculation.

(2) Specifying that the time standardsin 668.8(g) (employment within 180days of completing a program andemployment for 13 weeks) also apply torates calculated from State workforcedata systems.

(3) Specifying that employment must be paid. The commenters stated they areaware of institutions that have countedstudents in unpaid internships as beingemployed.

(4) To be counted in the placementrate, providing that a student must findemployment in one of the SOC codesidentified for the program unless thestudent finds a job that pays more thanany of the identified SOC codes. Thecommenters believed that someinstitutions stretch the concept of a related comparable job as currentlyprovided in 668.8(g)(1)(ii). Forexample, an institution might includeany job at a hospital, including thelowest paying jobs, when the studentwas trained for a skilled job such as an

x-ray technician. The higher earningsrecommendation would condition asuccessful placement but allow aninstitution to count a student employedin an unrelated SOC.

(5) To address the situation where astudent cannot qualify for employmentuntil he or she passes a licensing orcertification examination, providing thatthe 180-day period during which thestudent would otherwise have to findemployment should start after theresults of the examination are available.

(6) To be counted in the placementrate, specifying that a student mustwork for at least 32 hours per week. Thecommenters stated that they are awareof institutions that include as successfulplacements any student that works atany time during a week, even if it isonly for a few hours per week.

(7) Specifying that institutions mustuse a State data system if it is availableto ensure accurate reporting.

(8) If the institution chooses todemonstrate placement rates by salary,providing that documentation mustinclude signed copies of tax returns,W4s or paystubs to document earnings.

(9) To more thoroughly substantiateplacement rates, requiring the auditorwho performs the institutionscompliance audit under 668.23 todirectly contact former students andemployers whose statements wereobtained by the institution.

Discussion: We are persuaded by thecomments that using the methodologyin 668.8(g) may not be the mostappropriate method for determining the

placement rate for the majority of theprograms that are subject to the gainfulemployment provisions. Moreover, inview of the varied suggestions for howthe rate should be calculated,documented, and verified, in early 2011we will begin the process for developingthe method to calculate placement ratesfor institutions through the NationalCenter for Education Statistics (NCES).These final regulations establish somereporting requirements using existingplacement data as explained below,with a transition in a later period forinstitutions to disclose placement rates

obtained from the NCES methodology.NCES will develop a placement ratemethodology and the processesnecessary for determining anddocumenting student employment andreporting placement data to theDepartment using the IntegratedPostsecondary Education Data System(IPEDS).

NCES employs a collaborative processthat affords the public significantopportunities to participate in making,and commenting on, potential changesto IPEDS. Potential changes are



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examined by the IPEDS TechnicalReview Panel (TRP), which is a peerreview panel that includes individualsrepresenting institutions, educationassociations, data users, Stategovernments, the Federal government,and other groups. The TRP meets todiscuss and review IPEDS-related plansand looks at the feasibility and timingof the collection of proposed new items,added institutional burden, and possibleimplementation strategies. After eachmeeting, a meeting report andsuggestions summary is posted to theIPEDS Web site. The postsecondaryeducation community then has 30 daysto submit comments on the meetingreport and summary. After thosecomments are considered, theDepartment requests the Office of Management and Budget (OMB) toinclude the changes in the next IPEDSdata collection. This request for formsclearance is required by the Paperwork

Reduction Act of 1995, as amended. Adescription of the changes and theassociated institutional reporting

burden is included in the request whichis then published by OMB as a notice inthe Federal Register , initiating a 60-daypublic comment period. After that, asecond notice is published in theFederal Register , initiating a 30-daypublic comment period. Issues raised bycommenters are resolved, and thenOMB determines whether to grant formsclearance. Only OMB cleared items areadded to the IPEDS data collection.

Although we agree with thecommenters that the data maintained orprocesses used by workforce datasystems may vary State by State, andthat the data systems are not availableto all institutions or in all States, wecontinue to believe that these datasystems afford participating institutionsan efficient and accurate way of obtaining employment outcomeinformation. However, because of State-to-State variances and in response tocomments about how employmentoutcome data translate to a placementrate, NCES will develop the methodsneeded to use State employment data tocalculate placement rates under its

deliberative process for IPEDS.Until the IPEDS-developed placementrate methodology is implemented, aninstitution that is required by itsaccrediting agency or State to calculatea placement rate, or that otherwisecalculates a placement rate, mustdisclose that rate under the currentprovisions in 668.41(d)(5). However,under new 668.6(b), the institutionmust disclose on its Web site andpromotional materials the placementrate for each program that is subject tothe gainful employment provisions if

that information is available or can bedetermined from institutionalplacement rate calculations.Consequently, to satisfy the newdisclosure requirements, an institutionthat calculates a placement rate for oneor more programs would disclose thatrate under 668.6(b) by identifying theaccrediting agency or State agencyunder whose requirements the rate wascalculated. Otherwise, if an accreditingagency or State requires an institution tocalculate a placement rate only at theinstitutional level, the institution mustuse the agency or State methodology tocalculate the placement rate for each of its programs from information it alreadycollects and must disclose the program-specific placement rates in accordancewith 668.6(b).

Changes: Section 668.6(b) has beenrevised to specify that an institutionmust disclose for each program theplacement rate calculated under a

methodology developed by itsaccrediting agency, State, or theNational Center for Education Statistics(NCES). The institution must disclosethe accrediting agency or State-requiredplacement rate beginning on July 1,2011 and must identify the accreditingagency or State agency under whoserequirements the rate was calculated.The NCES-developed placement ratewould have to be disclosed when therates become available.On-Time Completion Rate

Comment: Many commenters askedthe Department to clarify the meaning of

on-time

completion rate. Othercommenters assumed that on-time

completion referred to the graduationrate currently calculated under theStudent Right to Know requirements in 668.45, or encouraged the Departmentto either (1) adopt the currentrequirements in 668.45 for gainfulemployment purposes, or (2) use acompletion rate methodology from anaccrediting agency or State, to minimizeconfusion among students and burdenon institutions. One of the commenterssuggested that if the Departmentintended on-time to mean 100 percent

of normal time for completion, then theproposed rate should be calculated inthe same manner as the completion ratein 668.45 for normal time andincorporate the exclusions for studentstransferring out of programs and otherexceptions identified in 668.45(c) and(d). Another commenter opined thatabsent significant enforcement to ensurethat all institutions consistently use thesame definition of on-time completionrate, students will be unfairly led to

believe that institutions who reportconservatively have less favorable

outcomes than institutions who reportaggressively. One commenter cautionedthat it may be misleading to focusheavily on graduation and placementrates, particularly for institutions whosestudents are employed while seeking adegree.

A number of commenters supportedthe on-time completion requirement,and in general all of the proposeddisclosures, stating that providingoutcome data would allow prospectivestudents to make more informeddecisions. The commenters believedthat better outcome data will help toensure that the taxpayer investment iswell spent, and that students areprotected from programs that overchargeand under-deliver.

A commenter stated that under Statelicensing requirements for cosmetologyschools a student must be present,typically for 1,500 hours, to qualify forgraduation and to complete theprogram. Taking attendance andensuring that a student is present forthese hours is typically required. Thecommenter reasoned that for a studentto complete the program on-time thestudent could not miss a single day oreven be late for classes as opposed to acredit hour program where a studentdoes not have to attend classes 100percent of the time but will still beconsidered to satisfy the on-timerequirement. To mitigate the difference

between clock and credit hour programsand account for legitimatecircumstances where a student wouldmiss classes, the commenter suggestedthat the standard for

on-time

incorporate the concept of a maximumtimeframe under the satisfactoryacademic progress provisions that allowa student to complete a program at aspecified rate.

Discussion: In proposing the on-timecompletion rate requirement, theDepartment intended to include allstudents who started a program todetermine the portion of those studentswho completed the program no laterthan its published length. This approachdiffered significantly in two ways fromthe completion rate under the Student

Right to Know (SRK) provisions in 668.45. First, in calculating thecompletion rate the SRK methodologyincludes in the cohort only full-time,first-time undergraduate students, notall students. Second, the SRK rate is

based on 150 percent of normal time,not the actual length of the program.However, in view of the commentssuggesting that we use the SRKmethodology, or a modified version, weexamined whether the cohort of students under SRK could be expandedto include all students and from that,



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whether a completion rate could becalculated based on normal time, asdefined in 668.41(a). We concludedthat doing this would be difficult andtoo complex for institutions and theDepartment.

We believe prospective studentsshould know the extent to which formerstudents completed a program on time,not only to ground their expectations but to plan for the time they will likely

be attending the programan importantconsideration for many students whocannot afford to continue theireducation without earnings fromemployment. Therefore, to minimize

burden on institutions while providingmeaningful information to prospectivestudents, an institution must calculatean on-time completion rate for eachprogram subject to the gainfulemployment provisions by:

(1) Determining the number of students who completed the programduring the most recently completedaward year.

(2) Determining the number of students in step (1) who completed theprogram within normal time, regardlessof whether the students transferred intothe program or changed programs at theinstitution. For example, the normaltime to complete an associate degree istwo years. The two-year timeframewould apply to all students who enrollin the program. In other words, if astudent transfers into the program,regardless of the number of credits theinstitution accepts from the studentsattendance at the prior institution, thetransfer credits have no bearing on thetwo-year timeframe. This student wouldstill have two years to complete fromthe date he or she began attending thetwo-year program. To be counted ascompleting on time, a student whoenrolls in the two-year program fromanother program at the institutionwould have to complete the two-yearprogram in normal time beginning fromthe date the student started attendingthe prior program.

(3) Dividing the number of studentswho completed within normal time instep (2) by the total number of

completers in step (1) and multiplying by 100.With regard to the commenter who

believed that a student could not missa single day of classes to complete aprogram on time, we note that under 668.4(e) a student can be excused fromattending classes. Under this section, astudent may be excused for an amountof time that does not exceed the lesserof (1) any thresholds established by theinstitutions accrediting agency or Stateagency, or (2) 10 percent of the clockhours in a payment period. Absent any

State or accrediting agencyrequirements, for a typical paymentperiod of 450 clock hours a studentcould miss 45 hours. In the commentersexample of a 1,500 clock hour program,the student could miss 150 hours andstill complete on time for thisrequirement. Also, under 668.41(a),normal time for a certificate program isthe time published in the institutionscatalog and that time may include make-up days. So, an institution couldschedule make-up days, as part of normal time, to enable students whomissed classes to complete the numberof hours required for State licensingpurposes.

Changes: Section 668.6(b) has beenrevised to specify how an institutioncalculates an on-time completion ratefor its programs.Median Loan Debt

Comment: Many commenters objectedstrongly to the requirement in proposed 668.6(a)(4) that an institution reportannually to the Department, for eachstudent attending a program that leadsto gainful employment, the amount eachstudent received from private educationloans and institutional financing plans.

With regard to private education loanstaken out by students, the commentersargued that because the loans are self-certified, in many cases an institution isnot aware of the loans and should onlyhave to report the amount of the privateloans it knows about or the amount of those loans that were paid directly tothe institution. Commentersrepresenting students and consumeradvocacy groups contended that mostinstitutions have preferred lender lists,help students arrange private loans,recommend a lender, receive studentpayments from a lender, or otherwisehave information about the lender.Consequently, to clarify that aninstitution cannot avoid reporting onprivate loans by feigned ignorance, thecommenters suggested that aninstitution report any private loan itknows about or should reasonably knowabout. To clarify the meaning of privateeducation loan one commenter

suggested that the Department referencethe definition in 601.2.With regard to institutional financing

plans, many commenters, argued that aninstitution should only be required toreport the amount of any remaininginstitutional loans or debt obligationsowed by a student after he or shecompletes the program, not the amountof the loan or credit extended to thestudent at the start of, or during, theprogram.

Many commenters asked theDepartment to clarify whether median

loan debt would include only loan debtincurred by students who completed aparticular program or loan debt incurredfrom previously attended programs orinstitutions. Some of the commentersargued that it would be difficult todetermine the relevant loan debt of students who enroll inpostbaccalaureate certificate programsand end up concurrently pursuing anassociated masters degree. Thecommenters argued that extracting theportion of debt that applies to thecertificate would be difficult, butreporting based on the total debtaccumulated during the graduate-levelenrollment period would overstate theamount borrowed if the intent was toreport on the certificate program. Theyalso believed that an institution wouldhave to track loan debt pertaining tocredits accepted for a program that werenot necessarily earned by students whocontinue in a graduate program,

including transfer credits accepted fromother institutions. In addition, thecommenters believed that for anyundergraduate work that transfers up,

the portion of the loan debt from thatperiod would have to be identified. Inview of these complexities andconsidering that two-year transferprograms are excluded from thereporting requirements, the commentersrequested a similar exclusion forgraduate certificate programs where thecredits apply directly to a graduatedegree. Along the same lines, othercommenters requested thatpostbaccalaureate certificate programsor courses such as a certification as aschool principal, districtsuperintendent, or director of instruction be exempted from theseregulations.

A commenter requested an exemptionfor four-year degree-granting institutionsstating that such institutions only havea handful of certificate programs thatwould be of no concern to theDepartment.

A few commenters believed thatinstitutions should either (1) be allowedto disclose separately the amount of loan debt students accumulate for

institutional charges and the amountincurred for living expenses, or (2) not be required to disclose loan debtincurred for living expenses becausethat debt is incurred at the studentsdiscretion and not be required todisclose loan debt incurred by a studentat prior, unrelated institutions.

Other commenters urged theDepartment to use the mean instead of the median loan debt arguing that usingmedian debt would unjustly penalizestudents attending institutions withlarger numbers of borrowers by



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providing a competitive advantage toinstitutions with smaller populations of student loan borrowers.

Many commenters supported theproposed requirement for disclosing themedian debt of students who completea program, but suggested thatinstitutions should also disclose themedian debt of noncompleters. Thecommenters stated that it was one thingfor students to be told that 40 percentgraduate with $20,000 in loan debt, butits another for them to understand thatthe majority of students who dontcomplete have $15,000 in loan debt theywould have to repay. The commenters

believed that separating the disclosures by completers and noncompleterswould enable better comparisons

between programs, and would not createthe appearance of low median debt forprograms with low completion rates. Inaddition, to minimize burden thecommenters suggested that collecting

the data needed to calculate the medianloan debt could appropriately be limitedto programs in which a significant shareof students borrow. According to thecommenters, this approach wouldensure that potential students and theDepartment know when a program hashigh student borrowing rates and lowcompletion rates.

Discussion: We agree with thecommenters that the debt an institutionreports under 668.6(a)(4) forinstitutional financing plans is theamount a student is obligated to repayupon completing the program. Underthis same section, an institution mustalso report the amount of any privateeducation loans it knows that studentsreceived.

The HEOA amended both the HEAand the Truth-in-Lending Act (TILA) torequire significant new disclosures for

borrowers of private education loans.The HEOA also requires privateeducation lenders to obtain a privateloan self-certification form from every

borrower of such a loan before thelender may disburse the privateeducation loan.

Although the term private educationlender is defined in the TILA, the

Federal Reserve Board considers anentity to be a private education lender,including an institution of highereducation, if it meets the definition of creditor. The term creditor is defined

by the Federal Reserve Board in 12 CFR226.2(a)(17) as a person who regularlyextends consumer credit that is subjectto a finance charge or is payable bywritten agreement in more than fourinstallments (not including a downpayment), and to whom the obligation isinitially payable, either on the face of the note or contract, or by agreement

when there is no note or contract. Aperson regularly extends consumercredit only if it extended credit morethan 25 times (or more than 5 times fortransactions secured by a dwelling) inthe preceding calendar year. If a persondid not meet these numerical standardsin the preceding calendar year, thenumerical standards must be applied tothe current calendar year.The term private education loan isdefined in 12 CFR 226.46(b)(5) as anextension of credit that:

Is not made, insured, or guaranteedunder title IV of the HEA;

Is extended to a consumerexpressly, in whole or in part, forpostsecondary educational expenses,regardless of whether the loan isprovided by the educational institutionthat the student attends;

Does not include open-end credit orany loan that is secured by real propertyor a dwelling; and

Does not include an extension of credit in which the covered educationalinstitution is the creditor if (1) the termof the extension of credit is 90 days orless (short-term emergency loans) or (2)an interest rate will not be applied tothe credit balance and the term of theextension of credit is one year or less,even if the credit is payable in morethan four installments (institutional

billing plans).Examples of private education loans

include, but are not limited to, loansmade expressly for educationalexpenses by financial institutions, creditunions, institutions of higher educationor their affiliates, States and localities,and guarantee agencies.

As noted previously, the HEOArequires that before a creditor mayconsummate a private education loan, itmust obtain a self-certification formfrom the borrower. The Department, inconsultation with the Federal ReserveBoard, developed and disseminated theprivate loan self-certification form inDear Colleague Letter GEN 1001published in February of 2010.

The Departments regulations in 34CFR 601.11(d), published on October28, 2009, require an institution to

provide the self-certification form andthe information needed to complete theform upon an enrolled or admittedstudent applicants request. Aninstitution must provide the privateloan self-certification form to the

borrower even if the institution alreadycertifies the loan directly to the privateeducation lender as part of an existingprocess. An institution must alsoprovide the self-certification form to aprivate education loan borrower if theinstitution itself is the creditor. Oncethe private loan self-certification form

and the information needed to completethe form are disseminated by theinstitution, there is no requirement thatthe institution track the status of a

borrowers private education loan.The Federal Reserve Board, in 12 CFR

226.48, built some flexibility into theprocess of obtaining the self-certification form for a private educationlender. The private education lendermay receive the form directly from theconsumer, the private education lendermay receive the form from the consumerthrough the institution of highereducation, or the lender may providethe form, and the information theconsumer will require to complete theform, directly to the borrower. However,in all cases the information needed tocomplete the form, whether obtained bythe borrower or by the private educationlender, must come directly from theinstitution.

Thus, even though an institution isnot required to track the status of itsstudent borrowers private educationloans, the institution will know aboutall the private education loans a student

borrower receives, with the exception of direct-to-consumer private educationloans, because most private educationloans are packaged and disbursedthrough the institutions financial aidoffice. The institution must report theseloans under 668.6(a)(4). Direct-to-consumer private education loans aredisbursed directly to a borrower, not tothe school. An institution is notinvolved in a certification process forthis type of loan.

We wish to make clear that any loan,extension of credit, payment plan, orother financing mechanism that wouldotherwise not be considered a privateeducation loan but that results in a debtobligation that a student must pay to aninstitution after completing a program,is considered a loan debt arising from aninstitutional financing plan and must bereported as such under 668.6(a)(4).

The Department will use the debtreported for institutional financingplans and private education loans alongwith any FFEL or Direct Loan debt fromNSLDS that was incurred by studentswho completed a program to determinethe median loan debt for the program.In general, median loan debt for aprogram at an institution does notinclude debt incurred by students whoattended a prior institution, unless theprior and current institutions are undercommon ownership or control, or areotherwise related entities. In caseswhere a student changes programswhile attending an institution ormatriculates to a higher credentialedprogram at the institution, theDepartment will associate the total



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amount of debt incurred by the studentto the program the student completed.So, in the commenters example wherea student enrolls in a postbaccalaureatecertificate program and is concurrentlypursuing a masters degree, the debt thestudent incurs for the certificateprogram would be included as part of the debt the student incurs forcompleting the program leading to amasters degree. If the student does notcomplete the masters degree program,

but completes the certificate program,then only the debt incurred by thestudent for the certificate programwould be used in determining thecertificate programs median loan debt.

The Department will provide themedian loan debt to an institution foreach of its programs, along with themedian loan debt identified separatelyfor FFEL and Direct Loans, and forprivate education loans andinstitutional financing plans. The

institution would then disclose thesedebt amounts, as well as any otherinformation the Department provides tothe institution about its gainfulemployment programs, on its Web siteand in its promotional materials tosatisfy the requirements in 668.6(b)(5).

While we generally agree with thesuggestion that disclosing the medianloan debt for students who do notcomplete a program may be helpful toprospective students, determining whenor whether students do not complete is

problematic for many programs even forstudents who withdraw or stopattending during a payment periodthose students may return the followingpayment period. Because further reviewand analysis are needed before we couldpropose a requirement along these lines,institutions will need to report the CIPcode for every student who attends aprogram subject to the gainfulemployment provisions and the totalnumber of students who are enrolled ineach of its programs at the end of anaward year.

In cases where a student matriculatesfrom one program to a highercredentialed program at the sameinstitution, the Department willassociate all the loan debt incurred bythe student at the institution to thehighest credentialed program completed

by the student. To do this, theinstitution must inform the Departmentthat even though a student completed a

program, the student is continuing hisor her education at the institution inanother program. We wish to make clearthat an institution would still need toprovide the information under 668.6(a)about each program the studentcompletes. The Department will includethe students loan debt in calculatingthe median loan debt for the programthe student most recently completed, ordelay including the students associatedloan debt in calculating the median loandebt for the higher credentialed

program. The Department will includethe students associated debt for thehigher credentialed program when thestudent completes that program. If thestudent does not complete the highercredentialed program, then only theloan debt incurred by the student forcompleting the first program would beused in calculating the median loandebt for the first program.

Similarly, in cases where a studenttransfers from school A to school B, theDepartment will delay including theloan debt incurred by a studentattending a program at school Apending the students success at schoolB. If the student completes a highercredentialed program at school B, themedian loan debt for that programincludes only the students loan debtincurred at school B. If the student doesnot complete the program at school B,then only the students loan debtincurred for completing the program atschool A is included in calculating themedian loan debt for the program atschool A. In other words, a student whocompletes a program and continues hisor her education at the same institutionor at another institution is considered to

be in an in-school status and we willdelay using the students loan debt untilthe student completes a highercredentialed program or stops attending.The following chart and discussionillustrate this process.

School A School B

Student Loan debt Loan debtCertificate $3,000 Completed Degree $4,000 Completed Gainful

EmploymentProgram?

1 ........................... ............................ ................ Yes ..................... ............................ ................ Yes ..................... Yes.2 ........................... ............................ ................ Yes ..................... ............................ ................ No ....................... Yes.3 ........................... ............................ ................ Yes ..................... ............................ ................ Yes ..................... No.

Same School

4 ........................... ............................ ................ Yes ..................... ............................ ................ Yes ..................... Yes.5 ........................... ............................ ................ Yes ..................... ............................ ................ No ....................... Yes.6 ........................... ............................ ................ Yes ..................... ............................ ................ Yes ..................... No.

Student 1. Student is in an in-schoolstatus until the degree program iscompleted at School B. School A and Bwould report loan debt for each of theirprograms. Only the $4,000 debt incurred

by the student at School B would beincluded in the median loan debtcalculation for the degree program(highest credential completed). Thestudents loan debt at School A wouldnot be included in calculating themedian loan debt for the certificateprogram.

Student 2. Student is in an in-schoolstatus while attending School B, butdoes not complete the degree program.Only the $3,000 debt incurred by thestudent at School A would be includedin the median loan debt calculation forthe certificate program. The studentsloan debt at School B would not beincluded in calculating the median loandebt for the degree program because thestudent did not complete that program.

Student 3. Student is in an in-schoolstatus while attending School B, but the

degree program at School B is notsubject to the gainful employmentprovisions. When the student completesthe degree program, none of thestudents debt would be included in themedian loan debt calculation for thecertificate program and no calculationwould be performed for the degreeprogram because it is not subject to thegainful employment provisions.

Student 4. Student is in an in-schoolstatus until the degree program iscompleted. All of the students debt at



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the school is associated to the degreeprogram and included in the medianloan debt calculation for the degreeprogram. None of the students debt isincluded in calculating the median loandebt of the certificate program.

Student 5. Student is in an in-schoolstatus while attending the degreeprogram, but does not complete thatprogram. Only the $3,000 debt incurred by the student for completing thecertificate program would be includedin the median loan debt calculation forthat program. None of the students debtwould be included in the median loandebt calculation for the degree program

because the student did not completethat program.

Student 6. Student is in an in-schoolstatus while attending the degreeprogram, but the degree program is notsubject to the gainful employmentprovisions. When the student completesthe degree program, none of thestudents debt would be included in themedian loan debt calculation for thecertificate program and no calculationwould be performed for the degreeprogram because it is not subject to thegainful employment provisions.

The Department disagrees with thesuggestions that an institution shouldnot be required to disclose loan debtincurred by students for living expenses

because many students cannot afford toenroll in a program without borrowingto pay for living expenses and othereducation-related costs. Identifying onlya portion of the loan debt that a studentis likely to incur not only defeats thepurpose of the disclosure but also may be misleading. With respect to thecomments that loan debt related toliving expenses should be disclosedseparately from loan debt tied directlyto institutional charges, we areconcerned about how institutions wouldmake or portray these disclosures and

believe that separating the debt amountswould be confusing to prospectivestudents.

We find little merit in the argumentthat using median loan debt, instead of mean loan debt, would provide acompetitive advantage to institutions

with fewer student loan borrowers.Assuming that an institution with fewer borrowers has the same enrollment asan institution with a large number of

borrowers, then regardless of whetherthe mean or the median is used, the loandebt will be lower for an institutionwith fewer borrowers because all of thestudents who do not borrow wouldreduce its mean or median loan debt.

When these regulations take effect on July 1, 2011, the Department willrequire institutions to report no laterthan October 1, 2011 the information

described in 668.6(a) for the 200607,200708, and 200809 award years. Inaccordance with the record retentionrequirements under 668.24(e), mostinstitutions should have the requiredinformation. We note that manyinstitutions may have an existingpractice of keeping student records forlonger periods, or do so for State oraccrediting purposes. If an institutionhas the records for the earlier periods,it must report the information describedin 668.6(a). Institutions that are nototherwise required to maintain theinformation for the 200607 award yeardescribed in 668.6(a) at the time thisregulation goes into effect on July 1,2011, should consider doing so for theirown purposes. In any case, if aninstitution is unable to report all orsome the required information, it mustprovide an explanation of why themissing information is not available.

Changes: Section 668.6(a) has been

revised to provide that in accordancewith procedures established by theSecretary, an institution must provide(1) information for the award year

beginning on July 1, 2006 andsubsequent award years, (2) informationabout whether a student matriculated toa higher credentialed program at theinstitution, (3) if it has evidence,information that a student transferred toa higher credentialed program atanother institution, and (4) if theinstitution is unable to report requiredinformation, an explanation of why themissing information is not available.

Student Information DatabaseComment: Several commentersquestioned the Departments ability tocollect data under section 134 of theHEA which prohibits the Departmentfrom developing, implementing, ormaintaining a Federal database of personally identifiable information. Thecommenters claimed that obtainingidentifying information on programcompleters by CIP code and programcompletion date would constitute aviolation of section 134 of the HEA.Some of the commenters suggested thatinstitutions provide only aggregate

information for individuals by CIP codeand opined that the completion datewas not necessary and should beremoved. These commenters reasonedthat the Department should use existinginformation, such as enrollment andloan repayment data in NSLDS and inany other systems, to determine whenstudents are enrolled or have completedtheir program. Another commenter citedsection 134 of the HEA as a reason whyan institution should not be required toprovide information on private orinstitutional loans.

Because section 134 of the HEAexempts existing systems that areneeded to operate the student aidprograms, some commenters asked theDepartment to clarify which currentsystems would be used to gather theinformation requested under proposed 668.6(a). Several of the commentersdid not believe that institutions shouldhave to collect and report informationfor students who completed theirprograms in the past three years andrequested that the information beprospective (students who beginattending a program after July 1, 2011).

Discussion: Section 134 of the HEAplaces restrictions on the Departmentsability to develop, implement, ormaintain a new database of personallyidentifiable information aboutindividuals attending institutions andreceiving title IV, HEA program funds,including systems that track individualstudents over time. It does not prohibit

the Department from including suchinformation in an existing system that isnecessary for the operation of theFederal student aid programs. In thiscase, the information being reported isalready a part of the information that ismaintained by institutions in theirstudent financial aid and academicrecords, and is subject to complianceand program reviews. Institutionsreporting that students have started orcompleted a program for which thosestudents received title IV, HEA programfunds will augment the existinginformation in the Departments systemsthat are used to monitor and maintainthe operations for the title IV, HEAprograms. The information is also beingcompiled to create aggregateinformation to evaluate whether aprogram demonstrates that it leads togainful employment for its students,rather than to monitor the individualstudents attending those programs overtime. For those reasons, the reportingand use of this information is notprohibited under the law.

Changes: None.Links to O*Net

Comment: Several commenters agreed

it was important to inform students andthe public about possible jobopportunities that could result fromenrolling in a program, but wereconcerned that the proposedrequirement would not serve toaccurately inform students. Some of thecommenters believed that the proposedrequirements might work for someprograms like teaching and nursing.However, for graduate-level programs,like MBAs and PhDs in Psychology,institutions would be required toprovide an unwieldy amount of data.



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For example, it would be impossible foran institution to identify and disclosethe full range and number of jobopportunities that might exist for MBAgraduates. As an alternative, thecommenters suggested that theDepartment require schools to disclosethe types of employment found by theirgraduates in the preceding three years.Other commenters had similar concernsand suggested that instead of disclosingall occupations by name and SOC code,the Department should allow aninstitution to disclose a sampling orrepresentative set of links for theoccupations stemming from itsprograms. Otherwise, the commenterswere concerned that an institutionwould run afoul of themisrepresentation provisions unless itfully and completely listed all of theSOC and O*NET codes related to eachprogram offered at the institution.Another commenter suggested that an

institution should only list thoseoccupations in which a majority of itsprogram completers were placed.

A commenter claimed that it would be confusing and misleading to provideinformation on hundreds of jobs. Toillustrate this point, the commenterstated that entering a CIP code of 52 for Business, Management, Marketing andRelated Support Services would lead to86 codes representing more than 300occupational profiles. To avoidconfusing students, the commentersuggested that an institution providelinks only to those careers where itsstudents have typically foundemployment.

One commenter thought that the linkto O*Net was unnecessary becausestudents could use search engines toresearch potential jobs.

Another commenter supported theO*NET disclosures because theadditional administrative burden wasnot significant and the change was longoverdue.

Discussion: In general, we do not believe that the links to O*NET willlead to an unwieldy amount of information when the full 6-digit CIPcode is entered on the SOC crosswalk athttp://online.onetcenter.org/crosswalk /. For example, entering the full 6 digitCIP code, 52.9999, for Business,Management, Marketing and RelatedSupport Services, identifies only ninerelated occupations (SOCs). As shown

below, it is these links to, and the namesof, the nine occupations that aninstitution must post on its Web site.52.9999 Business, Management,

Marketing, & Related SupportServices, Other

119151.00 Social and CommunityService Managers

119199.00 Managers, All Other131199.00 Business Operations

Specialists, All Other411011.00 First-Line Supervisors/

Managers of Retail Sales Workers411012.00 First-Line Supervisors/

Managers of Non-Retail Sales Workers413099.00 Sales Representatives,

Services, All Other

414011.00 Sales Representatives,Wholesale and Manufacturing,Technical and Scientific Products

414012.00 Sales Representatives,Wholesale and Manufacturing, ExceptTechnical and Scientific Products

419099.00 Sales and RelatedWorkers, All OtherHowever, for 6-digit CIP codes that

yield more than ten occupations, aninstitution may, in lieu of providinglinks to all the identified SOCs, providelinks to a representative sample of theSOCs for which its graduates typicallyfind employment within a few yearsafter completing a program.

Changes: Section 668.6(b) has beenrevised to allow an institution toprovide prospective students with Weblinks to a representative sample of theSOCs for which its graduates typicallyfind employment within a few yearsafter completing the program.Disclosing Program Costs

Comment: Many commenterssupported the proposal to discloseprogram costs. The commenters laudedthis information as more useful tostudents than disclosing costs by credithour or by semester and several

commenters encouraged the Departmentto make this section of the regulationseffective as soon as possible.

Some commenters indicated that theprogram costs in proposed 668.6(b)(2)differ from the costs an institutionmakes available under 668.43(g). Thecommenters suggested that all costs thata student may incur should be disclosedincluding charges for full-time and part-time students, estimates of costs fornecessary books and supplies as well asestimated transportation costs. Othercommenters asked the Department toclarify how program costs under theproposed Web site disclosures would becalculated differently than thoserequired in the student consumerinformation section of the regulations.In addition, some of these commentersnoted that although 668.43 requires aninstitution to disclose program costupon request, many students do notknow to ask for it, or the information isnot currently presented in a clearmanner. Another commenter noted thatthe phrase institutional costs could beinterpreted to mean only those costspayable to the institution and

recommended that the phrase bechanged to cost of attendance.

Several commenters opined thatproviding program costs would confusestudents. One of the commentersrecommended using just the net pricecalculator as that would also easeinstitutional burden.

Discussion: Although we recently

revised 668.43(a) to provide that aninstitution must make program costinformation readily available, not justupon the request of a student, thatsection does not require the institutionto disclose program costs on its Website. All of the disclosures in 668.6(b),including the disclosure of programcosts, must be on the same Web page toenable a prospective student to easilyobtain pertinent information about aprogram and compare programs. Alongthese lines, and in view of the recentGAO investigation (see http:// www.gao.gov/new.items/d10948t.pdf ) raising concerns over program costinformation, 668.6(b) specificallyrequires an institution to disclose on thesame Web page (1) Links to O*NETidentifying the occupations stemmingfrom a program or Web links to arepresentative sample of the SOCs forwhich its graduates typically findemployment within a few years aftercompleting the program, (2) the on-

Documents

Program Integrity Rules