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Title 34 – Education–Volume 3

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Title 34 – Education–Volume 3



SUBTITLE B – Regulations of the Offices of the Department of Education (Continued)

Part


chapter IV – Office of Career, Technical, and Adult Education, Department of Education

400


chapter V – Office of Bilingual Education and Minority Languages Affairs, Department of Education

500


chapter VI – Office of Postsecondary Education, Department of Education

600


Subtitle B – Regulations of the Offices of the Department of Education (Continued)

CHAPTER IV – OFFICE OF CAREER, TECHNICAL, AND ADULT EDUCATION, DEPARTMENT OF EDUCATION

PART 400 [RESERVED]

PART 401 – NATIVE AMERICAN CAREER AND TECHNICAL EDUCATION PROGRAM


Authority:20 U.S.C. 2313(b), 25 U.S.C. 5321.



Source:57 FR 36730, Aug. 14, 1992, unless otherwise noted.

Subpart A – General

§ 401.1 Is the Secretary’s decision not to make an award under the Native American Career and Technical Education Program subject to a hearing?

(a) After receiving written notice from an authorized official of the Department that the Secretary will not award a grant or cooperative agreement to an eligible applicant, an Indian tribal organization has 30 calendar days to make a written request to the Secretary for a hearing to review the Secretary’s decision.


(b) Within 10 business days of the Department’s receipt of a hearing request, the Secretary designates a Department employee who is not assigned to the Office of Career, Technical, and Adult Education to serve as a hearing officer. The hearing officer conducts a hearing and issues a written decision within 75 calendar days of the Department’s receipt of the hearing request. The hearing officer establishes rules for the conduct of the hearing. The hearing officer conducts the hearing solely on the basis of written submissions unless the officer determines, in accordance with standards in 34 CFR 81.6(b), that oral argument or testimony is necessary.


(c) The Secretary does not make any award under this part to an Indian tribal organization until the hearing officer issues a written decision on any appeal brought under this section.


[84 FR 7299, Mar. 4, 2019]


§§ 401.2-401.5 [Reserved]

PARTS 402-403 [RESERVED]

PART 406 [RESERVED]

PARTS 410-413 [RESERVED]

PART 415 [RESERVED]

PART 421 [RESERVED]

PARTS 425-429 [RESERVED]

PART 460-461 [RESERVED]

PART 462 – MEASURING EDUCATIONAL GAIN IN THE NATIONAL REPORTING SYSTEM FOR ADULT EDUCATION


Authority:29 U.S.C. 3292, et seq., unless otherwise noted.


Source:73 FR 2315, Jan. 14, 2008, unless otherwise noted.

Subpart A – General

§ 462.1 What is the scope of this part?

The regulations in this part establish the –


(a) Procedures the Secretary uses to determine the suitability of standardized tests for use in the National Reporting System for Adult Education (NRS) to measure educational gain of participants in an adult education program required to report under the NRS; and


(b) Procedures States and local eligible providers must follow when measuring educational gain for use in the NRS.


(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55551, Aug. 19, 2016]


§ 462.2 What regulations apply?

The following regulations apply to this part:


(a) The Education Department General Administrative Regulations (EDGAR) as follows:


(1) 34 CFR part 76 (State-Administered Programs).


(2) 34 CFR part 77 (Definitions that Apply to Department Regulations).


(3) 34 CFR part 79 (Intergovernmental Review of Department of Education Programs and Activities).


(4) 34 CFR part 81 (General Education Provisions Act – Enforcement).


(5) 34 CFR part 82 (New Restrictions on Lobbying).


(6) 34 CFR part 84 (Governmentwide Requirements for Drug-Free Workplace (Financial Assistance)).


(7) 34 CFR part 86 (Drug and Alcohol Abuse Prevention).


(8) 34 CFR part 97 (Protection of Human Subjects).


(9) 34 CFR part 98 (Student Rights in Research, Experimental Programs, and Testing).


(10) 34 CFR part 99 (Family Educational Rights and Privacy).


(b) The regulations in this part 462.


(c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 3485; and


(2) 2 CFR part 200 (Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards), as adopted at 2 CFR part 3474.


(Authority: 29 U.S.C. 3292)

[81 FR 55551, Aug. 19, 2016]


§ 462.3 What definitions apply?

(a) Definitions in the Adult Education and Family Literacy Act (Act). The following terms used in these regulations are defined in section 203 of the Adult Education and Family Literacy Act, 20 U.S.C. 3292 (Act):



Adult education,

Eligible provider,

Individual of limited English proficiency,

Individual with a disability,

Literacy.

(b) Other definitions. The following definitions also apply to this part:


Adult basic education (ABE) means instruction designed for an adult whose educational functioning level is equivalent to a particular ABE literacy level listed in the NRS educational functioning level table in the Guidelines.


Adult education population means individuals –


(1) Who have attained 16 years of age;


(2) Who are not enrolled or required to be enrolled in secondary school under State law; and


(3) Who –


(i) Are basic skills deficient;


(ii) Do not have a secondary school diploma or its recognized equivalent, and have not achieved an equivalent level of education; or


(iii) Are English language learners.


Adult secondary education (ASE) means instruction designed for an adult whose educational functioning level is equivalent to a particular ASE literacy level listed in the NRS educational functioning level table in the Guidelines.


Content domains, content specifications, or NRS skill areas mean, for the purpose of the NRS, reading, writing, and speaking the English language, mathematics, problem solving, English language acquisition, and other literacy skills as defined by the Secretary.


Educational functioning levels mean the ABE, ASE, and ESL literacy levels, as provided in the Guidelines, that describe a set of skills and competencies that students demonstrate in the NRS skill areas.


English as a Second Language (ESL) means instruction designed for an adult whose educational functioning level is equivalent to a particular ESL English language proficiency level listed in the NRS educational functioning level table in the Guidelines.


Guidelines means the Implementation Guidelines: Measures and Methods for the National Reporting System for Adult Education (OMB Control Number: 1830-0027) (also known as NRS Implementation Guidelines) posted on the Internet at: www.nrsweb.org.


Local eligible provider means an “eligible provider” as defined in the Act that operates an adult education program that is required to report under the NRS.


State means “State” and “Outlying area” as defined in the Act.


Test means a standardized test, assessment, or instrument that has a formal protocol on how it is to be administered. These protocols include, for example, the use of parallel, equated forms, testing conditions, time allowed for the test, standardized scoring, and the amount of instructional time a student needs before post-testing. Violation of these protocols often invalidates the test scores. Tests are not limited to traditional paper and pencil (or computer-administered) instruments for which forms are constructed prior to administration to examinees. Tests may also include adaptive tests that use computerized algorithms for selecting and administering items in real time; however, for such instruments, the size of the item pool and the method of item selection must ensure negligible overlap in items across pre- and post-testing.


Test administrator means an individual who is trained to administer tests the Secretary determines to be suitable under this part.


Test publisher means an entity, individual, organization, or agency that owns a registered copyright of a test or is licensed by the copyright holder to sell or distribute a test.


(Authority: 29 U.S.C. 3292, et seq., unless otherwise noted)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55551, Aug. 19, 2016]


§ 462.4 What are the transition rules for using tests to measure educational gain for the National Reporting System for Adult Education (NRS)?

A State or an eligible provider may continue to measure educational gain for the NRS using tests that the Secretary has identified in the most recent notice published in the Federal Register until the Secretary announces through a notice published in the Federal Register a date by which such tests may no longer be used.


(Authority: 29 U.S.C. 3292)

[81 FR 55551, Aug. 19, 2016]


Subpart B – What Process Does the Secretary Use To Review the Suitability of Tests for Use in the NRS?

§ 462.10 How does the Secretary review tests?

(a) The Secretary only reviews tests under this part that are submitted by a test publisher.


(b) A test publisher that wishes to have the suitability of its test determined by the Secretary under this part must submit an application to the Secretary, in the manner the Secretary may prescribe, by October 1, 2016, April 1, 2017, October 1, 2017, April 1, 2018, October 1, 2018, and by October 1 of each year thereafter.


(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55552, Aug. 19, 2016]


§ 462.11 What must an application contain?

(a) Application content and format. In order for the Secretary to determine whether a standardized test is suitable for measuring the gains of participants in an adult education program required to report under the NRS, a test publisher must –


(1) Include with its application information listed in paragraphs (b) through (i) of this section, and, if applicable, the information listed in paragraph (j) of this section;


(2) Provide evidence that it holds a registered copyright of a test or is licensed by the copyright holder to sell or distribute a test.


(3)(i) Arrange the information in its application in the order it is presented in paragraphs (b) through (j) of this section; or


(ii) Include a table of contents in its application that identifies the location of the information required in paragraphs (b) through (j) of this section.


(4) Submit to the Secretary four copies of its application.


(b) General information. (1) A statement, in the technical manual for the test, of the intended purpose of the test and how the test will allow examinees to demonstrate the skills that are associated with the NRS educational functioning levels in the Guidelines.


(2) The name, address, e-mail address, and telephone and fax numbers of a contact person to whom the Secretary may address inquiries.


(3) A summary of the precise editions, forms, levels, and, if applicable, sub-tests and abbreviated tests that the test publisher is requesting that the Secretary review and determine to be suitable for use in the NRS.


(c) Development. Documentation of how the test was developed, including a description of –


(1) The nature of samples of examinees administered the test during pilot or field testing, such as –


(i) The number of examinees administered each item;


(ii) How similar the sample or samples of examinees used to develop and evaluate the test were to the adult education population of interest to the NRS; and


(iii) The steps, if any, taken to ensure that the examinees were motivated while responding to the test; and


(2) The steps taken to ensure the quality of test items or tasks, such as –


(i) The extent to which items or tasks on the test were reviewed for fairness and sensitivity; and


(ii) The extent to which items or tasks on the test were screened for the adequacy of their psychometric properties.


(3) The procedures used to assign items to –


(i) Forms, for tests that are constructed prior to being administered to examinees; or


(ii) Examinees, for adaptive tests in which items are selected in real time.


(d) Maintenance. Documentation of how the test is maintained, including a description of –


(1) How frequently, if ever, new forms of the test are developed;


(2) The steps taken to ensure the comparability of scores across forms of the test;


(3) The steps taken to maintain the security of the test;


(4) A history of the test’s use, including the number of times the test has been administered; and


(5) For a computerized adaptive test, the procedures used to –


(i) Select subsets of items for administration;


(ii) Determine the starting point and termination conditions;


(iii) Score the test; and


(iv) Control for item exposure.


(e) Match of content to the NRS educational functioning levels (content validity). Documentation of the extent to which the items or tasks on the test cover the skills in the NRS educational functioning levels in the Guidelines, including –


(1) Whether the items or tasks on the test require the types and levels of skills used to describe the NRS educational functioning levels;


(2) Whether the items or tasks measure skills that are not associated with the NRS educational functioning levels;


(3) Whether aspects of a particular NRS educational functioning level are not covered by any of the items or tasks;


(4) The procedures used to establish the content validity of the test;


(5) The number of subject-matter experts who provided judgments linking the items or tasks to the NRS educational functioning levels and their qualifications for doing so, particularly their familiarity with adult education and the NRS educational functioning levels; and


(6) The extent to which the judgments of the subject matter experts agree.


(f) Match of scores to NRS educational functioning levels. Documentation of the adequacy of the procedure used to translate the performance of an examinee on a particular test to an estimate of the examinee’s standing with respect to the NRS educational functioning levels in the Guidelines, including –


(1) The standard-setting procedures used to establish cut scores for transforming raw or scale scores on the test into estimates of an examinee’s NRS educational functioning level;


(2) If judgment-based procedures were used –


(i) The number of subject-matter experts who provided judgments, and their qualifications; and


(ii) Evidence of the extent to which the judgments of subject-matter experts agree;


(3) The standard error of each cut score, and how it was established; and


(4) The extent to which the cut scores might be expected to differ if they had been established by a different (though similar) panel of experts.


(g) Reliability. Documentation of the degree of consistency in performance across different forms of the test in the absence of any external interventions, including –


(1) The correlation between raw (or scale) scores across alternate forms of the test or, in the case of computerized adaptive tests, across alternate administrations of the test;


(2) The consistency with which examinees are classified into the same NRS educational functioning levels across forms of the test. Information regarding classification consistency should be reported for each NRS educational functioning level that the test is being considered for use in measuring;


(3) The adequacy of the research design leading to the estimates of the reliability of the test, including –


(i) The size of the sample(s);


(ii) The similarity between the sample(s) used in the data collection and the adult education population; and


(iii) The steps taken to ensure the motivation of the examinees; and


(4) Any other information explaining the methodology and procedures used to measure the reliability of the test.


(h) Construct validity. Documentation of the appropriateness of a given test for measuring educational gain for the NRS, i.e., documentation that the test measures what it is intended to measure, including –


(1) The extent to which the raw or scale scores and the educational functioning classifications associated with the test correlate (or agree) with scores or classifications associated with other tests designed or intended to assess educational gain in the same adult education population as the NRS;


(2) The extent to which the raw or scale scores are related to other relevant variables, such as teacher evaluation, hours of instruction, or other measures that may be related to test performance;


(3) The adequacy of the research designs associated with these sources of evidence (see paragraph (g)(3) of this section); and


(4) Other evidence demonstrating that the test measures gains in educational functioning resulting from adult education and not from other construct-irrelevant variables, such as practice effects.


(i) Other information. (1) A description of the manner in which test administration time was determined, and an analysis of the speededness of the test.


(2) Additional guidance on the interpretation of scores resulting from any modifications of the tests for an individual with a disability.


(3) The manual provided to test administrators containing procedures and instructions for test security and administration.


(4) A description of the training or certification required of test administrators and scorers by the test publisher.


(5) A description of retesting (e.g., re-administration of a test because of problems in the original administration such as the test taker becomes ill during the test and cannot finish, there are external interruptions during testing, or there are administration errors) procedures and the analysis upon which the criteria for retesting are based.


(6) Such other evidence as the Secretary may determine is necessary to establish the test’s compliance with the criteria and requirements the Secretary uses to determine the suitability of tests as provided in § 462.13.


(j) Previous tests. (1) For a test used to measure educational gain in the NRS before the effective date of these regulations that is submitted to the Secretary for review under this part, the test publisher must provide documentation of periodic review of the content and specifications of the test to ensure that the test continues to reflect NRS educational functioning levels.


(2) For a test first published five years or more before the date it is submitted to the Secretary for review under this part, the test publisher must provide documentation of periodic review of the content and specifications of the test to ensure that the test continues to reflect NRS educational functioning levels.


(3) For a test that has not changed in the seven years since the Secretary determined, under § 462.13, that it was suitable for use in the NRS that is again being submitted to the Secretary for review under this part, the test publisher must provide updated data supporting the validity of the test for use in classifying adult learners with respect to the NRS educational functioning levels and the measurement of educational gain as defined in § 462.43 of this part.


(4) If a test has been substantially revised – for example by changing its mode of administration, administration procedures, structure, number of items, content specifications, item types, forms, sub-tests, or number of hours between pre- and post-testing from the most recent edition reviewed by the Secretary under this part – the test publisher must provide an analysis of the revisions, including the reasons for the revisions, the implications of the revisions for the comparability of scores on the current test to scores on the previous test, and results from validity, reliability, and equating or standard-setting studies undertaken subsequent to the revisions.


(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55552, Aug. 19, 2016]


§ 462.12 What procedures does the Secretary use to review the suitability of tests?

(a) Review. (1) When the Secretary receives a complete application from a test publisher, the Secretary selects experts in the field of educational testing and assessment who possess appropriate advanced degrees and experience in test development or psychometric research, or both, to advise the Secretary on the extent to which a test meets the criteria and requirements in § 462.13.


(2) The Secretary reviews and determines the suitability of a test only if an application –


(i) Is submitted by a test publisher;


(ii) Meets the deadline established by the Secretary;


(iii) Includes a test that –


(A) Has two or more secure, parallel, equated forms of the same test – either traditional paper and pencil or computer-administered instruments – for which forms are constructed prior to administration to examinees; or


(B) Is an adaptive test that uses computerized algorithms for selecting and administering items in real time; however, for such an instrument, the size of the item pool and the method of item selection must ensure negligible overlap in items across pre- and post-testing;


(iv) Includes a test that samples one or more of the major content domains of the NRS educational functioning levels of ABE, ASE or ESL with sufficient numbers of questions to represent adequately the domain or domains; and


(v) Includes the information prescribed by the Secretary, including the information in § 462.11 of this part.


(b) Secretary’s determination. (1) The Secretary determines whether a test meets the criteria and requirements in § 462.13 after taking into account the advice of the experts described in paragraph (a)(1) of this section.


(2) For tests that contain multiple sub-tests measuring content domains other than those of the NRS educational functioning levels, the Secretary determines the suitability of only those sub-tests covering the domains of the NRS educational functioning levels.


(c) Suitable tests. If the Secretary determines that a test satisfies the criteria and requirements in § 462.13 and, therefore, is suitable for use in the NRS, the Secretary –


(1) Notifies the test publisher of the Secretary’s decision; and


(2) Annually publishes in the Federal Register and posts on the Internet at www.nrsweb.org a list of the names of tests and test forms and the educational functioning levels the tests are suitable to measure in the NRS. A copy of the list is also available from the U.S. Department of Education, Office of Career, Technical, and Adult Education, Division of Adult Education and Literacy, 400 Maryland Avenue SW., Room 11152, Potomac Center Plaza, Washington, DC 20202-7240.


(d) Unsuitable tests. (1) If the Secretary determines that a test does not satisfy the criteria and requirements in § 462.13 and, therefore, is not suitable for use in the NRS, the Secretary notifies the test publisher of the Secretary’s decision and of the reasons why the test does not meet those criteria and requirements.


(2) The test publisher may resubmit an application to have the suitability of its test determined by the Secretary under this part on October 1 in the year immediately following the year in which the Secretary notifies the publisher.


(i) An analysis of why the information and documentation submitted meet the criteria and requirements in § 462.13, notwithstanding the Secretary’s earlier decision to the contrary; and


(ii) Any additional documentation and information that address the Secretary’s reasons for determining that the test was unsuitable.


(3) The Secretary reviews the additional information submitted by the test publisher and makes a final determination regarding the suitability of the test for use in the NRS.


(i) If the Secretary’s decision is unchanged and the test remains unsuitable for use in the NRS, the Secretary notifies the test publisher, and this action concludes the review process.


(ii) If the Secretary’s decision changes and the test is determined to be suitable for use in the NRS, the Secretary follows the procedures in paragraph (c) of this section.


(e) Revocation. (1) The Secretary’s determination regarding the suitability of a test may be revoked if the Secretary determines that –


(i) The information the publisher submitted as a basis for the Secretary’s review of the test was inaccurate; or


(ii) A test has been substantially revised – for example, by changing its mode of administration, administration procedures, structure, number of items, content specifications, item types, forms or sub-tests, or number of hours between pre- and post-testing.


(2) The Secretary notifies the test publisher of the –


(i) Secretary’s decision to revoke the determination that the test is suitable for use in the NRS; and


(ii) Reasons for the Secretary’s revocation.


(3) Within 30 days after the Secretary notifies a test publisher of the decision to revoke a determination that a test is suitable for use in the NRS, the test publisher may request that the Secretary reconsider the decision. This request must be accompanied by documentation and information that address the Secretary’s reasons for revoking the determination that the test is suitable for use in the NRS.


(4) The Secretary reviews the information submitted by the test publisher and makes a final determination regarding the suitability of the test for use in the NRS.


(5) If the Secretary revokes the determination regarding the suitability of a test, the Secretary publishes in the Federal Register and posts on the Internet at www.nrsweb.org a notice of that revocation along with the date by which States and eligible providers must stop using the revoked test. A copy of the notice of revocation is also available from the U.S. Department of Education, Office of Career, Technical, and Adult Education, Division of Adult Education and Literacy, 400 Maryland Avenue SW., Room 11152, Potomac Center Plaza, Washington, DC 20202-7240.


(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55552, Aug. 19, 2016]


§ 462.13 What criteria and requirements does the Secretary use for determining the suitability of tests?

In order for the Secretary to consider a test suitable for use in the NRS, the test or the test publisher, if applicable, must meet the following criteria and requirements:


(a) The test must measure the NRS educational functioning levels of members of the adult education population.


(b) The test must sample one or more of the major content domains of the NRS educational functioning levels of ABE, ASE or ESL with sufficient numbers of questions to adequately represent the domain or domains.


(c)(1) The test must meet all applicable and feasible standards for test construction and validity provided in the 1999 edition of the Standards for Educational and Psychological Testing, prepared by the Joint Committee on Standards for Educational and Psychological Testing of the American Educational Research Association, the American Psychological Association, and the National Council on Measurement in Education incorporated by reference in this section. The Director of the Federal Register approves this incorporation by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. You may obtain a copy from the American Psychological Association, Inc., 750 First Street, NE., Washington, DC 20002. You may inspect a copy at the Department of Education, room 11159, 550 12th Street, SW., Washington, DC 20202 or at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call (202) 741-6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.


(2) If requested by the Secretary, a test publisher must explain why it believes that certain standards in the 1999 edition of the Standards for Educational and Psychological Testing were not applicable or were not feasible to meet.


(d) The test must contain the publisher’s guidelines for retesting, including time between test-taking, which are accompanied by appropriate justification.


(e) The test must –


(1) Have two or more secure, parallel, equated forms of the same test – either traditional paper and pencil or computer administered instruments – for which forms are constructed prior to administration to examinees; or


(2) Be an adaptive test that uses computerized algorithms for selecting and administering items in real time; however, for such an instrument, the size of the item pool and the method of item selection must ensure negligible overlap in items across pre- and post-testing. Scores associated with these alternate administrations must be equivalent in meaning.


(f) For a test that has been modified for individuals with disabilities, the test publisher must –


(1) Provide documentation that it followed the guidelines provided in the Testing Individuals With Disabilities section of the 1999 edition of the Standards for Educational and Psychological Testing;


(2) Provide documentation of the appropriateness and feasibility of the modifications relevant to test performance; and


(3)(i) Recommend educational functioning levels based on the information obtained from adult education students who participated in the pilot or field test and who have the disability for which the test has been modified; and


(ii) Provide documentation of the adequacy of the procedures used to translate the performance of adult education students with the disability for whom the test has been modified to an estimate of the examinees’ standing with respect to the NRS educational functioning levels.


(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55552, Aug. 19, 2016]


§ 462.14 How often and under what circumstances must a test be reviewed by the Secretary?

(a) The Secretary’s determination that a test is suitable for use in the NRS is in effect for a period of seven years from the date of the Secretary’s written notification to the test publisher, unless otherwise indicated by the Secretary. After that time, if the test publisher wants the test to be used in the NRS, the test must be reviewed again by the Secretary so that the Secretary can determine whether the test continues to be suitable for use in the NRS.


(b) If a test that the Secretary has determined is suitable for use in the NRS is substantially revised – for example, by changing its mode of administration, administration procedures, structure, number of items, content specifications, item types, forms, sub-tests, or number of hours between pre- and post-testing – and the test publisher wants the test to continue to be used in the NRS, the test publisher must submit, as provided in § 462.11(j)(4), the substantially revised test or version of the test to the Secretary for review so that the Secretary can determine whether the test continues to be suitable for use in the NRS.


(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55552, Aug. 19, 2016]


Subpart C [Reserved]

Subpart D – What Requirements Must States and Local Eligible Providers Follow When Measuring Educational Gain?

§ 462.40 Must a State have an assessment policy?

(a) A State must have a written assessment policy that its local eligible providers must follow in measuring educational gain and reporting data in the NRS.


(b) A State must submit its assessment policy to the Secretary for review and approval at the time it submits its annual statistical report for the NRS.


(c) The State’s assessment policy must –


(1) Include a statement requiring that local eligible providers measure the educational gain of all students who receive 12 hours or more of instruction in the State’s adult education program with a test that the Secretary has determined is suitable for use in the NRS;


(2) Identify the pre- and post-tests that the State requires eligible providers to use to measure the educational functioning level gain of ABE, ASE, and ESL students;


(3)(i) Indicate when, in calendar days or instructional hours, eligible providers must administer pre- and post-tests to students;


(ii) Ensure that the time for administering the post-test is long enough after the pre-test to allow the test to measure educational functioning level gains according to the test publisher’s guidelines; and


(iii) Specify a standard for the percentage of students to be pre- and post-tested.


(4) Specify the score ranges tied to educational functioning levels for placement and for reporting gains for accountability;


(5) Identify the skill areas the State intends to require local eligible providers to assess in order to measure educational gain;


(6) Include the guidance the State provides to local eligible providers on testing and placement of an individual with a disability or an individual who is unable to be tested because of a disability;


(7) Describe the training requirements that staff must meet in order to be qualified to administer and score each test selected by the State to measure the educational gains of students;


(8) Identify the alternate form or forms of each test that local eligible providers must use for post-testing;


(9) Indicate whether local eligible providers must use a locator test for guidance on identifying the appropriate pre-test;


(10) Describe the State’s policy for the initial placement of a student at each NRS educational functioning level using test scores;


(11) Describe the State’s policy for using the post-test for measuring educational gain and for advancing students across educational functioning levels;


(12) Describe the pre-service and in-service staff training that the State or local eligible providers will provide, including training –


(i) For staff who either administer or score each of the tests used to measure educational gain;


(ii) For teachers and other local staff involved in gathering, analyzing, compiling, and reporting data for the NRS; and


(iii) That includes the following topics:


(A) NRS policy, accountability policies, and the data collection process.


(B) Definitions of measures.


(C) Conducting assessments; and


(13) Identify the State or local agency responsible for providing pre- and in-service training.


(Approved by the Office of Management and Budget under control number 1830-0027)

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55552, Aug. 19, 2016]


§ 462.41 How must tests be administered in order to accurately measure educational gain?

(a) General. A local eligible provider must measure the educational gains of students using only tests that the Secretary has determined are suitable for use in the NRS and that the State has identified in its assessment policy.


(b) Pre-test. A local eligible provider must –


(1) Administer a pre-test to measure a student’s educational functioning level at intake, or as soon as possible thereafter;


(2) Administer the pre-test to students at a uniform time, according to the State’s assessment policy; and


(3) Administer pre-tests to students in the skill areas identified in the State’s assessment policy.


(c) Post-test. A local eligible provider must –


(1) Administer a post-test to measure a student’s educational functioning level after a set time period or number of instructional hours;


(2) Administer the post-test to students at a uniform time, according to the State’s assessment policy;


(3)(i) Administer post-tests with a secure, parallel, equated form of the same test – either traditional paper and pencil or computer-administered instruments – for which forms are constructed prior to administration to examinees to pre-test and determine the initial placement of students; or


(ii) Administer post-tests with an adaptive test that uses computerized algorithms for selecting and administering items in real time; however, for such an instrument, the size of the item pool and the method of item selection must ensure negligible overlap in items across pre- and post-testing; and


(4) Administer post-tests to students in the same skill areas as the pre-test.


(d) Other requirements. (1) A local eligible provider must administer a test using only staff who have been trained to administer the test.


(2) A local eligible provider may use the results of a test in the NRS only if the test was administered in a manner that is consistent with the State’s assessment policy and the test publisher’s guidelines.


(Approved by the Office of Management and Budget under control number 1830-0027)

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55553, Aug. 19, 2016]


§ 462.42 How are tests used to place students at an NRS educational functioning level?

(a) A local eligible provider must use the results of the pre-test described in § 462.41(b) to initially place students at the appropriate NRS educational functioning level.


(b) A local eligible provider must use the results of the post-test described in § 462.41(c) –


(1) To determine whether students have completed one or more educational functioning levels or are progressing within the same level; and


(2) To place students at the appropriate NRS educational functioning level.


(c)(1) States and local eligible providers are not required to use all of the skill areas described in the NRS educational functioning levels to place students.


(2) States and local eligible providers must test and report on the skill areas most relevant to the students’ needs and to the programs’ curriculum.


(d)(1) If a State’s assessment policy requires a local eligible provider to test a student in multiple skill areas and the student will receive instruction in all of the skill areas, the local eligible provider must place the student in an educational functioning level that is equivalent to the student’s lowest test score for any of the skill areas tested under § 462.41(b) and (c).


(2) If a State’s assessment policy requires a local eligible provider to test a student in multiple skill areas, but the student will receive instruction in fewer than all of the skill areas, the local eligible provider must place the student in an educational functioning level that is equivalent to the student’s lowest test score for any of the skill areas –


(i) Tested under § 462.41(b) and (c); and


(ii) In which the student will receive instruction.


(Approved by the Office of Management and Budget under control number 1830-0027)

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55553, Aug. 19, 2016]


§§ 462.43-462.44 [Reserved]

PART 463 – ADULT EDUCATION AND FAMILY LITERACY ACT


Authority:29 U.S.C. 102 and 103, unless otherwise noted.


Source:81 FR 55553, Aug. 19, 2016, unless otherwise noted.

Subpart A – Adult Education General Provisions

§ 463.1 What is the purpose of the Adult Education and Family Literacy Act?

The purpose of the Adult Education and Family Literacy Act (AEFLA) is to create a partnership among the Federal Government, States, and localities to provide, on a voluntary basis, adult education and literacy activities, in order to –


(a) Assist adults to become literate and obtain the knowledge and skills necessary for employment and economic self-sufficiency;


(b) Assist adults who are parents or family members to obtain the education and skills that –


(1) Are necessary to becoming full partners in the educational development of their children; and


(2) Lead to sustainable improvements in the economic opportunities for their family;


(c) Assist adults in attaining a secondary school diploma or its recognized equivalent and in the transition to postsecondary education and training, through career pathways; and


(d) Assist immigrants and other individuals who are English language learners in –


(1) Improving their –


(i) Reading, writing, speaking, and comprehension skills in English; and


(ii) Mathematics skills; and


(2) Acquiring an understanding of the American system of Government, individual freedom, and the responsibilities of citizenship.


(Authority: 29 U.S.C. 3271)


§ 463.2 What regulations apply to the Adult Education and Family Literacy Act programs?

The following regulations apply to the Adult Education and Family Literacy Act programs:


(a) The following Education Department General Administrative Regulations (EDGAR):


(1) 34 CFR part 75 (Direct Grant Programs), except that 34 CFR 75.720(b), regarding the frequency of certain reports, does not apply.


(2) 34 CFR part 76 (State-Administered Programs), except that 34 CFR 76.101 (The general State application) does not apply.


(3) 34 CFR part 77 (Definitions that Apply to Department Regulations).


(4) 34 CFR part 79 (Intergovernmental Review of Department of Education Programs and Activities).


(5) 34 CFR part 81 (General Education Provisions Act – Enforcement).


(6) 34 CFR part 82 (New Restrictions on Lobbying).


(7) 34 CFR part 86 (Drug and Alcohol Prevention).


(8) 2 CFR part 200 (Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards), as adopted at 2 CFR part 3474.


(b) The regulations in 34 CFR part 462.


(c) The regulations in 34 CFR part 463.


§ 463.3 What definitions apply to the Adult Education and Family Literacy Act programs?

Definitions in the Workforce Innovation and Opportunity Act. The following terms are defined in Sections 3, 134, 203, and 225 of the Workforce Innovation and Opportunity Act (29 U.S.C. 3102, 3174, 3272, and 3305):



Adult Education

Adult Education and Literacy Activities

Basic Skills Deficient

Career Pathway

Core Program

Core Program Provision

Correctional Institution

Criminal Offender

Customized Training

Eligible Agency

Eligible Individual

Eligible Provider

English Language Acquisition Program

English Language Learner

Essential Components of Reading

Family Literacy Activities

Governor

Individual with a Barrier to Employment

Individual with a Disability

Institution of Higher Education

Integrated Education and Training

Integrated English Literacy and Civics Education

Literacy

Local Educational Agency

On-the-Job Training

Outlying Area

Postsecondary Educational Institution

State

Training Services

Workplace Adult Education and Literacy Activities

Workforce Preparation Activities

Definitions in EDGAR. The following terms are defined in 34 CFR 77.1:



Applicant

Application

Award

Budget

Budget Period

Contract

Department

ED

EDGAR

Fiscal Year

Grant

Grantee

Nonprofit

Private

Project

Project Period

Public

Secretary

Subgrant

Subgrantee

Other Definitions. The following definitions also apply:


Act means the Workforce Innovation and Opportunity Act, Public Law 113-128.


Concurrent enrollment or co-enrollment refers to enrollment by an eligible individual in two or more of the six core programs administered under the Act.


Digital literacy means the skills associated with using technology to enable users to find, evaluate, organize, create, and communicate information.


Peer tutoring means an instructional model that utilizes one institutionalized individual to assist in providing or enhancing learning opportunities for other institutionalized individuals. A peer tutoring program must be structured and overseen by educators who assist with training and supervising tutors, setting educational goals, establishing an individualized plan of instruction, and monitoring progress.


Re-entry and post-release services means services provided to a formerly incarcerated individual upon or shortly after release from a correctional institution that are designed to promote successful adjustment to the community and prevent recidivism. Examples include education, employment services, substance abuse treatment, housing support, mental and physical health care, and family reunification services.


Title means title II of the Workforce Innovation and Opportunity Act, the Adult Education and Family Literacy Act, Public Law 113-128.


Subpart B [Reserved]

Subpart C – How Does a State Make an Award to Eligible Providers?

§ 463.20 What is the process that the eligible agency must follow in awarding grants or contracts to eligible providers?

(a) From grant funds made available under section 222(a)(1) of the Act, each eligible agency must award competitive multiyear grants or contracts to eligible providers within the State or outlying area to enable the eligible providers to develop, implement, and improve adult education and literacy activities within the State or outlying area.


(b) The eligible agency must require that each eligible provider receiving a grant or contract use the funding to establish or operate programs that provide adult education and literacy activities, including programs that provide such activities concurrently.


(c) In conducting the competitive grant process, the eligible agency must ensure that –


(1) All eligible providers have direct and equitable access to apply and compete for grants or contracts;


(2) The same grant or contract announcement and application processes are used for all eligible providers in the State or outlying area; and


(3) In awarding grants or contracts to eligible providers for adult education and literacy activities, funds shall not be used for the purpose of supporting or providing programs, services, or activities for individuals who are not eligible individuals as defined in the Act, except that such agency may use such funds for such purpose if such programs, services, or activities are related to family literacy activities. Prior to providing family literacy activities for individuals who are not eligible individuals, an eligible provider shall attempt to coordinate with programs and services that do not receive funding under this title.


(d) In awarding grants or contracts for adult education and literacy activities to eligible providers, the eligible agency must consider the following:


(1) The degree to which the eligible provider would be responsive to –


(i) Regional needs as identified in the local workforce development plan; and


(ii) Serving individuals in the community who were identified in such plan as most in need of adult education and literacy activities, including individuals who –


(A) Have low levels of literacy skills; or


(B) Are English language learners;


(2) The ability of the eligible provider to serve eligible individuals with disabilities, including eligible individuals with learning disabilities;


(3) The past effectiveness of the eligible provider in improving the literacy of eligible individuals, especially those individuals who have low levels of literacy, and the degree to which those improvements contribute to the eligible agency meeting its State-adjusted levels of performance for the primary indicators of performance described in § 677.155;


(4) The extent to which the eligible provider demonstrates alignment between proposed activities and services and the strategy and goals of the local plan under section 108 of the Act, as well as the activities and services of the one-stop partners;


(5) Whether the eligible provider’s program –


(i) Is of sufficient intensity and quality, and based on the most rigorous research available so that participants achieve substantial learning gains; and


(ii) Uses instructional practices that include the essential components of reading instruction;


(6) Whether the eligible provider’s activities, including whether reading, writing, speaking, mathematics, and English language acquisition instruction delivered by the eligible provider, are based on the best practices derived from the most rigorous research available, including scientifically valid research and effective educational practice;


(7) Whether the eligible provider’s activities effectively use technology, services and delivery systems, including distance education, in a manner sufficient to increase the amount and quality of learning, and how such technology, services, and systems lead to improved performance;


(8) Whether the eligible provider’s activities provide learning in context, including through integrated education and training, so that an individual acquires the skills needed to transition to and complete postsecondary education and training programs, obtain and advance in employment leading to economic self-sufficiency, and to exercise the rights and responsibilities of citizenship;


(9) Whether the eligible provider’s activities are delivered by instructors, counselors, and administrators who meet any minimum qualifications established by the State, where applicable, and who have access to high-quality professional development, including through electronic means;


(10) Whether the eligible provider coordinates with other available education, training, and social service resources in the community, such as by establishing strong links with elementary schools and secondary schools, postsecondary educational institutions, institutions of higher education, Local WDBs, one-stop centers, job training programs, and social service agencies, business, industry, labor organizations, community-based organizations, nonprofit organizations, and intermediaries, in the development of career pathways;


(11) Whether the eligible provider’s activities offer the flexible schedules and coordination with Federal, State, and local support services (such as child care, transportation, mental health services, and career planning) that are necessary to enable individuals, including individuals with disabilities or other special needs, to attend and complete programs;


(12) Whether the eligible provider maintains a high-quality information management system that has the capacity to report measurable participant outcomes (consistent with section § 666.100) and to monitor program performance; and


(13) Whether the local area in which the eligible provider is located has a demonstrated need for additional English language acquisition programs and civics education programs.


(Authority: 29 U.S.C. 3321)


§ 463.21 What processes must be in place to determine the extent to which a local application for grants or contracts to provide adult education and literacy services is aligned with a local plan under section 108 of WIOA?

(a) An eligible agency must establish, within its grant or contract competition, a process that provides for the submission of all applications for funds under AEFLA to the appropriate Local Boards.


(b) The process must include –


(1) Submission of the applications to the appropriate Local Board for its review for consistency with the local plan within the appropriate timeframe; and


(2) An opportunity for the local board to make recommendations to the eligible agency to promote alignment with the local plan.


(c) The eligible agency must consider the results of the review by the Local Board in determining the extent to which the application addresses the required considerations in § 463.20.


(Authority: 29 U.S.C. 3122(d)(11), 3321(e), 3322)


§ 463.22 What must be included in the eligible provider’s application for a grant or contract?

(a) Each eligible provider seeking a grant or contract must submit an application to the eligible agency containing the information and assurances listed below, as well as any additional information required by the eligible agency, including:


(1) A description of how funds awarded under this title will be spent consistent with the requirements of title II of AEFLA;


(2) A description of any cooperative arrangements the eligible provider has with other agencies, institutions, or organizations for the delivery of adult education and literacy activities;


(3) A description of how the eligible provider will provide services in alignment with the local workforce development plan, including how such provider will promote concurrent enrollment in programs and activities under title I, as appropriate;


(4) A description of how the eligible provider will meet the State-adjusted levels of performance for the primary indicators of performance identified in the State’s Unified or Combined State Plan, including how such provider will collect data to report on such performance indicators;


(5) A description of how the eligible provider will fulfill, as appropriate, required one-stop partner responsibilities to –


(i) Provide access through the one-stop delivery system to adult education and literacy activities;


(ii) Use a portion of the funds made available under the Act to maintain the one-stop delivery system, including payment of the infrastructure costs for the one-stop centers, in accordance with the methods agreed upon by the Local Board and described in the memorandum of understanding or the determination of the Governor regarding State one-stop infrastructure funding;


(iii) Enter into a local memorandum of understanding with the Local Board, relating to the operations of the one-stop system;


(iv) Participate in the operation of the one-stop system consistent with the terms of the memorandum of understanding, and the requirements of the Act; and


(v) Provide representation to the State board;


(6) A description of how the eligible provider will provide services in a manner that meets the needs of eligible individuals;


(7) Information that addresses the 13 considerations listed in § 463.20; and


(8) Documentation of the activities required by § 463.21(b).


(b) [Reserved]


(Authority: 29 U.S.C. 3322)


§ 463.23 Who is eligible to apply for a grant or contract for adult education and literacy activities?

An organization that has demonstrated effectiveness in providing adult education and literacy activities is eligible to apply for a grant or contract. These organizations may include, but are not limited to:


(a) A local educational agency;


(b) A community-based organization or faith-based organization;


(c) A volunteer literacy organization;


(d) An institution of higher education;


(e) A public or private nonprofit agency;


(f) A library;


(g) A public housing authority;


(h) A nonprofit institution that is not described in any of paragraphs (a) through (g) of this section and has the ability to provide adult education and literacy activities to eligible individuals;


(i) A consortium or coalition of the agencies, organizations, institutions, libraries, or authorities described in any of paragraphs (a) through (h) of this section; and


(j) A partnership between an employer and an entity described in any of paragraphs (a) through (i) of this section.


(Authority: 29 U.S.C. 3272(5))


§ 463.24 How must an eligible provider establish that it has demonstrated effectiveness?

(a) For the purposes of this section, an eligible provider must demonstrate past effectiveness by providing performance data on its record of improving the skills of eligible individuals, particularly eligible individuals who have low levels of literacy, in the content domains of reading, writing, mathematics, English language acquisition, and other subject areas relevant to the services contained in the State’s application for funds. An eligible provider must also provide information regarding its outcomes for participants related to employment, attainment of secondary school diploma or its recognized equivalent, and transition to postsecondary education and training.


(b) There are two ways in which an eligible provider may meet the requirements in paragraph (a) of this section:


(1) An eligible provider that has been funded under title II of the Act must provide performance data required under section 116 to demonstrate past effectiveness.


(2) An eligible provider that has not been previously funded under title II of the Act must provide performance data to demonstrate its past effectiveness in serving basic skills deficient eligible individuals, including evidence of its success in achieving outcomes listed in paragraph (a) of this section.


(Authority: 29 U.S.C. 3272(5))


§ 463.25 What are the requirements related to local administrative cost limits?

Not more than five percent of a local grant to an eligible provider can be expended to administer a grant or contract under title II. In cases where five percent is too restrictive to allow for administrative activities, the eligible agency may increase the amount that can be spent on local administration. In such cases, the eligible provider must negotiate with the eligible agency to determine an adequate level of funds to be used for non-instructional purposes.


(Authority: 29 U.S.C. 3323)


§ 463.26 What activities are considered local administrative costs?

An eligible provider receiving a grant or contract under this part may consider costs incurred in connection with the following activities to be administrative costs:


(a) Planning;


(b) Administration, including carrying out performance accountability requirements;


(c) Professional development;


(d) Providing adult education and literacy services in alignment with local workforce plans, including promoting co-enrollment in programs and activities under title I, as appropriate; and


(e) Carrying out the one-stop partner responsibilities described in § 678.420, including contributing to the infrastructure costs of the one-stop delivery system.


(Authority: 29 U.S.C. 3323, 3322, 3151)


Subpart D – What Are Adult Education and Literacy Activities?

§ 463.30 What are adult education and literacy programs, activities, and services?

The term “adult education and literacy activities” means programs, activities, and services that include:


(a) Adult education,


(b) Literacy,


(c) Workplace adult education and literacy activities,


(d) Family literacy activities,


(e) English language acquisition activities,


(f) Integrated English literacy and civics education,


(g) Workforce preparation activities, or


(h) Integrated education and training.


(Authority: 29 U.S.C. 3272(2))


§ 463.31 What is an English language acquisition program?

The term “English language acquisition program” means a program of instruction –


(a) That is designed to help eligible individuals who are English language learners achieve competence in reading, writing, speaking, and comprehension of the English language; and


(b) That leads to –


(1) Attainment of a secondary school diploma or its recognized equivalent; and


(2) Transition to postsecondary education and training; or


(3) Employment.


(Authority: 29 U.S.C. 3272(6))


§ 463.32 How does a program that is intended to be an English language acquisition program meet the requirement that the program leads to attainment of a secondary school diploma or its recognized equivalent and transition to postsecondary education and training or leads to employment?

To meet the requirement in § 463.31(b) a program of instruction must:


(a) Have implemented State adult education content standards that are aligned with State-adopted challenging academic content standards, as adopted under the Elementary and Secondary Education Act of 1965, as amended (ESEA) as described in the State’s Unified or Combined State Plan and as evidenced by the use of a State or local curriculum, lesson plans, or instructional materials that are aligned with the State adult education content standards; or


(b) Offer educational and career counseling services that assist an eligible individual to transition to postsecondary education or employment; or


(c) Be part of a career pathway.


(Authority: 29 U.S.C. 3112(b)(2)(D)(ii), 3272)


§ 463.33 What are integrated English literacy and civics education services?

(a) Integrated English literacy and civics education services are education services provided to English language learners who are adults, including professionals with degrees or credentials in their native countries, that enable such adults to achieve competency in the English language and acquire the basic and more advanced skills needed to function effectively as parents, workers, and citizens in the United States.


(b) Integrated English literacy and civics education services must include instruction in literacy and English language acquisition and instruction on the rights and responsibilities of citizenship and civic participation and may include workforce training.


(Authority: 29 U.S.C. 3272(12))


§ 463.34 What are workforce preparation activities?

Workforce preparation activities include activities, programs, or services designed to help an individual acquire a combination of basic academic skills, critical thinking skills, digital literacy skills, and self-management skills, including competencies in:


(a) Utilizing resources;


(b) Using information;


(c) Working with others;


(d) Understanding systems;


(e) Skills necessary for successful transition into and completion of postsecondary education or training, or employment; and


(f) Other employability skills that increase an individual’s preparation for the workforce.


(Authority: 29 U.S.C. 3272(17); P.L. 111-340)


§ 463.35 What is integrated education and training?

The term “integrated education and training” refers to a service approach that provides adult education and literacy activities concurrently and contextually with workforce preparation activities and workforce training for a specific occupation or occupational cluster for the purpose of educational and career advancement.


(Authority: 29 U.S.C. 3272(11))


§ 463.36 What are the required components of an integrated education and training program funded under title II?

An integrated education and training program must include three components:


(a) Adult education and literacy activities as described in § 463.30.


(b) Workforce preparation activities as described in § 463.34.


(c) Workforce training for a specific occupation or occupational cluster which can be any one of the training services defined in section 134(c)(3)(D) of the Act.


(Authority: 29 U.S.C. 3272, 3174)


§ 463.37 How does a program providing integrated education and training under title II meet the requirement that the three required components be “integrated”?

In order to meet the requirement that the adult education and literacy activities, workforce preparation activities, and workforce training be integrated, services must be provided concurrently and contextually such that –


(a) Within the overall scope of a particular integrated education and training program, the adult education and literacy activities, workforce preparation activities, and workforce training:


(1) Are each of sufficient intensity and quality, and based on the most rigorous research available, particularly with respect to improving reading, writing, mathematics, and English proficiency of eligible individuals;


(2) Occur simultaneously; and


(3) Use occupationally relevant instructional materials.


(b) The integrated education and training program has a single set of learning objectives that identifies specific adult education content, workforce preparation activities, and workforce training competencies, and the program activities are organized to function cooperatively.


(Authority: 29 U.S.C. 3272)


§ 463.38 How does a program providing integrated education and training under title II meet the requirement that the integrated education and training program be “for the purpose of educational and career advancement”?

A provider meets the requirement that the integrated education and training program provided is for the purpose of educational and career advancement if:


(a) The adult education component of the program is aligned with the State’s content standards for adult education as described in the State’s Unified or Combined State Plan; and


(b) The integrated education and training program is part of a career pathway.


(Authority: 29 U.S.C. 3272, 3112)


Subpart E [Reserved]

Subpart F – What are Programs for Corrections Education and the Education of Other Institutionalized Individuals?

§ 463.60 What are programs for Corrections Education and the Education of other Institutionalized Individuals?

(a) Authorized under section 225 of the Act, programs for corrections education and the education of other institutionalized individuals require each eligible agency to carry out corrections education and education for other institutionalized individuals using funds provided under section 222 of the Act.


(b) The funds described in paragraph (a) of this section must be used for the cost of educational programs for criminal offenders in correctional institutions and other institutionalized individuals, including academic programs for –


(1) Adult education and literacy activities;


(2) Special education, as determined by the eligible agency;


(3) Secondary school credit;


(4) Integrated education and training;


(5) Career pathways;


(6) Concurrent enrollment;


(7) Peer tutoring; and


(8) Transition to re-entry initiatives and other post-release-services with the goal of reducing recidivism.


(Authority: 29 U.S.C. 3302, 3305)


§ 463.61 How does the eligible agency award funds to eligible providers under the program for Corrections Education and Education of other Institutionalized Individuals?

(a) States may award up to 20 percent of the 82.5 percent of the funds made available by the Secretary for local grants and contracts under section 231 of the Act for programs for corrections education and the education of other institutionalized individuals.


(b) The State must make awards to eligible providers in accordance with subpart C.


(Authority: 29 U.S.C. 3302, 3321)


§ 463.62 What is the priority for programs that receive funding through programs for Corrections Education and Education of other Institutionalized Individuals?

Each eligible agency using funds provided under Programs for Corrections Education and Education of Other Institutionalized Individuals to carry out a program for criminal offenders within a correctional institution must give priority to programs serving individuals who are likely to leave the correctional institution within five years of participation in the program.


(Authority: 29 U.S.C. 3305)


§ 463.63 How may funds under programs for Corrections Education and Education of other Institutionalized Individuals be used to support transition to re-entry initiatives and other post-release services with the goal of reducing recidivism?

Funds under Programs for Corrections Education and the Education of Other Institutionalized Individuals may be used to support educational programs for transition to re-entry initiatives and other post-release services with the goal of reducing recidivism. Such use of funds may include educational counseling or case work to support incarcerated individuals’ transition to re-entry and other post-release services. Examples include assisting incarcerated individuals to develop plans for post-release education program participation, assisting students in identifying and applying for participation in post-release programs, and performing direct outreach to community-based program providers on behalf of re-entering students. Such funds may not be used for costs for participation in post-release programs or services.


(Authority: 29 U.S.C. 3305)


Subpart G – What Is the Integrated English Literacy and Civics Education Program?

§ 463.70 What is the Integrated English Literacy and Civics Education program?

(a) The Integrated English Literacy and Civics Education program refers to the use of funds provided under section 243 of the Act for education services for English language learners who are adults, including professionals with degrees and credentials in their native countries.


(b) The Integrated English Literacy and Civics Education program delivers educational services as described in § 463.33.


(c) Such educational services must be delivered in combination with integrated education and training activities as described in § 463.36.


(Authority: 29 U.S.C. 3272, 3333)


§ 463.71 How does the Secretary make an award under the Integrated English Literacy and Civics Education program?

(a) The Secretary awards grants under the Integrated English Literacy and Civics Education program to States that have an approved Unified State Plan in accordance with § 463.90 through § 463.145, or an approved Combined State Plan in accordance with § 463.90 through § 463.145.


(b) The Secretary allocates funds to States following the formula described in section 243(b) of the Act.


(1) Sixty-five percent is allocated on the basis of a State’s need for integrated English literacy and civics education, as determined by calculating each State’s share of a 10-year average of the data of the Office of Immigration Statistics of the Department of Homeland Security for immigrants admitted for legal permanent residence for the 10 most recent years; and


(2) Thirty-five percent is allocated on the basis of whether the State experienced growth, as measured by the average of the three most recent years for which the data of the Office of Immigration Statistics of the Department of Homeland Security for immigrants admitted for legal permanent residence are available.


(3) No State receives an allotment less than $60,000.


(Authority: 29 U.S.C. 3333)


§ 463.72 How does the eligible agency award funds to eligible providers for the Integrated English Literacy and Civics Education program?

States must award funds for the Integrated English Literacy and Civics Education program to eligible providers in accordance with subpart C.


(Authority: 29 U.S.C. 3321)


§ 463.73 What are the requirements for eligible providers that receive funding through the Integrated English Literacy and Civics Education program?

Eligible providers receiving funds through the Integrated English Literacy and Civics Education program must provide services that –


(a) Include instruction in literacy and English language acquisition and instruction on the rights and responsibilities of citizenship and civic participation; and


(b) Are designed to:


(1) Prepare adults who are English language learners for, and place such adults in, unsubsidized employment in in-demand industries and occupations that lead to economic self-sufficiency; and


(2) Integrate with the local workforce development system and its functions to carry out the activities of the program.


(Authority: 29 U.S.C. 3272, 3333)


§ 463.74 How does an eligible provider that receives funds through the Integrated English Literacy and Civics Education program meet the requirement to use funds for Integrated English Literacy and Civics Education in combination with integrated education and training activities?

An eligible provider that receives funds through the Integrated English Literacy and Civics Education program may meet the requirement to use funds for integrated English literacy and civics education in combination with integrated education and training activities by:


(a) Co-enrolling participants in integrated education and training as described in subpart D of this part that is provided within the local or regional workforce development area from sources other than section 243 of the Act; or


(b) Using funds provided under section 243 of the Act to support integrated education and training activities as described in subpart D of this part.


(Authority: 29 U.S.C. 3333, 3121, 3122, 3123)


§ 463.75 Who is eligible to receive education services through the Integrated English Literacy and Civics Education program?

Individuals who otherwise meet the definition of “eligible individual” and are English language learners, including professionals with degrees and credentials obtained in their native countries, may receive Integrated English Literacy and Civics Education services.


(Authority: 29 U.S.C. 3272)


Subpart H – Unified and Combined State Plans Under Title I of the Workforce Innovation and Opportunity Act


Authority:Secs. 102, 103, and 503, Pub. L. 113-128, 128 Stat. 1425 (Jul. 22, 2014).



Source:81 FR 56046, Aug. 19, 2016, unless otherwise noted.

§ 463.100 What are the purposes of the Unified and Combined State Plans?

(a) The Unified and Combined State Plans provide the framework for States to outline a strategic vision of, and goals for, how their workforce development systems will achieve the purposes of the Workforce Innovation and Opportunity Act (WIOA).


(b) The Unified and Combined State Plans serve as 4-year action plans to develop, align, and integrate the State’s systems and provide a platform to achieve the State’s vision and strategic and operational goals. A Unified or Combined State Plan is intended to:


(1) Align, in strategic coordination, the six core programs required in the Unified State Plan pursuant to § 463.105(b), and additional Combined State Plan partner programs that may be part of the Combined State Plan pursuant to § 463.140;


(2) Direct investments in economic, education, and workforce training programs to focus on providing relevant education and training to ensure that individuals, including youth and individuals with barriers to employment, have the skills to compete in the job market and that employers have a ready supply of skilled workers;


(3) Apply strategies for job-driven training consistently across Federal programs; and


(4) Enable economic, education, and workforce partners to build a skilled workforce through innovation in, and alignment of, employment, training, and education programs.


§ 463.105 What are the general requirements for the Unified State Plan?

(a) The Unified State Plan must be submitted in accordance with § 463.130 and WIOA sec. 102(c), as explained in joint planning guidelines issued by the Secretaries of Labor and Education.


(b) The Governor of each State must submit, at a minimum, in accordance with § 463.130, a Unified State Plan to the Secretary of Labor to be eligible to receive funding for the workforce development system’s six core programs:


(1) The adult, dislocated worker, and youth programs authorized under subtitle B of title I of WIOA and administered by the U.S. Department of Labor (DOL);


(2) The Adult Education and Family Literacy Act (AEFLA) program authorized under title II of WIOA and administered by the U.S. Department of Education (ED);


(3) The Employment Service program authorized under the Wagner-Peyser Act of 1933, as amended by WIOA title III and administered by DOL; and


(4) The Vocational Rehabilitation program authorized under title I of the Rehabilitation Act of 1973, as amended by title IV of WIOA and administered by ED.


(c) The Unified State Plan must outline the State’s 4-year strategy for the core programs described in paragraph (b) of this section and meet the requirements of sec. 102(b) of WIOA, as explained in the joint planning guidelines issued by the Secretaries of Labor and Education.


(d) The Unified State Plan must include strategic and operational planning elements to facilitate the development of an aligned, coordinated, and comprehensive workforce development system. The Unified State Plan must include:


(1) Strategic planning elements that describe the State’s strategic vision and goals for preparing an educated and skilled workforce under sec. 102(b)(1) of WIOA. The strategic planning elements must be informed by and include an analysis of the State’s economic conditions and employer and workforce needs, including education and skill needs.


(2) Strategies for aligning the core programs and Combined State Plan partner programs as described in § 463.140(d), as well as other resources available to the State, to achieve the strategic vision and goals in accordance with sec. 102(b)(1)(E) of WIOA.


(3) Operational planning elements in accordance with sec. 102(b)(2) of WIOA that support the strategies for aligning the core programs and other resources available to the State to achieve the State’s vision and goals and a description of how the State Workforce Development Board (WDB) will implement its functions, in accordance with sec. 101(d) of WIOA. Operational planning elements must include:


(i) A description of how the State strategy will be implemented by each core program’s lead State agency;


(ii) State operating systems, including data systems, and policies that will support the implementation of the State’s strategy identified in paragraph (d)(1) of this section;


(iii) Program-specific requirements for the core programs required by WIOA sec. 102(b)(2)(D);


(iv) Assurances required by sec. 102(b)(2)(E) of WIOA, including an assurance that the lead State agencies responsible for the administration of the core programs reviewed and commented on the appropriate operational planning of the Unified State Plan and approved the elements as serving the needs of the population served by such programs, and other assurances deemed necessary by the Secretaries of Labor and Education under sec. 102(b)(2)(E)(x) of WIOA;


(v) A description of joint planning and coordination across core programs, required one-stop partner programs, and other programs and activities in the Unified State Plan; and


(vi) Any additional operational planning requirements imposed by the Secretary of Labor or the Secretary of Education under sec. 102(b)(2)(C)(viii) of WIOA.


(e) All of the requirements in this subpart that apply to States also apply to outlying areas.


§ 463.110 What are the program-specific requirements in the Unified State Plan for the adult, dislocated worker, and youth programs authorized under Workforce Innovation and Opportunity Act title I?

The program-specific requirements for the adult, dislocated worker, and youth programs that must be included in the Unified State Plan are described in sec. 102(b)(2)(D) of WIOA. Additional planning requirements may be explained in joint planning guidelines issued by the Secretaries of Labor and Education.


§ 463.115 What are the program-specific requirements in the Unified State Plan for the Adult Education and Family Literacy Act program authorized under Workforce Innovation and Opportunity Act title II?

The program-specific requirements for the AEFLA program in title II that must be included in the Unified State Plan are described in secs. 102(b)(2)(C) and 102(b)(2)(D)(ii) of WIOA.


(a) With regard to the description required in sec. 102(b)(2)(D)(ii)(I) of WIOA pertaining to content standards, the Unified State Plan must describe how the eligible agency will, by July 1, 2016, align its content standards for adult education with State-adopted challenging academic content standards under the Elementary and Secondary Education Act of 1965, as amended.


(b) With regard to the description required in sec. 102(b)(2)(C)(iv) of WIOA pertaining to the methods and factors the State will use to distribute funds under the core programs, for title II of WIOA, the Unified State Plan must include –


(1) How the eligible agency will award multi-year grants on a competitive basis to eligible providers in the State; and


(2) How the eligible agency will provide direct and equitable access to funds using the same grant or contract announcement and application procedure.


§ 463.120 What are the program-specific requirements in the Unified State Plan for the Employment Service program authorized under the Wagner-Peyser Act, as amended by Workforce Innovation and Opportunity Act title III?

The Employment Service program authorized under the Wagner-Peyser Act of 1933, as amended by WIOA title III, is subject to requirements in sec. 102(b) of WIOA, including any additional requirements imposed by the Secretary of Labor under secs. 102(b)(2)(C)(viii) and 102(b)(2)(D)(iv) of WIOA, as explained in joint planning guidelines issued by the Secretaries of Labor and Education.


§ 463.125 What are the program-specific requirements in the Unified State Plan for the State Vocational Rehabilitation program authorized under title I of the Rehabilitation Act of 1973, as amended by Workforce Innovation and Opportunity Act title IV?

The program specific-requirements for the vocational rehabilitation services portion of the Unified or Combined State Plan are set forth in sec. 101(a) of the Rehabilitation Act of 1973, as amended. All submission requirements for the vocational rehabilitation services portion of the Unified or Combined State Plan are in addition to the jointly developed strategic and operational content requirements prescribed by sec. 102(b) of WIOA.


§ 463.130 What is the development, submission, and approval process of the Unified State Plan?

(a) The Unified State Plan described in § 463.105 must be submitted in accordance with WIOA sec. 102(c), as explained in joint planning guidelines issued jointly by the Secretaries of Labor and Education.


(b) A State must submit its Unified State Plan to the Secretary of Labor pursuant to a process identified by the Secretary.


(1) The initial Unified State Plan must be submitted no later than 120 days prior to the commencement of the second full program year of WIOA.


(2) Subsequent Unified State Plans must be submitted no later than 120 days prior to the end of the 4-year period covered by a preceding Unified State Plan.


(3) For purposes of paragraph (b) of this section, “program year” means July 1 through June 30 of any year.


(c) The Unified State Plan must be developed with the assistance of the State WDB, as required by 20 CFR 679.130(a) and WIOA sec. 101(d), and must be developed in coordination with administrators with optimum policy-making authority for the core programs and required one-stop partners.


(d) The State must provide an opportunity for public comment on and input into the development of the Unified State Plan prior to its submission.


(1) The opportunity for public comment must include an opportunity for comment by representatives of Local WDBs and chief elected officials, businesses, representatives of labor organizations, community-based organizations, adult education providers, institutions of higher education, other stakeholders with an interest in the services provided by the six core programs, and the general public, including individuals with disabilities.


(2) Consistent with the “Sunshine Provision” of WIOA in sec. 101(g), the State WDB must make information regarding the Unified State Plan available to the public through electronic means and regularly occurring open meetings in accordance with State law. The Unified State Plan must describe the State’s process and timeline for ensuring a meaningful opportunity for public comment.


(e) Upon receipt of the Unified State Plan from the State, the Secretary of Labor will ensure that the entire Unified State Plan is submitted to the Secretary of Education pursuant to a process developed by the Secretaries.


(f) The Unified State Plan is subject to the approval of both the Secretary of Labor and the Secretary of Education.


(g) Before the Secretaries of Labor and Education approve the Unified State Plan, the vocational rehabilitation services portion of the Unified State Plan described in WIOA sec. 102(b)(2)(D)(iii) must be approved by the Commissioner of the Rehabilitation Services Administration.


(h) The Secretaries of Labor and Education will review and approve the Unified State Plan within 90 days of receipt by the Secretary of Labor, unless the Secretary of Labor or the Secretary of Education determines in writing within that period that:


(1) The plan is inconsistent with a core program’s requirements;


(2) The Unified State Plan is inconsistent with any requirement of sec. 102 of WIOA; or


(3) The plan is incomplete or otherwise insufficient to determine whether it is consistent with a core program’s requirements or other requirements of WIOA.


(i) If neither the Secretary of Labor nor the Secretary of Education makes the written determination described in paragraph (h) of this section within 90 days of the receipt by the Secretaries, the Unified State Plan will be considered approved.


§ 463.135 What are the requirements for modification of the Unified State Plan?

(a) In addition to the required modification review set forth in paragraph (b) of this section, a Governor may submit a modification of its Unified State Plan at any time during the 4-year period of the plan.


(b) Modifications are required, at a minimum:


(1) At the end of the first 2-year period of any 4-year State Plan, wherein the State WDB must review the Unified State Plan, and the Governor must submit modifications to the plan to reflect changes in labor market and economic conditions or other factors affecting the implementation of the Unified State Plan;


(2) When changes in Federal or State law or policy substantially affect the strategies, goals, and priorities upon which the Unified State Plan is based;


(3) When there are changes in the statewide vision, strategies, policies, State negotiated levels of performance as described in § 463.170(b), the methodology used to determine local allocation of funds, reorganizations that change the working relationship with system employees, changes in organizational responsibilities, changes to the membership structure of the State WDB or alternative entity, and similar substantial changes to the State’s workforce development system.


(c) Modifications to the Unified State Plan are subject to the same public review and comment requirements in § 463.130(d) that apply to the development of the original Unified State Plan.


(d) Unified State Plan modifications must be approved by the Secretaries of Labor and Education, based on the approval standards applicable to the original Unified State Plan under § 463.130. This approval must come after the approval of the Commissioner of the Rehabilitation Services Administration for modification of any portion of the plan described in sec. 102(b)(2)(D)(iii) of WIOA.


§ 463.140 What are the general requirements for submitting a Combined State Plan?

(a) A State may choose to develop and submit a 4-year Combined State Plan in lieu of the Unified State Plan described in §§ 463.105 through 463.125.


(b) A State that submits a Combined State Plan covering an activity or program described in paragraph (d) of this section that is, in accordance with WIOA sec. 103(c), approved or deemed complete under the law relating to the program will not be required to submit any other plan or application in order to receive Federal funds to carry out the core programs or the program or activities described under paragraph (d) of this section that are covered by the Combined State Plan.


(c) If a State develops a Combined State Plan, it must be submitted in accordance with the process described in § 463.143.


(d) If a State chooses to submit a Combined State Plan, the plan must include the six core programs and one or more of the Combined State Plan partner programs and activities described in sec. 103(a)(2) of WIOA. The Combined State Plan partner programs and activities that may be included in the Combined State Plan are:


(1) Career and technical education programs authorized under the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.);


(2) Temporary Assistance for Needy Families or TANF, authorized under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.);


(3) Employment and training programs authorized under sec. 6(d)(4) of the Food and Nutrition Act of 2008 (7 U.S.C. 2015(d)(4));


(4) Work programs authorized under sec. 6(o) of the Food and Nutrition Act of 2008 (7 U.S.C. 2015(o));


(5) Trade adjustment assistance activities under chapter 2 of title II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.);


(6) Services for veterans authorized under chapter 41 of title 38 United States Code;


(7) Programs authorized under State unemployment compensation laws (in accordance with applicable Federal law);


(8) Senior Community Service Employment Programs under title V of the Older Americans Act of 1965 (42 U.S.C. 3056 et seq.);


(9) Employment and training activities carried out by the Department of Housing and Urban Development (HUD);


(10) Employment and training activities carried out under the Community Services Block Grant Act (42 U.S.C. 9901 et seq.); and


(11) Reintegration of offenders programs authorized under sec. 212 of the Second Chance Act of 2007 (42 U.S.C. 17532).


(e) A Combined State Plan must contain:


(1) For the core programs, the information required by sec. 102(b) of WIOA and §§ 463.105 through 463.125, as explained in the joint planning guidelines issued by the Secretaries;


(2) For the Combined State Plan partner programs and activities, except as described in paragraph (h) of this section, the information required by the law authorizing and governing that program to be submitted to the appropriate Secretary, any other applicable legal requirements, and any common planning requirements described in sec. 102(b) of WIOA, as explained in the joint planning guidelines issued by the Secretaries;


(3) A description of the methods used for joint planning and coordination among the core programs, and with the required one-stop partner programs and other programs and activities included in the State Plan; and


(4) An assurance that all of the entities responsible for planning or administering the programs described in the Combined State Plan have had a meaningful opportunity to review and comment on all portions of the plan.


(f) Each Combined State Plan partner program included in the Combined State Plan remains subject to the applicable program-specific requirements of the Federal law and regulations, and any other applicable legal or program requirements, governing the implementation and operation of that program.


(g) For purposes of §§ 463.140 through 463.145 the term “appropriate Secretary” means the head of the Federal agency who exercises either plan or application approval authority for the program or activity under the Federal law authorizing the program or activity or, if there are no planning or application requirements, who exercises administrative authority over the program or activity under that Federal law.


(h) States that include employment and training activities carried out under the Community Services Block Grant (CSBG) Act (42 U.S.C. 9901 et seq.) under a Combined State Plan would submit all other required elements of a complete CSBG State Plan directly to the Federal agency that administers the program, according to the requirements of Federal law and regulations.


(i) States that submit employment and training activities carried out by HUD under a Combined State Plan would submit any other required planning documents for HUD programs directly to HUD, according to the requirements of Federal law and regulations.


§ 463.143 What is the development, submission, and approval process of the Combined State Plan?

(a) For purposes of § 463.140(a), if a State chooses to develop a Combined State Plan it must submit the Combined State Plan in accordance with the requirements described below and sec. 103 of WIOA, as explained in the joint planning guidelines issued by the Secretaries of Labor and Education.


(b) The Combined State Plan must be developed with the assistance of the State WDB, as required by 20 CFR 679.130(a) and WIOA sec. 101(d), and must be developed in coordination with administrators with optimum policy-making authority for the core programs and required one-stop partners.


(c) The State must provide an opportunity for public comment on and input into the development of the Combined State Plan prior to its submission.


(1) The opportunity for public comment for the portions of the Combined State Plan that cover the core programs must include an opportunity for comment by representatives of Local WDBs and chief elected officials, businesses, representatives of labor organizations, community-based organizations, adult education providers, institutions of higher education, other stakeholders with an interest in the services provided by the six core programs, and the general public, including individuals with disabilities.


(2) Consistent with the “Sunshine Provision” of WIOA in sec. 101(g), the State WDB must make information regarding the Combined State Plan available to the public through electronic means and regularly occurring open meetings in accordance with State law. The Combined State Plan must describe the State’s process and timeline for ensuring a meaningful opportunity for public comment on the portions of the plan covering core programs.


(3) The portions of the plan that cover the Combined State Plan partner programs are subject to any public comment requirements applicable to those programs.


(d) The State must submit to the Secretaries of Labor and Education and to the Secretary of the agency with responsibility for approving the program’s plan or deeming it complete under the law governing the program, as part of its Combined State Plan, any plan, application, form, or any other similar document that is required as a condition for the approval of Federal funding under the applicable program or activity. Such submission must occur in accordance with a process identified by the relevant Secretaries in paragraph (a) of this section.


(e) The Combined State Plan will be approved or disapproved in accordance with the requirements of sec. 103(c) of WIOA.


(1) The portion of the Combined State Plan covering programs administered by the Departments of Labor and Education must be reviewed, and approved or disapproved, by the appropriate Secretary within 90 days beginning on the day the Combined State Plan is received by the appropriate Secretary from the State, consistent with paragraph (f) of this section. Before the Secretaries of Labor and Education approve the Combined State Plan, the vocational rehabilitation services portion of the Combined State Plan described in WIOA sec. 102(b)(2)(D)(iii) must be approved by the Commissioner of the Rehabilitation Services Administration.


(2) If an appropriate Secretary other than the Secretary of Labor or the Secretary of Education has authority to approve or deem complete a portion of the Combined State Plan for a program or activity described in § 463.140(d), that portion of the Combined State Plan must be reviewed, and approved, disapproved, or deemed complete, by the appropriate Secretary within 120 days beginning on the day the Combined State Plan is received by the appropriate Secretary from the State consistent with paragraph (f) of this section.


(f) The appropriate Secretaries will review and approve or deem complete the Combined State Plan within 90 or 120 days, as appropriate, as described in paragraph (e) of this section, unless the Secretaries of Labor and Education or appropriate Secretary have determined in writing within that period that:


(1) The Combined State Plan is inconsistent with the requirements of the six core programs or the Federal laws authorizing or applicable to the program or activity involved, including the criteria for approval of a plan or application, or deeming the plan complete, if any, under such law;


(2) The portion of the Combined State Plan describing the six core programs or the program or activity described in paragraph (a) of this section involved does not satisfy the criteria as provided in sec. 102 or 103 of WIOA, as applicable; or


(3) The Combined State Plan is incomplete, or otherwise insufficient to determine whether it is consistent with a core program’s requirements, other requirements of WIOA, or the Federal laws authorizing, or applicable to, the program or activity described in § 463.140(d), including the criteria for approval of a plan or application, if any, under such law.


(g) If the Secretary of Labor, the Secretary of Education, or the appropriate Secretary does not make the written determination described in paragraph (f) of this section within the relevant period of time after submission of the Combined State Plan, that portion of the Combined State Plan over which the Secretary has jurisdiction will be considered approved.


(h) The Secretaries of Labor and Education’s written determination of approval or disapproval regarding the portion of the plan for the six core programs may be separate from the written determination of approval, disapproval, or completeness of the program-specific requirements of Combined State Plan partner programs and activities described in § 463.140(d) and included in the Combined State Plan.


(i) Special rule. In paragraphs (f)(1) and (3) of this section, the term “criteria for approval of a plan or application,” with respect to a State or a core program or a program under the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.), includes a requirement for agreement between the State and the appropriate Secretaries regarding State performance measures or State performance accountability measures, as the case may be, including levels of performance.


§ 463.145 What are the requirements for modifications of the Combined State Plan?

(a) For the core program portions of the Combined State Plan, modifications are required, at a minimum:


(1) By the end of the first 2-year period of any 4-year State Plan. The State WDB must review the Combined State Plan, and the Governor must submit modifications to the Combined State Plan to reflect changes in labor market and economic conditions or other factors affecting the implementation of the Combined State Plan;


(2) When changes in Federal or State law or policy substantially affect the strategies, goals, and priorities upon which the Combined State Plan is based;


(3) When there are changes in the statewide vision, strategies, policies, State negotiated levels of performance as described in § 463.170(b), the methodology used to determine local allocation of funds, reorganizations that change the working relationship with system employees, changes in organizational responsibilities, changes to the membership structure of the State WDB or alternative entity, and similar substantial changes to the State’s workforce development system.


(b) In addition to the required modification review described in paragraph (a)(1) of this section, a State may submit a modification of its Combined State Plan at any time during the 4-year period of the plan.


(c) For any Combined State Plan partner programs and activities described in § 463.140(d) that are included in a State’s Combined State Plan, the State –


(1) May decide if the modification requirements under WIOA sec. 102(c)(3) that apply to the core programs will apply to the Combined State Plan partner programs, as long as consistent with any other modification requirements for the programs, or may comply with the requirements applicable to only the particular program or activity; and


(2) Must submit, in accordance with the procedure described in § 463.143, any modification, amendment, or revision required by the Federal law authorizing, or applicable to, the Combined State Plan partner program or activity.


(i) If the underlying programmatic requirements change (e.g., the authorizing statute is reauthorized) for Federal laws authorizing such programs, a State must either modify its Combined State Plan or submit a separate plan to the appropriate Federal agency in accordance with the new Federal law authorizing the Combined State Plan partner program or activity and other legal requirements applicable to such program or activity.


(ii) If the modification, amendment, or revision affects the administration of only that particular Combined State Plan partner program and has no impact on the Combined State Plan as a whole or the integration and administration of the core and other Combined State Plan partner programs at the State level, modifications must be submitted for approval to only the appropriate Secretary, based on the approval standards applicable to the original Combined State Plan under § 463.143, if the State elects, or in accordance with the procedures and requirements applicable to the particular Combined State Plan partner program.


(3) A State also may amend its Combined State Plan to add a Combined State Plan partner program or activity described in § 463.140(d).


(d) Modifications of the Combined State Plan are subject to the same public review and comment requirements that apply to the development of the original Combined State Plan as described in § 463.143(c) except that, if the modification, amendment, or revision affects the administration of a particular Combined State Plan partner program and has no impact on the Combined State Plan as a whole or the integration and administration of the core and other Combined State Plan partner programs at the State level, a State may comply instead with the procedures and requirements applicable to the particular Combined State Plan partner program.


(e) Modifications for the core program portions of the Combined State Plan must be approved by the Secretaries of Labor and Education, based on the approval standards applicable to the original Combined State Plan under § 463.143. This approval must come after the approval of the Commissioner of the Rehabilitation Services Administration for modification of any portion of the Combined State Plan described in sec. 102(b)(2)(D)(iii) of WIOA.


Subpart I – Performance Accountability Under Title I of the Workforce Innovation and Opportunity Act


Authority:Secs. 116, 189, and 503 of Pub. L. 113-128, 128 Stat. 1425 (Jul. 22, 2014).



Source:81 FR 56051, Aug. 19, 2016, unless otherwise noted.

§ 463.150 What definitions apply to Workforce Innovation and Opportunity Act performance accountability provisions?

(a) Participant. A reportable individual who has received services other than the services described in paragraph (a)(3) of this section, after satisfying all applicable programmatic requirements for the provision of services, such as eligibility determination.


(1) For the Vocational Rehabilitation (VR) program, a participant is a reportable individual who has an approved and signed Individualized Plan for Employment (IPE) and has begun to receive services.


(2) For the Workforce Innovation and Opportunity Act (WIOA) title I youth program, a participant is a reportable individual who has satisfied all applicable program requirements for the provision of services, including eligibility determination, an objective assessment, and development of an individual service strategy, and received 1 of the 14 WIOA youth program elements identified in sec. 129(c)(2) of WIOA.


(3) The following individuals are not participants:


(i) Individuals in an Adult Education and Family Literacy Act (AEFLA) program who have not completed at least 12 contact hours;


(ii) Individuals who only use the self-service system.


(A) Subject to paragraph (a)(3)(ii)(B) of this section, self-service occurs when individuals independently access any workforce development system program’s information and activities in either a physical location, such as a one-stop center resource room or partner agency, or remotely via the use of electronic technologies.


(B) Self-service does not uniformly apply to all virtually accessed services. For example, virtually accessed services that provide a level of support beyond independent job or information seeking on the part of an individual would not qualify as self-service.


(iii) Individuals who receive information-only services or activities, which provide readily available information that does not require an assessment by a staff member of the individual’s skills, education, or career objectives.


(4) Programs must include participants in their performance calculations.


(b) Reportable individual. An individual who has taken action that demonstrates an intent to use program services and who meets specific reporting criteria of the program, including:


(1) Individuals who provide identifying information;


(2) Individuals who only use the self-service system; or


(3) Individuals who only receive information-only services or activities.


(c) Exit. As defined for the purpose of performance calculations, exit is the point after which a participant who has received services through any program meets the following criteria:


(1) For the adult, dislocated worker, and youth programs authorized under WIOA title I, the AEFLA program authorized under WIOA title II, and the Employment Service program authorized under the Wagner-Peyser Act, as amended by WIOA title III, exit date is the last date of service.


(i) The last day of service cannot be determined until at least 90 days have elapsed since the participant last received services; services do not include self-service, information-only services or activities, or follow-up services. This also requires that there are no plans to provide the participant with future services.


(ii) [Reserved].


(2)(i) For the VR program authorized under title I of the Rehabilitation Act of 1973, as amended by WIOA title IV (VR program):


(A) The participant’s record of service is closed in accordance with § 463.56 because the participant has achieved an employment outcome; or


(B) The participant’s service record is closed because the individual has not achieved an employment outcome or the individual has been determined ineligible after receiving services in accordance with § 463.43.


(ii) Notwithstanding any other provision of this section, a participant will not be considered as meeting the definition of exit from the VR program if the participant’s service record is closed because the participant has achieved a supported employment outcome in an integrated setting but not in competitive integrated employment.


(3)(i) A State may implement a common exit policy for all or some of the core programs in WIOA title I and the Employment Service program authorized under the Wagner-Peyser Act, as amended by WIOA title III, and any additional required partner program(s) listed in sec. 121(b)(1)(B) of WIOA that is under the authority of the U.S. Department of Labor (DOL).


(ii) If a State chooses to implement a common exit policy, the policy must require that a participant is exited only when all of the criteria in paragraph (c)(1) of this section are met for the WIOA title I core programs and the Employment Service program authorized under the Wagner-Peyser Act, as amended by WIOA title III, as well as any additional required partner programs listed in sec. 121(b)(1)(B) of WIOA under the authority of DOL to which the common exit policy applies in which the participant is enrolled.


(d) State. For purposes of this part, other than in regard to sanctions or the statistical adjustment model, all references to “State” include the outlying areas of American Samoa, Guam, Commonwealth of the Northern Mariana Islands, the U.S. Virgin Islands, and, as applicable, the Republic of Palau.


§ 463.155 What are the primary indicators of performance under the Workforce Innovation and Opportunity Act?

(a) All States submitting either a Unified or Combined State Plan under §§ 463.130 and 463.143, must propose expected levels of performance for each of the primary indicators of performance for the adult, dislocated worker, and youth programs authorized under WIOA title I; the AEFLA program authorized under WIOA title II; the Employment Service program authorized under the Wagner-Peyser Act, as amended by WIOA title III; and the VR program authorized under title I of the Rehabilitation Act of 1973, as amended by WIOA title IV.


(1) Primary indicators of performance. The six primary indicators of performance for the adult and dislocated worker programs, the AEFLA program, and the VR program are:


(i) The percentage of participants who are in unsubsidized employment during the second quarter after exit from the program;


(ii) The percentage of participants who are in unsubsidized employment during the fourth quarter after exit from the program;


(iii) Median earnings of participants who are in unsubsidized employment during the second quarter after exit from the program;


(iv)(A) The percentage of those participants enrolled in an education or training program (excluding those in on-the-job training [OJT] and customized training) who attained a recognized postsecondary credential or a secondary school diploma, or its recognized equivalent, during participation in or within 1 year after exit from the program.


(B) A participant who has attained a secondary school diploma or its recognized equivalent is included in the percentage of participants who have attained a secondary school diploma or recognized equivalent only if the participant also is employed or is enrolled in an education or training program leading to a recognized postsecondary credential within 1 year after exit from the program;


(v) The percentage of participants who, during a program year, are in an education or training program that leads to a recognized postsecondary credential or employment and who are achieving measurable skill gains, defined as documented academic, technical, occupational, or other forms of progress, towards such a credential or employment. Depending upon the type of education or training program, documented progress is defined as one of the following:


(A) Documented achievement of at least one educational functioning level of a participant who is receiving instruction below the postsecondary education level;


(B) Documented attainment of a secondary school diploma or its recognized equivalent;


(C) Secondary or postsecondary transcript or report card for a sufficient number of credit hours that shows a participant is meeting the State unit’s academic standards;


(D) Satisfactory or better progress report, towards established milestones, such as completion of OJT or completion of 1 year of an apprenticeship program or similar milestones, from an employer or training provider who is providing training; or


(E) Successful passage of an exam that is required for a particular occupation or progress in attaining technical or occupational skills as evidenced by trade-related benchmarks such as knowledge-based exams.


(vi) Effectiveness in serving employers.


(2) Participants. For purposes of the primary indicators of performance in paragraph (a)(1) of this section, “participant” will have the meaning given to it in § 463.150(a), except that –


(i) For purposes of determining program performance levels under indicators set forth in paragraphs (a)(1)(i) through (iv) and (vi) of this section, a “participant” does not include a participant who received services under sec. 225 of WIOA and exits such program while still in a correctional institution as defined in sec. 225(e)(1) of WIOA; and


(ii) The Secretaries of Labor and Education may, as needed and consistent with the Paperwork Reduction Act (PRA), make further determinations as to the participants to be included in calculating program performance levels for purposes of any of the performance indicators set forth in paragraph (a)(1) of this section.


(b) The primary indicators in paragraphs (a)(1)(i) through (iii) and (vi) of this section apply to the Employment Service program authorized under the Wagner-Peyser Act, as amended by WIOA title III.


(c) For the youth program authorized under WIOA title I, the primary indicators are:


(1) Percentage of participants who are in education or training activities, or in unsubsidized employment, during the second quarter after exit from the program;


(2) Percentage of participants in education or training activities, or in unsubsidized employment, during the fourth quarter after exit from the program;


(3) Median earnings of participants who are in unsubsidized employment during the second quarter after exit from the program;


(4) The percentage of those participants enrolled in an education or training program (excluding those in OJT and customized training) who obtained a recognized postsecondary credential or a secondary school diploma, or its recognized equivalent, during participation in or within 1 year after exit from the program, except that a participant who has attained a secondary school diploma or its recognized equivalent is included as having attained a secondary school diploma or recognized equivalent only if the participant is also employed or is enrolled in an education or training program leading to a recognized postsecondary credential within 1 year from program exit;


(5) The percentage of participants who during a program year, are in an education or training program that leads to a recognized postsecondary credential or employment and who are achieving measurable skill gains, defined as documented academic, technical, occupational or other forms of progress towards such a credential or employment. Depending upon the type of education or training program, documented progress is defined as one of the following:


(i) Documented achievement of at least one educational functioning level of a participant who is receiving instruction below the postsecondary education level;


(ii) Documented attainment of a secondary school diploma or its recognized equivalent;


(iii) Secondary or postsecondary transcript or report card for a sufficient number of credit hours that shows a participant is achieving the State unit’s academic standards;


(iv) Satisfactory or better progress report, towards established milestones, such as completion of OJT or completion of 1 year of an apprenticeship program or similar milestones, from an employer or training provider who is providing training; or


(v) Successful passage of an exam that is required for a particular occupation or progress in attaining technical or occupational skills as evidenced by trade-related benchmarks such as knowledge-based exams.


(6) Effectiveness in serving employers.


§ 463.160 What information is required for State performance reports?

(a) The State performance report required by sec. 116(d)(2) of WIOA must be submitted annually using a template the Departments of Labor and Education will disseminate, and must provide, at a minimum, information on the actual performance levels achieved consistent with § 463.175 with respect to:


(1) The total number of participants served, and the total number of participants who exited each of the core programs identified in sec. 116(b)(3)(A)(ii) of WIOA, including disaggregated counts of those who participated in and exited a core program, by:


(i) Individuals with barriers to employment as defined in WIOA sec. 3(24); and


(ii) Co-enrollment in any of the programs in WIOA sec. 116(b)(3)(A)(ii).


(2) Information on the performance levels achieved for the primary indicators of performance for all of the core programs identified in § 463.155 including disaggregated levels for:


(i) Individuals with barriers to employment as defined in WIOA sec. 3(24);


(ii) Age;


(iii) Sex; and


(iv) Race and ethnicity.


(3) The total number of participants who received career services and the total number of participants who exited from career services for the most recent program year and the 3 preceding program years, and the total number of participants who received training services and the total number of participants who exited from training services for the most recent program year and the 3 preceding program years, as applicable to the program;


(4) Information on the performance levels achieved for the primary indicators of performance consistent with § 463.155 for career services and training services for the most recent program year and the 3 preceding program years, as applicable to the program;


(5) The percentage of participants in a program who attained unsubsidized employment related to the training received (often referred to as training-related employment) through WIOA title I, subtitle B programs;


(6) The amount of funds spent on career services and the amount of funds spent on training services for the most recent program year and the 3 preceding program years, as applicable to the program;


(7) The average cost per participant for those participants who received career services and training services, respectively, during the most recent program year and the 3 preceding program years, as applicable to the program;


(8) The percentage of a State’s annual allotment under WIOA sec. 132(b) that the State spent on administrative costs; and


(9) Information that facilitates comparisons of programs with programs in other States.


(10) For WIOA title I programs, a State performance narrative, which, for States in which a local area is implementing a pay-for-performance contracting strategy, at a minimum provides:


(i) A description of pay-for-performance contract strategies being used for programs;


(ii) The performance of service providers entering into contracts for such strategies, measured against the levels of performance specified in the contracts for such strategies; and


(iii) An evaluation of the design of the programs and performance strategies and, when available, the satisfaction of employers and participants who received services under such strategies.


(b) The disaggregation of data for the State performance report must be done in compliance with WIOA sec. 116(d)(6)(C).


(c) The State performance reports must include a mechanism of electronic access to the State’s local area and eligible training provider (ETP) performance reports.


(d) States must comply with these requirements from sec. 116 of WIOA as explained in joint guidance issued by the Departments of Labor and Education, which may include information on reportable individuals as determined by the Secretaries of Labor and Education.


§ 463.165 May a State establish additional indicators of performance?

States may identify additional indicators of performance for the six core programs. If a State does so, these indicators must be included in the Unified or Combined State Plan.


§ 463.170 How are State levels of performance for primary indicators established?

(a) A State must submit in the State Plan expected levels of performance on the primary indicators of performance for each core program as required by sec. 116(b)(3)(A)(iii) of WIOA as explained in joint guidance issued by the Secretaries of Labor and Education.


(1) The initial State Plan submitted under WIOA must contain expected levels of performance for the first 2 years of the State Plan.


(2) States must submit expected levels of performance for the third and fourth year of the State Plan before the third program year consistent with §§ 463.135 and 463.145.


(b) States must reach agreement on levels of performance with the Secretaries of Labor and Education for each indicator for each core program. These are the negotiated levels of performance. The negotiated levels must be based on the following factors:


(1) How the negotiated levels of performance compare with State levels of performance established for other States;


(2) The application of an objective statistical model established by the Secretaries of Labor and Education, subject to paragraph (d) of this section;


(3) How the negotiated levels promote continuous improvement in performance based on the primary indicators and ensure optimal return on investment of Federal funds; and


(4) The extent to which the negotiated levels assist the State in meeting the performance goals established by the Secretaries of Labor and Education for the core programs in accordance with the Government Performance and Results Act of 1993, as amended.


(c) An objective statistical adjustment model will be developed and disseminated by the Secretaries of Labor and Education. The model will be based on:


(1) Differences among States in actual economic conditions, including but not limited to unemployment rates and job losses or gains in particular industries; and


(2) The characteristics of participants, including but not limited to:


(i) Indicators of poor work history;


(ii) Lack of work experience;


(iii) Lack of educational or occupational skills attainment;


(iv) Dislocation from high-wage and high-benefit employment;


(v) Low levels of literacy;


(vi) Low levels of English proficiency;


(vii) Disability status;


(viii) Homelessness;


(ix) Ex-offender status; and


(x) Welfare dependency.


(d) The objective statistical adjustment model developed under paragraph (c) of this section will be:


(1) Applied to the core programs’ primary indicators upon availability of data which are necessary to populate the model and apply the model to the local core programs;


(2) Subject to paragraph (d)(1) of this section, used before the beginning of a program year in order to reach agreement on State negotiated levels for the upcoming program year; and


(3) Subject to paragraph (d)(1) of this section, used to revise negotiated levels at the end of a program year based on actual economic conditions and characteristics of participants served, consistent with sec. 116(b)(3)(A)(vii) of WIOA.


(e) The negotiated levels revised at the end of the program year, based on the statistical adjustment model, are the adjusted levels of performance.


(f) States must comply with these requirements from sec. 116 of WIOA as explained in joint guidance issued by the Departments of Labor and Education.


§ 463.175 What responsibility do States have to use quarterly wage record information for performance accountability?

(a)(1) States must, consistent with State laws, use quarterly wage record information in measuring a State’s performance on the primary indicators of performance outlined in § 463.155 and a local area’s performance on the primary indicators of performance identified in § 463.205.


(2) The use of social security numbers from participants and such other information as is necessary to measure the progress of those participants through quarterly wage record information is authorized.


(3) To the extent that quarterly wage records are not available for a participant, States may use other information as is necessary to measure the progress of those participants through methods other than quarterly wage record information.


(b) “Quarterly wage record information” means intrastate and interstate wages paid to an individual, the social security number (or numbers, if more than one) of the individual, and the name, address, State, and the Federal employer identification number of the employer paying the wages to the individual.


(c) The Governor may designate a State agency (or appropriate State entity) to assist in carrying out the performance reporting requirements for WIOA core programs and ETPs. The Governor or such agency (or appropriate State entity) is responsible for:


(1) Facilitating data matches;


(2) Data quality reliability; and


(3) Protection against disaggregation that would violate applicable privacy standards.


§ 463.180 When is a State subject to a financial sanction under the Workforce Innovation and Opportunity Act?

A State will be subject to financial sanction under WIOA sec. 116(f) if it fails to:


(a) Submit the State annual performance report required under WIOA sec. 116(d)(2); or


(b) Meet adjusted levels of performance for the primary indicators of performance in accordance with sec. 116(f) of WIOA.


§ 463.185 When are sanctions applied for a State’s failure to submit an annual performance report?

(a) Sanctions will be applied when a State fails to submit the State annual performance report required under sec. 116(d)(2) of WIOA. A State fails to report if the State either:


(1) Does not submit a State annual performance report by the date for timely submission set in performance reporting guidance; or


(2) Submits a State annual performance report by the date for timely submission, but the report is incomplete.


(b) Sanctions will not be applied if the reporting failure is due to exceptional circumstances outside of the State’s control. Exceptional circumstances may include, but are not limited to:


(1) Natural disasters;


(2) Unexpected personnel transitions; and


(3) Unexpected technology related issues.


(c) In the event that a State may not be able to submit a complete and accurate performance report by the deadline for timely reporting:


(1) The State must notify the Secretary of Labor or Secretary of Education as soon as possible, but no later than 30 days prior to the established deadline for submission, of a potential impact on the State’s ability to submit its State annual performance report in order to not be considered failing to report.


(2) In circumstances where unexpected events occur less than 30 days before the established deadline for submission of the State annual performance reports, the Secretaries of Labor and Education will review requests for extending the reporting deadline in accordance with the Departments of Labor and Education’s procedures that will be established in guidance.


§ 463.190 When are sanctions applied for failure to achieve adjusted levels of performance?

(a) States’ negotiated levels of performance will be adjusted through the application of the statistical adjustment model established under § 463.170 to account for actual economic conditions experienced during a program year and characteristics of participants, annually at the close of each program year.


(b) Any State that fails to meet adjusted levels of performance for the primary indicators of performance outlined in § 463.155 for any year will receive technical assistance, including assistance in the development of a performance improvement plan provided by the Secretary of Labor or Secretary of Education.


(c) Whether a State has failed to meet adjusted levels of performance will be determined using the following three criteria:


(1) The overall State program score, which is expressed as the percent achieved, compares the actual results achieved by a core program on the primary indicators of performance to the adjusted levels of performance for that core program. The average of the percentages achieved of the adjusted level of performance for each of the primary indicators by a core program will constitute the overall State program score.


(2) However, until all indicators for the core program have at least 2 years of complete data, the overall State program score will be based on a comparison of the actual results achieved to the adjusted level of performance for each of the primary indicators that have at least 2 years of complete data for that program;


(3) The overall State indicator score, which is expressed as the percent achieved, compares the actual results achieved on a primary indicator of performance by all core programs in a State to the adjusted levels of performance for that primary indicator. The average of the percentages achieved of the adjusted level of performance by all of the core programs on that indicator will constitute the overall State indicator score.


(4) However, until all indicators for the State have at least 2 years of complete data, the overall State indicator score will be based on a comparison of the actual results achieved to the adjusted level of performance for each of the primary indicators that have at least 2 years of complete data in a State.


(5) The individual indicator score, which is expressed as the percent achieved, compares the actual results achieved by each core program on each of the individual primary indicators to the adjusted levels of performance for each of the program’s primary indicators of performance.


(d) A performance failure occurs when:


(1) Any overall State program score or overall State indicator score falls below 90 percent for the program year; or


(2) Any of the States’ individual indicator scores fall below 50 percent for the program year.


(e) Sanctions based on performance failure will be applied to States if, for 2 consecutive years, the State fails to meet:


(1) 90 percent of the overall State program score for the same core program;


(2) 90 percent of the overall State indicator score for the same primary indicator; or


(3) 50 percent of the same indicator score for the same program.


§ 463.195 What should States expect when a sanction is applied to the Governor’s Reserve Allotment?

(a) The Secretaries of Labor and Education will reduce the Governor’s Reserve Allotment by five percent of the maximum available amount for the immediately succeeding program year if:


(1) The State fails to submit the State annual performance reports as required under WIOA sec. 116(d)(2), as defined in § 463.185;


(2) The State fails to meet State adjusted levels of performance for the same primary performance indicator(s) under either § 463.190(d)(1) for the second consecutive year as defined in § 463.190; or


(3) The State’s score on the same indicator for the same program falls below 50 percent under § 463.190(d)(2) for the second consecutive year as defined in § 463.190.


(b) If the State fails under paragraphs (a)(1) and either (a)(2) or (3) of this section in the same program year, the Secretaries of Labor and Education will reduce the Governor’s Reserve Allotment by 10 percent of the maximum available amount for the immediately succeeding program year.


(c) If a State’s Governor’s Reserve Allotment is reduced:


(1) The reduced amount will not be returned to the State in the event that the State later improves performance or submits its annual performance report; and


(2) The Governor’s Reserve will continue to be set at the reduced level in each subsequent year until the Secretary of Labor or the Secretary of Education, depending on which program is impacted, determines that the State met the State adjusted levels of performance for the applicable primary performance indicators and has submitted all of the required performance reports.


(d) A State may request review of a sanction the Secretary of Labor imposes in accordance with the provisions of 20 CFR 683.800.


§ 463.200 What other administrative actions will be applied to States’ performance requirements?

(a) In addition to sanctions for failure to report or failure to meet adjusted levels of performance, States will be subject to administrative actions in the case of poor performance.


(b) States’ performance achievement on the individual primary indicators will be assessed in addition to the overall State program score and overall State indicator score. Based on this assessment, as clarified and explained in guidance, for performance on any individual primary indicator, the Secretary of Labor or the Secretary of Education will require the State to establish a performance risk plan to address continuous improvement on the individual primary indicator.


§ 463.205 What performance indicators apply to local areas and what information must be included in local area performance reports?

(a) Each local area in a State under WIOA title I is subject to the same primary indicators of performance for the core programs for WIOA title I under § 463.155(a)(1) and (c) that apply to the State.


(b) In addition to the indicators described in paragraph (a) of this section, under § 463.165, the Governor may apply additional indicators of performance to local areas in the State.


(c) States must annually make local area performance reports available to the public using a template that the Departments of Labor and Education will disseminate in guidance, including by electronic means. The State must provide electronic access to the public local area performance report in its annual State performance report.


(d) The local area performance report must include:


(1) The actual results achieved under § 463.155 and the information required under § 463.160(a);


(2) The percentage of a local area’s allotment under WIOA secs. 128(b) and 133(b) that the local area spent on administrative costs; and


(3) Other information that facilitates comparisons of programs with programs in other local areas (or planning regions if the local area is part of a planning region).


(e) The disaggregation of data for the local area performance report must be done in compliance with WIOA sec. 116(d)(6)(C).


(f) States must comply with any requirements from sec. 116(d)(3) of WIOA as explained in guidance, including the use of the performance reporting template, issued by DOL.


§ 463.210 How are local performance levels established?

(a) The objective statistical adjustment model required under sec. 116(b)(3)(A)(viii) of WIOA and described in § 463.170(c) must be:


(1) Applied to the core programs’ primary indicators upon availability of data which are necessary to populate the model and apply the model to the local core programs;


(2) Used in order to reach agreement on local negotiated levels of performance for the upcoming program year; and


(3) Used to establish adjusted levels of performance at the end of a program year based on actual conditions, consistent with WIOA sec. 116(c)(3).


(b) Until all indicators for the core program in a local area have at least 2 years of complete data, the comparison of the actual results achieved to the adjusted levels of performance for each of the primary indicators only will be applied where there are at least 2 years of complete data for that program.


(c) The Governor, Local Workforce Development Board (WDB), and chief elected official must reach agreement on local negotiated levels of performance based on a negotiations process before the start of a program year with the use of the objective statistical model described in paragraph (a) of this section. The negotiations will include a discussion of circumstances not accounted for in the model and will take into account the extent to which the levels promote continuous improvement. The objective statistical model will be applied at the end of the program year based on actual economic conditions and characteristics of the participants served.


(d) The negotiations process described in paragraph (c) of this section must be developed by the Governor and disseminated to all Local WDBs and chief elected officials.


(e) The Local WDBs may apply performance measures to service providers that differ from the performance indicators that apply to the local area. These performance measures must be established after considering:


(1) The established local negotiated levels;


(2) The services provided by each provider; and


(3) The populations the service providers are intended to serve.


§ 463.215 Under what circumstances are local areas eligible for State Incentive Grants?

(a) The Governor is not required to award local incentive funds, but is authorized to provide incentive grants to local areas for performance on the primary indicators of performance consistent with WIOA sec. 134(a)(3)(A)(xi).


(b) The Governor may use non-Federal funds to create incentives for the Local WDBs to implement pay-for-performance contract strategies for the delivery of training services described in WIOA sec. 134(c)(3) or activities described in WIOA sec. 129(c)(2) in the local areas served by the Local WDBs. Pay-for-performance contract strategies must be implemented in accordance with 20 CFR part 683, subpart E and § 463.160.


§ 463.220 Under what circumstances may a corrective action or sanction be applied to local areas for poor performance?

(a) If a local area fails to meet the adjusted levels of performance agreed to under § 463.210 for the primary indicators of performance in the adult, dislocated worker, and youth programs authorized under WIOA title I in any program year, technical assistance must be provided by the Governor or, upon the Governor’s request, by the Secretary of Labor.


(1) A State must establish the threshold for failure to meet adjusted levels of performance for a local area before coming to agreement on the negotiated levels of performance for the local area.


(i) A State must establish the adjusted level of performance for a local area, using the statistical adjustment model described in § 463.170(c).


(ii) At least 2 years of complete data on any indicator for any local core program are required in order to establish adjusted levels of performance for a local area.


(2) The technical assistance may include:


(i) Assistance in the development of a performance improvement plan;


(ii) The development of a modified local or regional plan; or


(iii) Other actions designed to assist the local area in improving performance.


(b) If a local area fails to meet the adjusted levels of performance agreed to under § 463.210 for the same primary indicators of performance for the same core program authorized under WIOA title I for a third consecutive program year, the Governor must take corrective actions. The corrective actions must include the development of a reorganization plan under which the Governor:


(1) Requires the appointment and certification of a new Local WDB, consistent with the criteria established under 20 CFR 679.350;


(2) Prohibits the use of eligible providers and one-stop partners that have been identified as achieving poor levels of performance; or


(3) Takes such other significant actions as the Governor determines are appropriate.


§ 463.225 Under what circumstances may local areas appeal a reorganization plan?

(a) The Local WDB and chief elected official for a local area that is subject to a reorganization plan under WIOA sec. 116(g)(2)(A) may appeal to the Governor to rescind or revise the reorganization plan not later than 30 days after receiving notice of the reorganization plan. The Governor must make a final decision within 30 days after receipt of the appeal.


(b) The Local WDB and chief elected official may appeal the final decision of the Governor to the Secretary of Labor not later than 30 days after receiving the decision from the Governor. Any appeal of the Governor’s final decision must be:


(1) Appealed jointly by the Local WDB and chief elected official to the Secretary of Labor under 20 CFR 683.650; and


(2) Must be submitted by certified mail, return receipt requested, to the Secretary of Labor, U.S. Department of Labor, 200 Constitution Ave. NW., Washington DC 20210, Attention: ASET. A copy of the appeal must be simultaneously provided to the Governor.


(c) Upon receipt of the joint appeal from the Local WDB and chief elected official, the Secretary of Labor must make a final decision within 30 days. In making this determination the Secretary of Labor may consider any comments submitted by the Governor in response to the appeals.


(d) The decision by the Governor on the appeal becomes effective at the time it is issued and remains effective unless the Secretary of Labor rescinds or revises the reorganization plan under WIOA sec. 116(g)(2)(C).


§ 463.230 What information is required for the eligible training provider performance reports?

(a) States are required to make available and publish annually using a template the Departments of Labor and Education will disseminate including through electronic means, the ETP performance reports for ETPs who provide services under sec. 122 of WIOA that are described in 20 CFR 680.400 through 680.530. These reports at a minimum must include, consistent with § 463.175 and with respect to each program of study that is eligible to receive funds under WIOA:


(1) The total number of participants as defined by § 463.150(a) who received training services under the adult and dislocated worker programs authorized under WIOA title I for the most recent year and the 3 preceding program years, including:


(i) The number of participants under the adult and dislocated worker programs disaggregated by barriers to employment;


(ii) The number of participants under the adult and dislocated worker programs disaggregated by race, ethnicity, sex, and age;


(iii) The number of participants under the adult and dislocated worker programs disaggregated by the type of training entity for the most recent program year and the 3 preceding program years;


(2) The total number of participants who exit a program of study or its equivalent, including disaggregate counts by the type of training entity during the most recent program year and the 3 preceding program years;


(3) The average cost-per-participant for participants who received training services for the most recent program year and the 3 preceding program years disaggregated by type of training entity;


(4) The total number of individuals exiting from the program of study (or the equivalent) with respect to all individuals engaging in the program of study (or the equivalent); and


(5) The levels of performance achieved for the primary indicators of performance identified in § 463.155(a)(1)(i) through (iv) with respect to all individuals engaging in a program of study (or the equivalent).


(b) Apprenticeship programs registered under the National Apprenticeship Act are not required to submit ETP performance information. If a registered apprenticeship program voluntarily submits performance information to a State, the State must include this information in the report.


(c) The State must provide a mechanism of electronic access to the public ETP performance report in its annual State performance report.


(d) States must comply with any requirements from sec. 116(d)(4) of WIOA as explained in guidance issued by DOL.


(e) The Governor may designate one or more State agencies such as a State Education Agency or other State Educational Authority to assist in overseeing ETP performance and facilitating the production and dissemination of ETP performance reports. These agencies may be the same agencies that are designated as responsible for administering the ETP list as provided under 20 CFR 680.500. The Governor or such agencies, or authorities, is responsible for:


(1) Facilitating data matches between ETP records and unemployment insurance (UI) wage data in order to produce the report;


(2) The creation and dissemination of the reports as described in paragraphs (a) through (d) of this section;


(3) Coordinating the dissemination of the performance reports with the ETP list and the information required to accompany the list, as provided in 20 CFR 680.500.


§ 463.235 What are the reporting requirements for individual records for core Workforce Innovation and Opportunity Act (WIOA) title I programs; the Wagner-Peyser Act Employment Service program, as amended by WIOA title III; and the Vocational Rehabilitation program authorized under title I of the Rehabilitation Act of 1973, as amended by WIOA title IV?

(a) On a quarterly basis, each State must submit to the Secretary of Labor or the Secretary of Education, as appropriate, individual records that include demographic information, information on services received, and information on resulting outcomes, as appropriate, for each reportable individual in either of the following programs administered by the Secretary of Labor or Secretary of Education: A WIOA title I core program; the Employment Service program authorized under the Wagner-Peyser Act, as amended by WIOA title III; or the VR program authorized under title I of the Rehabilitation Act of 1973, as amended by WIOA title IV.


(b) For individual records submitted to the Secretary of Labor, those records may be required to be integrated across all programs administered by the Secretary of Labor in one single file.


(c) States must comply with the requirements of sec. 116(d)(2) of WIOA as explained in guidance issued by the Departments of Labor and Education.


§ 463.240 What are the requirements for data validation of State annual performance reports?

(a) States must establish procedures, consistent with guidelines issued by the Secretary of Labor or the Secretary of Education, to ensure that they submit complete annual performance reports that contain information that is valid and reliable, as required by WIOA sec. 116(d)(5).


(b) If a State fails to meet standards in paragraph (a) of this section as determined by the Secretary of Labor or the Secretary of Education, the appropriate Secretary will provide technical assistance and may require the State to develop and implement corrective actions, which may require the State to provide training for its subrecipients.


(c) The Secretaries of Labor and Education will provide training and technical assistance to States in order to implement this section. States must comply with the requirements of sec. 116(d)(5) of WIOA as explained in guidance.


Subpart J – Description of the One-Stop Delivery System Under Title I of the Workforce Innovation and Opportunity Act


Authority:Secs. 503, 107, 121, 134, 189, Pub. L. 113-128, 128 Stat. 1425 (Jul. 22, 2014).



Source:81 FR 56057, Aug. 19, 2016, unless otherwise noted.

§ 463.300 What is the one-stop delivery system?

(a) The one-stop delivery system brings together workforce development, educational, and other human resource services in a seamless customer-focused service delivery network that enhances access to the programs’ services and improves long-term employment outcomes for individuals receiving assistance. One-stop partners administer separately funded programs as a set of integrated streamlined services to customers.


(b) Title I of the Workforce Innovation and Opportunity Act (WIOA) assigns responsibilities at the local, State, and Federal level to ensure the creation and maintenance of a one-stop delivery system that enhances the range and quality of education and workforce development services that employers and individual customers can access.


(c) The system must include at least one comprehensive physical center in each local area as described in § 463.305.


(d) The system may also have additional arrangements to supplement the comprehensive center. These arrangements include:


(1) An affiliated site or a network of affiliated sites, where one or more partners make programs, services, and activities available, as described in § 463.310;


(2) A network of eligible one-stop partners, as described in §§ 463.400 through 463.410, through which each partner provides one or more of the programs, services, and activities that are linked, physically or technologically, to an affiliated site or access point that assures customers are provided information on the availability of career services, as well as other program services and activities, regardless of where they initially enter the public workforce system in the local area; and


(3) Specialized centers that address specific needs, including those of dislocated workers, youth, or key industry sectors, or clusters.


(e) Required one-stop partner programs must provide access to programs, services, and activities through electronic means if applicable and practicable. This is in addition to providing access to services through the mandatory comprehensive physical one-stop center and any affiliated sites or specialized centers. The provision of programs and services by electronic methods such as Web sites, telephones, or other means must improve the efficiency, coordination, and quality of one-stop partner services. Electronic delivery must not replace access to such services at a comprehensive one-stop center or be a substitute to making services available at an affiliated site if the partner is participating in an affiliated site. Electronic delivery systems must be in compliance with the nondiscrimination and equal opportunity provisions of WIOA sec. 188 and its implementing regulations at 29 CFR part 38.


(f) The design of the local area’s one-stop delivery system must be described in the Memorandum of Understanding (MOU) executed with the one-stop partners, described in § 463.500.


§ 463.305 What is a comprehensive one-stop center and what must be provided there?

(a) A comprehensive one-stop center is a physical location where job seeker and employer customers can access the programs, services, and activities of all required one-stop partners. A comprehensive one-stop center must have at least one title I staff person physically present.


(b) The comprehensive one-stop center must provide:


(1) Career services, described in § 463.430;


(2) Access to training services described in 20 CFR 680.200;


(3) Access to any employment and training activities carried out under sec. 134(d) of WIOA;


(4) Access to programs and activities carried out by one-stop partners listed in §§ 463.400 through 463.410, including the Employment Service program authorized under the Wagner-Peyser Act, as amended by WIOA title III (Wagner-Peyser Act Employment Service program); and


(5) Workforce and labor market information.


(c) Customers must have access to these programs, services, and activities during regular business days at a comprehensive one-stop center. The Local Workforce Development Board (WDB) may establish other service hours at other times to accommodate the schedules of individuals who work on regular business days. The State WDB will evaluate the hours of access to service as part of the evaluation of effectiveness in the one-stop certification process described in § 463.800(b).


(d) “Access” to each partner program and its services means:


(1) Having a program staff member physically present at the one-stop center;


(2) Having a staff member from a different partner program physically present at the one-stop center appropriately trained to provide information to customers about the programs, services, and activities available through partner programs; or


(3) Making available a direct linkage through technology to program staff who can provide meaningful information or services.


(i) A “direct linkage” means providing direct connection at the one-stop center, within a reasonable time, by phone or through a real-time Web-based communication to a program staff member who can provide program information or services to the customer.


(ii) A “direct linkage” cannot exclusively be providing a phone number or computer Web site or providing information, pamphlets, or materials.


(e) All comprehensive one-stop centers must be physically and programmatically accessible to individuals with disabilities, as described in 29 CFR part 38, the implementing regulations of WIOA sec. 188.


§ 463.310 What is an affiliated site and what must be provided there?

(a) An affiliated site, or affiliate one-stop center, is a site that makes available to job seeker and employer customers one or more of the one-stop partners’ programs, services, and activities. An affiliated site does not need to provide access to every required one-stop partner program. The frequency of program staff’s physical presence in the affiliated site will be determined at the local level. Affiliated sites are access points in addition to the comprehensive one-stop center(s) in each local area. If used by local areas as a part of the service delivery strategy, affiliate sites must be implemented in a manner that supplements and enhances customer access to services.


(b) As described in § 463.315, Wagner-Peyser Act employment services cannot be a stand-alone affiliated site.


(c) States, in conjunction with the Local WDBs, must examine lease agreements and property holdings throughout the one-stop delivery system in order to use property in an efficient and effective way. Where necessary and appropriate, States and Local WDBs must take expeditious steps to align lease expiration dates with efforts to consolidate one-stop operations into service points where Wagner-Peyser Act employment services are colocated as soon as reasonably possible. These steps must be included in the State Plan.


(d) All affiliated sites must be physically and programmatically accessible to individuals with disabilities, as described in 29 CFR part 38, the implementing regulations of WIOA sec. 188.


§ 463.315 Can a stand-alone Wagner-Peyser Act Employment Service office be designated as an affiliated one-stop site?

(a) Separate stand-alone Wagner-Peyser Act Employment Service offices are not permitted under WIOA, as also described in 20 CFR 652.202.


(b) If Wagner-Peyser Act employment services are provided at an affiliated site, there must be at least one or more other partners in the affiliated site with a physical presence of combined staff more than 50 percent of the time the center is open. Additionally, the other partner must not be the partner administering local veterans’ employment representatives, disabled veterans’ outreach program specialists, or unemployment compensation programs. If Wagner-Peyser Act employment services and any of these 3 programs are provided at an affiliated site, an additional partner or partners must have a presence of combined staff in the center more than 50 percent of the time the center is open.


§ 463.320 Are there any requirements for networks of eligible one-stop partners or specialized centers?

Any network of one-stop partners or specialized centers, as described in § 463.300(d)(3), must be connected to the comprehensive one-stop center and any appropriate affiliate one-stop centers, for example, by having processes in place to make referrals to these centers and the partner programs located in them. Wagner-Peyser Act employment services cannot stand alone in a specialized center. Just as described in § 463.315 for an affiliated site, a specialized center must include other programs besides Wagner-Peyser Act employment services, local veterans’ employment representatives, disabled veterans’ outreach program specialists, and unemployment compensation.


§ 463.400 Who are the required one-stop partners?

(a) Section 121(b)(1)(B) of WIOA identifies the entities that are required partners in the local one-stop delivery systems.


(b) The required partners are the entities responsible for administering the following programs and activities in the local area:


(1) Programs authorized under title I of WIOA, including:


(i) Adults;


(ii) Dislocated workers;


(iii) Youth;


(iv) Job Corps;


(v) YouthBuild;


(vi) Native American programs; and


(vii) Migrant and seasonal farmworker programs;


(2) The Wagner-Peyser Act Employment Service program authorized under the Wagner-Peyser Act (29 U.S.C. 49 et seq.), as amended by WIOA title III;


(3) The Adult Education and Family Literacy Act (AEFLA) program authorized under title II of WIOA;


(4) The Vocational Rehabilitation (VR) program authorized under title I of the Rehabilitation Act of 1973 (29 U.S.C. 720 et seq.), as amended by WIOA title IV;


(5) The Senior Community Service Employment Program authorized under title V of the Older Americans Act of 1965 (42 U.S.C. 3056 et seq.);


(6) Career and technical education programs at the postsecondary level authorized under the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.);


(7) Trade Adjustment Assistance activities authorized under chapter 2 of title II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.);


(8) Jobs for Veterans State Grants programs authorized under chapter 41 of title 38, U.S.C.;


(9) Employment and training activities carried out under the Community Services Block Grant (42 U.S.C. 9901 et seq.);


(10) Employment and training activities carried out by the Department of Housing and Urban Development;


(11) Programs authorized under State unemployment compensation laws (in accordance with applicable Federal law);


(12) Programs authorized under sec. 212 of the Second Chance Act of 2007 (42 U.S.C. 17532); and


(13) Temporary Assistance for Needy Families (TANF) authorized under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.), unless exempted by the Governor under § 463.405(b).


§ 463.405 Is Temporary Assistance for Needy Families a required one-stop partner?

(a) Yes, TANF, authorized under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.), is a required partner.


(b) The Governor may determine that TANF will not be a required partner in the State, or within some specific local areas in the State. In this instance, the Governor must notify the Secretaries of the U.S. Departments of Labor and Health and Human Services in writing of this determination.


(c) In States, or local areas within a State, where the Governor has determined that TANF is not required to be a partner, local TANF programs may still work in collaboration or partnership with the local one-stop centers to deliver employment and training services to the TANF population unless inconsistent with the Governor’s direction.


§ 463.410 What other entities may serve as one-stop partners?

(a) Other entities that carry out a workforce development program, including Federal, State, or local programs and programs in the private sector, may serve as additional partners in the one-stop delivery system if the Local WDB and chief elected official(s) approve the entity’s participation.


(b) Additional partners may include, but are not limited to:


(1) Employment and training programs administered by the Social Security Administration, including the Ticket to Work and Self-Sufficiency Program established under sec. 1148 of the Social Security Act (42 U.S.C. 1320b-19);


(2) Employment and training programs carried out by the Small Business Administration;


(3) Supplemental Nutrition Assistance Program (SNAP) employment and training programs, authorized under secs. 6(d)(4) and 6(o) of the Food and Nutrition Act of 2008 (7 U.S.C. 2015(d)(4));


(4) Client Assistance Program authorized under sec. 112 of the Rehabilitation Act of 1973 (29 U.S.C. 732);


(5) Programs authorized under the National and Community Service Act of 1990 (42 U.S.C. 12501 et seq.); and


(6) Other appropriate Federal, State or local programs, including, but not limited to, employment, education, and training programs provided by public libraries or in the private sector.


§ 463.415 What entity serves as the one-stop partner for a particular program in the local area?

(a) The entity that carries out the program and activities listed in § 463.400 or § 463.410, and therefore serves as the one-stop partner, is the grant recipient, administrative entity, or organization responsible for administering the funds of the specified program in the local area. The term “entity” does not include the service providers that contract with, or are subrecipients of, the local administrative entity. For programs that do not include local administrative entities, the responsible State agency must be the partner. Specific entities for particular programs are identified in paragraphs (b) through (e) of this section. If a program or activity listed in § 463.400 is not carried out in a local area, the requirements relating to a required one-stop partner are not applicable to such program or activity in that local one-stop delivery system.


(b) For title II of WIOA, the entity or agency that carries out the program for the purposes of paragraph (a) of this section is the sole entity or agency in the State or outlying area responsible for administering or supervising policy for adult education and literacy activities in the State or outlying area. The State eligible entity or agency may delegate its responsibilities under paragraph (a) of this section to one or more eligible providers or consortium of eligible providers.


(c) For the VR program, authorized under title I of the Rehabilitation Act of 1973, as amended by WIOA title IV, the entity that carries out the program for the purposes of paragraph (a) of this section is the designated State agencies or designated State units specified under sec. 101(a)(2) of the Rehabilitation Act that is primarily concerned with vocational rehabilitation, or vocational and other rehabilitation, of individuals with disabilities.


(d) Under WIOA title I, the national programs, including Job Corps, the Native American program, YouthBuild, and Migrant and Seasonal Farmworker programs are required one-stop partners. The entity for the Native American program, YouthBuild, and Migrant and Seasonal Farmworker programs is the grantee of those respective programs. The entity for Job Corps is the Job Corps center.


(e) For the Carl D. Perkins Career and Technical Education Act of 2006, the entity that carries out the program for the purposes of paragraph (a) of this section is the eligible recipient or recipients at the postsecondary level, or a consortium of eligible recipients at the postsecondary level in the local area. The eligible recipient at the postsecondary level may also request assistance from the State eligible agency in completing its responsibilities under paragraph (a) of this section.


§ 463.420 What are the roles and responsibilities of the required one-stop partners?

Each required partner must:


(a) Provide access to its programs or activities through the one-stop delivery system, in addition to any other appropriate locations;


(b) Use a portion of funds made available to the partner’s program, to the extent consistent with the Federal law authorizing the partner’s program and with Federal cost principles in 2 CFR parts 200 and 3474 (requiring, among other things, that costs are allowable, reasonable, necessary, and allocable), to:


(1) Provide applicable career services; and


(2) Work collaboratively with the State and Local WDBs to establish and maintain the one-stop delivery system. This includes jointly funding the one-stop infrastructure through partner contributions that are based upon:


(i) A reasonable cost allocation methodology by which infrastructure costs are charged to each partner based on proportionate use and relative benefit received;


(ii) Federal cost principles; and


(iii) Any local administrative cost requirements in the Federal law authorizing the partner’s program. (This is further described in § 463.700.)


(c) Enter into an MOU with the Local WDB relating to the operation of the one-stop delivery system that meets the requirements of § 463.500(b);


(d) Participate in the operation of the one-stop delivery system consistent with the terms of the MOU, requirements of authorizing laws, the Federal cost principles, and all other applicable legal requirements; and


(e) Provide representation on the State and Local WDBs as required and participate in Board committees as needed.


§ 463.425 What are the applicable career services that must be provided through the one-stop delivery system by required one-stop partners?

(a) The applicable career services to be delivered by required one-stop partners are those services listed in § 463.430 that are authorized to be provided under each partner’s program.


(b) One-stop centers provide services to individual customers based on individual needs, including the seamless delivery of multiple services to individual customers. There is no required sequence of services.


§ 463.430 What are career services?

Career services, as identified in sec. 134(c)(2) of WIOA, consist of three types:


(a) Basic career services must be made available and, at a minimum, must include the following services, as consistent with allowable program activities and Federal cost principles:


(1) Determinations of whether the individual is eligible to receive assistance from the adult, dislocated worker, or youth programs;


(2) Outreach, intake (including worker profiling), and orientation to information and other services available through the one-stop delivery system. For the TANF program, States must provide individuals with the opportunity to initiate an application for TANF assistance and non-assistance benefits and services, which could be implemented through the provision of paper application forms or links to the application Web site;


(3) Initial assessment of skill levels including literacy, numeracy, and English language proficiency, as well as aptitudes, abilities (including skills gaps), and supportive services needs;


(4) Labor exchange services, including –


(i) Job search and placement assistance, and, when needed by an individual, career counseling, including –


(A) Provision of information on in-demand industry sectors and occupations (as defined in sec. 3(23) of WIOA); and


(B) Provision of information on nontraditional employment; and


(ii) Appropriate recruitment and other business services on behalf of employers, including information and referrals to specialized business services other than those traditionally offered through the one-stop delivery system;


(5) Provision of referrals to and coordination of activities with other programs and services, including programs and services within the one-stop delivery system and, when appropriate, other workforce development programs;


(6) Provision of workforce and labor market employment statistics information, including the provision of accurate information relating to local, regional, and national labor market areas, including –


(i) Job vacancy listings in labor market areas;


(ii) Information on job skills necessary to obtain the vacant jobs listed; and


(iii) Information relating to local occupations in demand and the earnings, skill requirements, and opportunities for advancement for those jobs;


(7) Provision of performance information and program cost information on eligible providers of education, training, and workforce services by program and type of providers;


(8) Provision of information, in usable and understandable formats and languages, about how the local area is performing on local performance accountability measures, as well as any additional performance information relating to the area’s one-stop delivery system;


(9) Provision of information, in usable and understandable formats and languages, relating to the availability of supportive services or assistance, and appropriate referrals to those services and assistance, including: Child care; child support; medical or child health assistance available through the State’s Medicaid program and Children’s Health Insurance Program; benefits under SNAP; assistance through the earned income tax credit; and assistance under a State program for TANF, and other supportive services and transportation provided through that program;


(10) Provision of information and meaningful assistance to individuals seeking assistance in filing a claim for unemployment compensation.


(i) “Meaningful assistance” means:


(A) Providing assistance on-site using staff who are well-trained in unemployment compensation claims filing and the rights and responsibilities of claimants; or


(B) Providing assistance by phone or via other technology, as long as the assistance is provided by trained and available staff and within a reasonable time.


(ii) The costs associated in providing this assistance may be paid for by the State’s unemployment insurance program, or the WIOA adult or dislocated worker programs, or some combination thereof.


(11) Assistance in establishing eligibility for programs of financial aid assistance for training and education programs not provided under WIOA.


(b) Individualized career services must be made available if determined to be appropriate in order for an individual to obtain or retain employment. These services include the following services, as consistent with program requirements and Federal cost principles:


(1) Comprehensive and specialized assessments of the skill levels and service needs of adults and dislocated workers, which may include –


(i) Diagnostic testing and use of other assessment tools; and


(ii) In-depth interviewing and evaluation to identify employment barriers and appropriate employment goals;


(2) Development of an individual employment plan, to identify the employment goals, appropriate achievement objectives, and appropriate combination of services for the participant to achieve his or her employment goals, including the list of, and information about, the eligible training providers (as described in 20 CFR 680.180);


(3) Group counseling;


(4) Individual counseling;


(5) Career planning;


(6) Short-term pre-vocational services including development of learning skills, communication skills, interviewing skills, punctuality, personal maintenance skills, and professional conduct services to prepare individuals for unsubsidized employment or training;


(7) Internships and work experiences that are linked to careers (as described in 20 CFR 680.170);


(8) Workforce preparation activities;


(9) Financial literacy services as described in sec. 129(b)(2)(D) of WIOA and 20 CFR 681.500;


(10) Out-of-area job search assistance and relocation assistance; and


(11) English language acquisition and integrated education and training programs.


(c) Follow-up services must be provided, as appropriate, including: Counseling regarding the workplace, for participants in adult or dislocated worker workforce investment activities who are placed in unsubsidized employment, for up to 12 months after the first day of employment.


(d) In addition to the requirements in paragraph (a)(2) of this section, TANF agencies must identify employment services and related support being provided by the TANF program (within the local area) that qualify as career services and ensure access to them via the local one-stop delivery system.


§ 463.435 What are the business services provided through the one-stop delivery system, and how are they provided?

(a) Certain career services must be made available to local employers, specifically labor exchange activities and labor market information described in § 463.430(a)(4)(ii) and (a)(6). Local areas must establish and develop relationships and networks with large and small employers and their intermediaries. Local areas also must develop, convene, or implement industry or sector partnerships.


(b) Customized business services may be provided to employers, employer associations, or other such organizations. These services are tailored for specific employers and may include:


(1) Customized screening and referral of qualified participants in training services to employers;


(2) Customized services to employers, employer associations, or other such organizations, on employment-related issues;


(3) Customized recruitment events and related services for employers including targeted job fairs;


(4) Human resource consultation services, including but not limited to assistance with:


(i) Writing/reviewing job descriptions and employee handbooks;


(ii) Developing performance evaluation and personnel policies;


(iii) Creating orientation sessions for new workers;


(iv) Honing job interview techniques for efficiency and compliance;


(v) Analyzing employee turnover;


(vi) Creating job accommodations and using assistive technologies; or


(vii) Explaining labor and employment laws to help employers comply with discrimination, wage/hour, and safety/health regulations;


(5) Customized labor market information for specific employers, sectors, industries or clusters; and


(6) Other similar customized services.


(c) Local areas may also provide other business services and strategies that meet the workforce investment needs of area employers, in accordance with partner programs’ statutory requirements and consistent with Federal cost principles. These business services may be provided through effective business intermediaries working in conjunction with the Local WDB, or through the use of economic development, philanthropic, and other public and private resources in a manner determined appropriate by the Local WDB and in cooperation with the State. Allowable activities, consistent with each partner’s authorized activities, include, but are not limited to:


(1) Developing and implementing industry sector strategies (including strategies involving industry partnerships, regional skills alliances, industry skill panels, and sectoral skills partnerships);


(2) Customized assistance or referral for assistance in the development of a registered apprenticeship program;


(3) Developing and delivering innovative workforce investment services and strategies for area employers, which may include career pathways, skills upgrading, skill standard development and certification for recognized postsecondary credential or other employer use, and other effective initiatives for meeting the workforce investment needs of area employers and workers;


(4) Assistance to area employers in managing reductions in force in coordination with rapid response activities and with strategies for the aversion of layoffs, which may include strategies such as early identification of firms at risk of layoffs, use of feasibility studies to assess the needs of and options for at-risk firms, and the delivery of employment and training activities to address risk factors;


(5) The marketing of business services to appropriate area employers, including small and mid-sized employers; and


(6) Assisting employers with accessing local, State, and Federal tax credits.


(d) All business services and strategies must be reflected in the local plan, described in 20 CFR 679.560(b)(3).


§ 463.440 When may a fee be charged for the business services in this subpart?

(a) There is no requirement that a fee-for-service be charged to employers.


(b) No fee may be charged for services provided in § 463.435(a).


(c) A fee may be charged for services provided under § 463.435(b) and (c). Services provided under § 463.435(c) may be provided through effective business intermediaries working in conjunction with the Local WDB and may also be provided on a fee-for-service basis or through the leveraging of economic development, philanthropic, and other public and private resources in a manner determined appropriate by the Local WDB. The Local WDB may examine the services provided compared with the assets and resources available within the local one-stop delivery system and through its partners to determine an appropriate cost structure for services, if any.


(d) Any fees earned are recognized as program income and must be expended by the partner in accordance with the partner program’s authorizing statute, implementing regulations, and Federal cost principles identified in Uniform Guidance.


§ 463.500 What is the Memorandum of Understanding for the one-stop delivery system and what must be included in the Memorandum of Understanding?

(a) The MOU is the product of local discussion and negotiation, and is an agreement developed and executed between the Local WDB and the one-stop partners, with the agreement of the chief elected official and the one-stop partners, relating to the operation of the one-stop delivery system in the local area. Two or more local areas in a region may develop a single joint MOU, if they are in a region that has submitted a regional plan under sec. 106 of WIOA.


(b) The MOU must include:


(1) A description of services to be provided through the one-stop delivery system, including the manner in which the services will be coordinated and delivered through the system;


(2) Agreement on funding the costs of the services and the operating costs of the system, including:


(i) Funding of infrastructure costs of one-stop centers in accordance with §§ 463.700 through 463.755; and


(ii) Funding of the shared services and operating costs of the one-stop delivery system described in § 463.760;


(3) Methods for referring individuals between the one-stop operators and partners for appropriate services and activities;


(4) Methods to ensure that the needs of workers, youth, and individuals with barriers to employment, including individuals with disabilities, are addressed in providing access to services, including access to technology and materials that are available through the one-stop delivery system;


(5) The duration of the MOU and procedures for amending it; and


(6) Assurances that each MOU will be reviewed, and if substantial changes have occurred, renewed, not less than once every 3-year period to ensure appropriate funding and delivery of services.


(c) The MOU may contain any other provisions agreed to by the parties that are consistent with WIOA title I, the authorizing statutes and regulations of one-stop partner programs, and the WIOA regulations.


(d) When fully executed, the MOU must contain the signatures of the Local WDB, one-stop partners, the chief elected official(s), and the time period in which the agreement is effective. The MOU must be updated not less than every 3 years to reflect any changes in the signatory official of the Board, one-stop partners, and chief elected officials, or one-stop infrastructure funding.


(e) If a one-stop partner appeal to the State regarding infrastructure costs, using the process described in § 463.750, results in a change to the one-stop partner’s infrastructure cost contributions, the MOU must be updated to reflect the final one-stop partner infrastructure cost contributions.


§ 463.505 Is there a single Memorandum of Understanding for the local area, or must there be different Memoranda of Understanding between the Local Workforce Development Board and each partner?

(a) A single “umbrella” MOU may be developed that addresses the issues relating to the local one-stop delivery system for the Local WDB, chief elected official and all partners. Alternatively, the Local WDB (with agreement of chief elected official) may enter into separate agreements between each partner or groups of partners.


(b) Under either approach, the requirements described in § 463.500 apply. Since funds are generally appropriated annually, the Local WDB may negotiate financial agreements with each partner annually to update funding of services and operating costs of the system under the MOU.


§ 463.510 How must the Memorandum of Understanding be negotiated?

(a) WIOA emphasizes full and effective partnerships between Local WDBs, chief elected officials, and one-stop partners. Local WDBs and partners must enter into good-faith negotiations. Local WDBs, chief elected officials, and one-stop partners may also request assistance from a State agency responsible for administering the partner program, the Governor, State WDB, or other appropriate parties on other aspects of the MOU.


(b) Local WDBs and one-stop partners must establish, in the MOU, how they will fund the infrastructure costs and other shared costs of the one-stop centers. If agreement regarding infrastructure costs is not reached when other sections of the MOU are ready, an interim infrastructure funding agreement may be included instead, as described in § 463.715(c). Once agreement on infrastructure funding is reached, the Local WDB and one-stop partners must amend the MOU to include the infrastructure funding of the one-stop centers. Infrastructure funding is described in detail in §§ 463.700 through 463.760.


(c) The Local WDB must report to the State WDB, Governor, and relevant State agency when MOU negotiations with one-stop partners have reached an impasse.


(1) The Local WDB and partners must document the negotiations and efforts that have taken place in the MOU. The State WDB, one-stop partner programs, and the Governor may consult with the appropriate Federal agencies to address impasse situations related to issues other than infrastructure funding after attempting to address the impasse. Impasses related to infrastructure cost funding must be resolved using the State infrastructure cost funding mechanism described in § 463.730.


(2) The Local WDB must report failure to execute an MOU with a required partner to the Governor, State WDB, and the State agency responsible for administering the partner’s program. Additionally, if the State cannot assist the Local WDB in resolving the impasse, the Governor or the State WDB must report the failure to the Secretary of Labor and to the head of any other Federal agency with responsibility for oversight of a partner’s program.


§ 463.600 Who may operate one-stop centers?

(a) One-stop operators may be a single entity (public, private, or nonprofit) or a consortium of entities. If the consortium of entities is one of one-stop partners, it must include a minimum of three of the one-stop partners described in § 463.400.


(b) The one-stop operator may operate one or more one-stop centers. There may be more than one one-stop operator in a local area.


(c) The types of entities that may be a one-stop operator include:


(1) An institution of higher education;


(2) An Employment Service State agency established under the Wagner-Peyser Act;


(3) A community-based organization, nonprofit organization, or workforce intermediary;


(4) A private for-profit entity;


(5) A government agency;


(6) A Local WDB, with the approval of the chief elected official and the Governor; or


(7) Another interested organization or entity, which is capable of carrying out the duties of the one-stop operator. Examples may include a local chamber of commerce or other business organization, or a labor organization.


(d) Elementary schools and secondary schools are not eligible as one-stop operators, except that a nontraditional public secondary school such as a night school, adult school, or an area career and technical education school may be selected.


(e) The State and Local WDBs must ensure that, in carrying out WIOA programs and activities, one-stop operators:


(1) Disclose any potential conflicts of interest arising from the relationships of the operators with particular training service providers or other service providers (further discussed in 20 CFR 679.430);


(2) Do not establish practices that create disincentives to providing services to individuals with barriers to employment who may require longer-term career and training services; and


(3) Comply with Federal regulations and procurement policies relating to the calculation and use of profits, including those at 20 CFR 683.295, the Uniform Guidance at 2 CFR part 200, and other applicable regulations and policies.


§ 463.605 How is the one-stop operator selected?

(a) Consistent with paragraphs (b) and (c) of this section, the Local WDB must select the one-stop operator through a competitive process, as required by sec. 121(d)(2)(A) of WIOA, at least once every 4 years. A State may require, or a Local WDB may choose to implement, a competitive selection process more than once every 4 years.


(b) In instances in which a State is conducting the competitive process described in paragraph (a) of this section, the State must follow the same policies and procedures it uses for procurement with non-Federal funds.


(c) All other non-Federal entities, including subrecipients of a State (such as local areas), must use a competitive process based on local procurement policies and procedures and the principles of competitive procurement in the Uniform Guidance set out at 2 CFR 200.318 through 200.326. All references to “noncompetitive proposals” in the Uniform Guidance at 2 CFR 200.320(f) will be read as “sole source procurement” for the purposes of implementing this section.


(d) Entities must prepare written documentation explaining the determination concerning the nature of the competitive process to be followed in selecting a one-stop operator.


§ 463.610 When is the sole-source selection of one-stop operators appropriate, and how is it conducted?

(a) States may select a one-stop operator through sole source selection when allowed under the same policies and procedures used for competitive procurement with non-Federal funds, while other non-Federal entities including subrecipients of a State (such as local areas) may select a one-stop operator through sole selection when consistent with local procurement policies and procedures and the Uniform Guidance set out at 2 CFR 200.320.


(b) In the event that sole source procurement is determined necessary and reasonable, in accordance with § 463.605(c), written documentation must be prepared and maintained concerning the entire process of making such a selection.


(c) Such sole source procurement must include appropriate conflict of interest policies and procedures. These policies and procedures must conform to the specifications in 20 CFR 679.430 for demonstrating internal controls and preventing conflict of interest.


(d) A Local WDB may be selected as a one-stop operator through sole source procurement only with agreement of the chief elected official in the local area and the Governor. The Local WDB must establish sufficient conflict of interest policies and procedures and these policies and procedures must be approved by the Governor.


§ 463.615 May an entity currently serving as one-stop operator compete to be a one-stop operator under the procurement requirements of this subpart?

(a) Local WDBs may compete for and be selected as one-stop operators, as long as appropriate firewalls and conflict of interest policies and procedures are in place. These policies and procedures must conform to the specifications in 20 CFR 679.430 for demonstrating internal controls and preventing conflict of interest.


(b) State and local agencies may compete for and be selected as one-stop operators by the Local WDB, as long as appropriate firewalls and conflict of interest policies and procedures are in place. These policies and procedures must conform to the specifications in 20 CFR 679.430 for demonstrating internal controls and preventing conflict of interest.


(c) In the case of single-area States where the State WDB serves as the Local WDB, the State agency is eligible to compete for and be selected as operator as long as appropriate firewalls and conflict of interest policies are in place and followed for the competition. These policies and procedures must conform to the specifications in 20 CFR 679.430 for demonstrating internal controls and preventing conflicts of interest.


§ 463.620 What is the one-stop operator’s role?

(a) At a minimum, the one-stop operator must coordinate the service delivery of required one-stop partners and service providers. Local WDBs may establish additional roles of one-stop operator, including, but not limited to: Coordinating service providers across the one-stop delivery system, being the primary provider of services within the center, providing some of the services within the center, or coordinating service delivery in a multi-center area, which may include affiliated sites. The competition for a one-stop operator must clearly articulate the role of the one-stop operator.


(b)(1) Subject to paragraph (b)(2) of this section, a one-stop operator may not perform the following functions: Convene system stakeholders to assist in the development of the local plan; prepare and submit local plans (as required under sec. 107 of WIOA); be responsible for oversight of itself; manage or significantly participate in the competitive selection process for one-stop operators; select or terminate one-stop operators, career services, and youth providers; negotiate local performance accountability measures; or develop and submit budget for activities of the Local WDB in the local area.


(2) An entity serving as a one-stop operator, that also serves a different role within the one-stop delivery system, may perform some or all of these functions when it is acting in its other role, if it has established sufficient firewalls and conflict of interest policies and procedures. The policies and procedures must conform to the specifications in 20 CFR 679.430 for demonstrating internal controls and preventing conflict of interest.


§ 463.625 Can a one-stop operator also be a service provider?

Yes, but there must be appropriate firewalls in place in regards to the competition, and subsequent oversight, monitoring, and evaluation of performance of the service provider. The operator cannot develop, manage, or conduct the competition of a service provider in which it intends to compete. In cases where an operator is also a service provider, there must be firewalls and internal controls within the operator-service provider entity, as well as specific policies and procedures at the Local WDB level regarding oversight, monitoring, and evaluation of performance of the service provider. The firewalls must conform to the specifications in 20 CFR 679.430 for demonstrating internal controls and preventing conflicts of interest.


§ 463.630 Can State merit staff still work in a one-stop center where the operator is not a governmental entity?

Yes. State merit staff can continue to perform functions and activities in the one-stop center. The Local WDB and one-stop operator must establish a system for management of merit staff in accordance with State policies and procedures. Continued use of State merit staff for the provision of Wagner-Peyser Act services or services from other programs with merit staffing requirements must be included in the competition for and final contract with the one-stop operator when Wagner-Peyser Act services or services from other programs with merit staffing requirements are being provided.


§ 463.635 What is the compliance date of the provisions of this subpart?

(a) No later than July 1, 2017, one-stop operators selected under the competitive process described in this subpart must be in place and operating the one-stop center.


(b) By November 17, 2016, every Local WDB must demonstrate it is taking steps to prepare for competition of its one-stop operator. This demonstration may include, but is not limited to, market research, requests for information, and conducting a cost and price analysis.


§ 463.700 What are the one-stop infrastructure costs?

(a) Infrastructure costs of one-stop centers are nonpersonnel costs that are necessary for the general operation of the one-stop center, including:


(1) Rental of the facilities;


(2) Utilities and maintenance;


(3) Equipment (including assessment-related products and assistive technology for individuals with disabilities); and


(4) Technology to facilitate access to the one-stop center, including technology used for the center’s planning and outreach activities.


(b) Local WDBs may consider common identifier costs as costs of one-stop infrastructure.


(c) Each entity that carries out a program or activities in a local one-stop center, described in §§ 463.400 through 463.410, must use a portion of the funds available for the program and activities to maintain the one-stop delivery system, including payment of the infrastructure costs of one-stop centers. These payments must be in accordance with this subpart; Federal cost principles, which require that all costs must be allowable, reasonable, necessary, and allocable to the program; and all other applicable legal requirements.


§ 463.705 What guidance must the Governor issue regarding one-stop infrastructure funding?

(a) The Governor, after consultation with chief elected officials, the State WDB, and Local WDBs, and consistent with guidance and policies provided by the State WDB, must develop and issue guidance for use by local areas, specifically:


(1) Guidelines for State-administered one-stop partner programs for determining such programs’ contributions to a one-stop delivery system, based on such programs’ proportionate use of such system, and relative benefit received, consistent with Office of Management and Budget (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards in 2 CFR part 200, including determining funding for the costs of infrastructure; and


(2) Guidance to assist Local WDBs, chief elected officials, and one-stop partners in local areas in determining equitable and stable methods of funding the costs of infrastructure at one-stop centers based on proportionate use and relative benefit received, and consistent with Federal cost principles contained in the Uniform Guidance at 2 CFR part 200.


(b) The guidance must include:


(1) The appropriate roles of the one-stop partner programs in identifying one-stop infrastructure costs;


(2) Approaches to facilitate equitable and efficient cost allocation that results in a reasonable cost allocation methodology where infrastructure costs are charged to each partner based on its proportionate use of the one-stop centers and relative benefit received, consistent with Federal cost principles at 2 CFR part 200; and


(3) The timelines regarding notification to the Governor for not reaching local agreement and triggering the State funding mechanism described in § 463.730, and timelines for a one-stop partner to submit an appeal in the State funding mechanism.


§ 463.710 How are infrastructure costs funded?

Infrastructure costs are funded either through the local funding mechanism described in § 463.715 or through the State funding mechanism described in § 463.730.


§ 463.715 How are one-stop infrastructure costs funded in the local funding mechanism?

(a) In the local funding mechanism, the Local WDB, chief elected officials, and one-stop partners agree to amounts and methods of calculating amounts each partner will contribute for one-stop infrastructure funding, include the infrastructure funding terms in the MOU, and sign the MOU. The local funding mechanism must meet all of the following requirements:


(1) The infrastructure costs are funded through cash and fairly evaluated non-cash and third-party in-kind partner contributions and include any funding from philanthropic organizations or other private entities, or through other alternative financing options, to provide a stable and equitable funding stream for ongoing one-stop delivery system operations;


(2) Contributions must be negotiated between one-stop partners, chief elected officials, and the Local WDB and the amount to be contributed must be included in the MOU;


(3) The one-stop partner program’s proportionate share of funding must be calculated in accordance with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards in 2 CFR part 200 based upon a reasonable cost allocation methodology whereby infrastructure costs are charged to each partner in proportion to its use of the one-stop center, relative to benefits received. Such costs must also be allowable, reasonable, necessary, and allocable;


(4) Partner shares must be periodically reviewed and reconciled against actual costs incurred, and adjusted to ensure that actual costs charged to any one-stop partners are proportionate to the use of the one-stop center and relative to the benefit received by the one-stop partners and their respective programs or activities.


(b) In developing the section of the MOU on one-stop infrastructure funding described in § 463.755, the Local WDB and chief elected officials will:


(1) Ensure that the one-stop partners adhere to the guidance identified in § 463.705 on one-stop delivery system infrastructure costs.


(2) Work with one-stop partners to achieve consensus and informally mediate any possible conflicts or disagreements among one-stop partners.


(3) Provide technical assistance to new one-stop partners and local grant recipients to ensure that those entities are informed and knowledgeable of the elements contained in the MOU and the one-stop infrastructure costs arrangement.


(c) The MOU may include an interim infrastructure funding agreement, including as much detail as the Local WDB has negotiated with one-stop partners, if all other parts of the MOU have been negotiated, in order to allow the partner programs to operate in the one-stop centers. The interim infrastructure funding agreement must be finalized within 6 months of when the MOU is signed. If the interim infrastructure funding agreement is not finalized within that timeframe, the Local WDB must notify the Governor, as described in § 463.725.


§ 463.720 What funds are used to pay for infrastructure costs in the local one-stop infrastructure funding mechanism?

(a) In the local funding mechanism, one-stop partner programs may determine what funds they will use to pay for infrastructure costs. The use of these funds must be in accordance with the requirements in this subpart, and with the relevant partner’s authorizing statutes and regulations, including, for example, prohibitions against supplanting non-Federal resources, statutory limitations on administrative costs, and all other applicable legal requirements. In the case of partners administering programs authorized by title I of WIOA, these infrastructure costs may be considered program costs. In the case of partners administering adult education and literacy programs authorized by title II of WIOA, these funds must include Federal funds made available for the local administration of adult education and literacy programs authorized by title II of WIOA. These funds may also include non-Federal resources that are cash, in-kind or third-party contributions. In the case of partners administering the Carl D. Perkins Career and Technical Education Act of 2006, funds used to pay for infrastructure costs may include funds available for local administrative expenses, non-Federal resources that are cash, in-kind or third-party contributions, and may include other funds made available by the State.


(b) There are no specific caps on the amount or percent of overall funding a one-stop partner may contribute to fund infrastructure costs under the local funding mechanism, except that contributions for administrative costs may not exceed the amount available for administrative costs under the authorizing statute of the partner program. However, amounts contributed for infrastructure costs must be allowable and based on proportionate use of the one-stop centers and relative benefit received by the partner program, taking into account the total cost of the one-stop infrastructure as well as alternate financing options, and must be consistent with 2 CFR part 200, including the Federal cost principles.


(c) Cash, non-cash, and third-party in-kind contributions may be provided by one-stop partners to cover their proportionate share of infrastructure costs.


(1) Cash contributions are cash funds provided to the Local WDB or its designee by one-stop partners, either directly or by an interagency transfer.


(2) Non-cash contributions are comprised of –


(i) Expenditures incurred by one-stop partners on behalf of the one-stop center; and


(ii) Non-cash contributions or goods or services contributed by a partner program and used by the one-stop center.


(3) Non-cash contributions, especially those set forth in paragraph (c)(2)(ii) of this section, must be valued consistent with 2 CFR 200.306 to ensure they are fairly evaluated and meet the partners’ proportionate share.


(4) Third-party in-kind contributions are:


(i) Contributions of space, equipment, technology, non-personnel services, or other like items to support the infrastructure costs associated with one-stop operations, by a non-one-stop partner to support the one-stop center in general, not a specific partner; or


(ii) Contributions by a non-one-stop partner of space, equipment, technology, non-personnel services, or other like items to support the infrastructure costs associated with one-stop operations, to a one-stop partner to support its proportionate share of one-stop infrastructure costs.


(iii) In-kind contributions described in paragraphs (c)(4)(i) and (ii) of this section must be valued consistent with 2 CFR 200.306 and reconciled on a regular basis to ensure they are fairly evaluated and meet the proportionate share of the partner.


(5) All partner contributions, regardless of the type, must be reconciled on a regular basis (i.e., monthly or quarterly), comparing actual expenses incurred to relative benefits received, to ensure each partner program is contributing its proportionate share in accordance with the terms of the MOU.


§ 463.725 What happens if consensus on infrastructure funding is not reached at the local level between the Local Workforce Development Board, chief elected officials, and one-stop partners?

With regard to negotiations for infrastructure funding for Program Year (PY) 2017 and for each subsequent program year thereafter, if the Local WDB, chief elected officials, and one-stop partners do not reach consensus on methods of sufficiently funding local infrastructure through the local funding mechanism in accordance with the Governor’s guidance issued under § 463.705 and consistent with the regulations in §§ 463.715 and 463.720, and include that consensus agreement in the signed MOU, then the Local WDB must notify the Governor by the deadline established by the Governor under § 463.705(b)(3). Once notified, the Governor must administer funding through the State funding mechanism, as described in §§ 463.730 through 463.738, for the program year impacted by the local area’s failure to reach consensus.


§ 463.730 What is the State one-stop infrastructure funding mechanism?

(a) Consistent with sec. 121(h)(1)(A)(i)(II) of WIOA, if the Local WDB, chief elected official, and one-stop partners in a local area do not reach consensus agreement on methods of sufficiently funding the costs of infrastructure of one-stop centers for a program year, the State funding mechanism is applicable to the local area for that program year.


(b) In the State funding mechanism, the Governor, subject to the limitations in paragraph (c) of this section, determines one-stop partner contributions after consultation with the chief elected officials, Local WDBs, and the State WDB. This determination involves:


(1) The application of a budget for one-stop infrastructure costs as described in § 463.735, based on either agreement reached in the local area negotiations or the State WDB formula outlined in § 463.745;


(2) The determination of each local one-stop partner program’s proportionate use of the one-stop delivery system and relative benefit received, consistent with the Uniform Guidance at 2 CFR part 200, including the Federal cost principles, the partner programs’ authorizing laws and regulations, and other applicable legal requirements described in § 463.736; and


(3) The calculation of required statewide program caps on contributions to infrastructure costs from one-stop partner programs in areas operating under the State funding mechanism as described in § 463.738.


(c) In certain situations, the Governor does not determine the infrastructure cost contributions for some one-stop partner programs under the State funding mechanism.


(1) The Governor will not determine the contribution amounts for infrastructure funds for Native American program grantees described in 20 CFR part 684. The appropriate portion of funds to be provided by Native American program grantees to pay for one-stop infrastructure must be determined as part of the development of the MOU described in § 463.500 and specified in that MOU.


(2) In States in which the policy-making authority is placed in an entity or official that is independent of the authority of the Governor with respect to the funds provided for adult education and literacy activities authorized under title II of WIOA, postsecondary career and technical education activities authorized under the Carl D. Perkins Career and Technical Education Act of 2006, or VR services authorized under title I of the Rehabilitation Act of 1973 (other than sec. 112 or part C), as amended by WIOA title IV, the determination of the amount each of the applicable partners must contribute to assist in paying the infrastructure costs of one-stop centers must be made by the official or chief officer of the entity with such authority, in consultation with the Governor.


(d) Any duty, ability, choice, responsibility, or other action otherwise related to the determination of infrastructure costs contributions that is assigned to the Governor in §§ 463.730 through 463.745 also applies to this decision-making process performed by the official or chief officer described in paragraph (c)(2) of this section.


§ 463.731 What are the steps to determine the amount to be paid under the State one-stop infrastructure funding mechanism?

(a) To initiate the State funding mechanism, a Local WDB that has not reached consensus on methods of sufficiently funding local infrastructure through the local funding mechanism as provided in § 463.725 must notify the Governor by the deadline established by the Governor under § 463.705(b)(3).


(b) Once a Local WDB has informed the Governor that no consensus has been reached:


(1) The Local WDB must provide the Governor with local negotiation materials in accordance with § 463.735(a).


(2) The Governor must determine the one-stop center budget by either:


(i) Accepting a budget previously agreed upon by partner programs in the local negotiations, in accordance with § 463.735(b)(1); or


(ii) Creating a budget for the one-stop center using the State WDB formula (described in § 463.745) in accordance with § 463.735(b)(3).


(3) The Governor then must establish a cost allocation methodology to determine the one-stop partner programs’ proportionate shares of infrastructure costs, in accordance with § 463.736.


(4)(i) Using the methodology established under paragraph (b)(2)(ii) of this section, and taking into consideration the factors concerning individual partner programs listed in § 463.737(b)(2), the Governor must determine each partner’s proportionate share of the infrastructure costs, in accordance with § 463.737(b)(1), and


(ii) In accordance with § 463.730(c), in some instances, the Governor does not determine a partner program’s proportionate share of infrastructure funding costs, in which case it must be determined by the entities named in § 463.730(c)(1) and (2).


(5) The Governor must then calculate the statewide caps on the amounts that partner programs may be required to contribute toward infrastructure funding, according to the steps found at § 463.738(a)(1) through (4).


(6) The Governor must ensure that the aggregate total of the infrastructure contributions according to proportionate share required of all local partner programs in local areas under the State funding mechanism do not exceed the cap for that particular program, in accordance with § 463.738(b)(1). If the total does not exceed the cap, the Governor must direct each one-stop partner program to pay the amount determined under § 463.737(a) toward the infrastructure funding costs of the one-stop center. If the total does exceed the cap, then to determine the amount to direct each one-stop program to pay, the Governor may:


(i) Ascertain, in accordance with § 463.738(b)(2)(i), whether the local partner or partners whose proportionate shares are calculated above the individual program caps are willing to voluntarily contribute above the capped amount to equal that program’s proportionate share; or


(ii) Choose from the options provided in § 463.738(b)(2)(ii), including having the local area re-enter negotiations to reassess each one-stop partner’s proportionate share and make adjustments or identify alternate sources of funding to make up the difference between the capped amount and the proportionate share of infrastructure funding of the one-stop partner.


(7) If none of the solutions given in paragraphs (b)(6)(i) and (ii) of this section prove to be viable, the Governor must reassess the proportionate shares of each one-stop partner so that the aggregate amount attributable to the local partners for each program is less than that program’s cap amount. Upon such reassessment, the Governor must direct each one-stop partner program to pay the reassessed amount toward the infrastructure funding costs of the one-stop center.


§ 463.735 How are infrastructure cost budgets for the one-stop centers in a local area determined in the State one-stop infrastructure funding mechanism?

(a) Local WDBs must provide to the Governor appropriate and relevant materials and documents used in the negotiations under the local funding mechanism, including but not limited to: The local WIOA plan, the cost allocation method or methods proposed by the partners to be used in determining proportionate share, the proposed amounts or budget to fund infrastructure, the amount of total partner funds included, the type of funds or non-cash contributions, proposed one-stop center budgets, and any agreed upon or proposed MOUs.


(b)(1) If a local area has reached agreement as to the infrastructure budget for the one-stop centers in the local area, it must provide this budget to the Governor as required by paragraph (a) of this section. If, as a result of the agreed upon infrastructure budget, only the individual programmatic contributions to infrastructure funding based upon proportionate use of the one-stop centers and relative benefit received are at issue, the Governor may accept the budget, from which the Governor must calculate each partner’s contribution consistent with the cost allocation methodologies contained in the Uniform Guidance found in 2 CFR part 200, as described in § 463.736.


(2) The Governor may also take into consideration the extent to which the partners in the local area have agreed in determining the proportionate shares, including any agreements reached at the local level by one or more partners, as well as any other element or product of the negotiating process provided to the Governor as required by paragraph (a) of this section.


(3) If a local area has not reached agreement as to the infrastructure budget for the one-stop centers in the local area, or if the Governor determines that the agreed upon budget does not adequately meet the needs of the local area or does not reasonably work within the confines of the local area’s resources in accordance with the Governor’s one-stop budget guidance (which is required to be issued by WIOA sec. 121(h)(1)(B) and under § 463.705), then, in accordance with § 463.745, the Governor must use the formula developed by the State WDB based on at least the factors required under § 463.745, and any associated weights to determine the local area budget.


§ 463.736 How does the Governor establish a cost allocation methodology used to determine the one-stop partner programs’ proportionate shares of infrastructure costs under the State one-stop infrastructure funding mechanism?

Once the appropriate budget is determined for a local area through either method described in § 463.735 (by acceptance of a budget agreed upon in local negotiation or by the Governor applying the formula detailed in § 463.745), the Governor must determine the appropriate cost allocation methodology to be applied to the one-stop partners in such local area, consistent with the Federal cost principles permitted under 2 CFR part 200, to fund the infrastructure budget.


§ 463.737 How are one-stop partner programs’ proportionate shares of infrastructure costs determined under the State one-stop infrastructure funding mechanism?

(a) The Governor must direct the one-stop partners in each local area that have not reached agreement under the local funding mechanism to pay what the Governor determines is each partner program’s proportionate share of infrastructure funds for that area, subject to the application of the caps described in § 463.738.


(b)(1) The Governor must use the cost allocation methodology – as determined under § 463.736 – to determine each partner’s proportionate share of the infrastructure costs under the State funding mechanism, subject to considering the factors described in paragraph (b)(2) of this section.


(2) In determining each partner program’s proportionate share of infrastructure costs, the Governor must take into account the costs of administration of the one-stop delivery system for purposes not related to one-stop centers for each partner (such as costs associated with maintaining the Local WDB or information technology systems), as well as the statutory requirements for each partner program, the partner program’s ability to fulfill such requirements, and all other applicable legal requirements. The Governor may also take into consideration the extent to which the partners in the local area have agreed in determining the proportionate shares, including any agreements reached at the local level by one or more partners, as well as any other materials or documents of the negotiating process, which must be provided to the Governor by the Local WDB and described in § 463.735(a).


§ 463.738 How are statewide caps on the contributions for one-stop infrastructure funding determined in the State one-stop infrastructure funding mechanism?

(a) The Governor must calculate the statewide cap on the contributions for one-stop infrastructure funding required to be provided by each one-stop partner program for those local areas that have not reached agreement. The cap is the amount determined under paragraph (a)(4) of this section, which the Governor derives by:


(1) First, determining the amount resulting from applying the percentage for the corresponding one-stop partner program provided in paragraph (d) of this section to the amount of Federal funds provided to carry out the one-stop partner program in the State for the applicable fiscal year;


(2) Second, selecting a factor (or factors) that reasonably indicates the use of one-stop centers in the State, applying such factor(s) to all local areas in the State, and determining the percentage of such factor(s) applicable to the local areas that reached agreement under the local funding mechanism in the State;


(3) Third, determining the amount resulting from applying the percentage determined in paragraph (a)(2) of this section to the amount determined under paragraph (a)(1) of this section for the one-stop partner program; and


(4) Fourth, determining the amount that results from subtracting the amount determined under paragraph (a)(3) of this section from the amount determined under paragraph (a)(1) of this section. The outcome of this final calculation results in the partner program’s cap.


(b)(1) The Governor must ensure that the funds required to be contributed by each partner program in the local areas in the State under the State funding mechanism, in aggregate, do not exceed the statewide cap for each program as determined under paragraph (a) of this section.


(2) If the contributions initially determined under § 463.737 would exceed the applicable cap determined under paragraph (a) of this section, the Governor may:


(i) Ascertain if the one-stop partner whose contribution would otherwise exceed the cap determined under paragraph (a) of this section will voluntarily contribute above the capped amount, so that the total contributions equal that partner’s proportionate share. The one-stop partner’s contribution must still be consistent with the program’s authorizing laws and regulations, the Federal cost principles in 2 CFR part 200, and other applicable legal requirements; or


(ii) Direct or allow the Local WDB, chief elected officials, and one-stop partners to: Re-enter negotiations, as necessary; reduce the infrastructure costs to reflect the amount of funds that are available for such costs without exceeding the cap levels; reassess the proportionate share of each one-stop partner; or identify alternative sources of financing for one-stop infrastructure funding, consistent with the requirement that each one-stop partner pay an amount that is consistent with the proportionate use of the one-stop center and relative benefit received by the partner, the program’s authorizing laws and regulations, the Federal cost principles in 2 CFR part 200, and other applicable legal requirements.


(3) If applicable under paragraph (b)(2)(ii) of this section, the Local WDB, chief elected officials, and one-stop partners, after renegotiation, may come to agreement, sign an MOU, and proceed under the local funding mechanism. Such actions do not require the redetermination of the applicable caps under paragraph (a) of this section.


(4) If, after renegotiation, agreement among partners still cannot be reached or alternate financing cannot be identified, the Governor may adjust the specified allocation, in accordance with the amounts available and the limitations described in paragraph (d) of this section. In determining these adjustments, the Governor may take into account information relating to the renegotiation as well as the information described in § 463.735(a).


(c) Limitations. Subject to paragraph (a) of this section and in accordance with WIOA sec. 121(h)(2)(D), the following limitations apply to the Governor’s calculations of the amount that one-stop partners in local areas that have not reached agreement under the local funding mechanism may be required under § 463.736 to contribute to one-stop infrastructure funding:


(1) WIOA formula programs and Wagner-Peyser Act Employment Service. The portion of funds required to be contributed under the WIOA youth, adult, or dislocated worker programs, or under the Wagner-Peyser Act (29 U.S.C. 49 et seq.) must not exceed three percent of the amount of the program in the State for a program year.


(2) Other one-stop partners. For required one-stop partners other than those specified in paragraphs (c)(1), (3), (5), and (6) of this section, the portion of funds required to be contributed must not exceed 1.5 percent of the amount of Federal funds provided to carry out that program in the State for a fiscal year. For purposes of the Carl D. Perkins Career and Technical Education Act of 2006, the cap on contributions is determined based on the funds made available by the State for postsecondary level programs and activities under sec. 132 of the Carl D. Perkins Career and Technical Education Act and the amount of funds used by the State under sec. 112(a)(3) of the Perkins Act during the prior year to administer postsecondary level programs and activities, as applicable.


(3) Vocational Rehabilitation


(i) Within a State, for the entity or entities administering the programs described in WIOA sec. 121(b)(1)(B)(iv) and § 463.400, the allotment is based on the one State Federal fiscal year allotment, even in instances where that allotment is shared between two State agencies, and the cumulative portion of funds required to be contributed must not exceed –


(A) 0.75 percent of the amount of Federal funds provided to carry out such program in the State for Fiscal Year 2016 for purposes of applicability of the State funding mechanism for PY 2017;


(B) 1.0 percent of the amount provided to carry out such program in the State for Fiscal Year 2017 for purposes of applicability of the State funding mechanism for PY 2018;


(C) 1.25 percent of the amount provided to carry out such program in the State for Fiscal Year 2018 for purposes of applicability of the State funding mechanism for PY 2019;


(D) 1.5 percent of the amount provided to carry out such program in the State for Fiscal Year 2019 and following years for purposes of applicability of the State funding mechanism for PY 2020 and subsequent years.


(ii) The limitations set forth in paragraph (d)(3)(i) of this section for any given fiscal year must be based on the final VR allotment to the State in the applicable Federal fiscal year.


(4) Federal direct spending programs. For local areas that have not reached a one-stop infrastructure funding agreement by consensus, an entity administering a program funded with direct Federal spending, as defined in sec. 250(c)(8) of the Balanced Budget and Emergency Deficit Control Act of 1985, as in effect on February 15, 2014 (2 U.S.C. 900(c)(8)), must not be required to provide more for infrastructure costs than the amount that the Governor determined (as described in § 463.737).


(5) TANF programs. For purposes of TANF, the cap on contributions is determined based on the total Federal TANF funds expended by the State for work, education, and training activities during the prior Federal fiscal year (as reported to the Department of Health and Human Services (HHS) on the quarterly TANF Financial Report form), plus any additional amount of Federal TANF funds that the State TANF agency reasonably determines was expended for administrative costs in connection with these activities but that was separately reported to HHS as an administrative cost. The State’s contribution to the one-stop infrastructure must not exceed 1.5 percent of these combined expenditures.


(6) Community Services Block Grant (CSBG) programs. For purposes of CSBG, the cap on contributions will be based on the total amount of CSBG funds determined by the State to have been expended by local CSBG-eligible entities for the provision of employment and training activities during the prior Federal fiscal year for which information is available (as reported to HHS on the CSBG Annual Report) and any additional amount that the State CSBG agency reasonably determines was expended for administrative purposes in connection with these activities and was separately reported to HHS as an administrative cost. The State’s contribution must not exceed 1.5 percent of these combined expenditures.


(d) For programs for which it is not otherwise feasible to determine the amount of Federal funding used by the program until the end of that program’s operational year – because, for example, the funding available for education, employment, and training activities is included within funding for the program that may also be used for other unrelated activities – the determination of the Federal funds provided to carry out the program for a fiscal year under paragraph (a)(1) of this section may be determined by:


(1) The percentage of Federal funds available to the one-stop partner program that were used by the one-stop partner program for education, employment, and training activities in the previous fiscal year for which data are available; and


(2) Applying the percentage determined under paragraph (d)(1) of this section to the total amount of Federal funds available to the one-stop partner program for the fiscal year for which the determination under paragraph (a)(1) of this section applies.


§ 463.740 What funds are used to pay for infrastructure costs in the State one-stop infrastructure funding mechanism?

(a) In the State funding mechanism, infrastructure costs for WIOA title I programs, including Native American Programs described in 20 CFR part 684, may be paid using program funds, administrative funds, or both. Infrastructure costs for the Senior Community Service Employment Program under title V of the Older Americans Act (42 U.S.C. 3056 et seq.) may also be paid using program funds, administrative funds, or both.


(b) In the State funding mechanism, infrastructure costs for other required one-stop partner programs (listed in §§ 463.400 through 463.410) are limited to the program’s administrative funds, as appropriate.


(c) In the State funding mechanism, infrastructure costs for the adult education program authorized by title II of WIOA must be paid from the funds that are available for local administration and may be paid from funds made available by the State or non-Federal resources that are cash, in-kind, or third-party contributions.


(d) In the State funding mechanism, infrastructure costs for the Carl D. Perkins Career and Technical Education Act of 2006 must be paid from funds available for local administration of postsecondary level programs and activities to eligible recipients or consortia of eligible recipients and may be paid from funds made available by the State or non-Federal resources that are cash, in-kind, or third-party contributions.


§ 463.745 What factors does the State Workforce Development Board use to develop the formula described in Workforce Innovation and Opportunity Act, which is used by the Governor to determine the appropriate one-stop infrastructure budget for each local area operating under the State infrastructure funding mechanism, if no reasonably implementable locally negotiated budget exists?

The State WDB must develop a formula, as described in WIOA sec. 121(h)(3)(B), to be used by the Governor under § 463.735(b)(3) in determining the appropriate budget for the infrastructure costs of one-stop centers in the local areas that do not reach agreement under the local funding mechanism and are, therefore, subject to the State funding mechanism. The formula identifies the factors and corresponding weights for each factor that the Governor must use, which must include: the number of one-stop centers in a local area; the population served by such centers; the services provided by such centers; and any factors relating to the operations of such centers in the local area that the State WDB determines are appropriate. As indicated in § 463.735(b)(1), if the local area has agreed on such a budget, the Governor may accept that budget in lieu of applying the formula factors.


§ 463.750 When and how can a one-stop partner appeal a one-stop infrastructure amount designated by the State under the State infrastructure funding mechanism?

(a) The Governor must establish a process, described under sec. 121(h)(2)(E) of WIOA, for a one-stop partner administering a program described in §§ 463.400 through 463.410 to appeal the Governor’s determination regarding the one-stop partner’s portion of funds to be provided for one-stop infrastructure costs. This appeal process must be described in the Unified State Plan.


(b) The appeal may be made on the ground that the Governor’s determination is inconsistent with proportionate share requirements in § 463.735(a), the cost contribution limitations in § 463.735(b), the cost contribution caps in § 463.738, consistent with the process described in the State Plan.


(c) The process must ensure prompt resolution of the appeal in order to ensure the funds are distributed in a timely manner, consistent with the requirements of 20 CFR 683.630.


(d) The one-stop partner must submit an appeal in accordance with State’s deadlines for appeals specified in the guidance issued under § 463.705(b)(3), or if the State has not set a deadline, within 21 days from the Governor’s determination.


§ 463.755 What are the required elements regarding infrastructure funding that must be included in the one-stop Memorandum of Understanding?

The MOU, fully described in § 463.500, must contain the following information whether the local areas use either the local one-stop or the State funding method:


(a) The period of time in which this infrastructure funding agreement is effective. This may be a different time period than the duration of the MOU.


(b) Identification of an infrastructure and shared services budget that will be periodically reconciled against actual costs incurred and adjusted accordingly to ensure that it reflects a cost allocation methodology that demonstrates how infrastructure costs are charged to each partner in proportion to its use of the one-stop center and relative benefit received, and that complies with 2 CFR part 200 (or any corresponding similar regulation or ruling).


(c) Identification of all one-stop partners, chief elected officials, and Local WDB participating in the infrastructure funding arrangement.


(d) Steps the Local WDB, chief elected officials, and one-stop partners used to reach consensus or an assurance that the local area followed the guidance for the State funding process.


(e) Description of the process to be used among partners to resolve issues during the MOU duration period when consensus cannot be reached.


(f) Description of the periodic modification and review process to ensure equitable benefit among one-stop partners.


§ 463.760 How do one-stop partners jointly fund other shared costs under the Memorandum of Understanding?

(a) In addition to jointly funding infrastructure costs, one-stop partners listed in §§ 463.400 through 463.410 must use a portion of funds made available under their programs’ authorizing Federal law (or fairly evaluated in-kind contributions) to pay the additional costs relating to the operation of the one-stop delivery system. These other costs must include applicable career services and may include other costs, including shared services.


(b) For the purposes of paragraph (a) of this section, shared services’ costs may include the costs of shared services that are authorized for and may be commonly provided through the one-stop partner programs to any individual, such as initial intake, assessment of needs, appraisal of basic skills, identification of appropriate services to meet such needs, referrals to other one-stop partners, and business services. Shared operating costs may also include shared costs of the Local WDB’s functions.


(c) Contributions to the additional costs related to operation of the one-stop delivery system may be cash, non-cash, or third-party in-kind contributions, consistent with how these are described in § 463.720(c).


(d) The shared costs described in paragraph (a) of this section must be allocated according to the proportion of benefit received by each of the partners, consistent with the Federal law authorizing the partner’s program, and consistent with all other applicable legal requirements, including Federal cost principles in 2 CFR part 200 (or any corresponding similar regulation or ruling) requiring that costs are allowable, reasonable, necessary, and allocable.


(e) Any shared costs agreed upon by the one-stop partners must be included in the MOU.


§ 463.800 How are one-stop centers and one-stop delivery systems certified for effectiveness, physical and programmatic accessibility, and continuous improvement?

(a) The State WDB, in consultation with chief elected officials and Local WDBs, must establish objective criteria and procedures for Local WDBs to use when certifying one-stop centers.


(1) The State WDB, in consultation with chief elected officials and Local WDBs, must review and update the criteria every 2 years as part of the review and modification of State Plans pursuant to § 463.135.


(2) The criteria must be consistent with the Governor’s and State WDB’s guidelines, guidance, and policies on infrastructure funding decisions, described in § 463.705. The criteria must evaluate the one-stop centers and one-stop delivery system for effectiveness, including customer satisfaction, physical and programmatic accessibility, and continuous improvement.


(3) When the Local WDB is the one-stop operator as described in 20 CFR 679.410, the State WDB must certify the one-stop center.


(b) Evaluations of effectiveness must include how well the one-stop center integrates available services for participants and businesses, meets the workforce development needs of participants and the employment needs of local employers, operates in a cost-efficient manner, coordinates services among the one-stop partner programs, and provides access to partner program services to the maximum extent practicable, including providing services outside of regular business hours where there is a workforce need, as identified by the Local WDB. These evaluations must take into account feedback from one-stop customers. They must also include evaluations of how well the one-stop center ensures equal opportunity for individuals with disabilities to participate in or benefit from one-stop center services. These evaluations must include criteria evaluating how well the centers and delivery systems take actions to comply with the disability-related regulations implementing WIOA sec. 188, set forth at 29 CFR part 38. Such actions include, but are not limited to:


(1) Providing reasonable accommodations for individuals with disabilities;


(2) Making reasonable modifications to policies, practices, and procedures where necessary to avoid discrimination against persons with disabilities;


(3) Administering programs in the most integrated setting appropriate;


(4) Communicating with persons with disabilities as effectively as with others;


(5) Providing appropriate auxiliary aids and services, including assistive technology devices and services, where necessary to afford individuals with disabilities an equal opportunity to participate in, and enjoy the benefits of, the program or activity; and


(6) Providing for the physical accessibility of the one-stop center to individuals with disabilities.


(c) Evaluations of continuous improvement must include how well the one-stop center supports the achievement of the negotiated local levels of performance for the indicators of performance for the local area described in sec. 116(b)(2) of WIOA and part 463. Other continuous improvement factors may include a regular process for identifying and responding to technical assistance needs, a regular system of continuing professional staff development, and having systems in place to capture and respond to specific customer feedback.


(d) Local WDBs must assess at least once every 3 years the effectiveness, physical and programmatic accessibility, and continuous improvement of one-stop centers and the one-stop delivery systems using the criteria and procedures developed by the State WDB. The Local WDB may establish additional criteria, or set higher standards for service coordination, than those set by the State criteria. Local WDBs must review and update the criteria every 2 years as part of the Local Plan update process described in § 463.580. Local WDBs must certify one-stop centers in order to be eligible to use infrastructure funds in the State funding mechanism described in § 463.730.


(e) All one-stop centers must comply with applicable physical and programmatic accessibility requirements, as set forth in 29 CFR part 38, the implementing regulations of WIOA sec. 188.


§ 463.900 What is the common identifier to be used by each one-stop delivery system?

(a) The common one-stop delivery system identifier is “American Job Center.”


(b) As of November 17, 2016, each one-stop delivery system must include the “American Job Center” identifier or “a proud partner of the American Job Center network” on all primary electronic resources used by the one-stop delivery system, and on any newly printed, purchased, or created materials.


(c) As of July 1, 2017, each one-stop delivery system must include the “American Job Center” identifier or “a proud partner of the American Job Center network” on all products, programs, activities, services, electronic resources, facilities, and related property and new materials used in the one-stop delivery system.


(d) One-stop partners, States, or local areas may use additional identifiers on their products, programs, activities, services, facilities, and related property and materials.


Subpart K [Reserved]

PART 464 [RESERVED]

PART 472 [RESERVED]

PART 477 [RESERVED]

PARTS 489-499 [RESERVED]

CHAPTER V – OFFICE OF BILINGUAL EDUCATION AND MINORITY LANGUAGES AFFAIRS, DEPARTMENT OF EDUCATION

PARTS 500-599 [RESERVED]

CHAPTER VI – OFFICE OF POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION

PART 600 – INSTITUTIONAL ELIGIBILITY UNDER THE HIGHER EDUCATION ACT OF 1965, AS AMENDED


Authority:20 U.S.C. 1001, 1002, 1003, 1088, 1091, 1094, 1099b, and 1099c, unless otherwise noted.


Source:53 FR 11210, Apr. 5, 1988, unless otherwise noted.

Subpart A – General


Source:59 FR 22336, Apr. 29, 1994, unless otherwise noted.

§ 600.1 Scope.

This part establishes the rules and procedures that the Secretary uses to determine whether an educational institution qualifies in whole or in part as an eligible institution of higher education under the Higher Education Act of 1965, as amended (HEA). An eligible institution of higher education may apply to participate in programs authorized by the HEA (HEA programs).


(Authority: 20 U.S.C. 1088, 1094, 1099b, 1099c, and 1141)


§ 600.2 Definitions.

The following definitions apply to terms used in this part:


Academic engagement: Active participation by a student in an instructional activity related to the student’s course of study that –


(1) Is defined by the institution in accordance with any applicable requirements of its State or accrediting agency;


(2) Includes, but is not limited to –


(i) Attending a synchronous class, lecture, recitation, or field or laboratory activity, physically or online, where there is an opportunity for interaction between the instructor and students;


(ii) Submitting an academic assignment;


(iii) Taking an assessment or an exam;


(iv) Participating in an interactive tutorial, webinar, or other interactive computer-assisted instruction;


(v) Participating in a study group, group project, or an online discussion that is assigned by the institution; or


(vi) Interacting with an instructor about academic matters; and


(3) Does not include, for example –


(i) Living in institutional housing;


(ii) Participating in the institution’s meal plan;


(iii) Logging into an online class or tutorial without any further participation; or


(iv) Participating in academic counseling or advisement.


Accredited: The status of public recognition that a nationally recognized accrediting agency grants to an institution or educational program that meets the agency’s established requirements.


Additional location: A facility that is geographically apart from the main campus of the institution and at which the institution offers at least 50 percent of a program and may qualify as a branch campus.


Award year: The period of time from July 1 of one year through June 30 of the following year.


Branch campus: An additional location of an institution that is geographically apart and independent of the main campus of the institution. The Secretary considers a location of an institution to be independent of the main campus if the location –


(1) Is permanent in nature;


(2) Offers courses in educational programs leading to a degree, certificate, or other recognized educational credential;


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


(4) Has its own budgetary and hiring authority.


Clock hour: (1) A period of time consisting of –


(i) A 50- to 60-minute class, lecture, or recitation in a 60-minute period;


(ii) A 50- to 60-minute faculty-supervised laboratory, shop training, or internship in a 60-minute period;


(iii) Sixty minutes of preparation in a correspondence course; or


(iv) In distance education, 50 to 60 minutes in a 60-minute period of attendance in –


(A) A synchronous or asynchronous class, lecture, or recitation where there is opportunity for direct interaction between the instructor and students; or


(B) An asynchronous learning activity involving academic engagement in which the student interacts with technology that can monitor and document the amount of time that the student participates in the activity.


(2) A clock hour in a distance education program does not meet the requirements of this definition if it does not meet all accrediting agency and State requirements or if it exceeds an agency’s or State’s restrictions on the number of clock hours in a program that may be offered through distance education.


(3) An institution must be capable of monitoring a student’s attendance in 50 out of 60 minutes for each clock hour under this definition.


Correspondence course: (1) A course provided by an institution under which the institution provides instructional materials, by mail or electronic transmission, including examinations on the materials, to students who are separated from the instructors. Interaction between instructors and students in a correspondence course is limited, is not regular and substantive, and is primarily initiated by the student.


(2) If a course is part correspondence and part residential training, the Secretary considers the course to be a correspondence course.


(3) A correspondence course is not distance education.


Credit hour: Except as provided in 34 CFR 668.8(k) and (l), a credit hour is an amount of student work defined by an institution, as approved by the institution’s accrediting agency or State approval agency, that is consistent with commonly accepted practice in postsecondary education and that –


(1) Reasonably approximates not less than –


(i) One hour of classroom or direct faculty instruction and a minimum of two hours of out-of-class student work each week for approximately fifteen weeks for one semester or trimester hour of credit, or ten to twelve weeks for one quarter hour of credit, or the equivalent amount of work over a different period of time; or


(ii) At least an equivalent amount of work as required in paragraph (1)(i) of this definition for other academic activities as established by the institution, including laboratory work, internships, practica, studio work, and other academic work leading to the award of credit hours; and


(2) Permits an institution, in determining the amount of work associated with a credit hour, to take into account a variety of delivery methods, measurements of student work, academic calendars, disciplines, and degree levels.


Distance education: (1) Education that uses one or more of the technologies listed in paragraphs (2)(i) through (iv) of this definition to deliver instruction to students who are separated from the instructor or instructors and to support regular and substantive interaction between the students and the instructor or instructors, either synchronously or asynchronously.


(2) The technologies that may be used to offer distance education include –


(i) The internet;


(ii) One-way and two-way transmissions through open broadcast, closed circuit, cable, microwave, broadband lines, fiber optics, satellite, or wireless communications devices;


(iii) Audio conference; or


(iv) Other media used in a course in conjunction with any of the technologies listed in paragraphs (2)(i) through (iii) of this definition.


(3) For purposes of this definition, an instructor is an individual responsible for delivering course content and who meets the qualifications for instruction established by an institution’s accrediting agency.


(4) For purposes of this definition, substantive interaction is engaging students in teaching, learning, and assessment, consistent with the content under discussion, and also includes at least two of the following –


(i) Providing direct instruction;


(ii) Assessing or providing feedback on a student’s coursework;


(iii) Providing information or responding to questions about the content of a course or competency;


(iv) Facilitating a group discussion regarding the content of a course or competency; or


(v) Other instructional activities approved by the institution’s or program’s accrediting agency.


(5) An institution ensures regular interaction between a student and an instructor or instructors by, prior to the student’s completion of a course or competency –


(i) Providing the opportunity for substantive interactions with the student on a predictable and scheduled basis commensurate with the length of time and the amount of content in the course or competency; and


(ii) Monitoring the student’s academic engagement and success and ensuring that an instructor is responsible for promptly and proactively engaging in substantive interaction with the student when needed on the basis of such monitoring, or upon request by the student.


Educational program: (1) A legally authorized postsecondary program of organized instruction or study that:


(i) Leads to an academic, professional, or vocational degree, or certificate, or other recognized educational credential, or is a comprehensive transition and postsecondary program, as described in 34 CFR part 668, subpart O; and


(ii) May, in lieu of credit hours or clock hours as a measure of student learning, utilize direct assessment of student learning, or recognize the direct assessment of student learning by others, if such assessment is consistent with the accreditation of the institution or program utilizing the results of the assessment and with the provisions of § 668.10.


(2) The Secretary does not consider that an institution provides an educational program if the institution does not provide instruction itself (including a course of independent study) but merely gives credit for one or more of the following: Instruction provided by other institutions or schools; examinations or direct assessments provided by agencies or organizations; or other accomplishments such as “life experience.”


Eligible institution: An institution that –


(1) Qualifies as –


(i) An institution of higher education, as defined in § 600.4;


(ii) A proprietary institution of higher education, as defined in § 600.5; or


(iii) A postsecondary vocational institution, as defined in § 600.6; and


(2) Meets all the other applicable provisions of this part.


Federal Family Education Loan (FFEL) Programs: The loan programs (formerly called the Guaranteed Student Loan (GSL) programs) authorized by title IV-B of the HEA, including the Federal Stafford Loan, Federal PLUS, Federal Supplemental Loans for Students (Federal SLS), and Federal Consolidation Loan programs, in which lenders use their own funds to make loans to enable students or their parents to pay the costs of the students’ attendance at eligible institutions. The Federal Stafford Loan, Federal PLUS, Federal SLS, and Federal Consolidation Loan programs are defined in 34 CFR part 668.


Incarcerated student: A student who is serving a criminal sentence in a Federal, State, or local penitentiary, prison, jail, reformatory, work farm, juvenile justice facility, or other similar correctional institution. A student is not considered incarcerated if that student is in a half-way house or home detention or is sentenced to serve only weekends. For purposes of Pell Grant eligibility under 34 CFR 668.32(c)(2)(ii), a student who is incarcerated in a juvenile justice facility, or in a local or county facility, is not considered to be incarcerated in a Federal or State penal institution, regardless of which governmental entity operates or has jurisdiction over the facility, including the Federal Government or a State, but is considered incarcerated for the purposes of determining costs of attendance under section 472 of the HEA in determining eligibility for and the amount of the Pell Grant.


Juvenile justice facility: A public or private residential facility that is operated primarily for the care and rehabilitation of youth who, under State juvenile justice laws –


(1) Are accused of committing a delinquent act;


(2) Have been adjudicated delinquent; or


(3) Are determined to be in need of supervision.


Nationally recognized accrediting agency: An agency or association that the Secretary recognizes as a reliable authority to determine the quality of education or training offered by an institution or a program offered by an institution. The Secretary recognizes these agencies and associations under the provisions of 34 CFR part 602 and publishes a list of the recognized agencies in the Federal Register.


Nonprofit institution: An institution that –


(1)(i) Is owned and operated by one of more nonprofit corporations or associations, no part of the net earnings of which benefits any private shareholder or individual;


(ii) Is legally authorized to operate as a nonprofit organization by each State in which it is physically located; and


(iii) Is determined by the U.S. Internal Revenue Service to be an organization to which contributions are tax-deductible in accordance with section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 501(c)(3)); or


(2) For a foreign institution –


(i) An institution that is owned and operated only by one or more nonprofit corporations or associations; and


(ii)(A) If a recognized tax authority of the institution’s home country is recognized by the Secretary for purposes of making determinations of an institution’s nonprofit status for title IV purposes, is determined by that tax authority to be a nonprofit educational institution; or


(B) If no recognized tax authority of the institution’s home country is recognized by the Secretary for purposes of making determinations of an institution’s nonprofit status for title IV purposes, the foreign institution demonstrates to the satisfaction of the Secretary that it is a nonprofit educational institution.


One-academic-year training program: An educational program that is at least one academic year as defined under 34 CFR 668.2.


Preaccreditation: The status of accreditation and public recognition that a nationally recognized accrediting agency grants to an institution or program for a limited period of time that signifies the agency has determined that the institution or program is progressing toward full accreditation and is likely to attain full accreditation before the expiration of that limited period of time (sometimes referred to as “candidacy”).


Recognized equivalent of a high school diploma: The following are the equivalent of a high school diploma –


(1) A General Education Development Certificate (GED);


(2) A State certificate received by a student after the student has passed a State-authorized examination that the State recognizes as the equivalent of a high school diploma;


(3) An academic transcript of a student who has successfully completed at least a two-year program that is acceptable for full credit toward a bachelor’s degree; or


(4) For a person who is seeking enrollment in an educational program that leads to at least an associate degree or its equivalent and who has not completed high school but who excelled academically in high school, documentation that the student excelled academically in high school and has met the formalized, written policies of the institution for admitting such students.


Recognized occupation: An occupation that is –


(1) Identified 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, which is available at www.onetonline.org or its successor site; or


(2) Determined by the Secretary in consultation with the Secretary of Labor to be a recognized occupation.


Regular student: A person who is enrolled or accepted for enrollment at an institution for the purpose of obtaining a degree, certificate, or other recognized educational credential offered by that institution.


Religious mission: A published institutional mission that is approved by the governing body of an institution of postsecondary education and that includes, refers to, or is predicated upon religious tenets, beliefs, or teachings.


Secretary: The Secretary of the Department of Education or an official or employee of the Department of Education acting for the Secretary under a delegation of authority.


State: A State of the Union, American Samoa, the Commonwealth of Puerto Rico, the District of Columbia, Guam, the Virgin Islands, the Commonwealth of the Northern Mariana Islands, the Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau. The latter three are also known as the Freely Associated States.


State authorization reciprocity agreement: An agreement between two or more States that authorizes an institution located and legally authorized in a State covered by the agreement to provide postsecondary education through distance education or correspondence courses to students located in other States covered by the agreement and cannot prohibit any member State of the agreement from enforcing its own general-purpose State laws and regulations outside of the State authorization of distance education.


Teach-out: A process during which a program, institution, or institutional location that provides 100 percent of at least one program engages in an orderly closure or when, following the closure of an institution or campus, another institution provides an opportunity for the students of the closed school to complete their program, regardless of their academic progress at the time of closure.


Teach-out agreement: A written agreement between institutions that provides for the equitable treatment of students and a reasonable opportunity for students to complete their program of study if an institution, or an institutional location that provides 100 percent of at least one program offered, ceases to operate or plans to cease operations before all enrolled students have completed their program of study.


Teach-out plan: A written plan developed by an institution that provides for the equitable treatment of students if an institution, or an institutional location that provides 100 percent of at least one program, ceases to operate or plans to cease operations before all enrolled students have completed their program of study.


Title IV, HEA program: Any of the student financial assistance programs listed in 34 CFR 668.1(c).


[59 FR 22336, Apr. 29, 1994, as amended at 63 FR 40622, July 29, 1998; 64 FR 58615, Oct. 29, 1999; 71 FR 45692, Aug. 9, 2006; 74 FR 55425, Oct. 27, 2009; 74 FR 55932, Oct. 29, 2009; 75 FR 66946, Oct. 29, 2010, 75 FR 67192, Nov. 1, 2010; 79 FR 65006, Oct. 31, 2014; 81 FR 92262, Dec. 19, 2016; 84 FR 58914, Nov. 1, 2019′ 85 FR 54808, Sept. 2, 2020]


§ 600.3 [Reserved]

§ 600.4 Institution of higher education.

(a) An institution of higher education is a public or private nonprofit educational institution that –


(1) Is in a State, or for purposes of the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant, Federal Work-Study, and Federal TRIO programs may also be located in the Federated States of Micronesia or the Marshall Islands;


(2) Admits as regular students only persons who –


(i) Have a high school diploma;


(ii) Have the recognized equivalent of a high school diploma; or


(iii) Are beyond the age of compulsory school attendance in the State in which the institution is physically located;


(3) Is legally authorized to provide an educational program beyond secondary education in the State in which the institution is physically located in accordance with § 600.9;


(4)(i) Provides an educational program –


(A) For which it awards an associate, baccalaureate, graduate, or professional degree;


(B) That is at least a two-academic-year program acceptable for full credit toward a baccalaureate degree; or


(C) That is at least a one academic year training program that leads to a certificate, or other nondegree recognized credential, and prepares students for gainful employment in a recognized occupation; and


(ii) May provide a comprehensive transition and postsecondary program, as described in 34 CFR part 668, subpart O; and


(5) Is –


(i) Accredited or preaccredited; or


(ii) Approved by a State agency listed in the Federal Register in accordance with 34 CFR part 603, if the institution is a public postsecondary vocational educational institution that seeks to participate only in Federal student assistance programs.


(b) An institution is physically located in a State if it has a campus or other instructional site in that State.


(c) The Secretary does not recognize the accreditation or preaccreditation of an institution unless the institution agrees to submit any dispute involving an adverse action, such as the final denial, withdrawal, or termination of accreditation, to arbitration before initiating any other legal action.


(Authority: 20 U.S.C. 1091, 1094, 1099b, 1141(a))

[59 FR 22336, Apr. 29, 1994, as amended at 64 FR 58615, Oct. 29, 1999; 74 FR 55932, Oct. 29, 2009; 75 FR 66946, Oct. 29, 2010; 84 FR 58915, Nov. 1, 2019]


§ 600.5 Proprietary institution of higher education.

(a) A proprietary institution of higher education is an educational institution that –


(1) Is not a public or private nonprofit educational institution;


(2) Is in a State;


(3) Admits as regular students only persons who –


(i) Have a high school diploma;


(ii) Have the recognized equivalent of a high school diploma; or


(iii) Are beyond the age of compulsory school attendance in the State in which the institution is physically located;


(4) Is legally authorized to provide an educational program beyond secondary education in the State in which the institution is physically located in accordance with § 600.9;


(5)(i)(A) Provides an eligible program of training, as defined in 34 CFR 668.8, to prepare students for gainful employment in a recognized occupation; or


(B)(1) Has provided a program leading to a baccalaureate degree in liberal arts, as defined in paragraph (e) of this section, continuously since January 1, 2009; and


(2) Is accredited by a recognized regional accrediting agency or association, and has continuously held such accreditation since October 1, 2007, or earlier; and


(ii) May provide a comprehensive transition and postsecondary program for students with intellectual disabilities, as provided in 34 CFR part 668, subpart O;


(6) Is accredited; and


(7) Has been in existence for at least two years.


(b)(1) The Secretary considers an institution to have been in existence for two years only if –


(i) The institution has been legally authorized to provide, and has provided, a continuous educational program to prepare students for gainful employment in a recognized occupation during the 24 months preceding the date of its eligibility application; and


(ii) The educational program that the institution provides on the date of its eligibility application is substantially the same in length and subject matter as the program that the institution provided during the 24 months preceding the date of its eligibility application.


(2)(i) The Secretary considers an institution to have provided a continuous educational program during the 24 months preceding the date of its eligibility application even if the institution did not provide that program during normal vacation periods, or periods when the institution temporarily closed due to a natural disaster that directly affected the institution or the institution’s students.


(ii) The Secretary considers an institution to have satisfied the provisions of paragraph (b)(1)(ii) of this section if the institution substantially changed the subject matter of the educational program it provided during that 24-month period because of new technology or the requirements of other Federal agencies.


(3) In determining whether an applicant institution satisfies the requirement contained in paragraph (b)(1) of this section, the Secretary –


(i) Counts any period during which the applicant institution has been certified as a branch campus; and


(ii) Except as provided in paragraph (b)(3)(i) of this section, does not count any period during which the applicant institution was a part of another eligible proprietary institution of higher education, postsecondary vocational institution, or vocational school.


(c) An institution is physically located in a State if it has a campus or other instructional site in that State.


(d) The Secretary does not recognize the accreditation of an institution unless the institution agrees to submit any dispute involving an adverse action, such as the final denial, withdrawal, or termination of accreditation, to arbitration before initiating any other legal action.


(e) For purposes of this section, a “program leading to a baccalaureate degree in liberal arts” is a program that is a general instructional program falling within one or more of the following generally accepted instructional categories comprising such programs, but including only instruction in regular programs, and excluding independently designed programs, individualized programs, and unstructured studies:


(1) A program that is a structured combination of the arts, biological and physical sciences, social sciences, and humanities, emphasizing breadth of study.


(2) An undifferentiated program that includes instruction in the general arts or general science.


(3) A program that focuses on combined studies and research in humanities subjects as distinguished from the social and physical sciences, emphasizing languages, literature, art, music, philosophy, and religion.


(4) Any single instructional program in liberal arts and sciences, general studies, and humanities not listed in paragraphs (e)(1) through (3) of this section.


(Approved by the Office of Management and Budget under control number 1845-0012)

(Authority: 20 U.S.C. 1088, 1091)

[59 FR 22336, Apr. 29, 1994; 59 FR 32082, June 22, 1994, as amended at 59 FR 47801, Sept. 19, 1994; 59 FR 61177, Nov. 29, 1994; 61 FR 29901, June 12, 1996; 61 FR 60569, Nov. 29, 1996; 64 FR 58615, Oct. 29, 1999; 74 FR 55932, Oct. 29, 2009; 76 FR 66946, Oct. 29, 2010; 84 FR 58915, Nov. 1, 2019]


§ 600.6 Postsecondary vocational institution.

(a) A postsecondary vocational institution is a public or private nonprofit educational institution that –


(1) Is in a State;


(2) Admits as regular students only persons who –


(i) Have a high school diploma;


(ii) Have the recognized equivalent of a high school diploma; or


(iii) Are beyond the age of compulsory school attendance in the State in which the institution is physically located;


(3) Is legally authorized to provide an educational program beyond secondary education in the State in which the institution is physically located in accordance with § 600.9;


(4)(i) Provides an eligible program of training, as defined in 34 CFR 668.8, to prepare students for gainful employment in a recognized occupation; and


(ii) May provide a comprehensive transition and postsecondary program for students with intellectual disabilities, as provided in 34 CFR part 668, subpart O;


(5) Is –


(i) Accredited or preaccredited; or


(ii) Approved by a State agency listed in the Federal Register in accordance with 34 CFR part 603, if the institution is a public postsecondary vocational educational institution that seeks to participate only in Federal assistance programs; and


(6) Has been in existence for at least two years.


(b)(1) The Secretary considers an institution to have been in existence for two years only if –


(i) The institution has been legally authorized to provide, and has provided, a continuous education or training program to prepare students for gainful employment in a recognized occupation during the 24 months preceding the date of its eligibility application; and


(ii) The education or training program it provides on the date of its eligibility application is substantially the same in length and subject matter as the program it provided during the 24 months preceding the date of its eligibility application.


(2)(i) The Secretary considers an institution to have provided a continuous education or training program during the 24 months preceding the date of its eligibility application even if the institution did not provide that program during normal vacation periods, or periods when the institution temporarily closed due to a natural disaster that affected the institution or the institution’s students.


(ii) The Secretary considers an institution to have satisfied the provisions of paragraph (b)(1)(ii) of this section if the institution substantially changed the subject matter of the educational program it provided during that 24-month period because of new technology or the requirements of other Federal agencies.


(3) In determining whether an applicant institution satisfies the requirement contained in paragraph (b)(1) of this section, the Secretary –


(i) Counts any period during which the applicant institution qualified as an eligible institution of higher education;


(ii) Counts any period during which the applicant institution was part of another eligible institution of higher education, provided that the applicant institution continues to be part of an eligible institution of higher education;


(iii) Counts any period during which the applicant institution has been certified as a branch campus; and


(iv) Except as provided in paragraph (b)(3)(iii) of this section, does not count any period during which the applicant institution was a part of another eligible proprietary institution of higher education or postsecondary vocational institution.


(c) An institution is physically located in a State or other instructional site if it has a campus or instructional site in that State.


(d) The Secretary does not recognize the accreditation or preaccreditation of an institution unless the institution agrees to submit any dispute involving an adverse action, such as the final denial, withdrawal, or termination of accreditation, to arbitration before initiating any other legal action.


(Authority: 20 U.S.C. 1088, 1091, 1094(c)(3))

[59 FR 22336, Apr. 29, 1994, as amended at 64 FR 58616, Oct. 29, 1999; 74 FR 55933, Oct. 29, 2009; 75 FR 66946, Oct. 29, 2010; 84 FR 58915, Nov. 1, 2019]


§ 600.7 Conditions of institutional ineligibility.

(a) General rule. For purposes of title IV of the HEA, an educational institution that otherwise satisfies the requirements contained in §§ 600.4, 600.5, or 600.6 nevertheless does not qualify as an eligible institution under this part if –


(1) For its latest complete award year –


(i) More than 50 percent of the institution’s courses were correspondence courses as calculated under paragraph (b) of this section;


(ii) Fifty percent or more of the institution’s regular enrolled students were enrolled in correspondence courses;


(iii) More than twenty-five percent of the institution’s regular enrolled students were incarcerated;


(iv) More than fifty percent of its regular enrolled students had neither a high school diploma nor the recognized equivalent of a high school diploma, and the institution does not provide a four-year or two-year educational program for which it awards a bachelor’s degree or an associate degree, respectively;


(2) The institution, or an affiliate of the institution that has the power, by contract or ownership interest, to direct or cause the direction of the management of policies of the institution –


(A) Files for relief in bankruptcy, or


(B) Has entered against it an order for relief in bankruptcy; or


(3) The institution, its owner, or its chief executive officer –


(i) Has pled guilty to, has pled nolo contendere to, or is found guilty of, a crime involving the acquisition, use, or expenditure of title IV, HEA program funds; or


(ii) Has been judicially determined to have committed fraud involving title IV, HEA program funds.


(b) Special provisions regarding correspondence courses and students – (1) Calculating the number of correspondence courses. For purposes of paragraphs (a)(1) (i) and (ii) of this section –


(i) A correspondence course may be a complete educational program offered by correspondence, or one course provided by correspondence in an on-campus (residential) educational program;


(ii) A course must be considered as being offered once during an award year regardless of the number of times it is offered during that year; and


(iii) A course that is offered both on campus and by correspondence must be considered two courses for the purpose of determining the total number of courses the institution provided during an award year.


(2) Calculating the number of correspondence students. For purposes of paragraph (a)(1)(ii) of this section, a student is considered “enrolled in correspondence courses” if the student’s enrollment in correspondence courses constituted more than 50 percent of the courses in which the student enrolled during an award year.


(3) Exceptions. (i) The provisions contained in paragraphs (a)(1) (i) and (ii) of this section do not apply to an institution that qualifies as a “technical institute or vocational school used exclusively or principally for the provision of vocational education to individuals who have completed or left high school and who are available for study in preparation for entering the labor market” under section 3(3)(C) of the Carl D. Perkins Vocational and Applied Technology Education Act of 1995.


(ii) The Secretary waives the limitation contained in paragraph (a)(1)(ii) of this section for an institution that offers a 2-year associate-degree or a 4-year bachelor’s-degree program if the students enrolled in the institution’s correspondence courses receive no more than 5 percent of the title IV, HEA program funds received by students at that institution.


(c) Special provisions regarding incarcerated students – (1) Exception. The Secretary may waive the prohibition contained in paragraph (a)(1)(iii) of this section, upon the application of an institution, if the institution is a nonprofit institution that provides four-year or two-year educational programs for which it awards a bachelor’s degree, an associate degree, or a postsecondary diploma.


(2) Waiver for entire institution. If the nonprofit institution that applies for a waiver consists solely of four-year or two-year educational programs for which it awards a bachelor’s degree, an associate degree, or a postsecondary diploma, the Secretary waives the prohibition contained in paragraph (a)(1)(iii) of this section for the entire institution.


(3) Other waivers. If the nonprofit institution that applies for a waiver does not consist solely of four-year or two-year educational programs for which it awards a bachelor’s degree, an associate degree, or a postsecondary diploma, the Secretary waives the prohibition contained in paragraph (a)(1)(iii) of this section –


(i) For the four-year and two-year programs for which it awards a bachelor’s degree, an associate degree or a postsecondary diploma; and


(ii) For the other programs the institution provides, if the incarcerated regular students enrolled in those other programs have a completion rate of 50 percent or greater.


(d) Special provision for a nonprofit institution if more than 50 percent of its enrollment consists of students who do not have a high school diploma or its equivalent. (1) Subject to the provisions contained in paragraphs (d)(2) and (d)(3) of this section, the Secretary waives the limitation contained in paragraph (a)(1)(iv) of this section for a nonprofit institution if that institution demonstrates to the Secretary’s satisfaction that it exceeds that limitation because it serves, through contracts with Federal, State, or local government agencies, significant numbers of students who do not have a high school diploma or its recognized equivalent.


(2) Number of critical students. The Secretary grants a waiver under paragraph (d)(1) of this section only if no more than 40 percent of the institution’s enrollment of regular students consists of students who –


(i) Do not have a high school diploma or its equivalent; and


(ii) Are not served through contracts described in paragraph (d)(3) of this section.


(3) Contracts with Federal, State, or local government agencies. For purposes of granting a waiver under paragraph (d)(1) of this section, the contracts referred to must be with Federal, State, or local government agencies for the purpose of providing job training to low-income individuals who are in need of that training. An example of such a contract is a job training contract under the Job Training Partnership Act (JPTA).


(e) Special provisions. (1) For purposes of paragraph (a)(1)of this section, when counting regular students, the institution shall –


(i) Count each regular student without regard to the full-time or part-time nature of the student’s attendance (i.e., “head count” rather than “full-time equivalent”);


(ii) Count a regular student once regardless of the number of times the student enrolls during an award year; and


(iii) Determine the number of regular students who enrolled in the institution during the relevant award year by –


(A) Calculating the number of regular students who enrolled during that award year; and


(B) Excluding from the number of students in paragraph (e)(1)(iii)(A) of this section, the number of regular students who enrolled but subsequently withdrew or were expelled from the institution and were entitled to receive a 100 percent refund of their tuition and fees less any administrative fee that the institution is permitted to keep under its fair and equitable refund policy.


(2) For the purpose of calculating a completion rate under paragraph (c)(3)(ii) of this section, the institution shall –


(i) Determine the number of regular incarcerated students who enrolled in the other programs during the last completed award year;


(ii) Exclude from the number of regular incarcerated students determined in paragraph (e)(2)(i) of this section, the number of those students who enrolled but subsequently withdrew or were expelled from the institution and were entitled to receive a 100 percent refund of their tuition and fees, less any administrative fee the institution is permitted to keep under the institution’s fair and equitable refund policy;


(iii) Exclude from the total obtained in paragraph (e)(2)(ii) of this section, the number of those regular incarcerated students who remained enrolled in the programs at the end of the applicable award year;


(iv) From the total obtained in paragraph (e)(2)(iii) of this section, determine the number of regular incarcerated students who received a degree, certificate, or other recognized educational credential awarded for successfully completing the program during the applicable award year; and


(v) Divide the total obtained in paragraph (e)(2)(iv) of this section by the total obtained in paragraph (e)(2)(iii) of this section and multiply by 100.


(f)(1) If the Secretary grants a waiver to an institution under this section, the waiver extends indefinitely provided that the institution satisfies the waiver requirements in each award year.


(2) If an institution fails to satisfy the waiver requirements for an award year, the institution becomes ineligible on June 30 of that award year.


(g)(1) For purposes of paragraph (a)(1) of this section, and any applicable waiver or exception under this section, the institution shall substantiate the required calculations by having the certified public accountant who prepares its audited financial statement under 34 CFR 668.15 or its title IV, HEA program compliance audit under 34 CFR 668.23 report on the accuracy of those determinations.


(2) The certified public accountant’s report must be based on performing an “attestation engagement” in accordance with the American Institute of Certified Public Accountants (AICPA’s) Statement on Standards for Attestation Engagements. The certified public accountant shall include that attestation report with or as part of the audit report referenced in paragraph (g)(1) of this section.


(3) The certified public accountant’s attestation report must indicate whether the institution’s determinations regarding paragraph (a)(1) of this section and any relevant waiver or exception under paragraphs (b), (c), and (d) of this section are accurate; i.e., fairly presented in all material respects.


(h) Notice to the Secretary. An institution shall notify the Secretary –


(1) By July 31 following the end of an award year if it falls within one of the prohibitions contained in paragraph (a)(1)of this section, or fails to continue to satisfy a waiver or exception granted under this section; or


(2) Within 10 days if it falls within one of the prohibitions contained in paragraphs (a)(2) or (a)(3) of this section.


(i) Regaining eligibility. (1) If an institution loses its eligibility because of one of the prohibitions contained in paragraph (a)(1) of this section, to regain its eligibility, it must demonstrate –


(i) Compliance with all eligibility requirements;


(ii) That it did not fall within any of the prohibitions contained in paragraph (a)(1) of this section for at least one award year; and


(iii) That it changed its administrative policies and practices to ensure that it will not fall within any of the prohibitions contained in paragraph (a)(1) of this section.


(2) If an institution loses its eligibility because of one of the prohibitions contained in paragraphs (a)(2) and (a)(3) of this section, this loss is permanent. The institution’s eligibility cannot be reinstated.


(Approved by the Office of Management and Budget under control number 1840-0098)

[59 FR 22336, Apr. 29, 1994; 59 FR 32082, June 22, 1994, as amended at 59 FR 47801, Sept. 19, 1994; 60 FR 34430, June 30, 1995; 64 FR 58616, Oct. 29, 1999; 71 FR 45692, Aug. 9, 2006; 85 FR 54810, Sept. 2, 2020]


§ 600.8 Treatment of a branch campus.

A branch campus of an eligible proprietary institution of higher education or a postsecondary vocational institution must be in existence for at least two years as a branch campus after the branch is certified as a branch campus before seeking to be designated as a main campus or a free-standing institution.


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

[64 FR 58616, Oct. 29, 1999, as amended at 67 FR 67070, Nov. 1, 2002]


§ 600.9 State authorization.

(a)(1) An institution described under §§ 600.4, 600.5, and 600.6 is legally authorized by a State if the State has a process to review and appropriately act on complaints concerning the institution including enforcing applicable State laws, and the institution meets the provisions of paragraphs (a)(1)(i), (a)(1)(ii), or (b) of this section.


(i)(A) The institution is established by name as an educational institution by a State through a charter, statute, constitutional provision, or other action issued by an appropriate State agency or State entity and is authorized to operate educational programs beyond secondary education, including programs leading to a degree or certificate.


(B) The institution complies with any applicable State approval or licensure requirements, except that the State may exempt the institution from any State approval or licensure requirements based on the institution’s accreditation by one or more accrediting agencies recognized by the Secretary or based upon the institution being in operation for at least 20 years.


(ii) If an institution is established by a State on the basis of an authorization to conduct business in the State or to operate as a nonprofit charitable organization, but not established by name as an educational institution under paragraph (a)(1)(i) of this section, the institution –


(A) By name, must be approved or licensed by the State to offer programs beyond secondary education, including programs leading to a degree or certificate; and


(B) May not be exempt from the State’s approval or licensure requirements based on accreditation, years in operation, or other comparable exemption.


(2) The Secretary considers an institution to meet the provisions of paragraph (a)(1) of this section if the institution is authorized by name to offer educational programs beyond secondary education by –


(i) The Federal Government; or


(ii) As defined in 25 U.S.C. 1802(2), an Indian tribe, provided that the institution is located on tribal lands and the tribal government has a process to review and appropriately act on complaints concerning an institution and enforces applicable tribal requirements or laws.


(b) An institution is considered to be legally authorized to operate educational programs beyond secondary education if it is exempt as a religious institution from State authorization under the State constitution or by State law.


(c)(1)(i) If an institution that meets the requirements under paragraph (a)(1) or (b) of this section offers postsecondary education through distance education or correspondence courses to students located in a State in which the institution is not physically located or in which the institution is otherwise subject to that State’s jurisdiction as determined by that State, except as provided in paragraph (c)(1)(ii) of this section, the institution must meet any of that State’s requirements for it to be legally offering postsecondary distance education or correspondence courses in that State. The institution must, upon request, document the State’s approval to the Secretary; or


(ii) If an institution that meets the requirements under paragraph (a)(1) or (b) of this section offers postsecondary education through distance education or correspondence courses in a State that participates in a State authorization reciprocity agreement, and the institution is covered by such agreement, the institution is considered to meet State requirements for it to be legally offering postsecondary distance education or correspondence courses in that State, subject to any limitations in that agreement and to any additional requirements of that State not relating to State authorization of distance education. The institution must, upon request, document its coverage under such an agreement to the Secretary.


(c)(2)(i) For purposes of this section, an institution must make a determination, in accordance with the institution’s policies or procedures, regarding the State in which a student is located, which must be applied consistently to all students.


(ii) The institution must, upon request, provide the Secretary with written documentation of its determination of a student’s location, including the basis for such determination.


(iii) An institution must make a determination regarding the State in which a student is located at the time of the student’s initial enrollment in an educational program and, if applicable, upon formal receipt of information from the student, in accordance with the institution’s procedures, that the student’s location has changed to another State.


(d) An additional location or branch campus of an institution that meets the requirements under paragraph (a)(1) of this section and that is located in a foreign country, i.e., not in a State, must comply with §§ 600.8, 600.10, 600.20, and 600.32, and the following requirements:


(1) For any additional location at which 50 percent or more of an educational program (as defined in § 600.2) is offered, or will be offered, or at a branch campus –


(i) The additional location or branch campus must be legally authorized by an appropriate government authority to operate in the country where the additional location or branch campus is physically located, unless the additional location or branch campus is physically located on a U.S. military base, facility, or area that the foreign country has granted the U.S. military to use and the institution can demonstrate that it is exempt from obtaining such authorization from the foreign country;


(ii) The institution must provide to the Secretary, upon request, documentation of such legal authorization to operate in the foreign country, demonstrating that the foreign governmental authority is aware that the additional location or branch campus provides postsecondary education and that the government authority does not object to those activities;


(iii) The additional location or branch campus must be approved by the institution’s recognized accrediting agency in accordance with § 602.22(a)(2)(ix) and (c).


(iv) The additional location or branch campus must meet any additional requirements for legal authorization in that foreign country as the foreign country may establish;


(v) The institution must report to the State in which the main campus of the institution is located at least annually, or more frequently if required by the State, the establishment or operation of each foreign additional location or branch campus; and


(vi) The institution must comply with any limitations the State places on the establishment or operation of the foreign additional location or branch campus.


(2) An additional location at which less than 50 percent of an educational program (as defined in § 600.2) is offered or will be offered must meet the requirements for legal authorization in that foreign country as the foreign country may establish.


(3) In accordance with the requirements of 34 CFR 668.41, the institution must disclose to enrolled and prospective students at foreign additional locations and foreign branch campuses the information regarding the student complaint process described in 34 CFR 668.43(b), of the State in which the main campus of the institution is located.


(4) If the State in which the main campus of the institution is located limits the authorization of the institution to exclude the foreign additional location or branch campus, the foreign additional location or branch campus is not considered to be legally authorized by the State.


(Authority: 20 U.S.C. 1001 and 1002)

[75 FR 66946, Oct. 29, 2010, as amended at 81 FR 92262, Dec. 19, 2016; 81 FR 92261, Dec. 19, 2016; 85 FR 58915, Nov. 1, 2019]


§ 600.10 Date, extent, duration, and consequence of eligibility.

(a) Date of eligibility. (1) If the Secretary determines that an applicant institution satisfies all the statutory and regulatory eligibility requirements, the Secretary considers the institution to be an eligible institution as of the date –


(i) The Secretary signs the institution’s program participation agreement described in 34 CFR part 668, subpart B, for purposes of participating in any title IV, HEA program; and


(ii) The Secretary receives all the information necessary to make that determination for purposes other than participating in any title IV, HEA program.


(2) [Reserved]


(b) Extent of eligibility. (1) If the Secretary determines that the entire applicant institution, including all its locations and all its educational programs, satisfies the applicable requirements of this part, the Secretary extends eligibility to all educational programs and locations identified on the institution’s application for eligibility.


(2) If the Secretary determines that only certain educational programs or certain locations of an applicant institution satisfy the applicable requirements of this part, the Secretary extends eligibility only to those educational programs and locations that meet those requirements and identifies the eligible educational programs and locations in the eligibility notice sent to the institution under § 600.21.


(3) Eligibility does not extend to any location that an institution establishes after it receives its eligibility designation if the institution provides at least 50 percent of an educational program at that location, unless –


(i) The Secretary approves that location under § 600.20(e)(4); or


(ii) The location is licensed and accredited, the institution does not have to apply to the Secretary for approval of that location under § 600.20(c), and the institution has reported to the Secretary that location under § 600.21.


(c) Educational programs. (1) An eligible institution that seeks to establish the eligibility of an educational program must –


(i) Pursuant to a requirement regarding additional programs included in the institution’s program participation agreement under 34 CFR 668.14, obtain the Secretary’s approval;


(ii) For a direct assessment program under 34 CFR 668.10, and for a comprehensive transition and postsecondary program under 34 CFR 668.232, obtain the Secretary’s approval; and


(iii) For a first direct assessment program under 34 CFR 668.10, the first direct assessment program offered at each credential level, and for a comprehensive transition and postsecondary program under 34 CFR 668.232, obtain the Secretary’s approval.


(2) Except as provided under § 600.20(c), an eligible institution does not have to obtain the Secretary’s approval to establish the eligibility of any program that is not described in paragraph (c)(1) of this section.


(3) An institution must repay to the Secretary all HEA program funds received by the institution for an educational program, and all the title IV, HEA program funds received by or on behalf of students who enrolled in that program if the institution –


(i) Fails to comply with the requirements in paragraph (c)(1) of this section; or


(ii) Incorrectly determines that an educational program that is not subject to approval under paragraph (c)(1) of this section is an eligible program for title IV, HEA program purposes.


(d) Duration of eligibility. (1) If an institution participates in the title IV, HEA programs, the Secretary’s designation of the institution as an eligible institution under the title IV, HEA programs expires when the institution’s program participation agreement, as described in 34 CFR part 668, subpart B, expires.


(2) If an institution participates in an HEA program other than a title IV, HEA program, the Secretary’s designation of the institution as an eligible institution, for purposes of that non-title IV, HEA program, does not expire as long as the institution continues to satisfy the statutory and regulatory requirements governing its eligibility.


(e) Consequence of eligibility. (1) If, as a part of its institutional eligibility application, an institution indicates that it wishes to participate in a title IV, HEA program and the Secretary determines that the institution satisfies the applicable statutory and regulatory requirements governing institutional eligibility, the Secretary will determine whether the institution satisfies the standards of administrative capability and financial responsibility contained in 34 CFR part 668, subpart B.


(2) If, as part of its institutional eligibility application, an institution indicates that it does not wish to participate in any title IV, HEA program and the Secretary determines that the institution satisfies the applicable statutory and regulatory requirements governing institutional eligibility, the institution is eligible to apply to participate in any HEA program listed by the Secretary in the eligibility notice it receives under § 600.21. However, the institution is not eligible to participate in those programs, or receive funds under those programs, merely by virtue of its designation as an eligible institution under this part.


(Approved by the Office of Management and Budget under control number 1845-0098)

[59 FR 22336, Apr. 29, 1994, as amended at 59 FR 47801, Sept. 19, 1994; 65 FR 65671, Nov. 1, 2000; 71 FR 45692, Aug. 9, 2006; 75 FR 66676, Oct. 29, 2010; 79 FR 65006, Oct. 31, 2014; 84 FR 31452, July 1, 2019; 85 FR 54810, Sept. 2, 2020]


§ 600.11 Special rules regarding institutional accreditation or preaccreditation.

(a) Change of accrediting agencies. (1) For purposes of §§ 600.4(a)(5)(i), 600.5(a)(6), and 600.6(a)(5)(i), the Secretary does not recognize the accreditation or preaccreditation of an otherwise eligible institution if that institution is in the process of changing its accrediting agency, unless the institution provides the following to the Secretary and receives approval:


(i) All materials related to its prior accreditation or preaccreditation.


(ii) Materials demonstrating reasonable cause for changing its accrediting agency. The Secretary will not determine such cause to be reasonable if the institution –


(A) Has had its accreditation withdrawn, revoked, or otherwise terminated for cause during the preceding 24 months, unless such withdrawal, revocation, or termination has been rescinded by the same accrediting agency; or


(B) Has been subject to a probation or equivalent, show cause order, or suspension order during the preceding 24 months.


(2) Notwithstanding paragraph (a)(1)(ii) of this section, the Secretary may determine the institution’s cause for changing its accrediting agency to be reasonable if the agency did not provide the institution its due process rights as defined in § 602.25, the agency applied its standards and criteria inconsistently, or if the adverse action or show cause or suspension order was the result of an agency’s failure to respect an institution’s stated mission, including religious mission.


(b) Multiple accreditation. The Secretary does not recognize the accreditation or preaccreditation of an otherwise eligible institution if that institution is accredited or preaccredited as an institution by more than one accrediting agency, unless the institution –


(1) Provides to each such accrediting agency and the Secretary the reasons for that multiple accreditation or preaccreditation;


(2) Demonstrates to the Secretary reasonable cause for that multiple accreditation or preaccreditation.


(i) The Secretary determines the institution’s cause for multiple accreditation to be reasonable unless the institution –


(A) Has had its accreditation withdrawn, revoked, or otherwise terminated for cause during the preceding 24 months, unless such withdrawal, revocation, or termination has been rescinded by the same accrediting agency; or


(B) Has been subject to a probation or equivalent, show cause order, or suspension order during the preceding 24 months.


(ii) Notwithstanding paragraphs (b)(2)(i)(A) and (B) of this section, the Secretary may determine the institution’s cause for seeking multiple accreditation or preaccreditation to be reasonable if the institution’s primary interest in seeking multiple accreditation is based on that agency’s geographic area, program-area focus, or mission; and


(3) Designates to the Secretary which agency’s accreditation or preaccreditation the institution uses to establish its eligibility under this part.


(c) Loss of accreditation or preaccreditation. (1) An institution may not be considered eligible for 24 months after it has had its accreditation or preaccreditation withdrawn, revoked, or otherwise terminated for cause, unless the accrediting agency that took that action rescinds that action.


(2) An institution may not be considered eligible for 24 months after it has withdrawn voluntarily from its accreditation or preaccreditation status under a show-cause or suspension order issued by an accrediting agency, unless that agency rescinds its order.


(d) Religious exception. (1) If an otherwise eligible institution loses its accreditation or preaccreditation, the Secretary considers the institution to be accredited or preaccredited for purposes of complying with the provisions of §§ 600.4, 600.5, and 600.6 if the Secretary determines that its loss of accreditation or preaccreditation –


(i) Is related to the religious mission or affiliation of the institution; and


(ii) Is not related to its failure to satisfy the accrediting agency’s standards.


(2) If the Secretary considers an unaccredited institution to be accredited or preaccredited under the provisions of paragraph (d)(1) of this section, the Secretary will consider that unaccredited institution to be accredited or preaccredited for a period sufficient to allow the institution to obtain alternative accreditation or preaccreditation, except that period may not exceed 18 months.


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

[59 FR 22336, Apr. 29, 1994, as amended at 85 FR 58916, Nov.1, 2019]


§ 600.12 Severability.

If any provision of this subpart or its application to any person, act, or practice is held invalid, the remainder of the subpart or the application of its provisions to any person, act, or practice shall not be affected thereby.


[84 FR 58916, Nov. 1, 2019]


Subpart B – Procedures for Establishing Eligibility


Source:59 FR 22336, Apr. 29, 1994, unless otherwise noted.

§ 600.20 Notice and application procedures for establishing, reestablishing, maintaining, or expanding institutional eligibility and certification.

(a) Initial eligibility application. (1) An institution that wishes to establish its eligibility to participate in any HEA program must submit an application to the Secretary for a determination that it qualifies as an eligible institution under this part. The Secretary must ensure prompt action is taken by the Department on any materially complete application required under this section.


(2) If the institution also wishes to be certified to participate in the title IV, HEA programs, it must indicate that intent on the application, and submit all the documentation indicated on the application to enable the Secretary to determine that it satisfies the relevant certification requirements contained in 34 CFR part 668, subparts B and L.


(3) A freestanding foreign graduate medical school, or a foreign institution that includes a foreign graduate medical school, must include in its application to participate –


(i)(A) A list of all medical school educational sites and where they are located, including all sites at which its students receive clinical training, except those clinical training sites that are not used regularly, but instead are chosen by individual students who take no more than two electives at the location for no more than a total of eight weeks; and


(B) The type of clinical training (core, required clinical rotation, not required clinical rotation) offered at each site listed on the application in accordance with paragraph (a)(3)(i)(A) of this section; and


(ii) Whether the school offers –


(A) Only post-baccalaureate/equivalent medical programs, as defined in § 600.52;


(B) Other types of programs that lead to employment as a doctor of osteopathic medicine or doctor of medicine; or


(C) Both; and


(iii) Copies of the formal affiliation agreements with hospitals or clinics providing all or a portion of a clinical training program required under § 600.55(e)(1).


(b) Reapplication. (1) A currently designated eligible institution that is not participating in the title IV, HEA programs must apply to the Secretary for a determination that the institution continues to meet the requirements in this part if the Secretary requests the institution to reapply. If the institution chooses to be certified to participate in the title IV, HEA programs, it must submit an application to the Secretary and must submit all the supporting documentation indicated on the application to enable the Secretary to determine that it satisfies the relevant certification requirements contained in subparts B and L of 34 CFR part 668.


(2)(i) A currently designated eligible institution that participates in the title IV, HEA programs must apply to the Secretary for a determination that the institution continues to meet the requirements in this part and in 34 CFR part 668 if the institution chooses to –


(A) Continue to participate in the title IV, HEA programs beyond the scheduled expiration of the institution’s current eligibility and certification designation;


(B) Reestablish eligibility and certification as a private nonprofit, private for-profit, or public institution following a change in ownership that results in a change in control as described in § 600.31; or


(C) Reestablish eligibility and certification after the institution changes its status as a proprietary, nonprofit, or public institution.


(ii) The Secretary must ensure prompt action is taken by the Department on any materially complete application required under paragraph (a)(2)(i) of this section.


(3) A freestanding foreign graduate medical school, or a foreign institution that includes a foreign graduate medical school, must include in its reapplication to participate –


(i)(A) A list of all of the foreign graduate medical school’s educational sites and where they are located, including all sites at which its students receive clinical training, except those clinical training sites that are not used regularly, but instead are chosen by individual students who take no more than two electives at the location for no more than a total of eight weeks; and


(B) The type of clinical training (core, required clinical rotation, not required clinical rotation) offered at each site listed on the application in accordance with paragraph (b)(3)(i)(A) of this section; and


(ii) Whether the school offers –


(A) Only post-baccalaureate/equivalent medical programs, as defined in § 600.52;


(B) Other types of programs that lead to employment as a doctor of osteopathic medicine or doctor of medicine; or


(C) Both; and


(iii) Copies of the formal affiliation agreements with hospitals or clinics providing all or a portion of a clinical training program required under § 600.55(e)(1).


(c) Application to expand eligibility. A currently designated eligible institution that wishes to expand the scope of its eligibility and certification and disburse title IV, HEA Program funds to students enrolled in that expanded scope must apply to the Secretary and wait for approval to –


(1) Add an educational program or a location at which the institution offers or will offer 50 percent or more of an educational program if one of the following conditions applies, otherwise it must report to the Secretary under § 600.21:


(i) The institution participates in the title IV, HEA programs under a provisional certification, as provided in 34 CFR 668.13.


(ii) The institution receives title IV, HEA program funds under the reimbursement or cash monitoring payment method, as provided in 34 CFR part 668, subpart K.


(iii) The institution acquires the assets of another institution that provided educational programs at that location during the preceding year and participated in the title IV, HEA programs during that year.


(iv) The institution would be subject to a loss of eligibility under 34 CFR 668.188 if it adds that location.


(v) The Secretary notifies, or has notified, the institution that it must apply for approval of an additional educational program or a location under § 600.10(c).


(2) Increase its level of program offering (e.g., adding graduate degree programs when it previously offered only baccalaureate degree programs);


(3) Add an educational program if the institution is required to apply to the Secretary for approval under § 600.10(c);


(4) Add a branch campus at a location that is not currently included in the institution’s eligibility and certification designation;


(5) For a freestanding foreign graduate medical school, or a foreign institution that includes a foreign graduate medical school, add a location that offers all or a portion of the foreign graduate medical school’s core clinical training or required clinical rotations, except for those locations that are included in the accreditation of a medical program accredited by the Liaison Committee on Medical Education (LCME) or the American Osteopathic Association (AOA); or


(6) Convert an eligible location to a branch campus.


(d) Notice and application – (1) Notice and application procedures. (i) To satisfy the requirements of paragraphs (a), (b), and (c) of this section, an institution must notify the Secretary of its intent to offer an additional educational program, or provide an application to expand its eligibility, in a format prescribed by the Secretary and provide all the information and documentation requested by the Secretary to make a determination of its eligibility and certification.


(ii)(A) An institution that notifies the Secretary of its intent to offer an educational program under paragraph (c)(3) of this section must ensure that the Secretary receives the notice described in paragraph (d)(2) of this section at least 90 days before the first day of class of the educational program.


(B) If an institution does not provide timely notice in accordance with paragraph (d)(1)(ii)(A) of this section, the institution must obtain approval of the additional educational program from the Secretary for title IV, HEA program purposes.


(C) If an additional educational program is required to be approved by the Secretary for title IV, HEA program purposes under paragraph (d)(1)(ii)(B) of this section, the Secretary may grant approval, or request further information prior to making a determination of whether to approve or deny the additional educational program.


(D) When reviewing an application under paragraph (d)(1)(ii)(C) of this section, the Secretary will take into consideration the following:


(1) The institution’s demonstrated financial responsibility and administrative capability in operating its existing programs.


(2) Whether the additional educational program is one of several new programs that will replace similar programs currently provided by the institution, as opposed to supplementing or expanding the current programs provided by the institution.


(3) Whether the number of additional educational programs being added is inconsistent with the institution’s historic program offerings, growth, and operations.


(4) Whether the process and determination by the institution to offer an additional educational program that leads to gainful employment in a recognized occupation is sufficient.


(E)(1) If the Secretary denies an application from an institution to offer an additional educational program, the denial will be based on the factors described in paragraphs (d)(1)(ii)(D)(2) and (3) of this section, and the Secretary will explain in the denial how the institution failed to demonstrate that the program is likely to lead to gainful employment in a recognized occupation.


(2) If the Secretary denies the institution’s application to add an additional educational program, the Secretary will permit the institution to respond to the reasons for the denial and request reconsideration of the denial.


(2) Notice format. An institution that notifies the Secretary of its intent to offer an additional educational program under paragraph (c)(3) of this section must at a minimum –


(i) Describe in the notice how the institution determined the need for the program and how the program was designed to meet local market needs, or for an online program, regional or national market needs. This description must contain any wage analysis the institution may have performed, including any consideration of Bureau of Labor Statistics data related to the program;


(ii) Describe in the notice how the program was reviewed or approved by, or developed in conjunction with, business advisory committees, program integrity boards, public or private oversight or regulatory agencies, and businesses that would likely employ graduates of the program;


(iii) Submit documentation that the program has been approved by its accrediting agency or is otherwise included in the institution’s accreditation by its accrediting agency, or comparable documentation if the institution is a public postsecondary vocational institution approved by a recognized State agency for the approval of public postsecondary vocational education in lieu of accreditation; and


(iv) Provide the date of the first day of class of the new program.


(e) Secretary’s response to applications. (1) If the Secretary receives an application under paragraph (a) or (b)(1) of this section, the Secretary notifies the institution –


(i) Whether the applicant institution qualifies in whole or in part as an eligible institution under the appropriate provisions in §§ 600.4 through 600.7; and


(ii) Of the locations and educational programs that qualify as the eligible institution if only a portion of the applicant qualifies as an eligible institution.


(2) If the Secretary receives an application under paragraph (a) or (b) of this section and that institution applies to participate in the title IV, HEA programs, the Secretary notifies the institution –


(i) Whether the institution is certified to participate in those programs;


(ii) Of the title IV, HEA programs in which it is eligible to participate;


(iii) Of the title IV, HEA programs in which it is eligible to apply for funds;


(iv) Of the effective date of its eligibility to participate in those programs; and


(v) Of the conditions under which it may participate in those programs.


(3) If the Secretary receives an application under paragraph (b)(2) of this section, the Secretary notifies the institution whether it continues to be certified, or whether it reestablished its eligibility and certification to participate in the title IV, HEA programs and the scope of such approval.


(4) If the Secretary receives an application under paragraph (c)(1) of this section for an additional location, the Secretary notifies the institution whether the location is eligible or ineligible to participate in the title IV, HEA programs, and the date of eligibility if the location is determined eligible.


(5) If the Secretary receives an application under paragraph (c)(2) of this section for an increase in the level of program offering, or for an additional educational program under paragraph (c)(3) of this section, the Secretary notifies the institution whether the program qualifies as an eligible program, and if the program qualifies, the date of eligibility.


(6) If the Secretary receives an application under paragraph (c)(4) or (5) of this section to have a branch campus certified to participate in the title IV, HEA programs as a branch campus, the Secretary notifies the institution whether that branch campus is certified to participate and the date that the branch campus is eligible to begin participation.


(f) Disbursement rules related to applications. (1)(i) Except as provided under paragraph (f)(1)(ii) of this section and 34 CFR 668.26, if an institution submits an application under paragraph (b)(2)(i) of this section because its participation period is scheduled to expire, after that expiration date the institution may not disburse title IV, HEA program funds to students attending that institution until the institution receives the Secretary’s notification that the institution is again eligible to participate in those programs.


(ii) An institution described in paragraph (f)(1)(i) of this section may disburse title IV, HEA program funds to its students if the institution submits to the Secretary a materially complete renewal application in accordance with the provisions of 34 CFR 668.13(b)(2), and has not received a final decision from the Department on that application.


(2)(i) Except as provided under paragraph (f)(2)(ii) of this section and 34 CFR 668.26, if a private nonprofit, private for-profit, or public institution submits an application under paragraph (b)(2)(ii) or (iii) of this section because it has undergone or will undergo a change in ownership that results in a change of control or a change in status, the institution may not disburse title IV, HEA program funds to students attending that institution after the change of ownership or status until the institution receives the Secretary’s notification that the institution is eligible to participate in those programs.


(ii) An institution described in paragraph (f)(2)(i) of this section may disburse title IV, HEA program funds to its students if the Secretary issues a provisional extension of certification under paragraph (g) of this section.


(3) If an institution must apply to the Secretary under paragraphs (c)(1) through (4) of this section, the institution may not disburse title IV, HEA program funds to students attending the subject location, program, or branch until the institution receives the Secretary’s notification that the location, program, or branch is eligible to participate in the title IV, HEA programs.


(4) If an institution applies to the Secretary under paragraph (c)(5) of this section to convert an eligible location to a branch campus, the institution may continue to disburse title IV, HEA program funds to students attending that eligible location.


(5) If an institution does not apply to the Secretary to obtain the Secretary’s approval of a new location, program, increased level of program offering, or branch, and the location, program, or branch does not qualify as an eligible location, program, or branch of that institution under this part and 34 CFR part 668, the institution is liable for all title IV, HEA program funds it disburses to students enrolled at that location or branch or in that program.


(g) Application for provisional extension of certification. (1) If a private nonprofit institution, a private for-profit institution, or a public institution participating in the title IV, HEA programs undergoes a change in ownership that results in a change of control as described in § 600.31, the Secretary may continue the institution’s participation in those programs on a provisional basis, if the institution under the new ownership submits a “materially complete application” that is received by the Secretary no later than 10 business days after the day the change occurs.


(2) For purposes of this section, a private nonprofit institution, a private for-profit institution, or a public institution submits a materially complete application if it submits a fully completed application form designated by the Secretary supported by –


(i) A copy of the institution’s State license or equivalent document that – as of the day before the change in ownership – authorized or will authorize the institution to provide a program of postsecondary education in the State in which it is physically located;


(ii) A copy of the document from the institution’s accrediting association that – as of the day before the change in ownership – granted or will grant the institution accreditation status, including approval of any non-degree programs it offers;


(iii) Audited financial statements of the institution’s two most recently completed fiscal years that are prepared and audited in accordance with the requirements of 34 CFR 668.23; and


(iv) Audited financial statements of the institution’s new owner’s two most recently completed fiscal years that are prepared and audited in accordance with the requirements of 34 CFR 668.23, or equivalent information for that owner that is acceptable to the Secretary.


(h) Terms of the extension. (1) If the Secretary approves the institution’s materially complete application, the Secretary provides the institution with a provisional Program Participation Agreement (PPA). The provisional PPA extends the terms and conditions of the program participation agreement that were in effect for the institution before its change of ownership.


(2) The provisional PPA expires on the earlier of –


(i) The date on which the Secretary signs a new program participation agreement;


(ii) The date on which the Secretary notifies the institution that its application is denied; or


(iii) The last day of the month following the month in which the change of ownership occurred, unless the provisions of paragraph (h)(3) of this section apply.


(3) If the provisional PPA will expire under the provisions of paragraph (h)(2)(iii) of this section, the Secretary extends the provisional PPA on a month-to-month basis after the expiration date described in paragraph (h)(2)(iii) of this section if, prior to that expiration date, the institution provides the Secretary with –


(i) A “same day” balance sheet showing the financial position of the institution, as of the date of the ownership change, that is prepared in accordance with Generally Accepted Accounting Principles (GAAP) published by the Financial Accounting Standards Board and audited in accordance with Generally Accepted Government Auditing Standards (GAGAS) published by the U.S. General Accounting Office;


(ii) If not already provided, approval of the change of ownership from the State in which the institution is located by the agency that authorizes the institution to legally provide postsecondary education in that State;


(iii) If not already provided, approval of the change of ownership from the institution’s accrediting agency; and


(iv) A default management plan unless the institution is exempt from providing that plan under 34 CFR 668.14(b)(15).


(Approved by the Office of Management and Budget under control number 1845-0012)


[85 FR 54810, Sept. 2, 2020, as amended at 86 FR 49479, Sept. 3, 2021]


§ 600.21 Updating application information.

(a) Reporting requirements. Except as provided in paragraph (b) of this section, an eligible institution must report to the Secretary in a manner prescribed by the Secretary no later than 10 days after the change occurs, of any change in the following:


(1) Its name, the name of a branch, or the name of a previously reported location.


(2) Its address, the address of a branch, or the address of a previously reported location.


(3) Its establishment of an accredited and licensed additional location at which it offers or will offer 50 percent or more of an educational program if the institution wants to disburse title IV, HEA program funds to students enrolled at that location, under the provisions in paragraph (d) of this section.


(4) Except as provided in 34 CFR 668.10, the way it measures program length (e.g., from clock hours to credit hours, or from semester hours to quarter hours).


(5) A decrease in the level of program offering (e.g. the institution drops its graduate programs).


(6) A person’s ability to affect substantially the actions of the institution if that person did not previously have this ability. The Secretary considers a person to have this ability if the person –


(i) Holds alone or together with another member or members of his or her family, at least a 25 percent “ownership interest” in the institution as defined in § 600.31(b);


(ii) Represents or holds, either alone or together with other persons, under a voting trust, power of attorney, proxy, or similar agreement at least a 25 percent “ownership interest” in the institution, as defined in § 600.31(b); or


(iii) Is a general partner, the chief executive officer, or chief financial officer of the institution.


(7) The individual the institution designates under 34 CFR 668.16(b)(1) as its title IV, HEA Program administrator.


(8) The closure of a branch campus or additional location that the institution was required to report to the Secretary.


(9) The governance of a public institution.


(10) For a freestanding foreign graduate medical school, or a foreign institution that includes a foreign graduate medical school, the school adds a location that offers all or a portion of the school’s clinical rotations that are not required, except for those that are included in the accreditation of a medical program accredited by the Liaison Committee on Medical Education (LCME) or the American Osteopathic Association (AOA), or that are not used regularly, but instead are chosen by individual students who take no more than two electives at the location for no more than a total of eight weeks.


(11) For any program that is required to provide training that prepares a student for gainful employment in a recognized occupation –


(i) Establishing the eligibility or reestablishing the eligibility of the program;


(ii) Discontinuing the program’s eligibility;


(iii) Ceasing to provide the program for at least 12 consecutive months;


(iv) Losing program eligibility under § 600.40; or


(v) Changing the program’s name, CIP code or


(12) Its addition of a second or subsequent direct assessment program.


(13) Its establishment of a written arrangement for an ineligible institution or organization to provide more than 25 percent of a program pursuant to 34 CFR 668.5(c).


(b) Additional reporting from institutions owned by publicly-traded corporations. An institution that is owned by a publicly-traded corporation must report to the Secretary any change in the information described in paragraph (a)(6) of this section when it notifies its accrediting agency, but no later than 10 days after the institution learns of the change.


(c) Secretary’s response to reporting. The Secretary notifies an institution if any reported changes affects the institution’s eligibility, and the effective date of that change.


(d) Disbursement rules related to additional locations. When an institution must report to the Secretary about an additional location under paragraph (a)(3) of this section, the institution may not disburse title IV, HEA funds to students at that location before it reports to the Secretary about that location. Unless it is an institution that must apply to the Secretary under § 600.20(c)(1), once it reports to the Secretary about that location, the institution may disburse those funds to those students if that location is licensed and accredited.


(e) Consequence of failure to report. An institution’s failure to inform the Secretary of a change described in paragraph (a) of this section within the time period stated in that paragraph may result in adverse action against the institution.


(f) Definition. A family member includes a person’s –


(1) Parent or stepparent, sibling or step-sibling, spouse, child or stepchild, or grandchild or step-grandchild;


(2) Spouse’s parent or stepparent, sibling or step-sibling, child or stepchild, or grandchild or step-grandchild;


(3) Child’s spouse; and


(4) Sibling’s spouse.


(Approved by the Office of Management and Budget under control number 1845-0012)

[65 FR 65673, Nov. 1, 2000, as amended at 67 FR 67070, Nov. 1, 2002; 71 FR 45692, Aug. 9, 2006; 75 FR 67193, Nov. 1, 2010; 79 FR 65006, Oct. 31, 2014; 84 FR 31452, July 1, 2019; 85 FR 54812, Sept. 2, 2020]


Subpart C – Maintaining Eligibility


Source:59 FR 22336, Apr. 29, 1994, unless otherwise noted.

§ 600.30 [Reserved]

§ 600.31 Change in ownership resulting in a change in control for private nonprofit, private for-profit and public institutions.

(a)(1) Except as provided in paragraph (a)(2) of this section, a private nonprofit, private for-profit, or public institution that undergoes a change in ownership that results in a change in control ceases to qualify as an eligible institution upon the change in ownership and control. A change of ownership that results in a change in control includes any change by which a person who has or thereby acquires an ownership interest in the entity that owns the institution or the parent of that entity, acquires or loses the ability to control the institution.


(2) If a private nonprofit, private for-profit, or public institution has undergone a change in ownership that results in a change in control, the Secretary may, under the provisions of § 600.20(g) and (h), continue the institution’s participation in the title IV, HEA programs on a provisional basis, provided that the institution submits, under the provisions of § 600.20(g), a materially complete application –


(i) No later than 10 business days after the change occurs; or


(ii) For an institution owned by a publicly-traded corporation, no later than 10 business days after the institution knew, or should have known of the change based upon SEC filings, that the change occurred.


(3) In order to reestablish eligibility and to resume participation in the title IV, HEA programs, the institution must demonstrate to the Secretary that after the change in ownership and control –


(i) The institution satisfies all the applicable requirements contained in §§ 600.4, 600.5, and 600.6, except that if the institution is a proprietary institution of higher education or postsecondary vocational institution, it need not have been in existence for two years before seeking eligibility; and


(ii) The institution qualifies to be certified to participate under 34 CFR part 668, subpart B.


(b) Definitions. The following definitions apply to terms used in this section:


Closely-held corporation. Closely-held corporation (including the term “close corporation”) means –


(1) A corporation that qualifies under the law of the State of its incorporation or organization as a closely-held corporation; or


(2) If the State of incorporation or organization has no definition of closely-held corporation, a corporation the stock of which –


(i) Is held by no more than 30 persons; and


(ii) Has not been and is not planned to be publicly offered.


Control. Control (including the terms controlling, controlled by and under common control with) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.


Ownership or ownership interest. (1) Ownership or ownership interest means a legal or beneficial interest in an institution or its corporate parent, or a right to share in the profits derived from the operation of an institution or its corporate parent.


(2) Ownership or ownership interest does not include an ownership interest held by –


(i) A mutual fund that is regularly and publicly traded;


(ii) A U.S. institutional investor, as defined in 17 CFR 240.15a-6(b)(7);


(iii) A profit-sharing plan of the institution or its corporate parent, provided that all full-time permanent employees of the institution or its corporate parent are included in the plan; or


(iv) An employee stock ownership plan (ESOP).


Parent. The parent or parent entity is the entity that controls the specified entity directly or indirectly through one or more intermediaries.


Person. Person includes a legal entity or a natural person.


Wholly-owned subsidiary. A wholly-owned subsidiary is one substantially all of whose outstanding voting securities are owned by its parent together with the parent’s other wholly-owned subsidiaries.


(c) Standards for identifying changes of ownership and control – (1) Closely-held corporation. A change in ownership and control occurs when –


(i) A person acquires more than 50 percent of the total outstanding voting stock of the corporation;


(ii) A person who holds an ownership interest in the corporation acquires control of more than 50 percent of the outstanding voting stock of the corporation; or


(iii) A person who holds or controls 50 percent or more of the total outstanding stock of the corporation ceases to hold or control that proportion of the stock of the corporation.


(2) Publicly traded corporations required to be registered with the Securities and Exchange Commission (SEC). A change in ownership and control occurs when –


(i) A person acquires such ownership and control of the corporation so that the corporation is required to file a Form 8K with the SEC notifying that agency of the change in control; or


(ii) (A) A person who is a controlling shareholder of the corporation ceases to be a controlling shareholder. A controlling shareholder is a shareholder who holds or controls through agreement both 25 percent or more of the total outstanding voting stock of the corporation and more shares of voting stock than any other shareholder. A controlling shareholder for this purpose does not include a shareholder whose sole stock ownership is held as a U.S. institutional investor, as defined in 17 CFR 240.15a-6(b)(7), held in mutual funds, held through a profit-sharing plan, or held in an Employee Stock Ownership Plan (ESOP).


(B) When a change of ownership occurs as a result of paragraph (c)(2)(ii)(A) of this section, the institution may submit its most recent quarterly financial statement as filed with the SEC, along with copies of all other SEC filings made after the close of the fiscal year for which a compliance audit has been submitted to the Department of Education, instead of the “same day” balance sheet.


(C) If a publicly-traded institution is provisionally certified due to a change in ownership under paragraph (c)(2)(ii) of this section, and that institution experiences another change of ownership under paragraph (c)(2)(ii) of this section, an approval of the subsequent change in ownership does not extend the original expiration date for the provisional certification provided that any current controlling shareholder was listed on the change of ownership application for which the original provisional approval was granted.


(3) Other entities. The term “other entities” includes limited liability companies, limited liability partnerships, limited partnerships, and similar types of legal entities. A change in ownership and control of an entity that is neither closely-held nor required to be registered with the SEC occurs when –


(i) A person who has or acquires an ownership interest acquires both control of at least 25 percent of the total of outstanding voting stock of the corporation and control of the corporation; or


(ii) A person who holds both ownership or control of at least 25 percent of the total outstanding voting stock of the corporation and control of the corporation, ceases to own or control that proportion of the stock of the corporation, or to control the corporation.


(4) General partnership or sole proprietorship. A change in ownership and control occurs when a person who has or acquires an ownership interest acquires or loses control as described in this section.


(5) Wholly owned subsidiary. An entity that is a wholly owned subsidiary changes ownership and control when its parent entity changes ownership and control as described in this section.


(6) Nonprofit institution. A nonprofit institution changes ownership and control when a change takes place that is described in paragraph (d) of this section.


(7) Public institution. The Secretary does not consider that a public institution undergoes a change in ownership that results in a change of control if there is a change in governance and the institution after the change remains a public institution, provided –


(i) The new governing authority is in the same State as included in the institution’s program participation agreement; and


(ii) The new governing authority has acknowledged the public institution’s continued responsibilities under its program participation agreement.


(d) Covered transactions. For the purposes of this section, a change in ownership of an institution that results in a change of control may include, but is not limited to –


(1) The sale of the institution;


(2) The transfer of the controlling interest of stock of the institution or its parent corporation;


(3) The merger of two or more eligible institutions;


(4) The division of one institution into two or more institutions;


(5) The transfer of the liabilities of an institution to its parent corporation;


(6) A transfer of assets that comprise a substantial portion of the educational business of the institution, except where the transfer consists exclusively in the granting of a security interest in those assets; or


(7) A change in status as a for-profit, nonprofit, or public institution.


(e) Excluded transactions. A change in ownership and control reported under § 600.21 and otherwise subject to this section does not include a transfer of ownership and control of all or part of an owner’s equity or partnership interest in an institution, the institution’s parent corporation, or other legal entity that has signed the institution’s Program Participation Agreement –


(1) From an owner to a “family member” of that owner as defined in § 600.21(f); or


(2) Upon the retirement or death of the owner, to a person with an ownership interest in the institution who has been involved in management of the institution for at least two years preceding the transfer and who has established and retained the ownership interest for at least two years prior to the transfer.


(Approved by the Office of Management and Budget under control number 1845-0012)

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

[59 FR 22336, Apr. 29, 1994, as amended at 59 FR 47801, Sept. 19, 1994; 60 FR 33430, June 30, 1995; 64 FR 58616, Oct. 29, 1999; 65 FR 65673, Nov. 1, 2000; 67 FR 67070, Nov. 1, 2002; 84 FR 58916, Nov. 1, 2019]


§ 600.32 Eligibility of additional locations.

(a) Except as provided in paragraphs (b), (c), and (d) of this section, to qualify as an eligible location, an additional location of an eligible institution must satisfy the applicable requirements of this section and §§ 600.4, 600.5, 600.6, 600.8, and 600.10.


(b) To qualify as an eligible location, an additional location is not required to satisfy the two-year requirement of §§ 600.5(a)(7) or 600.6(a)(6), unless –


(1) The location was a facility of another institution that has closed or ceased to provide educational programs for a reason other than a normal vacation period or a natural disaster that directly affects the institution or the institution’s students;


(2) The applicant institution acquired, either directly from the institution that closed or ceased to provide educational programs, or through an intermediary, the assets at the location; and


(3) The institution from which the applicant institution acquired the assets of the location –


(i) Owes a liability for a violation of an HEA program requirement; and


(ii) Is not making payments in accordance with an agreement to repay that liability.


(c) Notwithstanding paragraph (b) of this section, an additional location is not required to satisfy the two-year requirement of § 600.5(a)(7) or § 600.6(a)(6) if the applicant institution and the original institution are not related parties and there is no commonality of ownership, control, or management between the institutions, as described in 34 CFR 668.188(b) and 34 CFR 668.207(b) and the applicant institution agrees –


(1) To be liable for all improperly expended or unspent title IV, HEA program funds received during the current academic year and up to one academic year prior by the institution that has closed or ceased to provide educational programs;


(2) To be liable for all unpaid refunds owed to students who received title IV, HEA program funds during the current academic year and up to one academic year prior; and


(3) To abide by the policy of the institution that has closed or ceased to provide educational programs regarding refunds of institutional charges to students in effect before the date of the acquisition of the assets of the additional location for the students who were enrolled before that date.


(d)(1) An institution that conducts a teach-out at a site of a closed institution or an institution engaged in a teach-out plan approved by the institution’s agency may apply to have that site approved as an additional location if –


(i) The closed institution ceased operations, or the closing institution is engaged in an orderly teach-out plan and the Secretary has evaluated and approved that plan; and


(ii) The teach-out plan required under 34 CFR 668.14(b)(31) is approved by the closed or closing institution’s accrediting agency.


(2)(i) An institution that conducts a teach-out and is approved to add an additional location described in paragraph (d)(1) of this section –


(A) Does not have to meet the requirement of § 600.5(a)(7) or § 600.6(a)(6) for the additional location described in paragraph (d)(1) of this section;


(B) Is not responsible for any liabilities of the closed or closing institution as provided under paragraph (c)(1) and (c)(2) of this section if the institutions are not related parties and there is no commonality of ownership or management between the institutions, as described in 34 CFR 668.188(b) and 34 CFR 668.207(b); and


(C) Will not have the default rate of the closed institution included in the calculation of its default rate, as would otherwise be required under 34 CFR 668.184 and 34 CFR 668.203, if the institutions are not related parties and there is no commonality of ownership or management between the institutions, as described in 34 CFR 668.188(b) and 34 CFR 668.207(b).


(ii) As a condition for approving an additional location under paragraph (d)(1) of this section, the Secretary may require that payments from the institution conducting the teach-out to the owners or related parties of the closed institution, are used to satisfy any liabilities owed by the closed institution.


(e) For purposes of this section, an “additional location” is a location of an institution that was not designated as an eligible location in the eligibility notification provided to an institution under § 600.21.


(Authority: 20 U.S.C. 1088, 1099c, 1141)

[59 FR 22336, Apr. 29, 1994, as amended at 74 FR 55933, Oct. 29, 2009; 84 FR 58916, Nov. 1, 2019]


§ 600.33 Severability.

If any provision of this subpart or its application to any person, act, or practice is held invalid, the remainder of the subpart or the application of its provisions to any person, act, or practice shall not be affected thereby.


[84 FR 58917, Nov. 1, 2019]


Subpart D – Loss of Eligibility


Source:59 FR 22336, Apr. 29, 1994, unless otherwise noted.

§ 600.40 Loss of eligibility.

(a)(1) Except as provided in paragraphs (a) (2) and (3) of this section, an institution, or a location or educational program of an institution, loses its eligibility on the date that –


(i) The institution, location, or educational program fails to meet any of the eligibility requirements of this part;


(ii) The institution or location permanently closes;


(iii) The institution or location ceases to provide educational programs for a reason other than a normal vacation period or a natural disaster that directly affects the institution, particular location, or the students of the institution or location; or


(iv) For purposes of the title IV, HEA programs –


(A) The institution’s period of participation as specified under 34 CFR 668.13 expires; or


(B) The institution’s provisional certification is revoked under 34 CFR 668.13.


(2) If an institution loses its eligibility because it violated the requirements of § 600.5(a)(8), as evidenced by the determination under provisions contained in § 600.5(d), it loses its eligibility on the last day of the fiscal year used in § 600.5(d), except that if an institution’s latest fiscal year was described in § 600.7(h)(1), it loses its eligibility as of June 30, 1994.


(3) If an institution loses its eligibility under the provisions of § 600.7(a)(1), it loses its eligibility on the last day of the award year being evaluated under that provision.


(b) If the Secretary undertakes to terminate the eligibility of an institution because it violated the provisions of § 600.5(a)(8) or § 600.7(a), and the institution requests a hearing, the presiding official must terminate the institution’s eligibility if it violated those provisions, notwithstanding its status at the time of the hearing.


(c)(1) If the Secretary designates an institution or any of its educational programs or locations as eligible on the basis of inaccurate information or documentation, the Secretary’s designation is void from the date the Secretary made the designation, and the institution or program or location, as applicable, never qualified as eligible.


(2) If an institution closes its main campus or stops providing any educational programs on its main campus, it loses its eligibility as an institution, and that loss of eligibility includes all its locations and all its programs. Its loss of eligibility is effective on the date it closes that campus or stops providing any educational program at that campus.


(d) Except as otherwise provided in this part, if an institution ceases to satisfy any of the requirements for eligibility under this part –


(1) It must notify the Secretary within 30 days of the date that it ceases to satisfy that requirement; and


(2) It becomes ineligible to continue to participate in any HEA program as of the date it ceases to satisfy any of the requirements.


(Authority: 20 U.S.C. 1088, 1099a-3, and 1141)

[59 FR 22336, Apr. 29, 1994, as amended at 63 FR 40622, July 29, 1998]


§ 600.41 Termination and emergency action proceedings.

(a) If the Secretary believes that a previously designated eligible institution as a whole, or at one or more of its locations, does not satisfy the statutory or regulatory requirements that define that institution as an eligible institution, the Secretary may –


(1) Terminate the institution’s eligibility designation in whole or as to a particular location –


(i) Under the procedural provisions applicable to terminations contained in 34 CFR 668.81, 668.83, 668.86, 668.87, 668.88, 668.89, 668.90 (a)(1), (a)(4), and (c) through (f), and 668.91; or


(ii) Under a show-cause hearing, if the institution’s loss of eligibility results from –


(A) Its previously qualifying as an eligible vocational school;


(B) Its loss of accreditation or preaccreditation;


(C) Its loss of legal authority to provide postsecondary education in the State in which it is physically located;


(D) Its violations of the provisions contained in § 600.5(a)(8) or § 600.7(a);


(E) Its permanently closing; or


(F) Its ceasing to provide educational programs for a reason other than a normal vacation period or a natural disaster that directly affects the institution, a particular location, or the students of the institution or location;


(2) Limit, under the provisions of 34 CFR 668.86, the authority of the institution to disburse, deliver, or cause the disbursement or delivery of funds under one or more title IV, HEA programs as otherwise provided under 34 CFR 668.26 for the benefit of students enrolled at the ineligible institution or location prior to the loss of eligibility of that institution or location; and


(3) Initiate an emergency action under the provisions contained in 34 CFR 668.83 with regard to the institution’s participation in one or more title IV, HEA programs.


(b) If the Secretary believes that an educational program offered by an institution that was previously designated by the Secretary as an eligible institution under the HEA does not satisfy relevant statutory or regulatory requirements that define that educational program as part of an eligible institution, the Secretary may in accordance with the procedural provisions described in paragraph (a) of this section –


(1) Undertake to terminate that educational program’s eligibility under one or more of the title IV, HEA programs under the procedural provisions applicable to terminations described in paragraph (a) of this section;


(2) Limit the institution’s authority to deliver, disburse, or cause the delivery or disbursement of funds provided under that title IV, HEA program to students enrolled in that educational program, as otherwise provided in 34 CFR 668.26; and


(3) Initiate an emergency action under the provisions contained in 34 CFR 668.83 with regard to the institution’s participation in one or more title IV, HEA programs with respect to students enrolled in that educational program.


(c)(1) An action to terminate and limit the eligibility of an institution as a whole or as to any of its locations or educational programs is initiated in accordance with 34 CFR 668.86(b) and becomes final 20 days after the Secretary notifies the institution of the proposed action, unless the designated department official receives by that date a request for a hearing or written material that demonstrates that the termination and limitation should not take place.


(2) Once a termination under this section becomes final, the termination is effective with respect to any commitment, delivery, or disbursement of funds provided under an applicable title IV, HEA program by the institution –


(i) Made to students enrolled in the ineligible institution, location, or educational program; and


(ii) Made on or after the date of the act or omission that caused the loss of eligibility as to the institution, location, or educational program.


(3) Once a limitation under this section becomes final, the limitation is effective with regard to any commitment, delivery, or disbursement of funds under the applicable title IV, HEA program by the institution –


(i) Made after the date on which the limitation became final; and


(ii) Made to students enrolled in the ineligible institution, location, or educational program.


(d) After a termination under this section of the eligibility of an institution as a whole or as to a location or educational program becomes final, the institution may not originate applications for, make awards of or commitments for, deliver, or disburse funds under the applicable title IV, HEA program, except –


(1) In accordance with the requirements of 34 CFR 668.26(c) with respect to students enrolled in the ineligible institution, location, or educational program; and


(2) After satisfaction of any additional requirements, imposed pursuant to a limitation under paragraph (a)(2) of this section, which may include the following:


(i) Completion of the actions required by 34 CFR 668.26(a) and (b).


(ii) Demonstration that the institution has made satisfactory arrangements for the completion of actions required by 34 CFR 668.26(a) and (b).


(iii) Securing the confirmation of a third party selected by the Secretary that the proposed disbursements or delivery of title IV, HEA program funds meet the requirements of the applicable program.


(iv) Using institutional funds to make disbursements permitted under this paragraph and seeking reimbursement from the Secretary for those disbursements.


(e) If the Secretary undertakes to terminate the eligibility of an institution, location, or program under paragraphs (a) and (b) of this section:


(1) If the basis for the loss of eligibility is the loss of accreditation or preaccreditation, the sole issue is whether the institution, location, or program has the requisite accreditation or preaccreditation. The presiding official has no authority to consider challenges to the action of the accrediting agency.


(2) If the basis for the loss of eligibility is the loss of legal authorization, the sole issue is whether the institution, location, or program has the requisite legal authorization. The presiding official has no authority to consider challenges to the action of a State agency in removing the legal authorization.


(3) If the basis for the loss of eligibility of a foreign graduate medical school is one or more annual pass rates on the U.S. Medical Licensing Examination below the threshold required in § 600.55(f)(1)(ii), the sole issue is whether one or more of the foreign medical school’s pass rate or rates for the preceding calendar year fell below that threshold. For a foreign graduate medical school that opted to have the Educational Commission for Foreign Medical Graduates (ECFMG) calculate and provide the pass rates directly to the Secretary for the preceding calendar year as permitted under § 600.55(d)(2) in lieu of the foreign graduate medical school providing pass rate data to the Secretary under § 600.55(d)(1)(iii), the ECFMG’s calculations of the school’s rates are conclusive; and the presiding official has no authority to consider challenges to the computation of the rate or rates by the ECFMG.


(Authority: 20 U.S.C. 1088, 1091, 1094, 1099a-3, and 1141)

[59 FR 22336, Apr. 29, 1994, as amended at 63 FR 40623, July 29, 1998; 75 FR 67193, Nov. 1, 2010; 84 FR 58917, Nov. 1, 2019]


§ 600.42 Severability.

If any provision of this subpart or its application to any person, act, or practice is held invalid, the remainder of the subpart or the application of its provisions to any person, act, or practice shall not be affected thereby.


[84 FR 58917, Nov. 1, 2019]


Subpart E – Eligibility of Foreign Institutions To Apply To Participate in the Federal Family Education Loan (FFEL) Programs


Source:59 FR 22063, Apr. 28, 1994, unless otherwise noted.

§ 600.51 Purpose and scope.

(a) A foreign institution is eligible to apply to participate in the Federal Family Education Loan (FFEL) programs if it is comparable to an eligible institution of higher education located in the United States and has been approved by the Secretary in accordance with the provisions of this subpart.


(b) This subpart E contains the procedures and criteria under which a foreign institution may be deemed eligible to apply to participate in the FFEL programs.


(c) Applicability of other title IV, HEA program regulations.


(1) A foreign institution must comply with all requirements for eligible and participating institutions except when made inapplicable by the HEA or when the Secretary, through publication in the Federal Register, identifies specific provisions as inapplicable to foreign institutions.


(2)(i) A public or nonprofit foreign institution that meets the requirements of this subpart, and that also meets the requirements of this part except as provided in §§ 600.51(c)(1) and 600.54(a), is considered an “institution of higher education” for purposes of the title IV, HEA program regulations; and


(ii) A for-profit foreign institution that meets the requirements of this subpart, and that also meets the requirements of this Part, except as provided in §§ 600.51(c)(1) and 600.54(a), is considered a “proprietary institution” for purposes of title IV, HEA program regulations.


(d)(1) A program offered by a foreign school through any use of a telecommunications course, correspondence course, or direct assessment program is not an eligible program;


(2) Correspondence course has the meaning given in § 600.2;


(3) Direct assessment program has the meaning given in § 668.10(a)(1) of this chapter;


(4) Telecommunications course is a course offered through any one or a combination of the technologies listed in the definition of telecommunications course in § 600.2, except that telecommunications technologies may be used to supplement and support instruction that is offered in a classroom located in the foreign country where the students and instructor are physically present.


(Authority: 20 U.S.C. 1082, 1088)

[59 FR 22063, Apr. 28, 1994, as amended at 71 FR 45692, Aug. 9, 2006; 75 FR 67193, Nov. 1, 2010]


§ 600.52 Definitions.

The following definitions apply to this subpart E:


Associate degree school of nursing: A school that provides primarily or exclusively a two-year program of postsecondary education in professional nursing leading to a degree equivalent to an associate degree in the United States.


Clinical training: The portion of a graduate medical education program that counts as a clinical clerkship for purposes of medical licensure comprising core, required clinical rotation, and not required clinical rotation.


Collegiate school of nursing: A school that provides primarily or exclusively a minimum of a two-year program of postsecondary education in professional nursing leading to a degree equivalent to a bachelor of arts, bachelor of science, or bachelor of nursing in the United States, or to a degree equivalent to a graduate degree in nursing in the United States, and including advanced training related to the program of education provided by the school.


Diploma school of nursing: A school affiliated with a hospital or university, or an independent school, which provides primarily or exclusively a two-year program of postsecondary education in professional nursing leading to the equivalent of a diploma in the United States or to equivalent indicia that the program has been satisfactorily completed.


Foreign graduate medical school: A foreign institution (or, for a foreign institution that is a university, a component of that foreign institution) having as its sole mission providing an educational program that leads to a degree of medical doctor, doctor of osteopathic medicine, or the equivalent. A reference in these regulations to a foreign graduate medical school as “freestanding” pertains solely to those schools that qualify by themselves as foreign institutions and not to schools that are components of universities that qualify as foreign institutions.


Foreign institution: (1) For the purposes of students who receive title IV aid, an institution that –


(i) Is not located in the United States;


(ii) Except as provided with respect to clinical training offered under § 600.55(h)(1), § 600.56(b), or § 600.57(a)(2) –


(A) Has no U.S. location;


(B) Has no written arrangements, within the meaning of 34 CFR 668.5, with institutions or organizations located in the United States for those institutions or organizations to provide a portion of an eligible program, as defined under 34 CFR 668.8, except for written arrangements for no more than 25 percent of the courses required by the program to be provided by eligible institutions located in the United States; and


(C) Does not permit students to complete an eligible program by enrolling in courses offered in the United States, except that it may permit students to complete up to 25 percent of the program by –


(1) Enrolling in the coursework, research, work, or special studies offered by an eligible institution in the United States; or


(2) Participating in an internship or externship provided by an ineligible organization as described in 34 CFR 668.5(h)(2);


(iii) Is legally authorized by the education ministry, council, or equivalent agency of the country in which the institution is located to provide an educational program beyond the secondary education level; and


(iv) Awards degrees, certificates, or other recognized educational credentials in accordance with § 600.54(e) that are officially recognized by the country in which the institution is located.


(2) Notwithstanding paragraph (1)(ii)(C) of this definition, independent research done by an individual student in the United States for not more than one academic year is permitted, if it is conducted during the dissertation phase of a doctoral program under the guidance of faculty, and the research is performed only in a facility in the United States.


(3) If the educational enterprise enrolls students both within the United States and outside the United States, and the number of students who would be eligible to receive title IV, HEA program funds attending locations outside the United States is at least twice the number of students enrolled within the United States, the locations outside the United States must apply to participate as one or more foreign institutions and must meet all requirements of paragraph (1) of this definition, and the other requirements of this part. For the purposes of this paragraph (3), an educational enterprise consists of two or more locations offering all or part of an educational program that are directly or indirectly under common ownership.


Foreign nursing school: A foreign institution (or, for a foreign institution that is a university, a component of that foreign institution) that is an associate degree school of nursing, a collegiate school of nursing, or a diploma school of nursing. A reference in these regulations to a foreign nursing school as “freestanding” pertains solely to those schools that qualify by themselves as foreign institutions and not to schools that are components of universities that qualify as foreign institutions.


Foreign veterinary school: A foreign institution (or, for a foreign institution that is a university, a component of that foreign institution) having as its sole mission providing an educational program that leads to the degree of doctor of veterinary medicine, or the equivalent. A reference in these regulations to a foreign veterinary school as “freestanding” pertains solely to those schools that qualify by themselves as foreign institutions and not to schools that are components of universities that qualify as foreign institutions.


National Committee on Foreign Medical Education and Accreditation (NCFMEA): The operational committee of medical experts established by the Secretary to determine whether the medical school accrediting standards used in other countries are comparable to those applied to medical schools in the United States, for purposes of evaluating the eligibility of accredited foreign graduate medical schools to participate in the title IV, HEA programs.


Passing score: The minimum passing score as defined by the Educational Commission for Foreign Medical Graduates (ECFMG), or on the National Council Licensure Examination for Registered Nurses (NCLEX-RN), as applicable.


Post-baccalaureate/equivalent medical program: A program offered by a foreign graduate medical school that requires, as a condition of admission, that its students have already completed their non-medical undergraduate studies and that consists solely of courses and training leading to employment as a doctor of medicine or doctor of osteopathic medicine.


Secondary school: A school that provides secondary education as determined under the laws of the country in which the school is located.


[59 FR 22063, Apr. 28, 1994, as amended at 75 FR 67193, Nov. 1, 2010; 85 FR 54812, Sept. 2, 2020]


§ 600.53 Requesting an eligibility determination.

(a) To be designated as eligible to apply to participate in the FFEL programs or to continue to be eligible beyond the scheduled expiration of the institution’s current period of eligibility, a foreign institution must –


(1) Apply on the form prescribed by the Secretary; and


(2) Provide all the information and documentation requested by the Secretary to make a determination of that eligibility.


(b) If a foreign institution fails to provide, release, or authorize release to the Secretary of information that is required in this subpart E, the institution is ineligible to apply to participate in the FFEL programs.


(Approved by the Office of Management and Budget under control number 1840-0673)

(Authority: 20 U.S.C. 1082, 1088)


§ 600.54 Criteria for determining whether a foreign institution is eligible to apply to participate in the Direct Loan Program.

The Secretary considers a foreign institution to be comparable to an eligible institution of higher education in the United States and eligible to apply to participate in the Direct Loan Program if the foreign institution meets the following requirements:


(a)(1) Except for a freestanding foreign graduate medical school, foreign veterinary school, or foreign nursing school, the foreign institution is a public or private nonprofit educational institution.


(2) For a public or private nonprofit foreign institution, the institution meets the requirements of § 600.4, except § 600.4(a)(1), (a)(2), (a)(3), (a)(4)(ii), (a)(5), (b), (c), and any requirements the HEA or the Secretary has designated as inapplicable in accordance with § 600.51(c)(1).


(3) For a for-profit foreign medical, veterinary, or nursing school, the school meets the requirements of § 600.5, except § 600.5(a)(2), (a)(3), (a)(4), (a)(5)(i)(B), (a)(5)(ii), (a)(6), (c), (d), (e) and any requirements the HEA or the Secretary has designated as inapplicable in accordance with § 600.51(c)(1).


(b) The foreign institution admits as regular students only persons who –


(1) Have a secondary school completion credential; or


(2) Have the recognized equivalent of a secondary school completion credential.


(c)(1) Notwithstanding 34 CFR 668.5, written arrangements between an eligible foreign institution and an ineligible entity are limited to those under which –


(i) The ineligible entity is an institution that meets the requirements in paragraphs (1)(iii) and (iv) of the definition of “foreign institution” in § 600.52; and


(ii) The ineligible foreign institution provides 25 percent or less of the educational program.


(2) For the purpose of this paragraph (c), written arrangements do not include affiliation agreements for the provision of clinical training for foreign medical, veterinary, and nursing schools.


(d) An additional location of a foreign institution must separately meet the definition of a foreign institution in § 600.52 if the additional location is –


(1) Located outside of the country in which the main campus is located, except as provided in § 600.55(h)(1), § 600.56(b), § 600.57(a)(2), § 600.55(h)(3), and the definition of foreign institution found in § 600.52; or


(2) Located within the same country as the main campus, but is not covered by the legal authorization of the main campus.


(e) The foreign institution provides an eligible education program –


(1) For which the institution is legally authorized to award a degree that is equivalent to an associate, baccalaureate, graduate, or professional degree awarded in the United States;


(2) That is at least a two-academic-year program acceptable for full credit toward the equivalent of a baccalaureate degree awarded in the United States; or


(3)(i) That is equivalent to at least a one-academic-year training program in the United States that leads to a certificate, degree, or other recognized educational credential and prepares students for gainful employment in a recognized occupation within the meaning of the gainful employment provisions.


(ii) An institution must demonstrate to the satisfaction of the Secretary that the amount of academic work required by a program in paragraph (e)(3)(i) of this section is equivalent to at least the definition of an academic year in § 668.3.


(f) For a for-profit foreign medical, veterinary, or nursing school –


(1) No portion of an eligible medical or veterinary program offered may be at what would be an undergraduate level in the United States; and


(2) The title IV, HEA program eligibility does not extend to any joint degree program.


(g) Proof that a foreign institution meets the requirements of paragraph (1)(iii) of the definition of a foreign institution in § 600.52 may be provided to the Secretary by a legal authorization from the appropriate education ministry, council, or equivalent agency –


(1) For all eligible foreign institutions in the country;


(2) For all eligible foreign institutions in a jurisdiction within the country; or


(3) For each separate eligible foreign institution in the country.


[75 FR 67194, Nov. 1, 2010, as amended at 85 FR 54812, Sept. 2, 2020]


§ 600.55 Additional criteria for determining whether a foreign graduate medical school is eligible to apply to participate in the Direct Loan Program.

(a) General. (1) The Secretary considers a foreign graduate medical school to be eligible to apply to participate in the title IV, HEA programs if, in addition to satisfying the criteria of this part (except the criterion in § 600.54 that the institution be public or private nonprofit), the school satisfies the criteria of this section.


(2) A foreign graduate medical school must provide, and in the normal course require its students to complete, a program of clinical training and classroom medical instruction of not less than 32 months in length, that is supervised closely by members of the school’s faculty and that –


(i) Is provided in facilities adequately equipped and staffed to afford students comprehensive clinical training and classroom medical instruction;


(ii) Is approved by all medical licensing boards and evaluating bodies whose views are considered relevant by the Secretary; and


(iii) As part of its clinical training, does not offer more than two electives consisting of no more than eight weeks per student at a site located in a foreign country other than the country in which the main campus is located or in the United States, unless that location is included in the accreditation of a medical program accredited by the Liaison Committee on Medical Education (LCME) or the American Osteopathic Association (AOA).


(3) A foreign graduate medical school must appoint for the program described in paragraph (a)(2) of this section only those faculty members whose academic credentials are the equivalent of credentials required of faculty members teaching the same or similar courses at medical schools in the United States.


(4) A foreign graduate medical school must have graduated classes during each of the two twelve-month periods immediately preceding the date the Secretary receives the school’s request for an eligibility determination.


(b) Accreditation. A foreign graduate medical school must –


(1) Be approved by an accrediting body –


(i) That is legally authorized to evaluate the quality of graduate medical school educational programs and facilities in the country where the school is located; and


(ii) Whose standards of accreditation of graduate medical schools have been evaluated by the NCFMEA or its successor committee of medical experts and have been determined to be comparable to standards of accreditation applied to medical schools in the United States; or


(2) Be a public or private nonprofit educational institution that satisfies the requirements in § 600.4(a)(5)(i).


(c) Admission criteria. (1) A foreign graduate medical school having a post-baccalaureate/equivalent medical program must require students accepted for admission who are U.S. citizens, nationals, or permanent residents to have taken the Medical College Admission Test (MCAT) and to have reported their scores to the foreign graduate medical school; and


(2) A foreign graduate medical school must determine the consent requirements for, and require the necessary consents of, all students accepted for admission for whom the school must report to enable the school to comply with the collection and submission requirements of paragraph (d) of this section.


(d) Collection and submission of data. (1) A foreign graduate medical school must obtain, at its own expense, and submit, by the date required by paragraph (d)(3) of this section –


(i) To its accrediting authority and, on request, to the Secretary, the scores on the MCAT or successor examination, of all students admitted during the preceding calendar year who are U.S. citizens, nationals, or eligible permanent residents, together with a statement of the number of times each student took the examination;


(ii) To its accrediting authority and, on request, to the Secretary, the percentage of students graduating during the preceding calendar year (including at least all graduates who are U.S. citizens, nationals, or eligible permanent residents) who obtain placement in an accredited U.S. medical residency program;


(iii) To the Secretary, except as provided for in paragraph (d)(2) of this section, all scores, disaggregated by step/test – i.e., Step 1, Step 2 – Clinical Skills (Step 2-CS), and Step 2 – Clinical Knowledge (Step 2-CK), or the successor examinations – and attempt, earned during the preceding calendar year by each student and graduate, on Step 1, Step 2-CS, and Step 2-CK, or the successor examinations, of the U.S. Medical Licensing Examination (USMLE), together with the dates the student has taken each test, including any failed tests;


(iv) To the Secretary, a statement of its citizenship rate for the preceding calendar year for a school that is subject to paragraph (f)(1)(i)(A) of this section, together with a description of the methodology used in deriving the rate that is acceptable to the Secretary.


(2) In lieu of submitting the information required in paragraph (d)(1)(iii) of this section to the Secretary, a foreign graduate medical school that is not subject to paragraph (f)(4) of this section may agree to allow the Educational Commission for Foreign Medical Graduates (ECFMG) or other responsible third party to calculate the rate described in paragraph (f)(1)(ii) and (f)(3) of this section for the preceding calendar year and provide the rate directly to the Secretary on the school’s behalf with a copy to the foreign graduate medical school, provided –


(i) The foreign graduate medical school has provided by April 30 to the Secretary written consent acceptable to the Secretary to reliance by the Secretary on the pass rate as calculated by the ECFMG or other responsible third party for purposes of determining compliance with paragraph (f)(1)(ii) and (f)(3) of this section for the preceding calendar year; and


(ii) The foreign graduate medical school agrees in its written consent that for the preceding calendar year the rate as calculated by the ECFMG or other designated third party will be conclusive for purposes of determining compliance with paragraph (f)(1)(ii) and (f)(3) of this section.


(3) A foreign graduate medical school must submit the data it collects in accordance with paragraph (d)(1) of this section no later than April 30 of each year, unless the Secretary specifies a different date through a notice in the Federal Register.


(e) Requirements for clinical training. (1)(i) A foreign graduate medical school must have –


(A) A formal affiliation agreement with any hospital or clinic at which all or a portion of the school’s core clinical training or required clinical rotations are provided; and


(B) Either a formal affiliation agreement or other written arrangements with any hospital or clinic at which all or a portion of its clinical rotations that are not required are provided, except for those locations that are not used regularly, but instead are chosen by individual students who take no more than two electives at the location for no more than a total of eight weeks.


(ii) The agreements described in paragraph (e)(1)(i) of this section must state how the following will be addressed at each site –


(A) Maintenance of the school’s standards;


(B) Appointment of faculty to the medical school staff;


(C) Design of the curriculum;


(D) Supervision of students;


(E) Evaluation of student performance; and


(F) Provision of liability insurance.


(2) A foreign graduate medical school must notify its accrediting body within one year of any material changes in –


(i) The educational programs, including changes in clinical training programs; and


(ii) The overseeing bodies and in the formal affiliation agreements with hospitals and clinics described in paragraph (e)(1)(i) of this section.


(f) Citizenship and USMLE pass rate percentages. (1)(i)(A) During the calendar year preceding the year for which any of the school’s students seeks an title IV, HEA program loan, at least 60 percent of those enrolled as full-time regular students in the school and at least 60 percent of the school’s most recent graduating class must have been persons who did not meet the citizenship and residency criteria contained in section 484(a)(5) of the HEA, 20 U.S.C. 1091(a)(5); or


(B) The school must have had a clinical training program approved by a State prior to January 1, 2008, and must continue to operate a clinical training program in at least one State that approves the program; and


(ii) Except as provided in paragraph (f)(4) of this section, for a foreign graduate medical school outside of Canada, for Step 1, Step 2-CS, and Step 2-CK, or the successor examinations, of the USMLE administered by the ECFMG, at least 75 percent of the school’s students and graduates who took that step/test of the examination in the year preceding the year for which any of the school’s students seeks a title IV, HEA program loan must have received a passing score on that step/test and are taking the step/test for the first time; or


(2)(i) The school must have had a clinical training program approved by a State as of January 1, 1992; and


(ii) The school must continue to operate a clinical training program in at least one State that approves the program.


(3) In performing the calculation required in paragraph (f)(1)(ii) of this section, a foreign graduate medical school shall –


(i) Include as a graduate each student who graduated from the school during the three years preceding the year for which the calculation is performed and who took that step/test for the first time in that year; and


(ii) Include students and graduates who take more than one step/test of the USMLE examination for the first time in the same year in the denominator for each of those steps/tests;


(4)(i) If the calculation described in paragraph (f)(1)(ii) of this section would result in any step/test pass rate based on fewer than eight students, a single pass rate for the school is determined instead based on the performance of the school’s students and graduates on Step 1, Step 2-CS, and Step 2-CK combined;


(ii) If combining the results on all three step/tests as permitted in paragraph (f)(4)(i) of this section would result in a pass rate based on fewer than eight step/test results, the school is deemed to have no pass rate for that year and the results for the year are combined with each subsequent year until a pass rate based on at least eight step/test results is derived.


(g) Other criteria. (1) As part of establishing, publishing, and applying reasonable satisfactory academic progress standards, a foreign graduate medical school must include as a quantitative component a maximum timeframe in which a student must complete his or her educational program that must –


(i) Be no longer than 150 percent of the published length of the educational program measured in academic years, terms, credit hours attempted, clock hours completed, etc., as appropriate; and


(ii) Meet the requirements of § 668.16(e)(2)(ii)(B), (C) and (D).


(2) A foreign graduate medical school must document the educational remediation it provides to assist students in making satisfactory academic progress.


(3) A foreign graduate medical school must publish all the languages in which instruction is offered.


(h) Location of a program. (1) Except as provided in paragraph (h)(3)(ii) of this section, all portions of a graduate medical education program offered to U.S. students must be located in a country whose medical school accrediting standards are comparable to standards used in the United States, as determined by the NCFMEA, except for clinical training sites located in the United States.


(2) No portion of the graduate medical educational program offered to U.S. students, other than the clinical training portion of the program, may be located outside of the country in which the main campus of the foreign graduate medical school is located.


(3)(i) Except as provided in paragraph (h)(3)(ii) of this section, for any part of the clinical training portion of the educational program located in a foreign country other than the country in which the main campus is located or in the United States, in order for students attending the site to be eligible to borrow title IV, HEA program funds –


(A) The site must be located in an NCFMEA approved comparable foreign country;


(B) The institution’s medical accrediting agency must have conducted an on-site evaluation and specifically approved the clinical training site; and


(C) Clinical instruction must be offered in conjunction with medical educational programs offered to students enrolled in accredited medical schools located in that approved foreign country.


(ii) A clinical training site located in a foreign country other than the country in which the main campus is located or in the United States is not required to meet the requirements of paragraph (h)(3)(i) of this section in order for students attending that site to be eligible to borrow title IV, HEA program funds if –


(A) The location is included in the accreditation of a medical program accredited by the Liaison Committee on Medical Education (LCME) or the American Osteopathic Association (AOA); or


(B) No individual student takes more than two electives at the location and the combined length of the electives does not exceed eight weeks.


[75 FR 67195, Nov. 1, 2010]


§ 600.56 Additional criteria for determining whether a foreign veterinary school is eligible to apply to participate in the Direct Loan Program.

(a) The Secretary considers a foreign veterinary school to be eligible to apply to participate in the Direct Loan Program if, in addition to satisfying the criteria in this part (except the criterion in § 600.54 that the institution be public or private nonprofit), the school satisfies all of the following criteria:


(1) The school provides, and in the normal course requires its students to complete, a program of clinical and classroom veterinary instruction that is supervised closely by members of the school’s faculty, and that is provided in facilities adequately equipped and staffed to afford students comprehensive clinical and classroom veterinary instruction through a training program for foreign veterinary students that has been approved by all veterinary licensing boards and evaluating bodies whose views are considered relevant by the Secretary.


(2) The school has graduated classes during each of the two twelve-month periods immediately preceding the date the Secretary receives the school’s request for an eligibility determination.


(3) The school employs for the program described in paragraph (a)(1) of this section only those faculty members whose academic credentials are the equivalent of credentials required of faculty members teaching the same or similar courses at veterinary schools in the United States.


(4) Effective July 1, 2015, the school is accredited or provisionally accredited by an organization acceptable to the Secretary for the purpose of evaluating veterinary programs.


(b)(1) No portion of the foreign veterinary educational program offered to U.S. students, other than the clinical training portion of the program as provided for in paragraph (b)(2) of this section, may be located outside of the country in which the main campus of the foreign veterinary school is located;


(2)(i) For a veterinary school that is neither public nor private nonprofit, the school’s students must complete their clinical training at an approved veterinary school located in the United States;


(ii) For a veterinary school that is public or private nonprofit, the school’s students may complete their clinical training at an approved veterinary school located –


(A) In the United States;


(B) In the home country; or


(C) Outside of the United States or the home country, if –


(1) The location is included in the accreditation of a veterinary program accredited by the American Veterinary Medical Association (AVMA); or


(2) No individual student takes more than two electives at the location and the combined length of the elective does not exceed eight weeks.


(Authority: 20 U.S.C. 1002 and 1092.)

[75 FR 67197, Nov. 1, 2010]


§ 600.57 Additional criteria for determining whether a foreign nursing school is eligible to apply to participate in the Direct Loan Program.

(a) Effective July 1, 2012 for a foreign nursing school that was participating in any title IV, HEA program on August 13, 2008, and effective July 1, 2011 for all other foreign nursing schools, the Secretary considers the foreign nursing school to be eligible to apply to participate in the Direct Loan Program if, in addition to satisfying the criteria in this part (except the criterion in § 600.54 that the institution be public or private nonprofit), the nursing school satisfies all of the following criteria:


(1) The nursing school is an associate degree school of nursing, a collegiate school of nursing, or a diploma school of nursing.


(2) The nursing school has an agreement with a hospital located in the United States or an accredited school of nursing located in the United States that requires students of the nursing school to complete the student’s clinical training at the hospital or accredited school of nursing.


(3) The nursing school has an agreement with an accredited school of nursing located in the United States providing that students graduating from the nursing school located outside of the United States also receive a degree from the accredited school of nursing located in the United States.


(4) The nursing school certifies only Federal Stafford Loan program loans or Federal PLUS program loans, as those terms are defined in § 668.2, for students attending the nursing school.


(5) The nursing school reimburses the Secretary for the cost of any loan defaults for current and former students included in the calculation of the institution’s cohort default rate during the previous fiscal year.


(6)(i) The nursing school determines the consent requirements for and requires the necessary consents of all students accepted for admission who are U.S. citizens, nationals, or eligible permanent residents to enable the school to comply with the collection and submission requirements of paragraph (a)(6)(ii) of this section.


(ii) The nursing school annually either –


(A) Obtains, at its own expense, all results achieved by students and graduates who are U.S. citizens, nationals, or eligible permanent residents on the National Council Licensure Examination for Registered Nurses (NCLEX-RN), together with the dates the student has taken the examination, including any failed examinations, and provides such results to the Secretary; or


(B) Obtains a report or reports from the National Council of State Boards of Nursing (NCSB), or an NCSB affiliate or NCSB contractor, reflecting the percentage of the school’s students and graduates taking the NCLEX-RN in the preceding year who passed the examination, or the data from which the percentage could be derived, and provides the report to the Secretary.


(7) Not less than 75 percent of the school’s students and graduates who are U.S. citizens, nationals, or eligible permanent residents who took the NCLEX-RN in the year preceding the year for which the institution is certifying a Federal Stafford Loan or a Federal Plus Loan, passed the examination.


(8) The school provides, including under the agreements described in paragraphs (a)(2) and (a)(3) of this section, and in the normal course requires its students to complete, a program of clinical and classroom nursing instruction that is supervised closely by members of the school’s faculty that is provided in facilities adequately equipped and staffed to afford students comprehensive clinical and classroom nursing instruction, through a training program for foreign nursing students that has been approved by all nurse licensing boards and evaluating bodies whose views are considered relevant by the Secretary.


(9) The school has graduated classes during each of the two twelve-month periods immediately preceding the date the Secretary receives the school’s request for an eligibility determination.


(10) The school employs only those faculty members whose academic credentials are the equivalent of credentials required of faculty members teaching the same or similar courses at nursing schools in the United States.


(b) For purposes of paragraph (a)(5) of this section, the cost of a loan default is the estimated future cost of collections on the defaulted loan.


(c) The Department continues to collect on the Direct Loan after a school reimburses the Secretary for the amount specified in paragraph (b) of this section until the loan is paid in full or otherwise satisfied, or the loan account is closed out.


(d) No portion of the foreign nursing program offered to U.S. students may be located outside of the country in which the main campus of the foreign nursing school is located, except for clinical sites located in the United States.


[75 FR 67197, Nov. 1, 2010]


§ 600.58 Duration of eligibility determination.

(a) The eligibility of a foreign institution under this subpart expires six years after the date of the Secretary’s determination that the institution is eligible to apply for participation, except that the Secretary may specify a shorter period of eligibility. In the case of a foreign graduate medical school, continued eligibility is dependent upon annual submission of the data and information required under § 600.55(a)(5)(i), subject to the terms described in § 600.53(b).


(b) A foreign institution that has been determined eligible loses its eligibility on the date that the institution no longer meets any of the criteria in this subpart E.


(c) Notwithstanding the provisions of 34 CFR 668.26, if a foreign institution loses its eligibility under this subpart E, an otherwise eligible student, continuously enrolled at the institution before the loss of eligibility, may receive an FFEL program loan for attendance at that institution for the academic year succeeding the academic year in which that institution lost its eligibility, if the student actually received an FFEL program loan for attendance at the institution for a period during which the institution was eligible under this subpart E.


(Authority: 20 U.S.C. 1082, 1088, 1099c)

[59 FR 22063, Apr. 28, 1994. Redesignated at 64 FR 58616, Oct. 29, 1999, as amended at 69 FR 12275, Mar. 16, 2004. Redesignated at 75 FR 67197, Nov. 1, 2010]


PART 601 – INSTITUTION AND LENDER REQUIREMENTS RELATING TO EDUCATION LOANS


Authority:20 U.S.C. 1019-1019d, 1021, 1094(a) and (h).


Source:74 FR 55643, Oct. 28, 2009, unless otherwise noted.

Subpart A – General

§ 601.1 Scope.

This part establishes disclosure and reporting requirements for covered institutions, institution-affiliated organizations, and lenders that provide, issue, recommend, promote, endorse, or provide information relating to education loans. Education loans include loans authorized by the Higher Education Act of 1965, as amended (HEA) and private education loans.


(Authority:20 U.S.C. 1019-1019d, 1021, 1094(a)(25) and (e)).


§ 601.2 Definitions.

(a) The definitions of the following terms used in this part are set forth in the regulations for Institutional Eligibility under the Higher Education Act of 1965, as amended, 34 CFR part 600:


Federal Family Education Loan (FFEL) Program


Secretary


Title IV, HEA program


(b) The following definitions also apply to this part:


Agent: An officer or employee of a covered institution or an institution-affiliated organization.


Covered institution: Any institution of higher education, proprietary institution of higher education, postsecondary vocational institution, or institution outside the United States, as these terms are defined in 34 CFR part 600, that receives any Federal funding or assistance.


Education loan: Except when used as part of the term “private education loan”,


(1) Any loan made, insured, or guaranteed under the Federal Family Education Loan (FFEL) Program;


(2) Any loan made under the William D. Ford Federal Direct Loan Program; or


(3) A private education loan.


Institution-affiliated organization: (1) Any organization that –


(i) Is directly or indirectly related to a covered institution; and


(ii) Is engaged in the practice of recommending, promoting, or endorsing education loans for students attending such covered institution or the families of such students.


(2) An institution-affiliated organization –


(i) May include an alumni organization, athletic organization, foundation, or social, academic, or professional organization, of a covered institution; and


(ii) Does not include any lender with respect to any education loan secured, made, or extended by such lender.


Lender: (1) An eligible lender in the Federal Family Education Loan (FFEL) Program, as defined in 34 CFR 682.200(b);


(2) The Department in the Direct Loan program;


(3) In the case of a private educational loan, a private education lender as defined in section 140 of the Truth in Lending Act; and


(4) Any other person engaged in the business of securing, making, or extending education loans on behalf of the lender.


Officer: A director or trustee of a covered institution or institution-affiliated organization, if such individual is treated as an employee of such covered institution or institution-affiliated organization, respectively.


Preferred lender arrangement: (1) An arrangement or agreement between a lender and a covered institution or an institution-affiliated organization of such covered institution –


(i) Under which a lender provides or otherwise issues education loans to the students attending such covered institution or the families of such students; and


(ii) That relates to such covered institution or such institution-affiliated organization recommending, promoting, or endorsing the education loan products of the lender.


(2) A preferred lender arrangement does not include –


(i) Arrangements or agreements with respect to loans made under the William D. Ford Federal Direct Loan Program; or


(ii) Arrangements or agreements with respect to loans that originate through the PLUS Loan auction pilot program under section 499(b) of the HEA.


(3) For purpose of this definition, an arrangement or agreement does not exist if the private education loan provided or issued to a student attending a covered institution is made by the covered institution or by an institution-affiliated organization of the covered institution, and the private education loan is –


(i) Funded by the covered institution’s or institution-affiliated organization’s own funds;


(ii) Funded by donor-directed contributions;


(iii) Made under title VII or title VIII of the Public Service Health Act; or


(iv) Made under a State-funded financial aid program, if the terms and conditions of the loan include a loan forgiveness option for public service.


Private education loan: As the term is defined in 12 CFR 226.46(b)(5), a loan provided by a private educational lender that is not a title IV loan and that is issued expressly for postsecondary education expenses to a borrower, regardless of whether the loan is provided through the educational institution that the student attends or directly to the borrower from the private educational lender. A private education loan does not include –


(1) An extension of credit under an open end consumer credit plan, a reverse mortgage transaction, a residential mortgage transaction, or any other loan that is secured by real property or a dwelling; or


(2) An extension of credit in which the educational institution is the lender if –


(i) The term of the extension of credit is 90 days or less; or


(ii) An interest rate will not be applied to the credit balance and the term of the extension of credit is one year or less, even if the credit is payable in more than four installments.


(Authority:20 U.S.C. 1019)


Subpart B – Loan Information To Be Disclosed by Covered Institutions and Institution-Affiliated Organizations

§ 601.10 Preferred lender arrangement disclosures.

(a) A covered institution, or an institution-affiliated organization of such covered institution, that participates in a preferred lender arrangement must disclose –


(1) On such covered institution’s or institution-affiliated organization’s Web site and in all informational materials described in paragraph (b) of this section that describe or discuss education loans –


(i) The maximum amount of Federal grant and loan aid under title IV of the HEA available to students, in an easy to understand format;


(ii) The information identified on a model disclosure form developed by the Secretary pursuant to section 153(a)(2)(B) of the HEA, for each type of education loan that is offered pursuant to a preferred lender arrangement of the institution or institution-affiliated organization to students of the institution or the families of such students; and


(iii) A statement that such institution is required to process the documents required to obtain a loan under the Federal Family Education Loan (FFEL) Program from any eligible lender the student selects; and


(2) On such covered institution’s or institution-affiliated organization’s Web site and in all informational materials described in paragraph (b) of this section that describe or discuss private education loans –


(i) In the case of a covered institution, the information that the Board of Governors of the Federal Reserve System requires to be disclosed under section 128(e)(11) of the Truth in Lending Act (15 U.S.C. 1638(e)(11)), for each type of private education loan offered pursuant to a preferred lender arrangement of the institution to students of the institution or the families of such students; and


(ii) In the case of an institution-affiliated organization of a covered institution, the information the Board of Governors of the Federal Reserve System requires to be disclosed under section 128(e)(1) of the Truth in Lending Act (15 U.S.C. 1638(e)(1)), for each type of private education loan offered pursuant to a preferred lender arrangement of the organization to students of such institution or the families of such students.


(b) The informational materials described in paragraphs (a)(1) and (a)(2) of this section are publications, mailings, or electronic messages or materials that –


(1) Are distributed to prospective or current students of a covered institution and families of such students; and


(2) Describe or discuss the financial aid opportunities available to students at an institution of higher education.


(c)(1) Each covered institution and each institution-affiliated organization that participates in a preferred lender arrangement must provide the information described in paragraph (a)(1)(ii) of this section, and the information described in paragraphs (a)(2)(i) and (a)(2)(ii) of this section, respectively, for each type of education loan offered pursuant to the preferred lender arrangement.


(2) The information identified in paragraph (c)(1) of this section must be provided to students attending the covered institution, or the families of such students, as applicable, annually and must be provided in a manner that allows for the students or their families to take such information into account before selecting a lender or applying for an education loan.


(d) If a covered institution compiles, maintains, and makes available a preferred lender list as required under § 668.14(b)(28), the institution must –


(1) Clearly and fully disclose on such preferred lender list –


(i) Not less than the information required to be disclosed under section 153(a)(2)(A) of the HEA;


(ii) Why the institution participates in a preferred lender arrangement with each lender on the preferred lender list, particularly with respect to terms and conditions or provisions favorable to the borrower; and


(iii) That the students attending the institution, or the families of such students, do not have to borrow from a lender on the preferred lender list;


(2) Ensure, through the use of the list of lender affiliates provided by the Secretary under section 487(h)(2) of the HEA, that –


(i) There are not less than three FFEL lenders that are not affiliates of each other included on the preferred lender list and, if the institution recommends, promotes, or endorses private education loans, there are not less than two lenders of private education loans that are not affiliates of each other included on the preferred lender list; and


(ii) The preferred lender list under paragraph (d) of this section –


(A) Specifically indicates, for each listed lender, whether the lender is or is not an affiliate of each other lender on the preferred lender list; and


(B) If a lender is an affiliate of another lender on the preferred lender list, describes the details of such affiliation;


(3) Prominently disclose the method and criteria used by the institution in selecting lenders with which to participate in preferred lender arrangements to ensure that such lenders are selected on the basis of the best interests of the borrowers, including –


(i) Payment of origination or other fees on behalf of the borrower;


(ii) Highly competitive interest rates, or other terms and conditions or provisions of Title IV, HEA program loans or private education loans;


(iii) High-quality servicing for such loans; or


(iv) Additional benefits beyond the standard terms and conditions or provisions for such loans;


(4) Exercise a duty of care and a duty of loyalty to compile the preferred lender list under paragraph (d) of this section without prejudice and for the sole benefit of the students attending the institution, or the families of such students; and


(5) Not deny or otherwise impede the borrower’s choice of a lender or cause unnecessary delay in loan certification under title IV of the HEA for those borrowers who choose a lender that is not included on the preferred lender list.


(Approved by the Office of Management and Budget under control number 1845-XXXA)

(Authority:20 U.S.C. 1019a(a)(1)(A) and 1019b(c))


§ 601.11 Private education loan disclosures and self-certification form.

(a) A covered institution, or an institution-affiliated organization of such covered institution, that provides information regarding a private education loan from a lender to a prospective borrower must provide private education loan disclosures to the prospective borrower, regardless of whether the covered institution or institution-affiliated organization participates in a preferred lender arrangement.


(b) The private education loan disclosures must –


(1) Provide the prospective borrower with the information the Board of Governors of the Federal Reserve System requires to be disclosed under section 128(e)(1) of the Truth in Lending Act (15 U.S.C. 1638(e)(1)) for such loan;


(2) Inform the prospective borrower that –


(i) The prospective borrower may qualify for loans or other assistance under title IV of the HEA; and


(ii) The terms and conditions of Title IV, HEA program loans may be more favorable than the provisions of private education loans.


(c) The covered institution or institution-affiliated organization must ensure that information regarding private education loans is presented in such a manner as to be distinct from information regarding Title IV, HEA program loans.


(d) Upon an enrolled or admitted student applicant’s request for a private education loan self-certification form, an institution must provide to the applicant, in written or electronic form –


(1) The self-certification form for private education loans developed by the Secretary in consultation with the Board of Governors of the Federal Reserve System, to satisfy the requirements of section 128(e)(3) of the Truth in Lending Act (15 U.S.C. 1638(e)(3)); and


(2) The information required to complete the form, to the extent the institution possesses such information as specified in 34 CFR 668.14(b)(29).


(Approved by the Office of Management and Budget under control number 1845-XXXA)

(Authority:20 U.S.C. 1019a(a)(1)(B) and 1019d)


§ 601.12 Use of institution and lender name.

A covered institution, or an institution-affiliated organization of such covered institution, that participates in a preferred lender arrangement with a lender regarding private education loans must –


(a) Not agree to the lender’s use of the name, emblem, mascot, or logo of such institution or organization, or other words, pictures, or symbols readily identified with such institution or organization, in the marketing of private education loans to students attending such institution in any way that implies that the loan is offered or made by such institution or organization instead of the lender; and


(b) Ensure that the name of the lender is displayed in all information and documentation related to the private education loans described in this section.


(Authority:20 U.S.C. 1019a(a)(2)-(a)(3))


Subpart C – Responsibilities of Covered Institutions and Institution-Affiliated Organizations

§ 601.20 Annual report.

Each covered institution, and each institution-affiliated organization of such covered institution, that participates in a preferred lender arrangement, must –


(a) Prepare and submit to the Secretary an annual report, by a date determined by the Secretary, that includes, for each lender that participates in a preferred lender arrangement with such covered institution or organization –


(1) The information described in § 601.10(c); and


(2) A detailed explanation of why such covered institution or institution-affiliated organization participates in a preferred lender arrangement with the lender, including why the terms, conditions, and provisions of each type of education loan provided pursuant to the preferred lender arrangement are beneficial for students attending such institution, or the families of such students, as applicable; and


(b) Ensure that the report required under this section is made available to the public and provided to students attending or planning to attend such covered institution and the families of such students.


(Approved by the Office of Management and Budget under control number 1845-XXXA)

(Authority:20 U.S.C. 1019b(c)(2))


§ 601.21 Code of conduct.

(a)(1) A covered institution that participates in a preferred lender arrangement must comply with the code of conduct requirements described in this section.


(2) The covered institution must –


(i) Develop a code of conduct with respect to FFEL Program loans and private education loans with which the institution’s agents must comply. The code of conduct must –


(A) Prohibit a conflict of interest with the responsibilities of an agent of an institution with respect to FFEL Program loans and private education loans; and


(B) At a minimum, include the provisions specified in paragraph (c) of this section;


(ii) Publish such code of conduct prominently on the institution’s Web site; and


(iii) Administer and enforce such code by, at a minimum, requiring that all of the institution’s agents with responsibilities with respect to FFEL Program loans or private education loans be annually informed of the provisions of the code of conduct.


(b) Any institution-affiliated organization of a covered institution that participates in a preferred lender arrangement must –


(1) Comply with the code of conduct developed and published by such covered institution under paragraph (a)(1) of this section;


(2) If such institution-affiliated organization has a Web site, publish such code of conduct prominently on the Web site; and


(3) Administer and enforce such code of conduct by, at a minimum, requiring that all of such institution-affiliated organization’s agents with responsibilities with respect to FFEL Program loans or private education loans be annually informed of the provisions of such code of conduct.


(c) A covered institution’s code of conduct must prohibit –


(1) Revenue-sharing arrangements with any lender.The institution must not enter into any revenue-sharing arrangement with any lender. For purposes of this paragraph, the term revenue-sharing arrangement means an arrangement between a covered institution and a lender under which –


(i) A lender provides or issues a FFEL Program loan or private education loan to students attending the institution or to the families of such students; and


(ii) The institution recommends the lender or the loan products of the lender and in exchange, the lender pays a fee or provides other material benefits, including revenue or profit sharing, to the institution, an agent;


(2)(i) Employees of the financial aid office receiving gifts from a lender, a guarantor, or a loan servicer. Agents who are employed in the financial aid office of the institution or who otherwise have responsibilities with respect to FFEL Program loans or private education loans, must not solicit or accept any gift from a lender, guarantor, or servicer of FFEL Program loans or private education loans;


(ii) For purposes of paragraph (c) of this section, the term gift means any gratuity, favor, discount, entertainment, hospitality, loan, or other item having a monetary value of more than a de minimus amount. The term includes a gift of services, transportation, lodging, or meals, whether provided in kind, by purchase of a ticket, payment in advance, or reimbursement after the expense has been incurred;


(iii) The term gift does not include any of the following:


(A) Standard material, activities, or programs on issues related to a loan, default aversion, default prevention, or financial literacy, such as a brochure, a workshop, or training.


(B) Food, refreshments, training, or informational material furnished to an agent as an integral part of a training session that is designed to improve the service of a lender, guarantor, or servicer of FFEL Program loans or private education loans to the institution, if such training contributes to the professional development of the agent.


(C) Favorable terms, conditions, and borrower benefits on a FFEL Program loan or private education loan provided to a student employed by the institution if such terms, conditions, or benefits are comparable to those provided to all students of the institution.


(D) Entrance and exit counseling services provided to borrowers to meet the institution’s responsibilities for entrance and exit counseling as required by §§ 682.604(f) and 682.604(g), as long as the institution’s staff are in control of the counseling (whether in person or via electronic capabilities) and such counseling does not promote the products or services of any specific lender.


(E) Philanthropic contributions to an institution from a lender, servicer, or guarantor of FFEL Program loans or private education loans that are unrelated to FFEL Program loans or private education loans or any contribution from any lender, servicer, or guarantor, that is not made in exchange for any advantage related to FFEL Program loans or private education loans.


(F) State education grants, scholarships, or financial aid funds administered by or on behalf of a State; and


(iv) For purposes of paragraph (c) of this section, a gift to a family member of an agent, or to any other individual based on that individual’s relationship with the agent, is considered a gift to the agent if –


(A) The gift is given with the knowledge and acquiescence of the agent; and


(B) The agent has reason to believe the gift was given because of the official position of the agent;


(3) Consulting or other contracting arrangements. An agent who is employed in the financial aid office of the institution or who otherwise has responsibilities with respect to FFEL Program loans or private education loans must not accept from any lender or affiliate of any lender any fee, payment, or other financial benefit (including the opportunity to purchase stock) as compensation for any type of consulting arrangement or other contract to provide services to a lender or on behalf of a lender relating to FFEL Program loans or private education loans. Nothing in paragraph (c)(3) of this section will be construed as prohibiting –


(i) An agent who is not employed in the institution’s financial aid office and who does not otherwise have responsibilities with respect to FFEL Program loans or private education loans from performing paid or unpaid service on a board of directors of a lender, guarantor, or servicer of education loans;


(ii) An agent who is not employed in the institution’s financial aid office but who has responsibility with respect to FFEL Program loans or private education loans from performing paid or unpaid service on a board of directors of a lender, guarantor, or servicer of FFEL Program loans or private education loans, if the institution has a written conflict of interest policy that clearly sets forth that agents must recuse themselves from participating in any decision of the board regarding FFEL Program loans or private education loans at the institution; or


(iii) An officer, employee, or contractor of a lender, guarantor, or servicer of FFEL Program loans or private education loans from serving on a board of directors, or serving as a trustee, of an institution, if the institution has a written conflict of interest policy that the board member or trustee must recuse themselves from any decision regarding FFEL Program loans or private education loans at the institution;


(4) Directing borrowers to particular lenders or delaying loan certifications. The institution must not –


(i) For any first-time borrower, assign, through award packaging or other methods, the borrower’s loan to a particular lender; or


(ii) Refuse to certify, or delay certification of, any loan based on the borrower’s selection of a particular lender or guaranty agency;


(5)(i) Offers of funds for private loans. The institution must not request or accept from any lender any offer of funds to be used for private education loans, including funds for an opportunity pool loan, to students in exchange for the institution providing concessions or promises regarding providing the lender with –


(A) A specified number of FFEL Program loans or private education loans;


(B) A specified loan volume of such loans; or


(C) A preferred lender arrangement for such loans.


(ii) For purposes of paragraph (c) of this section, the term opportunity pool loan means a private education loan made by a lender to a student attending the institution or the family member of such a student that involves a payment, directly or indirectly, by such institution of points, premiums, additional interest, or financial support to such lender for the purpose of such lender extending credit to the student or the family;


(6) Staffing assistance. The institution must not request or accept from any lender any assistance with call center staffing or financial aid office staffing, except that nothing in this paragraph will be construed to prohibit the institution from requesting or accepting assistance from a lender related to –


(i) Professional development training for financial aid administrators;


(ii) Providing educational counseling materials, financial literacy materials, or debt management materials to borrowers, provided that such materials disclose to borrowers the identification of any lender that assisted in preparing or providing such materials; or


(iii) Staffing services on a short-term, nonrecurring basis to assist the institution with financial aid-related functions during emergencies, including State-declared or Federally declared natural disasters, Federally declared national disasters, and other localized disasters and emergencies identified by the Secretary; and


(7) Advisory board compensation. Any employee who is employed in the financial aid office of the institution, or who otherwise has responsibilities with respect to FFEL Program loans or private education loans or other student financial aid of the institution, and who serves on an advisory board, commission, or group established by a lender, guarantor, or group of lenders or guarantors, must not receive anything of value from the lender, guarantor, or group of lenders or guarantors, except that the employee may be reimbursed for reasonable expenses, as that term is defined in § 668.16(d)(2)(ii), incurred in serving on such advisory board, commission, or group.


(Approved by the Office of Management and Budget under control number 1845-XXXA)

(Authority:20 U.S.C. 1019b(c)(2)), 1094(a)(25) and (e)


Subpart D – Loan Information To Be Disclosed by Institutions Participating in the William D. Ford Direct Loan Program

§ 601.30 Duties of institutions.

(a) Each covered institution participating in the William D. Ford Direct Loan Program under part D of title IV of the HEA must –


(1) Make the information identified in a model disclosure form developed by the Secretary pursuant to section 154(a) of the HEA available to students attending or planning to attend the institution, or the families of such students, as applicable; and


(2) If the institution provides information regarding a private education loan to a prospective borrower, concurrently provide such borrower with the information identified on the model disclosure form that the Secretary provides to the institution under section 154(a) of the HEA.


(b) In providing the information required under paragraph (a) of this section, a covered institution may use a comparable form designed by the institution instead of the model disclosure form.


(Approved by the Office of Management and Budget under control number 1845-XXXB)

(Authority:20 U.S.C. 1019c(b))


Subpart E – Lender Responsibilities

§ 601.40 Disclosure and reporting requirements for lenders.

(a) Disclosures to borrowers. (1) A lender must, at or prior to disbursement of a FFEL loan, provide the borrower, in writing (including through electronic means), in clear and understandable terms, the disclosures required in § 682.205(a) and (b).


(2) A lender must, for each of its private education loans, comply with the disclosure requirements under section 128(e) of the Truth in Lending Act (15 U.S.C. 1638(e)).


(b) Reports to the Secretary. Each FFEL lender must report annually to the Secretary –


(1) Any reasonable expenses paid or provided to any agent of a covered institution who is employed in the financial aid office or has other responsibilities with respect to education loans or other student financial aid of the institution for service on a lender advisory board, commission or group established by a lender or group of lenders; or


(2) Any similar expenses paid or provided to any agent of an institution-affiliated organization who is involved in recommending, promoting, or endorsing education loans.


(3) The report required by this paragraph must include –


(i) The amount of expenses paid or provided for each specific instance in which the lender provided expenses;


(ii) The name of any agent described in paragraph (b)(1) of this section to whom the expenses were paid or provided;


(iii) The dates of the activity for which the expenses were paid or provided; and


(iv) A brief description of the activity for which the expenses were paid or provided.


(c) Lender certification of compliance. (1) Any FFEL lender participating in one or more preferred lender arrangements must annually certify to the Secretary its compliance with the Higher Education Act of 1965, as amended; and


(2) If the lender is required to submit an audit under 34 CFR 682.305(c), the lender’s compliance with the requirements under this section must be reported on and attested to annually by the lender’s auditor.


(3) A lender may comply with the certification requirements of this section if the certifications are provided as part of the annual audit required by 34 CFR 682.305(c).


(4) A lender who is not required to submit an audit must submit the required certification at such time and in such manner as directed by the Secretary.


(d) Annual lender report to covered institutions. A FFEL lender with a preferred lender arrangement with a covered institution or an institution-affiliated organization relating to FFEL loans must annually, on a date prescribed by the Secretary, provide to the covered institution or the institution-affiliated organization and to the Secretary, such information required by the Secretary in relation to the FFEL loans the lender plans to offer pursuant to that preferred lender arrangement for the next award year.


(Approved by the Office of Management and Budget under control number 1845-XXXA)

(Authority:20 U.S.C. 1019a(b) and 1019b(b))


PART 602 – THE SECRETARY’S RECOGNITION OF ACCREDITING AGENCIES


Authority:20 U.S.C. 1099b, unless otherwise noted.


Source:64 FR 56617, Oct. 20, 1999, unless otherwise noted.

Subpart A – General

§ 602.1 Why does the Secretary recognize accrediting agencies?

(a) The Secretary recognizes accrediting agencies to ensure that these agencies are, for the purposes of the Higher Education Act of 1965, as amended (HEA), or for other Federal purposes, reliable authorities regarding the quality of education or training offered by the institutions or programs they accredit.


(b) The Secretary lists an agency as a nationally recognized accrediting agency if the agency meets the criteria for recognition listed in subpart B of this part.


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


§ 602.2 How do I know which agencies the Secretary recognizes?

(a) Periodically, the Secretary publishes a list of recognized agencies in the Federal Register, together with each agency’s scope of recognition. You may obtain a copy of the list from the Department at any time. The list is also available on the Department’s web site.


(b) If the Secretary denies continued recognition to a previously recognized agency, or if the Secretary limits, suspends, or terminates the agency’s recognition before the end of its recognition period, the Secretary publishes a notice of that action in the Federal Register. The Secretary also makes the reasons for the action available to the public, on request.


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


§ 602.3 What definitions apply to this part?

(a) The following definitions are contained in the regulations for Institutional Eligibility under the Higher Education Act of 1965, as amended, 34 CFR part 600:


(1) Accredited.

(2) Additional location.

(3) Branch campus.

(4) Correspondence course.

(5) Direct assessment program.

(6) Distance education.

(7) Institution of higher education.

(8) Nationally recognized accrediting agency.

(9) Preaccreditation.

(10) Religious mission.

(11) Secretary.

(12) State.

(13) Teach-out.

(14) Teach-out agreement.

(15) Teach-out plan.

(b) The following definitions apply to this part:


Accreditation means the status of public recognition that an accrediting agency grants to an educational institution or program that meets the agency’s standards and requirements.


Accrediting agency or agency means a legal entity, or that part of a legal entity, that conducts accrediting activities through voluntary, non-Federal peer review and makes decisions concerning the accreditation or preaccreditation status of institutions, programs, or both.


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


Adverse accrediting action or adverse action means the denial, withdrawal, suspension, revocation, or termination of accreditation or preaccreditation, or any comparable accrediting action an agency may take against an institution or program.


Advisory Committee means the National Advisory Committee on Institutional Quality and Integrity.


Compliance report means a written report that the Department requires an agency to file when the agency is found to be out of compliance to demonstrate that the agency has corrected deficiencies specified in the decision letter from the senior Department official or the Secretary. Compliance reports must be reviewed by Department staff and the Advisory Committee and approved by the senior Department official or, in the event of an appeal, by the Secretary.


Designated Federal Official means the Federal officer designated under section 10(f) of the Federal Advisory Committee Act, 5 U.S.C. Appdx. 1.


Final accrediting action means a final determination by an accrediting agency regarding the accreditation or preaccreditation status of an institution or program. A final accrediting action is a decision made by the agency, at the conclusion of any appeals process available to the institution or program under the agency’s due process policies and procedures.


Institutional accrediting agency means an agency that accredits institutions of higher education.


Monitoring report means a report that an agency is required to submit to Department staff when it is found to be substantially compliant. The report contains documentation to demonstrate that –


(i) The agency is implementing its current or corrected policies; or


(ii) The agency, which is compliant in practice, has updated its policies to align with those compliant practices.


Program means a postsecondary educational program offered by an institution of higher education that leads to an academic or professional degree, certificate, or other recognized educational credential.


Programmatic accrediting agency means an agency that accredits specific educational programs, including those that prepare students in specific academic disciplines or for entry into a profession, occupation, or vocation.


Recognition means an unappealed determination by the senior Department official under § 602.36, or a determination by the Secretary on appeal under § 602.37, that an accrediting agency complies with the criteria for recognition listed in subpart B of this part and that the agency is effective in its application of those criteria. A grant of recognition to an agency as a reliable authority regarding the quality of education or training offered by institutions or programs it accredits remains in effect for the term granted except upon a determination made in accordance with subpart C of this part that the agency no longer complies with the subpart B criteria or that it has become ineffective in its application of those criteria.


Representative of the public means a person who is not –


(1) An employee, member of the governing board, owner, or shareholder of, or consultant to, an institution or program that either is accredited or preaccredited by the agency or has applied for accreditation or preaccreditation;


(2) A member of any trade association or membership organization related to, affiliated with, or associated with the agency; or


(3) A spouse, parent, child, or sibling of an individual identified in paragraph (1) or (2) of this definition.


Scope of recognition or scope means the range of accrediting activities for which the Secretary recognizes an agency. The Secretary may place a limitation on the scope of an agency’s recognition for title IV, HEA purposes. The Secretary’s designation of scope defines the recognition granted according to –


(i) Types of degrees and certificates covered;


(ii) Types of institutions and programs covered;


(iii) Types of preaccreditation status covered, if any; and


(iv) Coverage of accrediting activities related to distance education or correspondence courses.


Senior Department official means the official in the U.S. Department of Education designated by the Secretary who has, in the judgment of the Secretary, appropriate seniority and relevant subject matter knowledge to make independent decisions on accrediting agency recognition.


Substantial compliance means the agency demonstrated to the Department that it has the necessary policies, practices, and standards in place and generally adheres with fidelity to those policies, practices, and standards; or the agency has policies, practices, and standards in place that need minor modifications to reflect its generally compliant practice.


[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55426, Oct. 27, 2009; 84 FR 58917, Nov. 1, 2019; 85 FR 54812, Sept. 2, 2020]


§ 602.4 Severability.

If any provision of this subpart or its application to any person, act, or practice is held invalid, the remainder of the subpart or the application of its provisions to any person, act, or practice shall not be affected thereby.


[84 FR 58918, Nov. 1, 2019]


Subpart B – The Criteria for Recognition

Basic Eligibility Requirements

§ 602.10 Link to Federal programs.

The agency must demonstrate that –


(a) If the agency accredits institutions of higher education, its accreditation is a required element in enabling at least one of those institutions to establish eligibility to participate in HEA programs. If, pursuant to 34 CFR 600.11(b), an agency accredits one or more institutions that participate in HEA programs and that could designate the agency as its link to HEA programs, the agency satisfies this requirement, even if the institution currently designates another institutional accrediting agency as its Federal link; or


(b) If the agency accredits institutions of higher education or higher education programs, or both, its accreditation is a required element in enabling at least one of those entities to establish eligibility to participate in non-HEA Federal programs.


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

[64 FR 56617, Oct. 20, 1999, as amended at 85 FR 58918, Nov. 1, 2019]


§ 602.11 Geographic area of accrediting activities.

The agency must demonstrate that it conducts accrediting activities within –


(a) A State, if the agency is part of a State government;


(b) A region or group of States chosen by the agency in which an agency provides accreditation to a main campus, a branch campus, or an additional location of an institution. An agency whose geographic area includes a State in which a branch campus or additional location is located is not required to also accredit a main campus in that State. An agency whose geographic area includes a State in which only a branch campus or additional location is located is not required to accept an application for accreditation from other institutions in such State; or


(c) The United States.


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

[84 FR 58918, Nov. 1, 2019]


§ 602.12 Accrediting experience.

(a) An agency seeking initial recognition must demonstrate that it has –


(1) Granted accreditation or preaccreditation prior to submitting an application for recognition –


(i) To one or more institutions if it is requesting recognition as an institutional accrediting agency and to one or more programs if it is requesting recognition as a programmatic accrediting agency;


(ii) That covers the range of the specific degrees, certificates, institutions, and programs for which it seeks recognition; and


(iii) In the geographic area for which it seeks recognition; and


(2) Conducted accrediting activities, including deciding whether to grant or deny accreditation or preaccreditation, for at least two years prior to seeking recognition, unless the agency seeking initial recognition is affiliated with, or is a division of, an already recognized agency.


(b)(1) A recognized agency seeking an expansion of its scope of recognition must follow the requirements of §§ 602.31 and 602.32 and demonstrate that it has accreditation or preaccreditation policies in place that meet all the criteria for recognition covering the range of the specific degrees, certificates, institutions, and programs for which it seeks the expansion of scope and has engaged and can show support from relevant constituencies for the expansion. A change to an agency’s geographic area of accrediting activities does not constitute an expansion of the agency’s scope of recognition, but the agency must notify the Department of, and publicly disclose on the agency’s website, any such change.


(2) An agency that cannot demonstrate experience in making accreditation or preaccreditation decisions under the expanded scope at the time of its application or review for an expansion of scope may –


(i) If it is an institutional accrediting agency, be limited in the number of institutions to which it may grant accreditation under the expanded scope for a designated period of time; or


(ii) If it is a programmatic accrediting agency, be limited in the number of programs to which it may grant accreditation under that expanded scope for a certain period of time; and


(iii) Be required to submit a monitoring report regarding accreditation decisions made under the expanded scope.


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

[84 FR 58918, Nov. 1, 2019]


§ 602.13 [Reserved]

Organizational and Administrative Requirements

§ 602.14 Purpose and organization.

(a) The Secretary recognizes only the following four categories of accrediting agencies:


(1) A State agency that –


(i) Has as a principal purpose the accrediting of institutions of higher education, higher education programs, or both; and


(ii) Has been listed by the Secretary as a nationally recognized accrediting agency on or before October 1, 1991.


(2) An accrediting agency that –


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


(ii) Has as a principal purpose the accrediting of institutions of higher education and that accreditation is used to provide a link to Federal HEA programs in accordance with § 602.10; and


(iii) Satisfies the “separate and independent” requirements in paragraph (b) of this section.


(3) An accrediting agency that –


(i) Has a voluntary membership; and


(ii) Has as its principal purpose the accrediting of institutions of higher education or programs, and the accreditation it offers is used to provide a link to non-HEA Federal programs in accordance with § 602.10.


(4) An accrediting agency that, for purposes of determining eligibility for title IV, HEA programs –


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


(B) Has as its principal purpose the accrediting of programs within institutions that are accredited by another nationally recognized accrediting agency; and


(ii) Satisfies the “separate and independent” requirements in paragraph (b) of this section or obtains a waiver of those requirements under paragraph (d) of this section.


(b) For purposes of this section, “separate and independent” means that –


(1) The members of the agency’s decision-making body, who decide the accreditation or preaccreditation status of institutions or programs, establish the agency’s accreditation policies, or both, are not elected or selected by the board or chief executive officer of any related, associated, or affiliated trade association, professional organization, or membership organization and are not staff of the related, associated, or affiliated trade association, professional organization, or membership organization;


(2) At least one member of the agency’s decision-making body is a representative of the public, and at least one-seventh of the body consists of representatives of the public;


(3) The agency has established and implemented guidelines for each member of the decision-making body including guidelines on avoiding conflicts of interest in making decisions;


(4) The agency’s dues are paid separately from any dues paid to any related, associated, or affiliated trade association or membership organization; and


(5) The agency develops and determines its own budget, with no review by or consultation with any other entity or organization.


(c) The Secretary considers that any joint use of personnel, services, equipment, or facilities by an agency and a related, associated, or affiliated trade association or membership organization does not violate the “separate and independent” requirements in paragraph (b) of this section if –


(1) The agency pays the fair market value for its proportionate share of the joint use; and


(2) The joint use does not compromise the independence and confidentiality of the accreditation process.


(d) For purposes of paragraph (a)(4) of this section, the Secretary may waive the “separate and independent” requirements in paragraph (b) of this section if the agency demonstrates that –


(1) The Secretary listed the agency as a nationally recognized agency on or before October 1, 1991, and has recognized it continuously since that date;


(2) The related, associated, or affiliated trade association or membership organization plays no role in making or ratifying either the accrediting or policy decisions of the agency;


(3) The agency has sufficient budgetary and administrative autonomy to carry out its accrediting functions independently;


(4) The agency provides to the related, associated, or affiliated trade association or membership organization only information it makes available to the public.


(e) An agency seeking a waiver of the “separate and independent” requirements under paragraph (d) of this section must apply for the waiver each time the agency seeks recognition or continued recognition.


(Authority: 20 U.S.C. 1099b)
[84 FR 58919, Nov. 1, 2019]


§ 602.15 Administrative and fiscal responsibilities.

The agency must have the administrative and fiscal capability to carry out its accreditation activities in light of its requested scope of recognition. The agency meets this requirement if the agency demonstrates that –


(a) The agency has –


(1) Adequate administrative staff and financial resources to carry out its accrediting responsibilities;


(2) Competent and knowledgeable individuals, qualified by education or experience in their own right and trained by the agency on their responsibilities, as appropriate for their roles, regarding the agency’s standards, policies, and procedures, to conduct its on-site evaluations, apply or establish its policies, and make its accrediting and preaccrediting decisions, including, if applicable to the agency’s scope, their responsibilities regarding distance education and correspondence courses;


(3) Academic and administrative personnel on its evaluation, policy, and decision-making bodies, if the agency accredits institutions;


(4) Educators, practitioners, and/or employers on its evaluation, policy, and decision-making bodies, if the agency accredits programs or single-purpose institutions that prepare students for a specific profession;


(5) Representatives of the public, which may include students, on all decision-making bodies; and


(6) Clear and effective controls, including guidelines, to prevent or resolve conflicts of interest, or the appearance of conflicts of interest, by the agency’s –


(i) Board members;


(ii) Commissioners;


(iii) Evaluation team members;


(iv) Consultants;


(v) Administrative staff; and


(vi) Other agency representatives; and


(b) The agency maintains complete and accurate records of –


(1) Its last full accreditation or preaccreditation review of each institution or program, including on-site evaluation team reports, the institution’s or program’s responses to on-site reports, periodic review reports, any reports of special reviews conducted by the agency between regular reviews, and a copy of the institution’s or program’s most recent self-study; and


(2) All decision letters issued by the agency regarding the accreditation and preaccreditation of any institution or program and any substantive changes.


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

[84 FR 58919, Nov. 1, 2019]


Required Standards and Their Application

§ 602.16 Accreditation and preaccreditation standards.

(a) The agency must demonstrate that it has standards for accreditation, and preaccreditation, if offered, that are sufficiently rigorous to ensure that the agency is a reliable authority regarding the quality of the education or training provided by the institutions or programs it accredits. The agency meets this requirement if the following conditions are met:


(1) The agency’s accreditation standards must set forth clear expectations for the institutions or programs it accredits in the following areas:


(i) Success with respect to student achievement in relation to the institution’s mission, which may include different standards for different institutions or programs, as established by the institution, including, as appropriate, consideration of State licensing examinations, course completion, and job placement rates.


(ii) Curricula.


(iii) Faculty.


(iv) Facilities, equipment, and supplies.


(v) Fiscal and administrative capacity as appropriate to the specified scale of operations.


(vi) Student support services.


(vii) Recruiting and admissions practices, academic calendars, catalogs, publications, grading, and advertising.


(viii) Measures of program length and the objectives of the degrees or credentials offered.


(ix) Record of student complaints received by, or available to, the agency.


(x) Record of compliance with the institution’s program responsibilities under title IV of the Act, based on the most recent student loan default rate data provided by the Secretary, the results of financial or compliance audits, program reviews, and any other information that the Secretary may provide to the agency; and


(2) The agency’s preaccreditation standards, if offered, must –


(i) Be appropriately related to the agency’s accreditation standards; and


(ii) Not permit the institution or program to hold preaccreditation status for more than five years before a final accrediting action is made.


(b) Agencies are not required to apply the standards described in paragraph (a)(1)(x) of this section to institutions that do not participate in title IV, HEA programs. Under such circumstance, the agency’s grant of accreditation or preaccreditation must specify that the grant, by request of the institution, does not include participation by the institution in title IV, HEA programs.


(c) If the agency only accredits programs and does not serve as an institutional accrediting agency for any of those programs, its accreditation standards must address the areas in paragraph (a)(1) of this section in terms of the type and level of the program rather than in terms of the institution.


(d)(1) If the agency has or seeks to include within its scope of recognition the evaluation of the quality of institutions or programs offering distance education, correspondence courses, or direct assessment education, the agency’s standards must effectively address the quality of an institution’s distance education, correspondence courses, or direct assessment education in the areas identified in paragraph (a)(1) of this section.


(2) The agency is not required to have separate standards, procedures, or policies for the evaluation of distance education or correspondence courses.


(e) If none of the institutions an agency accredits participates in any title IV, HEA program, or if the agency only accredits programs within institutions that are accredited by a nationally recognized institutional accrediting agency, the agency is not required to have the accreditation standards described in paragraphs (a)(1)(viii) and (a)(1)(x) of this section.


(f) An agency that has established and applies the standards in paragraph (a) of this section may establish any additional accreditation standards it deems appropriate.


(g) Nothing in paragraph (a) of this section restricts –


(1) An accrediting agency from setting, with the involvement of its members, and applying accreditation standards for or to institutions or programs that seek review by the agency;


(2) An institution from developing and using institutional standards to show its success with respect to student achievement, which achievement may be considered as part of any accreditation review; or


(3) Agencies from having separate standards regarding an institution’s or a program’s process for approving curriculum to enable programs to more effectively meet the recommendations of –


(i) Industry advisory boards that include employers who hire program graduates;


(ii) Widely recognized industry standards and organizations;


(iii) Credentialing or other occupational registration or licensure; or


(iv) Employers in a given field or occupation, in making hiring decisions.


(4) Agencies from having separate faculty standards for instructors teaching courses within a dual or concurrent enrollment program, as defined in 20 U.S.C. 7801, or career and technical education courses, as long as the instructors, in the agency’s judgment, are qualified by education or work experience for that role.


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

[84 FR 58919, Nov. 1, 2019]


§ 602.17 Application of standards in reaching accreditation decisions.

The agency must have effective mechanisms for evaluating an institution’s or program’s compliance with the agency’s standards before reaching a decision to accredit or preaccredit the institution or program. The agency meets this requirement if the agency demonstrates that it –


(a) Evaluates whether an institution or program –


(1) Maintains clearly specified educational objectives that are consistent with its mission and appropriate in light of the degrees or certificates awarded;


(2) Is successful in achieving its stated objectives at both the institutional and program levels; and


(3) Maintains requirements that at least conform to commonly accepted academic standards, or the equivalent, including pilot programs in § 602.18(b);


(b) Requires the institution or program to engage in a self-study process that assesses the institution’s or program’s education quality and success in meeting its mission and objectives, highlights opportunities for improvement, and includes a plan for making those improvements;


(c) Conducts at least one on-site review of the institution or program during which it obtains sufficient information to determine if the institution or program complies with the agency’s standards;


(d) Allows the institution or program the opportunity to respond in writing to the report of the on-site review;


(e) Conducts its own analysis of the self-study and supporting documentation furnished by the institution or program, the report of the on-site review, the institution’s or program’s response to the report, and any other information substantiated by the agency from other sources to determine whether the institution or program complies with the agency’s standards;


(f) Provides the institution or program with a detailed written report that assesses the institution’s or program’s compliance with the agency’s standards, including areas needing improvement, and the institution’s or program’s performance with respect to student achievement;


(g) Requires institutions to have processes in place through which the institution establishes that a student who registers in any course offered via distance education or correspondence is the same student who academically engages in the course or program; and


(h) Makes clear in writing that institutions must use processes that protect student privacy and notify students of any projected additional student charges associated with the verification of student identity at the time of registration or enrollment.


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

[84 FR 58920, Nov. 1, 2019]


§ 602.18 Ensuring consistency in decision-making.

(a) The agency must consistently apply and enforce standards that respect the stated mission of the institution, including religious mission, and that ensure that the education or training offered by an institution or program, including any offered through distance education, correspondence courses, or direct assessment education is of sufficient quality to achieve its stated objective for the duration of any accreditation or preaccreditation period.


(b) The agency meets the requirement in paragraph (a) of this section if the agency –


(1) Has written specification of the requirements for accreditation and preaccreditation that include clear standards for an institution or program to be accredited or preaccredited;


(2) Has effective controls against the inconsistent application of the agency’s standards;


(3) Bases decisions regarding accreditation and preaccreditation on the agency’s published standards and does not use as a negative factor the institution’s religious mission-based policies, decisions, and practices in the areas covered by § 602.16(a)(1)(ii), (iii), (iv), (vi), and (vii) provided, however, that the agency may require that the institution’s or program’s curricula include all core components required by the agency;


(4) Has a reasonable basis for determining that the information the agency relies on for making accrediting decisions is accurate;


(5) Provides the institution or program with a detailed written report that clearly identifies any deficiencies in the institution’s or program’s compliance with the agency’s standards; and


(6) Publishes any policies for retroactive application of an accreditation decision, which must not provide for an effective date that predates either –


(i) An earlier denial by the agency of accreditation or preaccreditation to the institution or program; or


(ii) The agency’s formal approval of the institution or program for consideration in the agency’s accreditation or preaccreditation process.


(c) Nothing in this part prohibits an agency, when special circumstances exist, to include innovative program delivery approaches or, when an undue hardship on students occurs, from applying equivalent written standards, policies, and procedures that provide alternative means of satisfying one or more of the requirements set forth in 34 CFR 602.16, 602.17, 602.19, 602.20, 602.22, and 602.24, as compared with written standards, policies, and procedures the agency ordinarily applies, if –


(1) The alternative standards, policies, and procedures, and the selection of institutions or programs to which they will be applied, are approved by the agency’s decision-making body and otherwise meet the intent of the agency’s expectations and requirements;


(2) The agency sets and applies equivalent goals and metrics for assessing the performance of institutions or programs;


(3) The agency’s process for establishing and applying the alternative standards, policies, and procedures is set forth in its published accreditation manuals; and


(4) The agency requires institutions or programs seeking the application of alternative standards to demonstrate the need for an alternative assessment approach, that students will receive equivalent benefit, and that students will not be harmed through such application.


(d) Nothing in this part prohibits an agency from permitting the institution or program to be out of compliance with one or more of its standards, policies, and procedures adopted in satisfaction of §§ 602.16, 602.17, 602.19, 602.20, 602.22, and 602.24 for a period of time, as determined by the agency annually, not to exceed three years unless the agency determines there is good cause to extend the period of time, and if –


(1) The agency and the institution or program can show that the circumstances requiring the period of noncompliance are beyond the institution’s or program’s control, such as –


(i) A natural disaster or other catastrophic event significantly impacting an institution’s or program’s operations;


(ii) Accepting students from another institution that is implementing a teach-out or closing;


(iii) Significant and documented local or national economic changes, such as an economic recession or closure of a large local employer;


(iv) Changes relating to State licensure requirements;


(v) The normal application of the agency’s standards creates an undue hardship on students; or


(vi) Instructors who do not meet the agency’s typical faculty standards, but who are otherwise qualified by education or work experience, to teach courses within a dual or concurrent enrollment program, as defined in 20 U.S.C. 7801, or career and technical education courses;


(2) The grant of the period of noncompliance is approved by the agency’s decision-making body;


(3) The agency projects that the institution or program has the resources necessary to achieve compliance with the standard, policy, or procedure postponed within the time allotted; and


(4) The institution or program demonstrates to the satisfaction of the agency that the period of noncompliance will not –


(i) Contribute to the cost of the program to the student without the student’s consent;


(ii) Create any undue hardship on, or harm to, students; or


(iii) Compromise the program’s academic quality.


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

[84 FR 58920, Nov. 1, 2019]


§ 602.19 Monitoring and reevaluation of accredited institutions and programs.

(a) The agency must reevaluate, at regularly established intervals, the institutions or programs it has accredited or preaccredited.


(b) The agency must demonstrate it has, and effectively applies, monitoring and evaluation approaches that enable the agency to identify problems with an institution’s or program’s continued compliance with agency standards and that take into account institutional or program strengths and stability. These approaches must include periodic reports, and collection and analysis of key data and indicators, identified by the agency, including, but not limited to, fiscal information and measures of student achievement, consistent with the provisions of § 602.16(g). This provision does not require institutions or programs to provide annual reports on each specific accreditation criterion.


(c) Each agency must monitor overall growth of the institutions or programs it accredits and, at least annually, collect head-count enrollment data from those institutions or programs.


(d) Institutional accrediting agencies must monitor the growth of programs at institutions experiencing significant enrollment growth, as reasonably defined by the agency.


(e) Any agency that has notified the Secretary of a change in its scope in accordance with § 602.27(a) must monitor the headcount enrollment of each institution it has accredited that offers distance education or correspondence courses. The Secretary will require a review, at the next meeting of the National Advisory Committee on Institutional Quality and Integrity, of any change in scope undertaken by an agency if the enrollment of an institution that offers distance education or correspondence courses that is accredited by such agency increases by 50 percent or more within any one institutional fiscal year. If any such institution has experienced an increase in head-count enrollment of 50 percent or more within one institutional fiscal year, the agency must report that information to the Secretary within 30 days of acquiring such data.


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

[84 FR 58921, Nov. 1, 2019]


§ 602.20 Enforcement of standards.

(a) If the agency’s review of an institution or program under any standard indicates that the institution or program is not in compliance with that standard, the agency must –


(1) Follow its written policy for notifying the institution or program of the finding of noncompliance;


(2) Provide the institution or program with a written timeline for coming into compliance that is reasonable, as determined by the agency’s decision-making body, based on the nature of the finding, the stated mission, and educational objectives of the institution or program. The timeline may include intermediate checkpoints on the way to full compliance and must not exceed the lesser of four years or 150 percent of the –


(i) Length of the program in the case of a programmatic accrediting agency; or


(ii) Length of the longest program at the institution in the case of an institutional accrediting agency;


(3) Follow its written policies and procedures for granting a good cause extension that may exceed the standard timeframe described in paragraph (a)(2) of this section when such an extension is determined by the agency to be warranted; and


(4) Have a written policy to evaluate and approve or disapprove monitoring or compliance reports it requires, provide ongoing monitoring, if warranted, and evaluate an institution’s or program’s progress in resolving the finding of noncompliance.


(b) Notwithstanding paragraph (a) of this section, the agency must have a policy for taking an immediate adverse action, and take such action, when the agency has determined that such action is warranted.


(c) If the institution or program does not bring itself into compliance within the period specified in paragraph (a) of this section, the agency must take adverse action against the institution or program, but may maintain the institution’s or program’s accreditation or preaccreditation until the institution or program has had reasonable time to complete the activities in its teach-out plan or to fulfill the obligations of any teach-out agreement to assist students in transferring or completing their programs.


(d) An agency that accredits institutions may limit the adverse or other action to particular programs that are offered by the institution or to particular additional locations of an institution, without necessarily taking action against the entire institution and all of its programs, provided the noncompliance was limited to that particular program or location.


(e) All adverse actions taken under this subpart are subject to the arbitration requirements in 20 U.S.C. 1099b(e).


(f) An agency is not responsible for enforcing requirements in 34 CFR 668.14, 668.15, 668.16, 668.41, or 668.46, but if, in the course of an agency’s work, it identifies instances or potential instances of noncompliance with any of these requirements, it must notify the Department.


(g) The Secretary may not require an agency to take action against an institution or program that does not participate in any title IV, HEA or other Federal program as a result of a requirement specified in this part.


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

[84 FR 58922, Nov. 1, 2019]


§ 602.21 Review of standards.

(a) The agency must maintain a comprehensive systematic program of review that involves all relevant constituencies and that demonstrates that its standards are adequate to evaluate the quality of the education or training provided by the institutions and programs it accredits and relevant to the educational or training needs of students.


(b) The agency determines the specific procedures it follows in evaluating its standards, but the agency must ensure that its program of review –


(1) Is comprehensive;


(2) Occurs at regular, yet reasonable, intervals or on an ongoing basis;


(3) Examines each of the agency’s standards and the standards as a whole; and


(4) Involves all of the agency’s relevant constituencies in the review and affords them a meaningful opportunity to provide input into the review.


(c) If the agency determines, at any point during its systematic program of review, that it needs to make changes to its standards, the agency must initiate action within 12 months to make the changes and must complete that action within a reasonable period of time.


(d) Before finalizing any changes to its standards, the agency must –


(1) Provide notice to all of the agency’s relevant constituencies, and other parties who have made their interest known to the agency, of the changes the agency proposes to make;


(2) Give the constituencies and other interested parties adequate opportunity to comment on the proposed changes; and


(3) Take into account and be responsive to any comments on the proposed changes submitted timely by the relevant constituencies and other interested parties.


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

[64 FR 56617, Oct. 20, 1999, as amended at 84 FR 58922, Nov. 1, 2019]


Required Operating Policies and Procedures

§ 602.22 Substantive changes and other reporting requirements.

(a)(1) If the agency accredits institutions, it must maintain adequate substantive change policies that ensure that any substantive change, as defined in this section, after the agency has accredited or preaccredited the institution does not adversely affect the capacity of the institution to continue to meet the agency’s standards. The agency meets this requirement if –


(i) The agency requires the institution to obtain the agency’s approval of the substantive change before the agency includes the change in the scope of accreditation or preaccreditation it previously granted to the institution; and


(ii) The agency’s definition of substantive change covers high-impact, high-risk changes, including at least the following:


(A) Any substantial change in the established mission or objectives of the institution or its programs.


(B) Any change in the legal status, form of control, or ownership of the institution.


(C) The addition of programs that represent a significant departure from the existing offerings or educational programs, or method of delivery, from those that were offered or used when the agency last evaluated the institution.


(D) The addition of graduate programs by an institution that previously offered only undergraduate programs or certificates.


(E) A change in the way an institution measures student progress, including whether the institution measures progress in clock hours or credit-hours, semesters, trimesters, or quarters, or uses time-based or non-time-based methods.


(F) A substantial increase in the number of clock hours or credit hours awarded, or an increase in the level of credential awarded, for successful completion of one or more programs.


(G) The acquisition of any other institution or any program or location of another institution.


(H) The addition of a permanent location at a site at which the institution is conducting a teach-out for students of another institution that has ceased operating before all students have completed their program of study.


(I) The addition of a new location or branch campus, except as provided in paragraph (c) of this section. The agency’s review must include assessment of the institution’s fiscal and administrative capability to operate the location or branch campus, the regular evaluation of locations, and verification of the following:


(1) Academic control is clearly identified by the institution.


(2) The institution has adequate faculty, facilities, resources, and academic and student support systems in place.


(3) The institution is financially stable.


(4) The institution had engaged in long-range planning for expansion.


(J) Entering into a written arrangement under 34 CFR 668.5 under which an institution or organization not certified to participate in the title IV, HEA programs offers more than 25 and up to 50 percent of one or more of the accredited institution’s educational programs.


(K) Addition of each direct assessment program.


(2)(i) For substantive changes under only paragraph (a)(1)(ii)(C), (E), (F), (H), or (J) of this section, the agency’s decision-making body may designate agency senior staff to approve or disapprove the request in a timely, fair, and equitable manner; and


(ii) In the case of a request under paragraph (a)(1)(ii)(J) of this section, the agency must make a final decision within 90 days of receipt of a materially complete request, unless the agency or its staff determine significant circumstances related to the substantive change require a review by the agency’s decision-making body to occur within 180 days.


(b) Institutions that have been placed on probation or equivalent status, have been subject to negative action by the agency over the prior three academic years, or are under a provisional certification, as provided in 34 CFR 668.13, must receive prior approval for the following additional changes (all other institutions must report these changes within 30 days to their accrediting agency):


(1) A change in an existing program’s method of delivery.


(2) An aggregate change of 25 percent or more of the clock hours, credit hours, or content of a program since the agency’s most recent accreditation review.


(3) The development of customized pathways or abbreviated or modified courses or programs to –


(i) Accommodate and recognize a student’s existing knowledge, such as knowledge attained through employment or military service; and


(ii) Close competency gaps between demonstrated prior knowledge or competency and the full requirements of a particular course or program.


(4) Entering into a written arrangement under 34 CFR 668.5 under which an institution or organization not certified to participate in the title IV, HEA programs offers up to 25 percent of one or more of the accredited institution’s educational programs.


(c) Institutions that have successfully completed at least one cycle of accreditation and have received agency approval for the addition of at least two additional locations as provided in paragraph (a)(1)(ii)(I) of this section, and that have not been placed on probation or equivalent status or been subject to a negative action by the agency over the prior three academic years, and that are not under a provisional certification, as provided in 34 CFR 668.13, need not apply for agency approval of subsequent additions of locations, and must report these changes to the accrediting agency within 30 days, if the institution has met criteria established by the agency indicating sufficient capacity to add additional locations without individual prior approvals, including, at a minimum, satisfactory evidence of a system to ensure quality across a distributed enterprise that includes –


(1) Clearly identified academic control;


(2) Regular evaluation of the locations;


(3) Adequate faculty, facilities, resources, and academic and student support systems;


(4) Financial stability; and


(5) Long-range planning for expansion.


(d) The agency must have an effective mechanism for conducting, at reasonable intervals, visits to a representative sample of additional locations approved under paragraphs (a)(1)(ii)(H) and (I) of this section.


(e) The agency may determine the procedures it uses to grant prior approval of the substantive change. However, these procedures must specify an effective date, on which the change is included in the program’s or institution’s grant of accreditation or preaccreditation. The date of prior approval must not pre-date either an earlier agency denial of the substantive change, or the agency’s formal acceptance of the application for the substantive change for inclusion in the program’s or institution’s grant of accreditation or preaccreditation. An agency may designate the date of a change in ownership as the effective date of its approval of that substantive change if the accreditation decision is made within 30 days of the change in ownership. Except as provided in paragraphs (d) and (f) of this section, an agency may require a visit before granting such an approval.


(f) Except as provided in paragraph (c) of this section, if the agency’s accreditation of an institution enables the institution to seek eligibility to participate in title IV, HEA programs, the agency’s procedures for the approval of an additional location that is not a branch campus where at least 50 percent of an educational program is offered must include –


(1) A visit, within six months, to each additional location the institution establishes, if the institution –


(i) Has a total of three or fewer additional locations;


(ii) Has not demonstrated, to the agency’s satisfaction, that the additional location is meeting all of the agency’s standards that apply to that additional location; or


(iii) Has been placed on warning, probation, or show cause by the agency or is subject to some limitation by the agency on its accreditation or preaccreditation status;


(2) A mechanism for conducting, at reasonable intervals, visits to a representative sample of additional locations of institutions that operate more than three additional locations; and


(3) A mechanism, which may, at the agency’s discretion, include visits to additional locations, for ensuring that accredited and preaccredited institutions that experience rapid growth in the number of additional locations maintain education quality.


(g) The purpose of the visits described in paragraph (f) of this section is to verify that the additional location has the personnel, facilities, and resources the institution claimed it had in its application to the agency for approval of the additional location.


(h) The agency’s substantive change policy must define when the changes made or proposed by an institution are or would be sufficiently extensive to require the agency to conduct a new comprehensive evaluation of that institution.


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

[84 FR 58922, Nov. 1, 2019]


§ 602.23 Operating procedures all agencies must have.

(a) The agency must maintain and make available to the public written materials describing –


(1) Each type of accreditation and preaccreditation it grants;


(2) The procedures that institutions or programs must follow in applying for accreditation, preaccreditation, or substantive changes and the sequencing of those steps relative to any applications or decisions required by States or the Department relative to the agency’s preaccreditation, accreditation, or substantive change decisions;


(3) The standards and procedures it uses to determine whether to grant, reaffirm, reinstate, restrict, deny, revoke, terminate, or take any other action related to each type of accreditation and preaccreditation that the agency grants;


(4) The institutions and programs that the agency currently accredits or preaccredits and, for each institution and program, the year the agency will next review or reconsider it for accreditation or preaccreditation; and


(5) A list of the names, academic and professional qualifications, and relevant employment and organizational affiliations of –


(i) The members of the agency’s policy and decision-making bodies; and


(ii) The agency’s principal administrative staff.


(b) In providing public notice that an institution or program subject to its jurisdiction is being considered for accreditation or preaccreditation, the agency must provide an opportunity for third-party comment concerning the institution’s or program’s qualifications for accreditation or preaccreditation. At the agency’s discretion, third-party comment may be received either in writing or at a public hearing, or both.


(c) The accrediting agency must –


(1) Review in a timely, fair, and equitable manner any complaint it receives against an accredited institution or program that is related to the agency’s standards or procedures. The agency may not complete its review and make a decision regarding a complaint unless, in accordance with published procedures, it ensures that the institution or program has sufficient opportunity to provide a response to the complaint;


(2) Take follow-up action, as necessary, including enforcement action, if necessary, based on the results of its review; and


(3) Review in a timely, fair, and equitable manner, and apply unbiased judgment to, any complaints against itself and take follow-up action, as appropriate, based on the results of its review.


(d) If an institution or program elects to make a public disclosure of its accreditation or preaccreditation status, the agency must ensure that the institution or program discloses that status accurately, including the specific academic or instructional programs covered by that status and the name and contact information for the agency.


(e) The accrediting agency must provide for the public correction of incorrect or misleading information an accredited or preaccredited institution or program releases about –


(1) The accreditation or preaccreditation status of the institution or program;


(2) The contents of reports of on-site reviews; and


(3) The agency’s accrediting or preaccrediting actions with respect to the institution or program.


(f)(1) If preaccreditation is offered –


(i) The agency’s preaccreditation policies must limit the status to institutions or programs that the agency has determined are likely to succeed in obtaining accreditation;


(ii) The agency must require all preaccredited institutions to have a teach-out plan, which must ensure students completing the teach-out would meet curricular requirements for professional licensure or certification, if any, and which must include a list of academic programs offered by the institution and the names of other institutions that offer similar programs and that could potentially enter into a teach-out agreement with the institution;


(iii) An agency that denies accreditation to an institution it has preaccredited may maintain the institution’s preaccreditation for currently enrolled students until the institution has had a reasonable time to complete the activities in its teach-out plan to assist students in transferring or completing their programs, but for no more than 120 days unless approved by the agency for good cause; and


(iv) The agency may not move an accredited institution or program from accredited to preaccredited status unless, following the loss of accreditation, the institution or program applies for initial accreditation and is awarded preaccreditation status under the new application. Institutions that participated in the title IV, HEA programs before the loss of accreditation are subject to the requirements of 34 CFR 600.11(c).


(2) All credits and degrees earned and issued by an institution or program holding preaccreditation from a nationally recognized agency are considered by the Secretary to be from an accredited institution or program.


(g) The agency may establish any additional operating procedures it deems appropriate. At the agency’s discretion, these may include unannounced inspections.


(Approved by the Office of Management and Budget under control number 1845-0003)

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

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55428, Oct. 27, 2009; 84 FR 58923, Nov. 1, 2019]


§ 602.24 Additional procedures certain institutional agencies must have.

If the agency is an institutional accrediting agency and its accreditation or preaccreditation enables those institutions to obtain eligibility to participate in title IV, HEA programs, the agency must demonstrate that it has established and uses all of the following procedures:


(a) Branch campus. The agency must require the institution to notify the agency if it plans to establish a branch campus and to submit a business plan for the branch campus that describes –


(1) The educational program to be offered at the branch campus; and


(2) The projected revenues and expenditures and cash flow at the branch campus.


(b) Site visits. The agency must undertake a site visit to a new branch campus or following a change of ownership or control as soon as practicable, but no later than six months, after the establishment of that campus or the change of ownership or control.


(c) Teach-out plans and agreements. (1) The agency must require an institution it accredits to submit a teach-out plan as defined in 34 CFR 600.2 to the agency for approval upon the occurrence of any of the following events:


(i) For a nonprofit or proprietary institution, the Secretary notifies the agency of a determination by the institution’s independent auditor expressing doubt about the institution’s ability to operate as a going concern or indicating an adverse opinion or a finding of material weakness related to financial stability.


(ii) The agency acts to place the institution on probation or equivalent status.


(iii) The Secretary notifies the agency that the institution is participating in title IV, HEA programs under a provisional program participation agreement and the Secretary has required a teach-out plan as a condition of participation.


(2) The agency must require an institution it accredits or preaccredits to submit a teach-out plan and, if practicable, teach-out agreements (as defined in 34 CFR 600.2) to the agency for approval upon the occurrence of any of the following events:


(i) The Secretary notifies the agency that it has placed the institution on the reimbursement payment method under 34 CFR 668.162(c) or the heightened cash monitoring payment method requiring the Secretary’s review of the institution’s supporting documentation under 34 CFR 668.162(d)(2).


(ii) The Secretary notifies the agency that the Secretary has initiated an emergency action against an institution, in accordance with section 487(c)(1)(G) of the HEA, or an action to limit, suspend, or terminate an institution participating in any title IV, HEA program, in accordance with section 487(c)(1)(F) of the HEA.


(iii) The agency acts to withdraw, terminate, or suspend the accreditation or preaccreditation of the institution.


(iv) The institution notifies the agency that it intends to cease operations entirely or close a location that provides one hundred percent of at least one program, including if the location is being moved and is considered by the Secretary to be a closed school.


(v) A State licensing or authorizing agency notifies the agency that an institution’s license or legal authorization to provide an educational program has been or will be revoked.


(3) The agency must evaluate the teach-out plan to ensure it includes a list of currently enrolled students, academic programs offered by the institution, and the names of other institutions that offer similar programs and that could potentially enter into a teach-out agreement with the institution.


(4) If the agency approves a teach-out plan that includes a program or institution that is accredited by another recognized accrediting agency, it must notify that accrediting agency of its approval.


(5) The agency may require an institution it accredits or preaccredits to enter into a teach-out agreement as part of its teach-out plan.


(6) The agency must require a closing institution to include in its teach-out agreement –


(i) A complete list of students currently enrolled in each program at the institution and the program requirements each student has completed;


(ii) A plan to provide all potentially eligible students with information about how to obtain a closed school discharge and, if applicable, information on State refund policies;


(iii) A record retention plan to be provided to all enrolled students that delineates the final disposition of teach-out records (e.g., student transcripts, billing, financial aid records);


(iv) Information on the number and types of credits the teach-out institution is willing to accept prior to the student’s enrollment; and


(v) A clear statement to students of the tuition and fees of the educational program and the number and types of credits that will be accepted by the teach-out institution.


(7) The agency must require an institution it accredits or preaccredits that enters into a teach-out agreement, either on its own or at the request of the agency, to submit that teach-out agreement for approval. The agency may approve the teach-out agreement only if the agreement meets the requirements of 34 CFR 600.2 and this section, is consistent with applicable standards and regulations, and provides for the equitable treatment of students being served by ensuring that the teach-out institution –


(i) Has the necessary experience, resources, and support services to provide an educational program that is of acceptable quality and reasonably similar in content, delivery modality, and scheduling to that provided by the institution that is ceasing operations either entirely or at one of its locations; however, while an option via an alternate method of delivery may be made available to students, such an option is not sufficient unless an option via the same method of delivery as the original educational program is also provided;


(ii) Has the capacity to carry out its mission and meet all obligations to existing students; and


(iii) Demonstrates that it –


(A) Can provide students access to the program and services without requiring them to move or travel for substantial distances or durations; and


(B) Will provide students with information about additional charges, if any.


(8) Irrespective of any teach-out plan or signed teach-out agreement, the agency must not permit an institution to serve as a teach-out institution under the following conditions:


(i) The institution is subject to the conditions in paragraph (c)(1) or (2) of this section.


(ii) The institution is under investigation, subject to an action, or being prosecuted for an issue related to academic quality, misrepresentation, fraud, or other severe matters by a law enforcement agency.


(9) The agency is permitted to waive requirements regarding the percentage of credits that must be earned by a student at the institution awarding the educational credential if the student is completing his or her program through a written teach-out agreement or transfer.


(10) The agency must require the institution to provide copies of all notifications from the institution related to the institution’s closure or to teach-out options to ensure the information accurately represents students’ ability to transfer credits and may require corrections.


(d) Closed institution. If an institution the agency accredits or preaccredits closes without a teach-out plan or agreement, the agency must work with the Department and the appropriate State agency, to the extent feasible, to assist students in finding reasonable opportunities to complete their education without additional charges.


(e) Transfer of credit policies. The accrediting agency must confirm, as part of its review for initial accreditation or preaccreditation, or renewal of accreditation, that the institution has transfer of credit policies that –


(1) Are publicly disclosed in accordance with § 668.43(a)(11); and


(2) Include a statement of the criteria established by the institution regarding the transfer of credit earned at another institution of higher education.


(f) Agency designations. In its accrediting practice, the agency must –


(1) Adopt and apply the definitions of “branch campus” and “additional location” in 34 CFR 600.2;


(2) On the Secretary’s request, conform its designations of an institution’s branch campuses and additional locations with the Secretary’s if it learns its designations diverge; and


(3) Ensure that it does not accredit or preaccredit an institution comprising fewer than all of the programs, branch campuses, and locations of an institution as certified for title IV participation by the Secretary, except with notice to and permission from the Secretary.


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

[84 FR 58924, Nov. 1, 2019]


§ 602.25 Due process.

The agency must demonstrate that the procedures it uses throughout the accrediting process satisfy due process. The agency meets this requirement if the agency does the following:


(a) Provides adequate written specification of its requirements, including clear standards, for an institution or program to be accredited or preaccredited.


(b) Uses procedures that afford an institution or program a reasonable period of time to comply with the agency’s requests for information and documents.


(c) Provides written specification of any deficiencies identified at the institution or program examined.


(d) Provides sufficient opportunity for a written response by an institution or program regarding any deficiencies identified by the agency, to be considered by the agency within a timeframe determined by the agency, and before any adverse action is taken.


(e) Notifies the institution or program in writing of any adverse accrediting action or an action to place the institution or program on probation or show cause. The notice describes the basis for the action.


(f) Provides an opportunity, upon written request of an institution or program, for the institution or program to appeal any adverse action prior to the action becoming final.


(1) The appeal must take place at a hearing before an appeals panel that –


(i) May not include current members of the agency’s decision-making body that took the initial adverse action;


(ii) Is subject to a conflict of interest policy;


(iii) Does not serve only an advisory or procedural role, and has and uses the authority to make the following decisions: To affirm, amend, or remand adverse actions of the original decision-making body; and


(iv) Affirms, amends, or remands the adverse action. A decision to affirm or amend the adverse action is implemented by the appeals panel or by the original decision-making body, at the agency’s option; however, in the event of a decision by the appeals panel to remand the adverse action to the original decision-making body for further consideration, the appeals panel must explain the basis for a decision that differs from that of the original decision-making body and the original decision-making body in a remand must act in a manner consistent with the appeals panel’s decisions or instructions.


(2) The agency must recognize the right of the institution or program to employ counsel to represent the institution or program during its appeal, including to make any presentation that the agency permits the institution or program to make on its own during the appeal.


(g) The agency notifies the institution or program in writing of the result of its appeal and the basis for that result.


(h)(1) The agency must provide for a process, in accordance with written procedures, through which an institution or program may, before the agency reaches a final adverse action decision, seek review of new financial information if all of the following conditions are met:


(i) The financial information was unavailable to the institution or program until after the decision subject to appeal was made.


(ii) The financial information is significant and bears materially on the financial deficiencies identified by the agency. The criteria of significance and materiality are determined by the agency.


(iii) The only remaining deficiency cited by the agency in support of a final adverse action decision is the institution’s or program’s failure to meet an agency standard pertaining to finances.


(2) An institution or program may seek the review of new financial information described in paragraph (h)(1) of this section only once and any determination by the agency made with respect to that review does not provide a basis for an appeal.


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

[74 FR 55429, Oct. 27, 2009, as amended at 84 FR 58925, Nov. 1, 2019]


§ 602.26 Notification of accrediting decisions.

The agency must demonstrate that it has established and follows written procedures requiring it to provide written notice of its accrediting decisions to the Secretary, the appropriate State licensing or authorizing agency, the appropriate accrediting agencies, and the public. The agency meets this requirement if the agency, following its written procedures –


(a) Provides written notice of the following types of decisions to the Secretary, the appropriate State licensing or authorizing agency, the appropriate accrediting agencies, and the public no later than 30 days after it makes the decision:


(1) A decision to award initial accreditation or preaccreditation to an institution or program.


(2) A decision to renew an institution’s or program’s accreditation or preaccreditation;


(b) Provides written notice of a final decision of a probation or equivalent status or an initiated adverse action to the Secretary, the appropriate State licensing or authorizing agency, and the appropriate accrediting agencies at the same time it notifies the institution or program of the decision and requires the institution or program to disclose such an action within seven business days of receipt to all current and prospective students;


(c) Provides written notice of the following types of decisions to the Secretary, the appropriate State licensing or authorizing agency, and the appropriate accrediting agencies at the same time it notifies the institution or program of the decision, but no later than 30 days after it reaches the decision:


(1) A final decision to deny, withdraw, suspend, revoke, or terminate the accreditation or preaccreditation of an institution or program.


(2) A final decision to take any other adverse action, as defined by the agency, not listed in paragraph (c)(1) of this section;


(d) Provides written notice to the public of the decisions listed in paragraphs (b) and (c) of this section within one business day of its notice to the institution or program;


(e) For any decision listed in paragraph (c) of this section, requires the institution or program to disclose the decision to current and prospective students within seven business days of receipt and makes available to the Secretary, the appropriate State licensing or authorizing agency, and the public, no later than 60 days after the decision, a brief statement summarizing the reasons for the agency’s decision and the official comments that the affected institution or program may wish to make with regard to that decision, or evidence that the affected institution has been offered the opportunity to provide official comment;


(f) Notifies the Secretary, the appropriate State licensing or authorizing agency, the appropriate accrediting agencies, and, upon request, the public if an accredited or preaccredited institution or program –


(1) Decides to withdraw voluntarily from accreditation or preaccreditation, within 10 business days of receiving notification from the institution or program that it is withdrawing voluntarily from accreditation or preaccreditation; or


(2) Lets its accreditation or preaccreditation lapse, within 10 business days of the date on which accreditation or preaccreditation lapses.


(Approved by the Office of Management and Budget under control number 1845-0003)

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

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55429, Oct. 27, 2009; 84 FR 58924, Nov. 1, 2019]


§ 602.27 Other information an agency must provide the Department.

(a) The agency must submit to the Department –


(1) A list, updated annually, of its accredited and preaccredited institutions and programs, which may be provided electronically;


(2) A summary of the agency’s major accrediting activities during the previous year (an annual data summary), if requested by the Secretary to carry out the Secretary’s responsibilities related to this part;


(3) Any proposed change in the agency’s policies, procedures, or accreditation or preaccreditation standards that might alter its –


(i) Scope of recognition, except as provided in paragraph (a)(4) of this section; or


(ii) Compliance with the criteria for recognition;


(4) Notification that the agency has expanded its scope of recognition to include distance education or correspondence courses as provided in section 496(a)(4)(B)(i)(I) of the HEA. Such an expansion of scope is effective on the date the Department receives the notification;


(5) The name of any institution or program it accredits that the agency has reason to believe is failing to meet its title IV, HEA program responsibilities or is engaged in fraud or abuse, along with the agency’s reasons for concern about the institution or program; and


(6) If the Secretary requests, information that may bear upon an accredited or preaccredited institution’s compliance with its title IV, HEA program responsibilities, including the eligibility of the institution or program to participate in title IV, HEA programs.


(b) If an agency has a policy regarding notification to an institution or program of contact with the Department in accordance with paragraph (a)(5) or (6) of this section, it must provide for a case-by-case review of the circumstances surrounding the contact, and the need for the confidentiality of that contact. When the Department determines a compelling need for confidentiality, the agency must consider that contact confidential upon specific request of the Department.


[84 FR 58926, Nov. 1, 2019]


§ 602.28 Regard for decisions of States and other accrediting agencies.

(a) If the agency is an institutional accrediting agency, it may not accredit or preaccredit institutions that lack legal authorization under applicable State law to provide a program of education beyond the secondary level.


(b) Except as provided in paragraph (c) of this section, the agency may not grant initial or renewed accreditation or preaccreditation to an institution, or a program offered by an institution, if the agency knows, or has reasonable cause to know, that the institution is the subject of –


(1) A pending or final action brought by a State agency to suspend, revoke, withdraw, or terminate the institution’s legal authority to provide postsecondary education in the State;


(2) A decision by a recognized agency to deny accreditation or preaccreditation;


(3) A pending or final action brought by a recognized accrediting agency to suspend, revoke, withdraw, or terminate the institution’s accreditation or preaccreditation; or


(4) Probation or an equivalent status imposed by a recognized agency.


(c) The agency may grant accreditation or preaccreditation to an institution or program described in paragraph (b) of this section only if it provides to the Secretary, within 30 days of its action, a thorough and reasonable explanation, consistent with its standards, why the action of the other body does not preclude the agency’s grant of accreditation or preaccreditation.


(d) If the agency learns that an institution it accredits or preaccredits, or an institution that offers a program it accredits or preaccredits, is the subject of an adverse action by another recognized accrediting agency or has been placed on probation or an equivalent status by another recognized agency, the agency must promptly review its accreditation or preaccreditation of the institution or program to determine if it should also take adverse action or place the institution or program on probation or show cause.


(e) The agency must, upon request, share with other appropriate recognized accrediting agencies and recognized State approval agencies information about the accreditation or preaccreditation status of an institution or program and any adverse actions it has taken against an accredited or preaccredited institution or program.


(Approved by the Office of Management and Budget under control number 1845-0003)

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


§ 602.29 Severability.

If any provision of this subpart or its application to any person, act, or practice is held invalid, the remainder of the subpart or the application of its provisions to any person, act, or practice shall not be affected thereby.


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

[84 FR 58926, Nov. 1, 2019]


Subpart C – The Recognition Process


Source:74 FR 55430, Oct. 27, 2009, unless otherwise noted.

Application and Review by Department Staff

§ 602.30 [Reserved]

§ 602.31 Agency applications and reports to be submitted to the Department.

(a) Applications for recognition or renewal of recognition. An accrediting agency seeking initial or continued recognition must submit a written application to the Secretary. Each accrediting agency must submit an application for continued recognition at least once every five years, or within a shorter time period specified in the final recognition decision, and, for an agency seeking renewal of recognition, 24 months prior to the date on which the current recognition expires. The application, to be submitted concurrently with information required by § 602.32(a) and, if applicable, § 602.32(b), must consist of –


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


(2) Documentation that the agency complies with the criteria for recognition listed in subpart B of this part, including a copy of its policies and procedures manual and its accreditation standards; and


(3) Documentation of how an agency that includes or seeks to include distance education or correspondence courses in its scope of recognition applies its standards in evaluating programs and institutions it accredits that offer distance education or correspondence courses.


(b) Applications for expansions of scope. An agency seeking an expansion of scope by application must submit a written application to the Secretary. The application must –


(1) Specify the scope requested;


(2) Provide copies of any relevant standards, policies, or procedures developed and applied by the agency for its use in accrediting activities conducted within the expansion of scope proposed and documentation of the application of these standards, policies, or procedures; and


(3) Provide the materials required by § 602.32(j) and, if applicable, § 602.32(l).


(c) Compliance or monitoring reports. If an agency is required to submit a compliance or monitoring report, it must do so within 30 days following the end of the period for achieving compliance as specified in the decision of the senior Department official or Secretary, as applicable.


(d) Review following an increase in headcount enrollment. If an agency that has notified the Secretary in writing of its change in scope to include distance education or correspondence courses in accordance with § 602.27(a)(4) reports an increase in headcount enrollment in accordance with § 602.19(e) for an institution it accredits, or if the Department notifies the agency of such an increase at one of the agency’s accredited institutions, the agency must, within 45 days of reporting the increase or receiving notice of the increase from the Department, as applicable, submit a report explaining –


(1) How the agency evaluates the capacity of the institutions or programs it accredits to accommodate significant growth in enrollment and to maintain education quality;


(2) The specific circumstances regarding the growth at the institution or program that triggered the review and the results of any evaluation conducted by the agency; and


(3) Any other information that the agency deems appropriate to demonstrate the effective application of the criteria for recognition or that the Department may require.


(e) Consent to sharing of information. By submitting an application for recognition, the agency authorizes Department staff throughout the application process and during any period of recognition –


(1) To observe its site visits to one or more of the institutions or programs it accredits or preaccredits, on an announced or unannounced basis;


(2) To visit locations where agency activities such as training, review and evaluation panel meetings, and decision meetings take place, on an announced or unannounced basis;


(3) To obtain copies of all documents the staff deems necessary to complete its review of the agency; and


(4) To gain access to agency records, personnel, and facilities.


(f) Public availability of agency records obtained by the Department.


(1) The Secretary’s processing and decision-making on requests for public disclosure of agency materials reviewed under this part are governed by the Freedom of Information Act, 5 U.S.C. 552; the Trade Secrets Act, 18 U.S.C. 1905; the Privacy Act of 1974, as amended, 5 U.S.C. 552a; the Federal Advisory Committee Act, 5 U.S.C. Appdx. 1; and all other applicable laws. In recognition proceedings, agencies must, before submission to the Department –


(i) Redact the names and any other personally identifiable information about individual students and any other individuals who are not agents of the agency or of an institution or program the agency is reviewing;


(ii) Redact the personal addresses, personal telephone numbers, personal email addresses, Social Security numbers, and any other personally identifiable information regarding individuals who are acting as agents of the agency or of an institution or program under review;


(iii) Designate all business information within agency submissions that the agency believes would be exempt from disclosure under exemption 4 of the Freedom of Information Act (FOIA), 5 U.S.C. 552(b)(4). A blanket designation of all information contained within a submission, or of a category of documents, as meeting this exemption will not be considered a good faith effort and will be disregarded; and


(iv) Ensure documents submitted are only those required for Department review or as requested by Department officials.


(2) The agency may, but is not required to, redact the identities of institutions or programs that it believes are not essential to the Department’s review of the agency and may identify any other material the agency believes would be exempt from public disclosure under FOIA, the factual basis for the request, and any legal basis the agency has identified for withholding the document from public disclosure.


(3) The Secretary processes FOIA requests in accordance with 34 CFR part 5 and makes all documents provided to the Advisory Committee available to the public.


(4) Upon request by Department staff, the agency must disclose to Department staff any specific material the agency has redacted that Department staff believes is needed to conduct the staff review. Department staff will make any arrangements needed to ensure that the materials are not made public if prohibited by law.


(g) Length of submissions. The Secretary may publish reasonable, uniform limits on the length of submissions described in this section.


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

[84 FR 58926, Nov. 1, 2019]


§ 602.32 Procedures for submitting an application for recognition, renewal of recognition, expansion of scope, compliance reports, and increases in enrollment.

(a) An agency preparing for renewing recognition will submit, 24 months prior to the date on which the current recognition expires, and in conjunction with the materials required by § 602.31(a), a list of all institutions or programs that the agency plans to consider for an award of initial or renewed accreditation over the next year or, if none, over the succeeding year, as well as any institutions or programs currently subject to compliance report review or reporting requirements. An agency that does not anticipate a review of any institution or program for an initial award of accreditation or renewed accreditation in the 24 months prior to the date of recognition expiration may submit a list of institutions or programs it has reviewed for an initial award of accreditation or renewal of accreditation at any time since the prior award of recognition or leading up to the application for an initial award of recognition.


(b) An agency seeking initial recognition must follow the policies and procedures outlined in paragraph (a) of this section, but in addition must also submit –


(1) Letters of support for the agency from at least three accredited institutions or programs, three educators, and, if appropriate, three employers or practitioners, explaining the role for such an agency and the reasons for their support; and


(2) Letters from at least one program or institution that will rely on the agency as its link to a Federal program upon recognition of the agency or intends to seek multiple accreditation which will allow it in the future to designate the agency as its Federal link.


(c) Department staff publishes a notice of the agency’s submission of an application in the Federal Register inviting the public to comment on the agency’s compliance with the criteria for recognition and establishing a deadline for receipt of public comment.


(d) The Department staff analyzes the agency’s application for initial or renewal of recognition, to determine whether the agency satisfies the criteria for recognition, taking into account all available relevant information concerning the compliance of the agency with those criteria and the agency’s consistency in applying the criteria. The analysis of an application may include and, after January 1, 2021, will include –


(1)(i) Observations from site visits, on an announced or unannounced basis, to the agency or to a location where the agency conducts activities such as training, review and evaluation panel meetings, or decision meetings;


(ii) Observations from site visits, on an announced or unannounced basis, to one or more of the institutions or programs the agency accredits or preaccredits;


(iii) A file review at the agency of documents, at which time Department staff may retain copies of documents needed for inclusion in the administrative record;


(iv) Review of the public comments and other third-party information Department staff receives by the established deadline, the agency’s responses to the third-party comments, as appropriate, and any other information Department staff obtains for purposes of evaluating the agency under this part; and


(v) Review of complaints or legal actions involving the agency; and


(2) Review of complaints or legal actions against an institution or program accredited or preaccredited by the agency, which may be considered but are not necessarily determinative of compliance.


(e) The Department may view as a negative factor when considering an application for initial, or expansion of scope of, recognition as proposed by an agency, among other factors, any evidence that the agency was part of a concerted effort to unnecessarily restrict the qualifications necessary for a student to sit for a licensure or certification examination or otherwise be eligible for entry into a profession.


(f) Department staff’s evaluation of an agency may also include a review of information directly related to institutions or programs accredited or preaccredited by the agency relative to their compliance with the agency’s standards, the effectiveness of the standards, and the agency’s application of those standards, but must make all materials relied upon in the evaluation available to the agency for review and comment.


(g) If, at any point in its evaluation of an agency seeking initial recognition, Department staff determines that the agency fails to demonstrate compliance with the basic eligibility requirements in §§ 602.10 through 602.15, the staff –


(1) Returns the agency’s application and provides the agency with an explanation of the deficiencies that caused staff to take that action; and


(2) Requires that the agency withdraw its application and instructs the agency that it may reapply when the agency is able to demonstrate compliance.


(h) Except with respect to an application that has been returned and is withdrawn under paragraph (g) of this section, when Department staff completes its evaluation of the agency, the staff may and, after July 1, 2021, will –


(1) Prepare a written draft analysis of the agency’s application;


(2) Send to the agency the draft analysis including any identified areas of potential noncompliance and all third-party comments and complaints, if applicable, and any other materials the Department received by the established deadline or is including in its review;


(3) Invite the agency to provide a written response to the draft analysis and third-party comments or other material included in the review, specifying a deadline that provides at least 180 days for the agency’s response;


(4) Review the response to the draft analysis the agency submits, if any, and prepares the written final analysis –


(i) Indicating that the agency is in full compliance, substantial compliance, or noncompliance with each of the criteria for recognition; and


(ii) Recommending that the senior Department official approve, renew with compliance reporting requirements due in 12 months, renew with compliance reporting requirements with a deadline in excess of 12 months based on a finding of good cause and extraordinary circumstances, approve with monitoring or other reporting requirements, or deny, limit, suspend, or terminate recognition; and


(5) Provide to the agency, no later than 30 days before the Advisory Committee meeting, the final staff analysis and any other available information provided to the Advisory Committee under § 602.34(c).


(i) The agency may request that the Advisory Committee defer acting on an application at that Advisory Committee meeting if Department staff fails to provide the agency with the materials described, and within the timeframes provided, in paragraphs (g)(3) and (5) of this section. If the Department staff’s failure to send the materials in accordance with the timeframe described in paragraph (g)(3) or (5) of this section is due to the failure of the agency to, by the deadline established by the Secretary, submit reports to the Department, other information the Secretary requested, or its response to the draft analysis, the agency forfeits its right to request a deferral of its application.


(j) An agency seeking an expansion of scope, either as part of the regular renewal of recognition process or during a period of recognition, must submit an application to the Secretary, separately or as part of the policies and procedures outlined in paragraph (a) of this section, that satisfies the requirements of §§ 602.12(b) and 602.31(b) and –


(1) States the reason for the expansion of scope request;


(2) Includes letters from at least three institutions or programs that would seek accreditation under one or more of the elements of the expansion of scope; and


(3) Explains how the agency must expand capacity to support the expansion of scope, if applicable, and, if necessary, how it will do so and how its budget will support that expansion of capacity.


(k) The Department may view as a negative factor when considering an application for initial or expansion of scope of recognition as proposed by an agency, among other factors, any evidence that the agency was part of a concerted effort to unnecessarily restrict the qualifications necessary for a student to sit for a licensure or certification examination or otherwise be eligible for entry into a profession.


(l) Department staff’s evaluation of a compliance report includes review of public comments solicited by Department staff in the Federal Register received by the established deadline, the agency’s responses to the third-party comments, as appropriate, other third-party information Department staff receives, and additional information described in paragraphs (d) and (e) of this section, as appropriate.


(m) The Department will process an application for an expansion of scope, compliance report, or increase in enrollment report in accordance with paragraphs with paragraphs (c) through (h) of this section.


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

[84 FR 58927, Nov. 1, 2019]


§ 602.33 Procedures for review of agencies during the period of recognition, including the review of monitoring reports.

(a) Department staff may review the compliance of a recognized agency with the criteria for recognition at any time –


(1) Based on the submission of a monitoring report as directed by a decision by the senior Department official or Secretary; or


(2) Based on any information that, as determined by Department staff, appears credible and raises concerns relevant to the criteria for recognition.


(b) The review may include, but need not be limited to, any of the activities described in § 602.32(d) and (f).


(c) If, in the course of the review, and after providing the agency the documentation concerning the inquiry and consulting with the agency, Department staff notes that one or more deficiencies may exist in the agency’s compliance with the criteria for recognition or in the agency’s effective application of those criteria, Department staff –


(1) Prepares a written draft analysis of the agency’s compliance with the criteria of concern;


(2) Sends to the agency the draft analysis including any identified areas of noncompliance and all supporting documentation;


(3) Invites the agency to provide a written response to the draft analysis within 90 days; and


(4) Reviews any response provided by the agency, including any monitoring report submitted, and either –


(i) Concludes the review;


(ii) Continues monitoring of the agency’s areas of deficiencies; or


(iii)(A) Notifies the agency, in the event that the agency’s response or monitoring report does not satisfy the staff, that the draft analysis will be finalized for presentation to the Advisory Committee;


(B) Publishes a notice in the Federal Register with an invitation for the public to comment on the agency’s compliance with the criteria in question and establishing a deadline for receipt of public comment;


(C) Provides the agency with a copy of all public comments received and invites a written response from the agency;


(D) Finalizes the staff analysis as necessary to reflect its review of any agency response and any public comment received;


(E) Provides to the agency, no later than 30 days before the Advisory Committee meeting, the final staff analysis and a recognition recommendation and any other information provided to the Advisory Committee under § 602.34(c); and


(F) Submits the matter for review by the Advisory Committee in accordance with § 602.34.


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

[84 FR 58928, Nov. 1, 2019]


Review by the National Advisory Committee on Institutional Quality and Integrity

§ 602.34 Advisory Committee meetings.

(a) Department staff submits a proposed schedule to the Chairperson of the Advisory Committee based on anticipated completion of staff analyses.


(b) The Chairperson of the Advisory Committee establishes an agenda for the next meeting and, in accordance with the Federal Advisory Committee Act, presents it to the Designated Federal Official for approval.


(c) Before the Advisory Committee meeting, Department staff provides the Advisory Committee with –


(1) The agency’s application for recognition, renewal of recognition, or expansion of scope when Advisory Committee review is required, or the agency’s compliance report and supporting documentation submitted by the agency;


(2) The final Department staff analysis of the agency developed in accordance with § 602.32 or § 602.33, and any supporting documentation;


(3) The agency’s response to the draft analysis;


(4) Any written third-party comments the Department received about the agency on or before the established deadline;


(5) Any agency response to third-party comments; and


(6) Any other information Department staff relied upon in developing its analysis.


(d) At least 30 days before the Advisory Committee meeting, the Department publishes a notice of the meeting in the Federal Register inviting interested parties to make oral presentations before the Advisory Committee.


(e) The Advisory Committee considers the materials provided under paragraph (c) of this section in a public meeting and invites Department staff, the agency, and other interested parties to make oral presentations during the meeting. A transcript is made of all Advisory Committee meetings.


(f) The written motion adopted by the Advisory Committee regarding each agency’s recognition will be made available during the Advisory Committee meeting. The Department will provide each agency, upon request, with a copy of the motion on recognition at the meeting. Each agency that was reviewed will be sent an electronic copy of the motion relative to that agency as soon as practicable after the meeting.


(g) After each meeting of the Advisory Committee, the Advisory Committee forwards to the senior Department official its recommendation with respect to each agency, which may include, but is not limited to –


(1)(i) For an agency that is fully compliant, approve initial or renewed recognition;


(ii) Continue recognition with a required compliance report to be submitted to the Department within 12 months from the decision of the senior Department official;


(iii) In conjunction with a finding of exceptional circumstances and good cause, continue recognition for a specified period in excess of 12 months pending submission of a compliance report;


(iv) In the case of substantial compliance, grant initial recognition or renewed recognition and recommend a monitoring report with a set deadline to be reviewed by Department staff to ensure that corrective action is taken, and full compliance is achieved or maintained (or for action by staff under § 602.33 if it is not); or


(v) Deny, limit, suspend, or terminate recognition;


(2) Grant or deny a request for expansion of scope; or


(3) Revise or affirm the scope of the agency.


(Authority: 20 U.S.C. 1099b)
[84 FR 58929, Nov. 1, 2019]


§ 602.35 Responding to the Advisory Committee’s recommendation.

(a) Within ten business days following the Advisory Committee meeting, the agency and Department staff may submit written comments to the senior Department official on the Advisory Committee’s recommendation. The agency must simultaneously submit a copy of its written comments, if any, to Department staff. Department staff must simultaneously submit a copy of its written comments, if any, to the agency.


(b) Comments must be limited to –


(1) Any Advisory Committee recommendation that the agency or Department staff believes is not supported by the record;


(2) Any incomplete Advisory Committee recommendation based on the agency’s application; and


(3) The inclusion of any recommendation or draft proposed decision for the senior Department official’s consideration.


(c)(1) Neither the Department staff nor the agency may submit additional documentationwith its comments unless the Advisory Committee’s recognition recommendation proposes finding the agency noncompliant with, or ineffective in its application of, a criterion or criteria for recognition not identified in the final Department staff analysis provided to the Advisory Committee.


(2) Within ten business days of receipt by the Department staff of an agency’s comments or new evidence, if applicable, or of receipt by the agency of the Department staff’s comments, Department staff, the agency, or both, as applicable, may submit a response to the senior Department official. Simultaneously with submission, the agency must provide a copy of any response to the Department staff. Simultaneously with submission, Department staff must provide a copy of any response to the agency. No additional comments or new documentation may be submitted after the responses described in this paragraph are submitted.


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

[74 FR 55430, Oct. 27, 2009, as amended at 84 FR 58929, Nov. 1, 2019]


Review and Decision by the Senior Department Official

§ 602.36 Senior Department official’s decision.

(a) The senior Department official makes a decision regarding recognition of an agency based on the record compiled under §§ 602.32, 602.33, 602.34, and 602.35 including, as applicable, the following:


(1) The materials provided to the Advisory Committee under § 602.34(c).


(2) The transcript of the Advisory Committee meeting.


(3) The recommendation of the Advisory Committee.


(4) Written comments and responses submitted under § 602.35.


(5) New documentation submitted in accordance with § 602.35(c)(1).


(6) A communication from the Secretary referring an issue to the senior Department official’s consideration under § 602.37(e).


(b) In the event that statutory authority or appropriations for the Advisory Committee ends, or there are fewer duly appointed Advisory Committee members than needed to constitute a quorum, and under extraordinary circumstances when there are serious concerns about an agency’s compliance with subpart B of this part that require prompt attention, the senior Department official may make a decision on an application for renewal of recognition or compliance report on the record compiled under § 602.32 or § 602.33 after providing the agency with an opportunity to respond to the final staff analysis. Any decision made by the senior Department official under this paragraph from the Advisory Committee may be appealed to the Secretary as provided in § 602.37.


(c) Following consideration of an agency’s recognition under this section, the senior Department official issues a recognition decision.


(d) Except with respect to decisions made under paragraph (f) or (g) of this section and matters referred to the senior Department official under § 602.37(e) or (f), the senior Department official notifies the agency in writing of the senior Department official’s decision regarding the agency’s recognition within 90 days of the Advisory Committee meeting or conclusion of the review under paragraph (b) of this section.


(e) The senior Department official’s decision may include, but is not limited to, approving for recognition; approving with a monitoring report; denying, limiting, suspending, or terminating recognition following the procedures in paragraph (g) of this section; granting or denying an application for an expansion of scope; revising or affirming the scope of the agency; or continuing recognition pending submission and review of a compliance report under §§ 602.32 and 602.34 and review of the report by the senior Department official under this section.


(1)(i) The senior Department official approves recognition if the agency has demonstrated compliance or substantial compliance with the criteria for recognition listed in subpart B of this part. The senior Department official may determine that the agency has demonstrated compliance or substantial compliance with the criteria for recognition if the agency has a compliant policy or procedure in place but has not had the opportunity to apply such policy or procedure.


(ii) If the senior Department official approves recognition, the recognition decision defines the scope of recognition and the recognition period. The recognition period does not exceed five years, including any time during which recognition was continued to permit submission and review of a compliance report.


(iii) If the scope of recognition is less than that requested by the agency, the senior Department official explains the reasons for continuing or approving a lesser scope.


(2)(i) Except as provided in paragraph (e)(3) of this section, if the agency fails to comply with the criteria for recognition listed in subpart B of this part, the senior Department official denies, limits, suspends, or terminates recognition.


(ii) If the senior Department official denies, limits, suspends, or terminates recognition, the senior Department official specifies the reasons for this decision, including all criteria the agency fails to meet and all criteria the agency has failed to apply effectively.


(3)(i) If the senior Department official concludes an agency is noncompliant, the senior Department official may continue the agency’s recognition, pending submission of a compliance report that will be subject to review in the recognition process, provided that –


(A) The senior Department official concludes that the agency will demonstrate compliance with, and effective application of, the criteria for recognition within 12 months from the date of the senior Department official’s decision; or


(B) The senior Department official identifies a deadline more than 12 months from the date of the decision by which the senior Department official concludes the agency will demonstrate full compliance with, and effective application of, the criteria for recognition, and also identifies exceptional circumstances and good cause for allowing the agency more than 12 months to achieve compliance and effective application.


(ii) In the case of a compliance report ordered under paragraph (e)(3)(i) of this section, the senior Department official specifies the criteria the compliance report must address, and the time period for achieving compliance and effective application of the criteria. The compliance report documenting compliance and effective application of criteria is due not later than 30 days after the end of the period specified in the senior Department official’s decision.


(iii) If the record includes a compliance report required under paragraph (e)(3)(i) of this section, and the senior Department official determines that an agency has not complied with the criteria for recognition, or has not effectively applied those criteria, during the time period specified by the senior Department official in accordance with paragraph (e)(3)(i) of this section, the senior Department official denies, limits, suspends, or terminates recognition, except, in extraordinary circumstances, upon a showing of good cause for an extension of time as determined by the senior Department official and detailed in the senior Department official’s decision. If the senior Department official determines good cause for an extension has been shown, the senior Department official specifies the length of the extension and what the agency must do during it to merit a renewal of recognition.


(f) If the senior Department official determines that the agency is substantially compliant, or is fully compliant but has concerns about the agency maintaining compliance, the senior Department official may approve the agency’s recognition or renewal of recognition and require periodic monitoring reports that are to be reviewed and approved by Department staff.


(g) If the senior Department official determines, based on the record, that a decision to deny, limit, suspend, or terminate an agency’s recognition may be warranted based on a finding that the agency is noncompliant with one or more criteria for recognition, or if the agency does not hold institutions or programs accountable for complying with one or more of the agency’s standards or criteria for accreditation that were not identified earlier in the proceedings as an area of noncompliance, the senior Department official provides –


(1) The agency with an opportunity to submit a written response addressing the finding; and


(2) The staff with an opportunity to present its analysis in writing.


(h) If relevant and material information pertaining to an agency’s compliance with recognition criteria, but not contained in the record, comes to the senior Department official’s attention while a decision regarding the agency’s recognition is pending before the senior Department official, and if the senior Department official concludes the recognition decision should not be made without consideration of the information, the senior Department official either –


(1)(i) Does not make a decision regarding recognition of the agency; and


(ii) Refers the matter to Department staff for review and analysis under § 602.32 or § 602.33, as appropriate, and consideration by the Advisory Committee under § 602.34; or


(2)(i) Provides the information to the agency and Department staff;


(ii) Permits the agency to respond to the senior Department official and the Department staff in writing, and to include additional documentation relevant to the issue, and specifies a deadline;


(iii) Provides Department staff with an opportunity to respond in writing to the agency’s submission under paragraph (h)(2)(ii) of this section, specifying a deadline; and


(iv) Issues a recognition decision based on the record described in paragraph (a) of this section, as supplemented by the information provided under this paragraph (h).


(i) No agency may submit information to the senior Department official, or ask others to submit information on its behalf, for purposes of invoking paragraph (h) of this section. Before invoking paragraph (h) of this section, the senior Department official will take into account whether the information, if submitted by a third party, could have been submitted in accordance with § 602.32(a) or § 602.33(e)(2).


(j) If the senior Department official does not reach a final decision to approve, deny, limit, suspend, or terminate an agency’s recognition before the expiration of its recognition period, the senior Department official automatically extends the recognition period until a final decision is reached.


(k) Unless appealed in accordance with § 602.37, the senior Department official’s decision is the final decision of the Secretary.


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

[84 FR 58929, Nov. 1, 2019]


Appeal Rights and Procedures

§ 602.37 Appealing the senior Department official’s decision to the Secretary.

(a) The agency may appeal the senior Department official’s decision to the Secretary. Such appeal stays the decision of the senior Department official until final disposition of the appeal. If an agency wishes to appeal, the agency must –


(1) Notify the Secretary and the senior Department official in writing of its intent to appeal the decision of the senior Department official, no later than 10 business days after receipt of the decision;


(2) Submit its appeal to the Secretary in writing no later than 30 days after receipt of the decision; and


(3) Provide the senior Department official with a copy of the appeal at the same time it submits the appeal to the Secretary.


(b) The senior Department official may file a written response to the appeal. To do so, the senior Department official must –


(1) Submit a response to the Secretary no later than 30 days after receipt of a copy of the appeal; and


(2) Provide the agency with a copy of the senior Department official’s response at the same time it is submitted to the Secretary.


(c) Once the agency’s appeal and the senior Department official’s response, if any, have been provided, no additional written comments may be submitted by either party.


(d) Neither the agency nor the senior Department official may include in its submission any new documentation it did not submit previously in the proceeding.


(e) On appeal, the Secretary makes a recognition decision, as described in § 602.36(e). If the decision requires a compliance report, the report is due within 30 days after the end of the period specified in the Secretary’s decision. The Secretary renders a final decision after taking into account the senior Department official’s decision, the agency’s written submissions on appeal, the senior Department official’s response to the appeal, if any, and the entire record before the senior Department official. The Secretary notifies the agency in writing of the Secretary’s decision regarding the agency’s recognition.


(f) The Secretary may determine, based on the record, that a decision to deny, limit, suspend, or terminate an agency’s recognition may be warranted based on a finding that the agency is noncompliant with, or ineffective in its application with respect to, a criterion or criteria for recognition not identified as an area of noncompliance earlier in the proceedings. In that case, the Secretary, without further consideration of the appeal, refers the matter to the senior Department official for consideration of the issue under § 602.36(g). After the senior Department official makes a decision, the agency may, if desired, appeal that decision to the Secretary.


(g) If relevant and material information pertaining to an agency’s compliance with recognition criteria, but not contained in the record, comes to the Secretary’s attention while a decision regarding the agency’s recognition is pending before the Secretary, and if the Secretary concludes the recognition decision should not be made without consideration of the information, the Secretary either –


(1)(i) Does not make a decision regarding recognition of the agency; and


(ii) Refers the matter to Department staff for review and analysis under § 602.32 or § 602.33, as appropriate; review by the Advisory Committee under § 602.34; and consideration by the senior Department official under § 602.36; or


(2)(i) Provides the information to the agency and the senior Department official;


(ii) Permits the agency to respond to the Secretary and the senior Department official in writing, and to include additional documentation relevant to the issue, and specifies a deadline;


(iii) Provides the senior Department official with an opportunity to respond in writing to the agency’s submission under paragraph (g)(2)(ii) of this section, specifying a deadline; and


(iv) Issues a recognition decision based on all the materials described in paragraphs (e) and (g) of this section.


(h) No agency may submit information to the Secretary, or ask others to submit information on its behalf, for purposes of invoking paragraph (g) of this section. Before invoking paragraph (g) of this section, the Secretary will take into account whether the information, if submitted by a third party, could have been submitted in accordance with § 602.32(a) or § 602.33(c).


(i) If the Secretary does not reach a final decision on appeal to approve, deny, limit, suspend, or terminate an agency’s recognition before the expiration of its recognition period, the Secretary automatically extends the recognition period until a final decision is reached.


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

[84 FR 58931, Nov. 1, 2019]


§ 602.38 Contesting the Secretary’s final decision to deny, limit, suspend, or terminate an agency’s recognition.

An agency may contest the Secretary’s decision under this part in the Federal courts as a final decision in accordance with applicable Federal law. Unless otherwise directed by the court, a decision of the Secretary to deny, limit, suspend, or terminate the agency’s recognition is not stayed during an appeal in the Federal courts.


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


§ 602.39 Severability.

If any provision of this subpart or its application to any person, act, or practice is held invalid, the remainder of the subpart or the application of its provisions to any person, act, or practice shall not be affected thereby.


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

[84 FR 58931, Nov. 1, 2019]


Subpart D – Department Responsibilities


Source:64 FR 56617, Oct. 20, 1999. Redesignated at 74 FR 55435, Oct. 27, 2009, unless otherwise noted.

§ 602.50 What information does the Department share with a recognized agency about its accredited institutions and programs?

(a) If the Department takes an action against an institution or program accredited by the agency, it notifies the agency no later than 10 days after taking that action.


(b) If another Federal agency or a State agency notifies the Department that it has taken an action against an institution or program accredited by the agency, the Department notifies the agency as soon as possible but no later than 10 days after receiving the written notice from the other Government agency.


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


PART 603 – SECRETARY’S RECOGNITION PROCEDURES FOR STATE AGENCIES


Authority:20 U.S.C. 1001, 1002, 1094(c)(4); 38 U.S.C. 3675, unless otherwise noted.

Subpart A [Reserved]

Subpart B – Criteria for State Agencies


Authority:Sec. 438 (b) of the Higher Education Act of 1965 Pub. L. 89-329 as amended by Pub. L. 92-318, 86 Stat. 235, 264 (20 U.S.C. 1087-1(b)), unless otherwise noted.


Source:39 FR 30042, Aug. 20, 1974, unless otherwise noted. Redesignated at 45 FR 77369, Nov. 21, 1980.

§ 603.20 Scope.

(a) Pursuant to section 438(b) of the Higher Education Act of 1965 as amended by Pub. L. 92-318, the Secretary is required to publish a list of State agencies which he determines to be reliable authorities as to the quality of public postsecondary vocational education in their respective States for the purpose of determining eligibility for Federal student assistance programs administered by the Department.


(b) Approval by a State agency included on the list will provide an alternative means of satisfying statutory standards as to the quality of public postsecondary vocational education to be undertaken by students receiving assistance under such programs.


(Authority: 20 U.S.C. 1087-1(b))


§ 603.21 Publication of list.

Periodically the Secretary will publish a list in the Federal Register of the State agencies which he determines to be reliable authorities as to the quality of public postsecondary vocational education in their respective States.


(Authority: 20 U.S.C. 1087-1(b))


§ 603.22 Inclusion on list.

Any State agency which desires to be listed by the Secretary as meeting the criteria set forth in § 603.24 should apply in writing to the Director, Division of Eligibility and Agency Evaluation, Office of Postsecondary Education, Department of Education, Washington, DC 20202.


(Authority: 20 U.S.C. 1087-1(b))

[45 FR 86300, Dec. 30, 1980]


§ 603.23 Initial recognition, and reevaluation.

For initial recognition and for renewal of recognition, the State agency will furnish information establishing its compliance with the criteria set forth in § 603.24. This information may be supplemented by personal interviews or by review of the agency’s facilities, records, personnel qualifications, and administrative management. Each agency listed will be reevaluated by the Secretary at his discretion, but at least once every four years. No adverse decision will become final without affording an opportunity for a hearing.


(Authority: 20 U.S.C. 1087-1(b))


§ 603.24 Criteria for State agencies.

The following are the criteria which the Secretary will utilize in designating a State agency as a reliable authority to assess the quality of public postsecondary vocational education in its respective State.


(a) Functional aspects. The functional aspects of the State agency must be shown by:


(1) Its scope of operations. The agency:


(i) Is statewide in the scope of its operations and is legally authorized to approve public postsecondary vocational institutions or programs;


(ii) Clearly sets forth the scope of its objectives and activities, both as to kinds and levels of public postsecondary vocational institutions or programs covered, and the kinds of operations performed;


(iii) Delineates the process by which it differentiates among and approves programs of varying levels.


(2) Its organization. The State agency:


(i) Employs qualified personnel and uses sound procedures to carry out its operations in a timely and effective manner;


(ii) Receives adequate and timely financial support, as shown by its appropriations, to carry out its operations;


(iii) Selects competent and knowledgeable persons, qualified by experience and training, and selects such persons in accordance with nondiscriminatory practices, (A) to participate on visiting teams, (B) to engage in consultative services for the evaluation and approval process, and (C) to serve on decision-making bodies.


(3) Its procedures. The State agency:


(i) Maintains clear definitions of approval status and has developed written procedures for granting, reaffirming, revoking, denying, and reinstating approval status;


(ii) Requires, as an integral part of the approval and reapproval process, institutional or program self-analysis and onsite reviews by visiting teams, and provides written and consultative guidance to institutions or programs and visiting teams.


(A) Self-analysis shall be a qualitative assessment of the strengths and limitations of the instructional program, including the achievement of institutional or program objectives, and should involve a representative portion of the institution’s administrative staff, teaching faculty, students, governing body, and other appropriate constituencies.


(B) The visiting team, which includes qualified examiners other than agency staff, reviews instructional content, methods and resources, administrative management, student services, and facilities. It prepares written reports and recommendations for use by the State agency.


(iii) Reevaluates at reasonable and regularly scheduled intervals institutions or programs which it has approved.


(b) Responsibility and reliability. The responsibility and reliability of the State agency will be demonstrated by:


(1) Its responsiveness to the public interest. The State agency:


(i) Has an advisory body which provides for representation from public employment services and employers, employees, postsecondary vocational educators, students, and the general public, including minority groups. Among its functions, this structure provides counsel to the State agency relating to the development of standards, operating procedures and policy, and interprets the educational needs and manpower projections of the State’s public postsecondary vocational education system;


(ii) Demonstrates that the advisory body makes a real and meaningful contribution to the approval process;


(iii) Provides advance public notice of proposed or revised standards or regulations through its regular channels of communications, supplemented, if necessary, with direct communication to inform interested members of the affected community. In addition, it provides such persons the opportunity to comment on the standards or regulations prior to their adoption;


(iv) Secures sufficient qualitative information regarding the applicant institution or program to enable the institution or program to demonstrate that it has an ongoing program of evaluation of outputs consistent with its educational goals;


(v) Encourages experimental and innovative programs to the extent that these are conceived and implemented in a manner which ensures the quality and integrity of the institution or program;


(vi) Demonstrates that it approves only those institutions or programs which meet its published standards; that its standards, policies, and procedures are fairly applied; and that its evaluations are conducted and decisions are rendered under conditions that assure an impartial and objective judgment;


(vii) Regularly reviews its standards, policies and procedures in order that the evaluative process shall support constructive analysis, emphasize factors of critical importance, and reflect the educational and training needs of the student;


(viii) Performs no function that would be inconsistent with the formation of an independent judgment of the quality of an educational institution or program;


(ix) Has written procedures for the review of complaints pertaining to institutional or program quality as these relate to the agency’s standards, and demonstrates that such procedures are adequate to provide timely treatment of such complaints in a manner fair and equitable to the complainant and to the institution or program;


(x) Annually makes available to the public (A) its policies for approval, (B) reports of its operations, and (C) list of institutions or programs which it has approved;


(xi) Requires each approved school or program to report on changes instituted to determine continued compliance with standards or regulations;


(xii) Confers regularly with counterpart agencies that have similar responsibilities in other and neighboring States about methods and techniques that may be used to meet those responsibilities.


(2) Its assurances that due process is accorded to institutions or programs seeking approval. The State agency:


(i) Provides for adequate discussion during the on-site visit between the visiting team and the faculty, administrative staff, students, and other appropriate persons;


(ii) Furnishes as a result of the evaluation visit, a written report to the institution or program commenting on areas of strength, areas needing improvement, and, when appropriate, suggesting means of improvement and including specific areas, if any, where the institution or program may not be in compliance with the agency’s standards;


(iii) Provides the chief executive officer of the institution or program with opportunity to comment upon the written report and to file supplemental materials pertinent to the facts and conclusions in the written report of the visiting team before the agency takes action on the report;


(iv) Provides the chief executive officer of the institution with a specific statement of reasons for any adverse action, and notice of the right to appeal such action before an appeal body designated for that purpose;


(v) Publishes rules of procedure regarding appeals;


(vi) Continues the approval status of the institution or program pending disposition of an appeal;


(vii) Furnishes the chief executive officer of the institution or program with a written decision of the appeal body, including a statement of its reasons therefor.


(c) Capacity to foster ethical practices. The State agency must demonstrate its capability and willingness to foster ethical practices by showing that it:


(i) Promotes a well-defined set of ethical standards governing institutional or programmatic practices, including recruitment, advertising, transcripts, fair and equitable student tuition refunds, and student placement services;


(ii) Maintains appropriate review in relation to the ethical practices of each approved institution or program.


(Authority: 20 U.S.C. 1094(c)(4))

[39 FR 30042, Aug. 20, 1974, as amended at 75 FR 66947, Oct. 29, 2010; 84 FR 58931, Nov. 1, 2019]


§ 603.25 Severability.

If any provision of this subpart or its application to any person, act, or practice is held invalid, the remainder of the subpart or the application of its provisions to any person, act, or practice shall not be affected thereby.


[84 FR 58931, Nov. 1, 2019]


PART 604 [RESERVED]

PART 606 – DEVELOPING HISPANIC-SERVING INSTITUTIONS PROGRAM


Authority:20 U.S.C. 1101 et seq., unless otherwise noted.


Source:64 FR 70147, Dec. 15, 1999, unless otherwise noted.

Subpart A – General

§ 606.1 What is the Developing Hispanic-Serving Institutions Program?

The purpose of the Developing Hispanic-Serving Institutions Program is to provide grants to eligible institutions of higher education to –


(a) Expand educational opportunities for, and improve the academic attainment of, Hispanic students; and


(b) Expand and enhance the academic offerings, program quality, and institutional stability of colleges and universities that are educating the majority of Hispanic college students and helping large numbers of Hispanic students and other low-income individuals complete postsecondary degrees.


(Authority: 20 U.S.C. 1101)


§ 606.2 What institutions are eligible to receive a grant under the Developing Hispanic-Serving Institutions Program?

(a) An institution of higher education is eligible to receive a grant under this part if –


(1) At the time of application, it has an enrollment of undergraduate full-time equivalent students that is at least 25 percent Hispanic students;


(2) It provides assurances that not less than 50 percent of its Hispanic students are low-income individuals;


(3) It has an enrollment of needy students as described in § 606.3(a), unless the Secretary waives this requirement under § 606.3(b);


(4) It has low average educational and general expenditures per full-time equivalent undergraduate student as described in § 606.4(a), unless the Secretary waives this requirement under § 606.4(c);


(5) It is legally authorized by the State in which it is located to be a junior college or to provide an educational program for which it awards a bachelor’s degree; and


(6) It is accredited or preaccredited by a nationally recognized accrediting agency or association that the Secretary has determined to be a reliable authority as to the quality of education or training offered.


(b) A branch campus of a Hispanic-Serving institution is eligible to receive a grant under this part if –


(1) The institution as a whole meets the requirements of paragraphs (a)(3) through (a)(6) of this section; and


(2) The branch campus satisfies the requirements of paragraphs (a)(1) through (a)(4) of this section.


(c)(1) An institution that receives a grant under the Strengthening Institutions Program (34 CFR part 607) or the Strengthening Historically Black Colleges and Universities Program (34 CFR part 608) for a particular fiscal year is not eligible to receive a grant under this part for that same fiscal year, and may not relinquish its grant under those programs to secure a grant under this part.


(2) A Hispanic-Serving institution under this part may not concurrently receive grant funds under the Strengthening Institutions Program, Strengthening Historically Black Colleges and Universities Program, or Strengthening Historically Black Graduate Institutions Program.


(Authority: 20 U.S.C. 1101a and 1101d)

[64 FR 70147, Dec. 15, 1999, as amended at 66 FR 1263, Jan. 8, 2001]


§ 606.3 What is an enrollment of needy students?

(a) Except as provided in paragraph (b) of this section, for the purpose of § 606.2(a)(3), an applicant institution has an enrollment of needy students if in the base year –


(1) At least 50 percent of its degree students received student financial assistance under one or more of the following programs: Federal Pell Grant, Federal Supplemental Educational Opportunity Grant, Federal Work-Study, and Federal Perkins Loan; or


(2) The percentage of its undergraduate degree students who were enrolled on at least a half-time basis and received Federal Pell Grants exceeded the median percentage of undergraduate degree students who were enrolled on at least a half-time basis and received Federal Pell Grants at comparable institutions that offer similar instruction.


(b) The Secretary may waive the requirement contained in paragraph (a) of this section if the institution demonstrates that –


(1) The State provides more than 30 percent of the institution’s budget and the institution charges not more than $99.00 for tuition and fees for an academic year;


(2) At least 30 percent of the students served by the institution in the base year were students from low-income families;


(3) The institution substantially increases the higher education opportunities for low-income students who are also educationally disadvantaged, underrepresented in postsecondary education, or minority students;


(4) The institution substantially increases the higher education opportunities for individuals who reside in an area that is not included in a “metropolitan statistical area” as defined by the Office of Management and Budget and who are unserved by other postsecondary institutions; or


(5) The institution will, if granted the waiver, substantially increase the higher education opportunities for Hispanic Americans.


(c) For the purpose of paragraph (b) of this section, the Secretary considers “low-income” to be an amount which does not exceed 150 percent of the amount equal to the poverty level as established by the United States Bureau of the Census.


(d) Each year, the Secretary notifies prospective applicants of the low-income figures through a notice published in the Federal Register.


(Authority: 20 U.S.C. 1101a and 1103a)


§ 606.4 What are low educational and general expenditures?

(a)(1) Except as provided in paragraph (b) of this section, for the purpose of § 606.2(a)(2), an applicant institution’s average educational and general expenditures per full-time equivalent undergraduate student in the base year must be less than the average educational and general expenditures per full-time equivalent undergraduate student in that year of comparable institutions that offer similar instruction.


(2) For the purpose of paragraph (a)(1) of this section, the Secretary determines the average educational and general expenditure per full-time equivalent undergraduate student for institutions with graduate students that do not differentiate between graduate and undergraduate educational and general expenditures by discounting the graduate enrollment using a factor of 2.5 times the number of graduate students.


(b) Each year, the Secretary notifies prospective applicants through a notice in the Federal Register of the average educational and general expenditures per full-time equivalent undergraduate student at comparable institutions that offer similar instruction.


(c) The Secretary may waive the requirement contained in paragraph (a) of this section, if the Secretary determines, based upon persuasive evidence provided by the institution, that –


(1) The institution’s failure to satisfy the criteria in paragraph (a) of this section was due to factors which, if used in determining compliance with those criteria, distorted that determination; and


(2) The institution’s designation as an eligible institution under this part is otherwise consistent with the purposes of this part.


(d) For the purpose of paragraph (c)(1) of this section, the Secretary considers that the following factors may distort an institution’s educational and general expenditures per full-time equivalent undergraduate student –


(1) Low student enrollment;


(2) Location of the institution in an unusually high cost-of-living area;


(3) High energy costs;


(4) An increase in State funding that was part of a desegregation plan for higher education; or


(5) Operation of high cost professional schools such as medical or dental schools.


(Authority: 20 U.S.C. 1101a and 1103a)


§ 606.5 How does an institution apply to be designated an eligible institution?

(a) An institution applies to the Secretary to be designated an eligible institution under this part by first submitting an application to the Secretary in the form, manner, and time established by the Secretary. The application must contain –


(1) The information necessary for the Secretary to determine whether the institution satisfies the requirements of §§ 606.2, 606.3(a), and 606.4(a);


(2) Any waiver request under §§ 606.3(b) and 606.4(c); and


(3) Information or explanations justifying any requested waiver.


(b) An institution that wishes to receive a grant under this part must submit, as part of its application for that grant, an assurance that when it submits its application –


(1) Its enrollment of undergraduate full-time equivalent students is at least 25 percent Hispanic students; and


(2) Not less than 50 percent of its Hispanic students are low-income individuals.


(Authority: 20 U.S.C. 1101a and 1103)


§ 606.6 What regulations apply?

The following regulations apply to the Developing Hispanic-Serving Institutions Program:


(a) The Education Department General Administrative Regulations (EDGAR) as follows:


(1) [Reserved]


(2) 34 CFR part 75 (Direct Grant Programs), except 34 CFR 75.128(a)(2) and 75.129(a) in the case of applications for cooperative arrangements.


(3) 34 CFR part 77 (Definitions that Apply to Department Regulations).


(4) 34 CFR part 79 (Intergovernmental Review of Department of Education Programs and Activities).


(5) 34 CFR part 82 (New Restrictions on Lobbying).


(6) [Reserved]


(7) 34 CFR part 86 (Drug-Free Schools and Campuses).


(b) The regulations in this part 606.


(c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 3485; and


(2) 2 CFR part 200 (Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards), as adopted at 2 CFR part 3474.


(Authority: 20 U.S.C. 1101 et seq.)

[64 FR 70147, Dec. 15, 1999, as amended at 79 FR 76100, Dec. 19, 2014]


§ 606.7 What definitions apply?

(a) Definitions in EDGAR. The terms used in this part are defined in 34 CFR 77.1:




  • EDGAR

  • Fiscal year

  • Grant

  • Grantee

  • Grant period

  • Nonprofit

  • Private

  • Project period

  • Public

  • Secretary

  • State

  • (b) The following definitions also apply to this part:


    Accredited means the status of public recognition which a nationally recognized accrediting agency or association grants to an institution which meets certain established qualifications and educational standards.


    Activity means an action that is incorporated into an implementation plan designed to meet one or more objectives. An activity is a part of a project and has its own budget that is approved to carry out the objectives of that subpart.


    Base year means the second fiscal year preceding the fiscal year for which an institution seeks a grant under this part.


    Branch campus means a unit of a college or university that is geographically apart from the main campus of the college or university and independent of that main campus. The Secretary considers a unit of a college or university to be independent of the main campus if the unit –


    (1) Is permanent in nature;


    (2) Offers courses for credit and programs leading to an associate or bachelor’s degree; and


    (3) Is autonomous to the extent that it has –


    (i) Its own faculty and administrative or supervisory organization; and


    (ii) Its own budgetary and hiring authority.


    Comparable institutions that offer similar instruction means institutions that are being compared with an applicant institution and that fall within one of the following four categories –


    (1) Public junior or community colleges;


    (2) Private nonprofit junior or community colleges;


    (3) Public institutions that offer an educational program for which they offer a bachelor’s degree; or


    (4) Private nonprofit institutions that offer an educational program for which they offer a bachelor’s degree.


    Cooperative arrangement means an arrangement to carry out allowable grant activities between an institution eligible to receive a grant under this part and another eligible or ineligible institution of higher education, under which the resources of the cooperating institutions are combined and shared to better achieve the purposes of this part and avoid costly duplication of effort.


    Degree student means a student who enrolls at an institution for the purpose of obtaining the degree, certificate, or other recognized educational credential offered by that institution.


    Developmental program and services means new or improved programs and services, beyond those regularly budgeted, specifically designed to improve the self sufficiency of the school.


    Educational and general expenditures means the total amount expended by an institution of higher education for instruction, research, public service, academic support (including library expenditures), student services, institutional support, scholarships and fellowships, operation and maintenance expenditures for the physical plant, and any mandatory transfers which the institution is required to pay by law.


    Educationally disadvantaged means a college student who requires special services and assistance to enable them to succeed in higher education. The phrase includes, but is not limited to, students who come from –


    (1) Economically disadvantaged families;


    (2) Limited English proficiency families;


    (3) Migrant worker families; or


    (4) Families in which one or both of their parents have dropped out of secondary school.


    Federal Pell Grant Program means the grant program authorized by title IV-A-1 of the HEA.


    Federal Perkins Loan Program, formerly called the National Direct Student Loan Program, means the loan program authorized by title IV-E of the HEA.


    Federal Supplemental Education Opportunity Grant Program means the grant program authorized by title IV-A-3 of the HEA.


    Federal Work-Study Program means the part-time employment program authorized under title IV-C of the HEA.


    Full-time equivalent students means the sum of the number of students enrolled full-time at an institution, plus the full-time equivalent of the number of students enrolled part time (determined on the basis of the quotient of the sum of the credit hours of all part-time students divided by 12) at such institution.


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


    Hispanic student means a person of Mexican, Puerto Rican, Cuban, Central or South American, or other Spanish culture or origin, regardless of race.


    Institution of higher education means an educational institution defined in section 101 of the HEA.


    Junior or community college means an institution of higher education –


    (1) That admits as regular students persons who are beyond the age of compulsory school attendance in the State in which the institution is located and who have the ability to benefit from the training offered by the institution;


    (2) That does not provide an educational program for which it awards a bachelor’s degree (or an equivalent degree); and


    (3) That –


    (i) Provides an educational program of not less than 2 years that is acceptable for full credit toward such a degree; or


    (ii) Offers a 2-year program in engineering, mathematics, or the physical or biological sciences, designed to prepare a student to work as a technician or at the semiprofessional level in engineering, scientific, or other technological fields requiring the understanding and application of basic engineering, scientific, or mathematical principles of knowledge.


    Low-income individual means an individual from a family whose taxable income for the preceding year did not exceed 150 percent of an amount equal to the poverty level determined by using criteria of poverty established by the Bureau of the Census.


    Minority student means a student who is an Alaska Native, American Indian, Asian-American, Black (African-American), Hispanic American, Native Hawaiian, or Pacific Islander.


    Nationally recognized accrediting agency or association means an accrediting agency or association that the Secretary has recognized to accredit or preaccredit a particular category of institution in accordance with the provisions contained in 34 CFR part 603. The Secretary periodically publishes a list of those nationally recognized accrediting agencies and associations in the Federal Register.


    Operational programs and services means the regular, ongoing budgeted programs and services at an institution.


    Preaccredited means a status that a nationally recognized accrediting agency or association, recognized by the Secretary to grant that status, has accorded an unaccredited institution that is progressing toward accreditation within a reasonable period of time.


    Project means all the funded activities under a grant.


    Self-sufficiency means the point at which an institution is able to survive without continued funding under the Developing Hispanic-Serving Institutions Program.


    Underrepresented means proportionate representation as measured by degree recipients, that is less than the proportionate representation in the general population –


    (1) As indicated by –


    (i) The most current edition of the Department’s Digest of Educational Statistics;


    (ii) The National Research Council’s Doctorate Recipients from United States Universities; or


    (iii) Other standard statistical references, as announced annually in the Federal Register notice inviting applications for new awards under this program; or


    (2) As documented by national survey data submitted to and accepted by the Secretary on a case-by-case basis.


    (Authority: 20 U.S.C. 1101 et seq.; OMB Directive No. 15)


    § 606.8 What is a comprehensive development plan and what must it contain?

    (a) A comprehensive development plan is an institution’s strategy for achieving growth and self-sufficiency by strengthening its –


    (1) Academic programs;


    (2) Institutional management; and


    (3) Fiscal stability.


    (b) The comprehensive development plan must include the following:


    (1) An analysis of the strengths, weaknesses, and significant problems of the institution’s academic programs, institutional management, and fiscal stability.


    (2) A delineation of the institution’s goals for its academic programs, institutional management, and fiscal stability, based on the outcomes of the analysis described in paragraph (b)(1) of this section.


    (3) Measurable objectives related to reaching each goal and timeframes for achieving the objectives.


    (4) Methods and resources that will be used to institutionalize practices and improvements developed under the proposed project.


    (5) Its five year plan to improve its services to Hispanic and other low-income students.


    (Authority: 20 U.S.C. 1101 et seq.)


    § 606.9 What are the type, duration, and limitations in the awarding of grants under this part?

    (a)(1) Under this part, the Secretary may award planning grants and two types of development grants, individual development grants and cooperative arrangement development grants.


    (2) Planning grants may be awarded for a period not to exceed one year.


    (3) Either type of development grant may be awarded for a period of five years.


    (b)(1) An institution that received an individual development grant of five years may not subsequently receive another individual development grant for a period of two years from the date on which the five-year grant terminates.


    (2) A cooperative arrangement grant is not considered to be an individual development grant under paragraph (b)(1) of this section.


    (Authority: 20 U.S.C. 1101c and 1103c)


    § 606.10 What activities may and may not be carried out under a grant?

    (a) Planning grants. Under a planning grant, a grantee shall formulate –


    (1) A comprehensive development plan described in § 606.8; and


    (2) An application for a development grant.


    (b) Development grants – allowable activities. Under a development grant, except as provided in paragraph (c) of this section, a grantee shall carry out activities that implement its comprehensive development plan and hold promise for strengthening the institution. Activities that may be carried out include, but are not limited to –


    (1) Purchase, rental, or lease of scientific or laboratory equipment for educational purposes, including instructional and research purposes.


    (2) Construction, maintenance, renovation, and improvement in classrooms, libraries, laboratories, and other instructional facilities.


    (3) Support of faculty exchanges, faculty development, curriculum development, academic instruction, and faculty fellowships to assist in attaining advanced degrees in the fellow’s field of instruction.


    (4) Purchase of library books, periodicals, and other educational materials, including telecommunications program material.


    (5) Tutoring, counseling, and student service programs designed to improve academic success.


    (6) Funds management, administrative management, and acquisition of equipment for use in strengthening funds management.


    (7) Joint use of facilities, such as laboratories and libraries.


    (8) Establishing or improving a development office to strengthen or improve contributions from alumni and the private sector.


    (9) Establishing or improving an endowment fund, provided the grantee uses no more than 20 percent of its grant funds for this purpose and at least matches those grant funds with non-Federal funds.


    (10) Creating or improving facilities for Internet or other distance learning academic instruction capabilities, including purchase or rental of telecommunications technology equipment or services.


    (11) Establishing or enhancing a program of teacher education designed to qualify students to teach in public elementary or secondary schools.


    (12) Establishing community outreach programs that will encourage elementary school and secondary school students to develop the academic skills and the interest to pursue postsecondary education.


    (13) Expanding the number of Hispanic and other underrepresented graduate and professional students that can be served by the institution by expanding courses and institutional resources.


    (14) Other activities that contribute to carrying out the purposes of this program.


    (c) Development grants – unallowable activities. A grantee may not carry out the following activities or pay the following costs under a development grant:


    (1) Activities that are not included in the grantee’s approved application.


    (2) Activities that are inconsistent with any State plan for higher education that is applicable to the institution, including, but not limited to, a State plan for desegregation of higher education.


    (3) Activities or services that constitute religious instruction, religious worship, or proselytization.


    (4) Activities provided by a school or department of divinity. For the purpose of this provision, a “school or department of divinity” means an institution, or a department of an institution, whose program is solely to prepare students to become ministers of religion or to enter into some other religious vocation.


    (5) Developing or improving non-degree or non-credit courses other than basic skills development courses.


    (6) Developing or improving community-based or community services programs, unless the program provides academic-related experiences or academic credit toward a degree for degree students, or, unless it is a program or services to encourage elementary and secondary school students to develop the academic skills and the interest to pursue postsecondary education.


    (7) Purchase of standard office equipment, such as furniture, file cabinets, bookcases, typewriters, or word processors.


    (8) Payment of any portion of the salary of a president, vice president, or equivalent officer who has college-wide administrative authority and responsibility at an institution to fill a position under the grant such as project coordinator or activity director.


    (9) Costs of organized fund-raising, including financial campaigns, endowment drives, solicitation of gifts and bequests, and similar expenses incurred solely to raise capital or obtain contributions.


    (10) Costs of student recruitment such as advertisements, literature, and college fairs.


    (11) Services to high school students, unless they are services to encourage such students to develop the skills and the interest to pursue postsecondary education.


    (12) Instruction in the institution’s standard courses as indicated in the institution’s catalog.


    (13) Costs for health and fitness programs, transportation, and day care services.


    (14) Student activities such as entertainment, cultural, or social enrichment programs, publications, social clubs, or associations.


    (15) Activities that are operational in nature rather than developmental in nature.


    (d) Endowment funds. If a grantee uses part of its grant funds to establish or increase an endowment fund, it must comply with the provisions of §§ 628.3, 628.6, 628.10, and 628.41 through 628.47 of this chapter with regard to the use of those funds, except –


    (1) The definition of the term “endowment fund income” in § 628.6 of this chapter does not apply. For the purposes of this paragraph (d), “endowment fund income” means an amount equal to the total value of the fund, including fund appreciation and retained interest and dividends, minus the endowment fund corpus;


    (2) Instead of the requirement in § 628.10(a) of this chapter, the grantee institution must match each dollar of Federal grant funds used to establish or increase an endowment fund with one dollar of non-Federal funds; and


    (3) Instead of the requirements in § 628.41(a)(3) through (a)(5) and the introductory text in § 628.41(b) and § 628.41(b)(2) and (b)(3) of this chapter, if a grantee institution decides to use any of its grant funds for endowment purposes, it must match those grant funds immediately with non-Federal funds when it places those funds into its endowment fund.


    (Authority: 20 U.S.C. 1101 et seq.)

    [64 FR 70147, Dec. 15, 1999, as amended at 65 FR 79310, Dec. 19, 2000; 85 FR 59981, Sept. 23, 2020]


    Subpart B – How Does an Institution Apply for a Grant?

    § 606.11 Severability.

    If any provision of this subpart or its application to any person, act, or practice is held invalid, the remainder of the subpart or the application of its provisions to any person, act, or practice shall not be affected thereby.


    (Authority: 20 U.S.C. 1101 et seq.)

    [85 FR 59981, Sept. 23, 2020]


    § 606.12 What must be included in individual development grant applications?

    In addition to the information needed by the Secretary to determine whether the institution should be awarded a grant under the funding criteria contained in subpart C, an application for a development grant must include –


    (a) The institution’s comprehensive development plan;


    (b) A description of the relationship of each activity for which grant funds are requested to the relevant goals and objectives of its plan;


    (c) A description of any activities that were funded under previous development grants awarded under the Developing Hispanic-Serving Institutions Program that expired within five years of when the development grant will begin and the institution’s justification for not completing the activities under the previous grant, if applicable;


    (d) If the applicant is applying to carry out more than one activity –


    (1) A description of those activities that would be a sound investment of Federal funds if funded separately;


    (2) A description of those activities that would be a sound investment of Federal funds only if funded with the other activities; and


    (3) A ranking of the activities in preferred funding order.


    (Approved by the Office of Management and Budget under control number 1840-0114)

    (Authority: 20 U.S.C. 1101 et seq.)

    [64 FR 70147, Dec. 15, 1999. Redesignated at 85 FR 59981, Sept. 23, 2020]


    § 606.13 What must be included in cooperative arrangement grant applications?

    (a)(1) Institutions applying for a cooperative arrangement grant shall submit only one application for that grant regardless of the number of institutions participating in the cooperative arrangement.


    (2) The application must include the names of each participating institution, the role of each institution, and the rationale for each eligible participating institution’s decision to request grant funds as part of a cooperative arrangement rather than as an individual grantee.


    (b) If the application is for a development grant, the application must contain –


    (1) Each participating institution’s comprehensive development plan;


    (2) The information required under § 606.11; and


    (3) An explanation from each eligible participating institution of why participation in a cooperative arrangement grant rather than performance under an individual grant will better enable it to meet the goals and objectives of its comprehensive development plan at a lower cost.


    (4) The name of the applicant for the group that is legally responsible for –


    (i) The use of all grant funds; and


    (ii) Ensuring that the project is carried out by the group in accordance with Federal requirements.


    (Approved by the Office of Management and Budget under control number 1840-0114)

    (Authority: 20 U.S.C. 1103 and 1103e)

    [64 FR 70147, Dec. 15, 1999. Redesignated at 85 FR 59981, Sept. 23, 2020]


    § 606.14 How many applications for a development grant may an institution submit?

    In any fiscal year, an institution of higher education may –


    (a) Submit an application for an individual development grant; and


    (b) Be part of a cooperative arrangement application.


    (Authority: 20 U.S.C. 1101 et seq.)

    [64 FR 70147, Dec. 15, 1999. Redesignated at 85 FR 59981, Sept. 23, 2020]


    Subpart C – How Does the Secretary Make an Award?

    § 606.20 How does the Secretary choose applications for funding?

    (a) The Secretary evaluates an application on the basis of the criteria in –


    (1) Sections 606.21 and 606.23 for a planning grant; and


    (2) Sections 606.22, 606.23, 600.24, and 606.25 for a development grant.


    (b) The Secretary informs applicants of the maximum possible score for each criterion in the application package or in a notice published in the Federal Register.


    (c)(1) The Secretary considers funding an application for a planning grant that meets the requirements under § 606.21.


    (2) The Secretary considers funding an application for a development grant that –


    (i) Is submitted with a comprehensive development plan that satisfies all the elements required of such a plan under § 606.8; and


    (ii) In the case of an application for a cooperative arrangement grant, demonstrates that the grant will enable each eligible participant to meet the goals and objectives of its comprehensive development plan better and at a lower cost than if each eligible participant were funded individually.


    (Authority: 20 U.S.C. 1101 et seq.)

    [64 FR 70147, Dec. 15, 1999, as amended at 70 FR 13373, Mar. 21, 2005]


    § 606.21 What are the selection criteria for planning grants?

    The Secretary evaluates an application for a planning grant on the basis of the criteria in this section.


    (a) Design of the planning process. The Secretary reviews each application to determine the quality of the planning process that the applicant will use to develop a comprehensive development plan and an application for a development grant based on the extent to which –


    (1) The planning process is clearly and comprehensively described and based on sound planning practice;


    (2) The president or chief executive officer, administrators and other institutional personnel, students, and governing board members systematically and consistently will be involved in the planning process;


    (3) The applicant will use its own resources to help implement the project; and


    (4) The planning process is likely to achieve its intended results.


    (b) Key personnel. The Secretary reviews each application to determine the quality of key personnel to be involved in the project based on the extent to which –


    (1) The past experience and training of key personnel such as the project coordinator and persons who have key roles in the planning process are suitable to the tasks to be performed; and


    (2) The time commitments of key personnel are adequate.


    (c) Project Management. The Secretary reviews each application to determine the quality of the plan to manage the project effectively based on the extent to which –


    (1) The procedures for managing the project are likely to ensure effective and efficient project implementation; and


    (2) The project coordinator has sufficient authority, including access to the president or chief executive officer, to conduct the project effectively.


    (d) Budget. The Secretary reviews each application to determine the extent to which the proposed project costs are necessary and reasonable.


    (Approved by the Office of Management and Budget under control number 1840-0114)

    (Authority: 20 U.S.C. 1101 et seq.)

    [64 FR 70147, Dec. 15, 1999, as amended at 70 FR 13373, Mar. 21, 2005]


    § 606.22 What are the selection criteria for development grants?

    The Secretary evaluates an application for a development grant on the basis of the criteria in this section.


    (a) Quality of the applicant’s comprehensive development plan. The extent to which –


    (1) The strengths, weaknesses, and significant problems of the institution’s academic programs, institutional management, and fiscal stability are clearly and comprehensively analyzed and result from a process that involved major constituencies of the institution;


    (2) The goals for the institution’s academic programs, institutional management, and fiscal stability are realistic and based on comprehensive analysis;


    (3) The objectives stated in the plan are measurable, related to institutional goals, and, if achieved, will contribute to the growth and self-sufficiency of the institution; and


    (4) The plan clearly and comprehensively describes the methods and resources the institution will use to institutionalize practice and improvements developed under the proposed project, including, in particular, how operational costs for personnel, maintenance, and upgrades of equipment will be paid with institutional resources.


    (b) Quality of activity objectives. The extent to which the objectives for each activity are –


    (1) Realistic and defined in terms of measurable results; and


    (2) Directly related to the problems to be solved and to the goals of the comprehensive development plan.


    (c) Quality of implementation strategy. The extent to which –


    (1) The implementation strategy for each activity is comprehensive;


    (2) The rationale for the implementation strategy for each activity is clearly described and is supported by the results of relevant studies or projects; and


    (3) The timetable for each activity is realistic and likely to be attained.


    (d) Quality of key personnel. The extent to which –


    (1) The past experience and training of key professional personnel are directly related to the stated activity objectives; and


    (2) The time commitment of key personnel is realistic.


    (e) Quality of project management plan. The extent to which –


    (1) Procedures for managing the project are likely to ensure efficient and effective project implementation; and


    (2) The project coordinator and activity directors have sufficient authority to conduct the project effectively, including access to the president or chief executive officer.


    (f) Quality of evaluation plan. The extent to which –


    (1) The data elements and the data collection procedures are clearly described and appropriate to measure the attainment of activity objectives and to measure the success of the project in achieving the goals of the comprehensive development plan; and


    (2) The data analysis procedures are clearly described and are likely to produce formative and summative results on attaining activity objectives and measuring the success of the project on achieving the goals of the comprehensive development plan.


    (g) Budget. The extent to which the proposed costs are necessary and reasonable in relation to the project’s objectives and scope.


    (Approved by the Office of Management and Budget under control number 1840-0114)

    (Authority: 20 U.S.C. 1101 et seq.)

    [64 FR 70147, Dec. 15, 1999, as amended at 70 FR 13373, Mar. 21, 2005]


    § 606.23 What special funding consideration does the Secretary provide?

    (a) If funds are available to fund only one additional planning grant and each of the next fundable applications has received the same number of points under § 606.20 or 606.21, the Secretary awards additional points, as provided in the application package or in a notice published in the Federal Register, to any of those applicants that –


    (1) Has an endowment fund of which the current market value, per full-time equivalent enrolled student, is less than the average current market value of the endowment funds, per full-time equivalent enrolled student, at similar type institutions; or


    (2) Has expenditures for library materials per full-time equivalent enrolled student which are less than the average expenditure for library materials per full-time equivalent enrolled student at similar type institutions.


    (b) If funds are available to fund only one additional development grant and each of the next fundable applications has received the same number of points under § 606.20 or 606.22, the Secretary awards additional points, as provided in the application package or in a notice published in the Federal Register, to any of those applicants that –


    (1) Has an endowment fund of which the current market value, per full-time equivalent enrolled student, is less than the average current market value of the endowment funds, per full-time equivalent enrolled student, at comparable institutions that offer similar instruction;


    (2) Has expenditures for library materials per full-time equivalent enrolled student that are less than the average expenditures for library materials per full-time equivalent enrolled student at comparable institutions that offer similar instruction; or


    (3) Propose to carry out one or more of the following activities –


    (i) Faculty development;


    (ii) Funds and administrative management;


    (iii) Development and improvement of academic programs;


    (iv) Acquisition of equipment for use in strengthening management and academic programs;


    (v) Joint use of facilities; and


    (vi) Student services.


    (c) As used in this section, an “endowment fund” does not include any fund established or supported under 34 CFR part 628.


    (d) Each year, the Secretary provides prospective applicants with the average market value of endowment funds and the average expenditure of library materials per full-time equivalent student.


    (e) The Secretary gives priority to each application that contains satisfactory evidence that the applicant has entered into or will enter into a collaborative arrangement with at least one local educational agency or community-based organization to provide that agency or organization with assistance (from funds other than funds provided under this part) in –


    (1) Reducing the dropout rates of Hispanic students;


    (2) Improving rates of academic achievement of Hispanic students; and


    (3) Increasing the rates at which Hispanic high school graduates enroll in higher education.


    (Authority: 20 U.S.C. 1101 et seq.)

    [64 FR 70147, Dec. 15, 1999, as amended at 70 FR 13373, Mar. 21, 2005]


    § 606.24 How does the Secretary use an applicant’s performance under a previous development grant when awarding a development grant?

    (a)(1) In addition to evaluating an application under the selection criteria in § 606.22, the Secretary evaluates an applicant’s performance under any previous development grant awarded under the Developing Hispanic-Serving Institutions Program that expired within five years of the year when the development grant will begin.


    (2) The Secretary evaluates whether the applicant fulfilled, or is making substantial progress toward fulfilling, the goals and objectives of the previous grant, including, but not limited to, the applicant’s success in institutionalizing practices developed and improvements made under the grant.


    (3) The Secretary bases the evaluation of the applicant’s performance on information contained in –


    (i) Performance and evaluation reports submitted by the applicant;


    (ii) Audit reports submitted on behalf of the applicant; and


    (iii) Other information obtained by the Secretary, including reports prepared by the Department.


    (b) If the Secretary initially determines that the applicant did not fulfill the goals and objectives of a previous grant or is not making substantial progress towards fulfilling those goals and objectives, the Secretary affords the applicant the opportunity to respond to that initial determination.


    (c) If the Secretary determines that the applicant did not fulfill the goals and objectives of a previous grant or is not making substantial progress towards fulfilling those goals and objectives, the Secretary may –


    (1) Decide not to fund the applicant; or


    (2) Fund the applicant but impose special grant terms and conditions, such as specific reporting and monitoring requirements.


    (Authority: 20 U.S.C. 1101 et seq.)


    § 606.25 What priority does the Secretary use in awarding cooperative arrangement grants?

    Among applications for cooperative arrangement grants, the Secretary gives priority to proposed cooperative arrangements that are geographically and economically sound, or will benefit the institutions applying for the grant.


    (Authority: 20 U.S.C. 1101 et seq.)


    Subpart D – What Conditions Must a Grantee Meet?

    § 606.30 What are allowable costs and what are the limitations on allowable costs?

    (a) Allowable costs. Except as provided in paragraphs (b) and (c) of this section, a grantee may expend grant funds for activities that are related to carrying out the allowable activities included in its approved application.


    (b) Supplement and not supplant. Grant funds shall be used so that they supplement and, to the extent practical, increase the funds that would otherwise be available for the activities to be carried out under the grant and in no case supplant those funds.


    (c) Limitations on allowable costs. A grantee may not use an indirect cost rate to determine allowable costs under its grant.


    (Authority: 20 U.S.C. 1101 et seq.)


    § 606.31 How does a grantee maintain its eligibility?

    (a) A grantee shall maintain its eligibility under the requirements in § 606.2, except for § 606.2(a)(3) and (4), for the duration of the grant period.


    (b) The Secretary reviews an institution’s application for a continuation award to ensure that –


    (1) The institution continues to meet the eligibility requirements described in paragraph (a) of this section; and


    (2) The institution is making substantial progress toward achieving the objectives described in its grant application including, if applicable, the institution’s success in institutionalizing practices and improvements developed under the grant.


    (Authority: 20 U.S.C. 1101 et seq.)


    PART 607 – STRENGTHENING INSTITUTIONS PROGRAM


    Authority:20 U.S.C. 1057-1059g, 1067q, 1068-1068h unless otherwise noted.


    Source:52 FR 30529, Aug. 14, 1987, unless otherwise noted.

    Subpart A – General

    § 607.1 What is the Strengthening Institutions Program?

    The purpose of the Strengthening Institutions Program is to provide grants to eligible institutions of higher education to improve their academic programs, institutional management, and fiscal stability in order to increase their self-sufficiency and strengthen their capacity to make a substantial contribution to the higher education resources of the Nation.


    (Authority: 20 U.S.C. 1057)

    [59 FR 41921, Aug. 15, 1994]


    § 607.2 What institutions are eligible to receive a grant under the Strengthening Institutions Program?

    (a) Except as provided in paragraphs (b) and (c) of this section, an institution of higher education is eligible to receive a grant under the Strengthening Institutions Program if –


    (1) It has an enrollment of needy students as described in § 607.3(a), unless the Secretary waives this requirement under § 607.3(b);


    (2) It has low average educational and general expenditures per full-time equivalent undergraduate student as described in § 607.4(a), unless the Secretary waives this requirement under § 607.4(c).


    (3) It is legally authorized by the State in which it is located to be a junior college or to provide an educational program for which it awards a bachelor’s degree; and


    (4) It is accredited or preaccredited by a nationally recognized accrediting agency or association that the Secretary has determined to be a reliable authority as to the quality of education or training offered.


    (b) A branch campus of an institution of higher education, if the institution as a whole meets the requirements of paragraphs (a)(1) through (4) of this section, is eligible to receive a grant under the Strengthening Institutions Program even if, by itself, it does not satisfy the requirements of paragraphs (a)(3) and (a)(4) of this section, although the branch must meet the requirements of paragraphs (a)(1) and (a)(2) of this section.


    (c) For the purpose of paragraphs (e)(2) and (f)(2) of this section, an institution’s enrollment consists of a head count of its entire student body.


    (d) A tribal college or university may receive a grant authorized under section 316 of the HEA if –


    (1) It satisfies the requirements of paragraph (a) of this section, other than § 607.2(a)(3), and


    (2)(i) It meets the definition of the term “tribally controlled college or university” in section 2 of the Tribally Controlled College or University Assistance Act of 1978; or


    (ii) It is listed in the Equity in Educational Land Grant Status Act of 1994.


    (e) An Alaska Native-serving institution may receive a grant under section 317 of the HEA if –


    (1) It satisfies the requirements of paragraph (a) of this section; and


    (2) It has, at the time of application, an enrollment of undergraduate students that is at least 20 percent Alaska Native students.


    (f) A Native Hawaiian-serving institution may receive a grant authorized under section 317 of the HEA if –


    (1) It satisfies the requirements of paragraph (a) of this section; and


    (2) It has, at the time of application, an enrollment of undergraduate students that is at least 10 percent Native Hawaiian students.


    (g)(1) An institution that qualifies for a grant under the Strengthening Historically Black Colleges and Universities Program (34 CFR part 608) or the Developing Hispanic-Serving Institutions Program (34 CFR part 606) and receives a grant under either of these programs for a particular fiscal year is not eligible to receive a grant under this part for the same fiscal year.


    (2) A tribal college or university that receives a grant under section 316 of the HEA or an Alaska Native or Native Hawaiian-serving institution that receives a grant under section 317 of the HEA may not concurrently receive other grant funds under the Strengthening Institutions Program, Strengthening Historically Black Colleges and Universities Program, or Strengthening Historically Black Graduate Institutions Program.


    (Authority: 20 U.S.C. 1057 et seq.)

    [59 FR 41922, Aug. 15, 1994, as amended at 60 FR 15447, Mar. 23, 1995; 64 FR 70153, Dec. 15, 1999]


    § 607.3 What is an enrollment of needy students?

    (a) Except as provided in paragraph (b) of this section, for the purpose of § 607.2(a)(1), an applicant institution has an enrollment of needy students if in the base year –


    (1) At least 50 percent of its degree students received student financial assistance under one or more of the following programs: Pell Grant, Supplemental Educational Opportunity Grant, College Work-Study, and Perkins Loan; or


    (2) The percentage of its undergraduate degree students who were enrolled on at least a half-time basis and received Pell Grants exceeded the median percentage of undergraduate degree students who were enrolled on at least a half-time basis and received Pell Grants at comparable institutions that offer similar instruction.


    (b) The Secretary may waive the requirement contained in paragraph (a) of this section if the institution demonstrates that –


    (1) The State provides more than 30 percent of the institution’s budget and the institution charges not more than $99.00 for tuition and fees for an academic year;


    (2) At least 30 percent of the students served by the institution in the base year were students from low-income families;


    (3) The institution substantially increases the higher education opportunities for low-income students who are also educationally disadvantaged, underrepresented in postsecondary education, or minority students;


    (4) The institution substantially increases the higher education opportunities for individuals who reside in an area that is not included in a “metropolitan statistical area” as defined by the Office of Management and Budget and who are unserved by other postsecondary institutions;


    (5) The institution is located on or within 50 miles of an Indian reservation, or a substantial population of Indians and the institution will, if granted the waiver, substantially increase higher education opportunities for American Indians;


    (6) It is a tribal college or university; or


    (7) The institution will, if granted the waiver, substantially increase the higher education opportunities for Black Americans, Hispanic Americans, Native Americans, Asian Americans or Pacific Islanders, including Native Hawaiians.


    (c) For the purpose of paragraph (b) of this section, the Secretary considers “low-income” to be an amount which does not exceed 150 percent of the amount equal to the poverty level as established by the United States Bureau of the Census.


    (d) Each year, the Secretary notifies prospective applicants through a notice in the Federal Register of the low-income figures.


    (Authority: 20 U.S.C. 1058 and 1067)

    [52 FR 30529, Aug. 14, 1987, as amended at 60 FR 15447, Mar. 23, 1995; 64 FR 70153, Dec. 15, 1999]


    § 607.4 What are low educational and general expenditures?

    (a)(1) Except as provided in paragraph (b) of this section, for the purpose of § 6072(a)(2), an applicant institution’s average educational and general expenditures per full-time equivalent undergraduate student in the base year must be less than the average educational and general expenditures per full-time equivalent undergraduate student of comparable institutions that offer similar institution in that year.


    (2) For the purpose of paragraph (a)(1) of this section, the Secretary determines the average educational and general expenditure per FTE undergraduate student for institutions with graduate students that do not differentiate between graduate and undergraduate E&G expenditures by discounting the graduate enrollment using a factor of 2.5 times the number of graduate students.


    (b) Each year, the Secretary notifies prospective applicants through a notice in the Federal Register of the average educational and general expenditures per full-time equivalent undergraduate student at comparable institutions that offer similar instruction.


    (c) The Secretary may waive the requirement contained in paragraph (a) of this section, if the Secretary determines, based upon persuasive evidence provided by the institution, that –


    (1) The institution’s failure to satisfy the criteria in paragraph (a) of this section was due to factors which, if used in determining compliance with those criteria, distorted that determination; and


    (2) The institution’s designation as an eligible institution under this part is otherwise consistent with the purposes of this part.


    (d) For the purpose of paragraph (c)(1) of this section, the Secretary considers that the following factors may distort an institution’s educational and general expenditures per full-time equivalent undergraduate student –


    (1) Low student enrollment;


    (2) Location of the institution in an unusually high cost-of-living area;


    (3) High energy costs;


    (4) An increase in State funding that was part of a desegregation plan for higher education; or


    (5) Operation of high cost professional schools such as medical or dental schools.


    (Authority: 20 U.S.C. 1058 and 1067)

    [59 FR 41922, Aug. 15, 1994]


    § 607.5 How does an institution apply to be designated an eligible institution?

    An institution shall apply to the Secretary to be designated an eligible institution under the Strengthening Institutions Program by submitting an application to the Secretary in the form, manner and time established by the Secretary. The application must contain –


    (a) The information necessary for the Secretary to determine whether the institution satisfies the requirements of §§ 607.2, 607.3(a) and 607.4(a);


    (b) Any waiver request under §§ 607.3(b) and 607.4(c); and


    (c) Information or explanations justifying any requested waiver.


    (Authority: 20 U.S.C. 1058 and 1067)


    § 607.6 What regulations apply?

    The following regulations apply to the Strengthening Institutions Program:


    (a) The Education Department General Administrative Regulations (EDGAR) as follows:


    (1) [Reserved]


    (2) 34 CFR part 75 (Direct Grant Programs), except 34 CFR 75.128(a)(2) and 75.129(a) in the case of applications for cooperative arrangements.


    (3) 34 CFR part 77 (Definitions that Apply to Department Regulations).


    (4) 34 CFR part 79 (Intergovernmental Review of Department of Education Programs and Activities).


    (5) 34 CFR part 82 (New Restrictions on Lobbying).


    (6) [Reserved]


    (7) 34 CFR part 86 (Drug-Free Schools and Campuses).


    (b) The regulations in this part 607.


    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 3485; and


    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards), as adopted at 2 CFR part 3474.


    (Authority: 20 U.S.C. 1057)

    [59 FR 41922, Aug. 15, 1994, as amended at 79 FR 76100, Dec. 19, 2014]


    § 607.7 What definitions apply?

    (a) Definitions in EDGAR. The following terms that apply to the Institutional Aid Programs are defined in 34 CFR 77.1:




  • EDGAR

  • Fiscal year

  • Grant

  • Grantee

  • Grant period

  • Nonprofit

  • Private

  • Project period

  • Public

  • Secretary

  • State

  • (b) The following term used in this part is defined in section 312 of the HEA:



    Endowment fund

    (c) The following terms used in this part are defined in section 316 of the HEA:



    Indian

    Indian tribe

    Tribal college or university

    (d) The following terms used in this part are defined in section 317 of the HEA:


    Alaska Native

    Alaska Native-serving institution

    Native Hawaiian

    Native Hawaiian-serving institution

    (e) The following definitions also apply to this part:


    Accredited means the status of public recognition which a nationally recognized accrediting agency or association grants to an institution which meets certain established qualifications and educational standards.


    Activity means an action that is incorporated into an implementation plan designed to meet one or more objectives. An activity is a part of a project and has its own budget that is approved to carry out the objectives of that subpart.


    Base year means the second fiscal year preceding the fiscal year for which an institution seeks a grant under this part.


    Branch campus means a unit of a college or university that is geographically apart from the main campus of the college or university and independent of that main campus. The Secretary considers a unit of a college or university to be independent of the main campus if the unit –


    (1) Is permanent in nature;


    (2) Offers courses for credit and programs leading to an associate or bachelor’s degree; and


    (3) Is autonomous to the extent that it has –


    (i) Its own faculty and administrative or supervisory organization; and


    (ii) Its own budgetary and hiring authority.


    Comparable institutions that offer similar instruction means institutions that are being compared with an applicant institution and that fall within one of the following four categories –


    (1) Public junior or community colleges;


    (2) Private nonprofit junior or community colleges;


    (3) Public institutions that offer an educational program for which they offer a bachelor’s degree; or


    (4) Private nonprofit institutions that offer an educational program for which they offer a bachelor’s degree.


    Cooperative arrangement means an arrangement to carry out allowable grant activities between an institution eligible to receive a grant under this part and another eligible or ineligible institution of higher education, under which the resources of the cooperating institutions are combined and shared to better achieve the purposes of this part and avoid costly duplication of effort.


    Degree student means a student who enrolls at an institution for the purpose of obtaining the degree, certificate, or other recognized educational credential offered by that institution.


    Developmental program and services means new or improved programs and services, beyond those regularly budgeted, specifically designed to improve the self sufficiency of the school.


    Educational and general expenditures means the total amount expended by an institution of higher education for instruction, research, public service, academic support (including library expenditures), student services, institutional support, scholarships and fellowships, operation and maintenance expenditures for the physical plant, and any mandatory transfers which the institution is required to pay by law.


    Educationally disadvantaged means a college student who requires special services and assistance to enable them to succeed in higher education. The phrase includes, but is not limited to, students who come from –


    (1) Economically disadvantaged families;


    (2) Limited English proficiency families;


    (3) Migrant worker families; or


    (4) Families in which one or both of their parents have dropped out of secondary school.


    Federal Pell Grant Program means the grant program authorized by title IV-A-1 of the HEA.


    Federal Perkins Loan Program, formerly called the National Direct Student Loan Program, means the loan program authorized by title IV-E of the HEA.


    Federal Supplemental Education Opportunity Grant Program means the grant program authorized by title IV-A-3 of the HEA.


    Federal Work-Study Program means the part-time employment program authorized under title IV-C of the HEA.


    Full-time equivalent students means the sum of the number of students enrolled full-time at an institution, plus the full-time equivalent of the number of students enrolled part time (determined on the basis of the quotient of the sum of the credit hours of all part-time students divided by 12) at such institution.


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


    Hispanic student means a person of Mexican, Puerto Rican, Cuban, Central or South American, or other Spanish culture or origin, regardless of race.


    Institution of higher education means an educational institution defined in section 101 of the HEA.


    Junior or community college means an institution of higher education –


    (1) That admits as regular students persons who are beyond the age of compulsory school attendance in the State in which the institution is located and who have the ability to benefit from the training offered by the institution;


    (2) That does not provide an educational program for which it awards a bachelor’s degree (or an equivalent degree); and


    (3) That –


    (i) Provides an educational program of not less than 2 years that is acceptable for full credit toward such a degree, or


    (ii) Offers a 2-year program in engineering, mathematics, or the physical or biological sciences, designed to prepare a student to work as a technician or at the semiprofessional level in engineering, scientific, or other technological fields requiring the understanding and application of basic engineering, scientific, or mathematical principles of knowledge.


    Low-income individual means an individual from a family whose taxable income for the preceding year did not exceed 150 percent of an amount equal to the poverty level determined by using criteria of poverty established by the Bureau of Census.


    Minority student means a student who is Alaskan Native, American Indian, Asian-American, Black (African-American), Hispanic American, Native Hawaiian, or Pacific Islander.


    Nationally recognized accrediting agency or association means an accrediting agency or association that the Secretary has recognized to accredit or preaccredit a particular category of institution in accordance with the provisions contained in 34 CFR part 603. The Secretary periodically publishes a list of those nationally recognized accrediting agencies and associations in the Federal Register.


    Operational programs and services means the regular, ongoing budgeted programs and services at an institution.


    Preaccredited means a status that a nationally recognized accrediting agency or association, recognized by the Secretary to grant that status, has accorded an unaccredited institution that is progressing toward accreditation within a reasonable period of time.


    Project means all the funded activities under a grant.


    Self-sufficiency means the point at which an institution is able to survive without continued funding under the Strengthening Institutions Program.


    Underrepresented means proportionate representation as measured by degree recipients, that is less than the proportionate representation in the general population –


    (1) As indicated by –


    (i) The most current edition of the Department’s Digest of Educational Statistics;


    (ii) The National Research Council’s Doctorate Recipients from United States Universities; or


    (iii) Other standard statistical references, as announced annually in the Federal Register notice inviting applications for new awards under this program; or


    (2) As documented by national survey data submitted to and accepted by the Secretary on a case-by-case basis.


    (Authority: 20 U.S.C. 1051, 1057-1059 and 1066-1069f; OMB Directive No. 15)

    [52 FR 30529, Aug. 14, 1987, as amended at 59 FR 41922, Aug. 15, 1994; 60 FR 15447, Mar. 23, 1995; 64 FR 70153, Dec. 15, 1999]


    § 607.8 What is a comprehensive development plan and what must it contain?

    (a) A comprehensive development plan is an institution’s strategy for achieving growth and self-sufficiency by strengthening its –


    (1) Academic programs;


    (2) Institutional management; and


    (3) Fiscal stability.


    (b) The comprehensive development plan must include the following:


    (1) An analysis of the strengths, weaknesses, and significant problems of the institution’s academic programs, institutional management, and fiscal stability.


    (2) A delineation of the institution’s goals for its academic programs, institutional management, and fiscal stability, based on the outcomes of the analysis described in paragraph (b)(1) of this section.


    (3) Measurable objectives related to reaching each goal and timeframes for achieving the objectives.


    (4) Methods and resources that will be used to institutionalize practices and improvements developed under the proposed project.


    (5) For a grant under section 316 of the HEA to a tribal college or university, its five-year plan for improving its services to Indian students, increasing the rates at which Indian secondary school students enroll in higher education, and increasing overall postsecondary retention rates for Indian students.


    (6) For a grant under section 317 of the HEA to an Alaska Native-serving institution or to a Native Hawaiian-serving institution, its five-year plan for improving its services to Alaska Native or Native Hawaiian students, respectively.


    (Authority: 20 U.S.C. 1066)

    [59 FR 41923, Aug. 15, 1994, as amended at 64 FR 70154, Dec. 15, 1999]


    § 607.9 What are the type, duration and limitations in the awarding of grants under this part?

    (a)(1) Under this part, the Secretary may award planning grants and two types of development grants, individual development grants and cooperative arrangement development grants.


    (2) Planning grants may be awarded for a period not to exceed one year.


    (3) Either type of development grant may be awarded for a period of five years.


    (b)(1) An institution that received an individual development grant of five years may not subsequently receive another individual development grant for a period of two years from the date on which the five-year grant period terminates.


    (2) A cooperative arrangement grant is not considered to be an individual development grant under paragraph (b)(1) of this section.


    (Authority: 20 U.S.C. 1059)

    [52 FR 30529, Aug. 14, 1987, as amended at 59 FR 41923, Aug. 15, 1994; 64 FR 70154, Dec. 15, 1999]


    § 607.10 What activities may and may not be carried out under a grant?

    (a) Planning grants. Under a planning grant, a grantee shall formulate –


    (1) A comprehensive development plan described in § 607.8; and


    (2) An application for a development grant.


    (b) Development grants – allowable activities. Under a development grant, except as provided in paragraph (c) of this section, a grantee shall carry out activities that implement its comprehensive development plan and hold promise for strengthening the institution. Activities that may be carried out include, but are not limited to –


    (1) Faculty exchanges, faculty fellowships, and faculty development that provide faculty with the skills and knowledge needed to –


    (i) Develop academic support services, including advising and mentoring students;


    (ii) Develop academic programs or methodology, including computer-assisted instruction, that strengthen the academic quality of the institution; or


    (iii) Acquire terminal degrees that are required to obtain or retain accreditation of an academic program or department;


    (2) Funds and administrative management that will improve the institution’s ability to –


    (i) Manage financial resources in an efficient and effective manner; and


    (ii) Collect, access, and use information about the institution’s operations for improved decisionmaking;


    (3) Developing and improving academic programs that enable the institution to –


    (i) Develop new academic programs or new program options that show promise for increased student enrollment;


    (ii) Provide new technology or methodology to increase student success and retention or to retain accreditation; or


    (iii) Improve curriculum or methodology for existing academic programs to stabilize or increase student enrollment;


    (4) Acquiring equipment for use in strengthening management and academic programs to achieve objectives such as those described in paragraphs (b)(2) and (b)(3) of this section;


    (5) Establishing or increasing the joint use of facilities such as libraries and laboratories to –


    (i) Eliminate the distance and high cost associated with providing academic programs and academic support; or


    (ii) Provide clinical experience that is part of an approved academic program at off-campus locations;


    (6) Developing or improving student services to provide –


    (i) New or improved methods to deliver student services, including counseling, tutoring, and instruction in basic skills; or


    (ii) Improved strategies to train student services personnel;


    (7) Payment of any portion of the salary of a dean, with proper justification, to fill a position under the project such as project coordinator or activity director. For purposes of this paragraph, proper justification includes evidence that the position entitled “Dean” is not one that has college-wide administrative authority and responsibility;


    (8) Purchase, rental, or lease of scientific or laboratory equipment for educational purposes, including instructional and research purposes;


    (9) Construction, maintenance, renovation, and improvement in classrooms, libraries, laboratories, and other instructional facilities, including the integration of computer technology into institutional facilities to create smart buildings;


    (10) Establishing or improving a development office to strengthen or improve contributions from alumni and the private sector;


    (11) Establishing or improving an endowment fund, provided a grantee uses no more than 20 percent of its grant funds for this purpose and at least matches those grant funds with non-Federal funds;


    (12) Creating or improving facilities for Internet or other distance learning academic instruction capabilities, including purchase or rental of telecommunications technology equipment or services;


    (13) For grants authorized under section 316 of the HEA to tribal colleges or universities –


    (i) Purchase, rental, or lease of scientific or laboratory equipment for educational purposes, including instructional and research purposes;


    (ii) Construction, maintenance, renovation, and improvement in classroom, library, laboratory, and other instructional facilities, including purchase or rental of telecommunications technology equipment or services;


    (iii) Support of faculty exchanges, faculty development, and faculty fellowships to assist in attaining advanced degrees in their field of instruction;


    (iv) Curriculum development and academic instruction;


    (v) Purchase of library books, periodicals, microfilm, and other educational materials, including telecommunications program materials;


    (vi) Funds and administrative management, and acquisition of equipment for use in strengthening funds management;


    (vii) Joint use of facilities such as laboratories and libraries; and


    (viii) Academic tutoring and counseling programs and student support services designed to improve academic services;


    (ix) Academic instruction in disciplines in which Indians are underrepresented;


    (x) Establishing or improving a development office to strengthen or improve contributions from the alumni and the private sector;


    (xi) Establishing or enhancing a program of teacher education designed to qualify students to teach in elementary schools or secondary schools, with a particular emphasis on teaching Indian children and youth, that shall include, as part of such program, preparation for teacher certification;


    (xii) Establishing community outreach programs that encourage Indian elementary school and secondary school students to develop the academic skills and the interest to pursue postsecondary education; and


    (xiii) Establishing or improving an endowment fund, provided a grantee uses no more than 20 percent of its grant funds for this purpose and at least matches those grant funds with non-Federal funds; or


    (14) For grants authorized under section 317 of the HEA to Alaska Native-serving institutions and Native Hawaiian-serving institutions –


    (i) Purchase, rental, or lease of scientific or laboratory equipment for educational purposes, including instructional and research purposes;


    (ii) Renovation and improvement in classroom, library, laboratory, and other instructional facilities;


    (iii) Support of faculty exchanges, faculty development, and faculty fellowships to assist in attaining advanced degrees in the faculty’s field of instruction;


    (iv) Curriculum development and academic instruction;


    (v) Purchase of library books, periodicals, microfilm, and other educational materials;


    (vi) Funds and administrative management, and acquisition of equipment for use in strengthening funds management;


    (vii) Joint use of facilities such as laboratories and libraries;


    (viii) Academic tutoring and counseling programs and student support services.


    (c) Development grants – unallowable activities. A grantee may not carry out the following activities or pay the following costs under a development grant:


    (1) Activities that are not included in the grantee’s approved application.


    (2) Activities that are inconsistent with any State plan for higher education that is applicable to the institution, including, but not limited to, a State plan for desegregation of higher education.


    (3) Activities or services that constitute religious instruction, religious worship, or proselytization.


    (4) Activities provided by a school or department of divinity. For the purpose of this provision, a “school or department of divinity” means an institution, or a department of an institution, whose program is solely to prepare students to become ministers of religion or to enter into some other religious vocation.


    (5) Developing or improving non-degree or non-credit courses other than basic skills development courses.


    (6) Developing or improving community-based or community services programs, unless the program provides academic-related experiences or academic credit toward a degree for degree students, or unless it is an outreach program that encourages Indian elementary school and secondary school students to develop the academic skills and the interest to pursue postsecondary education.


    (7) Purchase of standard office equipment, such as furniture, file cabinets, bookcases, typewriters, or word processors.


    (8) Payment of any portion of the salary of a president, vice president, or equivalent officer who has college-wide administrative authority and responsibility at an institution to fill a position under the grant such as project coordinator or activity director.


    (9) Costs of organized fund-raising, including financial campaigns, endowment drives, solicitation of gifts and bequests, and similar expenses incurred solely to raise capital or obtain contributions.


    (10) Costs of student recruitment such as advertisements, literature, and college fairs.


    (11) Services to high school students, unless they are part of a program to encourage Indian students to develop the academic skills and the interest to pursue postsecondary education.


    (12) Instruction in the institution’s standard courses as indicated in the institution’s catalog.


    (13) Costs for health and fitness programs, transportation, and day care services.


    (14) Student activities such as entertainment, cultural, or social enrichment programs, publications, social clubs, or associations.


    (15) Activities that are operational in nature rather than developmental in nature.


    (d) Endowment funds. If a grantee uses part of its grant funds to establish or increase an endowment fund under paragraphs (b)(11) or (b)(13)(xiii) of this section, it must comply with the provisions of §§ 628.3, 628.6, 628.10 and 628.41 through 628.47 of this chapter with regard to the use of those funds, except –


    (1) The definition of the term “endowment fund income” in § 628.6 of this chapter does not apply. For the purposes of this paragraph (d), “endowment fund income” means an amount equal to the total value of the fund, including fund appreciation and retained interest and dividends, minus the endowment fund corpus.


    (2) Instead of the requirement in § 628.10(a) of this chapter, the grantee institution must match each dollar of Federal grant funds used to establish or increase an endowment fund with one dollar of non-Federal funds; and


    (3) Instead of the requirements in § 628.41(a)(3) through (a)(5) and the introductory text in § 628.41(b) and § 628.41(b)(2) and (b)(3) of this chapter, if a grantee institution decides to use any of its grant funds for endowment purposes, it must match those grant funds immediately with non-Federal funds when it places those funds into its endowment fund.


    (Authority: 20 U.S.C. 1057 et seq.)

    [52 FR 30529, Aug. 14, 1987, as amended at 59 FR 41923, Aug. 15, 1994; 60 FR 15447, Mar. 23, 1995; 64 FR 70154, Dec. 15, 1999; 65 FR 79310, Dec. 19, 2000; 85 FR 59981, Sept. 23, 2020]


    Subpart B – How Does an Institution Apply for a Grant?

    § 607.11 Severability.

    If any provision of this subpart or its application to any person, act, or practice is held invalid, the remainder of the subpart or the application of its provisions to any person, act, or practice shall not be affected thereby.


    (Authority: 20 U.S.C. 1057 et seq.)

    [85 FR 59981, Sept. 23, 2020]


    § 607.12 What must be included in individual development grant applications?

    In addition to the information needed by the Secretary to determine whether the institution should be awarded a grant under the funding criteria contained in subpart C, an application for a development grant must include –


    (a) The institution’s comprehensive development plan;


    (b) A description of the relationship of each activity for which grant funds are requested to the relevant goals and objectives of its plan;


    (c) A description of any activities that were funded under previous development grants awarded under the Strengthening Institutions Program that expired within five years of when the development grant will begin and the institution’s justification for not completing the activities under the previous grant, if applicable; and


    (d) If the applicant is applying to carry out more than one activity –


    (1) A description of those activities that would be a sound investment of Federal funds if funded separately;


    (2) A description of those activities that would be a sound investment of Federal funds only if funded with the other activities; and


    (3) A ranking of the activities in preferred funding order.


    (Approved by the Office of Management and Budget under control number 1840-0114)

    (Authority: 20 U.S.C. 1057 et seq.)

    [52 FR 30529, Aug. 14, 1987, as amended at 59 FR 41924, Aug. 15, 1994; 60 FR 15447, Mar. 23, 1995; 64 FR 70155, Dec. 15, 1999. Redesignated at 85 FR 59981, Sept. 23, 2020]


    § 607.13 What must be included in cooperative arrangement grant applications?

    (a)(1) Institutions applying for a cooperative arrangement grant shall submit only one application for that grant regardless of the number of institutions participating in the cooperative arrangement.


    (2) The application must include the names of each participating institution, the role of each institution, and the rationale for each eligible participating institution’s decision to request grant funds as part of a cooperative arrangement rather than as an individual grantee.


    (b) If the application is for a development grant, the application must contain –


    (1) Each participating institution’s comprehensive development plan;


    (2) The information required under § 607.11; and


    (3) An explanation from each eligible participating institution of why participation in a cooperative arrangement grant rather than performance under an individual grant will better enable it to meet the goals and objectives of its comprehensive development plan at a lower cost.


    (4) The name of the applicant for the group that is legally responsible for –


    (i) The use of all grant funds; and


    (ii) Ensuring that the project is carried out by the group in accordance with Federal requirements.


    (Approved by the Office of Management and Budget under control number 1840-0114)

    (Authority: 20 U.S.C. 1066 and 1069)

    [52 FR 30529, Aug. 14, 1987, as amended at 59 FR 41924, Aug. 15, 1994. Redesignated at 85 FR 59981, Sept 23, 2020]


    § 607.14 How many applications for a development grant may an institution submit?

    In any fiscal year, an institution of higher education that meets the eligibility requirements under sections 311, 316, and 317 of the HEA may –


    (a) Submit an application for a development grant authorized under sections 311, 316, and 317 of the HEA; and


    (b) Be part of a cooperative arrangement application.


    (Authority: 20 U.S.C. 1057, 1069)

    [59 FR 41924, Aug. 15, 1994, as amended at 64 FR 70155, Dec. 15, 1999; Redesignated at 85 FR 59981, Sept. 23, 2020]


    Subpart C – How Does the Secretary Make an Award?

    § 607.20 How does the Secretary choose applications for funding?

    (a) The Secretary evaluates an application on the basis of the criteria in –


    (1) Sections 607.21 and 607.23 for a planning grant; and


    (2) Sections 607.22, 607.23, 607.24, and 607.25 for a development grant.


    (b) The Secretary informs applicants of the maximum possible score for each criterion in the application package or in a notice published in the Federal Register.


    (c)(1) With regard to applicants that satisfy the requirements of paragraph (d) of this section, for each fiscal year, the Secretary awards individual development grants to applicants that are not individual development grantees under this part, before the Secretary awards an individual development grant to any applicant that is an individual grantee under this part.


    (2) For purposes of paragraph (c)(1) of this section, an institution that is a recipient of a cooperative arrangement grant is not an individual grantee under this part.


    (d) The Secretary considers funding an application for a development grant that –


    (1) Is submitted with a comprehensive development plan that satisfies all the elements required of such a plan under § 607.8; and


    (2) In the case of an application for a cooperative arrangement grant, demonstrates that the grant will enable each eligible participant to meet the goals and objectives of its comprehensive development plan better and at a lower cost than if each eligible participant were funded individually.


    (Authority: 20 U.S.C. 1057-1059, 1066-1069f)

    [59 FR 41924, Aug. 15, 1994, as amended at 60 FR 15447, Mar. 23, 1995; 64 FR 70155, Dec. 15, 1999; 70 FR 13373, Mar. 21, 2005]


    § 607.21 What are the selection criteria for planning grants?

    The Secretary evaluates an application for a planning grant on the basis of the criteria in this section.


    (a) Design of the planning process. The Secretary reviews each application to determine the quality of the planning process that the applicant will use to develop a comprehensive development plan and an application for a development grant based on the extent to which –


    (1) The planning process is clearly and comprehensively described and based on sound planning practice;


    (2) The president or chief executive officer, administrators and other institutional personnel, students, and governing board members systematically and consistently will be involved in the planning process;


    (3) The applicant will use its own resources to help implement the project; and


    (4) The planning process is likely to achieve its intended results.


    (b) Key personnel. The Secretary reviews each application to determine the quality of key personnel to be involved in the project based on the extent to which –


    (1) The past experience and training of key personnel such as the project coordinator and persons who have key roles in the planning process are suitable to the tasks to be performed; and


    (2) The time commitments of key personnel are adequate.


    (c) Project Management. The Secretary reviews each application to determine the quality of the plan to manage the project effectively based on the extent to which –


    (1) The procedures for managing the project are likely to ensure effective and efficient project implementation; and


    (2) The project coordinator has sufficient authority, including access to the president or chief executive officer, to conduct the project effectively.


    (d) Budget. The Secretary reviews each application to determine the extent to which the proposed project costs are necessary and reasonable.


    (Approved by the Office of Management and Budget under control number 1840-0114)

    (Authority: 20 U.S.C. 1057-1059, 1066-1069)

    [52 FR 30529, Aug. 14, 1987, as amended at 70 FR 13374, Mar. 21, 2005]


    § 607.22 What are the selection criteria for development grants?

    The Secretary evaluates an application for a development grant on the basis of the criteria in this section.


    (a) Quality of the applicant’s comprehensive development plan. The extent to which –


    (1) The strengths, weaknesses, and significant problems of the institution’s academic programs, institutional management, and fiscal stability are clearly and comprehensively analyzed and result from a process that involved major constituencies of the institution;


    (2) The goals for the institution’s academic programs, institutional management, and fiscal stability are realistic and based on comprehensive analysis;


    (3) The objectives stated in the plan are measurable, related to institutional goals, and, if achieved, will contribute to the growth and self-sufficiency of the institution; and


    (4) The plan clearly and comprehensively describes the methods and resources the institution will use to institutionalize practice and improvements developed under the proposed project, including, in particular, how operational costs for personnel, maintenance, and upgrades of equipment will be paid with institutional resources.


    (b) Quality of activity objectives. The extent to which the objectives for each activity are –


    (1) Realistic and defined in terms of measurable results; and


    (2) Directly related to the problems to be solved and to the goals of the comprehensive development plan.


    (c) Quality of implementation strategy. The extent to which –


    (1) The implementation strategy for each activity is comprehensive;


    (2) The rationale for the implementation strategy for each activity is clearly described and is supported by the results of relevant studies or projects; and


    (3) The timetable for each activity is realistic and likely to be attained.


    (d) Quality of key personnel. The extent to which –


    (1) The past experience and training of key professional personnel are directly related to the stated activity objectives; and


    (2) The time commitment of key personnel is realistic.


    (e) Quality of project management plan. The extent to which –


    (1) Procedures for managing the project are likely to ensure efficient and effective project implementation; and


    (2) The project coordinator and activity directors have sufficient authority to conduct the project effectively, including access to the president or chief executive officer.


    (f) Quality of evaluation plan. The extent to which –


    (1) The data elements and the data collection procedures are clearly described and appropriate to measure the attainment of activity objectives and to measure the success of the project in achieving the goals of the comprehensive development plan; and


    (2) The data analysis procedures are clearly described and are likely to produce formative and summative results on attaining activity objectives and measuring the success of the project on achieving the goals of the comprehensive development plan.


    (g) Budget. The extent to which the proposed costs are necessary and reasonable in relation to the project’s objectives and scope.


    (Approved by the Office of Management and Budget under control number 1840-0114)

    (Authority: 20 U.S.C. 1057-1059, 1066-1069f)

    [59 FR 41924, Aug. 15, 1994, as amended at 70 FR 13374, Mar. 21, 2005]


    § 607.23 What special funding consideration does the Secretary provide?

    (a) If funds are available to fund only one additional planning grant and each of the next fundable applications has received the same number of points under § 607.20 or 607.21, the Secretary awards additional points, as provided in the application package or in a notice published in the Federal Register, to any of those applicants that –


    (1) Has an endowment fund of which the current market value, per full-time equivalent enrolled student, is less than the average current market value of the endowment funds, per full-time equivalent enrolled student, at similar type institutions; or


    (2) Has expenditures for library materials per full-time equivalent enrolled student which is less than the average expenditure for library materials per full-time equivalent enrolled student at similar type institutions.


    (b) If funds are available to fund only one additional development grant and each of the next fundable applications has received the same number of points under § 607.20 or 607.22, the Secretary awards additional points, as provided in the application package or in a notice published in the Federal Register, to any of those applicants that –


    (1) Has an endowment fund of which the current market value, per full-time equivalent enrolled student, is less than the average current market value of the endowment funds, per full-time equivalent enrolled student, at comparable institutions that offer similar instruction;


    (2) Has expenditures for library materials per full-time equivalent enrolled student which are less than the average expenditures for library materials per full-time equivalent enrolled student at comparable institutions that offer similar instruction; or


    (3) Propose to carry out one or more of the following activities –


    (i) Faculty development;


    (ii) Funds and administrative management;


    (iii) Development and improvement of academic programs;


    (iv) Acquisition of equipment for use in strengthening management and academic programs;


    (v) Joint use of facilities; and


    (vi) Student services.


    (c) As used in this section, an endowment fund does not include any fund established or supported under 34 CFR part 628.


    (d) Each year, the Secretary provides prospective applicants with the average expenditure of endowment funds and library materials per full-time equivalent student.


    (Authority: 20 U.S.C. 1057 et seq.)

    [52 FR 30529, Aug. 14, 1987, as amended at 59 FR 41925, Aug. 15, 1994; 60 FR 15447, Mar. 23, 1995; 64 FR 70155, Dec. 15, 1999; 70 FR 13374, Mar. 21, 2005]


    § 607.24 How does the Secretary use an applicant’s performance under a previous development grant when awarding a development grant?

    (a)(1) In addition to evaluating an application under the selection criteria in § 607.22, the Secretary evaluates an applicant’s performance under any previous development grant awarded under the Strengthening Institutions Program that expired within five years of the year when the development grant will begin.


    (2) The Secretary evaluates whether the applicant fulfilled, or is making substantial progress toward fulfilling, the goals and objectives of the previous grant, including, but not limited to, the applicant’s success in institutionalizing practices developed and improvements made under the grant.


    (3) The Secretary bases the evaluation of the applicant’s performance on information contained in –


    (i) Performance and evaluation reports submitted by the applicant;


    (ii) Audit reports submitted on behalf of the applicant; and


    (iii) Other information obtained by the Secretary, including reports prepared by the Department.


    (b) If the Secretary initially determines that the applicant did not fulfill the goals and objectives of a previous grant or is not making substantial progress towards fulfilling those goals and objectives, the Secretary affords the applicant the opportunity to respond to that initial determination.


    (c) If the Secretary determines that the applicant did not fulfill the goals and objectives of a previous grant or is not making substantial progress towards fulfilling those goals and objectives, the Secretary may –


    (1) Decide not to fund the applicant; or


    (2) Fund the applicant but impose special grant terms and conditions, such as specific reporting and monitoring requirements.


    (Authority: 20 U.S.C. 1066)

    [59 FR 41925, Aug. 15, 1994, as amended at 64 FR 70155, Dec. 15, 1999]


    § 607.25 What priority does the Secretary use in awarding cooperative arrangement grants?

    Among applications for cooperative arrangement grants, the Secretary gives priority to proposed cooperative arrangements that are geographically and economically sound, or will benefit the institutions applying for the grant.


    (Authority: 20 U.S.C. 1057, 1069)

    [59 FR 41925, Aug. 15, 1994]


    Subpart D – What Conditions Must a Grantee Meet?

    § 607.30 What are allowable costs and what are the limitations on allowable costs?

    (a) Allowable costs. Except as provided in paragraphs (b) and (c) of this section, a grantee may expend grant funds for activities that are related to carrying out the allowable activities included in its approved application.


    (b) Supplement and not supplant. Grant funds shall be used so that they supplement and, to the extent practical, increase the funds that would otherwise be available for the activities to be carried out under the grant and in no case supplant those funds.


    (c) Limitations on allowable costs. A grantee may not use an indirect cost rate to determine allowable costs under its grant.


    (Authority: 20 U.S.C. 1057-1059 and 1066)


    § 607.31 How does a grantee maintain its eligibility?

    (a) A grantee shall maintain its eligibility under the requirements in § 607.2, except for § 607.2(a) (1) and (2), for the duration of the grant period.


    (b) The Secretary reviews an institution’s application for a continuation award to ensure that –


    (1) The institution continues to meet the eligibility requirements described in paragraph (a) of this section; and


    (2) The institution is making substantial progress toward achieving the objectives set forth in its grant application including, if applicable, the institution’s success in institutionalizing practices and improvements developed under the grant.


    (Authority: 20 U.S.C. 1057-1059b, 1066-1069f)

    [59 FR 41925, Aug. 15, 1994]


    PART 608 – STRENGTHENING HISTORICALLY BLACK COLLEGES AND UNIVERSITIES PROGRAM


    Authority:20 U.S.C. 1060 through 1063c, and 1068 through 1068h, unless otherwise noted.



    Source:58 FR 38713, July 20, 1993, unless otherwise noted.

    Subpart A – General

    § 608.1 What is the Strengthening Historically Black Colleges and Universities (HBCU) Program?

    The Strengthening Historically Black Colleges and Universities Program, hereafter called the HBCU Program, provides grants to Historically Black Colleges and Universities (HBCUs) to assist these institutions in establishing and strengthening their physical plants, academic resources and student services so that they may continue to participate in fulfilling the goal of equality of educational opportunity.


    (Authority: 20 U.S.C. 1060)


    § 608.2 What institutions are eligible to receive a grant under the HBCU Program?

    (a) To be eligible to receive a grant under this part, an institution must –


    (1) Satisfy section 322(2) of the Higher Education Act of 1965, as amended (HEA);


    (2) Be legally authorized by the State in which it is located –


    (i) To be a junior or community college; or


    (ii) To provide an educational program for which it awards a bachelor’s degree; and


    (3) Be accredited or preaccredited by a nationally recognized accrediting agency or association.


    (b) The Secretary has determined that the following institutions satisfy section 322(2) of the HEA.



    Alabama

    Alabama A&M University-Huntsville

    Alabama State University – Montgomery

    Carver State Technical College – Mobile

    Concordia College – Selma

    Fredd State Technical College – Tuscaloosa

    J.F. Drake State Technical College – Huntsville

    S.D. Bishop State Junior College – Mobile

    Lawson State College – Birmingham

    Miles College – Birmingham

    Oakwood College – Huntsville

    Selma University – Selma

    Stillman College – Tuscaloosa

    Talladega University – Talladega

    Trenholm State Technical College – Montgomery

    Tuskegee University – Tuskegee

    Arkansas

    Arkansas Baptist College – Little Rock

    Philander Smith College – Little Rock

    Shorter College – Little Rock

    University of Arkansas at Pine Bluff – Pine Bluff

    Delaware

    Delaware State College – Dover

    District of Columbia

    Howard University

    University of the District of Columbia

    Florida

    Bethune Cookman College – Daytona Beach

    Edward Waters College – Jacksonville

    Florida A&M University – Tallahassee

    Florida Memorial College – Miami

    Georgia

    Albany State College – Albany

    Atlanta University – Atlanta

    Clark College – Atlanta

    Fort Valley State College – Fort Valley

    Interdenominational Theological Center – Atlanta

    Morehouse College – Atlanta

    Morris Brown College – Atlanta

    Paine College – Augusta

    Savannah State College – Savannah

    Spelman College – Atlanta

    Kentucky

    Kentucky State University – Frankfurt

    Louisiana

    Dillard University – New Orleans

    Grambling State University – Grambling

    Southern University A&M College – Baton Rouge

    Southern University at New Orleans – New Orleans

    Southern University at Shreveport – Shreveport

    Xavier University of Louisiana – New Orleans

    Maryland

    Bowie State College – Bowie

    Coppin State College – Baltimore

    Morgan State University – Baltimore

    University of Maryland-Eastern Shore – Princess Anne

    Michigan

    Lewis College of Business – Detroit

    Mississippi

    Alcorn State University – Lorman

    Coahoma Junior College – Clarksdale

    Jackson State University – Jackson

    Mary Holmes College – West Point

    Mississippi Valley State University – Itta Bena

    Prentiss Normal and Industrial Institute – Prentiss

    Rust College – Holly Springs

    Tougaloo College – Tougaloo

    Hinds Junior College (Utica Jr Coll) – Raymond

    Missouri

    Lincoln University – Jefferson City

    Harris-Stowe State College – St. Louis

    North Carolina

    Barber-Scotia College – Concord

    Bennett College – Greensboro

    Elizabeth City State University – Elizabeth City

    Fayetteville State University – Fayetteville

    Johnson C. Smith University – Charlotte

    Livingstone College – Salisbury

    North Carolina A&T State University – Greensboro

    North Carolina Central University – Durham

    Saint Augustine’s College – Raleigh

    Shaw University – Raleigh

    Winston-Salem State University – Winston Salem

    Ohio

    Central State University – Wilberforce

    Wilberforce University – Wilberforce

    Oklahoma

    Langston University – Langston

    Pennsylvania

    Cheyney State University – Cheyney

    Lincoln University – Lincoln

    South Carolina

    Allen University – Columbia

    Benedict College – Columbia

    Claflin College – Orangeburg

    Clinton Junior College – Rock Hill

    Denmark Technical College – Denmark

    Morris College – Sumter

    South Carolina State College – Orangeburg

    Voorhees College – Denmark

    Tennessee

    Fisk University – Nashville

    Knoxville College – Knoxville

    Lane College – Jackson

    LeMoyne-Owen College – Memphis

    Meharry Medical College – Nashville

    Morristown College – Morristown

    Tennessee State University – Nashville

    Texas

    Huston-Tillotson College – Austin

    Jarvis Christian College – Hawkins

    Paul Quinn College – Waco

    Prairie View A&M University – Prairie View

    Saint Philip’s College – San Antonio

    Southwestern Christian College – Terrell

    Texas College – Tyler

    Texas Southern University – Houston

    Wiley College – Marshall

    U.S. Virgin Islands

    College of the Virgin Islands – St. Thomas

    Virginia

    Hampton University – Hampton

    Norfolk State University – Norfolk

    Saint Paul’s College – Lawrenceville

    Virginia State University – Petersburg

    Virginia Union University – Richmond

    West Virginia

    Bluefield State College – Bluefield

    West Virginia State College – Institute

    (c) If an institution identified in paragraph (b) of this section has merged with another institution, and, as a result of the merger, would not otherwise qualify to receive a grant under this part, that institution may nevertheless qualify to receive a grant under this part if –


    (1) The institution would have qualified to receive a grant before the merger; and


    (2) The institution was eligible to receive a grant under the Special Needs Program in any fiscal year prior to fiscal year 1986. (The Special Needs Program was authorized under Title III, Part B, of the HEA before 1986.)


    (d) For the purpose of paragraph (a)(3) of this section, the Secretary publishes a list in the Federal Register of nationally recognized accrediting agencies and associations.


    (e) Notwithstanding any other provision of this section, for each fiscal year –


    (1) The University of the District of Columbia is eligible to receive a grant under this part only if the amount of the grant it is scheduled to receive under § 608.31 exceeds the amount it is scheduled to receive in the same fiscal year under the District of Columbia Self-Government and Governmental Reorganization Act; and


    (2) Howard University is eligible to receive a grant under this part only if the amount of the grant it is scheduled to receive under § 608.31 exceeds the amount it is scheduled to receive in the same fiscal year under the Act of March 2, 1867, 20 U.S.C. 123.


    (Authority: 20 U.S.C. 1061, 1063, and 1063a; House Report 99-861, 99th Cong., 2d Sess. p. 367, September 22, 1986; Senate Report 99-296, 99th Cong., 2d Sess. p. 23, May 12, 1986; Cong. Rec. of June 3, 1986, pp. 6588-6589)


    § 608.3 What regulations apply?

    The following regulations apply to this part:


    (a) The Department of Education General Administrative Regulations (EDGAR) as follows:


    (1) [Reserved]


    (2) The following sections of 34 CFR part 75 (Direct Grant Programs): §§ 75.1-75.104, 75.125-75.129, 75.190-75.192, 75.230-75.261, 75.500, 75.510-75.519, 75.524-75.534, 75.580-75.903, and 75.910;


    (3) 34 CFR part 77 (Definitions that Apply to Department Regulations).


    (4) 34 CFR part 79 (Intergovernmental Review of Department of Education Programs and Activities).


    (5) 34 CFR part 82 (New Restrictions on Lobbying).


    (6) [Reserved]


    (7) 34 CFR part 86 (Drug-Free Schools and Campuses).


    (b) The regulations in this part 608.


    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 3485; and


    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards), as adopted at 2 CFR part 3474.


    (Authority: 20 U.S.C. 1060-1063a, 1063c)

    [58 FR 38713, July 20, 1993, as amended at 79 FR 76101, Dec. 19, 2014]


    § 608.4 What definitions apply?

    (a) General definitions. The following terms used in this part are defined in 2 CFR part 200, subpart A, or 34 CFR 77.1:




  • Applicant

  • Application

  • Award

  • Budget

  • EDGAR

  • Equipment

  • Fiscal year

  • Grant period

  • Private

  • Project period

  • Public

  • Secretary

  • (b) Other definitions. The following definitions also apply to this part:


    Accredited means the status of public recognition which a nationally recognized accrediting agency or association grants to an institution which meets certain established qualifications and educational standards.


    Graduate means a student who has attended an institution for at least three semesters and fulfilled academic requirements for undergraduate studies in not more than five consecutive school years.


    Junior or community college means an institution of higher education that –


    (i) Admits as regular students persons who are beyond the age of compulsory school attendance in the State in which the institution is located and who have the ability to benefit from the training offered by the institution;


    (ii) Does not provide an educational program for which it awards a bachelor’s degree or an equivalent degree; and


    (iii) Provides an educational program of not less than 2 years that is acceptable for full credit toward such a degree; or offers a 2-year program in engineering, mathematics, or the physical or biological sciences, designed to prepare a student to work as a technician or at the semiprofessional level in engineering, scientific, or other technological fields requiring the understanding and application of basic engineering, scientific, or mathematical principles of knowledge.


    Pell Grant means the grant program authorized by Title IV-A-1 of the Higher Education Act of 1965, as amended.


    Preaccredited means a status, also called candidacy status, that a nationally recognized accrediting agency or association, recognized by the Secretary to grant that status, has accorded an unaccredited institution that is making reasonable progress toward accreditation.


    School year means the period of time from July 1 of one calendar year through June 30 of the subsequent calendar year. (A “school year” is equivalent to an “award year” under the Pell Grant Program.)


    (Authority: 20 U.S.C. 1060-1063)

    [58 FR 38713, July 20, 1993, as amended at 79 FR 76101, Dec. 19, 2014]


    Subpart B – What Kind of Projects Does the Secretary Fund?

    § 608.10 What activities may be carried out under a grant?

    (a) Allowable activities. Except as provided in paragraph (b) of this section, a grantee may carry out the following activities under this part –


    (1) Purchase, rental, or lease of scientific or laboratory equipment for educational purposes, including instructional or research purposes;


    (2) Construction, maintenance, renovation, and improvement in classroom, library, laboratory, and other instructional facilities, including purchase or rental of telecommunications technology equipment or services;


    (3) Support of faculty exchanges, faculty development and faculty fellowships to assist these faculty members in attaining advanced degrees in their fields of instruction;


    (4) Academic instruction in disciplines in which Black Americans are underrepresented;


    (5) Purchase of library books, periodicals, microfilm, and other educational materials, including telecommunications program materials;


    (6) Tutoring, counseling, and student service programs designed to improve academic success;


    (7) Funds and administrative management, and acquisition of equipment for use in strengthening funds management;


    (8) Joint use of facilities, such as laboratories and libraries;


    (9) Establishing or improving a development office to strengthen or improve contributions from alumni and the private sector;


    (10) Establishing or enhancing a program of teacher education designed to qualify students to teach in a public elementary or secondary school in the State that shall include, as part of the program, preparation for teacher certification;


    (11) Establishing community outreach programs that will encourage elementary and secondary students to develop the academic skills and the interest to pursue postsecondary education; and


    (12) Other activities that it proposes in its application that contribute to carrying out the purpose of this part and are approved by the Secretary as part of the review and acceptance of the application.


    (b) Unallowable activities. A grantee may not carry out the following activities under this part –


    (1) Activities that are not included in the grantee’s approved application;


    (2) Activities described in paragraph (a)(12) of this section that are not approved by the Secretary;


    (3) Activities that are inconsistent with any State plan of higher education that is applicable to the institution;


    (4) Activities that are inconsistent with a State plan for desegregation of higher education that is applicable to the institution;


    (5) Activities or services that constitute religious instruction, religious worship, or proselytization.


    (6) Activities provided by a school or department of divinity. For the purpose of this provision, a “school or department of divinity” means an institution, or a department of an institution, whose program is solely to prepare students to become ministers of religion or to enter into some other religious vocation.


    (c) No award under this part may be used for telecommunications technology equipment, facilities or services, if such equipment, facilities or services are available pursuant to section 396(k) of the Communications Act of 1934.


    (d) Endowment funds. If a grantee uses part of its grant funds to establish or increase an endowment fund, it is subject to the provisions of §§ 628.3, 628.6, 628.10 and 628.41 through 628.47 of this chapter with regard to the use of those funds, except –


    (1) The definition of the term “endowment fund income” in § 628.6 of this chapter does not apply. For the purposes of this paragraph (d), “endowment fund income” means an amount equal to the total value of the fund, including fund appreciation and retained interest and dividends, minus the endowment fund corpus;


    (2) Instead of the requirement in § 628.10(a) of this chapter, the grantee institution must match each dollar of Federal grant funds used to establish or increase an endowment fund with one dollar of non-Federal funds; and


    (3) Instead of the requirements in § 628.41(a)(3) through (a)(5) and the introductory text in § 628.41(b) and § 628.41(b)(2) and (b)(3) of this chapter, if a grantee institution decides to use any of its grant funds for endowment purposes, it must match those grant funds immediately with non-Federal funds when it places those funds into its endowment fund.


    (Authority: 20 U.S.C. 1062, 1063a, and 1069c)

    [58 FR 38713, July 20, 1993, as amended at 65 FR 79311, Dec. 19, 2000; 85 FR 59981, Sept. 23, 2020]


    § 608.11 What is the duration of a grant?

    The Secretary may award a grant under this part for a period of up to five academic years.


    (Authority: 20 U.S.C. 1063b(b))


    § 608.12 Severability.

    If any provision of this subpart or its application to any person, act, or practice is held invalid, the remainder of the subpart or the application of its provisions to any person, act, or practice shall not be affected thereby.


    (Authority: 20 U.S.C. 1060 through 1063c, and 1068 through 1068h)

    [85 FR 59981, Sept. 23, 2020]


    Subpart C – How Does an Eligible Institution Apply for a Grant?

    § 608.20 What are the application requirements for a grant under this part?

    In order to receive a grant under this part, an institution must submit an application to the Secretary at such time and in such manner as the Secretary may prescribe. The application must contain –


    (a) A description of the activities to be carried out with grant funds;


    (b) A description of how the grant funds will be used so that they will supplement and, to the extent practical, increase the funds that would otherwise be made available for the activities to be carried out under the grant and in no case supplant those funds;


    (c) (1) A comprehensive development plan as described in § 608.21; or


    (2) If an applicant has already submitted a comprehensive development plan as described in § 608.21, a description of the progress the applicant has made in carrying out the goals of its plan;


    (d) An assurance that the institution will provide the Secretary with an annual report on the activities carried out under the grant;


    (e) An assurance that the institution will provide for, and submit to the Secretary, the compliance and financial audit described in § 608.41;


    (f) An assurance that the proposed activities in the application are in accordance with any State plan that is applicable to the institution;


    (g) The number of graduates of the applicant institution during the school year immediately preceding the fiscal year for which grant funds are requested; and


    (h) The number of graduates of the applicant institution –


    (1) Who, within five years of graduating with baccalaureate degrees, attended graduate or professional schools and enrolled in degree programs in disciplines in which Blacks are underrepresented during the school year immediately preceding the fiscal year for which funds are requested; and


    (2) Who graduated with baccalaureate degrees during any one of the five school years immediately preceding the school year described in paragraph (h)(1) of this section.


    (Approved by the Office of Management and Budget under control number 1840-0113)

    (Authority: 20 U.S.C. 1063, 1063a and 1066(b)(2))


    § 608.21 What is a comprehensive development plan and what must it contain?

    (a) A comprehensive development plan must describe an institution’s strategy for achieving growth and self-sufficiency by strengthening its –


    (1) Financial management;


    (2) Academic programs; and


    (b) The comprehensive development plan must include the following:


    (1) An assessment of the strengths and weaknesses of the institution’s financial management and academic programs.


    (2) A delineation of the institution’s goals for its financial management and academic programs, based on the outcomes of the assessment described in paragraph (b)(1) of this section.


    (3) A listing of measurable objectives designed to assist the institution to reach each goal with accompanying timeframes for achieving the objectives.


    (4) A description of methods, processes, and procedures that will be used by the college or university to institutionalize financial management and academic program practices and improvements developed under the proposed funded activities.


    (Approved by the Office of Management and Budget under control number 1840-0113)

    (Authority: 20 U.S.C. 1063a)


    Subpart D – How Does the Secretary Make a Grant?

    § 608.30 What is the procedure for approving and disapproving grant applications?

    The Secretary –


    (a) Approves any application that satisfies the requirements of § 608.10 and § 608.20; and


    (b) Does not disapprove any application, or any modification of an application, without affording the applicant reasonable notice and opportunity for a hearing.


    (Authority: 20 U.S.C. 1063a)


    § 608.31 How does the Secretary determine the amount of a grant?

    (a) Except as provided in paragraph (c) of this section, for each fiscal year, the Secretary determines the amount of a grant under this part by-


    (1) Multiplying fifty percent of the amount appropriated for the HBCU Program by the following fraction:



    Number of Pell Grant recipients at the applicant institution during the school year immediately preceding that fiscal year.



    Number of Pell Grant recipients at all applicant institutions during the school year immediately preceding that fiscal year.

    (2) Multiplying twenty-five percent of the amount appropriated for the HBCU Program by the following fraction:



    Number of graduates of the applicant institution during the school year immediately preceding that fiscal year.



    Number of graduates of all applicant institutions during the school year immediately preceding that fiscal year.

    (3) Multiplying twenty-five percent of the amount appropriated for the HBCU Program by the following fraction:



    The percentage of graduates of an applicant institution who, within five years of graduating with baccalaureate degrees, are in attendance at graduate or professional schools and enrolled in degree programs in disciplines in which Blacks are underrepresented



    The sum of the percentages of those graduates of all applicant institutions.

    (4) Adding the amounts obtained in paragraphs (a)(1), (a)(2), and (a)(3) of this section.


    (b)(1) For each fiscal year, the numerator in paragraph (a)(3) of this section is calculated by –


    (i) Determining the number of graduates of an applicant institution who, within five years of graduating with baccalaureate degrees, attended graduate or professional schools and enrolled in degree programs in disciplines in which Blacks are underrepresented during the school year immediately preceding that fiscal year; and


    (ii) Dividing the number obtained in paragraph (b)(1)(i) of this section by the number of graduates of an applicant institution who graduated with baccalaureate degrees during the five school years immediately preceding the school year described in paragraph (b)(1)(i) of this section.


    (2) For purposes of this section, the Secretary –


    (i) Considers that Blacks are underrepresented in a professional or academic discipline if the percentage of Blacks in that discipline is less than the percentage of Blacks in the general population of the United States; and


    (ii) Notifies applicants of the disciplines in which Blacks are underrepresented through a notice in the Federal Register, after consulting with the Commissioner of the Bureau of Labor Statistics.


    (c) Notwithstanding the formula in paragraph (a) of this section –


    (1) For each fiscal year, each eligible institution with an approved application must receive at least $500,000; and


    (2) If the amount appropriated for a fiscal year for the HBCU Program is insufficient to provide $500,000 to each eligible institution with an approved application, each grant is ratably reduced. If additional funds become available for the HBCU Program during a fiscal year, each grant is increased on the same basis as it was decreased until the grant amount reaches $500,000.


    (d) The amount of any grant that the Secretary determines will not be required by a grantee for the period for which the grant was made is available for reallotment by the Secretary during that period to other eligible institutions under the formula contained in paragraph (a) of this section.


    (Authority: 20 U.S.C. 1063)


    Subpart E – What Conditions Must a Grantee Meet?

    § 608.40 What are allowable costs and what are the limitations on allowable costs?

    (a) Allowable costs. Except as provided in paragraphs (b) and (c) of this section, a grantee may expend grant funds for activities that are related to carrying out the allowable activities included in its approved application.


    (b) Supplement and not supplant. Grant funds shall be used so that they supplement, and to the extent practical, increase the funds that would otherwise be available for the activities to be carried out under the grant, and in no case supplant those funds.


    (c) Limitations on allowable costs. A grantee may not –


    (1) Spend more than fifty percent of its grant award in each fiscal year for costs relating to constructing or maintaining a classroom, library, laboratory, or other instructional facility; or


    (2) Use an indirect cost rate to determine allowable costs under its grant.


    (Authority: 20 U.S.C. 1062 and 1066)


    § 608.41 What are the audit and repayment requirements?

    (a) (1) A grantee shall provide for the conduct of a compliance and financial audit of any funds it receives under this part of a qualified, independent organization or person in accordance with the Standards for Audit of Governmental Organizations, Programs, Activities, and Functions, 1981 revision, established by the Comptroller General of the United States. This publication is available from the Superintendent of Documents, U.S. Government Printing Office.


    (2) The grantee shall have an audit conducted at least once every two years, covering the period since the previous audit, and the grantee shall submit the audit to the Secretary.


    (3) If a grantee is audited under Chapter 75 of Title 31 of the United States Code, the Secretary considers that audit to satisfy the requirements of paragraph (a)(1) of this section.


    (b) An institution awarded a grant under this part must submit to the Department of Education Inspector General three copies of the audit required in paragraph (a) of this section within six months after completion of the audit.


    (c) Any individual or firm conducting an audit described in this section shall give the Department of Education’s Inspector General access to records or other documents necessary to review the results of the audit.


    (d) A grantee shall repay to the Treasury of the United States any grant funds it received that it did not expend or use to carry out the allowable activities included in its approved application within ten years following the date of the initial grant it received under this part.


    (Authority: 20 U.S.C. 1063a and 1063c)


    § 608.42 Under what conditions does the Secretary terminate a grant?

    The Secretary terminates any grant under which funds were not expended if an institution loses –


    (a) Its accredited status; or


    (b) Its legal authority in the State in which it is located –


    (1) To be a junior or community college; or


    (2) To provide an educational program for which it awards a bachelor’s degree.


    (Authority: 20 U.S.C. 1063a)


    PART 609 – STRENGTHENING HISTORICALLY BLACK GRADUATE INSTITUTIONS PROGRAM


    Authority:20 U.S.C. 1060 through 1063c, and 1068 through 1068h, unless otherwise noted.



    Source:59 FR 38717, July 20, 1993, unless otherwise noted.

    Subpart A – General

    § 609.1 What is the Strengthening Historically Black Graduate Institutions Program?

    The Strengthening Historically Black Graduate Institutions Program provides grants to the institutions listed in § 609.2 to assist these institutions in establishing and strengthening their physical plants, development offices, endowment funds, academic resources and student services so that they may continue to participate in fulfilling the goal of equality of educational opportunity in graduate education.


    (Authority: 20 U.S.C. 1060 and 1063b)


    § 609.2 What institutions are eligible to receive a grant under this part?

    (a) An institution or an institution’s qualified graduate program listed in paragraph (b) of this section is eligible to receive a grant under this part if the Secretary determines that the institution is making a substantial contribution to legal, medical, dental, veterinary or other graduate education opportunities for Black Americans.


    (b) The institutions and programs referred to in paragraph (a) of this section are –


    (1) Morehouse School of Medicine;


    (2) Meharry Medical School;


    (3) Charles R. Drew Postgraduate Medical School;


    (4) Clark Atlanta University;


    (5) Tuskegee Institute School of Veterinary Medicine;


    (6) Xavier University School of Pharmacy;


    (7) Southern University School of Law;


    (8) Texas Southern University School of Law and School of Pharmacy;


    (9) Florida A&M University School of Pharmaceutical Sciences;


    (10) North Carolina Central University School of Law;


    (11) Morgan State University’s qualified graduate program;


    (12) Hampton University’s qualified graduate program;


    (13) Alabama A&M’s qualified graduate program;


    (14) North Carolina A&T State University’s qualified graduate program;


    (15) University of Maryland Eastern Shore’s qualified graduate program; and


    (16) Jackson State University’s qualified graduate program.


    (c) An institution that was awarded a grant prior to October 1, 1992 may continue to receive grant payments, regardless of the eligibility of the graduate institutions described in paragraphs (b)(6) through (16) of this section, until the institution’s grant period has expired or September 30, 1993, whichever is later.


    (d) No institution of higher education or university system may receive more than one grant under this section in any fiscal year.


    (Authority: 20 U.S.C. 1063b(e))


    § 609.3 What regulations apply?

    The following regulations apply to this part:


    (a) The Department of Education General Administrative Regulations (EDGAR) as follows:


    (1) [Reserved]


    (2) The following sections of 34 CFR part 75 (Direct Grant Programs): §§ 75.1-75.104, 75.125-75.129, 75.190-75.192, 75.230-75.261, 75.500, 75.510-75.519, 75.524-75.534, 75.580-75.903, and 75.901;


    (3) 34 CFR part 77 (Definitions that Apply to Department Regulations).


    (4) 34 CFR part 79 (Intergovernmental Review of Department of Education Programs and Activities).


    (5) 34 CFR part 82 (New Restrictions on Lobbying).


    (6) [Reserved]


    (7) 34 CFR part 86 (Drug-Free Schools and Campuses).


    (b) The regulations in this part 609.


    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 3485; and


    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards), as adopted at 2 CFR part 3474.


    (Authority: 20 U.S.C. 1063b)

    [59 FR 38717, July 20, 1993, as amended at 79 FR 76101, Dec. 19, 2014]


    § 609.4 What definitions apply?

    (a) General definitions. The following terms used in this part are defined in 2 CFR part 200, subpart A, or 34 CFR 77.1:




  • Applicant

  • Application

  • Award

  • Budget

  • EDGAR

  • Equipment

  • Fiscal year

  • Grant period

  • Private

  • Project period

  • Public

  • Secretary

  • (b) The following definition applies to a term used in this part:


    Qualified graduate program means a graduate or professional program that –


    (i) Provides a program of instruction in the physical or natural sciences, engineering, mathematics, or other scientific disciplines in which African Americans are underrepresented;


    (ii) Has been accredited or approved by a nationally recognized accrediting agency or association. (The Secretary publishes a list in the Federal Register of nationally recognized accrediting agencies and associations.); and


    (iii) Has students enrolled in that program when the institution offering the program applies for a grant under this part.


    (Authority: 20 U.S.C. 1063b and 1069c)

    [59 FR 38717, July 20, 1993, as amended at 79 FR 76101, Dec. 19, 2014]


    Subpart B – What Kind of Projects Does the Secretary Fund?

    § 609.10 What activities may be carried out under a grant?

    (a) Allowable activities. Except as provided in paragraph (b) of this section, a grantee may carry out the following activities under this part –


    (1) Purchase, rental, or lease of scientific or laboratory equipment for educational purposes, including instructional or research purposes;


    (2) Construction, maintenance, renovation, and improvement in classroom, library, laboratory, and other instructional facilities, including purchase or rental of telecommunications technology equipment or services;


    (3) Support of faculty exchanges, faculty development and faculty fellowships to assist these faculty members in attaining advanced degrees in their fields of instruction;


    (4) Academic instruction in disciplines in which Black Americans are underrepresented;


    (5) Purchase of library books, periodicals, microfilm, and other educational materials, including telecommunications program materials;


    (6) Tutoring, counseling, and student service programs designed to improve academic success;


    (7) Funds and administrative management, and acquisition of equipment for use in strengthening funds management;


    (8) Joint use of facilities, such as laboratories and libraries;


    (9) Establishing or improving a development office to strengthen or improve contributions from alumni and the private sector;


    (10) Establishing or enhancing a program of teacher education designed to qualify students to teach in a public elementary or secondary school in the State that shall include, as part of such program preparation for teacher certification;


    (11) Establishing community outreach programs that will encourage elementary and secondary students to develop the academic skills and the interest to pursue postsecondary education;


    (12) Other activities that it proposes in its application that contribute to carrying out the purpose of this part and are approved by the Secretary;


    (13) Establishing or improving a development office to strengthen and increase contributions from alumni and the private sector; and


    (14) Establishing and maintaining an institutional endowment under 34 CFR part 628 to facilitate financial independence.


    (b) Unallowable activities. A grantee may not carry out the following activities under this part –


    (1) Activities that are not included in the grantee’s approved application;


    (2) Activities described in paragraph (a)(12) of this section that are not approved by the Secretary;


    (3) Activities that are inconsistent with any State plan of higher education that is applicable to the institution;


    (4) Activities that are inconsistent with a State plan for desegregation of higher education that is applicable to the institution;


    (5) Activities or services that constitute religious instruction, religious worship, or proselytization.


    (6) Activities provided by a school or department of divinity. For the purpose of this provision, a “school or department of divinity” means an institution, or a department of an institution, whose program is solely to prepare students to become ministers of religion or to enter into some other religious vocation.