[Federal Register Volume 76, Number 187 (Tuesday, September 27, 2011)]
[Proposed Rules]
[Pages 59864-59877]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-24454]
[[Page 59863]]
Vol. 76
Tuesday,
No. 187
September 27, 2011
Part V
Department of Education
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34 CFR Part 600
Application and Approval Process for New Programs; Proposed Rule
Federal Register / Vol. 76 , No. 187 / Tuesday, September 27, 2011 /
Proposed Rules
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DEPARTMENT OF EDUCATION
34 CFR Part 600
RIN 1840-AD10
[Docket ID ED-2011-OPE-0011]
Application and Approval Process for New Programs
AGENCY: Office of Postsecondary Education, Department of Education.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Secretary proposes to amend the regulations for
Institutional Eligibility under the Higher Education Act of 1965, as
amended (HEA), to streamline the application and approval process for
new educational programs that qualify for student financial assistance
under title IV of the HEA.
DATES: We must receive your comments on or before November 14, 2011.
ADDRESSES: Submit your comments through the Federal eRulemaking Portal
or via postal mail, commercial delivery, or hand delivery. We will not
accept comments by fax or by e-mail. To ensure that we do not receive
duplicate copies, please submit your comments only one time. In
addition, please include the Docket ID at the top of your comments.
Federal eRulemaking Portal: Go to http://www.regulations.gov to submit your comments electronically. Information
on using Regulations.gov, including instructions for accessing agency
documents, submitting comments, and viewing the docket, is available on
the site under ``How To Use This Site.''
Postal Mail, Commercial Delivery, or Hand Delivery: If you
mail or deliver your comments about these proposed regulations, address
them to Jessica Finkel, U.S. Department of Education, 1990 K Street,
NW., room 8031, Washington, DC 20006-8502.
Privacy Note: The Department's policy for comments received from
members of the public (including those comments submitted by mail,
commercial delivery, or hand delivery) is to make these submissions
available for public viewing in their entirety on the Federal
eRulemaking Portal at http://www.regulations.gov. Therefore, commenters
should be careful to include in their comments only information that
they wish to make publicly available on the Internet.
FOR FURTHER INFORMATION CONTACT: John Kolotos, U.S. Department of
Education, 1990 K Street, NW., room 8018, Washington, DC 20006-8502.
Telephone: (202) 502-7762 or by e-mail: [email protected].
If you use a telecommunications device for the deaf (TDD) or a text
telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-
800-877-8339.
SUPPLEMENTARY INFORMATION:
Invitation To Comment
We invite you to submit comments regarding these proposed
regulations. To ensure that your comments have maximum effect in
developing the final regulations, we urge you to identify clearly the
specific section or sections of the proposed regulations that each of
your comments addresses and to arrange your comments in the same order
as the proposed regulations. Please do not submit comments outside the
scope of the specific proposals in this notice of proposed rulemaking
(NPRM). We will not respond to comments that do not specifically relate
to the proposed regulations.
We invite you to assist us in complying with the specific
requirements of Executive Order 12866 and Executive Order 13563 and
their overall direction to Federal agencies to reduce regulatory burden
where possible. Please let us know of any further ways we could reduce
potential costs or increase potential benefits while preserving the
effective and efficient administration of the Department's student aid
regulations.
During and after the comment period, you may inspect all public
comments about these proposed regulations by accessing Regulations.gov.
You may also inspect the comments, in person, in room 8031, 1990 K
Street, NW., Washington, DC, between the hours of 8:30 a.m. and 4:00
p.m., Washington, DC time, Monday through Friday of each week except
Federal holidays.
Assistance to Individuals with Disabilities in Reviewing the
Rulemaking Record: On request, we will provide an appropriate
accommodation or auxiliary aid to an individual with a disability who
needs assistance to review the comments or other documents in the
public rulemaking record for these proposed regulations. If you want to
schedule an appointment for this type of accommodation or auxiliary
aid, please contact the person listed under FOR FURTHER INFORMATION
CONTACT.
Negotiated Rulemaking and Background of These Proposed Regulations
Section 492 of the HEA requires the Secretary, before publishing
any proposed regulations for programs authorized by title IV of the
HEA, to obtain public involvement in the development of the proposed
regulations. After obtaining advice and recommendations from the
public, including individuals and representatives of groups involved in
the Federal student financial assistance programs, the Secretary must
subject the proposed regulations to a negotiated rulemaking process.
All proposed regulations that the Department publishes on which the
negotiators reached consensus must conform to final agreements
resulting from that process unless the Secretary reopens the process or
provides a written explanation to the participants stating why the
Secretary has decided to depart from the agreements. Further
information on the negotiated rulemaking process can be found at:
http://www2.ed.gov/policy/highered/leg/hea08/index.html#neg-reg.
Between November, 2009 and January, 2010, the Department held three
negotiated rulemaking sessions aimed at improving integrity in the
title IV, HEA programs. As a result of these discussions, during which
consensus was not reached, the Department published two notices of
proposed rulemaking, one on June 18, 2010 (June 18th NPRM) and one on
July 26, 2010 (July 26th NPRM). The July 26th NPRM focused specifically
on the issue of ``gainful employment'' and the June 18th NPRM covered
the remaining Program Integrity issues. After considering public
comments on the June 18th NPRM, the Department published final
regulations on October 29, 2010 (75 FR 66832) (Program Integrity
Issues), which included requirements for institutions to disclose and
report information about gainful employment programs. After considering
comments on the July 26th NPRM related to new programs, the Department
published final regulations on October 29, 2010 (75 FR 66665) (Gainful
Employment--New Programs), which included requirements for institutions
to notify the Department before offering a new educational program that
provides training leading to gainful employment in a recognized
occupation (gainful employment program). Through this notification
process, the Department may advise an institution that it must obtain
approval to establish the eligibility of an additional gainful
employment program for purposes of the title IV, HEA programs.
The Department established the notification requirement out of
concern that some institutions might attempt to circumvent the proposed
gainful employment standards in Sec. 668.7(a)(1)
[[Page 59865]]
of the July 26th NPRM by adding new programs before those standards
could take effect. The Department explained that the notification
process requirements, referred to as ``interim requirements,'' were
intended to remain in effect until the final regulations that
established eligibility measures for gainful employment programs would
take effect. Specifically, we stated that with regard to approving
additional programs, ``[w]e intend to establish performance-based
requirements in subsequent regulations'' and that ``[u]ntil those
subsequent regulations take effect, institutions must comply with the
interim requirements in [the Gainful Employment--New Programs final]
regulations'' (75 FR 66671).
We published the final regulations establishing the gainful
employment eligibility measures on June 13, 2011 (76 FR 34386) (Gainful
Employment--Debt Measures). In those regulations, the Department
established measures for gainful employment programs that are intended
to identify the worst performing programs. For gainful employment
programs that fail those measures, an institution will be required to
provide warnings to enrolled and prospective students for up to three
years or until the programs lose eligibility for title IV, HEA funds.
Under these measures, institutions may also choose to voluntarily
discontinue a failing program.
The Gainful Employment--Debt Measures final regulations also place
restrictions on when an institution may reestablish the eligibility of
an ineligible program or a failing program that was voluntarily
discontinued, or establish the eligibility of a new program that is
substantially similar to an ineligible program. However, we do not
believe that when these new provisions go into effect on July 1, 2013,
the notification process for all new gainful employment programs
established in the Gainful Employment--New Programs final regulations
will be needed and therefore are seeking input from the public on this
issue through these proposed regulations.
In this NPRM, among other changes, we propose to eliminate the
notification process for new gainful employment programs by amending
the Gainful Employment--New Programs final regulations to establish a
smaller group of gainful employment programs for which an institution
must obtain approval from the Department. We believe that with these
changes, these proposed regulations will significantly reduce burden on
institutions and the Department while still ensuring the effectiveness
of the debt measures established in the Gainful Employment--Debt
Measures final regulations.
The Department used the negotiated rulemaking process to discuss
its proposal to define eligibility for gainful employment programs
using metrics. Following the completion of the negotiated rulemaking
sessions, the Department published the July 26th NPRM and received over
90,000 comments in response to those proposed regulations. These
proposed regulations arise from those discussions, proposals, and
comments submitted, and, per the Department's stated goal in the
Gainful Employment--New Programs final regulations, would establish a
simplified process for institutions to establish the eligibility of new
gainful employment programs now that the gainful employment measures
have been finalized. The discussions about new programs during
negotiated rulemaking, and the comments received on the July 26th NPRM,
were focused on the nature of the requirements that would be in place
at the conclusion of the rulemaking process. For these reasons, the
Department has determined that it is not necessary to conduct
additional negotiations to discuss the proposed requirements regarding
the approval of new gainful employment programs. The Department is
publishing new proposed regulations and requesting additional public
comment because the proposed changes will modify the Gainful
Employment--New Programs final regulations that require institutions to
provide notice to the Department for all new gainful employment
programs.
Summary of Proposed Changes
These proposed regulations would amend the application process for
new programs by--
Limiting the new gainful employment programs for which an
institution must apply to the Department to those programs that are (1)
the same as, or substantially similar to, failing programs that the
institution voluntarily discontinued or programs that became ineligible
under the debt measures for gainful employment programs, and (2)
programs that are substantially similar to failing programs;
Specifying that a program is substantially similar if it
has the same credential level and the same first four digits of the CIP
code as that of a failing program, a failing program the institution
voluntarily discontinued, or an ineligible program;
Clarifying that there are separate application
requirements for establishing the eligibility of other educational
programs such as direct assessment programs and comprehensive
transition and postsecondary programs;
Providing that if the Secretary notifies an institution,
the institution must apply for approval of a new educational program;
Revising the documentation that must be included in an
institution's application to establish the eligibility of a new gainful
employment program;
Specifying that the Secretary may request additional
information from the institution prior to making an eligibility
determination for a new gainful employment program;
Specifying that the Secretary, in making an eligibility
determination, will take into account whether the processes used and
determinations made by the institution to offer the program are
sufficient and will consider the performance of the institution's other
gainful employment programs; and
Specifying that if the Secretary denies the eligibility of
a new gainful employment program, the Secretary will inform an
institution of the reasons for the denial and the institution may
request that the Secretary reconsider the determination.
Significant Proposed Regulations
Part 600 Institutional Eligibility Under the Higher Education Act of
1965, as Amended
We discuss substantive issues under the sections of the proposed
regulations to which they pertain. Generally, we do not address
proposed regulatory changes that are technical or otherwise minor in
effect.
Classification of Instructional Programs (CIP) Code
Statute: Section 481 of the HEA (20 U.S.C. 1088) provides
definitions for the General Provisions Relating to Student Financial
Assistance Programs. It does not provide a definition of Classification
of instructional programs or CIP.
Current regulations: The classification of instructional programs
(CIP) code is described under current Sec. 600.10(c)(2)(i).
Proposed regulations: We propose to relocate the current
description of the CIP to Sec. 600.2, Definitions. Under this section,
the CIP would be defined as ``a taxonomy of instructional program
classifications and descriptions developed by the U.S. Department of
Education's National Center for Education Statistics.''
Reasons: This is merely a technical change that would include the
definition of the term Classification of
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instructional programs or CIP among the definitions of other terms used
in part 600 of the title IV, HEA program regulations.
New Educational Programs
Statute: With regard to eligibility for funds under title IV of the
HEA, section 481 of the HEA defines an eligible program (20 U.S.C.
1088(b)), and section 498 of the HEA provides for the eligibility of
institutions of higher education (20 U.S.C. 1099c).
Current regulations: Under current Sec. 600.10(c)(1), an
institution that intends to add a gainful employment program, as
provided under 34 CFR 668.8(c)(3) or (d), must notify the Department at
least 90 days before the first day of class for that program. The
institution may proceed to offer the program described in its notice to
the Secretary, unless the Department advises the institution that the
program must be approved under Sec. 600.20(c)(1)(v). Except for direct
assessment programs under 34 CFR 668.10, or pursuant to a requirement
included in an institution's program participation agreement (PPA)
under 34 CFR 668.14, an institution does not have to apply to the
Department for approval to add any other type of educational program.
Under Sec. 600.20(c)(2), an institution that wishes to expand the
scope of its eligibility by increasing its level of program offerings
(e.g., adding graduate degree programs when it previously offered only
baccalaureate degree programs) must apply to the Secretary for approval
of that expanded scope.
Under 34 CFR 668.10(b), an institution that offers a direct
assessment program must apply to the Secretary to establish the
eligibility of that program for title IV, HEA program funds.
Under 34 CFR 668.13(c)(4)(ii), the Secretary may condition the
provisional certification of an institution by specifying compliance
requirements in the institution's PPA.
Under 34 CFR 668.14(a), the Secretary may condition an
institution's participation in the title IV, HEA programs by specifying
compliance requirements in the institution's PPA. We note that the
Secretary may specify compliance requirements regardless of whether the
institution is provisionally certified under 34 CFR 668.13(c).
Under 34 CFR 668.232, an institution that offers a comprehensive
transition and postsecondary program must apply to the Secretary to
establish the eligibility of that program for title IV, HEA program
funds.
Proposed regulations: In proposed Sec. 600.10(c)(1), we specify
that an institution would not have to apply to the Secretary for
approval of a new educational program unless the institution is
required to obtain the Secretary's approval under the provisions in
Sec. 600.20(c)(2), Sec. 600.20(d)(2), 34 CFR 668.10(b), 34 CFR
668.14(a)(1), or 34 CFR 668.232, or the Secretary notifies the
institution that it must apply for approval.
Instead of subjecting all gainful employment programs to a notice
process or a notice and approval process, we propose in Sec.
600.10(c)(1), by reference to Sec. 600.20(d)(2), to limit required
approvals to new gainful employment programs that are the same as or
substantially similar to programs that performed poorly under the debt
measures in 34 CFR 668.7(a). As discussed more fully under the heading
Application requirements, in proposed Sec. 600.20(d) an institution
would have to obtain the Department's approval only if a gainful
employment program (1) is the same as, or substantially similar to, a
failing program that the institution voluntarily discontinued under 34
CFR 668.7(l)(1) or a program that became ineligible under 34 CFR
668.7(i), or (2) is substantially similar to a failing program under 34
CFR 668.7(h).
Reasons: The changes we are proposing in Sec. 600.10(c)(1)(i),
would clarify the approval provisions that apply to new programs by
providing references for existing approval requirements in one
regulatory provision. We are proposing in Sec. 600.10(c)(1)(ii) that
institutions must apply for approval of new programs if the Secretary
notifies them they must do so, in order to ensure that the Secretary
has sufficient discretion to assess whether a new program would serve
students effectively. For example, the Secretary would have the
discretion to notify an institution that it must apply for approval for
a new program due to material audit or program review deficiencies such
as late or unmade refunds, verification issues, failure to provide
timely notices of significant events, or other conditions that
adversely affect its administrative or financial capability, including
the performance of its gainful employment programs under the debt
measures in 34 CFR 668.7.
Our proposed approach in Sec. 600.10(c)(1) and Sec. 600.20(d)(2)
is consistent with the approach taken in the Gainful Employment--Debt
Measures final regulations in that both sets of regulations focus on
poorly performing gainful employment programs. Moreover, by publishing
these proposed regulations we are carrying out the commitment made in
the Gainful Employment--New Programs final regulations (75 FR 66669),
to establish performance-based standards for approving new programs.
Compared to the current regulations for new programs, this performance-
based approach would decrease burden for institutions and the
Department by eliminating the notice and approval process for many new
gainful employment programs. We believe that this tailored program
approval process would protect student borrowers while reducing
institutional costs and burden.
Application requirements.
Statute: With regard to eligibility for funds under title IV of the
HEA, section 481 of the HEA defines an eligible program (20 U.S.C.
1088(b)), and section 498 of the HEA provides for the eligibility of
institutions of higher education (20 U.S.C. 1099c).
Current regulations: Under the current procedures in Sec.
600.20(d)(1), an institution must notify the Department of its intent
to offer an additional educational program, or submit an application
requesting approval to expand the institution's eligibility. The
institution must provide, in a format prescribed by the Secretary, all
the information and documentation requested by the Department to make a
determination of the program's eligibility or institutional
certification. For a new gainful employment program, an institution
must notify the Department at least 90 days before the first day of
class for that program. Unless the Department alerts the institution at
least 30 days before the first day of class that the program must be
approved for title IV, HEA program purposes, the institution may
disburse title IV, HEA program funds to students enrolled in the
program. However, if an institution does not notify the Department
before the 90-day period, it must obtain the Department's approval
before disbursing title IV, HEA program funds to students in the
program. In any case, whenever a new gainful employment program must be
approved, the Department treats the institution's notice as an
application for that program. The Department may approve the
institution's application or request more information prior to making a
determination of whether to approve or deny the eligibility of the new
educational program.
In reviewing the institution's application, the Department takes
into account the following factors:
(1) The institution's demonstrated financial responsibility and
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administrative performance in operating its existing programs.
(2) Whether the additional 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 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 the additional program is sufficient.
If the Department denies an application from an institution to
offer a new education program, the Department explains how the
institution failed to demonstrate that the program is likely to lead to
gainful employment in a recognized occupation. The institution may
respond to the reasons for the denial, and request that the Department
reconsider its determination. The Department bases its determination to
deny an application on factors (2), (3) and (4).
Under Sec. 600.20(d)(2), whenever an institution notifies the
Department of its intent to offer an additional gainful employment
program, the institution must include in its notice:
A description of 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. The
description must contain any wage analysis the institution may have
performed, including any consideration of Bureau of Labor Statistics
(BLS) data related to the program;
A description of 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;
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
The date of the first day of class of the new program.
Proposed regulations: In Sec. 600.20(d)(1) we propose to eliminate
the current notice requirements in favor of a more streamlined approach
under which an institution would simply apply to establish the
eligibility of a gainful employment program.
Under proposed Sec. 600.20(d)(2), an institution that seeks to
establish the eligibility of a gainful employment program must submit
an application to the Department only if that program (1) is the same
as, or substantially similar to, a failing program that was voluntarily
discontinued by the institution under 34 CFR 668.7(l)(1) or a program
that became ineligible for title IV, HEA program funds under 34 CFR
668.7(i), or (2) is substantially similar to a program designated as a
failing program under 34 CFR 668.7(h) for any one of the two most
recent fiscal years (FYs). For this purpose, a program is substantially
similar if it has the same credential level and the same first four
digits of the CIP code as that of a failing program, a failing program
the institution voluntarily discontinued, or an ineligible program. In
proposed Sec. 600.20(d)(3), while we are not proposing to change the
core requirements under current Sec. 600.20(d)(2)(i), (d)(2)(ii),
(d)(2)(iii), or (d)(2)(iv), we would augment those requirements by
having the institution include in its application:
A wage analysis of the new program performed by or on
behalf of the institution. This wage analysis would need to include
supporting documentation based on the best data that is reasonably
available to the institution;
Compared to the failing or ineligible program, a
description of the enhancements or modifications the institution made
to improve the new program's performance under the gainful employment
standards in 34 CFR 668.7(a); and
The CIP code and credential level of the new program,
along with a description of how the institution determined that CIP
code.
We would relocate the approval provisions in current Sec.
600.20(d)(1)(ii)(E) and (F) to proposed Sec. 600.20(d)(4) and amend
those provisions. Under this section, the Department would determine
whether to approve the eligibility of a new program by taking into
account (1) the institution's demonstrated financial responsibility and
administrative capability in operating its existing programs, (2)
whether the processes used and determinations made by the institution
to offer the new program, as described by the institution in its
application, are sufficient, and (3) the performance under 34 CFR 668.7
of the institution's other gainful employment programs. Before making
that determination, the Department may request additional information
from the institution. If the Department denies the institution's
eligibility for a new gainful employment program, we inform the
institution of the reasons for the denial and the institution may
request that we reconsider our determination.
These proposed regulations reflect the approach taken in the
Gainful Employment--Debt Measures final regulations under which the
Department identifies failing programs under the debt measures for
gainful employment programs and uses those measures over time to
determine if a program becomes ineligible or when it may apply to
regain eligibility. Thus, we are proposing to require institutions to
submit applications for approval for new programs that are
substantially similar to failing programs that they offer and failing
programs that they voluntarily discontinued. Consequently, in proposed
Sec. 600.20(d)(2) an institution must apply for approval of a new
program if it is (1) substantially similar to a program designated as a
failing program for any one of the two most recent fiscal years, (2)
the same as or substantially similar to a failing program the
institution voluntarily discontinued, or, (3) the same or substantially
similar to an ineligible program that the institution offered. We note
that under 34 CFR 668.7(l) of the Gainful Employment--Debt Measures
final regulations, an institution must delay submitting an application
for two or three years if it seeks to (1) Reestablish the eligibility
of a program that became ineligible under the debt measures, (2)
reestablish the eligibility of a failing program that the institution
voluntarily discontinued, or (3) establish the eligibility of a program
substantially similar to an ineligible program. For clarity, we are
restating these requirements in proposed Sec. 600.20(d)(2)(iii). Under
these proposed regulations, an institution would not have to delay
submitting an application for a program that is substantially similar
to a failing program that an institution offers or substantially
similar to a failing program that the institution voluntarily
discontinued.
Reasons: Because we will use the debt measures under 34 CFR 668.7
to identify the gainful employment programs that are subject to
approval, it is no longer necessary to screen all potential program
applications through the current notice process. Therefore, we are
proposing to revise the application requirements in Sec. 600.20(d)(2).
We note that the Department will obtain an updated
[[Page 59868]]
listing of all gainful employment programs, including new programs,
under the annual reporting requirements in 34 CFR 668.6. Using that
information, the Department will be able to monitor whether an
institution obtained any needed approvals for new programs.
With regard to the provision in proposed Sec. 600.20(d)(2)(i)(B),
that an institution must apply for approval of a program that is
substantially similar to a program designated as a failing program for
any one of the two most recent fiscal years, we note that this approach
parallels the approach for ineligible programs under 34 CFR 668.7(i).
Under that section, a program becomes ineligible if it fails the debt
measures under 34 CFR 668.7(a) for three out of the four most recent
fiscal years. For example, a program becomes ineligible if it fails the
first and second FYs, passes the third FY, but fails the fourth FY.
This approach prevents a program that generally fails the debt measures
from remaining eligible by simply passing the measures in one year.
Likewise, under the approach proposed in these regulations, an
institution would have to apply for approval of a program that is
substantially similar to a program designated as a failing program
under 34 CFR 668.7(h) for any one of the two most recent fiscal years.
Our proposal to require a wage analysis in Sec. 600.20(d)(3)(v)
stems, in part, from comments received on the July 26th NPRM regarding
the proposal under which an institution would have to submit employer
affirmations and enrollment projections when obtaining approval of a
new program. The Department deferred addressing those comments in the
Gainful Employment--New Programs final regulations. For the benefit of
the reader, we summarize those comments in the following discussion and
respond to them to provide context and our reasons for the proposed
regulations regarding wage analysis.
Several of the commenters supported the employer affirmation
requirements as a borrower protection, but suggested that the
Department should also require (1) Employers to specify the location of
anticipated job vacancies, (2) employers to identify the number of
current or expected job vacancies and whether the vacancies are for
full-time, part-time, or temporary jobs, (3) that affirmations apply to
time periods related to the length of the program, (4) that employers
may not provide affirmations to several different institutions if the
employer does not have jobs for the graduates from all those
institutions, and (5) a standardized form to ensure that employer
affirmations are clear and uniform.
Many other commenters, however, objected to the requirement to
provide employer affirmations, stating that such a process would be
costly and cumbersome to implement for both institutions and the
Department and that the proposal requiring employer affirmations was
too vague. Some commenters were concerned that employers would not be
qualified to assess the quality of an institution's curriculum and that
employers would be unwilling to affirm job openings or expected demand
because of the liability risks of making such an affirmation and
uncertainty about future economic conditions. Several commenters
objected to the requirement that employers cannot be affiliated with
the institution to which they provide the affirmation. The commenters
stated that, as a common business practice, many schools work closely
with employers that hire their students, and that such a prohibition
would, in many cases, eliminate an institution's ability to offer new
gainful employment programs. Finally, several commenters suggested that
the Department rely on BLS data instead of employer affirmations to
evaluate expected demand because it is readily available and
institutions can confirm demand before spending substantial sums for
the development of an additional program.
With regard to enrollment projections, several commenters asked the
Department to clarify the enrollment projection requirement in proposed
Sec. 668.7(g)(1)(ii) of the July 26th NPRM. Specifically, the
commenters asked how an institution would determine projected
enrollment, how the Department would use the projections, and whether
an institution would be able to update its projections. Another
commenter stated that rather than the Department attempting to control
the number of individuals entering an occupation by limiting the
students who enroll in a particular program, students should have the
option of choosing a program as long as the program satisfies the
standards of quality established by the institution's accrediting
agency.
Although we believe that employer affirmations can be useful in
evaluating whether a program is designed to meet, or historically met,
employer and student needs and market demand, in view of the comments
that the affirmations could be costly or difficult to obtain, or that
some employers are not qualified to assess the quality of a program's
curriculum, we are not proposing in these regulations that institutions
obtain employer affirmations. Instead, we propose that an institution
must submit a wage analysis whenever it seeks to reestablish the
eligibility of an ineligible program or a failing program that it
voluntarily discontinued, or to establish the eligibility of a
substantially similar program. The wage analysis would need to include
supporting documentation based on the best data that is reasonably
available to the institution.
We believe the following elements should be included in a wage
analysis based on the best data reasonably available to the
institution:
(1) The typical first-year annual earnings of students who would
complete the program and the typical earnings of those students after a
few years of employment;
(2) The short- and long-term market demand for jobs or occupations
stemming from the training provided by the program;
(3) A sample of the types and names of the businesses or employers
most likely to employ the program's graduates; and
(4) The amount of tuition and fees the institution will charge for
the program and the typical loan debt a student would incur in
completing the program.
Data that may be reasonably available to the institution could
include BLS data or data provided by businesses or employers consulted
in developing the program. However, if the institution uses BLS data we
expect the institution to show how the BLS data correlates to, or
sufficiently represents, the likely earnings of its program graduates
and the likely demand for jobs or occupations stemming from the
program. We invite comments on the proposed wage analysis requirement,
and are particularly interested in comments on the elements to be
included in the wage analysis and the types of data that we should
require to support these elements. We believe that a wage analysis is a
necessary part of the institution's due diligence in developing or
revising a previously ineligible or a failing program that it
voluntarily discontinued, or a substantially similar program, because
it supports an overall eligibility determination that, due to the
program improvements, there is a reasonable expectation that the
program will satisfy the debt measures.
We also reject the suggestion by some commenters that asking an
institution to provide enrollment projections for an additional program
is tantamount to controlling enrollment in that program. This
information may be useful when evaluating whether a program is supposed
to replace an existing program
[[Page 59869]]
over time, and provides some measure of the relative impact that
program would have compared to the size of the institution and other
programs it offers. Nevertheless, in view of the comments that
providing estimated enrollment data may be complicated, we are not
proposing this requirement in these regulations. However, the
Department may request, as needed, additional information from an
institution about its enrollment projections on a case-by-case basis.
With regard to the other application requirements in proposed Sec.
600.20(d)(3)(vi) and (vii), the Department needs assurance from an
institution that (1) the enhancements and modifications it made to a
failing or ineligible program are likely to improve the new program's
performance under the debt measures in 34 CFR 668.7(a), and (2) it
assigned the correct CIP code to the new program. We are proposing
these regulations because we are concerned that an institution may
attempt to circumvent the two- or three-year ineligibility period for a
failing program that it voluntarily discontinued by portraying that
program in its application as a substantially similar program.
With regard to the eligibility determination provisions in proposed
Sec. 600.20(d)(4), we note that most of these provisions are the same
as those in the current regulations under Sec. 600.20(d)(1)(ii)(E) and
(F). The primary difference is in proposed Sec. 600.20(d)(4)(i)(B),
under which we would take into account the performance of an
institution's other gainful employment programs under the debt measures
in Sec. 668.7(a) in determining whether to approve the institution's
application for a new program. We believe that it would be useful to
consider the performance history of the institution's programs,
particularly since the debt measures under Sec. 668.7(a) will not be
calculated for the new program for at least three or four years.
Moreover, we believe that an institution's performance history is an
important component in determining whether to approve the eligibility
of a new gainful employment program because it provides an
understanding of the program in context, and thus, allows for a more
informed determination.
Executive Orders 12866 and 13563
Regulatory Impact Analysis
Under Executive Order 12866, the Secretary must determine whether
the regulatory action is ``significant'' and therefore subject to the
requirements of the Executive Order and subject to review by the Office
of Management and Budget (OMB). Section 3(f) of Executive Order 12866
defines a ``significant regulatory action'' as an action likely to
result in regulations that may (1) Have an annual effect on the economy
of $100 million or more, or adversely affect a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local, or tribal governments or communities in a
material way (also referred to as ``economically significant''
regulations); (2) create serious inconsistency or otherwise interfere
with an action taken or planned by another agency; (3) materially alter
the budgetary impacts of entitlement grants, user fees, or loan
programs or the rights and obligations of recipients thereof; or (4)
raise novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in the Executive
order.
It has been determined that this regulatory action is a significant
regulatory action subject to review by OMB under section 3(f)(4) of
Executive Order 12866.
In accordance with the Executive order, the Department has assessed
the potential costs and benefits of this regulatory action. The
potential costs associated with this regulatory action are those
resulting from statutory requirements and those we have determined as
necessary for administering this program effectively and efficiently.
Elsewhere in this SUPPLEMENTARY INFORMATION section we identify and
explain burdens specifically associated with information collection
requirements. See the heading
Paperwork Reduction Act of 1995
In assessing the potential costs and benefits of this regulatory
action, we have determined that the benefits of the regulatory action
justify the costs.
The Department has also reviewed these regulations pursuant to
Executive Order 13563, published on January 21, 2011 (76 FR 3821).
Executive Order 13563 is supplemental to and explicitly reaffirms the
principles, structures, and definitions governing regulatory review
established in Executive Order 12866. To the extent permitted by law,
agencies are required by Executive Order 13563 to: (1) Propose or adopt
regulations only upon a reasoned determination that their benefits
justify their costs (recognizing that some benefits and costs are
difficult to quantify); (2) tailor their regulations to impose the
least burden on society, consistent with obtaining regulatory
objectives, taking into account, among other things, and to the extent
practicable, the costs of cumulative regulations; (3) select, in
choosing among alternative regulatory approaches, those approaches that
maximize net benefits (including potential economic, environmental,
public health and safety, and other advantages; distributive impacts;
and equity); (4) the extent feasible, specify performance objectives,
rather than specifying the behavior or manner of compliance that
regulated entities must adopt; and (5) identify and assess available
alternatives to direct regulation, including providing economic
incentives to encourage the desired behavior, such as user fees or
marketable permits, or providing information upon which choices can be
made by the public.
We emphasize as well that Executive Order 13563 requires agencies
``to use the best available techniques to quantify anticipated present
and future benefits and costs as accurately as possible.'' In its
February 2, 2011, memorandum (M-11-10) on Executive Order 13563,
improving regulation and regulatory review, the Office of Information
and Regulatory Affairs has emphasized that such techniques may include
``identifying changing future compliance costs that might result from
technological innovation or anticipated behavioral changes.''
We are issuing these regulations only after making a reasoned
determination that their benefits justify their costs and we selected,
in choosing among alternative regulatory approaches, those approaches
that maximize net benefits. Based on this analysis and for the
additional reasons stated in the preamble, the Department believes that
these final regulations are consistent with the principles in Executive
Order 13563.
Need for Federal Regulatory Action
Executive Order 12866 emphasizes that ``Federal agencies should
promulgate only such regulations as are required by law, are necessary
to interpret the law, or are made necessary by compelling public need,
such as material failures of private markets to protect or improve the
health and safety of the public, the environment, or the well-being of
the American people.'' When the Gainful Employment--New Programs final
regulations were published, the final gainful employment debt measures
had not been established. The Department specified at that time that it
intended to establish performance-based requirements with regard to
approving additional programs once regulations for the gainful
employment debt measures were
[[Page 59870]]
finalized. Those debt measures have now been finalized through the
Gainful Employment--Debt Measures final regulations. Thus, these
proposed regulations are necessary to ensure that the procedures for
establishing new gainful employment programs are aligned with those
measures and our intent to target the worst-performing programs, while
allowing innovation and expansion by institutions with a track record
of establishing successful programs.
Regulatory Alternatives Considered
As part of an extensive rulemaking process over the last two years,
the Department considered a number of alternatives to these proposed
regulations.
July 26th NPRM
In the July 26th NPRM, the Department proposed a requirement that
would require an institution to submit employer affirmations and
enrollment projections in order to demonstrate the need for and value
of the program to be established. We received a number of comments
opposing our proposal. These comments noted that the fact that some
programs prepare students for nationwide opportunities could make it
difficult for institutions to obtain nonaffiliated employer
affirmations. The commenters expressed concern that the proposed
process would hamper the development of innovative programs related to
emerging fields of employment. Commenters also said that they believed
that employers would be reluctant to offer affirmations for fear of it
being construed as a commitment to hire. With regard to enrollment
projections, several commenters asked the Department to clarify the
enrollment projection requirement in proposed Sec. 668.7(g)(1)(ii) of
the July 26th NPRM. Specifically, the commenters asked how an
institution would determine projected enrollment, how the Department
would use the projections, and whether an institution would be able to
update its projections. Another commenter stated that rather than the
Department attempting to control the number of individuals entering an
occupation by limiting the students who enroll in a particular program,
students should have the option of choosing a program as long as the
program satisfies the standards of quality established by the
institution's accrediting agency.
Gainful Employment--New Programs
In the Gainful Employment--New Programs final regulations, we
established a process for institutions to notify the Department before
enrolling students in a new gainful employment program. We took this
action out of concern that some institutions might attempt to
circumvent the proposed gainful employment standards in the July 26th
NPRM by adding new programs before those standards could take effect.
These provisions were intended to serve as interim requirements until
the final gainful employment debt measures could be finalized. In those
regulations, we also indicated that we would defer our consideration of
the comments regarding employer affirmations until we finalized the
debt measures regulations.
Under the Gainful Employment--New Programs final regulations,
institutions must notify the Department within certain time limits
before starting new gainful employment programs. The notice must
describe or document: (1) How the institution determined the need for
the new program and how the program was designed to meet local market
needs, or for an online program, regional or national market needs by,
for example, consulting BLS data or State labor data systems or
consulting with State workforce agencies; (2) 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; (3) 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; (4) how
the program would be offered in connection with, or in response to, an
initiative by a governmental entity; and (5) any wage analysis it may
have performed, including any consideration of BLS wage data that is
related to the new program.
With the publication of the Gainful Employment--Debt Measures final
regulations, and as discussed elsewhere in our discussion of these
proposed regulations, we no longer believe that the notification
process is necessary and are therefore proposing a streamlined approval
process that targets only the worst-performing programs.
Benefits
We are establishing a process for institutions to apply to the
Department for approval of new programs that are (1) the same as, or
substantially similar to, failing programs that the institution
voluntarily discontinued or programs that became ineligible under the
debt measures for gainful employment programs, and (2) programs that
are substantially similar to failing programs, in part, to ensure that
institutions do not circumvent the debt measures we recently
established in the Gainful Employment--Debt Measures final regulations.
These proposed regulations clarify and streamline the review and
approval process for new gainful employment programs by eliminating the
requirement that institutions submit information for all new gainful
employment programs in order to obtain approval, and narrowing the
scope of new programs for which an institution must submit an
application for approval. This streamlined process should reduce the
administrative burden on institutions and the Department and allow
institutions with a strong track record of establishing programs that
perform well on the gainful employment debt measures to continue to
innovate and expand their program offerings without having to notify
the Department each time they offer a new program.
We also see as a key benefit of our proposal that institutions
would have to demonstrate, in applying for approval of a new program,
how they enhanced or modified the ineligible or failing program to
improve the program's performance under the debt measures. We believe
that over time, this should result in increased quality in the pool of
programs from which students can choose to attend.
Costs
The main costs of these proposed regulations derive from the
administrative and paperwork burden associated with applying for
approval of a new program. Much of the information required to be
included in an application for new program eligibility would be
generated as a school reaches its decision to develop a new program.
Accordingly, many entities wishing to continue to participate in the
title IV, HEA programs have already absorbed many of the administrative
costs that would be related to implementing these proposed regulations,
and additional costs would primarily be due to documenting the program
development process. Other institutions may have to establish a program
development process, but the regulations allow flexibility in meeting
the core requirements.
In assessing the potential economic impact of these regulations,
the
[[Page 59871]]
Department recognizes that compliance with the proposed regulations may
result in an increased workload for some institutions but overall, when
compared to the burden outlined in the July 26th NPRM and the burden
outlined in the Gainful Employment--New Programs final regulations,
there will be a net reduction in burden. Additional costs would
normally be expected to result from either the hiring of additional
employees or opportunity costs related to the reassignment of existing
staff from other activities.
In the July 26th NPRM, we estimated that the burden to institutions
of researching and establishing new programs would be 8,450 hours, or
$175,000 per year. In the Gainful Employment--New Programs final
regulations, we estimated that the burden on institutions in complying
with the notification process would be 3,591 hours, or $91,032 per
year.
As described in the Paperwork Reduction Act of 1995 section of this
preamble, following issuance of the Gainful Employment--New Programs
final regulations, the Department continued to review the estimates of
new programs that would be subject to the notice requirement in those
regulations. Based on that analysis and specifically, an increase in
the estimated number of new program applications, we have revised the
estimated burden of the Gainful Employment--New Programs final
regulations from 3,591 hours to 12,343 hours. Based on a wage rate of
$25.35, this results in a revised estimate of $312,895 for complying
with the Gainful Employment--New Programs final regulations.
The changes proposed in this NPRM are expected to reduce burden by
7,068 hours to an estimated 5,275 hours, primarily by restricting the
application requirement to programs that are the same as or
substantially similar to failing programs voluntarily discontinued or
ineligible programs, or the same as a failing program under 34 CFR
668.7(h). Thus, the estimated cost is also reduced to $133,721.
Given the limited data available, the Department is particularly
interested in comments and supporting information related to possible
burden stemming from these proposed regulations. Estimates included in
this notice will be reevaluated based on any information received
during the public comment period.
Net Budget Impacts
The proposed regulations are not estimated to have a net budget
impact as the changes in the process for establishing new programs is
not expected to change the demand for programs. While the process to
establish new programs will be easier for institutions with a track
record of successful programs, it is only in their interest to
establish new programs if the new programs will pass the gainful
employment debt measures. Program expansion and contraction occur on a
regular basis and the change in the process to establish eligibility is
not expected to affect capacity in a way that would impact the Federal
student aid programs.
Assumptions, Limitations, and Data Sources
In developing these estimates, a wide range of data sources was
used, including data from the National Student Loan Data System
(NSLDS); operational and financial data from Department of Education
systems; and data from a range of surveys conducted by the National
Center for Education Statistics (NCES) such as the 2007-2008 National
Postsecondary Student Aid Study (NPSAS), the 2008-09 Integrated
Postsecondary Education Data System (IPEDS), and the 2009 follow-up to
the 2004 Beginning Postsecondary Students Longitudinal Study (BPS).
Data from other sources, such as the U.S. Census Bureau and the
Missouri Department of Higher Education, were also used. The estimates
for the number of programs affected were derived from the estimates
described in the Gainful Employment--Debt Measures final regulations.
Data on administrative burden at participating institutions are
extremely limited; accordingly, the Department is interested in
receiving comments in this area. As additional data become available,
the Department may update these estimates.
We identify and explain burdens specifically associated with
information collection requirements in the Paperwork Reduction Act of
1995 section of the preamble.
Accounting Statement
As required by OMB Circular A-4 (available at http://www.whitehouse.gov/sites/default/files/omb/assets/omb/circulars/a004/a-4.pdf, in Table A as follows, we have prepared an accounting statement
showing the classification of the expenditures associated with the
provisions of these regulations. This table provides our best estimate
of the changes in Federal student aid payments as a result of these
regulations. Expenditures are classified as transfers from the Federal
student aid programs to students.
Table A--Accounting Statement: Classification of Estimated Expenditures
[In millions]
------------------------------------------------------------------------
Category Costs
------------------------------------------------------------------------
Reduction in Cost of Paperwork ($.13).
Burden.
Category............................ Transfers.
Annualized Monetized Transfers...... $0.
From Whom To Whom?.................. N/A.
------------------------------------------------------------------------
Clarity of the Regulations
Executive Order 12866 and the Presidential memorandum on ``Plain
Language in Government Writing'' require each agency to write
regulations that are easy to understand.
The Secretary invites comments on how to make these proposed
regulations easier to understand, including answers to questions such
as the following:
Are the requirements in the proposed regulations clearly
stated?
Do the proposed regulations contain technical terms or
other wording that interferes with their clarity?
Does the format of the proposed regulations (grouping and
order of sections, use of headings, paragraphing, etc.) aid or reduce
their clarity?
Would the proposed regulations be easier to understand if
we divided them into more (but shorter) sections? (A ``section'' is
preceded by the symbol ``Sec. '' and a numbered heading; for example,
Sec. 600.2 Definitions.)
Could the description of the proposed regulations in the
SUPPLEMENTARY INFORMATION section of this preamble be more helpful in
making the proposed regulations easier to understand? If so, how?
[[Page 59872]]
What else could we do to make the proposed regulations
easier to understand?
To send any comments that concern how the Department could make
these proposed regulations easier to understand, see the instructions
in the ADDRESSES section of this preamble.
Regulatory Flexibility Act Certification
The Secretary certifies that these proposed regulations would not
have a significant economic impact on a substantial number of small
entities.
These regulations would affect institutions that participate in
title IV, HEA programs and loan borrowers. The definition of ``small
entity'' in the Regulatory Flexibility Act encompasses ``small
businesses,'' ``small organizations,'' and ``small governmental
jurisdictions.'' The definition of ``small business'' comes from the
definition of ``small business concern'' under section 3 of the Small
Business Act as well as regulations issued by the U.S. Small Business
Administration (SBA). The SBA defines a ``small business concern'' as
one that is ``organized for profit; has a place of business in the
U.S.; operates primarily within the U.S. or makes a significant
contribution to the U.S. economy through payment of taxes or use of
American products, materials or labor * * *'' ``Small organizations,''
are further defined as any ``not-for-profit enterprise that is
independently owned and operated and not dominant in its field.'' The
definition of ``small entity'' also includes ``small governmental
jurisdictions,'' which includes ``school districts with a population
less than 50,000.''
Data from the Integrated Postsecondary Education Data System
(IPEDS) indicate that roughly 4,379 institutions participating in the
Federal student assistance programs meet the definition of ``small
entities.'' The following table provides the distribution of
institutions and students by revenue category and institutional
control.
[GRAPHIC] [TIFF OMITTED] TP27SE11.007
Approximately two-thirds of these institutions are for-profit
schools that would be subject to these proposed regulations. Other
affected small institutions include small community colleges and
tribally controlled schools. The impact of the regulations on
individuals is not subject to the Regulatory Flexibility Act.
We estimated in the Gainful Employment--Debt Measures final
regulations that approximately 3 percent of programs at small entities
across all sectors would fail the measures at least once. The changes
to the process for establishing new gainful employment programs that we
are proposing in this NPRM would eliminate the notice requirement for
the vast majority of programs at small entities because most gainful
employment programs offered at those institutions are expected to pass
the gainful employment measures. For institutions that choose to pursue
establishing the title IV, HEA eligibility for a new program associated
with a program that failed the gainful employment measures, the
proposed regulations consolidate the notice and application process
from the Gainful Employment--New Programs regulations and build on
existing processes for determining if the Department will approve the
new program.
As detailed in the Paperwork Reduction Act of 1995 section of this
preamble, institutions would only have to apply to establish gainful
employment programs that are the same as or substantially similar to
programs that are ineligible or that have been voluntarily withdrawn or
programs that are substantially similar to failing programs. There are
no explicit growth limitations or employer verification requirements.
The estimated total hours, costs, and requirements applicable to small
entities from these provisions on an annual basis are 3,165 hours and
$80,233, based on a wage rate of $25.35. This represents a decrease
from the revised estimated burden associated with the Gainful
Employment--New Programs regulations of 7,406 hours and $187,737.
The proposed regulations are unlikely to conflict with or duplicate
existing Federal regulations.
Alternatives Considered
No alternative provisions were considered that would target small
institutions with exemptions or additional time for compliance as this
provision builds on existing industry
[[Page 59873]]
practices. The Secretary invites comments from small institutions and
other affected entities as to whether they believed the proposed
changes would have a significant economic impact on them and requests
evidence to support that belief.
Paperwork Reduction Act of 1995
As part of its continuing effort to reduce paperwork and respondent
burden, the Department conducts a preclearance consultation program to
provide the general public and Federal agencies with an opportunity to
comment on proposed and continuing collections of information in
accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C.
3506(c)(2)(A)). This helps ensure that the public understands the
Department's collection instructions; respondents can provide the
requested data in the desired format; reporting burden (time and
financial resources) is minimized; collection instruments are clearly
understood; and the Department can properly assess the impact of
collection requirements on respondents.
Proposed Sec. 600.20 contains information collection requirements.
Under the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), the
Department has submitted a copy of this section to OMB for its review.
A Federal agency cannot conduct or sponsor a collection of
information unless OMB approves the collection under the PRA and the
corresponding information collection instrument displays a currently
valid OMB control number. Notwithstanding any other provision of law,
no person is required to comply with, or is subject to penalty for
failure to comply with, a collection of information if the collection
instrument does not display a currently valid OMB control number.
In the final regulations we will display the control number
assigned by OMB to any information collection requirement in these
proposed regulations and adopted in the final regulations.
Estimating the Number of New Gainful Employment Programs
Since the publication of the Gainful Employment--New Program final
regulations, we have continued to analyze the number of gainful
employment programs that have been submitted to the Department for
approval. We now estimate, based on the following information, that
institutions will submit a total of 4,527 new gainful employment
programs to the Department for approval annually.
With respect to nondegree programs, in 2009, there were 4,852 new
gainful employment nondegree programs submitted to the Department by
institutions. In 2010, there were 3,318 new gainful employment
nondegree programs submitted to the Department for approval. We have
averaged these two numbers to estimate the annual number of new gainful
employment nondegree programs established by institutions to be 4,085
(4,852 plus 3,318 equals 8,170, which we then divided by 2). The total
number of new gainful employment nondegree programs by institutional
type is 540 new nondegree programs at proprietary institutions; 433 new
nondegree programs at private nonprofit institutions; and 3,112 new
nondegree programs at public institutions.
With respect to degree programs, we do not currently maintain
records concerning the number of new gainful employment degree programs
that are established by institutions on an annual basis. Previously, we
have only required that institutions report new degree programs
periodically at the time of recertification. We determined from a
review of the June 13, 2011 Gainful Employment--Debt Measures final
regulations (76 FR 34386, June 13, 2011) that 55 percent of the gainful
employment programs at proprietary institutions are nondegree programs,
and that 45 percent are degree programs. As described earlier, we
estimate that proprietary institutions will seek to establish 540 new
gainful employment nondegree programs on an annual basis. If the 540
new nondegree programs make up 55 percent of the total number of new
nondegree programs at proprietary institutions, then the total number
of new programs established by such institutions would be 982 (540
divided by 0.55 equals 982). Therefore, we estimate that proprietary
institutions will seek to establish a total of 442 new gainful
employment degree programs on an annual basis (982 minus 540 equals
442).
The sum of the number of new gainful employment nondegree programs
established annually (4,085) and new gainful employment degree programs
established annually (442) is 4,527. Thus, we estimate that
institutions will be establishing a total of 4,527 new gainful
employment programs annually.
Proposed Sec. 600.20--Application procedures for establishing,
reestablishing, maintaining, or expanding program eligibility and
institutional eligibility and certification.
The proposed regulations eliminate the current notice requirements
in favor of a more streamlined approach under which an institution
would simply apply to establish the eligibility of certain new gainful
employment programs rather than all new gainful employment programs. As
a result, there will be fewer submissions for approval of new programs
under these proposed regulations, as compared to the current
notification requirements that apply to all new gainful employment
programs.
Section 600.20(d)(2)
In proposed Sec. 600.20(d)(2), an institution that seeks to
establish the eligibility of a gainful employment program must submit
an application to the Department, except as provided under Sec.
600.10(c)(1), only if that program (1) is the same as, or substantially
similar to, a failing program that was voluntarily discontinued by the
institution under 34 CFR 668.7(l)(1) or a program that became
ineligible for title IV, HEA program funds under 34 CFR 668.7(i), or
(2) is substantially similar to a failing program designated as a
failing program under 34 CFR 668.7(h) for any one of the two most
recent fiscal years. For this purpose, a program is substantially
similar if it has the same credential level and the same first four
digits of the CIP code as that of a failing program, a failing program
the institution voluntarily discontinued, or an ineligible program. The
application and eligibility determination requirements are set forth in
Sec. 600.20(d)(3) and (d)(4), respectively.
Section 600.20(d)(3)
Proposed Sec. 600.20(d)(3) specifies the information that an
institution that seeks to establish the eligibility of a program that
leads to gainful employment under Sec. 600.20(d)(2) must include in
its application. In this proposed regulation, we are retaining the core
requirements for information to be reported about new programs under
current Sec. 600.20(d)(2)(i), (d)(2)(ii), (d)(2)(iii), and (d)(2)(iv),
and we propose to augment those requirements by having the institution
include the following additional information in its application: (1) A
wage analysis of the new program performed by or on behalf of the
institution (Sec. 600.20(d)(3)(v)); (2) compared to the failing or
ineligible program, a description of the enhancements or modifications
the institution made to improve the new program's performance under the
gainful employment standards in Sec. 668.7(a) (Sec.
600.20(d)(3)(vi)); and (3) the CIP code and credential level of the new
program, along with a description of how the institution determined
that CIP code (Sec. 600.20(d)(3)(vii)).
[[Page 59874]]
In the Gainful Employment--New Programs final regulations, we
estimated that the burden associated with notifying the Department
about a new gainful employment program would be an average of 2.5
hours. With respect to the application requirements under the proposed
regulations, we anticipate a small additional amount of burden
associated with the collection of a wage analysis of the new program
under proposed Sec. 600.20(d)(3)(v), a description of the enhancements
or modifications the institution made to improve the new program's
performance under proposed Sec. 600.20(d)(3)(vi), and the requirement
that an application include the CIP code, the credential level, and a
description of how the institution determined the CIP code under
proposed Sec. 600.20(d)(3)(vii). As a result of these proposed
changes, we expect the per unit burden for each submission to increase
from an average of 2.5 hours to 3 hours per submission.
We are estimating the application burden for new gainful employment
programs based upon the type of institution and the type of program. We
begin this analysis by adjusting the number of programs in each group
to remove the programs that are exempt from the debt measures under
Sec. 668.7(d)(2) (i.e., programs with 30 or fewer borrowers or
completers), because those programs cannot trigger an application
requirement for an institution (the remaining programs are ones to
which the debt measures apply). We then determine how many of those
remaining programs will fail the debt measures at least once. We
estimate that this is the number of new programs that would need to
submit an application to the Secretary for approval under proposed
Sec. 600.20(d)(2).
We estimate that the number of programs that fail the debt measures
at least once will be comparable to the number of new programs that are
the same as or substantially similar to failing programs that an
institution voluntarily discontinued or ineligible programs, or
substantially similar to failing programs because we believe schools
will generally aim to modify or replace programs that fail. We
understand that some institutions may already have other programs that
are providing better outcomes under the debt measures and therefore may
not replace a program that was less successful under those measures. We
also believe that some institutions may decide to focus on establishing
new gainful employment programs that are not substantially similar to a
program that did not perform well on the debt measures. In these cases,
an institution would not be required to obtain approval of the new
program under proposed Sec. 600.20. On the other side of this
equation, however, we also believe that some institutions will seek to
offer new programs that are the same as or substantially similar to
failing programs the institution voluntarily discontinued or were
determined ineligible or substantially similar to failing programs. In
these cases, an institution would be required to obtain the Secretary's
approval under proposed Sec. 600.20. On balance, we believe that for
every gainful employment program that fails the debt measures at least
once, there will be a new program established that will need to obtain
approval under the application requirements. We are using this same
estimate across all types of affected entities (proprietary
institutions, private nonprofit institutions, and public institutions).
The amount of burden we are estimating for each of these sectors under
these proposed regulations follows.
Nondegree Programs--Proprietary Institutions. Based on the Gainful
Employment--Debt Measures final regulations analysis in Table 9-A (76
FR 34386, 34474) (Table 9-A), we estimate that there are 7,213 existing
gainful employment nondegree programs at proprietary institutions
(13,114 total gainful employment programs times 55 percent that are
nondegree programs equals 7,213 nondegree programs). Based upon the
Gainful Employment--Debt Measures final regulations analysis in Table 1
(76 FR 34386, 34457) (Table 1), we project that 39.5 percent of
existing nondegree programs at proprietary institutions will be exempt
from the debt measures because they have 30 or fewer borrowers or
completers and that the remaining 60.5 percent of the gainful
employment nondegree programs will be subject to the debt measures;
therefore, 4,364 nondegree programs (7,213 times 0.605 equals 4,364)
will be subject to the debt measures. Table 9-A indicates that 18
percent of proprietary nondegree programs will fail or become
ineligible for a total of 786 programs (4,364 times 0.18 equals 786).
Therefore, for the reasons discussed previously, we estimate that
proprietary institutions would apply for approval for 786 new gainful
employment nondegree programs under proposed Sec. 600.20(d). We
estimate that on average, each application would take 3 hours to
prepare and submit to the Department; therefore, the total amount of
burden for proprietary institutions to submit applications for new
gainful employment nondegree programs would equal 2,358 hours under OMB
control number 1845-0012.
Nondegree Programs--Private Nonprofit Institutions.
Based on the analysis in Table 9-A, we estimate that there are
2,790 existing gainful employment nondegree programs at private
nonprofit institutions (5,073 total gainful employment programs times
55 percent that are nondegree programs equals 2,790 nondegree
programs). Based upon the analysis in Table 1, we project that 75.6
percent of these programs will be exempt from the debt measures because
they have 30 or fewer borrowers or completers and that 24.4 percent of
these programs will be subject to the debt measures. Therefore, 681
gainful employment nondegree programs at private nonprofit institutions
(2,790 times 0.244 equals 681) will be subject to the debt measures.
Table 9-A indicates that 5 percent of these programs will fail or
become ineligible for a total of 34 programs (681 times 0.05 equals
34). Therefore, for the reasons discussed previously, we estimate that
private nonprofit institutions would apply for approval for 34 new
gainful employment nondegree programs under proposed Sec.
600.20(d)(2).
We estimate that, on average, each application would take 3 hours
to prepare and submit to the Department; therefore, the total burden
for private nonprofit institutions to submit applications for new
gainful employment nondegree would equal 102 hours under OMB control
1845-0012.
Nondegree Programs--Public Institutions.
Based upon the analysis in Table 9-A, we estimate that there are
20,470 existing gainful employment nondegree programs at public
institutions (37,218 total gainful employment programs times 55 percent
that are nondegree programs equals 20,470 nondegree programs). Based
upon the analysis in Table 1, we project that 68.1 percent of these
programs will be exempt from the debt measures because they have 30 or
fewer borrowers or completers and that the remaining 31.9 percent of
these programs will be subject to the debt measures; therefore, 6,530
nondegree programs at public institutions (20,470 times 0.319 equals
6,530) will be subject to the debt measures.
Table 9-A indicates that 3 percent of gainful employment nondegree
programs at public institutions will fail or become ineligible for a
total of 196 programs (6,530 times 0.03 equals 196). Therefore, for the
reasons discussed previously, we estimate that public
[[Page 59875]]
institutions would apply for approval for 196 gainful employment
nondegree programs under proposed Sec. 600.20(d)(2). We estimate that,
on average, each application would take 3 hours to prepare and submit
to the Department; therefore, the total amount of burden for public
institutions to submit applications for new gainful employment
nondegree programs would equal 588 hours under OMB control number 1845-
0012.
Collectively, we project that the annual burden for the submission
of applications for new gainful employment nondegree programs under
proposed Sec. 600.20(d) would be 3,048 hours under OMB 1845-0012.
Degree Programs.
Based upon the analysis in Table 9-A, we estimate that there are
5,901 existing gainful employment degree programs at proprietary
institutions (13,114 total gainful employment programs at proprietary
institutions times 45 percent that are degree programs equals 5,901
degree programs). Based upon the analysis in Table 1, we project that
39.5 percent will be exempt from the debt measures because they have 30
or fewer borrowers or completers and that the remaining 60.5 percent of
these programs will be subject to the debt measures; therefore, 3,570
degree programs (5,901 times 0.605 equals 3,570) will be subject to the
debt measures.
Table 9-A indicates that 18 percent of degree programs at
proprietary schools will fail or become ineligible for a total of 643
programs (3,570 times 0.18 equals 643). Therefore, for the reasons
described previously, we estimate that proprietary institutions would
apply for approval for 643 new gainful employment degree programs under
proposed Sec. 600.20(d)(2).
As indicated previously, given the additional items that an
institution must include in its application, we have adjusted the
amount of burden per submission; therefore, we estimate that the
average amount of time to prepare and submit the application would
increase from 1.75 hours, as described in the Gainful Employment--New
Programs final regulations, to 2.25 hours per submission under these
proposed regulations.
We estimate that the burden for institutions to submit individual
applications for 643 new degree programs would be 1,447 hours (643
individual submissions times 2.25 hours per submission equals 1,447
hours) under OMB control number 1845-0012. Collectively, we estimate
that the annual burden on proprietary institutions for gainful
employment degree program submissions under proposed Sec. 600.20(d)
would be 1,447 hours under OMB control number 1845-0012.
Section 600.20(d)(4)(ii)
The proposed regulations in Sec. 600.20(d)(4)(ii) provide that the
Secretary may request additional information from an institution that
has submitted an application for approval of a new program before
making an eligibility determination. Therefore, we have estimated the
amount of reporting burden associated with providing the additional
information. As we did with our analysis of the burden under proposed
Sec. 600.20(d)(3), we provide the following sector-by-sector analysis
of the burden for nondegree programs under the provisions of Sec.
600.20(d)(4)(ii).
Nondegree Programs--Proprietary Institutions.
As noted previously, we estimate that proprietary institutions
would apply for approval for 786 new gainful employment nondegree
programs under proposed Sec. 600.20(d). We further estimate that of
those 786 new programs, the Secretary will request additional
information for 24 percent. We estimate that for 10 percent of the
applications, the request will be for minor clarifications and would
likely be resolved through a phone call or e-mail to institutional
staff. The additional increase in burden associated with these minor
clarifications would average an additional 0.5 hours per contact for a
total increase of 40 hours under OMB control number 1845-0012 (786
applications times 0.1 equals 79 requests for minor clarifications,
times 0.5 hours per request equals 40 hours).
We estimate that for 14 percent of the applications, an institution
would have to submit substantive additional information in response to
the Secretary's request. The additional increase in burden associated
with responding to a request for additional substantive information
would average an additional 3 hours per request for a total increase of
330 hours under OMB control number 1845-0012 (786 applications times
0.14 equals 110 requests for substantive additional information, times
3 hours per request equals 330 hours).
Nondegree programs--Private Nonprofit Institutions.
As noted previously, we estimate that private nonprofit
institutions would apply for approval for 34 new gainful employment
nondegree programs under proposed Sec. 600.20(d)(2). We further
estimate that of those 34 new programs, the Secretary will request
additional information for 24 percent. We estimate that for 10 percent
of the applications, the request will be for minor clarifications and
would likely be resolved through a phone call or e-mail to
institutional staff. The additional increase in burden associated with
these minor clarifications would average an additional 0.5 hours per
contact for a total increase of 2 hours under OMB control number 1845-
0012 (34 applications times 0.10 equals 3 requests for minor
clarifications times 0.5 hours per request equals 2 hours).
We estimate that for 14 percent of the applications, an institution
would have to submit substantive additional information in response to
the Secretary's request. The additional increase in burden associated
with responding to a request for additional substantive information
would average an additional 3 hours per request for a total increase of
15 hours under OMB control number 1845-0012 (34 applications times 0.14
equals 5 requests for substantive additional information, times 3 hours
per request equals 15 hours).
Nondegree Programs--Public Institutions.
As noted previously, we estimate that public institutions would
apply for approval for 196 new gainful employment nondegree programs
under proposed Sec. 600.20(d)(2). We further estimate that of those
196 new programs, the Secretary will request additional information for
24 percent. We estimate that for 10 percent of the applications, the
request will be for minor clarifications and would likely be resolved
through a phone call or e-mail to institutional staff. The additional
increase in burden associated with these minor clarifications would
average an additional 0.5 hours per contact for a total increase of 10
hours under OMB control number 1845-0012 (196 applications times 0.10
equals 20 requests for minor clarifications, times 0.5 hours per
request equals 10 hours).
We estimate that for 14 percent of the applications, an institution
would have to submit additional substantive information in response to
the Secretary's request. The additional increase in burden associated
with responding to a request for additional substantive information
would average an additional 3 hours per request for a total increase of
81 hours under OMB control number 1845-0012 (196 applications times
0.14 equals 27 requests for substantive additional information, times 3
hours per request equals 81 hours).
Collectively, we estimate that the annual burden hours associated
with
[[Page 59876]]
the submission of additional information after being contacted by the
Department regarding new gainful employment nondegree programs would be
478 hours under OMB control number 1845-0012.
Degree Programs.
As stated previously, we estimate that proprietary institutions
would apply for approval of 643 new gainful employment degree programs
under proposed Sec. 600.20(d)(2). We further estimate that of those
643 new programs, the Secretary will request additional information for
24 percent. We estimate that for 10 percent of the applications, the
request will be for minor clarifications and would likely be resolved
through a phone call or e-mail to institutional staff. The additional
increase in burden associated with these minor clarifications would
average an additional 0.5 hours per contact for a total increase of 32
hours under OMB control number 1845-0012 (643 applications times 0.10
equals 64 requests for minor clarifications, times 0.5 hours per
request equals 32 hours). We estimate that for 14 percent of the
applications, an institution would have to submit substantive
additional information in response to the Secretary's request. The
additional increase in burden associated with responding to a request
for additional substantive information request would average an
additional 3 hours per request for a total increase of 270 hours under
OMB control number 1845-0012 (643 applications times 0.14 equals 90
requests for substantive additional information, times 3 hours per
request equals 270 hours).
Collectively, we estimate that the annual burden hours associated
with the submission of additional information after being contacted by
the Department regarding new degree programs would be 302 hours under
OMB control number 1845-0012.
In total, the proposed regulations in Sec. 600.20(d) would result
in a reduction in burden under OMB 1845-0012 to 5,275 hours. This is
because we have revised the currently approved burden of 3,591 hours
under OMB 1845-0012 to 12,343 hours of burden. To attain this result,
we multiplied 4,085 nondegree programs by 2.5 hours per program, which
equals 10,213 hours. To this figure, we added 774 hours of burden (442
degree programs times 1.75 hours per program) for a sum of 10,987 hours
of burden. To this sum we added the burden associated with the
reporting of additional information for 10 percent of the 4,527 new
programs (452 programs), which we estimated would be 1,356 hours (452
times 3). This results in 12,343 hours of burden. The revision was due
to the use of more recent data regarding new gainful employment
nondegree program applications for 2009 and 2010. Under these proposed
regulations to streamline and limit the scope of affected programs, the
burden associated with the application process will decrease by 7,068
hours under OMB control number 1845-0012.
Collection of Information
------------------------------------------------------------------------
Information
Regulatory section collection Collection
------------------------------------------------------------------------
600.20.................... The currently OMB 1845-0012.
approved burden for The burden has been
this section has revised from 3,591
been revised based hours to 12,343
upon newer data hours based upon new
which increases the nondegree program
burden from the applications
currently approved received in 2009 and
3,591 hours to 2010. These proposed
12,343 hours. This regulations would
proposed regulatory result in a decrease
section streamlines in burden to 5,275
the application hours, a decrease of
requirement for new 7,068 hours.
gainful employment
programs and limits
the need to submit
an application to
new programs that
are the same as or
substantially
similar to failing
programs that are
voluntarily
discontinued by the
institution or
programs that became
ineligible, or
programs that are
substantially
similar to a failing
program. The
proposed regulations
also require
institutions to
provide additional
information about a
new program when
requested by the
Secretary.
------------------------------------------------------------------------
Assessment of Educational Impact
In accordance with section 411 of the General Education Provisions
Act, 20 U.S.C. 1221e-4, the Secretary particularly requests comments on
whether these proposed regulations would require transmission of
information that any other agency or authority of the United States
gathers or makes available.
Accessible Format: Individuals with disabilities can obtain this
document in an accessible format (e.g., braille, large print,
audiotape, or compact disc) on request to the program contact person
listed under FOR FURTHER INFORMATION CONTACT.
Electronic Access to This Document: The official version of this
document is the document published in the Federal Register. Free
Internet access to the official edition of the Federal Register and the
Code of Federal Regulations is available via the Federal Digital System
at: http://www.gpo.gov/fdsys. At this site you can view this document,
as well as all other documents of this Department published in the
Federal Register, in text or Adobe Portable Document Format (PDF). To
use PDF you must have Adobe Acrobat Reader, which is available free at
the site.
You may also access documents of the Department published in the
Federal Register by using the article search feature at: http://www.federalregister.gov. Specifically, through the advanced search
feature at this site, you can limit your search to documents published
by the Department. You may also view this document in text or PDF at
the following site: http://www2.ed.gov/about/offices/list/ope/policy.html.
(Catalog of Federal Domestic Assistance Numbers: 84.007 FSEOG;
84.032 Federal Family Education Loan Program; 84.033 Federal Work-
Study Program; 84.037 Federal Perkins Loan Program; 84.063 Federal
Pell Grant Program; 84.069 LEAP; 84.268 William D. Ford Federal
Direct Loan Program; 84.375 Academic Competitiveness Grant (ACG);
84.376 National Science and Mathematics Access to Retain Talent
(National SMART); 84.379 TEACH Grant Program)
List of Subjects in 34 CFR Part 600
Colleges and universities, Foreign relations, Grant programs--
education, Loan programs--education, Reporting and recordkeeping
requirements, Selective Service System, Student aid, Vocational
education.
Dated: September 20, 2011.
Arne Duncan,
Secretary of Education.
For the reasons discussed in the preamble, the Secretary proposes
to amend part 600 of title 34 of the Code of Federal Regulations as
follows:
PART 600--INSTITUTIONAL ELIGIBILITY UNDER THE HIGHER EDUCATION ACT
OF 1965, AS AMENDED
1. The authority citation for part 600 continues to read as
follows:
[[Page 59877]]
Authority: 20 U.S.C. 1001, 1002, 1003, 1088, 1091, 1094, 1099b,
and 1099c, unless otherwise noted.
2. Section 600.2 is amended by adding, in alphabetical order, the
definition of ``Classification of instructional programs or CIP'' to
read as follows:
Sec. 600.2 Definitions.
* * * * *
Classification of instructional programs or CIP: A taxonomy of
instructional program classifications and descriptions developed by the
U.S. Department of Education's National Center for Education
Statistics.
* * * * *
3. Section 600.10 is amended by:
A. Revising paragraph (c)(1).
B. Removing paragraph (c)(2).
C. Redesignating paragraph (c)(3) as paragraph (c)(2).
The revision reads as follows:
Sec. 600.10 Date, extent, duration, and consequence of eligibility.
* * * * *
(c) New educational programs. (1) An eligible institution that
seeks to establish the eligibility of an educational program after it
has been designated as an eligible institution by the Secretary does
not have to apply to the Secretary to have that program approved
unless--
(i) The institution is required to obtain the Secretary's approval
under the provisions in Sec. 600.20(c)(2), Sec. 600.20(d)(2), 34 CFR
668.10(b), 34 CFR 668.14(a)(1), or 34 CFR 668.232; or
(ii) The Secretary notifies the institution that it must apply for
approval.
* * * * *
4. Section 600.20 is amended by:
A. Revising the section heading.
B. Revising paragraph (d).
The revisions read as follows:
Sec. 600.20 Application procedures for establishing, reestablishing,
maintaining, or expanding program eligibility or institutional
eligibility and certification.
* * * * *
(d) Application requirements. (1) General. To satisfy the
requirements of paragraphs (a), (b), and (c) of this section, an
institution must submit an application to the Secretary in a format
prescribed by the Secretary for that purpose and provide all the
information and documentation requested by the Secretary to make a
determination of its eligibility and certification.
(2) Gainful employment programs. (i) Except as provided under Sec.
600.10(c)(1), an institution that seeks to establish the eligibility of
a program that leads to gainful employment, as described under 34 CFR
668.7(a)(2)(i), must apply to the Secretary only if the program is--
(A) The same as, or substantially similar to, a program that--
(1) Was a failing program that was voluntarily discontinued by the
institution under 34 CFR 668.7(l)(1); or
(2) Became ineligible for title IV, HEA program funds under 34 CFR
668.7(i); or
(B) Substantially similar to a program designated as a failing
program under 34 CFR 668.7(h) for any one of the two most recent fiscal
years.
(ii) For the purposes of this section, a program is substantially
similar if it has the same credential level and the same first four
digits of the CIP code as that of a failing program, a failing program
the institution voluntarily discontinued, or an ineligible program.
(iii) An institution that submits an application for a gainful
employment program must obtain the Secretary's approval before
providing title IV, HEA program funds to students enrolled in the
program. However, an institution may not apply to reestablish the
eligibility of a failing program that was voluntarily discontinued by
the institution, or a program that is the same as or substantially
similar to an ineligible program, until the ineligibility period for
that program has expired, as provided under 34 CFR 668.7(l)(2).
(3) Application. An institution that seeks to establish the
eligibility of a program that leads to gainful employment under
paragraph (d)(2) of this section must include in its application--
(i) A description of how the institution determined the need for
the new gainful employment program and how the program was designed to
meet local market needs, or for an online program, regional or national
market needs;
(ii) A description of how the new 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) Documentation that the new 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;
(iv) The date of the first day of class of the new program.
(v) A wage analysis of the new program performed by or on behalf of
the institution. The wage analysis must include supporting
documentation based on the best data that is reasonably available to
the institution;
(vi) Compared to the failing or ineligible program, a description
of the enhancements or modifications the institution made to improve
the new program's performance under the gainful employment standards in
34 CFR 668.7(a); and
(vii) The CIP code and credential level of the new program, along
with a description of how the institution determined that CIP code.
(4) Eligibility determination. (i) In determining whether to
approve the eligibility of a new gainful employment program, the
Secretary takes into account--
(A) The institution's demonstrated financial responsibility and
administrative capability in operating its existing programs;
(B) Based on the information provided by the institution under
paragraph (d)(3) of this section, whether the processes used and
determinations made by the institution to offer the program are
sufficient; and
(C) The performance under 34 CFR 668.7 of the institution's other
gainful employment programs.
(ii) The Secretary may request additional information from the
institution before making an eligibility determination.
(iii) If the Secretary denies the institution's eligibility for a
new gainful employment program, the Secretary informs the institution
of the reasons for the denial. The institution may request that the
Secretary reconsider the determination.
* * * * *
[FR Doc. 2011-24454 Filed 9-26-11; 8:45 am]
BILLING CODE 4000-01-P