Program Integrity and Improvement, 48597-48617 [2016-17068]

Agencies

• DEPARTMENT OF EDUCATION

[Federal Register Volume 81, Number 142 (Monday, July 25, 2016)]
[Proposed Rules]
[Pages 48597-48617]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-17068]



[[Page 48597]]

Vol. 81

Monday,

No. 142

July 25, 2016

Part IV





Department of Education





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34 CFR Parts 600 and 668





Program Integrity and Improvement; Proposed Rule

Federal Register / Vol. 81 , No. 142 / Monday, July 25, 2016 / 
Proposed Rules

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DEPARTMENT OF EDUCATION

34 CFR Parts 600 and 668

[Docket ID ED-2016-OPE-0050]
RIN 1840-AD20


Program Integrity and Improvement

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Secretary proposes to amend the State authorization 
sections of the Institutional Eligibility regulations issued under the 
Higher Education Act of 1965, as amended (HEA). In addition, the 
Secretary proposes to amend the Student Assistance General Provisions 
regulations issued under the HEA, including the addition of a new 
section on required institutional disclosures for distance education 
and correspondence courses.

DATES: We must receive your comments on or before August 24, 2016.

ADDRESSES: Submit your comments through the Federal eRulemaking Portal 
or via postal mail, commercial delivery, or hand delivery. We will not 
accept comments submitted by fax or by email or those submitted after 
the comment period. To ensure that we do not receive duplicate copies, 
please submit your comments only once. In addition, please include the 
Docket ID at the top of your comments.
    If you are submitting comments electronically, we strongly 
encourage you to submit any comments or attachments in Microsoft Word 
format. If you must submit a comment in Adobe Portable Document Format 
(PDF), we strongly encourage you to convert the PDF to print-to-PDF 
format or to use some other commonly used searchable text format. 
Please do not submit the PDF in a scanned format. Using a print-to-PDF 
format allows the Department of Education (Department) to 
electronically search and copy certain portions of your submissions.
     Federal eRulemaking Portal: Go to 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 ``help'' tab.
     Postal Mail, Commercial Delivery, or Hand Delivery: The 
Department strongly encourages commenters to submit their comments 
electronically. However, if you mail or deliver your comments about the 
proposed regulations, address them to Sophia McArdle, U.S. Department 
of Education, 400 Maryland Ave. SW., Room 6W256, Washington, DC 20202. 
Scott Filter, U.S. Department of Education, 400 Maryland Ave. SW., Room 
6W253, Washington, DC 20202.
    Privacy Note: The Department's policy is to make all comments 
received from members of the public available for public viewing in 
their entirety on the Federal eRulemaking Portal at 
www.regulations.gov. Therefore, commenters should be careful to include 
in their comments only information that they wish to make publicly 
available.

FOR FURTHER INFORMATION CONTACT: Sophia McArdle, U.S. Department of 
Education, 400 Maryland Ave. SW., Room 6W256, Washington, DC 20202. 
Telephone (202) 453-6318 or by email at: sophia.mcardle@ed.gov. Scott 
Filter, U.S. Department of Education, 400 Maryland Ave. SW., Room 
6W253, Washington, DC 20202. Telephone (202) 453-7249 or by email at: 
scott.filter@ed.gov.
    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: 

Executive Summary

    Purpose of This Regulatory Action: This regulatory action 
establishes requirements for institutional eligibility to participate 
in title IV, HEA programs. These financial aid programs are the Federal 
Pell Grant program, the Federal Supplemental Educational Opportunity 
Grant, the Federal Work-Study program, the Teacher Education Assistance 
for College and Higher Education (TEACH) Grant program, Federal Family 
Educational Loan Program, and the William D. Ford Direct Loan program.
    The HEA established what is commonly known as the program integrity 
``triad'' under which States, accrediting agencies, and the Department 
act jointly as gatekeepers for the Federal student aid programs 
mentioned above. This triad has been in existence since the inception 
of the HEA; and as an important component of this triad, the HEA 
requires institutions of higher education to obtain approval from the 
States in which they provide postsecondary educational programs. This 
requirement recognizes the important oversight role States play in 
protecting students, their families, taxpayers, and the general public 
as a whole.
    The Department established regulations in 2010 to clarify the 
minimum standards of State authorization that an institution must 
demonstrate in order to establish eligibility to participate in title 
IV programs. While the regulations established in 2010 made clear that 
all eligible institutions must have State authorization in the States 
in which they are physically located, the U.S. Court of Appeals for the 
District of Columbia set aside the Department's regulations regarding 
authorization of distance education programs or correspondence courses, 
and the regulations did not address additional locations or branch 
campuses located in foreign locations. As such, these proposed 
regulations would clarify the State authorization requirements an 
institution must comply with in order to be eligible to participate in 
title IV programs, ending uncertainty with respect to State 
authorization and closing any gaps in State oversight to ensure 
students, families and taxpayers are protected.
    The Office of the Inspector General (OIG), the Government 
Accountability Office (GAO), and others have voiced concerns over 
fraudulent practices, issues of non-compliance with requirements of the 
title IV programs, and other challenges within the distance education 
environment. Such practices and challenges include misuse of title IV 
funds, verification of student identity, and gaps in consumer 
protections for students. The clarified requirements related to State 
authorization will support the integrity of the title IV, HEA programs 
by permitting the Department to withhold title IV funds from 
institutions that are not authorized to operate in a given State.
    Because institutions that offer distance education programs usually 
offer the programs in multiple States, there are unique challenges with 
respect to oversight of these programs by State and other agencies.
    Many States and stakeholders have expressed concerns with these 
unique challenges, especially those related to ensuring adequate 
consumer protections for students as well as compliance by institutions 
participating in this sector. For example, some States have expressed 
concerns over their ability to identify what out of State providers are 
operating in their States, whether those programs prepare their 
students for employment, including meeting licensure requirements in 
those States, the academic quality of programs offered by those 
providers, as well as the ability to receive, investigate and address 
student complaints about out-of-State institutions.

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    One stakeholder provided an example of a student in California who 
enrolled in an online program offered by an institution in Virginia, 
but then informed the institution of her decision to cancel her 
enrollment agreement. Four years later, that student was told that her 
wages would be garnished if she did not begin making monthly payments 
on her debt to the institution. Although the State of California had a 
cancellation law that may have been beneficial to the student, that law 
did not apply due to the institution's lack of physical presence in the 
State. According to the stakeholder, the Virginia-based institution was 
also exempt from oversight by the appropriate State oversight agency, 
making it problematic for the student to voice a complaint or have any 
action taken on it.
    Documented wrong-doing has been reflected in the actions of 
multiple State attorneys general who have filed lawsuits against online 
education providers due to misleading business tactics. For example, 
the attorney general of Iowa settled a case against a distance 
education provider for misleading Iowa students because the provider 
stated that their educational programs would qualify a student to earn 
teacher licensure, which the programs did not lead to.
    As such, this regulatory action also establishes requirements for 
institutional disclosures to prospective and enrolled students in 
programs offered through distance education or correspondence courses, 
which we believe will protect students by providing them with important 
information that will influence their attendance in distance education 
programs or correspondence courses as well as improve the efficacy of 
State-based consumer protections for students. Since distance education 
may involve multiple States, authorization requirements among States 
may differ, and students may be unfamiliar with or fail to receive 
information about complaint processes, licensure requirements, or other 
requirements of authorities in States in which they do not reside.
    These disclosures will provide consistent information necessary to 
safeguard students and taxpayer investments in the title IV, HEA 
programs. By requiring disclosures that reflect actions taken against a 
distance education program, how to lodge complaints against a program 
they believe has misled them, and whether the program will lead to 
certification or licensure will provide enrolled and prospective 
students with important information that will protect them.
    Summary of the Major Provisions of This Regulatory Action: The 
proposed regulations would--
     Require an institution offering distance education or 
correspondence courses to be authorized by each State in which the 
institution enrolls students, if such authorization is required by the 
State, in order to link State authorization of institutions offering 
distance education to institutional eligibility to participate in title 
IV programs, including through a State authorization reciprocity 
agreement.
     Define the term ``State authorization reciprocity 
agreement'' to be an agreement between two or more States that 
authorizes an institution located and legally authorized in a State 
covered by the agreement to provide postsecondary education through 
distance education or correspondence courses to students in other 
States covered by the agreement.
     Require an institution to document the State process for 
resolving complaints from students enrolled in programs offered through 
distance education or correspondence courses.
     Require that an additional location or branch campus 
located in a foreign location be authorized by an appropriate 
government agency of the country where the additional location or 
branch campus is located and, if at least half of an educational 
program can be completed at the location or branch campus, be approved 
by the institution's accrediting agency and be reported to the State 
where the institution's main campus is located.
     Require that an institution provide public and 
individualized disclosures to enrolled and prospective students 
regarding its programs offered solely through distance education or 
correspondence courses.

Costs and Benefits

    The proposed regulations support States in their efforts to develop 
standards and increase State accountability for a significant sector of 
higher education--the distance education sector. In 2014, over 
2,800,000 students were enrolled in over 23,000 separate distance 
education programs. The potential primary benefits of the proposed 
regulations are: (1) Increased transparency and access to 
institutional/program information through additional disclosures, (2) 
updated and clarified requirements for State authorization of distance 
education and foreign additional locations, and (3) a process for 
students to access complaint resolution in either the State in which 
the institution is authorized or the State in which they reside. The 
clarified requirements related to State authorization also support the 
integrity of the title IV, HEA programs by permitting the Department to 
withhold title IV funds from institutions that are not authorized to 
operate in a given State. Institutions that choose to offer distance 
education will incur costs in complying with State authorization 
requirements as well as costs associated with the disclosures that 
would be required by the proposed regulations.
    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 provide relevant information 
and data, as well as other supporting materials in the request for 
comment, even when there is no specific solicitation of data. We also 
urge you to arrange your comments in the same order as the proposed 
regulations. Please do not submit comments outside the scope of the 
specific proposed regulations in this notice of proposed rulemaking, as 
we are not required to respond to comments that are outside of the 
scope of the proposed rule. See ADDRESSES: for instructions on how to 
submit comments.
    We invite you to assist us in complying with the specific 
requirements of Executive Orders 12866 and 13563 and their overall 
requirement of reducing regulatory burden that might result from the 
proposed regulations. 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 programs 
and activities.
    During and after the comment period, you may inspect all public 
comments about the proposed regulations by accessing Regulations.gov. 
You may also inspect the comments in person in Room 6C105, 400 Maryland 
Ave. SW., Washington, DC, between 8:30 a.m. and 4 p.m., Washington, DC 
time, Monday through Friday of each week except Federal holidays. If 
you want to schedule time to inspect comments, please contact the 
individuals listed under FOR FURTHER INFORMATION CONTACT.
    Assistance to Individuals with Disabilities in Reviewing the 
Rulemaking Record: On request, we will

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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 the 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.

Public Participation

    On May 1, 2012, we published a document in the Federal Register (77 
FR 25658) announcing our intent to establish a negotiated rulemaking 
committee under section 492 of the HEA to develop proposed regulations 
designed to prevent fraud and otherwise ensure proper use of title IV 
of the HEA, Federal student aid program funds, especially within the 
context of current technologies. On April 16, 2013, we published a 
document in the Federal Register (78 FR 22467), which we corrected on 
April 30, 2013 (78 FR 25235), announcing additional topics for 
consideration for action by a negotiated rulemaking committee. The 
following topics for consideration were identified: Cash management of 
funds provided under the title IV Federal Student Aid programs; State 
authorization for programs offered through distance education or 
correspondence education; State authorization for foreign locations of 
institutions located in a State; clock-to-credit- hour conversion; 
gainful employment; changes to the campus safety and security reporting 
requirements in the Clery Act made by the Violence Against Women Act; 
and the definition of ``adverse credit'' for borrowers in the Federal 
Direct PLUS Loan program. In that notice, we announced three public 
hearings at which interested parties could comment on the topics 
suggested by the Department and could suggest additional topics for 
consideration for action by a negotiated rulemaking committee. We also 
invited parties unable to attend a public hearing to submit written 
comments on the additional topics and to submit other topics for 
consideration. On May 13, 2013, we announced in the Federal Register 
(78 FR 27880) the addition of a fourth hearing. The hearings were held 
on May 21, 2013, in Washington, DC; May 23, 2013, in Minneapolis, 
Minnesota; May 30, 2013, in San Francisco, California; and June 4, 
2013, in Atlanta, Georgia. Transcripts from the public hearings are 
available at https://www2.ed.gov/policy/highered/reg/hearulemaking/2012/. Written comments submitted in response to the April 16, 
2013, document may be viewed through the Federal eRulemaking Portal at 
www.regulations.gov, within docket ID ED-2012-OPE-0008. Instructions 
for finding comments are also available on the site under the ``help'' 
tab.

Negotiated Rulemaking

    Section 492 of the HEA, 20 U.S.C. 1098a, requires the Secretary to 
obtain public involvement in the development of proposed regulations 
affecting programs authorized by title IV of the HEA. After obtaining 
advice and recommendations from the public, including individuals and 
representatives of groups involved in the title IV, HEA programs, in 
most cases the Secretary must subject the proposed regulations to a 
negotiated rulemaking process. If negotiators reach consensus on the 
proposed regulations, the Department agrees to publish without 
alteration a defined group of regulations on which the negotiators 
reached consensus unless the Secretary reopens the process or provides 
a written explanation to the participants stating why the Secretary has 
decided to depart from the agreement reached during negotiations. 
Further information on the negotiated rulemaking process can be found 
at: https://www2.ed.gov/policy/highered/reg/hearulemaking/hea08/neg-reg-faq.html.
    On November 20, 2013, we published a document in the Federal 
Register (78 FR 69612) announcing our intent to establish a negotiated 
rulemaking committee to prepare proposed regulations to address program 
integrity and improvement issues for the Federal Student Aid programs 
authorized under title IV of the HEA. That document set forth a 
schedule for the committee meetings and requested nominations for 
individual negotiators to serve on the negotiating committee.
    The Department sought negotiators to represent the following 
groups: Students; legal assistance organizations that represent 
students; consumer advocacy organizations; State higher education 
executive officers; State attorneys general and other appropriate State 
officials; business and industry; institutions of higher education 
eligible to receive Federal assistance under title III, parts A, B, and 
F and title V of the HEA, which include Historically Black Colleges and 
Universities (HBCUs), Hispanic-Serving Institutions, American Indian 
Tribally Controlled Colleges and Universities, Alaska Native and Native 
Hawaiian-Serving Institutions, Predominantly Black Institutions, and 
other institutions with a substantial enrollment of needy students as 
defined in title III of the HEA; two-year public institutions of higher 
education; four-year public institutions of higher education; private, 
non-profit institutions of higher education; private, for-profit 
institutions of higher education; regional accrediting agencies; 
national accrediting agencies; specialized accrediting agencies; 
financial aid administrators at postsecondary institutions; business 
officers and bursars at postsecondary institutions; admissions officers 
at postsecondary institutions; institutional third-party servicers who 
perform functions related to the title IV Federal Student Aid programs 
(including collection agencies); State approval agencies; and lenders, 
community banks, and credit unions. The Department considered the 
nominations submitted by the public and chose negotiators who would 
represent the various constituencies.
    The negotiating committee included the following members:

    Chris Lindstrom, U.S. Public Interest Research Group, and 
Maxwell John Love (alternate), United States Student Association, 
representing students.
    Whitney Barkley, Mississippi Center for Justice, and Toby 
Merrill (alternate), Project on Predatory Student Lending, The Legal 
Services Center, Harvard Law School, representing legal assistance 
organizations that represent students.
    Suzanne Martindale, Consumers Union, representing consumer 
advocacy organizations. Carolyn Fast, Consumer Frauds and Protection 
Bureau, New York Attorney General's Office, and Jenny Wojewoda 
(alternate), Massachusetts Attorney General's Office representing 
State attorneys general and other appropriate State officials.
    David Sheridan, School of International & Public Affairs, 
Columbia University in the City of New York, and Paula Luff 
(alternate), DePaul University, representing financial aid 
administrators.
    Gloria Kobus, Youngstown State University, and Joan Piscitello 
(alternate), Iowa State University, representing business officers 
and bursars at postsecondary institutions.
    David Swinton, Benedict College, and George French (alternate), 
Miles College, representing minority serving institutions.
    Brad Hardison, Santa Barbara City College, and Melissa Gregory 
(alternate), Montgomery College, representing two-year public 
institutions.
    Chuck Knepfle, Clemson University, and J. Goodlett McDaniel 
(alternate), George Mason University, representing four-year public 
institutions.
    Elizabeth Hicks, Massachusetts Institute of Technology, and Joe 
Weglarz (alternate), Marist College, representing private, nonprofit 
institutions.
    Deborah Bushway, Capella University, and Valerie Mendelsohn 
(alternate), American

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Career College, representing private, for-profit institutions.
    Casey McGuane, Higher One, and Bill Norwood (alternate), 
Heartland Payment Systems, representing institutional third-party 
servicers.
    Russ Poulin, WICHE Cooperative for Educational Technologies, and 
Marshall Hill (alternate), National Council for State Authorization 
Reciprocity Agreements, representing distance education providers.
    Dan Toughey, TouchNet, and Michael Gradisher (alternate), 
Pearson Embanet, representing business and industry.
    Paul Kundert, University of Wisconsin Credit Union, and Tom 
Levandowski (alternate), Wells Fargo Bank Law Department, Consumer 
Lending & Corporate Regulatory Division, representing lenders, 
community banks, and credit unions.
    Leah Matthews, Distance Education and Training Council, and 
Elizabeth Sibolski (alternate), Middle States Commission on Higher 
Education, representing accrediting agencies.
    Carney McCullough, U.S. Department of Education, representing 
the Department.
    Pamela Moran, U.S. Department of Education, representing the 
Department.

    The negotiated rulemaking committee met to develop proposed 
regulations on February 19-21, 2014, March 26-28, 2014, and April 23-
25, 2014. During the March session, the Department proposed adding a 
negotiated rulemaking session to the schedule to give the negotiators 
more time to consider the issues and reach consensus on proposed 
regulatory language. The negotiators agreed to add a fourth and final 
session. On April 11, 2014, we published in the Federal Register (79 FR 
20139) a document announcing the addition of a fourth session. That 
final session was held on May 19-20, 2014.
    At its first meeting, the negotiating committee reached agreement 
on its protocols and proposed agenda. These protocols provided, among 
other things, that the committee would operate by consensus. Consensus 
means that there must be no dissent by any member in order for the 
committee to have reached agreement. Under the protocols, if the 
committee reached a final consensus on all issues, the Department would 
use the consensus-based language in its proposed regulations. 
Furthermore, the Department would not alter the consensus-based 
language of its proposed regulations unless the Department reopened the 
negotiated rulemaking process or provided a written explanation to the 
committee members regarding why it decided to depart from that 
language.
    During the first meeting, the negotiating committee agreed to 
negotiate an agenda of six issues related to student financial aid. 
These six issues were: Clock-to-credit-hour conversion; State 
authorization of distance education; State authorization of foreign 
locations of domestic institutions; cash management; retaking 
coursework; and PLUS loan adverse credit history. Under the protocols, 
a final consensus would have to include consensus on all six issues, 
which was not achieved in these negotiations. If consensus were 
reached, we would have been required to propose the agreed upon 
language. As it was not reached, there is no such requirement; the 
Department has discretion with regard to the regulations it proposes on 
the negotiated issues.
    Significant Proposed Regulations: We discuss substantive issues 
under the sections of the proposed regulations to which they pertain. 
Generally, we do not address proposed regulatory provisions that are 
technical or otherwise minor in effect.

Sec.  600.2 Definitions

State Authorization Reciprocity Agreement
    Statute: Section 101(a)(2) of the HEA defines the term 
``institution of higher education'' to mean, in part, an educational 
institution in any State that is legally authorized within the State to 
provide a program of education beyond secondary education. Section 
102(a) of the HEA provides, by reference to section 101(a)(2) of the 
HEA, that a proprietary institution of higher education and a 
postsecondary vocational institution must be similarly authorized 
within a State.
    Current Regulations: None.
    Proposed Regulations: The Department proposes to add under Sec.  
600.2 a definition of a ``State authorization reciprocity agreement''. 
The Department proposes to define a State authorization reciprocity 
agreement as an agreement between two or more States that authorizes an 
institution located and legally authorized in a State covered by the 
agreement to provide postsecondary education through distance education 
or correspondence courses to students in other States covered by the 
agreement and does not prohibit a participating State from enforcing 
its own consumer protection laws.
    Reasons: The HEA requires that an institution be legally authorized 
in States to provide a program of education beyond secondary education 
for purposes of institutional eligibility for funding under the HEA. 
One way a State could authorize an institution that provides 
postsecondary education through distance education or correspondence 
courses to students in that State is to enter into a reciprocity 
agreement with the State where the institution providing that 
educational program is located. Such an agreement can provide 
institutions located in participating States with greater ease by which 
to achieve State authorization in multiple States. However, we strongly 
believe that a State should be active in protecting its own students, 
and therefore such agreements should not prohibit a participating State 
from enforcing its own consumer protection laws. Thus, any reciprocity 
agreement that would prohibit a participating State from enforcing its 
own consumer protection laws would not comply with our proposed 
definition of a State authorization reciprocity agreement, nor meet the 
requirements for State authorization under 34 CFR 600.9.

Sec.  600.9 State Authorization

State Authorization of Distance or Correspondence Education Providers
    Statute: Section 101(a)(2) of the HEA defines the term 
``institution of higher education'' to mean, in part, an educational 
institution in any State that is legally authorized within the State to 
provide a program of education beyond secondary education. Section 
102(a) of the HEA provides, by reference to section 101(a)(2) of the 
HEA, that a proprietary institution of higher education and a 
postsecondary vocational institution must be similarly authorized 
within a State.
    Current Regulations: Following negotiations that occurred in 2010 
on a number of program integrity issues, the Department promulgated a 
regulation in Sec.  600.9(c) regarding the State authorization of 
institutions providing distance education programs (75 FR 66832). On 
July 12, 2011, in response to a legal challenge by the Association of 
Private Sector Colleges and Universities, the U.S. District Court for 
the District of Columbia vacated Sec.  600.9(c) on procedural grounds. 
On August 14, 2012, on appeal, the U.S. Court of Appeals for the D.C. 
Circuit ruled that Sec.  600.9(c) was not a logical outgrowth of the 
Department's proposed rules published at 75 FR 34806 (June 18, 2010) 
and vacated the regulation. Therefore the Department needed to go 
through a new rulemaking and public comment process.
    The vacated regulations under Sec.  600.9(c) had provided that, if 
an institution is offering postsecondary education through distance or 
correspondence education to students in a State in which it is not 
physically located, or in which it is otherwise subject to State 
jurisdiction as determined by the State, the institution

[[Page 48602]]

would be required to meet any State requirements in order to legally 
offer postsecondary distance or correspondence education in that State. 
Furthermore, an institution was required to be able to provide, upon 
request, documentation of the State's approval for the distance or 
correspondence education to the Secretary.
    Proposed Regulations: Under proposed Sec.  600.9(c)(1)(i), an 
institution described under Sec.  600.9(a)(1) that offers postsecondary 
education through distance education or correspondence courses to 
students in a State in which it is not physically located or in which 
it is otherwise subject to State jurisdiction as determined by the 
State, except as provided in Sec.  600.9(c)(1)(ii), would need to meet 
any State requirements in order to legally offer postsecondary distance 
or correspondence education in that State. An institution would be 
required to document to the Secretary the State's approval upon 
request.
    Under proposed Sec.  600.9(c)(1)(ii), if an institution described 
under Sec.  600.9(a)(1) offers postsecondary education through distance 
education or correspondence courses in a State that participates in a 
State authorization reciprocity agreement, and the institution offering 
the program is located in a State where it is covered by such an 
agreement, the institution would be considered to be legally authorized 
to offer postsecondary distance or correspondence education in the 
State students enrolled in the program reside, subject to any 
limitations in that agreement. An institution would be required to 
document its coverage under such an agreement to the Secretary upon 
request.
    In addition, under proposed Sec.  600.9(c)(2)(i), if an institution 
described under Sec.  600.9(a)(1) is offering postsecondary education 
through distance education or correspondence courses to students 
residing in a State in which it is not physically located, in order for 
the institution to be considered legally authorized in that State, the 
institution would be required to document that there is a State process 
in each State in which its enrolled students reside to review and take 
appropriate action on complaints from any of those enrolled students 
concerning the institution, including enforcing applicable State law. 
Alternatively, under Sec.  600.9(c)(2)(ii), an institution could 
document that it was covered under a State authorization reciprocity 
agreement which included a process, in either the States in which 
students reside or the State in which the institution's main campus, as 
identified by the Department of Education and the institution's 
accrediting agency, is located, to review and take appropriate action 
on complaints from any of those enrolled students concerning the 
institution.
    Reasons: These proposed regulations would operationalize the 
requirement in the HEA that an institution described in Sec.  
600.9(a)(1) be legally authorized in a State to provide a program of 
education beyond secondary education for purposes of institutional 
eligibility for funding under the HEA in the case of institutions 
providing distance education or correspondence courses in States that 
have State authorization requirements. It is reasonable to expect that, 
if a State has requirements regarding its approval for an institution 
to offer postsecondary educational programs through distance education 
or correspondence courses in the State, then an institution would have 
to meet those State requirements to be considered legally authorized to 
operate in that State for purposes of institutional eligibility for 
funding under the HEA and that the institution would be able to 
demonstrate that it has met those requirements. Similarly, in the case 
where a State is participating in a State authorization reciprocity 
agreement, an institution described in Sec.  600.9(a)(1) that 
participates in such agreement should be able to meet any requirements 
of such an agreement to be considered legally authorized to operate in 
a State and to demonstrate that it meets those requirements.
    We have previously stated that, with respect to institutions 
subject to 34 CFR 600.9(a), State authorization for an institution must 
include a process where the State reviews and appropriately acts on 
complaints arising under State law (75 FR 66865-66, Oct. 29, 2010). We 
further clarified in Dear Colleague Letter GEN-14-04 that, while a 
State may refer the review of complaints concerning an institution to 
another entity, the final authority to ensure that complaints are 
resolved timely is with the State. Similarly, we believe that States 
should also play an important role in the protection of students who 
enroll in postsecondary educational programs provided through distance 
education or correspondence courses. Therefore, just like institutions 
physically located in a State, in order for an institution offering 
postsecondary educational programs through distance education or 
correspondence courses to students residing in one or more States in 
which the institution is not physically located to be considered 
legally authorized in those States, the institution would need to 
document that there is a State complaint process in each State in which 
the students reside. This State process must include steps to review 
and appropriately act in a timely manner on complaints by any of those 
students concerning the institution, including enforcing applicable 
State law. Students enrolled in programs offered through distance 
education or correspondence courses would therefore be able to access a 
complaint process under both current Sec.  600.9(a)(1), which requires 
a process in the State in which the institution is physically located, 
and proposed Sec.  600.9(c)(2), which requires a process in a student's 
State of residence. Because a State authorization reciprocity agreement 
may also designate a State process for these complaints, an institution 
could alternatively show that it was covered by that agreement's 
process for resolving complaints.
State Authorization of Foreign Additional Locations and Branch Campuses 
of Domestic Institutions
    Statute: Sections 101(a)(2), 102(a)(1), 102(b)(1)(B), and 
102(c)(1)(B) of the HEA require an educational institution to be 
legally authorized in a State to provide a program of education beyond 
secondary education in order to be eligible to apply to participate in 
programs approved under the HEA, unless an institution meets the 
definition of a foreign institution.
    Current Regulations: Although the State authorization regulations 
in current Sec. Sec.  600.4(a)(3), 600.5(a)(4), 600.6(a)(3), and 600.9 
delineate the requirements for State authorization of institutions, 
they do not specifically address State authorization requirements for 
foreign locations of domestic institutions.
    Proposed Regulations: The proposed regulations would specify the 
requirements for State authorization of foreign additional locations 
and branch campuses of domestic institutions.
    Proposed Sec.  600.9(d)(1) would specify the requirements for legal 
authorization for any foreign additional location at which a student 
can complete 50 percent or more of an educational program, and for any 
foreign branch campus. Proposed Sec.  600.9(d)(1)(i) would require 
these additional locations and branch campuses to be legally authorized 
to operate by an appropriate government authority in the country where 
the foreign additional location or branch campus is physically located, 
unless the additional location or branch campus is located on a U.S. 
military base and is exempt from obtaining such authorization from the 
foreign country.

[[Page 48603]]

Under proposed Sec.  600.9(d)(1)(ii), an institution would be required 
to provide documentation of that authorization by the foreign country 
to the Department upon request. The documentation would be required to 
demonstrate that the government authority for the foreign country is 
aware that the additional location or branch campus provides 
postsecondary education and does not object to those activities. In 
addition, proposed Sec.  600.9(d)(1)(iii) would require these 
additional locations and branch campuses to be approved in accordance 
with the existing regulations for the approval of additional locations 
and branch campuses in the regulations for the Secretary's recognition 
of accrediting agencies (Sec.  602.24(a) and Sec.  602.22(a)(2)(viii)). 
Proposed Sec.  600.9(d)(1)(iv) would require institutions to be in 
compliance with any additional requirements for legal authorization 
established by the foreign country. Proposed Sec.  600.9(d)(1)(v) would 
specify that an institution would be required to report the 
establishment or operation of a foreign additional location or branch 
campus to the State in which the main campus of the institution is 
located at least annually, or more frequently if required by the State. 
Although these regulations would not require an institution to obtain 
authorization in the State in which the main campus is located for the 
foreign additional location or branch campus, Sec.  600.9(d)(1)(vi) 
would require the institution to comply with any limitations on the 
establishment or operation of a foreign additional location or branch 
campus set by that State.
    Proposed Sec.  600.9(d)(2) would require that foreign additional 
locations at which less than 50 percent of an educational program is 
offered, or will be offered, be in compliance with any requirements for 
legal authorization established by the foreign country.
    Proposed Sec.  600.9(d)(3) would provide that an institution must 
disclose to enrolled and prospective students the information regarding 
the student complaint process described in Sec.  668.43(b), in 
accordance with 34 CFR 668.41 and would be satisfied by making this 
information available to prospective and enrolled students on the 
institution's Web site, which would then make it available to the 
general public. The requirement would apply to all foreign additional 
locations and branch campuses where students are attending and 
receiving title IV funds, regardless of the amount of the program 
offered there.
    Proposed Sec.  600.9(d)(4) would make clear that if the State in 
which the main campus of the institution is located limits the 
authorization of the institution to exclude the foreign additional 
location or branch campus, the foreign additional location or branch 
campus would not be considered to be authorized regardless of the 
percentage of the program offered at a foreign additional location or 
branch campus.
    Reasons: The negotiating committee reached tentative agreement on 
the proposed regulations related to additional locations or branch 
campuses in a foreign location. The Department did not make substantive 
changes to the regulatory language to which the committee tentatively 
agreed.
    The proposed regulations would allow an institution with a foreign 
additional location or branch campus to meet the statutory State 
authorization requirement for the foreign location or branch campus in 
a manner that recognizes both the domestic control of the institution 
as a whole, while ensuring that the foreign location or branch campus 
is legally operating in the foreign country in which it is located. In 
addition, the proposed regulations would recognize the importance of 
extending the protections provided to U.S. students attending an 
institution in a State to those attending at a foreign additional 
location or branch campus.
    The proposed regulations would only apply to foreign additional 
locations and branch campuses of domestic institutions. They would not 
apply to study abroad arrangements that domestic institutions have with 
foreign institutions whereby a student attends a portion of a program 
at a separate foreign institution, which are regulated under current 
Sec.  668.5. These proposed regulations also would not apply to foreign 
institutions. The requirements for additional locations of foreign 
institutions are contained in current Sec.  600.54(d).
    Proposed Sec.  600.9(d)(1) would limit the applicability of the 
proposed legal authorization and accreditation requirements to (1) 
foreign additional locations at which 50 percent or more of an 
educational program is offered, or will be offered, and (2) all foreign 
branch campuses. This is consistent with current Sec.  600.10(b)(3) 
which provides that, generally, title IV eligibility does not 
automatically extend to any branch campus or additional location where 
the institution provides at least 50 percent of the educational 
program, so institutions are required to apply for separate approval of 
such locations under current Sec.  600.20. It would also be consistent 
with current Sec.  602.24(a), which requires accrediting agencies to 
approve the addition of branch campuses, and current Sec.  
602.22(a)(2)(viii), which generally requires accrediting agencies to 
have substantive change policies that include the evaluation of 
additional locations that provide at least 50 percent of a program, 
unless the location meets certain exceptions.
    Because of the protections provided by State authorization of the 
main campus of an institution and accrediting agency oversight, the 
proposed legal authorization standard for foreign additional locations 
and branch campuses in Sec.  600.9(d)(1)(i), (ii) and (iv) is more 
lenient than the standard for foreign schools, which provides that 
legal authorization must be obtained from the education ministry, 
council, or equivalent agency of the country in which the institution 
is located to provide an educational program beyond the secondary 
education level. Under the proposed regulations, a license for an 
additional location of a U.S. based postsecondary educational 
institution to operate from an appropriate foreign government authority 
would be sufficient to demonstrate compliance with Sec.  
600.9(d)(1)(i). In addition, unlike foreign schools, which must provide 
documentation of legal authorization up front, Sec.  600.9(d)(1)(ii) 
would require that the institution provide documentation of the 
authorization by the foreign country in which the additional location 
or branch campus is located upon request to demonstrate that the 
government authority for the foreign country is aware that the 
additional location or branch provides postsecondary education and does 
not object to the institution's activities. This would allow the 
Department to ensure that a foreign additional location or branch 
campus actually has the appropriate authorization to operate. It would 
also demonstrate that a foreign additional location or branch campus is 
not operating under a license for a purpose other than providing 
postsecondary education and, therefore, is in compliance with section 
101(a)(2) of the HEA, which defines the term ``institution of higher 
education'' to mean, in part, an educational institution in any State 
that is legally authorized within the State to provide a program of 
education beyond secondary education. The proposed regulations would 
require that the government authority for the foreign country is aware 
that the additional location or branch provides postsecondary 
education. Although the Department originally proposed requiring an 
institution to demonstrate that the government entity had actively

[[Page 48604]]

consented to the location's or branch's provision of postsecondary 
education, again because of the protections provided by State 
authorization of the main campus of an institution and accrediting 
agency oversight, the committee ultimately agreed that it was only 
necessary that the foreign government entity not object to it.
    Some negotiators suggested that State authorization of the 
institution's main campus and compliance with the accreditation 
requirements for a foreign additional location or branch campus was 
sufficient for the location or branch campus to be title IV eligible. 
However, the negotiated rulemaking committee discussed and tentatively 
agreed that this standard did not provide enough protection for 
students who would be harmed if a country sought to close an additional 
location or branch campus that it had not authorized to operate. For 
this same reason, proposed Sec.  600.9(d)(1)(iv) would require that 
foreign additional locations and branch campuses be in compliance with 
any additional requirements for legal authorization established by the 
foreign country. While the committee agreed that it was not necessary 
that the specific legal authorization requirements of proposed Sec.  
600.9(d)(1)(i) and (ii) would apply to foreign additional locations at 
which less than 50 percent of an educational program is offered, or 
will be offered (discussed above), the committee agreed that proposed 
Sec.  600.9(d)(2) would require that foreign additional locations at 
which less than 50 percent of an educational program is offered, or 
will be offered, be in compliance with any requirements for legal 
authorization established by the foreign country.
    Under the proposed regulations, a foreign additional location or 
branch campus that is located on a U.S. military base and is exempt 
from obtaining legal authorization from the foreign country would be 
exempt from being legally authorized to operate by an appropriate 
government authority in the country where the additional location or 
branch campus is physically located. Although some negotiators 
suggested that all additional locations or branch campuses located on 
U.S. military bases should be exempt from the laws and regulations of 
the countries in which they are located because they are considered to 
be located on ``U.S. soil,'' the Department's understanding is that 
U.S. military bases are not automatically considered to be located on 
``U.S. soil.'' Rather, they are governed by individual Status of Forces 
Agreements and vary by country and base. These regulations would defer 
to those agreements regarding the applicability of authorizing 
requirements of the foreign country.
    Proposed Sec.  600.9(d)(1)(iii) would not create a new requirement 
for accrediting agency approval of foreign additional locations or 
branch campuses. Rather, approval would be required in accordance with 
the existing regulations for the approval of additional locations and 
branch campuses in the regulations for the Secretary's recognition of 
accrediting agencies. That is, under the current regulations, if an 
institution plans to establish a branch campus, the accrediting agency 
must require the institution to notify the agency, submit a business 
plan for the branch campus, and wait for accrediting agency approval 
(Sec.  602.24(a)). For additional locations that provide at least 50 
percent of a program, accrediting agencies must have substantive change 
policies that include the evaluation of additional locations that 
provide at least 50 percent of a program, unless the location meets 
certain exceptions (Sec.  602.22(a)(2)(viii)). In order to facilitate 
the oversight role of the State in which the institution's main campus 
is located with respect to a foreign additional location or branch 
campus, proposed Sec.  600.9(d)(1)(v) would require an institution with 
a main campus in the State to report the establishment or operation of 
a foreign additional location or branch campus to the State at least 
annually, or more frequently if required by the State. Although the 
proposed regulations would not specifically require an institution to 
obtain authorization in the State in which the main campus is located 
for the foreign additional location or branch campus, in recognition 
that a State may set limitations on the establishment or operation of 
foreign locations or branch campuses other than simply denying 
eligibility, proposed Sec.  600.9(d)(1)(vi) would provide that an 
institution must comply with any State limitations on the establishment 
or operation of a foreign additional location or branch campus set by 
that State.
    To ensure that students are aware of the complaint process of the 
State in which the main campus of the institution is located, proposed 
Sec.  600.9(d)(3) would require institutions to disclose information 
regarding the student complaint process to enrolled and prospective 
students at that foreign additional location or branch campus. To 
minimize burden, the proposed regulations would require that this 
disclosure be made in accordance with the existing consumer disclosure 
requirements of subpart D of part 668, rather than through the 
establishment of a separate disclosure.
    Proposed Sec.  600.9(d)(4) would make clear that if the State 
limits the authorization of the institution to exclude the additional 
foreign location or branch campus in a foreign country, the additional 
location or branch campus would not be considered to be authorized by 
the State. This would mean that a State is not required to authorize a 
foreign additional location or branch campus, but if a State expressly 
prohibits an institution then the location is not considered to be 
authorized. A State may also provide conditions by which an institution 
must abide by to have its foreign additional locations or branch 
campuses be authorized. In such an instance, the institution must abide 
by those conditions to be considered authorized.

Sec.  668.50 Institutional Disclosures for Distance or Correspondence 
Programs

    Statute: Section 485(a)(1) of the HEA provides that an institution 
must disclose information about the institution's accreditation and 
State authorization.
    Current Regulations: None.
    Proposed Regulations: The Department proposes to add new Sec.  
668.50, which would require an institution to disclose certain 
information about the institution's distance education programs or 
correspondence courses to enrolled and prospective students. The 
Department proposes seven general disclosures to be made publicly 
available and three individualized disclosures that will require direct 
communication with enrolled and prospective students, but only if 
certain conditions are met. The proposed regulations state that the 
Secretary may determine the form and content of these disclosures in 
the future. These proposed disclosures will not alter or reduce any 
other required disclosures that are required in this subpart.
    For distance education programs and correspondence courses offered 
by an institution of higher education, the institution must disclose:
     How the distance education program or correspondence 
course is authorized (34 CFR 668.50(b)(1));
     How to submit complaints to the appropriate State agency 
responsible for student complaints or to the state authority 
reciprocity agreement, whichever is appropriate based on how the 
program or course is authorized (34 CFR 668.50(b)(2));
     How to submit complaints to the appropriate State agency 
in the student's State of residence (34 CFR 668.50(b)(3));

[[Page 48605]]

     Any adverse actions taken by a State or accrediting agency 
against an institution of higher education's distance education program 
or correspondence course and the year that the action was initiated for 
the previous five calendar years (34 CFR 668.50(b)(4) and 34 CFR 
668.50(b)(5));
     Refund policies that the institution is required to comply 
with (34 CFR 668.50(b)(6));
     The applicable licensure or certification requirements for 
a career a student prepares to enter, and whether the program meets 
those requirements (34 CFR 668.50(b)(7)).
    Additionally, these institutions must also disclose directly:
     When a distance education program or correspondence course 
does not meet the licensure or certification requirements for a State 
to all prospective students (34 CFR 668.50(c)(1)(i));
     When an adverse action is taken against an institution's 
postsecondary education programs offered by the institution solely 
through distance education or correspondence student to each enrolled 
and prospective student (34 CFR 668.50(c)(2)); and
     Any determination that a program ceases to meet licensure 
or certification requirements to each enrolled and prospective student 
(34 CFR 668.50(c)(2)).
    Under proposed Sec.  668.50(b)(1), an institution would be required 
to disclose whether the program offered by the institution through 
distance education or correspondence courses is authorized by each 
State in which students enrolled in the program reside. If an 
institution is authorized through a State authorization reciprocity 
agreement, the institution would be required to disclose its 
authorization status under such an agreement.
    Under proposed Sec.  668.50(b)(2)(i), an institution authorized by 
a State agency would be required to disclose the process for submitting 
complaints to the appropriate State agency in the State in which the 
main campus of the institution is located, including providing contact 
information for the appropriate individuals at the State agencies that 
handle consumer complaints.
    Under proposed Sec.  668.50(b)(2)(ii), an institution that is 
authorized by a State authorization reciprocity agreement would be 
required to disclose the complaint process established by the 
reciprocity agreement, if the agreement establishes such a process. In 
addition to the State authorization reciprocity agreement's complaint 
process, an institution authorized through such an agreement would also 
be required to provide contact information for the individual 
responsible for handling such complaints, as set out in the State 
authorization reciprocity agreement, if applicable.
    Under proposed Sec.  668.50(b)(3), an institution would be required 
to disclose the process for submitting complaints to the appropriate 
State agency for all States in which the institution enrolls students 
in distance education programs or correspondence courses, regardless of 
whether the institution is authorized by the State in which the main 
campus of the institution is located or by a State authorization 
reciprocity agreement.
    Under proposed Sec.  668.50(b)(4) and (5), an institution would be 
required to disclose any adverse actions a State entity or an 
accrediting agency has initiated related to the institution's distance 
education programs or correspondence courses for a five calendar year 
period prior to the year in which the institution makes the disclosure.
    Under proposed Sec.  668.50(b)(6), an institution would be required 
to disclose, for any State in which the institution enrolls students in 
distance education programs or correspondence courses, any State 
policies requiring the institution to refund unearned tuition and fees.
    Under proposed Sec.  668.50(b)(7), an institution would be required 
to disclose the applicable educational prerequisites for professional 
licensure or certification which the program prepares the student to 
enter in any State in which the program's enrolled students reside, or 
any other State for which the institution has made a determination 
regarding such prerequisites. The institution would also be required to 
disclose whether the distance education program or correspondence 
course does or does not satisfy those applicable educational 
prerequisites for professional licensure or certification. Distance 
education programs and correspondence courses enroll students from a 
multitude of States where they do not have a physical presence and 
their programs may not necessarily lead to licensure or certification, 
which would be important for students to know. For any State as to 
which an institution has not made a determination with respect to the 
licensure or certification requirement, an institution would be 
required to disclose a statement to that effect. This disclosure does 
not require an institution to make a determination with regard to how 
its distance education programs or correspondence courses meet the 
prerequisites for licensure or certification in States where none of 
its enrolled students reside, but does require an institution to 
disclose whether it has made such determinations and, if it has made a 
determination, whether its programs meet such prerequisites.
    Under proposed Sec.  668.50(c), an institution offering programs 
solely through distance education or correspondence courses would be 
required to provide individualized disclosures to students to disclose 
certain information, but only if certain conditions are met. An 
individualized disclosure would be providing a disclosure through 
direct contact, such as through an email or written correspondence, 
unlike a public disclosure, such as through the program's Web site or 
in promotional material.
    Under proposed Sec.  668.50(c)(1)(i), an institution would be 
required to provide an individualized disclosure to prospective 
students when the institution determines that an educational program is 
being offered solely through distance education or correspondence 
courses, excluding internships or practicums, does not meet licensure 
or certification prerequisites in the State of the student's residence. 
The institution would be required to obtain an acknowledgment from the 
student that the communication was received prior to the student's 
enrollment in the program. The Department believes this can be solved 
relatively easily by including attestation as part of a student's 
enrollment agreement or other paperwork required for new students by 
the institution, which an institution would already prepare and 
maintain.
    Under proposed Sec.  668.50(c)(1)(ii), an institution would be 
required to provide an individualized disclosure to enrolled and 
prospective students of any adverse action initiated by a State or an 
accrediting agency related to the institution's programs, including the 
years in which such actions were initiated, and when the institution 
determines that its program ceases to meet licensure or certification 
prerequisites of a State. These individualized disclosures would have 
to occur within 30 days and 7 days of the institution becoming aware of 
the event, respectively.
    Reasons: The proposed regulations in Sec.  668.50 would increase 
transparency and accountability in the distance education sector by 
providing enrolled and prospective students with essential information 
about postsecondary

[[Page 48606]]

institutions that offer distance education programs and correspondence 
courses.
    Through these proposed requirements, a student enrolled or planning 
to enroll in programs offered through distance education or 
correspondence courses would receive information regarding whether 
programs or courses are authorized by the State in which he or she 
lives and whether those programs or courses also meet State 
prerequisites for licensure and certification. Without such 
requirements, students could unknowingly enroll in programs that do not 
qualify them for Federal student aid or that do not fulfill 
requirements for employment in a particular profession or field, either 
in the State in which they reside or in the State in which they intend 
to seek employment.
    These requirements would also strengthen the effectiveness of the 
program integrity triad by ensuring that enrolled and prospective 
students are aware of any adverse actions a State or accrediting agency 
has initiated against an institution that may potentially impact the 
post-secondary success or financial well-being of students. This 
requirement would also limit the time period for disclosing such 
information to the past five years, so that institutions would not be 
required to disclose every adverse action ever made against them, and 
institutions that have improved over time will be able to distance 
themselves from an adverse compliance history.
    We believe it is important to provide information to students on 
whatever adverse actions have been initiated against an institution 
regarding its distance education program or correspondence course 
regardless of the status of the action. For example, if an institution 
appeals an adverse action being taken against it by a State, we believe 
that an institution should still disclose that adverse action to an 
enrolled or prospective student. However, the institution is permitted 
to provide qualifying information to the student about any appeal that 
is being pursued by the institution regarding its distance education 
program or correspondence course offered by the institution.
    Additionally, through these requirements, students would receive 
information about the complaint processes available to them. This 
information should be readily available to students as a way to ensure 
transparency and to protect students from bad actors in the field. We 
also believe that students should be provided with the complaint 
process for their State of residence regardless of how their distance 
education program or correspondence course was authorized.
    Providing information to a student about tuition refund policies is 
also important as it may impact a student's finances and their decision 
to enroll in a distance education program or correspondence courses. 
This information can help a student navigate the refund process if they 
decide to withdraw from a course or program.
    Given the multi-State environment in which distance education 
programs and correspondence courses may be offered, it is important 
that students understand and make informed decisions about the 
educational options available to them through distance and 
correspondence education. As such, these proposed regulations would 
require that certain individualized disclosures be made to students, 
but only in certain situations. Under these proposed regulations, when 
a State or accrediting agency initiates an adverse action against an 
institution offering programs offered through distance education or 
correspondence courses or if a program does not meet or ceases to meet 
prerequisites for State licensure or certification, this information 
will be directly communicated to enrolled and prospective students. In 
those situations, these disclosures will help a student evaluate 
whether enrollment or continued enrollment in a particular program is 
in his or her best interest.
    Overall, the public and individualized disclosures provided under 
these proposed regulations establish important consumer protections 
within the distance education field and help enrolled and prospective 
students make informed choices about postsecondary distance education 
programs and correspondence courses.

Executive Orders 12866 and 13563

Regulatory Impact Analysis

Introduction
    Under Executive Order 12866, it must be determined whether this 
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 a rule 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 an ``economically significant'' rule);
    (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 stated in the 
Executive order.
    This proposed regulatory action is a significant regulatory action 
subject to review by OMB under section 3(f) of Executive Order 12866.
    We have also reviewed these regulations under Executive Order 
13563, which supplements and explicitly reaffirms the principles, 
structures, and definitions governing regulatory review established in 
Executive Order 12866. To the extent permitted by law, Executive Order 
13563 requires that an agency--
    (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 its regulations to impose the least burden on society, 
consistent with obtaining regulatory objectives and taking into 
account--among other things and to the extent practicable--the costs of 
cumulative regulations;
    (3) In choosing among alternative regulatory approaches, select 
those approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity);
    (4) To the extent feasible, specify performance objectives, rather 
than the behavior or manner of compliance a regulated entity must 
adopt; and
    (5) Identify and assess available alternatives to direct 
regulation, including economic incentives--such as user fees or 
marketable permits--to encourage the desired behavior, or provide 
information that enables the public to make choices.
    Executive Order 13563 also requires an agency ``to use the best 
available techniques to quantify anticipated present and future 
benefits and costs as accurately as possible.'' The Office of 
Information and Regulatory Affairs of OMB has emphasized that these 
techniques may include ``identifying changing future compliance costs 
that might result from technological innovation or anticipated 
behavioral changes.''
    We are issuing these proposed regulations only on a reasoned

[[Page 48607]]

determination that their benefits would justify their costs. In 
choosing among alternative regulatory approaches, we selected those 
approaches that maximize net benefits. Based on the analysis that 
follows, the Department believes that these proposed regulations are 
consistent with the principles in Executive Order 13563.
    We also have determined that this regulatory action would not 
unduly interfere with State, local, and tribal governments in the 
exercise of their governmental functions.
    In this Regulatory Impact Analysis we discuss the need for 
regulatory action, the potential costs and benefits, net budget 
impacts, assumptions, limitations, and data sources, as well as 
regulatory alternatives we considered. Although the majority of the 
costs related to information collection are discussed within this RIA, 
elsewhere in this NPRM under Paperwork Reduction Act of 1995, we also 
identify and further explain burdens specifically associated with 
information collection requirements.
Need for Regulatory Action
    The landscape of higher education has changed over the last 20 
years. During that time, the role of distance education in the higher 
education sector has grown significantly. For Fall 1999, eight percent 
of all male students and ten percent of all female students 
participated in at least one distance education course.\1\ Recent IPEDS 
data indicate that in the fall of 2013, 26.4 percent of students at 
degree-granting, title IV participating institutions were enrolled in 
at least one distance education class.\1\ The emergence of online 
learning options has allowed students to enroll in colleges authorized 
in other States and jurisdictions with relative ease. According to the 
National Center for Education Statistics' Integrated Postsecondary 
Education Data System (IPEDS), in the fall of 2014, the number of 
students enrolled exclusively in distance education programs totaled 
843,107. Distance education industry sales have increased alongside 
student enrollment. As students continue to embrace distance education, 
revenue for distance education providers has increased steadily. In 
2014, market research firm Global Industry Analysts projected that 2015 
revenue for the distance education industry would reach $107 
billion.\2\ For the same year, gross output for the overall non-
hospital private Education Services sector totaled $332.2 billion.\3\ 
Distance education has grown to account for roughly one-third of the 
U.S. non-hospital private Education Services sector. In this aggressive 
market environment, distance education providers have looked to expand 
their footprint to gain market share. An analysis of recent data from 
IPEDS indicates that 2,301 title-IV-participating institutions offered 
23,434 programs through distance education in 2014. Approximately 2.8 
million students were exclusively enrolled in distance education 
courses, with 1.2 million of those students enrolled in programs 
offered by institutions from a different State. Table 1 summarizes the 
number of institutions, programs, and students involved in distance 
education by sector.
---------------------------------------------------------------------------

    \1\ 2014 Digest of Education Statistics: Table 311.15: Number 
and percentage of students enrolled in degree-granting postsecondary 
institutions, by distance education participation, location of 
student, level of enrollment, and control and level of institution: 
fall 2012 and fall 2013.
    \2\ Online Learning Industry Poised for $107 Billion In 2015 
(https://www.forbes.com/sites/tjmccue/2014/08/27/online-learning-industry-poised-for-107-billion-in-2015/#46857a0966bc).
    \3\ US Bureau of Economic Analysis GDP-by-Industry interactive 
table (https://bea.gov/iTable/iTableHtml.cfm?reqid=51&step=51&isuri=1&5101=1&5114=a&5113=61go&5112=1&5111=2014&5102=15).

                           Table 1--2014 Participation in Distance Education by Sector
----------------------------------------------------------------------------------------------------------------
                                                                                                    Students
                                            Institutions        Number of         Students       exclusively in
                                              offering          distance       exclusively in     out-of-state
                 Sector                       distance          education         distance          distance
                                              education         programs          education         education
                                              programs                            programs          programs
----------------------------------------------------------------------------------------------------------------
Public 4-year...........................               540             5,967           692,074           144,039
Private Not-for-Profit 4-year...........               745             6,555           607,224           333,495
Proprietary 4-year......................               255             5,153           820,630           628,699
Public 2-year...........................               625             5,311           690,771            45,684
Private Not-for-Profit 2-year...........                15                42               814               388
Proprietary 2-year......................                87               339            21,421             5,291
Public less-than-2-year.................                 7                10                55                 -
Private Not-for-Profit less-than- 2-year                 1                 1                 -                 -
Proprietary less-than-2-year............                26                56             1,056               382
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
    Total...............................             2,301            23,434         2,834,045         1,157,978
----------------------------------------------------------------------------------------------------------------

    Some States have entered into reciprocity agreements with other 
States in an effort to address the issues that distance education 
presents, such as States having differing and conflicting requirements 
that institutions of higher education will have to adhere to, 
potentially causing increased costs and burden for those institutions. 
For example, as of June 2016, 40 States and the District of Columbia 
have entered into a State Authorization Reciprocity Agreement (SARA) 
administered by the National Council for State Authorization 
Reciprocity Agreements, which establishes standards for the interstate 
offering of postsecondary distance-education courses and programs. 
Through a State authorization reciprocity agreement, an approved 
institution may provide distance education to residents of any other 
member State without seeking authorization from each member State. 
However, even where States accept the terms of a reciprocity agreement, 
that agreement may not apply to all institutions and programs in any 
given State.
    There also has been a significant growth in the number of American 
institutions and programs enrolling students abroad. As of May 2016, 
American universities were operating 80 foreign locations worldwide 
according to information available from the

[[Page 48608]]

Department's Postsecondary Education Participation System (PEPS). Many 
institutions are also allowing foreign students to enroll in distance 
education programs in conjunction with, or in lieu of, taking courses 
at a foreign location.
    American institutions operating foreign locations are still 
relatively new. As such, data about the costs involved in these 
operations is limited. Some American institutions establishing 
locations in other countries have negotiated joint ventures and 
reimbursement agreements with foreign governments to share the startup 
costs. The Department found no evidence suggesting that institutions 
make payments to foreign governments in order to operate in the foreign 
country.
    With the expansion of these higher education models, the Department 
believes it is important to maintain a minimum standard of State 
approval for higher education institutions. The proposed regulations 
support States in their efforts to develop standards for this growing 
sector of higher education. The clarified requirements related to State 
authorization also support the integrity of the Federal student aid 
programs by not supplying funds to programs and institutions that are 
not authorized to operate in a given State.

Summary of Proposed Changes

    The proposed regulations:
     Require an institution offering distance education or 
correspondence courses to be authorized by each State in which the 
institution enrolls students, if such authorization is required by the 
State, including through a State authorization reciprocity agreement.
     Define the term ``State authorization reciprocity 
agreement'' to be an agreement between two or more States that 
authorizes an institution located in a State covered by the agreement 
to provide postsecondary education through distance education or 
correspondence courses to students in other States covered by the 
agreement.
     Require an institution to document the State process for 
resolving complaints from students enrolled in programs offered through 
distance education or correspondence courses.
     Require that an additional location or branch campus 
located in a foreign location be authorized by an appropriate 
government agency of the country where the additional location or 
branch campus is located and, if at least half of an educational 
program can be completed at the location or branch campus, be approved 
by the institution's accrediting agency and be reported to the State 
where the institution's main campus is located.
     Require that an institution provide public and 
individualized disclosures to enrolled and prospective students 
regarding its programs offered solely through distance education or 
correspondence courses.

Discussion of Costs, Benefits, and Transfers

    The potential primary benefits of the proposed regulations are: (1) 
Increased transparency and access to institutional and program 
information, (2) updated and clarified requirements for State 
authorization of distance education and foreign additional locations, 
and (3) a process for students to access complaint resolution in either 
the State in which the institution is authorized or the State in which 
they reside.
    We have identified the following groups and entities we expect to 
be affected by the proposed regulations:

 Students
 Institutions
 Federal, State, and local government

Students

    Students who made public comments during negotiated rulemaking 
stated that the availability of online courses allowed them to earn 
credentials in an environment that suited their personal needs. We 
believe, therefore, that students would benefit from increased 
transparency about distance education programs. The disclosures of 
adverse actions against the programs, refund policies, and the 
prerequisites for licensure and whether the program meets those 
prerequisites in States for which the institution has made those 
determinations would provide valuable information that can help 
students make more informed decisions about which institution to 
attend. Increased access to information could help students identify 
programs that offer credentials that potential employers recognize and 
value. Additionally, institutions would have to provide an 
individualized disclosure to enrolled and prospective students of 
adverse actions against the institution and when programs offered 
solely through distance education or correspondence courses do not meet 
licensure or certification prerequisites in the student's State of 
residence. The disclosure regarding adverse actions would help ensure 
that students have information about potential wrongdoing by 
institutions. Similarly, disclosures regarding whether a program meets 
applicable licensure or certification requirements would provide 
students with valuable information about whether attending the program 
will allow them to pursue the chosen career upon program completion. 
The licensure disclosure requires acknowledgment by the student before 
enrollment, which emphasizes the importance of ensuring students 
receive that information. It also recognizes that students may have 
specific plans for using their degree, potentially in a new State of 
residence where the program would meet the relevant prerequisites.
    Students in distance education or at foreign locations of domestic 
institutions would also benefit from the disclosure and availability of 
complaint resolution processes that would let them know how to submit 
complaints to the State in which the main campus of the institution is 
located or, for distance education students, the students' State of 
residence. This can help to ensure the availability to students of 
consumer protections and make it more convenient for students to access 
those supports.

Institutions

    Institutions will benefit from the increased clarity concerning the 
requirements and process for State authorization of distance education 
and of foreign additional locations. Institutions will bear the costs 
of ensuring they remain in compliance with State authorization 
requirements, whether through entering into a State authorization 
reciprocity agreement or researching and meeting the relevant 
requirements of the States in which they operate distance education 
programs. The Department does not ascribe specific costs to the 
proposed State authorization regulations and associated definitions 
because it is presumed that institutions are complying with applicable 
State authorization requirements. Additionally, nothing in the proposed 
regulations would require institutions to participate in distance 
education. However, in the event that the clarification of the State 
authorization requirements in the proposed regulations, among other 
factors, would provide an incentive for more institutions to be 
involved to offer distance education courses, the Department has 
estimated some costs as an illustrative example of what institutions 
can expect from complying with State authorization requirements.
    The costs for each institution will vary based on a number of 
factors, including the institutions' size, the extent to which an 
institution provides distance education, and whether it participates in 
a State authorization reciprocity agreement or chooses to obtain 
authorization in specific States. The Department has estimated annual

[[Page 48609]]

costs for institutions that participate in a reciprocity agreement 
using cost information for the National Council of State Authorization 
Reciprocity Agreements.\4\ We assume that participation in such 
agreements will vary by sector and size of institution. Additionally, 
States that participate in these arrangements may charge their own 
fees, which vary by size and type of institution and range from zero 
dollars to $40,000 annually for institutions with 20,001 or more on-
line out-of-State students.\5\
---------------------------------------------------------------------------

    \4\ NC-SARA Fees https://nc-sara.org/what-does-institution-do.
    \5\ State Fees for In-state Institutions https://www.nc-sara.org/state-fees-regarding-sarawww.nc-sara.org/state-fees-regarding-sara 
(National Council for State Authorization Reciprocity Agreement).
---------------------------------------------------------------------------

    These costs are only one example of an arrangement institutions can 
use to meet distance education authorization requirements, so actual 
costs will vary. As seen in Table 2 below, the Department applied the 
costs associated with a SARA arrangement to all 2,301 title IV 
participating institutions reported as offering distance education 
programs in IPEDS for a total of $19.3 million annually in direct fees 
and charges associated with distance education authorization. 
Additional State fees to institutions applied were $3,000 for 
institutions under 2,500 FTE, $6,000 for 2,500 to 9,999 FTE, and 
$10,000 for institutions with 10,000 or more FTE. The Department 
welcomes comments on the assumptions and estimates presented here and 
will consider them in the analysis of the final regulation.

                      Table 2--Estimated Costs of State Authorization of Distance Education
----------------------------------------------------------------------------------------------------------------
                                                                                                    Additional
                          Institutions                                 Count         SARA Fees      State fees
----------------------------------------------------------------------------------------------------------------
 Public 2-year or less
Under 2,500.....................................................             273         546,000         819,000
2,500 to 9,999..................................................             290       1,160,000       1,740,000
10,000 or more..................................................              69         414,000         690,000
 Private Not-for-Profit 2-year or less
Under 2,500.....................................................              16          32,000          48,000
2,500 to 9,999..................................................               -  ..............  ..............
10,000 or more..................................................               -  ..............  ..............
 Proprietary 2-year or less
Under 2,500.....................................................             109         218,000         327,000
2,500 to 9,999..................................................               3          12,000          18,000
10,000 or more..................................................               1           6,000          10,000
 Public 4-year
Under 2,500.....................................................              92         184,000         276,000
2,500 to 9,999..................................................             235         940,000       1,410,000
10,000 or more..................................................             213       1,278,000       2,130,000
 Private Not-for-Profit 4-year
Under 2,500.....................................................             474         948,000       1,422,000
2,500 to 9,999..................................................             227         908,000       1,362,000
10,000 or more..................................................              44         264,000         440,000
 Proprietary 4-year
Under 2,500.....................................................             198         396,000         594,000
2,500 to 9,999..................................................              39         156,000         234,000
10,000 or more..................................................              18         108,000         180,000
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
    Total.......................................................           2,301       7,570,000      11,700,000
----------------------------------------------------------------------------------------------------------------

    Domestic institutions that choose to operate foreign locations may 
incur costs from complying with the requirements of the foreign country 
or the State of their main campus, and these will vary based on the 
location, the State, the percentage of the program offered at the 
foreign location, and other factors. As with distance education, 
nothing in the regulation requires institutions to operate foreign 
locations and we assume that institutions have complied with applicable 
requirements in operating their foreign locations.
    In addition to the costs institutions incur from identifying State 
requirements or entering a State authorization reciprocity agreement to 
comply with the proposed regulations, institutions will incur costs 
associated with the proposed disclosure requirements. This additional 
workload is discussed in more detail under the Paperwork Reduction Act 
of 1995 section of this preamble. In total, the proposed regulations 
are estimated to increase burden on institutions participating in the 
title IV, HEA programs by 35,365 hours. The monetized cost of this 
burden on institutions, using wage data developed using Bureau of Labor 
Statistics BLS data available at: www.bls.gov/ncs/ect/sp/ecsuphst.pdf, 
is $ 1,292,591. This burden estimate is based on an hourly rate of 
$36.55.

Federal, State, and Local Governments

    The proposed regulations maintain the important role of States in 
authorizing institutions and in providing consumer protection for 
residents. The increased clarity about State authorization should also 
assist the Federal government in administering the title IV, HEA 
programs. The proposed regulations would not require States to take 
specific actions related to authorization of distance education 
programs. States would choose the systems they establish, their 
participation in a State authorization reciprocity agreement, and the 
fees they charge institutions and have the option to do nothing in 
response to the proposed regulations. Therefore, the Department has not 
quantified specific annual costs to States based on the proposed 
regulations.

Net Budget Impacts

    The proposed regulations are not estimated to have a significant 
net budget impact in costs over the 2017-2026 loan cohorts. A cohort 
reflects all

[[Page 48610]]

loans originated in a given fiscal year. Consistent with the 
requirements of the Credit Reform Act of 1990, budget cost estimates 
for the student loan programs reflect the estimated net present value 
of all future non-administrative Federal costs associated with a cohort 
of loans.
    In the absence of evidence that the proposed regulations will 
significantly change the size and nature of the student loan borrower 
population, the Department estimates no significant net budget impact 
from the proposed regulations. While the clarity about the requirements 
for State authorization and the option to use State authorization 
reciprocity agreements may expand the availability of distance 
education; that does not necessarily mean the volume of student loans 
will expand greatly. Additional distance education could serve as a 
convenient option for students to pursue their education and loan 
funding may shift from physical to online campuses. Distance education 
has expanded significantly already and the proposed regulations are 
only one factor in institutions' plans within this field. The 
distribution of title IV, HEA program funding could continue to evolve, 
but the overall volume is also driven by demographic and economic 
conditions that are not affected by the proposed regulations and State 
authorization requirements are not expected to change loan volumes in a 
way that would result in a significant net budget impact. Likewise, the 
availability of options to study abroad at foreign locations of 
domestic institutions offers students flexibility and potentially 
rewarding experiences, but is not expected to significantly change the 
amount or type of loans students use to finance their education. 
Therefore, the Department does not estimate that the requirements that 
an additional location or branch campus located in a foreign location 
be authorized by an appropriate government agency of the country where 
the additional location or branch campus is located and, if at least 
half of an educational program can be completed at the location or 
branch campus, be approved by the institution's accrediting agency and 
be reported to the State where the institution's main campus is located 
will have a significant budget impact on title IV, HEA programs. The 
Department welcomes comments on this analysis and will consider them in 
the development of the final rule.

Assumptions, Limitations and Data Sources

    In developing these estimates, a wide range of data sources were 
used, including data from the National Student Loan Data System, and 
data from a range of surveys conducted by the National Center for 
Education Statistics such as the 2012 National Postsecondary Student 
Aid Survey. Data from other sources, such as the U.S. Census Bureau, 
were also used.

Alternatives Considered

    In the interest of promoting good governance and ensuring that 
these proposed regulations produce the best possible outcome, the 
Department reviewed and considered various proposals from both internal 
sources as well as from non-Federal negotiators. We summarize below the 
major proposals that we considered but ultimately declined to adopt in 
these proposed regulations.
    The Department has addressed State authorization during two 
previous rulemaking sessions, one in 2010 and the other in 2014. In 
2010, State authorization of distance education was not a topic 
addressed in the negotiations, but the Department addressed the issue 
in the final rule in response to public comment. The distance education 
provision in the 2010 regulation was struck down in court on procedural 
grounds, leading to the inclusion of the issue in the 2014 
negotiations. The 2014 proposal would have required, in part, an 
institution of higher education to obtain State authorization wherever 
its students were located. That proposal would also have allowed for 
reciprocity agreements between States as a form of State authorization, 
including State authorization reciprocity agreements administered by a 
non-State entity. The Department and participants of the 2014 
rulemaking session were unable to reach consensus.
    As it developed the proposed regulations, the Department considered 
adopting the 2010 or 2014 proposals. However, the 2010 rule did not 
allow for reciprocity agreements and did not require a student 
complaint process for distance education students if a State did not 
already require it. The 2014 proposal raised concerns about complexity 
and level of burden involved. The Department therefore used elements of 
both proposals in formulating these proposed regulations. Using the 
2010 rule as a starting point, the proposed regulations allow for State 
authorization reciprocity agreements and provide a student complaint 
process requirement to achieve a balance between appropriate oversight 
and burden level. The Department and non-Federal negotiators reached 
agreement on the provisions related to foreign locations without 
considering specific alternative proposals.

Clarity of the Regulations

    Executive Order 12866 and the Presidential memorandum ``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.  668.50 Institutional disclosures for distance education or 
correspondence education programs.)
     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?
     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.

Initial Regulatory Flexibility Analysis

    The proposed regulations would affect institutions that participate 
in the title IV, HEA. The U.S. Small Business Administration (SBA) Size 
Standards define ``for-profit institutions'' as ``small businesses'' if 
they are independently owned and operated and not dominant in their 
field of operation with total annual revenue below $7,000,000. The SBA 
Size Standards define ``not-for-profit institutions'' as ``small 
organizations'' if they are independently owned and operated and not 
dominant in their field of operation, or as ``small entities'' if they 
are institutions controlled by governmental entities with populations 
below 50,000. Under these definitions, approximately 4,267 of the IHEs 
that would be subject to the proposed paperwork compliance provisions 
of the final regulations are small entities. Accordingly, we have 
prepared this initial regulatory

[[Page 48611]]

flexibility analysis to present an estimate of the effect on small 
entities of the proposed regulations. The Department welcomes comments 
on this analysis and requests additional information to refine it.

Description of the Reasons That Action by the Agency Is Being 
Considered

    The Secretary is proposing to amend the regulations governing the 
title IV, HEA programs to provide clarity to the requirements for, and 
options to: obtain State authorization of distance education, 
correspondence courses, and foreign locations; document the process to 
resolve complaints from distance education students in the State in 
which they reside; and make disclosures about distance education and 
correspondence courses.

Succinct Statement of the Objectives of, and Legal Basis for, the 
Proposed Regulations

    Section 101(a)(2) of the HEA defines the term ``institution of 
higher education'' to mean, in part, an educational institution in any 
State that is legally authorized within the State to provide a program 
of education beyond secondary education. Section 102(a) of the HEA 
provides, by reference to section 101(a)(2) of the HEA, that a 
proprietary institution of higher education and a postsecondary 
vocational institution must be similarly authorized within a State. 
Section 485(a)(1) of the HEA provides that an institution must disclose 
information about the institution's accreditation and State 
authorization.

Description of and, Where Feasible, an Estimate of the Number of Small 
Entities to which the Regulations Will Apply

    These proposed regulations would affect IHEs that participate in 
the Federal Direct Loan Program and borrowers. Approximately 60 percent 
of IHEs qualify as small entities, even if the range of revenues at the 
not-for-profit institutions varies greatly. Using data from IPEDS, the 
Department estimates that approximately 4,267 IHEs participating in the 
title IV, HEA programs qualify as small entities--1,878 are not-for-
profit institutions, 2,099 are for-profit institutions with programs of 
two years or less, and 290 are for-profit institutions with four-year 
programs. The Department believes that most proprietary institutions 
that are heavily involved in distance education should not be 
considered small entities because the scale required to operate 
substantial distance education programs would put them above the 
relevant revenue threshold. However, the private non-profit sector's 
involvement in the field may mean that a significant number of small 
entities could be affected. The Department also expects this to be the 
case for foreign locations of domestic institutions, with proprietary 
institutions operating foreign locations unlikely to be small entities 
and a number of private not-for-profit classified as small entities 
involved.
    Distance education offers small entities, particularly not-for-
profit entities of substantial size that are classified as small 
entities, an opportunity to serve students who could not be 
accommodated at their physical locations. Institutions that that choose 
to provide distance education could potentially capture a larger share 
of the higher education market. Overall, as of Fall 2013, approximately 
13 percent of students receive their education exclusively through 
distance education while 73 percent took no distance education courses. 
However, at proprietary institutions almost 52 percent of students were 
exclusively distance education students and 40 percent had not enrolled 
in distance education courses. As discussed above, we assume that most 
of the proprietary institutions offering a substantial amount of 
distance education are not small entities, but if not-for-profit 
institutions expand their role in the distance education sector, small 
entities could increase their share of revenue. On the other hand, 
small entities that operate physical campuses could face more 
competition from distance education providers. The potential 
reshuffling of resources within higher education would occur regardless 
of the proposed regulations, but the clarity provided by the distance 
education requirements and the acceptance of State authorization 
reciprocity agreementss could accelerate those changes.
    However, in order to accommodate students through distance 
learning, institutions would face a number of costs, including the 
costs of complying with the authorization requirements of the proposed 
regulations. As with the broader set of institutions, the costs for 
small entities would vary based on the scope of the distance education 
they choose to provide, the States in which they operate, and the size 
of the institution. Applying the same costs from the National Council 
for State Authorization Reciprocity Agreements as in the Regulatory 
Impact Analysis, we estimate that small entities will face annual costs 
of $7.0 million.

            Table 3--Estimated Costs for State Authorization of Distance Education for Small Entities
----------------------------------------------------------------------------------------------------------------
                                                                                                    Additional
                          Institutions                                 Count         SARA fees      state fees
----------------------------------------------------------------------------------------------------------------
Private Not-for-Profit 2-year or less
Under 2,500.....................................................              16          32,000          48,000
2,500 to 9,999..................................................              --
10,000 or more..................................................              --
Proprietary 2-year or less
Under 2,500.....................................................             109         218,000         327,000
2,500 to 9,999..................................................              --              --              --
10,000 or more..................................................              --              --              --
Private Not-for-Profit 4-year
Under 2,500.....................................................             474         948,000       1,422,000
2,500 to 9,999..................................................             227         908,000       1,362,000
10,000 or more..................................................              44         264,000         440,000
Proprietary 4-year
Under 2,500.....................................................             198         396,000         594,000
2,500 to 9,999..................................................              --              --              --
10,000 or more..................................................              --              --              --
                                                                 -----------------------------------------------
 Total                                                                     1,068       2,766,000       4,193,000
----------------------------------------------------------------------------------------------------------------


[[Page 48612]]

Description of the Projected Reporting, Recordkeeping and Other 
Compliance Requirements of the Regulations, Including an Estimate of 
the Classes of Small Entities That Will Be Subject to the Requirement 
and the Type of Professional Skills Necessary for Preparation of the 
Report or Record

    Table 3 relates the estimated burden of each information collection 
requirement to the hours and costs estimated in the Paperwork Reduction 
Act of 1995 section of the preamble. This additional workload is 
discussed in more detail under the Paperwork Reduction Act of 1995 
section of the preamble. Additional workload would normally be expected 
to result in estimated costs associated with either the hiring of 
additional employees or opportunity costs related to the reassignment 
of existing staff from other activities. In total, these changes are 
estimated to increase burden on small entities participating in the 
title IV, HEA programs by 13,981 hours. The monetized cost of this 
additional burden on institutions, using wage data developed using BLS 
data available at www.bls.gov/ncs/ect/sp/ecsuphst.pdf, is $510,991. 
This cost was based on an hourly rate of $36.55.

                           Table 4--Paperwork Reduction Act Burden for Small Entities
----------------------------------------------------------------------------------------------------------------
             Provision                   Reg section         OMB control number        Hours           Costs
----------------------------------------------------------------------------------------------------------------
Reporting related to foreign        600.9................  1845-NEW1............              86           3,158
 additional locations or branch
 campuses..
Public disclosure made to enrolled  668.50(b)............  1845-NEW2............          13,623         497,921
 and prospective students in the
 institution's distance education
 programs or correspondence
 courses. Requires 7 disclosures
 related to State authorization,
 complaints process, adverse
 actions, refund policies, and
 whether the program meets
 prerequisites for licensure or
 certification..
Individualized disclosure to and    668.50(c)............  1845-NEW2............             271           9,912
 attestation by enrolled and
 prospective students of distance
 education programs about adverse
 actions or the program not
 meeting licensure requirements in
 the student's State..
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
    Total.........................  .....................  .....................          13,981         510,991
----------------------------------------------------------------------------------------------------------------

Identification, to the Extent Practicable, of All Relevant Federal 
Regulations that May Duplicate, Overlap, or Conflict with the 
Regulations

    The regulations are not expected to duplicate, overlap, or conflict 
with existing Federal regulations.

Alternatives Considered

    As described above, the Department participated in negotiated 
rulemaking when developing the proposed regulations, and considered a 
number of options for some of the provisions. No alternatives were 
aimed specifically at small entities.

Paperwork Reduction Act of 1995

    As part of its continuing effort to reduce paperwork and respondent 
burden, the Department provides 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.
    Sections 600.9 and 668.50 contain information collection 
requirements. Under the PRA, the Department has submitted a copy of 
these sections, and an Information Collection Request (ICR) to OMB for 
its review.
    A Federal agency may not 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 numbers 
assigned by OMB to any information collection requirements proposed in 
this NPRM and adopted in the final regulations.

Background

    The following data will be used throughout this section: For the 
year 2014, there were 2,301 institutions that reported to IPEDS that 
they had enrollment of 2,834,045 students attending a program through 
distance education as follows:
    1,172 public institutions reported 1,382,900 students attending a 
program through distance education;
    761 private, not-for-profit institutions reported 608,038 students 
attending a program through distance education;
    368 private, for-profit institutions reported 843,107 students 
attending a program through distance education.
    According to information available from the Department's 
Postsecondary Education Participation System (PEPS), there are 
currently 80 domestic institutions with identified additional locations 
in 60 foreign countries; 35 public institutions, 42 private, not-for-
profit institutions, and 3 private, for-profit institutions.

Section 600.9 State Authorization

State Authorization of Foreign Additional Locations and Branch Campuses 
of Domestic Institutions
    Requirements: Proposed Sec.  600.9(d)(1)(v) would specify that, for 
any foreign additional location at which 50 percent or more of an 
educational program is offered, or will be offered, and any foreign 
branch campus, an institution would be required to report the 
establishment or operation of the foreign additional location or branch 
campus to the State in which the main campus of the institution is 
located at least annually, or more frequently if required by the State.
    Burden Calculation: There will be burden on each domestic 
institution reporting the establishment or continued operation of a 
foreign additional location or branch campus to the State in which the 
main campus of the domestic institution is located. We estimate that 
each institution will require 2 hours annually to draft and submit the 
required notice. The total estimated burden would be 160 hours

[[Page 48613]]

under OMB Control Number 1845-NEW1. We estimate that 35 public 
institutions will require a total of 70 hours to draft and submit the 
required State notice (35 institutions x 2 hours). We estimate that 42 
private, not-for-profit institutions will require a total of 84 hours 
to draft and submit the required State notice (42 institutions x 2 
hours). We estimate that 3 private, for-profit institutions will 
require a total of 6 hours to draft and submit the required State 
notice (3 institutions x 2 hours).
    The total estimated burden for 34 CFR 600.9 would be 160 hours 
under OMB Control Number 1845-NEW1.

Section 668.50 Institutional Disclosures for Distance or Correspondence 
Programs

    Requirements: The Department proposes to add new Sec.  668.50(b) 
and (c), which would require disclosures to enrolled and prospective 
students in the institution's distance education programs or 
correspondence courses. Seven proposed disclosures would be made 
publicly available, and three disclosures would require direct 
communication with enrolled and prospective students when certain 
conditions have been met. These proposed disclosures would not change 
any other required disclosures of subpart D of Student Assistance 
General Provisions.
Public Disclosures
    Under proposed Sec.  668.50(b)(1), an institution would be required 
to disclose whether or not the program offered through distance 
education or correspondence courses is authorized by each State in 
which enrolled students reside. If an institution is authorized through 
a State authorization reciprocity agreement, the institution would be 
required to disclose its authorization status under such an agreement.
    Under proposed Sec.  668.50(b)(2)(i), an institution authorized by 
a State agency would be required to disclose the process for submitting 
complaints to the appropriate State agency in the State in which the 
main campus of the institution is located, including contact 
information for the appropriate individuals at those State agencies 
that handle consumer complaints.
    Under proposed Sec.  668.50(b)(2)(ii), an institution authorized by 
a State authorization reciprocity agreement would be required to 
disclose the complaint process established by the reciprocity 
agreement, if the agreement established such a process. An institution 
would be required to provide a contact responsible for handling such 
complaints, as set out in the State authorization reciprocity 
agreement.
    Under proposed Sec.  668.50(b)(3), an institution would be required 
to disclose the process for submitting complaints to the appropriate 
State agency in the State in which enrolled students reside, including 
contact information for the appropriate individuals at those State 
agencies that handle consumer complaints.
    Under proposed Sec.  668.50(b)(4), an institution would be required 
to disclose any adverse actions a State entity has initiated related to 
the institution's distance education programs or correspondence courses 
for a five calendar year period prior to the year in which the 
institution makes the disclosure.
    Under proposed Sec.  668.50(b)(5) an institution would be required 
to disclose any adverse actions an accrediting agency has initiated 
related to the institution's distance education programs or 
correspondence courses for a five calendar year period prior to the 
year in which the institution makes the disclosure.
    Under proposed Sec.  668.50(b)(6), an institution would be required 
to disclose any refund policies for the return of unearned tuition and 
fees with which the institution is required to comply by any State in 
which the institution enrolls students in a distance education program 
or correspondence courses. This disclosure would require publication of 
the State-specific requirements on the refund policies as well as any 
institutional refund policies that would be applicable to students 
enrolled in programs offered through distance education or 
correspondence courses with which the institution must comply.
    Under proposed Sec.  668.50(b)(7), an institution would be required 
to disclose the applicable educational prerequisites for professional 
licensure or certification which the program offered through distance 
education or correspondence course prepares the student to enter for 
each State in which students reside, and for which the institution has 
made a determination regarding such prerequisites. For any State for 
which an institution has not made a determination with respect to the 
licensure or certification requirement, an institution would be 
required to disclose a statement to that effect.
    Burden Calculation: We anticipate that institutions will provide 
this information electronically to enrolled and prospective students 
regarding their distance education or correspondence courses. We 
estimate that the seven public disclosure requirements would take 
institutions an average of 15 hours to research, develop, and post on a 
Web site. We estimate that 1,172 public institutions would require 
17,580 hours to research, develop, and post on a Web site the required 
public disclosures (1,172 institutions x 15 hours). We estimate that 
761 private, not-for-profit institutions would require 11,415 hours to 
research, develop, and post on a Web site the required public 
disclosures (761 institutions x 15 hours). We estimate that 368 
private, for-profit institutions would require 5,520 hours to research, 
develop, and post on a Web site the required public disclosures (368 
institutions x 15 hours).
    The total estimated burden for proposed Sec.  668.50(b) would be 
34,515 hours under OMB Control Number 1845-NEW2.

Individualized Disclosures

    Under proposed Sec.  668.50(c)(1)(i), an institution would be 
required to provide an individualized disclosure to prospective 
students when it determines a program offered solely through distance 
education or correspondence courses does not meet licensure or 
certification prerequisites in the State of the student's residence.
    Under proposed Sec.  668.50(c)(1)(ii), an institution would be 
required to provide an individualized disclosure to both enrolled and 
prospective students within 30 days of when it becomes aware of any 
adverse action initiated by a State or an accrediting agency related to 
the institution's programs offered through distance education or 
correspondence courses; or within seven days of the institution's 
determination that a program ceases to meet licensure or certification 
prerequisites of a State.
    For prospective students who receive any individualized disclosure 
and subsequently enroll, proposed Sec.  668.50(c)(2) would require an 
institution to obtain an acknowledgment from the student that the 
communication was received prior to the student's enrollment in the 
program.
    Burden Calculation: We anticipate that institutions will provide 
this information electronically to enrolled and prospective students 
regarding their distance education or correspondence courses. We 
estimate that institutions would take an average of 2 hours to develop 
the language for the individualized disclosures. We estimate that it 
would take an additional average of 4 hours for the institution to 
individually disclose this information to enrolled and prospective 
students for a total of 6 hours of burden to the

[[Page 48614]]

institutions. We estimate that five percent of institutions would meet 
the criteria to require these individual disclosures. We estimate that 
59 public institutions would require 354 hours to develop the language 
for the disclosures and to individually disclose this information to 
enrolled and prospective students (59 institutions x 6 hours). We 
estimate that 38 private, not-for-profit institutions would require 228 
hours to develop the language for the disclosures and to individually 
disclose this information to enrolled and prospective students (38 
institutions x 6 hours). We estimate that 18 private, for-profit 
institutions would require 108 hours to develop the language for the 
disclosures and to individually disclose this information to enrolled 
and prospective students (18 institutions x 6 hours).
    The total estimated burden for proposed Sec.  668.50(c) would be 
690 hours under OMB Control Number 1845-NEW2.
    The combined total estimated burden for proposed Sec.  668.50 would 
be 35,205 hours under OMB Control Number 1845-NEW2.
    Consistent with the discussion above, the following chart describes 
the sections of the proposed regulations involving information 
collections, the information being collected, and the collections that 
the Department will submit to OMB for approval and public comment under 
the PRA, and the estimated costs associated with the information 
collections. The monetized net costs of the increased burden on 
institutions, lenders, guaranty agencies, and borrowers, using BLS wage 
data, available at www.bls.gov/ncs/ect/sp/ecsuphst.pdf, is $1,292,591 
as shown in the chart below. This cost was based on an hourly rate of 
$36.55 for institutions.

                                            Collection of Information
----------------------------------------------------------------------------------------------------------------
                                                                             OMB Control number
         Regulatory section                 Information collection         and  estimated burden     Estimated
                                                                             [change in burden]        costs
----------------------------------------------------------------------------------------------------------------
Sec.   600.9.......................  The proposed regulations would        1845-NEW1--This would          $5,848
                                      specify that, for any foreign         be a new collection.
                                      additional location at which 50       We estimate that the
                                      percent or more of an educational     burden would
                                      program is offered, or will be        increase by 160
                                      offered, and any foreign branch       hours.
                                      campus, an institution would be
                                      required to report the
                                      establishment or operation of the
                                      foreign additional location or
                                      branch campus to the State in which
                                      the main campus of the institution
                                      is located at least annually, or
                                      more frequently if required by the
                                      State.
Sec.   668.50(b)...................  The proposed regulations would        1845-NEW2--This would       1,261,523
                                      require institutions to produce       be a new collection.
                                      disclosures to enrolled and           We estimate that the
                                      prospective students in the           burden would
                                      institution's distance education      increase by 34,515
                                      programs or correspondence courses.   hours.
                                      Seven proposed disclosures must be
                                      made publicly available. These
                                      disclosures include:
                                     (1) Whether the distance education
                                      programs are authorized by the
                                      State where the student resides;
                                     (2) The process for submitting a
                                      complaint to the appropriate State
                                      agency in the State where the main
                                      campus of the institution is
                                      located;
                                     (3) The process for submitting a
                                      complaint if the institution is
                                      covered by a State authorization
                                      reciprocity agreement and it has
                                      such a process;
                                     (4) The disclosure of any adverse
                                      action initiated by the
                                      institution's State entity related
                                      to the distance education program;
                                     (5) The disclosure of any adverse
                                      action initiated by the
                                      institution's accrediting agency
                                      related to the distance education
                                      program;
                                     (6) The disclosure of any refund
                                      policy required by any State in
                                      which the institution enrolls
                                      students;
                                     (7) The disclosure of any
                                      determination made regarding
                                      whether or not the distance
                                      education program meets applicable
                                      prerequisites for professional
                                      licensure or certification in the
                                      State where the student resides, if
                                      such a determination has been made.
                                      If such a determination has not
                                      been made, a statement to that
                                      effect would be required.
Sec.   668.50(c)...................  The proposed regulations would        1845-NEW2--This would          25,220
                                      require institutions to produce       be a new collection.
                                      disclosures to enrolled and           We estimate that the
                                      prospective students in the           burden would
                                      institution's distance education      increase by 690
                                      programs or correspondence courses.   hours
                                      Three proposed disclosures must be
                                      made available to individuals.
                                      These disclosures include:
                                     (1) Notice of an adverse action by
                                      the State or accrediting agency
                                      related to the distance education
                                      program. This disclosure must be
                                      provided within 30 days of when the
                                      institution becomes aware of the
                                      action;
                                     (2) Notice of the institution's
                                      determination that the distance
                                      education program no longer meets
                                      the prerequisites for licensure or
                                      certification of a State. This
                                      disclosure must be provided within
                                      7 days of when the institution
                                      makes such a determination.
----------------------------------------------------------------------------------------------------------------


[[Page 48615]]

    The total burden hours and change in burden hours associated with 
each OMB Control number affected by the proposed regulations follows:

------------------------------------------------------------------------
                                                             Proposed
             Control number               Total proposed     change in
                                           burden hours    burden hours
------------------------------------------------------------------------
1845-NEW1...............................             160             160
1845-NEW2...............................          35,205          35,205
                                         -------------------------------
    Total...............................          35,365          35,365
------------------------------------------------------------------------

    We have prepared an Information Collection Request (ICR) for these 
information collection requirements. If you want to review and comment 
on the ICR, please follow the instructions in the ADDRESSES section of 
this notice.

    Note: The Office of Information and Regulatory Affairs in the 
Office of Management and Budget (OMB), and the Department of 
Education review all comments posted at www.regulations.gov.

    In preparing your comments, you may want to review the ICR, 
including the supporting materials, in www.regulations.gov by using the 
Docket ID number specified in this notice. These proposed collections 
are identified as proposed collections 1845-NEW1 and 1845-NEW2.
    We consider your comments on these proposed collections of 
information in--
     Deciding whether the proposed collections are necessary 
for the proper performance of our functions, including whether the 
information will have practical use;
     Evaluating the accuracy of our estimate of the burden of 
the proposed collections, including the validity of our methodology and 
assumptions;
     Enhancing the quality, usefulness, and clarity of the 
information we collect; and
     Minimizing the burden on those who must respond. This 
includes exploring the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques.
    Between 30 and 60 days after publication of this document in the 
Federal Register, OMB is required to make a decision concerning the 
collections of information contained in these proposed regulations. 
Therefore, to ensure that OMB gives your comments full consideration, 
it is important that OMB receives your comments on this ICR by August 
24, 2016. This does not affect the deadline for your comments to us on 
the proposed regulations.
    If your comments relate to the ICRs for these proposed regulations, 
please specify the Docket ID number and indicate ``Information 
Collection Comments'' on the top of your comments.

Intergovernmental Review

    These programs are not subject to Executive Order 12372 and the 
regulations in 34 CFR part 79.

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.

Federalism

    Executive Order 13132 requires us to ensure meaningful and timely 
input by State and local elected officials in the development of 
regulatory policies that have federalism implications. ``Federalism 
implications'' means substantial direct effects on the States, on the 
relationship between the National Government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government. The proposed regulations in Sec.  600.9(c) and (d) may have 
federalism implications. We encourage State and local elected officials 
to review and provide comments on these proposed regulations.
    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 person [one of the 
persons] 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: 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: 
www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department. (Catalog of Federal Domestic Assistance: 84.007 
FSEOG; 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; 84.379 TEACH Grant Program)

List of Subjects

34 CFR Part 600

    Colleges and universities, Foreign relations, Grant programs-
education, Loan programs-education, Reporting and recordkeeping 
requirements, Student aid, Vocational education.

34 CFR Part 668

    Administrative practice and procedure, Colleges and universities, 
Consumer protection, Grant programs-education, Loan programs-education, 
Reporting and recordkeeping requirements, Selective Service System, 
Student aid, Vocational education.

    Dated: July 13, 2016.
John B. King, Jr.,
Secretary of Education.
    For the reasons discussed in the preamble, the Secretary proposes 
to amend parts 600 and 668 as follows:

PART 600--INSTITUTIONAL ELIGIBILITY UNDER THE HIGHER EDUCATION ACT 
OF 1965, AS AMENDED

0
1. The authority citation for part 600 continues to read as follows:

    Authority:  20 U.S.C. 1001, 1002, 1003, 1088, 1091, 1094, 1099b, 
and 1099c, unless otherwise noted.

0
2. Section 600.2 is amended by adding, in alphabetical order, a 
definition of ``State authorization

[[Page 48616]]

reciprocity agreement'' to read as follows:


Sec.  600.2  Definitions.

* * * * *
    State authorization reciprocity agreement. An agreement between two 
or more States that authorizes an institution located and legally 
authorized in a State covered by the agreement to provide postsecondary 
education through distance education or correspondence courses to 
students in other States covered by the agreement and does not prohibit 
a participating State from enforcing its own consumer protection laws.
* * * * *
0
3. Section 600.9 is amended by revising paragraph (c) and adding 
paragraph (d) to read as follows:


Sec.  600.9  State authorization.

* * * * *
    (c)(1)(i) If an institution described under paragraph (a)(1) of 
this section offers postsecondary education through distance education 
or correspondence courses to students in a State in which the 
institution is not physically located or in which the institution is 
otherwise subject to that State's jurisdiction as determined by that 
State, except as provided in paragraph (c)(1)(ii) of this section, the 
institution must meet any State requirements for it to be legally 
offering postsecondary distance education or correspondence courses in 
that State. The institution must, upon request, document to the 
Secretary the State's approval.
    (ii) If an institution described under paragraph (a)(1) of this 
section offers postsecondary education through distance education or 
correspondence courses in a State that participates in a State 
authorization reciprocity agreement, and the institution is covered by 
such agreement, the institution is considered to meet State 
requirements for it to be legally offering postsecondary distance 
education or correspondence courses in that State, subject to any 
limitations in that agreement. The institution must, upon request, 
document its coverage under such an agreement to the Secretary.
    (2) If an institution described under paragraph (a)(1) of this 
section offers postsecondary education through distance education or 
correspondence courses to students residing in a State in which the 
institution is not physically located, for the institution to be 
considered legally authorized in that State, the institution must 
document that there is a State process for review and appropriate 
action on complaints from any of those enrolled students concerning the 
institution--
    (i) In each State in which the institution's enrolled students 
reside; or
    (ii) Through a State authorization reciprocity agreement which 
designates for this purpose either the State in which the institution's 
enrolled students reside or the State in which the institution's main 
campus is located.
    (d) An additional location or branch campus of an institution, 
described under paragraph (a)(1) of this section, that is located in a 
foreign country, i.e., not in a State, must comply with Sec. Sec.  
600.8, 600.10, 600.20, and 600.32, and the following requirements:
    (1) For any additional location at which 50 percent or more of an 
educational program (as defined in Sec.  600.2) is offered, or will be 
offered, or at a branch campus--
    (i) The additional location or branch campus must be legally 
authorized by an appropriate government authority to operate in the 
country where the additional location or branch campus is physically 
located, unless the additional location or branch campus is physically 
located on a U.S. military base and the institution can demonstrate 
that it is exempt from obtaining such authorization from the foreign 
country;
    (ii) The institution must provide to the Secretary, upon request, 
documentation of such legal authorization to operate in the foreign 
country, demonstrating that the government authority is aware that the 
additional location or branch campus provides postsecondary education 
and that the government authority does not object to those activities;
    (iii) The additional location or branch campus must be approved by 
the institution's recognized accrediting agency in accordance with 
Sec.  602.24(a) and Sec.  602.22(a)(2)(viii), as applicable;
    (iv) The additional location or branch campus must meet any 
additional requirements for legal authorization in that foreign country 
as the foreign country may establish;
    (v) The institution must report to the State in which the main 
campus of the institution is located at least annually, or more 
frequently if required by the State, the establishment or operation of 
each foreign additional location or branch campus; and
    (vi) The institution must comply with any limitations the State 
places on the establishment or operation of the foreign additional 
location or branch campus.
    (2) An additional location at which less than 50 percent of an 
educational program (as defined in Sec.  600.2) is offered or will be 
offered must meet the requirements for legal authorization in that 
foreign country as the foreign country may establish.
    (3) In accordance with the requirements of 34 CFR 668.41, the 
institution must disclose to enrolled and prospective students at 
foreign additional locations the information regarding the student 
complaint process described in 34 CFR 668.43(b).
    (4) If the State in which the main campus of the institution is 
located limits the authorization of the institution to exclude the 
foreign additional location or branch campus, the foreign additional 
location or branch campus is not considered to be legally authorized by 
the State.
* * * * *

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

0
4. The authority citation for part 668 continues to read as follows:

    Authority:  20 U.S.C. 1001-1003, 1070a, 1070g, 1085, 1087b, 
1087d, 1087e, 1088, 1091, 1092, 1094, 1099c, 1099c-1, 1221e-3, and 
3474, unless otherwise noted.


Sec.  668.2  [Amended]

0
5. Section 668.2 is amended in paragraph (a) by adding to the list of 
definitions, in alphabetical order, ``Distance education''.
0
6. Section 668.50 is added to subpart D to read as follows:


Sec.  668.50  Institutional disclosures for distance or correspondence 
programs.

    (a) General. In addition to the other institutional disclosure 
requirements established in this subpart, an institution described 
under 34 CFR 600.9(a)(1) that offers a program solely through distance 
education or correspondence courses must provide the information 
described in paragraphs (b) and (c) of this section to enrolled and 
prospective students in that program.
    (b) Public disclosures. An institution described under 34 CFR 
600.9(a)(1) that offers an educational program that is provided, or can 
be completed solely through distance education or correspondence 
courses, excluding internships and practicums, must make available the 
following information to enrolled and prospective students of such 
program, the form and content of which the Secretary may determine:
    (1)(i) Whether the institution is authorized to provide the program 
by each State in which enrolled students reside; or
    (ii) Whether the institution is authorized through a State 
authorization reciprocity agreement, as defined in 34 CFR 600.2;
    (2)(i) If the institution is required to provide a disclosure under 
paragraph

[[Page 48617]]

(b)(1)(i) of this section, a description of the process for submitting 
complaints, including contact information for the receipt of consumer 
complaints at the appropriate State authorities in the State in which 
the institution's main campus is located, as required under Sec.  
668.43(b); and
    (ii) If the institution is required to provide a disclosure under 
paragraph (b)(1)(ii) of this section, and that agreement establishes a 
complaint process as described in 34 CFR 600.9(c)(2)(ii), a description 
of the process for submitting complaints that was established in the 
reciprocity agreement, including contact information for receipt of 
consumer complaints at the appropriate State authorities;
    (3) A description of the process for submitting consumer complaints 
in each State in which the program's enrolled students reside, 
including contact information for receipt of consumer complaints at the 
appropriate State authorities;
    (4) Any adverse actions a State entity has initiated, and the years 
in which such actions were initiated, related to postsecondary 
education programs offered solely through distance education or 
correspondence courses at the institution for the five calendar years 
prior to the year in which the disclosure is made;
    (5) Any adverse actions an accrediting agency has initiated, and 
the years in which such actions were initiated, related to 
postsecondary education programs offered solely through distance 
education or correspondence courses at the institution for the five 
calendar years prior to the year in which the disclosure is made;
    (6) Refund policies with which the institution is required to 
comply by any State in which enrolled students reside for the return of 
unearned tuition and fees; and
    (7)(i) The applicable educational prerequisites for professional 
licensure or certification for the occupation for which the program 
prepares students to enter in--
    (A) Each State in which the program's enrolled students reside; and
    (B) Any other State for which the institution has made a 
determination regarding such prerequisites;
    (ii) If the institution makes a determination with respect to 
certification or licensure prerequisites in a State, whether the 
program does or does not satisfy the applicable educational 
prerequisites for professional licensure or certification in that 
State; and
    (iii) For any State as to which the institution has not made a 
determination with respect to the licensure or certification 
prerequisites, a statement to that effect.
    (c) Individualized disclosures. (1) An institution described under 
34 CFR 600.9(a)(1) that offers a program solely through distance 
education or correspondence courses must disclose directly and 
individually--
    (i) To each prospective student, any determination by the 
institution that the program does not meet licensure or certification 
prerequisites in the State of the student's residence, prior to the 
student's enrollment; and
    (ii) To each enrolled and prospective student--
    (A) Any adverse action initiated by a State or an accrediting 
agency related to postsecondary education programs offered by the 
institution solely through distance education or correspondence study 
within 30 days of the institution's becoming aware of such action; or
    (B) Any determination by the institution that the program ceases to 
meet licensure or certification prerequisites of a State within 7 days 
of that determination.
    (2) For a prospective student who received a disclosure under 
paragraph (c)(1)(i) of this section and who subsequently enrolls in the 
program, the institution must receive acknowledgment from that student 
that the student received the disclosure and be able to demonstrate 
that it received the student's acknowledgment.

(Authority: 20 U.S.C. 1092)

[FR Doc. 2016-17068 Filed 7-22-16; 8:45 am]
 BILLING CODE 4000-01-P