Foreign Institutions-Federal Student Aid Programs, 42190-42236 [2010-17313]
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Federal Register / Vol. 75, No. 138 / Tuesday, July 20, 2010 / Proposed Rules
DEPARTMENT OF EDUCATION
34 CFR Parts 600, 668, and 682
RIN 1840–AD03
[Docket ID ED–2010–OPE–0009]
Foreign Institutions—Federal Student
Aid Programs
AGENCY: Office of Postsecondary
Education, Department of Education.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Secretary proposes to
implement provisions related to the
eligibility of foreign institutions for
participation in the Federal student aid
programs that were added to the Higher
Education Act of 1965, as amended
(HEA), by the Higher Education
Opportunity Act of 2008 (HEOA), as
well as other provisions related to the
eligibility of a foreign institution by
amending the regulations for
Institutional Eligibility Under the
Higher Education Act of 1965, the
Student Assistance General Provisions,
and the Federal Family Education Loan
(FFEL) Program.
DATES: We must receive your comments
on or before August 19, 2010.
ADDRESSES: Submit your comments
through the Federal eRulemaking Portal
or via postal mail, commercial delivery,
or hand delivery. We will not accept
comments by fax or by e-mail. Please
submit your comments only one time, in
order to ensure that we do not receive
duplicate copies. In addition, please
include the Docket ID at the top of your
comments.
• Federal eRulemaking Portal: Go to
https://www.regulations.gov to submit
your comments electronically.
Information on using Regulations.gov,
including instructions for finding a
regulation, submitting a comment,
finding a comment, and signing up for
e-mail alerts, is available on the site
under ‘‘How To Use Regulations.gov’’ in
the Help section.
• Postal Mail, Commercial Delivery,
or Hand Delivery. If you mail or deliver
your comments about these proposed
regulations, address them to Wendy
Macias, U.S. Department of Education,
1990 K Street, NW., room 8017,
Washington, DC 20006–8502.
Privacy Note: The Department’s policy for
comments received from members of the
public (including those comments submitted
by mail, commercial delivery, or hand
delivery) is to make these submissions
available for public viewing in their entirety
on the Federal eRulemaking Portal at https://
www.regulations.gov. Therefore, commenters
should be careful to include in their
comments only information that they wish to
make publicly available on the Internet
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FOR FURTHER INFORMATION CONTACT: For
general information or information
related to nonprofit status for foreign
institutions, public foreign institutions
and financial responsibility, eligibility
of training programs at foreign
institutions, and foreign graduate
medical schools, Wendy Macias.
Telephone: (202) 502–7526 or via the
Internet at: Wendy.Macias@ed.gov.
For information related to audited
financial statements and compliance
audits, Anthony Gargano. Telephone:
(202) 502–7519, or via the Internet at:
Anthony.Gargano@ed.gov.
For information related to the
definition of a foreign institution, Gail
McLarnon. Telephone: (202) 219–7048,
or via the Internet at:
Gail.McLarnon@ed.gov.
For information related to single legal
authorization for groups of foreign
institutions, foreign veterinary schools,
foreign nursing schools and certification
of foreign institutions, Brian Smith.
Telephone: (202) 502–7551, or via the
Internet at Brian.Smith@ed.gov.
If you use a telecommunications
device for the deaf, call the Federal
Relay Service, toll free, at 1–800–877–
8339.
Individuals with disabilities can
obtain this document in an accessible
format (e.g., braille, large print,
audiotape, or computer diskette) on
request to one of the contact persons
listed under FOR FURTHER INFORMATION
CONTACT.
SUPPLEMENTARY INFORMATION:
Invitation To Comment
As outlined in the section of this
notice entitled Negotiated Rulemaking,
significant public participation, through
three public hearings and three
negotiated rulemaking sessions, has
occurred in developing this notice of
proposed rulemaking (NPRM). In
accordance with the requirements of the
Administrative Procedure Act, we invite
you to submit comments regarding these
proposed regulations on or before
August 19, 2010. To ensure that your
comments have maximum effect in
developing the final regulations, we
urge you to identify clearly the specific
section or sections of the proposed
regulations that each of your comments
addresses and to arrange your comments
in the same order as the proposed
regulations.
We invite you to assist us in
complying with the specific
requirements of Executive Order 12866,
including its overall requirements to
assess both the costs and the benefits of
the proposed regulations and feasible
alternatives, and to make a reasoned
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determination that the benefits of these
proposed regulations justify their costs.
Please let us know of any further
opportunities we should take to reduce
potential costs or increase potential
benefits while preserving the effective
and efficient administration of the
programs.
During and after the comment period,
you may inspect all public comments
about these proposed regulations by
accessing Regulations.gov. You may also
inspect the comments, in person, in
room 8031, 1990 K Street, NW.,
Washington, DC, between the hours of
8:30 a.m. and 4:00 p.m., Eastern time,
Monday through Friday of each week
except Federal holidays.
Assistance to Individuals With
Disabilities in Reviewing the
Rulemaking Record
On request, we will supply an
appropriate aid, such as a reader or
print magnifier, to an individual with a
disability who needs assistance to
review the comments or other
documents in the public rulemaking
record for these proposed regulations. If
you want to schedule an appointment
for this type of aid, please contact one
of the persons listed under FOR FURTHER
INFORMATION CONTACT.
Negotiated Rulemaking
Section 492 of the HEA requires the
Secretary, before publishing certain
proposed regulations for programs
authorized by Title IV of the HEA, to
obtain public involvement in the
development of the proposed
regulations. After obtaining advice and
recommendations from the public,
including individuals and
representatives of groups involved in
the Federal student financial assistance
programs, the Secretary in many cases
must subject the proposed regulations to
a negotiated rulemaking process.
Proposed regulations that the
Department publishes on which the
negotiators reached consensus must
conform to final agreements resulting
from that process unless the Secretary
reopens the process or provides a
written explanation to the participants
stating why the Secretary has decided to
depart from the agreements. Further
information on the negotiated
rulemaking process can be found at:
https://www.ed.gov/policy/highered/leg/
hea08/.
On May 26, 2009, the Department
published a notice in the Federal
Register (74 FR 24728) announcing our
intent to establish two negotiated
rulemaking committees to prepare
proposed regulations. One committee
would focus on issues related to
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program integrity (Team I—Program
Integrity Issues). A second committee
would focus on issues related to the
eligibility of foreign institutions for
participation in the Title IV, HEA
programs (Team II—Foreign School
Issues). On September 9, 2009, the
Department published a second notice
in the Federal Register (74 FR 46399)
listing the topics the committees were
likely to address and requested
nominations of individuals for
membership on the committees who
could represent the interests of key
stakeholder constituencies on each
committee.
Team II—Foreign School Issues (Team
II) met to develop proposed regulations
during the months of November 2009,
January 2010, and February 2010.
The Department developed a list of
proposed regulatory provisions based on
the provisions contained in the HEOA
and from advice and recommendations
submitted by individuals and
organizations as testimony to the
Department in a series of three public
hearings held on—
• June 15–16, 2009, at the
Community College of Denver in
Denver, Colorado;
• June 18–19, 2009, at the University
of Arkansas in Little Rock, Arkansas;
• June 22–23, 2009, at the
Community College of Philadelphia in
Pennsylvania.
In addition, the Department accepted
written comments on possible
regulatory provisions submitted directly
to the Department by interested parties
and organizations. A summary of all
comments received orally and in writing
is posted as background material in the
docket for this NPRM. Transcripts of the
regional meetings can be accessed at
https://www.ed.gov/policy/highered/leg/
hea08/.
Staff within the Department also
identified issues for discussion and
negotiation.
At its first meeting, Team II reached
agreement on its protocols. The agenda
included the issues identified for the
Committee’s consideration.
Team II included the following
members:
• Harrison Wadsworth, representing
the International Education Council.
• Yvonne Oberhollenzer and John
Hayton (alternate), Australian Education
International North America,
representing the Embassy of Australia,
the Embassy of New Zealand, the British
Council and the German Academic
Exchange Service.
• Judy Stymest, McGill University,
and Alexander Leipziger (alternate),
Canadian Embassy, representing the
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Canadian Association of Student
Financial Aid Administrators.
• Warren Ross and Jerry Thornton
(alternate), representing the
International University of Nursing and
the University of Medicine and Health
Sciences.
• Cynthia Holden, American
University of the Caribbean, and James
McIntyre (alternate), McIntyre Law
Firm, PLLC, representing American
University of the Caribbean.
• Nancy Perri, Ross University School
of Medicine, and William Clohan
(alternate), DeVry Inc., representing
Ross University School of Medicine.
• Steven Rodger, and Patrick
Donnellan (alternate) representing R3
Education Inc.
• Ronald Blumenthal and Rebecca
Campoverde (alternate) representing
Kaplan, Inc.
• Charles Modica, representing St.
George’s University.
• Betsy Mayotte, American Student
Assistance, and Jacqueline Fairbairn
(alternate), Great Lakes Higher
Education Guaranty Corporation,
representing guaranty agencies.
• David Bergeron and Gail McLarnon
(alternate), U.S. Department of
Education, representing the Federal
Government.
The Committee’s protocols provided
that the Committee would operate by
consensus, meaning there must be no
dissent by any member. Under the
protocols, if the Committee reaches
consensus on all issues, the Department
will use the consensus-based language
in the proposed regulations and
Committee members and the
organizations whom they represent will
refrain from commenting negatively on
the package, except as provided for in
the agreed upon protocols.
During the meetings, Team II
reviewed and discussed drafts of
proposed regulations. At the final
meeting in February 2010, Team II
reached consensus on the proposed
regulations in this document.
More information on the work of
Team II can be found at https://
www2.ed.gov/policy/highered/reg/
hearulemaking/2009/negregsummerfall.html.
Summary of Proposed Changes
These proposed regulations would
implement provisions related to the
eligibility of foreign institutions to
participate in the Title IV, HEA
programs including—
• Establishing submission
requirements for compliance audits and
audited financial statements specific to
foreign institutions;
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• Clarifying and revising the
definition of a foreign institution;
• Establishing a definition of
nonprofit status specific to foreign
institutions;
• Establishing a financial
responsibility standard for foreign
public institutions that is comparable to
the financial responsibility standard for
domestic public institutions;
• Permitting a single legal
authorization for groups of foreign
institutions under the purview of a
single government entity;
• Establishing eligibility of training
programs at foreign institutions;
• Establishing institutional eligibility
criteria specific to foreign graduate
medical schools, foreign veterinary
schools, and foreign nursing schools;
and
• Revising the maximum certification
period for some foreign institutions.
Significant Proposed Regulations
We group major issues according to
subject, with appropriate sections of the
proposed regulations referenced in
parentheses. We discuss other
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.
Until amended effective July 1, 2010,
section 102(a)(1)(C) of the HEA
provided that foreign institutions may
participate in the Title IV, HEA
programs ‘‘only for purposes of part B of
Title IV.’’ Part B of Title IV contains the
statutory requirements for the FFEL
Program. With the enactment of the
Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111–
152) (HCERA) on March 30, 2010, as of
July 1, 2010, there will be no new
originations of FFEL Program loans. All
new originations with a first
disbursement on or after July 1, 2010,
will be made via the William D. Ford
Federal Direct Loan (Direct Loan)
Program, including loans for students
attending foreign institutions. At the
time these proposed regulations were
negotiated, it was unclear whether the
proposed legislation that would end the
FFEL Program would be enacted. As a
result, these proposed regulations
reference participation in the FFEL
Program, except as noted. When the
Department publishes final regulations
to implement these proposed
regulations, it will correct those
references in the regulations resulting
from these proposed regulations to
indicate participation in the Direct Loan
Program, rather than the FFEL Program.
Any substantive or technical changes to
the Title IV, HEA program regulations
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resulting from the HCERA will be
addressed through future rulemaking
efforts. For more information about the
transition of foreign institutions to the
Direct Loan Program, contact the Office
of Federal Student Aid’s Foreign
Schools Team at
fsa.foreign.schools@ed.gov or (202) 377–
3168.
Part 600 Institutional Eligibility Under
the Higher Education Act of 1965, as
Amended.
Nonprofit Status for Foreign
Institutions (§ 600.2)
Statute: Section 102(a)(2)(A) of the
HEA directs the Secretary to establish
criteria by regulation for the
determination that foreign institutions
are comparable to an institution of
higher education as defined in section
101 of the HEA—which specifies that an
institution of higher education must be
a public or other nonprofit institution—
except that foreign graduate medical
schools, foreign veterinary schools, and
foreign nursing schools may be forprofit. Sections 101(a)(4) and 101(b)(2)
of the HEA identify nonprofit
institutions as one type of institution
that may be an institution of higher
education and, therefore, may be
eligible to apply to participate in the
Title IV, HEA programs.
Current Regulations: Section 600.54
provides that, to participate in the Title
IV, HEA programs, a foreign institution
must be a public or private nonprofit
educational institution. Foreign
graduate medical schools, foreign
veterinary schools, and foreign nursing
schools are excepted from this
requirement by section 102(a)(2)(A) of
the HEA. Section 600.2 defines a
nonprofit institution as an institution
that—
• Is owned and operated by one or
more nonprofit corporations or
associations, no part of the net earnings
of which benefits any private
shareholder or individual;
• Is legally authorized to operate as a
nonprofit organization by each State in
which it is physically located; and
• Is determined by the U.S. Internal
Revenue Service (IRS) to be an
organization to which contributions are
tax-deductible in accordance with
section 501(c)(3) of the Internal Revenue
Code (26 U.S.C. 501(c)(3)).
Proposed Regulations: Under
proposed § 600.2, a new paragraph (2) of
the definition of a nonprofit institution
would provide that if a recognized tax
authority of a foreign institution’s home
country is recognized by the Secretary
for purposes of making determinations
of an institution’s nonprofit status for
Title IV, HEA purposes, the Secretary
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would automatically accept that tax
authority’s determination of nonprofit
educational status for any institution
located in that country. If a recognized
tax authority of the institution’s home
country is not recognized by the
Secretary for purposes of making
determinations of an institution’s
nonprofit status for Title IV, HEA
program purposes, a foreign institution
would have to demonstrate to the
satisfaction of the Secretary that it is a
nonprofit educational institution. The
proposed regulations would also make
clear that a nonprofit foreign institution
may not be owned by a for profit entity,
directly or indirectly. A foreign
institution that did not meet this
definition of a nonprofit foreign
institution would not be eligible to
participate in the Title IV, HEA
programs unless it was a medical,
veterinary, or nursing school.
Reasons: As foreign institutions must
be nonprofit institutions to participate
in the Title IV, HEA programs, unless
they are medical, veterinary, or nursing
schools, the Department believes it is
necessary to delineate in regulations the
requirements for demonstrating
nonprofit status for foreign institutions.
Some non-Federal negotiators originally
suggested that the Department should
always defer to any determination by a
foreign country that an institution is
nonprofit. The Department pointed out
that a domestic institution must be
determined by the U.S. IRS to be a
nonprofit organization in order to be
eligible as a nonprofit institution for
participation in the Title IV, HEA
programs. The Department also noted
that certain countries may not have
standards for the determination of
nonprofit status that are comparable to
those used in the United States, and
may not ensure that the institution’s net
earnings do not benefit any private
shareholder or individual. Therefore, to
make the proposed regulations as
comparable as possible to those
applicable to domestic institutions, the
Department proposed, and the
Committee agreed, that a determination
that an institution is nonprofit by an
entity in the institution’s foreign
country would qualify an institution as
nonprofit only if the determination is
made by a recognized tax authority of
the country, and the Secretary has
recognized that tax authority as one that
can make a determination using criteria
that are similar to those used by the IRS.
In response to non-Federal negotiators
pointing out that some countries may
have more than one recognized entity
for the purpose of making
determinations of the nonprofit status of
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its institutions, the Department made
clear during the negotiations that under
the language proposed, the Secretary
may recognize more than one tax
authority in a country. Some nonFederal negotiators suggested that the
Department allow a determination of
nonprofit status to be made by an entity
other than a recognized tax authority of
the country. The Department noted that,
as the proposed language was written,
information submitted by such entities
would be taken into account by the
Department; however, this would be
done as part of an individual
determination of the eligibility of an
institution. The Department believes
that the only entities it should recognize
across the board for making
determinations of nonprofit status are
those that are responsible for
administering the country’s tax laws.
Definition of a Foreign Institution
(§§ 600.51, 600.52, 600.54, 682.200 and
682.611)
Statute: Section 102(a)(1)(C) of the
HEA provides that an ‘‘institution of
higher education,’’ only for the purposes
of part B of Title IV, includes an
institution outside the United States
that is comparable to an institution of
higher education as that term is defined
in section 101 of the HEA and is an
institution that has been approved by
the Secretary. Section 102(a)(2)(A) of the
HEA requires the Secretary to establish
regulatory criteria for the approval of
such institutions and for the
determination that they are comparable.
Current Regulations: Subpart E of 34
CFR part 600 (§§ 600.51 through 600.57)
contains the eligibility requirements
that a foreign institution must meet to
participate in the FFEL Program.
Current § 600.51 explains the purpose
and scope of subpart E and provides
that a foreign institution is eligible to
participate in the FFEL Program if it is
comparable to an eligible institution of
higher education located in the United
States and has been approved by the
Secretary. Implementing a statutory
provision in section 481(b)(4) of the
HEA, current § 600.51 also provides that
a program offered by a foreign school
through any use of a
telecommunications or correspondence
course or through a direct assessment
program is not an eligible program.
Current § 600.52 contains the
definitions associated with subpart E
and defines foreign institution as an
institution that is not located in a State.
State is defined in § 600.2 as a State of
the Union, American Samoa, the
Commonwealth of Puerto Rico, the
District of Columbia, Guam, the Virgin
Islands, the Commonwealth of the
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Northern Mariana Islands, the Republic
of the Marshall Islands, the Federal
States of Micronesia, and the Republic
of Palau.
Current § 600.54 contains the criteria
the Secretary uses to determine whether
a foreign institution is eligible to apply
to participate in the FFEL Program. A
public or private nonprofit foreign
institution may apply to participate in
the FFEL Program if the institution—
• Admits as regular students only
those students with a secondary school
completion credential or its recognized
equivalent;
• Is legally authorized by an
appropriate authority to provide an
eligible program beyond the secondary
school level in the country in which the
institution is located; and
• Provides eligible programs for
which the institution is legally
authorized to award the equivalent of an
associate, baccalaureate, graduate, or
professional degree awarded in the
United States; provides an eligible
program that is at least a two-academic
year program acceptable for full credit
toward the equivalent of a baccalaureate
degree awarded in the United States; or,
provides an eligible program that is
equivalent to at least a one-academic
year training program in the United
States that leads to a certificate, degree,
or other recognized educational
credential and prepares students for
gainful employment in a recognized
occupation.
Currently, §§ 668.2 and 682.200 do
not contain a reference to the definition
of foreign institution in the list of
definitions set forth in 34 CFR part 600.
Lastly, current § 682.611 provides that
a foreign school is required to comply
with the provisions of part 682 unless
the regulations or other official
Department of Education publications
or documents state otherwise.
Proposed Regulations: The proposed
regulations would remove and reserve
§ 682.611, remove the definition of
foreign school from § 682.200(b)(1), and
add references to §§ 668.2(a)(2) and
682.200(a)(2) specifying that the
definition of foreign institution is
contained in regulations for Institutional
Eligibility under the HEA, as amended,
34 CFR part 600. These proposed
revisions would consolidate the
requirements and definitions related to
the eligibility of foreign institutions to
apply for Title IV, HEA program
participation in subpart E of 34 CFR part
600. The proposed regulations would
revise § 600.51(c) to incorporate the
provisions of removed § 682.611, i.e.,
that a foreign institution must comply
with all requirements for eligible and
participating institutions except to the
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extent those provisions are inconsistent
with the HEA, 34 CFR part 600, or other
regulatory provisions specific to foreign
institutions. Proposed § 600.51(c) would
also exempt foreign institutions from
requirements that the Secretary
identifies through a notice in the
Federal Register.
The proposed regulations would
amend § 600.52 to include a detailed
definition of foreign institution. Under
the definition proposed, foreign
institution would mean, for the
purposes of students who receive Title
IV, HEA program aid, an institution
that—
• Is not located in a State;
• Except with respect to clinical
training offered at foreign graduate
medical, veterinary, and nursing
schools, has no U.S. locations;
• Has no written arrangements,
within the meaning of § 668.5, with
institutions or organizations located in
the U.S. for students at foreign
institutions to take a portion of the
program from institutions located in the
U.S.;
• Does not permit students to enroll
in any course offered by the foreign
institution in the U.S. except for
independent research under very
limited circumstances;
• Is legally authorized by the
education ministry, council, or
equivalent agency of its home country to
provide an education program beyond
the secondary level;
• Awards degrees, certificates, or
other recognized educational credentials
in accordance with § 600.54(d) that are
officially recognized by the institution’s
home country; and
• For any program designed to
prepare the student for employment in
a recognized occupation, provides a
credential that satisfies the educational
requirements in the institution’s home
country for entry into that occupation,
including licensure; and satisfies the
educational requirements for entry into
that occupation in the U.S., including
licensure.
The proposed definition of foreign
institution would also require that if an
educational enterprise enrolls students
both within a State and outside a State,
and the number of students who would
be eligible to receive Title IV, HEA
program funds attending locations
outside a State is at least twice the
number of students enrolled within a
State, the locations outside a State must
apply to participate as one or more
foreign institutions and must meet all
requirements of the definition of foreign
institution and other requirements of 34
CFR part 600. Under the proposed
regulations, educational enterprise
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would mean an enterprise consisting of
two or more locations offering all or part
of an educational program that are
directly or indirectly under common
control.
The proposed regulations would
amend the threshold criteria in § 600.54
for determining whether a foreign
institution is comparable to a domestic
‘‘institution of higher education’’ as that
term is defined in the HEA, and eligible
for Title IV, HEA program participation.
Proposed § 600.54(a) states that to be
eligible, a foreign institution that is not
a freestanding foreign graduate medical,
veterinary, or nursing school must be a
public or private nonprofit educational
institution (i.e., a for-profit foreign
institution may participate only if it is
a freestanding foreign graduate medical,
veterinary, or nursing school). Proposed
§ 600.54(c)(1) would prohibit an eligible
foreign institution from entering into a
written arrangement under which an
ineligible institution or organization
provides any portion of one or more of
the eligible foreign institution’s
programs. Written arrangements would
not include affiliation agreements for
the provision of clinical training for
foreign graduate medical, veterinary,
and nursing schools under this
proposed change. Proposed
§ 600.54(c)(2) would require that an
additional location of a foreign
institution must separately meet the
proposed definition of foreign
institution in § 600.52 if it is located
outside of the country in which the
main campus is located, except for
clinical locations of foreign graduate
medical, veterinary, and nursing
schools, as provided for in
§ 600.55(h)(1), § 600.56(b),
§ 600.57(a)(2), § 600.55(h)(3), and except
for locations at which independent
research is conducted as part of a
doctoral program as provided for in the
definition of foreign institution in
§ 600.52. Under proposed § 600.52(c)(2),
an additional location of a foreign
institution would also have to meet
separately the definition of foreign
institution, even if that location is
within the same country as the main
campus, if it is not covered by the legal
authorization of the main campus.
Lastly, proposed § 600.54(e) would
prohibit any portion of an eligible forprofit foreign graduate medical or
veterinary program from being offered at
what would be an undergraduate level
in the U.S. and would deny Title IV,
HEA program eligibility to any joint
degree programs offered at for-profit
foreign graduate medical, veterinary, or
nursing schools.
Reasons: Proposed §§ 600.52 and
600.54, revising and adding detail to the
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definition of foreign institution, are
necessary to ensure that a foreign
institution is comparable to institutions
in the United States, in accordance with
section 102(a)(1)(C) of the HEA, before
the foreign institution is allowed to
apply for Title IV, HEA program
participation. The Department is
concerned that a foreign institution that
is not comparable to a domestic
institution, especially in terms of the
quality of its educational programs, may
misuse Federal funds to the detriment of
its students who may have to borrow
heavily in order to attend the foreign
institution. The proposed regulations
also more fully implement the scheme
of the HEA, which distinguishes
between foreign and domestic
institutions and includes provisions
unique to each. For example, these
regulations would prevent a domestic
institution from claiming to be a foreign
institution by virtue of the fact that it
has established an offshore location,
thereby avoiding the requirements
applied to domestic institutions such as
recognized accreditation, but that sends
its students to the United States for the
majority of the required coursework.
During the first round of negotiated
rulemaking, the Federal negotiator
explained the need for a more detailed
definition of foreign institution and
sought comments and feedback from the
non-Federal negotiators. Several
negotiators urged the Department to
define foreign institution in a way that
ensures quality control through high
academic standards and avoids abuse of
the Title IV, HEA programs. The nonFederal negotiators suggested requiring
that foreign institutions be subject to
accreditation by accreditors recognized
by the Department as a means of
ensuring comparability with domestic
institutions. The Federal negotiator
explained that the Department does not
recognize U.S. accreditors for
accreditation of institutions outside the
United States. In light of this fact, the
non-Federal negotiators suggested a
requirement that foreign institutions be
‘‘legally authorized’’ by an appropriate
authority in the country in which the
institution is located, such as a Ministry
of Education or other governmental
agency. Other non-Federal negotiators
also urged the Department to be flexible
in this area because such authority
could reside in different branches of
government depending on the country.
Recognizing that there might be
pressure on some foreign governments
to set minimal standards because
educational institutions are an
important part of their economy, several
non-Federal negotiators suggested that
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the Department require foreign
countries to recognize the degrees and
licenses offered by a foreign institution.
In the second round of negotiations,
the Department responded with draft
language that addressed many of the
non-Federal negotiators’ suggestions
from the first round of discussion.
However, the Department’s inclusion of
provisions prohibiting foreign
institutions from entering into written
arrangements with institutions located
in the United States and preventing
foreign institution students from
engaging in courses, research, work, and
other pursuits within the United States
drew objections from the non-Federal
negotiators. The Federal negotiator
explained that these provisions
addressed abuses witnessed by the
Department whereby an institution sets
up an offshore campus to claim foreign
institution status and thus avoids
domestic requirements even though the
institution is, for all intents and
purposes, a domestic institution. The
non-Federal negotiators felt the
language prohibiting students from
engaging in pursuits within the U.S. was
too broad and urged the Department to
make exceptions for research conducted
in the United States by PhD students.
The non-Federal negotiators also
requested that the Department clarify
what it meant by ‘‘written arrangements’’
in the provision that would prohibit
foreign institutions from having written
arrangements with U.S. institutions or
organizations, noting that many foreign
institutions have multiple types of
written arrangements with institutions
in the U.S.
Based on comments received from the
non-Federal negotiators at the second
round of negotiated rulemaking, the
Department returned to the last round
with language that added a crossreference to § 668.5 in draft paragraph
(1)(iii) of the definition of foreign
institution to clarify the meaning of
written arrangements. The proposed
language also added an exception in
draft paragraph (1)(iv) of the definition
of foreign institution for independent
research done under certain
circumstances during the dissertation
phase of a doctoral program from the
general prohibition on enrolling
students in courses offered by a foreign
institution in the United States. In draft
paragraph (2) of the definition of foreign
institution, the Department sought to
further distinguish between foreign and
domestic institutions by prohibiting
foreign locations of an educational
enterprise from being considered
additional locations of a domestic
location of the educational enterprise if
the enterprise has at least twice as many
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students enrolled in foreign locations as
those enrolled in domestic locations.
This provision would prevent a
predominantly foreign educational
enterprise from establishing a minor
presence within the United States for
the purpose of circumventing the
statutory provision limiting foreign
institution participation to the Direct
Loan program (or, before July 1, 2010, to
the FFEL program), so as to provide
other Title IV grant, loan, and workstudy funds to students at what are
really foreign institutions. In addition,
in response to requests by non-Federal
negotiators, the Department added
clarity to the paragraph by describing an
‘‘educational enterprise’’ as an entity
that consists of two or more locations
offering all or part of an educational
program that are directly or indirectly
under common ownership. Locations
are considered to be ‘‘indirectly’’ under
common ownership if, at any level, the
locations are owned and controlled by
the same parties, or related parties,
within the meaning of § 600.31. In draft
§ 600.54(c)(1), the Department clarified
that written arrangements do not
include affiliation agreements for the
provision of clinical training.
The non-Federal negotiators were
comfortable with the majority of the
Department’s proposed language but
several non-Federal negotiators
continued to raise concerns about the
proposed language prohibiting U.S.
locations of foreign institutions and
written arrangements with institutions
located in the United States. The
Federal negotiator stated that foreign
institutions are free to establish U.S.
locations and have written arrangements
with institutions located in the United
States, but that such locations and
institutions would need to be separately
certified and meet the requirements
applicable to domestic institutions in
order for U.S. students attending them
to receive Title IV, HEA program funds.
In this regard, the Department does not
want a foreign institution to send its
U.S. students to a U.S. location of a
foreign institution, or to a U.S.
institution with which it has an
agreement for their training, because
students enrolled in a foreign institution
are only eligible for Direct Loan program
(or, before July 1, 2010, FFEL program)
loans. Instead the Department wants
U.S. students attending postsecondary
institutions in the United States to be
eligible for the full range of Title IV,
HEA program funds available to
domestic institutions. The Federal
negotiator noted that it would be
acceptable for a U.S. student to transfer
officially from a foreign institution to an
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school in § 600.52. In addition, the
proposed regulations would modify the
regulations governing certification
procedures in § 668.13.
The proposed definition of foreign
graduate medical school in § 600.52
would be modified by removing the
reference to the World Directory of
Medical Schools (see the discussion
under Foreign Graduate Medical
Schools below) and replacing it with
language specifying that a foreign
graduate medical school is a foreign
institution or component of a foreign
institution that has, as its sole mission,
providing an educational program that
leads to a degree of medical doctor,
doctor of osteopathy, or its equivalent.
The proposed definition would clarify
that references to a foreign graduate
medical school as ‘‘freestanding’’ pertain
solely to a school that qualifies by itself
as a foreign institution, and not to a
school that is a component of a larger
university that qualifies as a foreign
institution. Similar language is included
in the proposed definitions for the terms
foreign nursing school and foreign
veterinary school.
The proposed regulations would
amend § 668.13(b)(1) to specify that the
period of participation for a private, forprofit foreign institution expires three
years after the date the institution is
certified by the Secretary, rather than
the current six years.
Certification of Foreign Institutions
Reasons: The National Committee on
(§§ 600.52 and 668.13)
Foreign Medical Education and
Accreditation (NCFMEA) recommended
Statute: Section 102(a)(5) of the HEA
that a foreign graduate medical school
requires the Secretary to certify an
that is a component of a larger foreign
institution’s qualifications as an
institution be certified as a separate
institution of higher education in
institution of higher education from the
accordance with subpart 3, part H of
larger institution (Recommendation
Title IV. Under section 498(g)(1) of the
14(a)). The Department initially
HEA, the Secretary is authorized to
proposed implementing this
certify an institution’s eligibility for
purposes of participating in the Title IV, recommendation and applying it to
foreign nursing and veterinary schools
HEA programs for a period of up to six
as well. Under that proposal, a graduate
years.
Current Regulations: Section 600.52 of medical, nursing, or veterinary school
that is part of a larger institution would
the Institutional Eligibility regulations
defines foreign graduate medical school be given its own OPEID number. Cohort
default rates for the graduate medical,
as a foreign institution that is listed in
nursing, or veterinary school would be
the most current edition of the World
calculated independently of the cohort
Directory of Medical Schools. Foreign
default rate for the larger foreign
nursing school and foreign veterinary
institution.
school are not currently defined in
After discussions with the non§ 600.52.
Federal negotiators regarding the
Section 668.13(b)(1) of the General
administrative burdens that separate
Provisions regulations specifies that an
certification of non-freestanding
institution’s period of participation
graduate medical, veterinary, and
expires six years after the date of
nursing schools would entail, the
certification, except that the Secretary
Department decided to withdraw this
may specify a shorter period.
proposal. Instead, the Department will
Proposed Regulations: The proposed
regulations would modify the definition track such graduate medical, veterinary,
and nursing schools separately from the
of foreign graduate medical school and
larger institution. To facilitate this, the
add definitions for the terms foreign
Department proposed regulations that
nursing school and foreign veterinary
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institution in the U.S. that would be
separately certified as a domestic
institution. The non-Federal negotiators
asked the Department to clarify that the
proposed definition of foreign
institution would apply only for the
purposes of students who receive Title
IV, HEA program funds. For example, a
foreign institution would not be
prohibited from having U.S. locations,
but the locations would not be
recognized as part of the institution for
Title IV purposes, so no student
attending the location, or enrolled in a
program designed to be offered there in
whole or in part, would be eligible to
receive Title IV, HEA program funds.
Similarly, a foreign institution may also
maintain agreements with a U.S.
institution or organization so that
students of the foreign institution may
continue to engage in exchange
opportunities offered by U.S.
institutions, but the agreement would
not be recognized for Title IV, HEA
purposes, so no student attending the
U.S. institution, or enrolled in a
program designed to be offered there in
whole or in part, would be eligible to
receive Title IV, HEA program funds.
The Department noted that the Title IV,
HEA program regulations are always
applicable for Title IV, HEA program
purposes only, but agreed to add the
clarification.
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clarify the distinction between
‘‘freestanding’’ graduate medical,
veterinary, and nursing schools and
graduate medical, veterinary, and
nursing schools that are components of
a larger foreign institution.
The NCFMEA also recommended that
all foreign graduate medical schools be
certified for a period of no more than
three years (Recommendation 14(b)).
The Department initially proposed
reducing the certification period for all
foreign institutions from six years to
three years to provide the Department
with more oversight over foreign
institutions. Non-Federal negotiators
noted that the Department’s proposal to
decrease the certification period would
be administratively burdensome for
institutions. Some non-Federal
negotiators felt that the increased
administrative burden might lead
foreign institutions that enroll small
numbers of Title IV borrowers to
reconsider participating in the Title IV,
HEA programs. Non-Federal negotiators
also noted that for-profit foreign
institutions might have difficulty raising
capital based on three-year certifications
rather than six-year certifications.
Non-Federal negotiators also
contended that the reduction in the
certification period would not provide
much benefit to the Department. They
felt that the relevant information for an
institution would not be likely to
change significantly in three years. The
non-Federal negotiators also pointed out
that this change would increase the
workload for the Department staff who
review and approve institutional
eligibility applications for foreign
institutions.
The Department continues to believe
that reducing the certification period
will give the Department better
oversight over foreign institutions,
particularly over institutions that enroll
large numbers of Title IV borrowers.
However, the Department acknowledges
that decreasing the certification period
from six to three years would be
unnecessary for certain types of
institutions. Therefore, the Department
revised its proposal by limiting the
three-year certification period to private,
for-profit medical, veterinary, and
nursing schools. These institutions,
among all participating foreign
institutions, continue to receive by far
the largest amounts of Title IV, HEA
program funds. Under the revised
proposal, public and nonprofit
institutions would continue to be
recertified every six years.
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Single Legal Authorization for Groups
of Foreign Institutions (§ 600.54)
Statute: Section 101(a)(2) of the HEA
requires a domestic institution of higher
education to be legally authorized by
the State in which it is located to
provide a program of postsecondary
education. Section 102(a)(2)(A) of the
HEA requires the Secretary, through
regulation, to develop eligibility criteria
for foreign institutions of higher
education that are comparable to the
eligibility criteria for U.S. institutions of
higher education. Section 498(a) and (b)
of the HEA require the Secretary to
determine whether an institution is
legally authorized and to prepare and
prescribe an application form for
purposes of determining that the
requirements of eligibility,
accreditation, financial responsibility,
and administrative capability are met.
Current Regulations: Section
600.54(b) of the current regulations
requires a foreign institution to be
legally authorized by an appropriate
authority to provide postsecondary
education in the country where the
institution is located.
Proposed Regulations: Proposed
§ 600.54(f) would provide three different
methods for a foreign institution to
prove that it is legally authorized to
provide postsecondary education in the
country where the institution is located.
The documentation from a foreign
country’s education ministry, council,
or equivalent agency may either be—
• A single legal authorization that
covers all eligible foreign institutions in
the country;
• A single legal authorization that
covers all eligible foreign institutions in
a jurisdiction within the country; or
• Separate legal authorizations for
each eligible foreign institution in the
country.
Reasons: To ease administrative
burden for foreign institutions, the
Department sought to determine if
compliance with any of the foreign
institution eligibility criteria could be
demonstrated at a nationwide level, for
all eligible institutions within a country,
rather than at the individual institution
level. After discussions with the nonFederal negotiators and our own
internal review of the Title IV
institutional eligibility criteria, the
Department determined that the
requirement for proof of legal
authorization to provide postsecondary
education could be provided this way.
Non-Federal negotiators were
generally supportive of the
Department’s proposal. However, they
did raise some concerns. Some nonFederal negotiators felt that institutions
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should not have to rely on a national
government to develop a nationwide list
of institutions legally authorized to
provide postsecondary education in the
country. They contended that some
national governments might not have
the resources to develop and maintain
such a list. The non-Federal negotiators
argued that for institutions in some
countries, it might be cumbersome and
time-consuming to obtain such a list
from the national government. This
would have the effect of slowing down
the eligibility certification processes for
some foreign institutions. These nonFederal negotiators recommended that
institutions retain the option of
providing the Department with their
own individual legal authorizations,
rather than relying on a nationwide list.
Other non-Federal negotiators
believed that it was too constricting to
limit the authority for developing the
list of institutions to an agency of the
national government. They noted that in
some countries, such as Canada, legal
authorization to provide postsecondary
education is provided by the provincial
governments, not by the national
government. These non-Federal
negotiators requested that the
Department make provision for legal
authorizations from government entities
at a provincial level, not at the national
level.
The Department agreed with these
recommendations. In addition to
allowing proof of legal authorization to
be provided on a nationwide basis, the
proposed regulations allow for proof of
legal authorization to be provided for all
eligible institutions in a jurisdiction
within the country, and continue to
allow proof of legal authorization to be
provided separately for each eligible
institution in a country.
Eligibility of Training Programs at
Foreign Institutions (§ 600.54)
Statute: Section 101(b)(1) of the HEA
provides, in part, that one type of
educational program that a Title IV
‘‘institution of higher education’’ may
provide to be eligible to apply to
participate in the Title IV, HEA
programs is a training program of at
least one year that prepares students for
gainful employment in a recognized
occupation. Section 102(a)(2)(A)
provides for participation in the Title
IV, HEA programs by entities that are
comparable to such institutions under
regulations prescribed by the Secretary.
Current Regulations: Section 600.54
provides that, in order to be eligible to
apply to participate in the Title IV, HEA
programs, a foreign institution must
provide an eligible educational program
that leads to a degree that is equivalent
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to a U.S. degree, or be at least a twoacademic-year program acceptable for
full credit toward the equivalent of a
U.S. baccalaureate degree, or be
equivalent to at least a one-academicyear training program that leads to a
certificate, degree, or other recognized
educational credential and prepares
students for gainful employment in a
recognized occupation.
Section 668.3 defines an academic
year as—
• For a program offered in credit
hours, a minimum of 30 weeks of
instructional time and, for an
undergraduate program, an amount of
instructional time whereby a full-time
student is expected to complete at least
24 semester or trimester credit hours or
36 quarter credit hours; or
• For a program offered in clock
hours, a minimum of 26 weeks of
instructional time and, for an
undergraduate program, an amount of
instructional time whereby a full-time
student is expected to complete at least
900 clock hours.
Proposed Regulations: Under the
proposed regulations, a foreign
institution would have to demonstrate
to the satisfaction of the Secretary (who
would make program-by-program
determinations of comparability) that
the amount of academic work required
by a program it seeks to qualify as
eligible is at least a one-academic-year
training program that is equivalent to—
• For a program offered in credit
hours, a minimum of 30 weeks of
instructional time and, for an
undergraduate program, an amount of
instructional time whereby a full-time
student is expected to complete at least
24 semester or trimester credit hours or
36 quarter credit hours; or
• For a program offered in clock
hours, a minimum of 26 weeks of
instructional time and, for an
undergraduate program, an amount of
instructional time whereby a full-time
student is expected to complete at least
900 clock hours.
Reasons: The Department believes the
proposed regulations are necessary
because many foreign institutions use
educational measurements other than
conventional U.S. semester, trimester,
quarter credits and clock-hours. As the
definition of an academic year—the
program length measurement used
here—specifically references these U.S.
measurements, it is necessary to make
some sort of comparability
determination in order to determine the
eligibility of these programs at foreign
institutions, and the eligibility of those
foreign institutions that do not offer any
other type of Title IV, HEA eligible
program. The non-Federal negotiators
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provided the Department with
information regarding the definition of
non-degree programs by different
countries, units of measurement for
programs in other countries, and
evaluation and comparability
determinations made by private entities.
The information provided consistently
indicates that the assignment of credits
or other measures of academic work by
foreign institutions vary greatly. As a
result, under the proposed regulations,
the Secretary would make
determinations of comparability on a
program-by-program basis, based on
information provided by a foreign
institution to demonstrate that the
amount of academic work required by a
program it seeks to qualify as eligible is
comparable to at least a one-academicyear training program that is equivalent
to the academic work required for
eligibility of these programs at domestic
institutions.
Two of the issues under negotiation
by the Team I negotiating committee
(Program Integrity Issues)—the
definition of what it means to ‘‘provide
gainful employment in a recognized
occupation’’ and the definition of a
credit hour for Title IV, HEA program
purposes—could impact the eligibility
of all programs, offered at foreign and
domestic institutions, that are eligible
because they are at least one academic
year in length and prepare students for
gainful employment in a recognized
occupation. These Team I issues are
distinct from the issue negotiated here
by Team II—i.e., the translation of
credits or other measures of academic
work by foreign institutions for
purposes of determining program length
(a measure of both weeks and credit
hours).
Foreign Graduate Medical Schools
(§§ 600.20, 600.21, 600.52, 600.55)
Statute: Section 102(a)(2)(A) of the
HEA provides that the Secretary shall
establish criteria by regulation for the
approval of institutions outside the
United States and for the determination
that such institutions are comparable to
an ‘‘institution of higher education’’ as
defined in section 101 of the HEA,
except that a foreign graduate medical,
veterinary or nursing school may be forprofit. That section also provides that,
except for foreign graduate medical
schools that had a clinical training
program that was approved by a State as
of January 1, 1992, at least 60 percent
of students and graduates must not be
persons described in section 484(a)(5) of
the HEA in the year preceding the year
for which students are seeking Title IV,
HEA program loans, and that at least 60
percent of students and graduates taking
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the United States Medical Licensing
Examination (USMLE) administered by
the Educational Commission for Foreign
Medical Graduates (ECFMG) must have
received a passing score in that
preceding year.
Effective July 1, 2010, the HEOA
amended sections 102(a)(2)(A) and (B)
of the HEA to (1) increase the pass rate
threshold for the USMLE from 60
percent to 75 percent; (2) allow a foreign
graduate medical school that was
eligible based on having a clinical
training program approved by a State as
of July 1, 1992, to continue to be eligible
as long as it has continuously operated
a clinical training program in at least
one State that approves the program;
and (3) allow for the promulgation,
through regulations, of new eligibility
criteria for foreign graduate medical
schools that have a clinical training
program approved by a State prior to
January 1, 2008, but that would not
meet the otherwise—applicable
requirement that at least 60 percent of
their students and graduates not be
persons described in section 484(a)(5) of
the HEA in the year preceding the year
for which students are seeking Title IV,
HEA program loans. Section
102(a)(2)(B)(iii)(IV)(aa) of the HEA
provides that such new eligibility
criteria must be based on the
recommendations contained in a report
to be prepared by August 14, 2009, by
the NCFMEA. The NCFMEA is a panel
of medical experts that evaluates the
medical school accrediting agency
standards used in the foreign country
where medical education is provided to
determine comparability to the
standards of accreditation applied to
medical schools in the United States.
The statute required the NCFMEA’s
report to address: entrance
requirements; retention and graduation
rates; successful placement of students
in U.S. medical residency programs;
passage rate of students on the USMLE;
the assessment of program quality by
State medical boards; the extent to
which graduates would be unable to
practice medicine in one or more States,
based on the judgment of a State
medical board; any areas recommended
by the Comptroller General (i.e., head of
the Government Accountability Office
(GAO)) under section 1101 of the
HEOA; and any additional areas the
Secretary may require. The statute
provides that the regulations must, at a
minimum, require a USMLE pass rate of
at least 75 percent.
The HEOA also provides that the
Department may issue an NPRM
addressing the new eligibility criteria
for foreign graduate medical schools no
earlier than 180 days after the
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submission of the report, and may issue
final regulations no earlier than one year
after the issuance of the NPRM.
Current Regulations: Neither § 600.20,
which addresses the application
procedures for establishing,
reestablishing, maintaining, or
expanding institutional eligibility and
certification, nor § 600.21, which
addresses when and how an institution
must update application information,
currently include any provisions
specific to foreign graduate medical
schools. Section 600.52 defines a foreign
graduate medical school as a foreign
institution that qualifies to be listed in,
and is listed as a medical school in, the
most current edition of the World
Directory of Medical Schools published
by the World Health Organization
(WHO). The regulations do not currently
include a definition of clinical training,
the NCFMEA, or a post-baccalaureate/
equivalent medical program. Section
600.55(a)(5) contains the additional
criteria for determining whether a
foreign graduate medical school is
eligible to apply to participate in the
Title IV, HEA programs. Currently, a
foreign graduate medical school
generally must, in addition to satisfying
the criteria in § 600.54 for determining
a foreign institution’s eligibility (except
the criterion that the institution be
public or private nonprofit), satisfy all
of the following criteria:
• Provide, and require its students to
complete a program of clinical and
classroom medical instruction of not
less than 32 months that is supervised
closely by members of the school’s
faculty and that is provided either (1)
Outside the United States, in facilities
adequately equipped and staffed to
afford students comprehensive clinical
and classroom medical instruction; or
(2) In the United States, through a
training program for foreign medical
students that has been approved by all
medical licensing boards and evaluating
bodies whose views are considered
relevant by the Secretary.
• Have graduated classes during each
of the two twelve-month periods
immediately preceding the date the
Secretary receives the school’s request
for an eligibility determination.
• Employ only those faculty members
whose academic credentials are the
equivalent of credentials required of
faculty members teaching the same or
similar courses at medical schools in the
United States;
• Be approved by an accrediting body
(1) that is legally authorized to evaluate
the quality of graduate medical school
educational programs and facilities in
the country where the school is located;
and (2) whose standards of accreditation
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of graduate medical schools have been
evaluated by the advisory panel of
medical experts established by the
Secretary and have been determined to
be comparable to standards of
accreditation applied to medical schools
in the United States.
In addition, current regulations
provide that foreign graduate medical
schools that do not have a clinical
training program that has been
continuously approved by a State since
January 1, 1992, must—
• During the academic year preceding
the year for which any of the school’s
students seeks a FFEL program loan,
have at least 60 percent of those
enrolled as full-time regular students in
the school and at least 60 percent of the
school’s most recent graduating class be
persons who did not meet the
citizenship and residency criteria
contained in section 484(a)(5) of the
HEA, 20 U.S.C. 1091(a)(5); and
• For a foreign graduate medical
school outside of Canada, have at least
60 percent of the school’s students and
graduates who took any step of the
USMLE administered by the ECFMG
(including the ECFMG English test) in
the year preceding the year for which
any of the school’s students seeks a
FFEL program loan to have received
passing scores on the exams. In
performing the calculation, a foreign
graduate medical school must count as
a graduate each person who graduated
from the school during the three years
preceding the year for which the
calculation is performed.
Proposed Regulations: Location of a
graduate medical education program,
affiliation agreements, and application
and notification procedures for foreign
graduate medical schools
Section 600.55(h)(2) of the proposed
regulations would provide that no
portion of the medical education
program offered to U.S. students by a
foreign graduate medical school, other
than the clinical training portion of the
program, would be allowed to be
located outside of the country in which
the main campus of the school is
located.
For clinical training sites located
outside the United States, proposed
§ 600.55(h)(1) would require that, with
two exceptions, all portions of the
medical education program offered to
U.S. students must be located in a
country whose medical school
accrediting standards are comparable to
standards used in the United States, as
determined by the NCFMEA. Under
proposed § 600.55(h)(3), with the same
two exceptions, if any portion of the
clinical training portion of the
educational program is located in an
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approved comparable foreign country
other than the country in which the
main campus is located, the institution’s
medical accrediting agency must have
conducted an on-site evaluation and
specifically approved the clinical
training sites in order for students
attending the site to be eligible to
borrow Title IV, HEA program funds.
Furthermore, clinical instruction offered
at a site in a foreign NCFMEA-approved
country must be offered in conjunction
with medical educational programs
offered to students enrolled in
accredited medical schools located in
that approved foreign country. The two
exceptions are that these criteria would
not have to be met if the clinical
training location is included in the
accreditation of a medical program
accredited by the Liaison Committee on
Medical Education (LCME), or if no
individual student takes more than two
electives at the clinical training location
and the combined length of the electives
does not exceed eight weeks.
Proposed § 600.55(e)(1) would require
a foreign graduate medical school to
have: (1) A formal affiliation agreement
with any hospital or clinic at which all
or a portion of the school’s core clinical
training or required clinical rotations
are provided; and (2) either a formal
affiliation agreement or other written
arrangements with any hospital or clinic
at which all or a portion of its clinical
rotations that are not required are
provided, except for those locations that
are not used regularly, but instead are
chosen by individual students who take
no more than two electives at the
location for no more than a combined
total of eight weeks.
The proposed regulations would
require these affiliation agreements or
other written arrangements to state how
the following will be addressed at each
site: (1) Maintenance of the school’s
standards; (2) appointment of faculty to
the medical school staff; (3) design of
the curriculum; (4) supervision of
students; (5) provision of liability
insurance; and (6) evaluation of student
performance.
Proposed § 600.20(a)(3)(iii) and
§ 600.20(b)(3)(iii) would require a
foreign graduate medical school (i.e., a
freestanding foreign graduate medical
school or a foreign institution that
includes a foreign graduate medical
school) to provide copies of the
affiliation agreements with hospitals
and clinics that it is required to have
under proposed § 600.55(e)(2) as a part
of any application for initial
certification or recertification to
participate in the Title IV, HEA
programs.
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Proposed § 600.20(a)(3)(i)(A) and
§ 600.20(b)(3)(i)(A) would provide that,
for initial certification or for
recertification, a foreign graduate
medical school (i.e., a freestanding
foreign graduate medical school or a
foreign institution that includes a
foreign graduate medical school) would
be required to list on the application to
participate all educational sites and
where they are located, except for those
locations that are not used regularly, but
instead are chosen by individual
students who take no more than two
electives at the location for no more
than a combined total of eight weeks.
In § 600.52, the proposed regulations
would add a definition of clinical
training. Clinical training would be
defined as the portion of a graduate
medical education program that counts
as a clinical clerkship for purposes of
medical licensure. Proposed
§§ 600.20(a)(3)(i)(B) and (b)(3)(i)(B)
would require freestanding foreign
graduate medical schools, and foreign
institutions that include a foreign
graduate medical school, to identify, for
each clinical site reported in the
certification or recertification
application as required under
§§ 600.20(a)(3)(i)(A) and (b)(3)(i)(A), the
type of clinical training (core, required
clinical rotation, not required clinical
rotation) offered at that site.
Proposed § 600.20(c)(5) would require
a foreign graduate medical school (i.e.,
a freestanding foreign graduate medical
school or a foreign institution that
includes a foreign graduate medical
school) that adds a location that offers
all or a portion of the school’s core
clinical training or required clinical
rotations to apply to the Secretary and
wait for approval if it wishes to provide
Title IV, HEA program funds to the
students at that location, except for
those locations that are included in the
accreditation of a medical program
accredited by the LCME. If a foreign
graduate medical school (i.e., a
freestanding foreign graduate medical
school or a foreign institution that
includes a foreign graduate medical
school) adds a location that offers all or
a portion of the school’s clinical
rotations that are not required, proposed
§ 600.21(a)(10) would require the school
to notify the Secretary no later than 10
days after the location is added, except
for those locations that are included in
the accreditation of a medical program
accredited by the LCME, or that are not
used regularly, but instead are chosen
by individual students who take no
more than two electives at the location
for no more than a combined total of
eight weeks.
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In addition, proposed
§ 600.20(a)(3)(ii) and § 600.20(b)(3)(ii)
would require that, for initial
certification or for recertification, a
foreign graduate medical school (i.e., a
freestanding foreign graduate medical
school or a foreign institution that
includes a foreign graduate medical
school) indicate whether it offers (1)
only post-baccalaureate/equivalent
medical programs; (2) other types of
programs that lead to employment as a
doctor of osteopathic medicine or doctor
of medicine; or (3) both. Proposed
§ 600.52 would define a postbaccalaureate/equivalent medical
program as a program that consists
solely of courses and training leading to
employment as a doctor of medicine or
doctor of osteopathic medicine, and is
offered by a foreign graduate medical
school that requires, as a condition of
admission, that its students have
already completed their non-medical
undergraduate studies.
General
Proposed § 600.52 would replace the
definition of a foreign graduate medical
school and clarify that a foreign
graduate medical school can be freestanding or a component of an eligible
foreign institution.
Proposed § 600.55(a)(1) would
continue to provide that, in addition to
satisfying the general criteria for
determining a foreign institution’s
eligibility (except the criterion that the
institution be public or private
nonprofit), a foreign graduate medical
school would have to satisfy all
applicable criteria in this section, except
that the proposed regulations would
clarify that the general criteria that must
be satisfied are all applicable criteria in
part 600, rather than just § 600.55.
Proposed § 600.55(a)(2) would require
a foreign graduate medical school to
provide, and require its students to
complete, a program of clinical training
and classroom medical instruction of
not less than 32 months, that is
supervised closely by members of the
school’s faculty, and that is both (1)
provided in facilities adequately
equipped and staffed to afford students
comprehensive clinical and classroom
medical instruction; and (2) approved
by all medical licensing boards and
evaluating bodies whose views are
considered relevant by the Secretary,
regardless of whether it is located
outside or inside the United States.
In addition, the proposed regulations
would make clear that a foreign
graduate medical school may offer, as
part of its clinical training, no more than
two electives consisting of a combined
total of no more than eight weeks per
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student at a site located in a foreign
country other than the country in which
the main campus is located or in the
United States, unless that location is
included in the accreditation of a
medical program that is accredited by
the LCME.
Proposed § 600.55(a)(3) would require
that a foreign graduate medical school
appoint, rather than employ, only those
faculty members whose academic
credentials are the equivalent of
credentials required of faculty members
teaching the same or similar courses at
medical schools in the United States.
Finally, proposed § 600.55(a)(4)
would continue to require that a foreign
graduate medical school have graduated
classes during each of the two twelvemonth periods immediately preceding
the date the Secretary receives the
school’s request for an eligibility
determination.
Accreditation
The proposed regulations would make
no substantive changes to the
accreditation requirements for foreign
graduate medical schools.
Admission Criteria and Collection and
Submission of Data
Section 668.55(c) would require a
foreign graduate medical school with a
post-baccalaureate/equivalent medical
program to require students accepted for
admission who are U.S. citizens,
nationals, or permanent residents to
have taken the Medical College
Admission Test (MCAT) and to have
reported their scores to the school. In
addition, § 600.55(c) would require a
foreign graduate medical school to
determine the consent requirements for
and require the necessary consents of all
students accepted for admission who
are U.S. citizens, nationals, or eligible
permanent residents to enable the
school to comply with the collection
and submission requirements in
proposed § 600.55(d) for MCAT scores,
residency placement, and USMLE
scores.
Proposed § 600.55(d) would require a
foreign graduate medical school to
obtain, at its own expense, and by
September 30 of each year submit to its
accrediting authority: (1) MCAT scores
for all students who are U.S. citizens,
nationals, or eligible permanent
residents admitted during the preceding
award year and the number of times
each student took the exam; and (2) the
percentage of students who are U.S.
citizens, nationals, or eligible
permanent residents graduating during
the preceding award year who are
placed in an accredited U.S. medical
residency. A school would have to
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submit the data on MCAT scores and
placement in a U.S. residency program
to the Secretary only upon request. In
addition, proposed § 600.55(d) would
require a foreign graduate medical
school to obtain, at its own expense and
by September 30 of each year submit to
the Secretary, unless the Secretary
notifies schools that it will receive the
information directly from the ECFMG,
or other responsible third parties,
USMLE scores earned during the
preceding award year by at least each
student who is a U.S. citizen, national,
or eligible permanent resident, and each
graduate who is a U.S. citizen, national,
or eligible permanent resident who
graduated during the three preceding
years, and the date each student took
each test, including any failed tests. The
USMLE scores submitted would have to
be disaggregated by step/test for Step 1,
which assesses knowledge and
application of basic science concepts;
Step 2–Clinical Skills (Step 2–CS),
which assesses knowledge of clinical
science principles; and Step 2–Clinical
Knowledge (Step 2–CK), which tests a
student’s ability to examine and interact
with patients and colleagues, and by
attempt. A school would not be required
to submit data on the USMLE Step 3,
which provides a final assessment of a
physician’s ability to assume
independent delivery of general medical
care. All foreign graduate medical
schools would be required to submit
these data, even those that are not
required to meet the 60 percent/75
percent USMLE pass rate requirement.
Notification to Accrediting Body
Proposed § 600.55(e)(2) would require
a foreign graduate medical school to
notify its accrediting body within one
year of any material changes in (1) the
educational programs, including
changes in clinical training programs;
and (2) the overseeing bodies in the
formal affiliation agreements with
hospitals and clinics.
Citizenship and USMLE Pass Rate
Percentages
Proposed § 600.55(f)(1)(i)(B) would
allow a foreign graduate medical school
to be exempt from the existing
citizenship requirement (in proposed
§ 600.55(f)(1)(i)(A)) that at least 60
percent of the school’s students and
recent graduates not be U.S. citizens,
nationals, or eligible permanent
residents if it had a clinical training
program approved by a State as of
January 1, 2008, and continues to
operate a clinical training program in at
least one State that approves the
program. In addition, proposed
§ 600.55(f)(2)(ii) would allow a foreign
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graduate medical school that was
eligible to participate in the Title IV,
HEA programs and exempt from the
USMLE pass rate requirement based on
having a clinical training program
approved by a State as of January 1,
1992, to continue to be eligible and
exempt from the USMLE pass rate
requirement as long as it continues to
operate a clinical training program in at
least one State that approves the
program. Proposed § 600.55(f)(1)(ii)
would make the following changes to
the USMLE pass rate requirement:
• Increase the USMLE pass rate
threshold from 60 percent to 75 percent
(§ 600.55(f)(1)(ii)).
• Limit the pass rate requirement to
Step 1, Step 2–CS, and Step 2–CK,
excluding Step 3.
• Require a foreign graduate medical
school to have at least a 75 percent pass
rate on each step/test of the USMLE
(limited to Step 1, Step 2–CS, and Step
2–CK), rather than a combined pass rate
for all steps/tests.
• Require foreign graduate medical
schools to include in the calculation
only U.S. citizens, nationals, or eligible
permanent residents, rather than all
students taking the USMLE.
• Require foreign graduate medical
schools to include only first time test
takers in the calculation.
For example, the award year 2011–
2012 pass rate for the USMLE–Step 1
would be calculated as follows:
Those from the denominator who
passed Step 1.
All U.S. citizens, nationals, and
eligible permanent residents who are
students during award year 2010–2011,
or who graduated in award year 2008–
2009, 2009–2010, or 2010–2011, and
took Step 1 of the exam for the first time
in award year 2010–2011.
Under proposed § 600.55(f)(4), if the
result of any step/test pass rate would
be based on fewer than eight students,
a single pass rate would be determined
for the school based on the performance
of U.S. citizens, nationals, and eligible
permanent residents on Step 1, Step 2–
CS and Step 2–CK combined. If that
combined pass rate would be based on
fewer than eight step/test results, the
school would be deemed to have no
pass rate for that year, and the results
for the year would be combined with
each subsequent year until a pass rate
based on at least eight step/test results
could be derived.
Other Criteria
Proposed § 600.55(g)(1) would require
a foreign graduate medical school to
apply existing § 668.16(e)(2)(ii)(B), (C),
and (D) for establishing a quantitative
satisfactory academic progress policy
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and require that a student complete his
or her educational program within 150
percent of the published length of the
educational program. In addition,
proposed § 600.55(g)(2) would require a
foreign graduate medical school to
document the educational remediation
it provides to assist students in making
satisfactory academic progress. Finally,
proposed § 600.55(g)(3) would require a
foreign graduate medical school to
publish all the languages in which
instruction is offered.
Reasons: As required by statute, the
recommendations of the 2009 Report to
the U.S. Congress by the National
Committee on Foreign Medical
Education and Accreditation
Recommending Institutional Eligibility
Criteria for Participation by Certain
Foreign Medical Schools in the Federal
Family Education Loan Program
(NCFMEA report) that could be
implemented through regulations were
taken into consideration in the
development of these proposed
regulations. The report is available at
https://www2.ed.gov/about/bdscomm/
list/ncfmea-dir/
reporttocongress2009.pdf. The
Department determined that the
following recommendations made by
the NCFMEA could be addressed
through regulatory change: 1(a), 1(b), 3,
4(a), 4(b), 4(c), 9(a), 9(b), 10, 12(a), 12(b),
14(a) and 14(b). The Committee’s
consideration of these recommendations
is discussed below in relation to the
areas of the proposed regulations to
which they pertain, except for
Recommendations 14(a) and 14(b),
which are discussed under Certification
of Foreign Institutions (§§ 600.52, and
668.13) above.
Although the HEOA specified that the
NCFMEA was to take into account in
the development of their
recommendations the results of the
GAO report related to foreign graduate
medical schools, the HEOA specified a
later deadline for the issuance of the
GAO report than for the NCFMEA
recommendations. As a result, the GAO
report was not completed in time for the
NCFMEA to take it into account. The
GAO report was published June 2010.
The Department will take the GAO
report into consideration as the
rulemaking process continues. Although
the statute directed the NCFMEA to
make recommendations for a specific
group of schools, the NCFMEA stated on
page seven of its report, ‘‘It also suggests
the recommendations contained within
the report be applied to all foreign
graduate medical schools participating
in the FFEL program. The NCFMEA
does not believe that two sets of criteria
should be applied, given the millions of
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dollars in Federal student loans
disbursed annually to foreign graduate
medical schools that are already
participating in the FFEL program. If
performance levels are set to ensure
quality, they should apply to all.’’ The
Department in general agrees with this
recommendation; thus, these proposed
regulations for foreign graduate medical
schools would apply to all foreign
graduate medical schools, except where
noted. Some non-Federal negotiators
believed the NCFMEA report contains a
contradictory statement indicating the
NCFMEA’s desire to limit its
recommendations for change to a
specific group of schools (‘‘The foreign
medical schools that are subject to the
recommendations contained within this
report are identified as * * * having
American citizens/permanent residents
constitute more than 40 percent of its
fulltime enrollment and/or graduates
from the preceding year.’’ page five).
These non-Federal negotiators were
concerned about the large overall
administrative burden that the proposed
regulations as a whole would have on
foreign graduate medical schools with
small numbers of U.S. students with
Title IV, HEA program loans. The
Department made clear during the
negotiations that it believes the
statement identified by the non-Federal
negotiators is merely a restating of the
statute. Regardless, the Department
believes that these proposed regulations
are important to the integrity of the Title
IV, HEA programs and should apply to
all foreign graduate medical schools,
except where noted.
Location of a Graduate Medical
Education Program, Affiliation
Agreements, and Application and
Notification Procedures for Foreign
Graduate Medical Schools
Under section 102(a)(2)(B) of the
HEA, a foreign graduate medical school
must be accredited or preaccredited by
an accrediting agency recognized by the
Secretary, or approved under foreign
accrediting standards found comparable
by the NCFMEA to standards applied in
the United States. In order for this
provision to have effect, and as the
Department’s implementing regulations
have always provided, an accrediting
body approved by NCFMEA must be
legally authorized to evaluate the
quality of the medical school
educational programs and facilities in
the country in which those schools are
located. The Department generally
construes this requirement for
comparable accreditation to mean that
(except for clinical training locations in
the U.S. that are provided for in the
statute) the graduate medical program
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must be located in the country in which
the main campus of the school is
located. Although a medical accrediting
body may accredit locations of
institutions in other countries, the
Department believes this is the best
interpretation of the statute because,
with limited exceptions, an accrediting
body’s actual authority does not extend
beyond the country in which it is
established. The Department currently
does not approve for participation in the
Title IV, HEA programs any educational
program in which a portion of what is
commonly referred to as the basic
science part of the program is located
outside of the country in which the
main campus is located. However, the
Department has allowed for the clinical
training part of the program to be
located in an approved comparable
foreign country other than the country
in which the main campus is located, if
the site is located in an NCFMEA
approved country, the institution’s
medical accrediting agency has
conducted an on-site evaluation and
specifically approved the site, and the
clinical instruction is offered in
conjunction with medical educational
programs offered to students enrolled in
accredited medical schools located in
that foreign country. The Department’s
initial proposal reflected this policy,
which is also the approach
recommended by NCFMEA
Recommendation 12(a).
Several non-Federal negotiators felt
this initial proposal was too limiting.
The Committee discussed at length the
different parts of a graduate medical
program and the characteristics of each
part that might justify different
treatment. In addition to distinguishing
between the basic science and the
clinical training parts of the program,
the Committee discussions
distinguished between the different
parts of clinical training referred to in
these proposed regulations as the core
rotations, the required clinical rotations
(the electives that students are required
to take), and the not required clinical
rotations (the electives that students can
choose).
In general, some non-Federal
negotiators felt that matriculating in
different countries as part of a graduate
medical program would benefit students
by exposing them to medical education
and practice in different environments
and cultures. One non-Federal
negotiator argued that allowing a
portion of the basic science part of the
program to be located in the United
States would assist in providing a
smooth transition to clinical training in
the United States. The negotiator also
proposed a way of achieving what some
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non-Federal negotiators felt was
sufficient oversight to permit a portion
of the basic science part of the program
to be located in a non-NCFMEA
approved foreign country other than the
country in which the main campus is
located: Limiting a school to the
establishment of one such site, limiting
the amount of the program that could be
offered there, requiring a visit and
approval by the school’s accrediting
body, setting cohort default rate and
USMLE pass rate thresholds, requiring
specific evaluations by the school’s
accrediting body, requiring a formal
agreement/recognition of the accrediting
body’s authority by the country in
which the site was located, and
requiring an NCFMEA determination
that the accrediting body has
demonstrated its capacity to conduct
off-site and on-site reviews of the site
that are comparable to the reviews
conducted of the main campus and
additional locations within the country
in which the main campus is located.
Others suggested that a portion of the
basic science part of the program be
allowed to be located in a country other
than the country in which the main
campus is located if the location is
accredited by a comparable accrediting
agency.
Non-Federal negotiators also argued
for more leniency regarding the offering
of the clinical training part of the
program in countries other than the
country in which the main campus is
located. While some felt that all clinical
training should be permitted to be
located in another country without as
much oversight as the Department
proposed, others felt that leniency was
appropriate only for the clinical rotation
part because exposure to different
medical environments and cultures was
most important during the hospitalbased part of the clinical training where
the students are in direct contact with
patients and medical residents. Other
non-Federal negotiators felt that
leniency was appropriate only for the
not-required-clinical-rotation part,
because that is when a student will most
benefit from the exposure without the
program losing coherence. The
Committee discussed how the notrequired-clinical-rotation part of the
program may be very individualized,
with numerous sites, sometimes
suggested by students, at which
students study for short periods of time.
They pointed out that, as a result, some
sites are only used for a short period of
time. They noted that an accrediting
body would not have the time or
resources to visit and approve these
short-term sites. Non-Federal
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negotiators suggested various ways of
achieving what they felt was sufficient
oversight of these locations: e.g.,
limiting the amount of the program that
could be offered there, limiting the
amount of the program an individual
student could take at the location, and
limiting the number of students who
could attend the location. The nonFederal negotiators pointed to language
in the September 2009 NCFMEA
Guidelines for Requesting a
Comparability Determination (page 17)
that omits any mention of non-core
portions of a clinical training program
in its discussion of the site visits that
the school’s accrediting body is required
to make (the document is available at
https://www2.ed.gov/about/bdscomm/
list/ncfmea-dir/ncfmea-guidelines.pdf).
In addition, some non-Federal
negotiators felt that locations that are
included in the accreditation of a
medical program accredited by the
LCME, such as locations of some
Canadian schools, should be exempt
because the LCME accrediting standards
are those that are applied to medical
schools in the United States. The
Department agreed.
Because of the lack of direct authority
of accrediting bodies from different
countries, the Department held firm on
limiting the location of the basic science
portion of the program to the
institution’s home country. The
Department reiterated its belief that the
basic sciences part of a graduate medical
program should be located in the same
country as the main campus so that the
majority of the classroom instruction
part of the program will be under the
direct authority of the school’s
accrediting body. In one draft of the
proposed regulations, the Department
referred to this part of the program as
the ‘‘didactic components.’’ A nonFederal negotiator pointed out that this
term could be construed to include
lectures and other instruction that take
place during the clinical training
portion of the program. The non-Federal
negotiator argued that blurring the line
between the ‘‘basic science’’ and the
‘‘clinical training’’ portions of the
programs could lead to an interpretation
of the regulations whereby a foreign
graduate medical school would offer
parts of what is really the basic science
portion of the program in the United
States. As a result, the Committee
agreed to add a definition of clinical
training to the proposed regulations to
make clear that only parts of the
program that meet that definition may
be located in the United States. The
definition was also added to clarify the
terminology that the proposed
regulations are using for the
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components of clinical training, as
provisions both here and elsewhere in
the proposed regulations differentiate
among these components.
The Department agreed that it was
acceptable to balance less oversight of a
short-term location at which individual
students were taking a small portion of
the not-required-clinical-rotation part of
the program, with the benefits of
exposure to other medical environments
and cultures. The Department believes
this is warranted because of the
individualized nature of the notrequired-clinical-rotation part of the
program, when individual sites are often
used for short periods of time. The
Department also agreed that locations in
countries other than the country in
which the main campus is located that
are included in the accreditation of a
medical program accredited by the
LCME should also be exempt from
meeting the three criteria (i.e., required
to be located in an approved comparable
country, required on-site evaluation and
specific approval of the site by the
institution’s medical accrediting agency,
and the requirement that instruction
must be offered in conjunction with
medical educational programs offered to
students enrolled in accredited medical
schools located in that approved foreign
country) because the LCME accrediting
standards are those that are applied to
medical schools in the United States.
Therefore, the Department’s final
proposal, which was agreed to by the
Committee, provided that clinical
training may be offered outside the
United States and the country in which
the main campus is located without the
site meeting the three criteria, if the
location is included in the accreditation
of a medical program accredited by the
LCME, or if no individual student takes
more than two electives at the location
and the combined length of the electives
does not exceed eight weeks.
Because of the importance and more
standardized nature of core and
required clinical rotations, proposed
§ 600.55(e)(1) would require a foreign
graduate medical school to have a
formal affiliation agreement with any
hospital or clinic at which all or a
portion of the school’s core clinical
training or required clinical rotations
are provided. However, for any hospital
or clinic at which only clinical rotations
that are not required are provided, a
school would be permitted to have other
written arrangements instead of a formal
affiliation agreement, and the proposed
regulations would not require a school
to have any written arrangements for
those locations that are not used
regularly, but instead are chosen by
individual students who take no more
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than two electives at the location for no
more than a combined total of eight
weeks. Also, in accordance with
NCFMEA Recommendation 12(b),
proposed § 600.20(a)(3)(iii) and
§ 600.20(b)(3)(iii) would require a
foreign graduate medical school to
provide as a part of any application for
initial certification or recertification to
participate in the Title IV, HEA
programs, copies of the affiliation
agreements that it is required to have for
locations that offer the core and
required-clinical-rotation parts of the
clinical training, but not copies of
written arrangements for locations
offering the not-required-clinicalrotation part of the program. The
Department was persuaded by the nonFederal negotiators who noted that it
would be quite burdensome for
institutions to execute formal affiliation
agreements with the sites of rotations
that are not required, because there are
often so many of them and use is often
for the short-term. They assured the
Department that other written
arrangements, such as letters of good
standing, insurance arrangements, and
other documents specific to a particular
student, are made with these locations
that cover the elements of formal
affiliation agreements. Because of the
multitude of documentation comprising
the written arrangements with these
often short-term sites, the Department
did not believe it was necessary to
require a regular submission to the
Department. In accordance with
NCFMEA Recommendation 12(b), to
ensure continuity of the eligible
program from the main campus to
remote locations, the proposed
regulations would require that all
required affiliation agreements or other
written arrangements address
maintenance of the school’s standards,
appointment of faculty, design of the
curriculum, provision of liability
insurance, and supervision and
evaluation of student performance.
Although an institution would not be
required to have formal affiliation
agreements with locations that offer the
not-required-clinical-rotation part of the
clinical training, proposed
§ 600.20(a)(3)(i) and § 600.20(b)(3)(i)
would provide that, for initial
certification or for recertification, a
foreign graduate medical school would
be required to list these locations and
where they are located on the
application to participate, along with
the sites at which the non-clinical, core
clinical, and required-clinical-rotation
parts of the program are offered, except
that those not-required-clinical-rotation
locations that are not used regularly, but
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instead are chosen by individual
students who take no more than two
electives at the location for no more
than a combined total of eight weeks, do
not have to be listed. The Department
believes it is essential for the
Department to be aware of all locations
of an institution to which Title IV, HEA
program funds are provided, and agreed
to make an exception only for sites that
are not used regularly and, therefore,
would be difficult and burdensome to
track. Some non-Federal negotiators
indicated that most institutions can and
do track the locations the proposed
regulations would require them to
report to the Department, so providing
this information to the Department
would not be unduly burdensome.
Consistent with these proposed
regulations, proposed § 600.20(c)(5)
would require a foreign graduate
medical school that adds a location that
offers all or a portion of the school’s
core clinical training or required clinical
rotations to apply to the Secretary and
wait for the Secretary’s approval before
providing Title IV, HEA program funds
to the students at the location. In
proposed 600.21(a)(10), they would
allow a foreign graduate medical school
that adds a location that offers all or a
portion of the school’s clinical rotations
that are not required to provide Title IV,
HEA program funds to the students at
the location without waiting for
approval from the Secretary, provided
the school notifies the Secretary no later
than 10 days after the location is added.
As with the proposed exceptions to the
requirements for offering a portion of
the clinical training portion of the
program outside of the country in which
the main campus of the school is
located, and the proposed regulations
specifying when affiliation agreements
would be required, an exception from
the prior approval requirement for
adding locations offering core/required
rotations would be allowed for those
locations that are included in the
accreditation of a medical program
accredited by the LCME. No notification
to the Department would be required for
adding LCME locations, or locations
offering only non-core, non-required
rotations that are not used regularly, but
instead are chosen by individual
students who take no more than two
electives at the location for no more
than a combined total of eight weeks.
So that the Department may track and
enforce provisions specific to postbaccalaureate/equivalent medical
programs, proposed §§ 600.20(a)(3)(ii)
and 600.20(b)(3)(ii) would require that,
for initial certification or for
recertification, a foreign graduate
medical school (i.e., a freestanding
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foreign graduate medical school or a
foreign institution that includes a
foreign graduate medical school)
indicate whether it offers only postbaccalaureate/equivalent medical
programs, other types of programs that
lead to employment as a doctor of
osteopathic medicine or doctor of
medicine, or both.
Finally, a proposed definition of
NCFMEA was added to make clear that
the NCFMEA is the operational
committee of medical experts
established by the Secretary to
determine whether the medical school
accrediting standards used in other
countries are comparable to those
applied to medical schools in the U.S.,
for purposes of evaluating the eligibility
of accredited foreign graduate medical
schools to participate in the Title IV,
HEA programs.
General
Proposed § 600.52 would remove from
the definition of a foreign graduate
medical school the requirement that a
foreign graduate medical school be a
foreign institution that qualifies to be
listed in, and is listed as a medical
school in, the most current edition of
the World Directory of Medical Schools
published by the World Health
Organization (WHO) as the Department
believes it is no longer a needed
measure of comparability in light of the
proposed new criteria for foreign
graduate medical schools as well as the
proposed changes to the definition of a
foreign institution.
Proposed § 600.55(a)(1) would clarify
that the general criteria that must be
satisfied is all applicable criteria in part
600, rather than just § 600.54, to make
clear that, unless otherwise specified,
all the provisions of part 600 apply to
foreign institutions, including foreign
graduate medical schools. Current
regulations require only instruction that
is offered outside of the United States to
be provided in facilities adequately
equipped and staffed to afford students
comprehensive clinical and classroom
medical instruction, and require only
the training located in the United States
to be approved by all medical licensing
boards and evaluating bodies whose
views are considered relevant by the
Secretary. Proposed § 600.55(a)(2)
would apply these provisions to all
portions of the medical program,
regardless of whether the program is
located outside or inside the United
States, as the Department believes they
are good requirements regardless of
location. To provide consistency with
the proposed provisions addressing the
location of clinical training (see the
discussion of Location of a graduate
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medical education program, affiliation
agreements, and application and
notification procedures for foreign
graduate medical schools above), the
proposed regulations would make clear
that a foreign graduate medical school
may offer, as part of its clinical training,
no more than two electives consisting of
a combined total of no more than eight
weeks per student at a site located in a
foreign country other than the country
in which the main campus is located or
in the United States, unless that location
is included in the accreditation of a
medical program that is accredited by
the LCME. Non-Federal negotiators
noted that foreign graduate medical
schools do not necessarily directly
employ faculty for the clinical training
portion of the program, but rather
appoint them and the individuals are
usually employed by the hospital or
clinic at which the clinical training
takes place. The Committee agreed the
regulations should be changed to reflect
actual practice.
Admission Criteria and Collection and
Submission of Data
The Department initially proposed
that, consistent with NCFMEA
Recommendations 1(a) and 1(b), a
foreign graduate medical school would
have to require students who it admits
to have a specific educational
background (e.g., for a postbaccalaureate equivalent medical
program, students must have a
baccalaureate degree, or at least 90
semester credit hours or the equivalent,
in general education that includes, but
is not limited to, coursework in the
social sciences, history, and languages).
Several of the non-Federal negotiators
felt that such provisions were unduly
limiting. The Committee, including the
Department, ultimately agreed it would
be more appropriate for the NCFMEA to
establish these provisions as guidelines
for accrediting bodies. The Department
had also included as a part of its initial
proposal, that a school having an
integrated program for a first
professional program leading to a Doctor
of Medicine (M.D.) degree, or its
equivalent, must require students who
are U.S. citizens, nationals, or
permanent residents to take the MCAT
no later than three years after admission
to the program. Although this provision
was consistent with NCFMEA
Recommendation 1(b), the Department
was ultimately persuaded to remove the
provision by non-Federal negotiators
who pointed out that requiring students
to take the MCAT early in the program
would distract them from the education
that was preparing them to take the
USMLE.
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Ultimately, the Department agreed to
retain from Recommendations 1(a) and
1(b) only the provision that would
require U.S. students who are admitted
to a school having a post-baccalaureate
equivalent medical program to have
taken the MCAT and to report the score.
This provision would not require a
foreign graduate medical school to give
weight to a U.S. student’s score on the
MCAT as part of its admission
requirements. Although some nonFederal negotiators expressed concern
that the MCAT would not be readily
available to U.S. students who are
residing outside of the United States
prior to enrolling in a foreign graduate
medical school, it was determined that
the MCAT is administered several times
during the year in countries around the
world.
The inclusion of the requirement that
a foreign graduate medical school
determine the consent requirements for,
and require the necessary consents of,
all students accepted for admission who
are U.S. citizens, nationals, or eligible
permanent residents to enable the
school to comply with the collection
and submission requirements for MCAT
scores, residency placement, and
USMLE scores reflects NCFMEA
Recommendations 9(a), 3, and 4(a), but
limits the requirement to U.S. citizens,
nationals, or eligible permanent
residents. These proposed regulations
would not establish eligibility
thresholds for MCAT scores or
residency placement. As indicated in
the discussion of these
recommendations in the NCFMEA
report, the NCFMEA believes, and the
Department agrees, that successful
performance by an institution in these
three areas may be valuable for the
evaluation of the quality of education
being provided to students attending
foreign graduate medical schools. The
data will facilitate the NCFMEA’s
further study of the issues, strengthen
the accreditation process, and allow for
the potential development of additional
recommendations for regulatory change,
and/or the NCFMEA standards for
evaluating accrediting bodies of foreign
graduate medical schools. Non-Federal
negotiators argued, and the Department
agreed, that the Department’s main
concern is how well students from the
United States, who represent potential
borrowers of Title IV, HEA funds, are
doing at these schools. The non-Federal
negotiators felt that it was inappropriate
to include non-U.S. students who may
not have as much at stake when they
take the United States’ MCAT or
USMLE, or attempt to be placed in a
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U.S. residency, and, thus, may skew the
data.
Some non-Federal negotiators
expressed concern that requiring foreign
institutions to obtain student consent
for the release of information may be in
violation of certain countries’ privacy
laws. In response to the Department’s
request for specific information, the
Department was provided with an
analysis of the privacy laws and
requirements of one country that had
been identified as one that could have
problems in this area. After analyzing
the information, the Department
concluded that there would be several
ways that institutions in that country
could legally obtain the required
information from students, and
committed to working with those
schools and schools in any country that
have concerns to facilitate compliance.
The Department noted, however, that
the Department cannot waive statutory
or regulatory requirements used to
determine institutional eligibility and
that if a foreign country’s privacy laws
did preclude obtaining the information
and materials necessary for establishing
compliance the institutions located in
those countries would not be able to
qualify for participation in the Title IV,
HEA programs.
The proposed regulations state that
collection and submission of data must
be done at the institution’s own expense
to emphasize that the institution is
ultimately responsible for providing this
information. In the future, the
Department may be able to obtain the
necessary USMLE pass rates directly
from the ECFMG. However, unless and
until the Secretary notifies institutions
that this is the case, an institution
would be required to take whatever
steps are necessary to obtain and
provide the data to its accrediting
agency and the Secretary. Currently, an
institution can obtain a student’s
consent for USMLE pass rate data on
Steps 1 and 2 by requiring students to
sign ECFMG’s Institutional Request for
an Official USMLE Transcript Form 173.
The form and information on its use are
available at the ECFMG’s Web site at
https://www.ecfmg.org/usmle/
transcripts/. We also note
that the ECFMG has established an
online procedure by which schools can
obtain data on Steps 1 and 2 directly
from the ECFMG (see the ECFMG’s Web
site at https://www.ecfmg.org/
emswp.html). As this procedure is still
new, the Committee was not able to
ascertain whether the data provided to
schools in this manner would be
sufficient for schools to meet the
requirements of these proposed
regulations. As information becomes
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available, the Department will evaluate
the appropriateness of these data for
meeting the proposed requirement.
Although the Department originally
proposed requiring schools to submit
data on all steps of the USMLE, nonFederal negotiators pointed out that it
would be extremely difficult for schools
to obtain data on Step 3. The nonFederal negotiators noted that this
difficulty stems from the fact that Step
3, which is administered by the
Federation of State Medical Boards
(FSMB), is taken by students after they
have graduated from the institution and
a student cannot sign a consent to
provide information on Step 3 to third
parties until he or she is actually taking
the test. Although the Department is
continuing to explore the collection of
data from the FSMB for evaluating its
use in the future, the Department agrees
that it would be unreasonable to require
institutions to be responsible for its
collection and submission at this time.
As one of the purposes of the data
submission provision is to provide data
for the evaluation of whether additional
performance measures should be
required of foreign graduate medical
schools, all foreign graduate medical
schools, even those that are exempt
from meeting the 60 percent/75 percent
USMLE pass rate requirement, would
have to submit the data under proposed
§ 600.55(d).
The Department believes that the
proposed periods for which data must
be collected and the proposed annual
September 30 submission deadline will
provide for consistent submission of
data by all schools, taking into
consideration the timing of the events
for which data must be obtained. As
these data, other than the USMLE data,
are to be collected for the use of the
accrediting bodies and, indirectly, by
the NCFMEA, schools would be
required to make submissions of the
data to their accrediting bodies but,
except for data on the USMLE, would be
required to submit such data to the
Secretary only upon request. The
Secretary would collect the USMLE data
on a regular basis in support of the
requirement in § 600.55(f)(1)(ii) that an
institution have at least a 75 percent
pass rate on the USMLE.
Notification to Accrediting Body
Proposed § 600.55(e)(2), which would
require a foreign graduate medical
school to notify its accrediting body
within one year of any material changes
in educational programs and the
overseeing bodies in the formal
affiliation agreements with hospitals
and clinics, would reflect NCFMEA
Recommendations 12(a) and 12(b) and
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would allow a school’s accrediting body
to assess any substantive impact the
change would have on the school’s
operations.
Citizenship and USMLE Pass Rate
Percentages
The proposed change in
§ 600.55(f)(1)(i)(B) would allow a foreign
graduate medical school to be exempt
from the existing citizenship rate
requirement if it had a clinical training
program approved by a State as of
January 1, 2008, and continues to
operate a clinical training program in at
least one State that approves the
program reflects the statutory change
made by the HEOA. As a result, both
foreign graduate medical schools that
had a clinical training program
approved by a State as of January 1,
1992, and those that had a clinical
training program approved by a State as
of January 1, 2008, are exempt from the
citizenship rate provision, provided the
school continues to operate a clinical
training program in at least one State
that approves the program. The increase
in the USMLE pass rate threshold from
60 percent to 75 percent also reflects a
change made by the HEOA, as does
proposed § 600.55(f)(2)(ii), which would
allow a foreign graduate medical school
that was eligible and exempt from the
USMLE pass rate requirement based on
having a clinical training program
approved by a State as of January 1,
1992, to continue to be eligible and
exempt from the USMLE pass rate
requirement as long as it continues to
operate a clinical training program in at
least one State that approves the
program.
Although the Department originally
proposed requiring pass rate
information for all steps of the USMLE,
as stated previously in the discussion of
the submission of USMLE pass data
under Admission criteria and collection
and submission of data above, the
Department believes that it would be
unreasonable to require institutions to
obtain data on Step 3 of the USMLE for
inclusion in the pass rate at this time.
As suggested by NCFMEA
Recommendations 4(b) and 4(c), the
proposed regulations would require a
foreign graduate medical school to have
at least a 75 percent pass rate on each
step/test of the USMLE (limited to Step
1, Step 2–CS, and Step 2–CK), rather
than a combined pass rate for all steps/
tests. This approach would provide an
assessment of the sequential
performance of students on the USMLE,
which the NCFMEA and the Department
believe provides a better measure of a
medical program’s effectiveness by
evaluating how well it prepares students
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for each step/test of the USMLE and, in
particular, will allow for the judgment
of the performance of each institution in
preparing students for future clinical
performance.
The Committee decided to limit the
USMLE pass rate calculation to U.S.
citizens, nationals, and eligible
permanent residents for the reasons
discussed for limiting the collection and
submission of data related to MCAT
scores, placement in a U.S. medical
residency program, and the USMLE in
the same manner (see Admission criteria
and collection and submission of data
above). That is, the Committee desired
to focus the pass rate on the students the
Department is most concerned about,
students from the United States, who
represent potential borrowers of Title
IV, HEA funds, and to prevent a school’s
rate from being lowered by non-U.S.
students who may not be as invested in
passing the USMLE as U.S. students.
As for the actual calculation used to
determine the pass rate for each step/
test of the USMLE, the Department had
suggested a rate that would have
required an institution to count an
individual student in the denominator
for each time the student took Step 1,
Step 2–CS and Step 2–CK. The
Department believed this approach was
consistent with NCFMEA
Recommendation 4(b) and was a better
measure of how well prepared students
were by the medical education program
because it would reflect failures on
repeated attempts. Some non-Federal
negotiators felt that this approach was
too burdensome and not an appropriate
means of achieving the Department’s
goal. They argued that the pass rates of
students in subsequent attempts is
typically quite low; thus, such a
measure would be redundant and not
more indicative of the quality of the
institution’s instruction. Eventually, the
non-Federal negotiators suggested that
the calculation be limited to first time
test takers only. The non-Federal
negotiators noted that reports issued in
other contexts about pass rates for
domestic schools have included only
first time test takers. Ultimately, the
Department was persuaded that a
proposed regulation that would require
foreign graduate medical schools to
include only first time test takers in the
calculation provided a better evaluation
of an institution’s performance than that
required under current regulations, and
had the benefit of being comparable to
rates published for domestic schools.
The non-Federal negotiators raised
strong concerns about the pass rate’s
applicability to schools with small
numbers of U.S. students. They pointed
out that such a school’s eligibility for
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participation could be put at risk by the
failure of just a small number of
students, or even one student, for those
with fewer than four students who
would be included in the cohort for the
calculation. The non-Federal negotiators
felt that schools with small numbers of
students should be exempt from this
requirement or, at the very least, the
regulations should provide an
alternative way for these institutions to
comply. The Department noted that the
statute does not provide for exempting
institutions from this requirement.
However, in response to these concerns,
the Department proposed an alternative
way to comply in § 600.55(f)(4) to allow
for the use of a rate that would combine
the performance of U.S. students on
Step 1, Step 2–CS and Step 2–CK, if the
result of any step/test pass rate would
be based on fewer than eight students.
If that combined pass rate would be
based on fewer than eight step/test
results, the school would be deemed to
have no pass rate for that year, and the
results for the year would be combined
with each subsequent year until a pass
rate based on at least eight step/test
results could be derived. The
Department believes that this approach
applies the pass rate provision to all
institutions, while appropriately
mitigating the unduly harsh effect a
small number of failures could have on
the pass rate calculation for schools
with small numbers of U.S. students.
Other Criteria
The proposed requirements in
§ 600.55(g)(1) and (g)(2) that would
require a foreign graduate medical
school to include in its satisfactory
academic progress standards a
requirement that a student complete his
or her educational program within 150
percent of the published length of the
educational program and document the
educational remediation it provides to
assist students in making satisfactory
academic progress adopts NCFMEA
Recommendation 9(b), but requires
schools to document, rather than submit
to the Department as the NCFMEA
recommended, any educational
remediation provided.
For consistency with current
regulations, in adopting NCFMEA
Recommendation 9(b), suggesting that a
student’s enrollment prior to graduation
must not exceed 150 percent of the
normal length of the program, the
proposed regulations refer to existing
§§ 668.16(e)(2)(ii)(B), (C), and (D). These
regulations, currently applicable to
undergraduate programs, provide
additional requirements as to the
quantitative aspect of a foreign graduate
medical school’s institutional
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satisfactory academic progress
standards.
Although the Committee agreed with
the NCFMEA that there is merit to
requiring institutions to document the
remediation it provides to assist
students in making satisfactory
academic progress so that, as needed,
the Department, the NCFMEA, or the
accrediting body may collect and
examine the data to see if this is an area
of concern that may need to be
addressed, they did not believe it was
necessary or cost effective to require the
regular submission of these data to the
Department.
Finally, proposed § 600.55(g)(3),
which would require a foreign graduate
medical school to publish all the
languages in which instruction is
offered, would provide information to
students that could be essential to a
student’s success in the program.
Although NCFMEA Recommendation
10 suggested requiring schools to
publish the primary language of
instruction, and if not English, identify
any alternate language of instruction,
the Committee agreed that requiring
schools to publish all languages in
which instruction is offered would be
more beneficial and no more
burdensome.
Foreign Veterinary Schools (§ 600.56)
Statute: Section 102(a)(2)(A)(ii) of the
HEA stipulates that Title IV borrowers
attending a foreign for-profit veterinary
school must complete clinical training
at an approved veterinary school located
in the United States. The HEA does not
establish additional eligibility criteria
specific to foreign veterinary schools.
Section 102(a)(2)(A) of the HEA requires
the Secretary, through regulations, to
develop eligibility criteria for foreign
institutions that are comparable to the
eligibility criteria for domestic
‘‘institutions of higher education.’’
Current Regulations: Section 600.56 of
the Institutional Eligibility regulations
includes additional eligibility criteria
for foreign veterinary schools. Under
§ 600.56(a)(1)(i), foreign veterinary
school facilities outside the United
States must be adequately equipped and
staffed to provide students
comprehensive clinical and classroom
veterinary instruction. Under
§ 600.56(a)(1)(ii), foreign veterinary
school programs provided inside the
United States must be approved by all
veterinary licensing boards and
evaluating bodies that the Secretary
considers to be relevant. Under
§ 600.56(a)(3), the credentials of faculty
members employed by the foreign
veterinary school must be equivalent to
the credentials of faculty members
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teaching the same or similar courses in
the United States.
Proposed Regulations: The proposed
regulations would combine the
requirements in § 600.56(a)(1)(i) and
§ 600.56(a)(1)(ii) into one paragraph,
eliminating the distinction in those
sections between portions of veterinary
programs provided inside and outside of
the United States. Proposed
§ 600.56(a)(4) would require a foreign
veterinary school to be accredited or
provisionally accredited by an
organization acceptable to the Secretary.
Proposed § 600.56(a)(4) would also
specify that the requirement for
accreditation or provisional
accreditation does not take effect until
July 1, 2015. Finally, proposed
§ 600.56(b)(2)(i) would require that, for
a for-profit veterinary school, the
school’s students must complete their
clinical training at an approved
veterinary school located in the United
States. Under proposed
§ 600.56(b)(2)(ii), for a veterinary school
that is public or private nonprofit, the
school’s students may complete their
clinical training at an approved
veterinary school located in the United
States or in the home country, and may
also take clinical training at a location
outside of the United States or the home
country if no individual student takes
more than two electives at the location
and the combined length of the
elective(s) does not exceed eight weeks.
Reasons: The Department proposed
revising the regulations governing
eligibility criteria for foreign veterinary
schools to improve the Department’s
process for making determinations of
eligibility of foreign veterinary schools
to participate in the Title IV, HEA
programs. The Department’s expertise
with regard to making independent
evaluations of the academic quality of
veterinary programs is limited, and
currently the Department relies heavily
on information provided to us by the
foreign veterinary school to make
eligibility determinations. If the school
has been accredited or reviewed by the
American Veterinary Medical
Association (AVMA), the Department
considers reports provided by the
AVMA to the school to assist in making
eligibility determinations.
The Department initially proposed to
build on the Department’s current
practice by requiring AVMA
accreditation for foreign veterinary
schools applying to participate in the
Title IV, HEA programs. We believed
that requiring AVMA accreditation
would provide the Department with an
assurance of the academic quality of the
veterinary program. AVMA standards
for accrediting veterinary schools are
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detailed and specific, and the AVMA
has the expertise and resources to
evaluate veterinary schools that the
Department lacks. In addition, the
AVMA has a history of accrediting
foreign veterinary school academics. For
example, veterinary schools in Canada,
Australia, and the Netherlands are
currently accredited by the AVMA.
Non-Federal negotiators generally
acknowledged the high quality of the
AVMA’s accreditation standards and
procedures. One non-Federal negotiator
agreed that it was logical to require
AVMA accreditation of foreign
veterinary schools, as most U.S.
students studying at those schools
ultimately practice as veterinarians in
the United States. However, several
non-Federal negotiators had concerns
about requiring AVMA accreditation as
a condition for participation in the Title
IV, HEA programs.
Some non-Federal negotiators pointed
out that the process for receiving AVMA
accreditation is lengthy and expensive.
Non-Federal negotiators asserted that
the standards of foreign accrediting
agencies such as the Veterinary Schools
Accreditation Advisory Committee
(VSAAC), which accredits veterinary
schools in Australia and New Zealand,
and the Royal College of Veterinary
Surgeons (RCVS), which accredits
veterinary schools in the United
Kingdom, are comparable to the
AVMA’s standards. These non-Federal
negotiators contended that it would be
unnecessarily burdensome to require a
veterinary school that has already been
accredited by an agency such as VSAAC
to also obtain AVMA accreditation to
participate in the Title IV, HEA
programs. The non-Federal negotiators
cautioned the Department that foreign
veterinary schools that enroll small
numbers of Title IV borrowers may
determine that obtaining AVMA
accreditation is not cost effective, and
may choose to end their participation in
the Title IV, HEA programs. This would
have the effect of limiting the options of
U.S. students considering attending
foreign veterinary schools.
Other non-Federal negotiators
contended that it is extremely difficult
for for-profit veterinary schools to
obtain AVMA accreditation. Although
they felt that for-profit veterinary
schools can meet AVMA’s standards
around facilities, curriculum, and
faculty, the AVMA standards also
require veterinary schools to have a
strong research component. These
negotiators stated that for-profit
veterinary schools tend not to have the
resources to pursue research to the
extent required by AVMA. These
negotiators pointed out that public
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veterinary schools often have State
sources of funding for research
programs, while for-profit veterinary
schools do not. The expense of
establishing a research program
acceptable to AVMA could be
prohibitive for most for-profit veterinary
schools. These non-Federal negotiators
contended that, for purposes of
preparing students for employment as
competent veterinarians in most nonresearch venues, it is not necessary to
include a research component of the
kind required by AVMA.
In addition, non-Federal negotiators
expressed concerns that foreign
veterinary schools without AVMA
accreditation that currently participate
in the Title IV, HEA programs might be
forced out of the Title IV, HEA programs
if the Department went forward with its
proposal. The effective date for most of
the regulations in this NPRM is
expected to be July 1, 2011. As the
accreditation process can take several
years, even a school that ultimately
receives AVMA accreditation might not
be able to obtain AVMA accreditation
before the regulations become effective.
Although AVMA offers provisional
accreditation for schools in the U.S. or
Canada that are on track to become
accredited, it currently does not offer
provisional accreditation to other
schools.
As an alternative, non-Federal
negotiators recommended using other
measures, such as pass rates on
licensing exams, licensure rates, or
default rates, to determine eligibility of
a foreign veterinary school. In addition,
non-Federal negotiators recommended
that the Department delay the effective
date for the accreditation provision of
the proposed regulations for up to ten
years, if the Department goes forward
with the AVMA requirement.
The Department noted that using
measures such as pass rates on licensing
examinations can be operationally
complicated, raising concerns over
privacy rights, obtaining exam results,
and calculating pass rates in ways that
are not disadvantageous to schools with
low numbers of Title IV students. In
addition, pass rates would not
necessarily be a reliable indicator of the
academic credentials of the faculty at a
foreign veterinary school, and would
provide no indication that the facilities
at the veterinary school are adequate
and safe for the students or for the
animals housed in the facilities.
Instead, the Department accepted the
recommendation of some of the nonFederal negotiators to replace the
proposed requirement that a foreign
veterinary school be accredited or
provisionally accredited by the AVMA,
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with a requirement that the school be
accredited or provisionally accredited
by an agency acceptable to the
Secretary. Although the Department
continues to believe that AVMA
accreditation is the most desirable
standard for foreign schools that train
students for veterinary practice in the
United States, we recognize that other
accrediting agencies may also be
satisfactory for this purpose. Under the
revised regulations, foreign veterinary
schools must still be accredited or
provisionally accredited by an agency
with expertise in accrediting veterinary
education programs, but the agency
does not have to be the AVMA. This
gives the Department some flexibility in
evaluating schools’ compliance with the
accreditation requirement, and gives
schools some flexibility with regard to
obtaining accreditation.
In addition, the Department delayed
the effective date of the accreditation
requirement until July 1, 2015, giving
foreign veterinary schools that are
currently in the Title IV, HEA programs
approximately five years after final
regulations are published to obtain
accreditation from an acceptable
accrediting agency. The Department
believes that five years should be
sufficient time for a school to obtain
accreditation or provisional
accreditation from an acceptable
accrediting agency. In addition, Title IV
borrowers who are currently enrolled in
a foreign veterinary school should be
able to complete their education
programs before the five years elapses.
Newly enrolled Title IV borrowers
coming into those schools after this
NPRM is published should be advised
by the school’s financial aid officers that
there is a possibility that the school
could lose Title IV, HEA program
eligibility after July 1, 2015, so those
borrowers can plan accordingly.
The Department proposed combining
the requirements in § 600.56(a)(1)(i) and
in § 600.56(a)(1)(ii) into one paragraph
to simplify the regulations, and to
eliminate the distinction between
veterinary school activities in the
United States and outside the United
States for purposes of these particular
requirements. The Department did not
believe that this distinction in the
current regulations served any useful
purpose. The non-Federal negotiators
did not express concerns about this
modification to the existing regulations.
Regarding the provisions addressing
the location of a foreign veterinary
school in proposed § 600.57(b), the
Committee agreed to be consistent with
provisions that would permit some
clinical training locations of foreign
graduate medical schools to be outside
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of the United States and of the country
in which the main campus of the school
is located. Proposed § 600.57(b) would
permit students who attend a public or
private nonprofit foreign veterinary
school to take no more than two
electives at the clinical training location
per student, as long as the elective(s)
have a combined length of not more
than eight weeks. This provision could
not be extended to for-profit veterinary
schools because the statute requires
students who attend these schools to
complete their clinical training in the
United States.
Foreign Nursing Schools (§ 600.57)
Statute: The HEOA amended section
102(a)(2)(A) of the HEA to provide
specific standards for foreign nursing
schools. The amendments are effective
beginning July 1, 2010, except that, for
nursing schools that were eligible for
Title IV, HEA program participation on
August 13, 2008 (the day before
enactment of the HEOA), they are
effective July 1, 2012.
The HEA, as amended by the HEOA
and HCERA, provides that a foreign
nursing school, including a for-profit
nursing school, may not participate in
the Title IV, HEA programs unless the
school—
• Has an agreement with a hospital or
accredited school of nursing (as those
terms are defined in section 801 of the
Public Health Service Act (42 United
States Code 296)) located in the United
States that requires the students of the
nursing school to complete the students’
clinical training at the hospital or
accredited school of nursing;
• Has an agreement with an
accredited school of nursing located in
the United States providing that the
students graduating from the foreign
nursing school also receive a degree
from the accredited U.S. school of
nursing;
• Certifies only Federal Direct
Stafford loans under section
455(a)(2)(A) of the HEA, Federal Direct
Unsubsidized loans under section
455(a)(2)(D) of the HEA, or Federal
Direct PLUS loans under section
455(a)(2)(B) of the HEA for students
attending the school; and
• Reimburses the Secretary for the
cost of any loan defaults for current and
former students included in the
calculation of the school’s cohort
default rate during the previous fiscal
year.
In addition, the HEOA amendments to
the HEA require that at least 75 percent
of the individuals who were students or
graduates of a foreign nursing school,
and who took the National Council
Licensure Examination for Registered
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Nurses (NCLEX–RN) in the year
preceding the year for which the school
is certifying a Title IV, HEA program
loan, received a passing score on the
NCLEX–RN.
Current Regulations: Current
regulations do not define foreign
nursing school, or specify Title IV
eligibility criteria unique to foreign
nursing schools.
Proposed Regulations: The proposed
regulations would add several new
definitions relating to foreign nursing
schools to § 600.52, would redesignate
current § 600.57 as § 600.58, and would
add a new § 600.57 specifying
additional Title IV eligibility criteria for
foreign nursing schools. The proposed
regulations would add definitions to
§ 600.52 for associate degree school of
nursing, collegiate school of nursing,
and diploma school of nursing. The
proposed new definitions are derived
from definitions relating to nursing
schools in section 801 of the Public
Health Service Act, as amended (42
U.S.C. 201 et seq.), as required by the
HEA as amended by the HEOA.
Under the proposed definitions, the
primary distinction between the three
types of nursing schools is the type of
degree offered by the school. For an
associate degree school of nursing, the
nursing program must lead to a degree
equivalent to an associate degree in the
U.S. For a collegiate school of nursing,
the nursing program must lead to a
degree equivalent to a bachelor of arts,
a bachelor of science, or a bachelor of
nursing in the U.S, or to a degree
equivalent to a graduate degree in
nursing in the U.S. For a diploma school
of nursing, the nursing program must
lead to the equivalent of a diploma in
the U.S. or to other indicators
equivalent to a diploma that
demonstrate that the student has
satisfactorily completed the program.
Proposed new § 600.57 would require
a foreign nursing school to meet the
applicable eligibility criteria elsewhere
in part 600. In addition, a foreign
nursing school must—
• Meet the definition of associate
degree school of nursing, collegiate
school of nursing, or diploma school of
nursing;
• Have an agreement with a hospital
located in the United States or an
accredited school of nursing located in
the United States that requires students
of the nursing school to complete the
student’s clinical training at the hospital
or accredited school of nursing;
• Have an agreement with an
accredited school of nursing located in
the United States providing that
students graduating from the nursing
school located outside of the United
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States also receive a degree from the
accredited school of nursing located in
the United States;
• Only certify Federal Stafford Loan
program loans or Federal PLUS program
loans for students attending the nursing
school;
• Reimburse the Secretary for the cost
of any loan defaults for current and
former students included in the
calculation of the institution’s cohort
default rate during the previous fiscal
year;
• Determine the consent requirements
for, and require the necessary consents
of, all students accepted for admission
who are U.S. citizens, nationals, or
eligible permanent residents, to enable
the school to comply with the
requirements for collection and
submission of NCLEX–RN results or
pass rates;
• Annually, at its own expense,
obtain all results on the NCLEX–RN
achieved by students and graduates who
are U.S. citizens, nationals, or eligible
permanent residents, together with the
dates the student has taken the
examination (including any failed
examinations) and provide the results to
the Secretary;
• As an alternative to obtaining the
NCLEX results individually, the school
may obtain a report or reports from the
National Council of State Boards of
Nursing (NCSB), or an NCSB affiliate or
NCSB contractor, reflecting the
percentage of the school’s students and
graduates taking the NCLEX–RN in the
preceding year who passed the
examination, or the data from which the
percentage could be derived, and
provide the report to the Secretary;
• Demonstrate at least a 75 percent
pass rate on the NCLEX–RN for all of
the U.S. citizens, nationals, or eligible
permanent residents who were students
or graduates of the school and who took
the NCLEX–RN in the year preceding
the year for which the institution is
certifying Federal Stafford or Federal
Plus loans;
• Provide a program of clinical and
classroom nursing instruction, which
students are normally required to
complete, that is supervised closely by
members of the school’s faculty. The
program, which includes programs
provided through agreements with
nursing schools in the United States,
must be provided in facilities
adequately equipped and staffed to
afford students comprehensive clinical
and classroom nursing instruction,
through a training program for foreign
nursing students that has been approved
by all nurse licensing boards and
evaluating bodies whose views are
considered relevant by the Secretary;
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• Have graduated classes during each
of the two twelve-month periods
immediately preceding the date the
Secretary receives the school’s request
for an eligibility determination; and
• Employ only those faculty members
whose academic credentials are the
equivalent of credentials required of
faculty members teaching the same or
similar courses at nursing schools in the
United States.
In addition, the proposed regulations
would specify that for purposes of
reimbursing the Secretary for defaulted
loans, the cost of a loan default is the
sum of the defaulted loan’s—
• Outstanding principal;
• Accrued interest;
• Unpaid late fees and collection
costs;
• Special allowance payments;
• Reinsurance payments; and
• Any related or similar payments the
Secretary is obligated to make on the
loan.
The proposed regulations also would
specify that after a school reimburses
the Secretary for the cost of a loan
default, the loan is assigned to the
school. The borrower remains liable to
the school for the outstanding balance of
the loan, under the terms and
conditions specified in the promissory
note.
Finally, proposed § 600.57(d) would
provide that no portion of the foreign
nursing program offered to U.S. students
may be located outside of the country in
which the main campus of the foreign
nursing school is located, except for
clinical sites located in the United
States.
Reasons: The Department modeled
the proposed language in new § 600.57
on the provisions in the HEOA
regarding foreign nursing schools, as
well as on language in existing
§§ 600.55 and 600.56, which provide
additional eligibility criteria for foreign
graduate medical schools and foreign
veterinary schools. In addition, in an
effort to alleviate some of the burden
entailed in demonstrating compliance
with the NCLEX–RN pass rate
requirement, the Department provided
leeway for the school to obtain and
submit, if available, reports on NCLEX–
RN results from the NCSB, or one of its
affiliates or contractors, showing the
percentage of students from the school
who passed the NCLEX–RN.
In most cases, the non-Federal
negotiators did not have concerns or
questions regarding the proposed
language in § 600.57 that was modeled
on language in sections §§ 600.55 and
600.56. However, non-Federal
negotiators did have concerns relating to
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several of the provisions unique to
foreign nursing schools.
The non-Federal negotiators believed
that the new requirements in
§§ 600.57(a)(2) and 600.57(a)(3),
requiring agreements between foreign
nursing schools and U.S nursing schools
and hospitals, would force many foreign
nursing schools that currently
participate in the Title IV, HEA
programs out of the Title IV, HEA
programs. The non-Federal negotiators
stated that most foreign nursing schools
do not currently have such agreements
and could not revamp their nursing
programs to provide clinical training in
the U.S. for their Title IV students. This
issue was of special concern with regard
to foreign nursing schools that enroll
relatively small numbers of Title IV
borrowers. The Title IV loan amounts
such schools receive might not be
sufficient enough to justify the expense
of revamping their nursing programs.
The Department noted that the
proposed regulations reflect the statute,
and that any regulations developed by
the Department must be consistent with
statutory requirements.
Non-Federal negotiators also had
concerns about the statutory provision,
reflected in proposed § 600.57(a)(5),
requiring a foreign nursing school to
reimburse the Secretary for the cost of
loan defaults for loans included in the
calculation of a school’s cohort default
rate. Discussion of the reimbursement
requirement centered around two major
topics: the cost of a loan default and the
status of the loan after the school
reimburses the Secretary. Proposed
§§ 600.57(b) and 600.57(c) address these
two issues.
At the time that these proposed
regulations were being negotiated, it
was unclear whether foreign institutions
would continue to participate in the
FFEL program or be required to switch
over to the Direct Loan Program. Given
this uncertainty, the Department drafted
proposed §§ 600.57(b) and 600.57(c) in
such a way that the regulations could
apply to either a FFEL loan or a Direct
Loan.
The cost of a loan default, as specified
in proposed § 600.57(b), includes some
items that only apply to FFEL loans,
such as special allowance payments,
reinsurance payments, and payments of
other fees. For a Direct Loan, the
calculation of cost of a loan default
would not include such costs. The cost
of loan default for a Direct Loan would
include such items as outstanding
principal, accrued interest, and unpaid
late fees or collection costs.
Proposed § 600.57(c) would specify
that after a school reimburses the
Secretary for the cost of a loan default,
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the loan would be assigned to the
school. The borrower would be required
to repay the loan to the school, under
the terms and conditions of the
promissory note. The reimbursement by
the school would not change the
school’s official cohort default rate or
exempt the school from the
consequences of its cohort default rate.
In the initial discussions with the
non-Federal negotiators, the nonFederal negotiators emphasized the
importance of borrowers remaining
liable for repayment of the loan after the
school has reimbursed the Department
for the loan default. The non-Federal
negotiators stressed that if the
reimbursement is deemed to have paid
off the loan, the borrower’s obligation to
repay the loan would effectively be
discharged. This would provide a
perverse incentive for borrowers to
default deliberately on their Title IV
loans.
The Department agreed with the nonFederal negotiators. Initially we
proposed that after the Secretary is
reimbursed, the loan would remain with
the loan holder, who would continue to
collect on the loan. However, the
Department determined that after it
received the reimbursement payment, it
would have no financial interest in the
loan, and would have no statutory basis
for collecting on the loan. Accordingly,
the Department modified the proposed
regulatory language to require that the
loan to be assigned to the school.
Although non-Federal negotiators
supported borrowers remaining liable
for the loan, some non-Federal
negotiators had concerns about how
assigning the loan to the school would
affect the borrower. One non-Federal
negotiator asked how NSLDS reporting,
loan rehabilitation, and total and
permanent disability discharges would
be handled for these loans.
The Department did not address in
detail operational matters with regard to
defaulted loans assigned to a school.
Instead, the Department pointed out that
currently a FFEL loan can fall out of the
FFEL program, usually due to a due
diligence failure. The terms and
conditions on the promissory note
remain in effect on these loans, and loan
holders continue to collect on them.
Procedures currently in place for FFEL
loans that have lost their eligibility
would apply to defaulted Title IV loans
that are assigned to a foreign nursing
school.
Non-Federal negotiators questioned
how foreign schools could comply with
proposed § 600.57(a)(8), which would
require that the clinical training
provided at a U.S. school or hospital be
‘‘supervised closely’’ by members of the
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foreign school’s faculty, in light of the
fact that that training would already be
supervised by faculty of the U.S. school.
The Department noted that faculty at the
U.S. clinical training facility could be
appointed as faculty of the foreign
school as well, and that, in any event,
the foreign graduate medical school
needs to have its own faculty supervise
its entire program. The Department
emphasized that Title IV eligibility is
based on a school offering an eligible
program, not a portion of an eligible
program. The foreign school would have
to develop agreements with U.S. schools
that ensure continuity between the
training offered at the foreign school
and at the U.S. school.
Non-Federal negotiators also
questioned the provision in
§ 600.57(a)(8) requiring a training
program to be approved ‘‘by all licensing
boards and evaluating bodies whose
views are considered relevant by the
Secretary.’’ Non-Federal negotiators
asked how a nursing program could be
expected to obtain approval from state
licensing boards in all 50 states. The
Department responded that the
Department would focus on the
licensing boards and evaluating bodies
applicable to the state where the
training program is located, not
licensing boards and evaluating bodies
for all of the states, in determining
compliance with this eligibility
requirement, although approval or
disapproval decisions from other states
would be considered if available.
Proposed § 600.57(d) would provide
that no portion of the foreign nursing
program offered to U.S. students may be
located outside of the country in which
the main campus of the foreign nursing
school is located, except for clinical
sites located in the United States, to
protect the coherence of the educational
program and ensure continuity of
oversight by the foreign government.
The statute requires these nursing
programs to provide their clinical
training in the United States.
As negotiated, proposed § 600.57(d)
does not reflect the inapplicability,
through June 30, 2012, to foreign
nursing schools that were participating
in a Title IV, HEA program as of August
13, 2008, of the HEOA’s new eligibility
requirements for foreign nursing
schools. In the final regulations, the
Department will specify that this section
becomes effective on July 1, 2012, with
respect to foreign nursing schools that
were participating in a Title IV, HEA
program as of August 13, 2008.
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Part 668 Student Assistance General
Provisions Audited Financial
Statements (§ 668.23)
Statute: Section 487(c)(1)(A)(i) of the
HEA was amended by the HEOA to give
the Secretary the authority to modify the
financial and compliance audit
requirements for foreign institutions,
and the authority to waive the audit
requirements for foreign institutions
that receive less than $500,000 in Title
IV, HEA program funds in the preceding
year.
Current Regulations: Currently, under
§ 668.23(a)(2), an annual submission of
both a compliance audit and audited
financial statements is required of all
institutions participating in the Title IV,
HEA programs. Section 668.23(d)(1)
requires that an institution’s audited
financial statements must be prepared
on an accrual basis in accordance with
U.S. generally accepted accounting
principles (U.S. GAAP), and audited by
an independent auditor in accordance
with U.S. generally accepted
government auditing standards (U.S.
GAGAS) and other guidance contained
in the Office of Management and Budget
Circular A–133 and A–128 regarding
audits of States, Local Government and
Non-Profit Organizations, or in audit
guides developed by, and available
from, the Department of Education’s
Office of Inspector General, whichever
is applicable. Section 668.15(h) permits
a foreign institution whose enrolled
students received less than $500,000 in
U.S. FFEL Program funds per fiscal year
to have its required audited financial
statements prepared according to the
generally accepted accounting
principles and auditing standards of the
institution’s home country. Current
regulations notwithstanding, on May 15,
2009, the Department of Education
published a Dear Colleague Letter
(GEN–09–06) that announced that the
Secretary was waiving the annual
audited financial statements
requirement for foreign institutions
whose enrolled students received less
than $500,000 in U.S. FFEL Program
funds during the award year preceding
the audit period. The waiver applies to
any audited financial statements for
such a foreign institution due on or after
August 14, 2008, the effective date of
the HEOA amendment described
previously, and renders unnecessary
§ 668.15(h), providing for submission of
audits prepared under home country
standards.
Proposed Regulations: Proposed
§ 668.23 would establish new financial
audit submission requirements for
foreign institutions as follows:
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• For a public or nonprofit foreign
institution that received less than
$500,000 in U.S. Title IV, HEA program
funds during the institution’s most
recently completed fiscal year, the
audited financial statements submission
would be waived, unless the institution
is in its initial provisional period of
participation and received Title IV, HEA
program funds during that year, in
which case the institution must submit,
in English, audited financial statements
prepared in accordance with the
generally accepted accounting
principles of the institution’s home
country.
• For a public or nonprofit foreign
institution that received at least
$500,000 but less than $3,000,000 in
U.S. Title IV, HEA program funds
during its most recently completed
fiscal year, the institution would be
allowed to submit for that year, in
English, audited financial statements
prepared in accordance with the
generally accepted accounting
principles of the institution’s home
country in lieu of financial statements
prepared in accordance with U.S.
GAAP.
• For a public or nonprofit foreign
institution that received at least
$3,000,000 but less than $5,000,000 in
U.S. Title IV, HEA program funds
during its most recently completed
fiscal year, the institution would be
required to submit once every three
years audited financial statements
prepared in accordance with the
generally accepted accounting
principles of both the institution’s home
country and U.S. GAAP, but for the two
years in between would be allowed to
submit, in English, audited financial
statements prepared in accordance with
the generally accepted accounting
principles of the institution’s home
country in lieu of financial statements
prepared in accordance with U.S.
GAAP.
• For a public or nonprofit foreign
institution that received $5,000,000 or
more in U.S. Title IV, HEA program
funds during its most recently
completed fiscal year, and for any forprofit foreign institution, the institution
would be required to submit for that
year audited financial statements
prepared in accordance with the
generally accepted accounting
principles of both the institution’s home
country and U.S. GAAP.
Proposed § 668.23(h)(3)(i) would
allow the Secretary to issue a letter to
a foreign institution that has been
identified as having problems with its
financial condition or financial
reporting that would require the foreign
institution to submit its audited
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financial statements in the manner
specified by the Secretary.
In addition, the proposed regulations
would: (1) Remove the superseded
language in § 668.15 addressing
submission of financial audits for
foreign institutions; (2) make technical
corrections to reflect the Office of
Management and Budget’s (OMB’s) 2003
rescission of Circular A–128 and
expansion of Circular A–133 to include
State and local governments and (3) add
‘‘issued by the Comptroller General of
the United States’’ to § 668.23(d)(1) to
make clear that United States generally
accepted government auditing standards
must be used for all submitted financial
statements, including those from foreign
institutions. The removal of the
superseded language in § 668.15(h)
would not impact the Secretary’s ability
to make a determination of financial
responsibility for any foreign
institution. The Secretary would make
such a determination on the basis of
financial statements submitted under
proposed § 668.23(h).
These proposed regulations would
supersede the May 15, 2009, Dear
Colleague Letter (GEN–09–06). The
proposed regulations would apply the
waiver of the annual audited financial
statements requirement to public or
nonprofit foreign institution that
received less than $500,000 in U.S. Title
IV, HEA program funds during the
institution’s most recently completed
fiscal year, instead of applying it to
foreign institutions that received less
than $500,000 in U.S. Title IV, HEA
Program funds during the award year
preceding the audit period, as the Dear
Colleague Letter does. This would
match the Title IV, HEA program funds
being administered by a foreign
institution with the period of time
covered in the audited financial
statements of the institution. If this
proposed provision becomes final, the
Department will provide
implementation guidance to institutions
addressing the change in the period
used to determine the amount of Title
IV, HEA program funds received by a
foreign institution.
Reasons: The negotiators reached
agreement on the proposed regulatory
language only after extensive
negotiations and significant
compromises.
The Department initially proposed to
require audited financial statements
prepared in accordance with U.S.
GAAP, which is the requirement for
domestic institutions, for public foreign
institutions that received $1,000,000 or
more in U.S. Title IV, HEA program
funds, or private foreign institutions
that received $500,000 or more in U.S.
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Title IV, HEA program funds, as well as
for any institution in its initial
provisional period of participation. For
public foreign institutions, if an
institution received at least $500,000 in
U.S. Title IV, HEA program funds, but
less than $1,000,000 in U.S. Title IV,
HEA program funds during the
institution’s fiscal year preceding the
audit period, the institution would have
been allowed to submit audited
financial statements prepared in
accordance with the generally accepted
accounting principles of the
institution’s home country in lieu of
financial statements prepared in
accordance with U.S. GAAP. If there
was an unpaid liability due to the
Secretary by any public institution
controlled by the same government
entity, all public institutions controlled
by that government entity would be
required to submit audited financial
statements prepared in accordance with
U.S. GAAP.
Upon hearing the Department’s initial
proposal, some non-Federal negotiators
argued that nonprofit foreign
institutions should be treated the same
as public foreign institutions. Others
opined that requiring the audited
financial statements to be prepared in
accordance with U.S. GAAP was cost
prohibitive, and suggested that a nonU.S. GAAP financial statement such as
the International Financial Reporting
Standards (IFRS) would be comparable
and provide the Department with the
information it needs. Another nonFederal negotiator suggested that the
cost of preparing audited financial
statements would be paid by students in
the form of higher tuition and fees. It
was also suggested that a rating from a
financial rating agency such as Moody’s
or Standard and Poor’s could be used as
an indicator of financial solvency.
Several non-Federal negotiators
suggested that the Department should
accept audited financial statements
prepared under the institution’s home
country accounting standards from
nonprofit or public foreign institutions
where the Department determined those
home country standards were
comparable to U.S. GAAP, regardless of
the amount of U.S Title IV, HEA
program funds that an institution may
have received in the fiscal year
preceding the audit. Non-Federal
negotiators pointed out that no evidence
had been presented during the
negotiating sessions that international
accounting principles are inferior to
U.S. GAAP, and noted that an
institution’s compliance audit would
continue to be used to demonstrate that
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Title IV, HEA program funds are being
handled appropriately.
Other suggestions made by the nonFederal negotiators included that the
Department tie its requirement of U.S.
GAAP financial statements to a foreign
institution’s cohort default rate, given
that such rates are generally lower than
those for domestic institutions, and that
public foreign institutions be relieved
from submitting U.S. GAAP financial
statements if the total number of U.S.
students enrolled at that entity was less
than fifty, regardless of the amount of
U.S. Title IV, HEA program funds
received during the institution’s fiscal
year.
The Department responded that it
believes there is a risk threshold of Title
IV, HEA program dollars administered
by foreign institutions where the
audited financial statements for those
institutions should be provided in the
same format and at the level of testing
required from domestic institutions.
These submissions would be reviewed
on an equal footing with domestic
institutions, and allow the Department
to evaluate efficiently and effectively
the financial condition of those
institutions. The Department explained
that financial statements prepared under
U.S. GAAP provide Department staff
with detailed information about the
financial condition and operation of an
institution. The additional information
comes from the analysis of the audited
financial statements, the accompanying
audit opinion letters and related
disclosures, and items in the footnote
disclosures. Although the Department
explored the use of IFRS as an
alternative to U.S. GAAP, the
Department believes it is premature to
consider doing so now because the
adoption of IFRS by the U.S. and other
countries is proceeding slowly and
inconsistently within the different
countries.
After consideration of the feedback
from the non-Federal negotiators, the
Department agreed to treat nonprofit
and public foreign institutions alike,
and removed the requirement that an
unpaid liability due to the Secretary by
related public institutions would
require the submission of audited
financial statements prepared in
accordance with U.S. GAAP. In order to
reach a compromise with the nonFederal negotiators, the Department
agreed to raise the threshold for
nonprofit and public foreign institutions
that would be allowed to submit audited
financial statements prepared in
accordance with the generally accepted
accounting principles of the
institution’s home country from
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$1,000,000 to $3,000,000 in U.S. Title
IV, HEA program funds.
The Department also clarified that a
foreign institution required to submit
audited financial statements prepared in
accordance with U.S. GAAP would be
required also to submit a copy of the
institution’s audited financial
statements that were prepared under the
institution’s home country accounting
standards for the same period. By doing
so, the Department would be able to
perform a comparative analysis between
both sets of financial statements to
determine if the requirement to provide
U.S. GAAP financial statements could
be changed in the future.
Upon hearing the revised regulatory
proposals, several non-Federal
negotiators suggested that, in lieu of a
required annual submission of any
audited financial statements, the
Department could simply rely on
applying the exception provided to the
Secretary under § 668.23(h)(3)(i) and
require an institution to submit audited
financial statements on only an ‘‘as
needed’’ basis. Some non-Federal
negotiators suggested raising the
threshold to as much as $10,000,000 in
U.S. Title IV, HEA program funds.
Others suggested that a threshold
should be based on a percentage of U.S.
Title IV, HEA program funds received
against the total student generated
revenues by an institution.
The Department responded to these
concerns with a final modification for
public and nonprofit institutions that
receive at least $3,000,000 but less than
$5,000,000 in U.S. Title IV, HEA
program funds annually. The
Department was unwilling to accept
only audited financial statements
prepared in the home country standards
on an ongoing basis for these
institutions due to the unknown
comparability of these submissions to
audited financial statements prepared
under U.S. GAAP. However, the
Department proposed having these
institutions submit U.S. GAAP financial
statements once every three years, rather
than every year, which would allow the
Department to achieve the appropriate
level of monitoring while providing
some burden relief to these institutions.
This proposal was discussed in detail,
and consensus was reached on this
issue.
Compliance Audits (§ 668.23)
Statute: Section 487(c)(1)(A)(i) of the
HEA was amended by the HEOA to give
the Secretary the authority to modify the
financial and compliance audit
requirements for foreign institutions,
and the authority to waive the audit
requirements for foreign institutions
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that receive less than $500,000 in Title
IV, HEA program funds in the preceding
year.
Current Regulations: Section
668.23(a)(2) of the current regulations
requires an annual submission of both a
compliance audit and audited financial
statements from all institutions
participating in the Title IV, HEA
programs.
Sections 668.23(b)(1) and (2) require
that an institution’s compliance audit
must cover, on a fiscal year basis, all
Title IV, HEA program transactions, and
must cover all of those transactions that
have occurred since the period covered
by the institution’s last compliance
audit. They also require that the
compliance audit under this section be
conducted in accordance with the
general standards for compliance audits
contained in the U.S. GAO Government
Auditing Standards and procedures for
audits contained in audit guides
developed by the Department of
Education’s Office of Inspector General.
The Inspector General’s current
Foreign School Audit Guide, as
amended, includes an Alternative
Compliance Engagement that may be
used for foreign institutions whose
enrolled students received less than the
$500,000 threshold in U.S. Title IV,
HEA program funds.
Proposed Regulations: The proposed
regulations would separate foreign
institutions into two groups,
establishing new compliance audit
requirements for foreign institutions
based upon whether the institution
received less than $500,000 or $500,000
or more in U.S. Title IV, HEA program
funds during the institution’s most
recently completed fiscal year.
Under proposed § 668.23(h)(2)(ii) and
(iii), foreign institutions that receive less
than $500,000 per year in U.S. Title IV,
HEA program funds would be required
to submit compliance audits under an
alternative compliance audit performed
in accordance with the audit guide from
the Department’s Office of Inspector
General. The proposed regulations
would require an annual submission of
the compliance audit, except that, under
certain conditions as described in the
following paragraphs, an institution
would submit a compliance audit
annually for two consecutive years,
then, once notified by the Secretary,
would be permitted to submit a
cumulative compliance audit every
three years thereafter.
In order to submit a cumulative
compliance audit once every three years
instead of annually, a foreign institution
would be required to have received less
than $500,000 U.S. in U.S. Title IV, HEA
program funds for its most recently
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completed fiscal year, be fully certified,
have timely submitted and had accepted
compliance audits for two consecutive
fiscal years, and have no history of late
submissions since then.
Under an alternative compliance
audit, the auditor performs prescribed
procedures and reports the findings,
but, unlike a standard compliance audit,
is not required to express an opinion of
the reliability of the institution’s
assertions concerning the institution’s
compliance with the requirements. The
alternative compliance audit is
performed as an agreed-upon
procedures attestation engagement, and
the standard compliance audit is
performed as an examination-level
attestation engagement. An alternative
compliance audit is an agreed-upon
procedures attestation engagement,
which consists of specific procedures
performed on a subject matter and is
substantially narrower in scope than a
standard compliance audit, which is an
examination-level attestation
engagement.
Under proposed § 668.23(h)(2)(i),
foreign institutions that receive
$500,000 or more per year in U.S. Title
IV, HEA program funds, as in the
current regulations, would be required
to submit annual compliance audits
using the standard audit procedures for
foreign institutions set out in the audit
guide issued by the Office of Inspector
General.
When an institution submits a
standard compliance audit because it
received more than $500,000 in U.S.
Title IV, HEA program funds in its
previous year, the institution must also
submit any alternative compliance audit
or audits for preceding years that were
prepared in accordance with proposed
§ 668.23(h)(2)(ii) for any preceding fiscal
year or years in which the foreign
institution received less than $500,000
in U.S. Title IV, HEA program funds.
Section 668.23(h)(3)(ii) of the
proposed regulations would provide the
Secretary with the authority to require
that a foreign institution’s compliance
audit must be performed at a higher
level of engagement, and/or require that
a compliance audit must be submitted
to the Secretary annually, if the
institution has been notified by the
Secretary about problems with its
administrative capability or compliance
reporting.
Section 668.23(h)(2) of the proposed
regulations would make clear that, as
under current regulations, a foreign
institution’s compliance audit must be
done on a fiscal year basis, and all Title
IV, HEA program transactions that have
occurred since the period covered by
the institution’s last compliance audit
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must be covered. For institutions that
are permitted to submit one compliance
audit every three years, this requirement
ensures that the compliance audit is
cumulative. Also, when an institution is
required to submit a compliance audit,
the compliance audit must be submitted
no later than six months after the last
day of the institution’s preceding fiscal
year.
Reasons: The Department believes
that by allowing foreign institutions that
receive $500,000 or less in U.S. Title IV,
HEA program funds per year to make
less frequent audit submissions, the
proposed regulations would provide a
basis to establish a streamlined set of
compliance audit requirements that
would provide flexibility and cost
benefits to a large number of relatively
small foreign institutions and would
reduce the reporting burden for the
majority of foreign institutions that
currently participate in the Title IV,
HEA programs.
The proposed regulations would also
allow the Department to concentrate its
resources on reviewing compliance
audits from larger volume institutions
and institutions that have demonstrated
Title IV, HEA program problems, which
represent the Department’s greatest
financial risk. It would also be more
efficient to review the cumulative audit
submissions from lower-volume foreign
institutions. Approximately 75% of the
foreign institutions that participate in
the Title IV, HEA programs are in this
lower-volume group, and these
institutions account for less than 7.5%
of total Title IV, HEA program funds
received by foreign institutions. Where
problems are identified with a foreign
institution, § 668.23(h)(3)(ii) of the
proposed regulations provides that the
Secretary may require the compliance
audit to be performed at a higher level
of engagement and may require the
compliance audit to be submitted
annually.
Public Foreign Institutions and
Financial Responsibility (§ 668.171)
Statute: Section 487(c)(1)(B) of the
HEA provides that the Secretary shall
prescribe regulations, as necessary, to
provide for the establishment of
reasonable standards of financial
responsibility for institutions that
participate in the Title IV, HEA
programs. Section 102(a)(2)(A) of the
HEA provides that the Secretary shall
prescribe regulations for determining
the comparability of foreign institutions
to Title IV ‘‘institutions of higher
education.’’
Current Regulations: Section
668.171(c) provides that an institution is
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financially responsible if the
institution—
• Notifies the Secretary that it is
designated as a public institution by the
State, local, or municipal government
entity, tribal authority, or other
government entity that has the legal
authority to make that designation; and
• Provides a letter from an official of
that State or other government entity
confirming that the institution is a
public institution. In addition, the
institution may not be in violation of
any past performance requirement.
Proposed Regulations: The proposed
regulations would permit a foreign
public institution to meet the financial
responsibility requirements in a manner
similar to domestic public institutions.
That is, the Secretary would consider a
public foreign institution to be
financially responsible if the institution:
(1) Notifies the Secretary that it is
designated as a public institution by the
country or other government entity that
has the legal authority to make that
designation; and (2) provides
documentation from an official of that
country or other government entity
confirming that the institution is a
public institution and is backed by the
full faith and credit of the country or
other government entity. As with
domestic public institutions, a foreign
public institution would not meet this
standard of financial responsibility if it
was in violation of any past
performance requirement.
If a foreign public institution did not
meet the new requirements, its financial
responsibility would be determined
under the general requirements of
financial responsibility, including the
application of the equity, primary
reserve, and net income ratios. Although
the full faith and credit provision would
provide an alternate way of meeting the
financial responsibility standards for
public foreign institutions, it would not
excuse the institution from required
submissions of audited financial
statements (see the discussion under
Audited Financial Statements above). If
a government entity provided full faith
and credit backing, the entity would be
held liable for any Title IV, HEA
program liabilities that were not paid by
the institution.
Reasons: Current § 668.171(c) is not
addressed to foreign institutions.
Therefore, the proposed regulations
would establish a financial
responsibility standard for public
foreign institutions that is comparable to
public domestic institutions that
participate in the Title IV, HEA
programs. Although the Department has
not identified specific countries that
would be willing to provide the
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proposed full faith and credit backing,
and one non-Federal negotiator reported
that a particular country with several
public institutions that participate in
the Title IV, HEA programs did not
think that it would be willing to provide
such backing, the Committee agreed that
it was a good idea to make this
alternative available.
Executive Order 12866
Regulatory Impact Analysis
Under Executive Order 12866, the
Secretary must determine whether the
regulatory action is ‘‘significant’’ and
therefore subject to the requirements of
the Executive Order and subject to
review by the 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
set forth in the Executive order.
Pursuant to the terms of the Executive
Order, it has been determined this
proposed regulatory action would not
have an annual effect on the economy
of more than $100 million. Therefore,
this action is not ‘‘economically
significant’’ and subject to OMB review
under section 3(f)(1) of Executive Order
12866. Notwithstanding this
determination, the Secretary has
assessed the potential costs and benefits
of this regulatory action and has
determined that the benefits justify the
costs.
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Need for Federal Regulatory Action
These proposed regulations are
needed to implement provisions of the
HEA, as amended by the HEOA,
particularly related to audit
requirements for foreign institutions, the
USMLE pass rate for foreign graduate
medical schools, clinical training
programs of foreign graduate medical
schools, eligibility criteria for foreign
graduate medical schools that have a
clinical training program approved by a
State prior to January 1, 2008, clinical
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training programs for foreign veterinary
schools, provisions for participation by
for-profit foreign nursing schools, and
eligibility restrictions applicable to forprofit (and, later, all) foreign nursing
schools. A brief description of the
proposed rules, the reasons for adopting
them, and an analysis of their effects is
presented in the following sections of
this NPRM:
Definition of a Foreign Institution
(§§ 600.51, 600.52, 600.54, 682.200,
682.611): Section 102(a)(2)(A) of the
HEA requires the Secretary to establish
regulatory criteria for the approval of
foreign institutions and for the
determination that they are comparable
to an institution of higher education
within the United States. Proposed
§§ 600.52 and 600.54 would include a
more detailed definition of foreign
institution to ensure that a foreign
institution is comparable to institutions
in the United States, in accordance with
HEA section 102(a)(1)(C), before
allowing a foreign institution to
participate in the Title IV, HEA
programs. The Department is concerned
that a foreign institution that is not
comparable to a domestic institution,
especially in terms of the quality of its
educational programs, may misuse
Federal funds to the detriment of its
students who may have to borrow
heavily in order to attend the foreign
institution. The proposed regulations
also more fully implement the scheme
of the HEA, which distinguishes
between foreign and domestic
institutions and includes provisions
unique to each. For example, these
regulations would prevent a domestic
institution from claiming to be a foreign
institution by virtue of the fact that it
has established an offshore location,
thereby avoiding the requirements
applied to domestic institutions such as
recognized accreditation, but that sends
its students to the United States for the
majority of the required coursework.
As described in the preamble section
related to this provision, under current
regulations a foreign institution is
eligible to participate if it is comparable
to an institution of higher education
located in the United States; has been
approved by the Secretary; does not
offer its programs through any use of
telecommunications, correspondence
course, or direct assessment program; is
not located in a State as defined in
§ 600.2; admits as regular students only
those with a secondary school
credential or recognized equivalent; and
is legally authorized by an appropriate
authority to provide an eligible program
beyond the secondary level in the
country in which it is located. The
foreign institution must also provide
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eligible programs for which the
institution is authorized to award the
equivalent of an associate,
baccalaureate, graduate, or professional
degree in the United States; or a twoyear program acceptable for full credit
towards the equivalent of a
baccalaureate degree awarded in the
United States; or a program equivalent
to a one-academic year training program
that leads to a certificate, degree, or
other credential and prepares a student
for gainful employment in a recognized
occupation.
The proposed regulations would
consolidate the definitions and
requirements related to the eligibility of
foreign institutions to apply for Title IV,
HEA program eligibility in subpart E of
34 CFR 600. As is the current practice,
foreign institutions would be required to
comply with all other requirements for
eligible and participating institutions
except to the extent the provisions are
inconsistent with the HEA, 34 part CFR
600, or other regulatory provisions
specific to foreign institutions. Proposed
§ 600.51(c) would also exempt foreign
institutions from requirements that the
Secretary identifies through a notice in
the Federal Register. The proposed
regulations would amend § 600.52 to
include a detailed definition of foreign
institution. Under the definition
proposed, foreign institution would
mean, for the purposes of students who
receive Title IV, HEA program aid, an
institution that is not located in a State;
has no U.S. locations except with
respect to clinical training for foreign
graduate medical, veterinary, and
nursing schools; has no written
agreements with institutions or
organizations located in the United
States for students to take a portion of
the program in the United States; does
not permit students to enroll in any
course offered by the foreign institution
in the United States except for
independent research under very
limited circumstances; is legally
authorized by an agency of its home
country to provide an education
program beyond its secondary level;
awards degrees that are officially
recognized by the institution’s home
country; and, for a program designed to
prepare a student for gainful
employment in a recognized
occupation, provides a credential that
satisfies the education requirements in
the institution’s home country for entry
into that occupation and satisfies the
educational requirements for entry into
that occupation in the United States,
including licensure. Proposed
§ 600.54(a) clarifies that, with the
exception of freestanding foreign
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graduate medical, veterinary, or nursing
schools that may be for-profit, foreign
institutions must be public or private
nonprofit education institutions to be
eligible.
Nonprofit Status for Foreign
Institutions (§ 600.2): As foreign
institutions must be public or private
nonprofit institutions to participate in
the Title IV, HEA programs, unless they
are medical, veterinary, or nursing
schools, the Department believes it is
necessary to delineate in regulations the
requirements for demonstrating
nonprofit status for foreign institutions.
Current section 600.2 defines a
nonprofit institution as an institution
that—
• Is owned and operated by one or
more nonprofit corporations or
associations, no parts of the net earnings
of which benefits any private
shareholder or individual;
• Is legally authorized to operate as a
nonprofit organization by each State in
which it is physically located; and
• Is determined by the U.S. Internal
Revenue Service (IRS) to be an
organization to which contributions are
tax-deductible in accordance with
section 501(c)(3) of the Internal Revenue
Code (26 U.S.C. 501(c)(3)).
Under proposed § 600.2, a new
paragraph (2) of the definition of a
nonprofit institution would provide that
if a recognized tax authority of a foreign
institution’s home country is recognized
by the Secretary for purposes of making
determinations of an institution’s
nonprofit status for Title IV, HEA
purposes, the Secretary would
automatically accept that tax authority’s
determination of nonprofit educational
status for any institution located in that
country. If a recognized tax authority of
the institution’s home country is not
recognized by the Secretary for purposes
of making determinations of an
institution’s nonprofit status for Title
IV, HEA program purposes, a foreign
institution would have to demonstrate
to the satisfaction of the Secretary that
it is a nonprofit educational institution.
The proposed regulations would also
make clear that a nonprofit foreign
institution may not be owned by a for
profit entity, directly or indirectly. A
foreign institution that did not meet this
definition of a nonprofit foreign
institution would not be eligible to
participate in the Title IV, HEA
programs unless it was a medical,
veterinary, or nursing school.
The proposed regulations should
increase comparability in the
determination of nonprofit status
between domestic and foreign
institutions. A domestic institution
must be determined by the IRS to be a
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nonprofit organization in order to be
eligible as a nonprofit institution for
participation in the Title IV, HEA
programs. Additionally, certain
countries may not have standards for
the determination of nonprofit status
that are comparable to those used in the
United States, and may not ensure that
the institution’s net earnings do not
benefit any private shareholder or
individual. Therefore, to make the
proposed regulations as comparable as
possible to those applicable to domestic
institutions, the Department proposed,
and the Committee agreed, that a
determination that an institution is
nonprofit by an entity in the
institution’s foreign country would
qualify an institution as nonprofit only
if the determination is made by a
recognized tax authority of the country,
and the Secretary has recognized that
tax authority as one that can make a
determination using criteria that are
similar to those used by the U.S. IRS.
The Secretary may recognize more than
one tax authority in a country.
Information submitted by entities other
than recognized tax authorities would
be taken into account by the
Department; however, this would be
done as part of an individual
determination of the eligibility of an
institution.
Foreign Graduate Medical Schools
(§§ 600.20, 600.21, 600.52, 600.55): As
discussed in the section of the preamble
related to this provision, the proposed
regulations reflect amendments made to
the sections 102(a)(2)(A) and (B) of the
HEA by the HEOA and the requirement
in 102(a)(2)(B)(iii)(IV)(aa) of the HEA
that the regulations be based on the
recommendations of the 2009 NCFMEA
report. The NCFMEA is a panel of
medical experts that evaluates the
medical school accrediting agency
standards used in the country where
medical education is provided to
determine comparability to the
standards of accreditation applied to
medical schools in the United States.
Current section 600.52 defines a
foreign graduate medical school as a
foreign institution that qualifies to be
listed in, and is listed as a medical
school in, the most current edition of
the World Directory of Medical Schools
published by the World Health
Organization. The regulations do not
define clinical training, the NCFMEA, or
a post-baccalaureate/equivalent medical
degree. Neither section 600.20, which
addresses the application procedures for
establishing, reestablishing,
maintaining, or expanding institutional
eligibility and certification, nor
§ 600.21, which addresses when and
how an institution must update
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application information, currently
include any provisions specific to
foreign graduate medical schools.
Foreign graduate medical schools
generally must meet the criteria in
§ 600.54 for determining a foreign
institution’s eligibility (except the
criterion that the institution be public or
private nonprofit), as well as the
additional criteria in § 600.55(a)(5). The
additional criteria include the
following: (1) Providing and requiring
students to complete a program of
clinical and classroom medical
instruction of not less than thirty-two
months that is supervised closely by
faculty and that is provided (a) outside
the United States in facilities adequately
equipped and staffed to afford students
comprehensive clinical and classroom
medical instruction, or (b) in the United
States, through a training program for
foreign medical students that has been
approved by all medical licensing
boards and evaluating bodies whose
views are considered relevant by the
Secretary; (2) having graduated classes
during each of the two twelve-month
periods immediately preceding the date
the Secretary receives the school’s
request for an eligibility determination;
(3) employing only those faculty
members whose academic credentials
are the equivalent of credentials
required of faculty members teaching
the same or similar courses at medical
schools in the United States; and (4)
being approved by an accrediting body
that is legally authorized to evaluate
graduate medical schools in the country
where the school is located and whose
standards of accreditation have been
evaluated by the advisory panel of
medical experts established by the
Secretary and have been determined to
be comparable to standards of
accreditation applied to medical schools
in the United States. In addition, current
regulations provide that foreign
graduate medical schools that do not
have a clinical training program that has
been continuously approved by a State
since January 1, 1992, must: (1) During
the academic year preceding the year for
which any of the school’s students seeks
a FFEL program loan, have at least 60
percent of those enrolled as full-time
regular students in the school and at
least 60 percent of the school’s most
recent graduating class be persons who
did not meet the citizenship and
residency criteria contained in section
484(a)(5) of the HEA, 20 U.S.C.
1091(a)(5); and (2) for a foreign graduate
medical school outside of Canada, have
at least 60 percent of the school’s
students and graduates who took any
step of the USMLE administered by the
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ECFMG (including the ECFMG English
test) in the year preceding the year for
which any of the school’s students seeks
a FFEL program loan to have received
passing scores on the exams.
The proposed regulations would deal
with location requirements for foreign
medical education programs, affiliation
agreements, application and notification
procedures, accreditation, admission
criteria, collection and submission of
data, citizenship and USMLE pass rate
percentages, maximum timeframes for
program completion, required
documentation related to educational
remediation a school provides as part of
a satisfactory academic progress policy,
and publication of the languages in
which instruction is offered.
Proposed § 600.55(h) contains
regulations concerning the locations
where a foreign graduate medical school
can establish its program. No portion of
the medical education program offered
to United States students by a foreign
graduate medical school, other than the
clinical training portion of the program,
would be allowed to be offered outside
the country where the main campus of
the school is located. In addition to
distinguishing between the basic
science and the clinical training parts of
the program, the Committee discussions
distinguished between the different
parts of clinical training; referred to in
these proposed regulations as the core,
the required clinical rotation (the
electives that students are required to
take), and the not required clinical
rotation (the electives that students can
choose). The proposed regulations set
three criteria for clinical training sites
outside the United States—the
requirement to be located in an
approved comparable country; required
on-site evaluation and specific approval
of the site by the institution’s medical
accrediting agency if a location is in a
comparable foreign country outside the
country of the program’s main campus;
and the requirement that instruction be
offered in conjunction with medical
educational programs offered to
students enrolled in accredited medical
schools located in that approved foreign
country—but allow two exceptions. The
two exceptions would permit a foreign
graduate medical school to have a
clinical training program in a foreign
country other than the country in which
the main campus is located or in the
United States without meeting these
three criteria if the clinical training
location is included in the accreditation
of a medical program accredited by the
LCME, or if no individual student takes
more than two electives at the clinical
training location and the combined
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length of the electives does not exceed
eight weeks.
Proposed § 600.55(e)(1) would require
a foreign graduate medical school to
have: (1) A formal affiliation agreement
with any hospital or clinic at which all
or a portion of the school’s core clinical
training or required clinical rotations
are provided; and (2) either a formal
affiliation agreement or other written
arrangements with any hospital or clinic
at which all or a portion of its clinical
rotations that are not required are
provided, except for those locations that
are not used regularly, but instead are
chosen by individual students who take
no more than two electives at the
location for no more than a combined
total of eight weeks. The proposed
regulations would require these
affiliation agreements or other written
arrangements to state how the following
will be addressed at each site: (1)
Maintenance of the school’s standards;
(2) appointment of faculty to the
medical school staff; (3) design of the
curriculum; (4) supervision of students;
(5) provision of liability insurance; and
(6) evaluation of student performance.
In addition, the proposed regulations
would require a foreign graduate
medical school to do the following in its
application for participation in Title IV,
HEA programs: (1) To provide copies of
the affiliation agreements with hospitals
and clinics that it is required to have
under proposed § 600.55(e)(2); (2) to list
all educational sites associated with its
program on its application for
participation, except those not used
regularly that are chosen by individual
students who take no more than two
electives there for no more than a
combined total of eight weeks; (3) to
apply for certification and wait for
approval before dispensing Title IV,
HEA program funds at any additional
location that offers core clinical
training, except for those locations
included in the accreditation of a
medical program accredited by the
LCME; and (4) to indicate whether it
offers only post-baccalaureate/
equivalent medical programs, other
types of programs that lead to
employment as a doctor of osteopathic
medicine or doctor of medicine, or both.
The Department believes that
distinguishing between the parts of the
medical education program allows a
balance between effective oversight and
exposure to other medical environments
and cultures for short-term elective
training.
Other proposed regulations address
general definitions and requirements
related to foreign graduate medical
programs. The proposed regulations
would change the definition of a foreign
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graduate medical school, removing the
requirement that a school qualify for
listing in the World Directory of
Medical Schools and clarifying that
schools would have to meet all
applicable criteria for foreign
institution’s Title IV, HEA program
eligibility in part 600, not just the
criteria in § 600.55. In its place, the
definition proposed would clarify that a
foreign graduate medical school can be
free-standing or a component of an
eligible foreign institution. Current
regulations require only clinical training
and classroom instruction that is offered
outside of the United States to be
provided in facilities adequately
equipped and staffed to afford students
comprehensive clinical and classroom
medical instruction, and require only
the clinical training and classroom
instruction located in the United States
to be approved by all medical licensing
boards and evaluating bodies whose
views are considered relevant by the
Secretary. Proposed § 600.55(a)(2)
would apply these provisions to the
entire medical program, regardless of
whether a particular portion is located
outside or inside the United States, as
the Department believes both are good
requirements for medical education
regardless of location. In § 600.52, the
proposed regulations would add a
definition of clinical training. Clinical
training would be defined as the portion
of a graduate medical education
program that counts as a clinical
clerkship for purposes of medical
licensure. Proposed §§ 600.20(a)(3)(i)(B)
and (b)(3)(i)(B) would require
freestanding foreign graduate medical
schools, and foreign institutions that
include a foreign graduate medical
school, to identify, for each clinical site
reported in the certification or
recertification application as required
under §§ 600.20(a)(3)(i)(A) and
(b)(3)(i)(A), the type of clinical training
(core, required clinical rotation, not
required clinical rotation) offered at that
site. Proposed § 600.55(a)(3) would
require foreign graduate medical schools
to appoint, rather than employ, faculty
members with comparable academic
credentials to those teaching similar
courses at U.S. medical schools. The
proposed regulations make no
substantive changes to existing
accreditation requirements for foreign
graduate medical schools.
The proposed regulations also address
admission criteria and collection and
submission of data in order to provide
data for the evaluation of whether
additional performance measures
should be required of foreign graduate
medical schools. Proposed § 668.55(c)
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would require foreign graduate medical
school with a post-baccalaureate/
equivalent medical program to require
U.S. citizens, nationals, or permanent
residents accepted as students to have
taken the MCAT and have reported the
scores to the school. To provide
information valuable for the future
evaluation of the quality of education
being provided to students attending
foreign graduate medical schools,
foreign graduate medical schools must
determine consent requirements, obtain
necessary consents from U.S. citizens,
nationals, or eligible permanent
residents, and comply with the
collection and submission requirements
in proposed § 600.55(d) for MCAT
scores, residency placement, and
USMLE examination scores. Proposed
§ 600.55(d) requires that schools obtain
the required information at their own
expense, submit MCAT scores and
medical residency data to their
accrediting agency by September 30 of
each year, and submit the USMLE
scores for Step 1, Step 2—Clinical
Skills, and Step 2—Clinical Knowledge
to the Department annually by
September 30 unless the Department
informs the school that it will get the
USMLE scores from ECFMG. The
provision in proposed § 600.55(e)(2)
would require a foreign graduate
medical school to notify its accrediting
body within one year of any material
changes in educational programs, and
the overseeing bodies and in the formal
affiliation agreements with hospitals
and clinics would reflect NCFMEA
Recommendations 12(a) and 12(b) and
would allow a school’s accrediting body
to assess any substantive impact the
change would have on the school’s
operations.
The proposed change in
§ 600.55(f)(1)(i)(B) to allow a foreign
graduate medical school to be exempt
from the existing citizenship
requirement if it had a clinical training
program approved by a State as of
January 1, 2008, and continues to
operate a clinical training program in at
least one State that approves the
program, reflects a change made by the
HEOA. As a result, both foreign
graduate medical schools that had a
clinical training program approved by a
State as of January 1, 1992, and those
that had a clinical training program
approved by a State as of January 1,
2008, are exempt from the citizenship
rate provision, provided the school
continues to operate a clinical training
program in at least one State that
approves the program.
The increase in the USMLE pass rate
threshold from 60 percent to 75 percent
also reflects a change made by the
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HEOA, as does proposed
§ 600.55(f)(2)(ii), which would allow a
foreign graduate medical school that
was eligible to participate in the Title
IV, HEA programs and exempt from the
USMLE pass rate requirement based on
having a clinical training program
approved by a State as of January 1,
1992, to continue to be eligible and
exempt from the USMLE pass rate
requirement as long as it continues to
operate a clinical training program in at
least one State that approves the
program. Proposed § 600.55(f)(1)(ii)
would make the following changes to
the USMLE pass rate requirement: (1)
Increase the USMLE pass rate threshold
from 60 percent to 75 percent
(§ 600.55(f)(1)(ii)); (2) limit the pass rate
requirement to Step 1, Step 2—CS, and
Step 2—CK, excluding Step 3; (3)
require a foreign graduate medical
school to have at least a 75 percent pass
rate on each step/test of the USMLE
(limited to Step 1, Step 2—CS, and Step
2—CK), rather than a combined pass
rate for all steps/tests; (4) require foreign
graduate medical schools to include in
the calculation only U.S. citizens,
nationals, or eligible permanent
residents, rather than all students taking
the USMLE; and (5) require foreign
graduate medical schools to include
only first time test takers in the
calculation. As described in the
preamble section related to this
provision, under proposed
§ 600.55(f)(4), pass rates must be based
on at least eight step/test results.
Proposed § 600.55(g)(1) would require
a foreign graduate medical school to
follow existing regulations currently
applicable to undergraduate programs
for establishing a maximum timeframe
in which a student must complete his or
her program of medical education and
require that a student complete his or
her program within 150 percent of the
published length of the program. This
adopts NCFMEA Recommendation 9(b).
In addition, proposed § 600.55(g)(2)
would require a foreign graduate
medical school to document the
educational remediation it provides to
assist students in making satisfactory
academic progress. In the future, the
Department or the NCFMEA may collect
and examine the data to see if this is an
area of concern that may need to be
addressed, but they did not believe it
was currently necessary or cost effective
to require the regular submission of
these data to the Department. Finally,
proposed § 600.55(g)(3) would require a
foreign graduate medical school to
publish all the languages in which
instruction is offered. Although
NCFMEA Recommendation 10
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suggested requiring schools to publish
the primary language of instruction, and
if not English, identify any alternate
language of instruction, the Committee
agreed that requiring schools to publish
all languages in which instruction is
offered would be more beneficial and no
more burdensome.
Foreign Veterinary Schools (§ 600.56):
Section 102(a)(2)(A)(ii) of the HEA
stipulates that Title IV borrowers
attending a foreign for-profit veterinary
school must complete clinical training
at an approved veterinary school located
in the United States. The HEA does not
establish additional eligibility criteria
specific to foreign veterinary schools,
and requires the Secretary to develop,
through regulation, eligibility criteria for
foreign institutions that are comparable
to the eligibility criteria for domestic
institutions of higher education. Under
current regulations, foreign veterinary
school facilities outside the United
States must be adequately equipped and
staffed to provide students
comprehensive clinical and classroom
veterinary instruction, foreign
veterinary school programs provided
inside the United States must be
approved by all veterinary licensing
boards and evaluating bodies that the
Secretary considers to be relevant, and
the credentials of faculty members
employed by the foreign veterinary
school must be equivalent to the
credentials of faculty members teaching
the same or similar courses in the
United States.
The Department proposed revising the
regulations governing eligibility criteria
for foreign veterinary schools to
improve the Department’s process for
making determinations of eligibility of
foreign veterinary schools to participate
in the Title IV, HEA programs. The
proposed regulations would apply the
current regulatory standards regarding
facilities, approvals and faculty
credentials without distinguishing
between portions of veterinary programs
provided inside and outside of the
United States, and, as of July 1, 2015,
would require a foreign veterinary
school to be accredited or provisionally
accredited by an organization acceptable
to the Secretary. As required by the
HEA, the proposed regulations also
distinguish between for-profit foreign
veterinary schools and those that are
public or private nonprofit. Students
from a for-profit foreign veterinary
school must complete their clinical
training at an approved veterinary
school located in the United States.
Students from public or private
nonprofit foreign veterinary schools
may complete their clinical training at
an approved veterinary school located
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in the United States or in the home
country, and may also take clinical
training outside the United States or the
home country if no individual student
takes more than two electives at the
location and the combined length of the
elective does not exceed eight weeks.
The Department agreed to be consistent
with medical school provisions that
would permit some clinical training
locations of foreign graduate medical
schools to be outside of the United
States and the country in which the
main campus of the school is located.
This provision could not be extended to
for-profit veterinary schools because the
statute requires students who attend
these schools to complete their clinical
training in the United States.
Foreign Nursing Schools (§ 600.57):
The HEOA amended section
102(a)(2)(A) of the HEA to provide
specific standards for foreign nursing
schools. The amendments are effective
beginning July 1, 2010, except that, for
nursing schools that were eligible for
Title IV, HEA program participation on
August 13, 2008 (the day before
enactment of the HEOA), they are
effective July 1, 2012. The HEA, as
amended by the HEOA and HCERA,
provides that a foreign nursing school,
including a for-profit nursing school,
may not participate in the Title IV, HEA
programs unless the school: (1) Has an
clinical training agreement with a
hospital or accredited school of nursing
located in the United States; (2) has an
agreement with an accredited school of
nursing located in the United States
providing that the students graduating
from the foreign nursing school also
receive a degree from the accredited
U.S. school of nursing; (3) certifies only
Federal Direct Stafford Loans under
section 455(a)(2)(A) of the HEA, Federal
Direct Unsubsidized Stafford Loans
under section 455(a)(2)(D) of the HEA,
or Federal Direct PLUS loans under
section 455(a)(2)(B) of the HEA for
students attending the school; and (4)
reimburses the Secretary for the cost of
any loan defaults for current and former
students included in the calculation of
the school’s cohort default rate during
the previous fiscal year. In addition, the
HEOA amendments to the HEA require
that at least 75 percent of the
individuals who were students or
graduates of a foreign nursing school,
and who took the National Council
Licensure Examination for Registered
Nurses (NCLEX–RN) in the year
preceding the year for which the school
is certifying a Title IV, HEA program
loan, received a passing score on the
NCLEX–RN. Current regulations do not
define the term ‘‘foreign nursing school’’,
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or specify Title IV, HEA program
eligibility criteria unique to foreign
nursing schools.
The proposed regulations would add
several new definitions relating to
foreign nursing schools to § 600.52, and
would add a new § 600.57 specifying
additional Title IV eligibility criteria for
foreign nursing schools. The proposed
regulations would add definitions to
§ 600.52 for the terms associate degree
school of nursing, collegiate school of
nursing, and diploma school of nursing,
with the primary distinction between
the three types of nursing schools being
the type of degree offered by the school.
For an associate degree school of
nursing, the nursing program must lead
to a degree equivalent to an associate
degree in the U.S. For a collegiate
school of nursing, the nursing program
must lead to a degree equivalent to a
bachelor of arts, a bachelor of science,
or a bachelor of nursing in the U.S., or
to a degree equivalent to a graduate
degree in nursing in the U.S. For a
diploma school of nursing, the nursing
program must lead to the equivalent of
a diploma in the U.S. or to other indicia
equivalent to a diploma that
demonstrates that the student has
satisfactorily completed the program.
These definitions are drawn from the
Public Health Service Act, as required
by the foreign nursing school provisions
of the HEOA amendments to the HEA.
Proposed new § 600.57 would require
a foreign nursing school to meet the
applicable eligibility criteria elsewhere
in part 600. In addition, a foreign
nursing school must meet the statutory
requirements described above as well as
the following eligibility criteria: (1)
Meet the definition of associate degree
school of nursing, collegiate school of
nursing, or diploma school of nursing;
(2) reimburse the Department for the
cost of any loan defaults for current and
former students included in the
calculation of the institution’s cohort
default rate during the previous fiscal
year; (3) determine the consent
requirements for, and require the
necessary consents of, all students
accepted for admission who are U.S.
citizens, nationals, or eligible
permanent residents, to enable the
school to comply with the requirements
for collection and submission of
NCLEX–RN results or pass rates; (4)
annually, at its own expense, obtain all
results on the NCLEX–RN achieved by
students and graduates who are U.S.
citizens, nationals, or eligible
permanent residents, together with the
dates the student has taken the
examination (including any failed
examinations) and provide the results to
the Secretary; (5) as an alternative to
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obtaining the NCLEX results
individually, the school may obtain a
report or reports from the National
Council of State Boards of Nursing
(NCSB), or an NCSB affiliate or NCSB
contractor, reflecting the percentage of
the school’s students and graduates
taking the NCLEX–RN in the preceding
year who passed the examination, or the
data from which the percentage could
be derived, and provide the report to the
Secretary; (6) provide, a program of
clinical and classroom nursing
instruction, which students are
normally required to complete, that is
supervised closely by members of the
school’s faculty. The program, which
includes programs provided through
agreements with nursing schools in the
United States, must be provided in
facilities adequately equipped and
staffed to afford students comprehensive
clinical and classroom nursing
instruction, through a training program
for foreign nursing students that has
been approved by all nurse licensing
boards and evaluating bodies whose
views are considered relevant by the
Secretary; (7) have graduated classes
during each of the two twelve-month
periods immediately preceding the date
the Secretary receives the school’s
request for an eligibility determination;
and (8) employ only those faculty
members whose academic credentials
are the equivalent of credentials
required of faculty members teaching
the same or similar courses at nursing
schools in the United States.
The proposed regulations also would
specify that after a school reimburses
the Secretary for the cost of a loan
default, the loan is assigned to the
school. The borrower remains liable to
the school for the outstanding balance of
the loan, under the terms and
conditions specified in the promissory
note.
Proposed § 600.56(b) would provide
that no portion of the foreign nursing
program offered to U.S. students may be
located outside of the country in which
the main campus of the foreign nursing
school is located, except for clinical
sites, which by statute must be located
in the United States.
Single Legal Authorization for Groups
of Foreign Institutions (§ 600.54)
To ease administrative burden for
foreign institutions, the Department
sought to determine if compliance with
any of the foreign institution
institutional eligibility criteria could be
demonstrated at a nationwide level, for
all eligible institutions within a country,
rather than at the individual institution
level. After discussions with the nonFederal negotiators and our own
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internal review of the Title IV
institutional eligibility criteria, the
Department determined that the
requirement for proof of legal
authorization to provide postsecondary
education could be provided this way.
Section 600.54(b) of the current
regulations requires a foreign institution
to be legally authorized by an
appropriate authority to provide
postsecondary education in the country
where the institution is located.
Proposed § 600.54(f) would provide
three different methods for a foreign
institution to prove that it is legally
authorized to provide postsecondary
education in the country where the
institution is located. The
documentation from a foreign country’s
education ministry, council, or
equivalent agency may either be: (1) A
single legal authorization that covers all
eligible foreign institutions in the
country; (2) a single legal authorization
that covers all eligible foreign
institutions in a jurisdiction within the
country; or (3) separate legal
authorizations for each eligible foreign
institution in the country.
The proposed regulations reflect
recommendations made in response to
concerns raised by non-Federal
negotiators about reliance on national
governments to produce lists of
institutions legally authorized to
provide postsecondary education
because of efficiency and provincial
level regulation of educational providers
in some countries. In addition to
allowing proof of legal authorization to
be provided on a nationwide basis, the
proposed regulations allow for proof of
legal authorization to be provided for all
eligible institutions in a jurisdiction
within the country, and continue to
allow proof of legal authorization to be
provided separately for each eligible
institution in a country.
Eligibility of Training Programs at
Foreign Institutions (§ 600.54): Section
101(b)(1) of the HEA provides, in part,
that one type of educational program
that a Title IV ‘‘institution of higher
education’’ may provide to be eligible to
apply to participate in the Title IV, HEA
programs, is a training program of at
least one year that prepares students for
gainful employment in a recognized
occupation. Section 102(a)(2)(A)
provides for participation in the Title
IV, HEA programs by entities that are
comparable to such institutions under
regulations prescribed by the Secretary.
Current regulations provide that, in
order to be eligible to apply to
participate in the Title IV, HEA
programs, a foreign institution must
provide an eligible educational program
that leads to a degree that is equivalent
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to a U.S. degree, or be at least a twoacademic year program acceptable for
full credit toward the equivalent of a
U.S. baccalaureate degree, or be
equivalent to at least a one-academicyear training program that leads to a
certificate, degree, or other recognized
educational credential and prepares
students for gainful employment in a
recognized occupation.
Under the proposed regulations, a
foreign institution would have to
demonstrate to the satisfaction of the
Secretary (who would make programby-program determinations of
comparability) that the amount of
academic work required by a program it
seeks to qualify as eligible as at least a
one-academic-year training program is
equivalent to—
• For a program offered in credit
hours, a minimum of 30 weeks of
instructional time and, for an
undergraduate program, an amount of
instructional time whereby a full-time
student is expected to complete at least
24 semester or trimester credit hours or
36 quarter credit hours; or
• For a program offered in clock
hours, a minimum of 26 weeks of
instructional time and, for an
undergraduate program, an amount of
instructional time whereby a full-time
student is expected to complete at least
900 clock hours.
The Department believes the
proposed regulations are necessary
because many foreign institutions use
educational measurements other than
conventional U.S. semester, trimester,
quarter credits and clock-hours. The
non-Federal negotiators provided the
Department with information regarding
the definition of non-degree programs
by different countries, units of
measurement for programs in other
countries, and evaluation and
comparability determinations made by
private entities. The information
provided consistently indicates that the
assignment of credits or other measures
of academic work by foreign institutions
vary greatly. As the definition of an
academic year—the program length
measurement used here—specifically
references these U.S. measurements, it
is necessary to make some sort of
comparability determination in order to
determine the eligibility of these
programs at foreign institutions, and in
some cases to determine the eligibility
of the foreign institution itself. Under
the proposed regulations, the Secretary
would make determinations of
comparability on a program-by-program
basis, based on information provided by
a foreign institution to demonstrate that
the amount of academic work required
by a program it seeks to qualify as
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eligible as comparable to at least a oneacademic-year training program is
equivalent to the academic work
required for eligibility of these programs
at domestic institutions.
Audited Financial Statements
(§ 668.23): Section 487(c)(1)(A)(i) of the
HEA was amended by the HEOA to give
the Secretary the authority to modify the
financial and compliance audit
requirements for foreign institutions and
the authority to waive the audit
requirements for foreign institutions
that receive less than $500,000 in Title
IV, HEA program funds in the preceding
year. Currently, under § 668.23(a)(2), an
annual submission of both a compliance
audit and audited financial statements
is required of all institutions
participating in the Title IV, HEA
programs. Section 668.23(d)(1) requires
that an institution’s financial statements
must be prepared on an accrual basis in
accordance with U.S. GAAP, and
audited by an independent auditor in
accordance with U.S. GAGAS, or in
compliance with guidance in Office of
Management and Budget Circular A–133
and A–128 or in audit guides developed
by, and available from, the Department
of Education’s Office of Inspector
General.
The proposed regulations categorize
foreign institutions by control and
amount of Title IV, HEA program funds
received during the institution’s most
recently completed fiscal year and
establish new financial audit
submission requirements. For a public
or nonprofit foreign institution that
received less than $500,000 in U.S. Title
IV, HEA program funds during the
institution’s most recently completed
fiscal year, the audited financial
statements submission normally would
be waived. However, if the institution is
in its initial provisional period of
participation, and received Title IV,
HEA program funds during that year,
the institution must submit, in English,
audited financial statements prepared in
accordance with generally accepted
accounting principles of the
institution’s home country. For a public
or nonprofit foreign institution that
received at least $500,000 but less than
$3,000,000 in U.S. Title IV, HEA
program funds during its most recently
completed fiscal year, the institution
would be allowed to submit for that
year, in English, audited financial
statements prepared in accordance with
the generally accepted accounting
principles of the institution’s home
country in lieu of financial statements
prepared in accordance with U.S.
GAAP. For a public or nonprofit foreign
institution that received at least
$3,000,000 but less than $5,000,000 in
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U.S. Title IV, HEA program funds
during its most recently completed
fiscal year, the institution would be
required to submit once every three
years audited financial statements
prepared in accordance with the
generally accepted accounting
principles of both the institution’s home
country and U.S. GAAP, but, for the two
years in between, would be allowed to
submit in English, audited financial
statements prepared in accordance with
the generally accepted accounting
principles of the institution’s home
country in lieu of financial statements
prepared in accordance with U.S.
GAAP. Foreign institutions that receive
more than $5,000,000 or more annually
would remain subject to current
requirements for audited financial
statements prepared in accordance with
U.S. GAAP.
The proposed regulations also allow
the Secretary to issue a letter to a foreign
institution that has been identified as
having problems with its financial
condition or financial reporting that
requires the foreign institution to submit
its audited financial statements in the
manner specified by the Secretary.
Compliance Audits (§ 668.23): Current
regulations require an annual
submission of both a compliance audit
and audited financial statements from
all institutions participating in the Title
IV, HEA programs. An institution’s
compliance audit must cover on a fiscal
year basis, all Title IV, HEA program
transactions, and must cover all of those
transactions that have occurred since
the period covered by the institution’s
last compliance audit and be conducted
in compliance with the general
standards for compliance audits
contained in the U.S. GAO Government
Auditing Standards and procedures for
audits contained in audit guides
developed by the Department of
Education’s Office of Inspector General.
The current Inspector General’s Audit
Guide concerning compliance audits for
foreign institutions includes an
Alternative Compliance Engagement
that may be used for foreign institutions
whose enrolled students received less
than the $500,000 threshold in U.S.
Title IV, HEA program funds.
The proposed regulations would
separate foreign institutions into two
groups, establishing new compliance
audit requirements for foreign
institutions based upon whether the
institution received less than $500,000
or $500,000 or more in U.S. Title IV,
HEA program funds during the
institution’s most recently completed
fiscal year. For foreign institutions that
receive less than $500,000 per year in
U.S. Title IV, HEA program funds would
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be required to submit compliance audits
under an alternative compliance audit
performed in accordance with the audit
guide from the Department’s Office of
Inspector General. Under an alternative
compliance audit, the auditor performs
prescribed procedures and reports the
findings, but, unlike a standard
compliance audit, is not required to
express an opinion of the reliability of
the institution’s assertions concerning
the institution’s compliance with the
requirements. The alternative
compliance audit is performed as an
agreed-upon procedures attestation
engagement, and the standard
compliance audit is performed as an
examination-level attestation
engagement. The proposed regulations
would require an annual submission of
the compliance audit, except that, in
specified circumstances, an institution
would submit a compliance audit
annually for two consecutive years,
then, once notified by the Department,
would be permitted to submit a
compliance audit every three years
thereafter. To qualify for these less
frequent submission requirements, a
foreign institution would be required to
have received less than $500,000 in the
most recently completed fiscal year, be
fully certified, have timely submitted
and had accepted compliance audits for
two consecutive fiscal years, and have
no history of late submissions since
then.
Foreign institutions that receive
$500,000 or more in U.S. Title IV, HEA
program funds would be required to
submit an annual compliance audit
using the standard audit procedures for
foreign institutions in the audit guide
issued by the Office of Inspector
General. The compliance audit would
be submitted along with any alternative
compliance audits for any preceding
fiscal years in which the institutions
received less than $500,000 in U.S. Title
IV, HEA program funds.
Section 668.23(h)(3)(ii) of the
proposed regulations would provide the
Secretary with the authority to require
that a foreign institution’s compliance
audit be performed at a higher level of
engagement, and/or require that a
compliance audit must be submitted to
the Secretary annually if it has been
identified that the institution has
problems with its administrative
capability or compliance reporting.
Section 668.23(h)(2) of the proposed
regulations would make clear that, as
under the current regulations, a foreign
institution’s compliance audit must be
done on a fiscal year basis, and all Title
IV, HEA program transactions that have
occurred since the period covered by
the institution’s last compliance audit
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must be covered. Also, a compliance
audit must be submitted no later than
six months after the last day of the
institution’s fiscal year.
The Department believes the
proposed regulations provide a basis to
establish a streamlined set of
compliance audit requirements that
would provide flexibility and cost
benefits to the large number of relatively
small foreign institutions and reduce the
reporting burden for the majority of
foreign institutions. Approximately 75%
of the foreign institutions that
participate in the Title IV, HEA
programs are in this lower-volume
group, and these institutions account for
less than 7.5% of total Title IV, HEA
program funds received by foreign
institutions. The proposed regulations
should allow the Department to
concentrate its resources on reviewing
compliance audits from the larger
volume institutions and institutions that
have demonstrated Title IV, HEA
program problems that represent the
Department’s greatest financial risk.
Public Foreign Schools and Financial
Responsibility (§ 668.171)
Section 487(c)(1)(B) of the HEA
provides that the Secretary shall
prescribe regulations, as necessary, to
provide for the establishment of
reasonable standards of financial
responsibility for institutions that
participate in the Title IV, HEA
programs. Section 102(a)(2)(A) provides
that the Secretary shall prescribe
regulations for determining the
comparability of foreign schools to Title
IV ‘‘institutions of higher education.’’
Current section 668.171(c) provides that
an institution is financially responsible
if the institution notifies the Secretary
that it is designated as a public
institution by the State, local, or
municipal government entity, tribal
authority, or other government entity
that has the legal authority to make that
designation, and provides a letter from
an official of that State or other
government entity confirming that the
institution is a public institution. In
addition, the institution may not be in
violation of any past performance
requirement. Current § 668.171(c) is not
addressed to foreign institutions. The
proposed regulations would permit a
foreign public institution to meet the
financial responsibility in a manner
similar to domestic public institutions
as described above. If a foreign public
institution did not meet the new
requirements, its financial responsibility
would be determined under the general
requirements of financial responsibility,
including the application of the equity,
primary reserve, and net income ratios.
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Although the full faith and credit
provision would provide an alternate
way of meeting the financial
responsibility standards for public
foreign institutions, it would not excuse
the institution from required
submissions of audited financial
statements.
The following section addresses the
alternatives that the Secretary
considered in implementing these
regulations. These alternatives are also
discussed in more detail in the Reasons
sections of this preamble related to the
specific regulatory provisions.
Regulatory Alternatives Considered
Definition of a Foreign Institution
(§§ 600.51, 600.52, 600.54, 682.200,
682.611): As described in the section of
the preamble related to this provision,
there were extensive comments and
negotiations related to the definition of
a foreign institution. In response to the
Department’s position that a more
detailed definition of foreign institution
is necessary and request for comments,
several non-Federal negotiators urged
the Department to define the term to
ensure quality control through high
academic standards and suggested
subjecting foreign institutions to
accreditation by accreditors recognized
by the Department. When the
Department indicated that it does not
recognize U.S. accreditors for
accreditation of institutions outside the
United States, the non-Federal
negotiators suggested a requirement that
foreign institutions be ‘‘legally
authorized’’ by an appropriate authority
in the country in which the institution
is located, with some negotiators urging
the Department to be flexible in this
area as such authority could reside in
different branches of government
depending on the country. Several nonFederal negotiators suggested that the
Department require foreign countries to
recognize the degrees and licenses
offered by a foreign institution.
The Department drafted regulatory
language that responded to these
suggestions and also included
provisions prohibiting foreign
institutions from entering into written
arrangements with institutions located
in the United States and preventing
foreign institution students from
engaging in courses, research, work, and
other pursuits within the United States
that drew objections from the nonFederal negotiators. The Department
included these provisions to address
abuses whereby an institution sets up an
offshore campus to claim foreign
institution status and thus avoids
domestic requirements even though the
institution is, for all intents and
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purposes, a domestic institution, but the
non-Federal negotiators felt the
language was too broad and urged the
Department to make exceptions for
research conducted in the United States
by PhD students. In responding to these
comments, the Department clarified the
meaning of the terms written agreement
and educational enterprise and sought
to further distinguish between foreign
and domestic institutions by prohibiting
foreign locations of an educational
enterprise from being considered
additional locations of a domestic
location of the educational enterprise if
the enterprise has at least twice as many
students enrolled in foreign locations as
those enrolled in domestic locations.
The non-Federal negotiators were
comfortable with the majority of the
Department’s proposed language but
several non-Federal negotiators
continued to raise concerns about the
proposed language prohibiting U.S.
locations of foreign institutions and
written arrangements with institutions
located in the United States. The
Department indicated that foreign
institutions can establish locations in
the United States, but that such
locations and institutions would need to
be separately certified and meet the
requirements applicable to domestic
institutions in order for U.S. students
attending them to receive Title IV, HEA
funds. The Department does not want a
foreign institution to send its U.S.
students to a U.S. location of a foreign
institution or to a U.S. institution with
which it has an agreement for their
training because students enrolled in a
foreign institution are only eligible for
Direct Loan program (or, before July 1,
2010, FFEL program) loans. Instead, the
Department wants U.S. students
attending postsecondary institutions in
the United States to be eligible for the
full range of Title IV, HEA program
funds available to domestic institutions.
Foreign Graduate Medical Schools
(§§ 600.20, 600.21, 600.52, 600.55): The
Department’s initial proposal related to
the location of foreign graduate medical
schools reflected the approach
recommended by NCFMEA
Recommendation 12(a) and the
Department’s current policy of allowing
clinical training sites outside of the
program’s main country if the site is
located in an NCFMEA approved
country, the institution’s medical
accrediting agency has conducted an onsite evaluation and specifically
approved the site, and the clinical
instruction is offered in conjunction
with medical educational programs
offered to students enrolled in
accredited medical schools located in
that foreign country. Several non-
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Federal negotiators felt this initial
proposal was too limiting and that
matriculating in different countries as
part of a graduate medical program
would benefit students by exposing
them to medical education and practice
in different environments and cultures.
After negotiations involving possible
locations for the basic science portion of
the program as well as accreditation
requirements for clinical training sites,
the proposed framework that
distinguishes the basic science, required
clinical training, and elective clinical
training was established. The
Department reiterated its belief that the
basic sciences part of a graduate medical
program should be located in the same
country as the main campus so that the
classroom instruction part of the
program will be under the direct
authority of the school’s accrediting
body. In addition, the Department
agreed to the position of some nonFederal negotiators who felt that clinical
locations that are included in the
accreditation of a medical program
accredited by the LCME, such as
locations of some Canadian schools,
should be eligible regardless of locale
because the LCME accrediting standards
are those that are applied to medical
schools in the United States.
The Department initially proposed
that, consistent with NCFMEA
Recommendations 1(a) and 1(b), a
foreign graduate medical school would
have to require students who it admits
to have a specific educational
background (e.g., for a postbaccalaureate/equivalent medical
program, students must have a
baccalaureate degree, or at least 90
semester credit hours or the equivalent,
in general education that includes, but
is not limited to, coursework in the
social sciences, history, and languages).
Several of the non-Federal negotiators
felt that such provisions were unduly
limiting, and ultimately the negotiators
agreed it would be more appropriate for
the NCFMEA to establish these
provisions as guidelines for accrediting
bodies. The Department had also
included as a part of its initial proposal,
that a school having an integrated
program for a first professional program
leading to a Doctor of Medicine (M.D.)
degree, or its equivalent must require
students who are U.S. citizens,
nationals, or permanent residents to
take the MCAT no later than three years
after admission to the program. The
Department was ultimately persuaded to
remove the provision by non-Federal
negotiators who pointed out that
requiring students to take the MCAT
early in the program would distract
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them from the education that was
preparing them to take the USMLE.
Ultimately, the Department agreed to
retain from Recommendations 1(a) and
1(b) only the provision that would
require U.S. students who are admitted
to a school having a post-baccalaureate/
equivalent medical program to have
taken the MCAT and to report the score.
This provision would not require a
foreign graduate medical school to give
weight to a U.S. student’s score on the
MCAT as part of its admission
requirements.
The Department originally proposed
requiring schools to submit data on all
steps of the USMLE, but non-Federal
negotiators pointed out that it would be
extremely difficult for schools to obtain
data on Step-3 as it is taken by students
after they have graduated from the
institution and a student cannot sign a
consent to provide information on Step
3 to third parties until he or she is
actually taking the test. Although the
Department is continuing to explore the
collection of data from the FSMB for
evaluating its use in the future, the
Department agrees that it would be
unreasonable to require institutions to
be responsible for its collection and
submission at this time. To focus the
USMLE pass rate on the students the
Department is most concerned about
and allow comparability to domestic
schools, the USMLE pass rate
calculation was limited to U.S. citizens,
nationals, and eligible permanent
residents taking the tests for the first
time.
Some non-Federal negotiators
expressed concern that requiring foreign
institutions to obtain student consent
for the release of information may be in
violation of certain countries’ privacy
laws. After reviewing an analysis of the
privacy laws and requirements of one
country that had been identified as one
that could have problems in this area,
the Department concluded that there
would be several ways that institutions
in that country could legally obtain the
required information from students, and
committed to working with those
schools and schools in any country that
have concerns to facilitate compliance.
The Department noted, however, that
the Department cannot waive statutory
or regulatory requirements used to
determine institutional eligibility and
that if a foreign country’s privacy laws
did preclude obtaining the information
and materials necessary for establishing
compliance, the institutions located in
those countries unfortunately would not
be able to qualify for participation in the
Title IV, HEA programs.
Foreign Veterinary Schools (§ 600.56):
The Department’s initial proposal built
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on current practice by requiring AVMA
accreditation for foreign veterinary
schools applying to participate in Title
IV, HEA programs. The AVMA’s
standards are detailed and specific, it
has the expertise to evaluate foreign
veterinary programs that the Department
lacks, and it has a history of accrediting
foreign veterinary programs as
veterinary schools in Australia, Canada,
the Netherlands and other foreign
countries are currently accredited by the
AVMA. Non-Federal negotiators
acknowledged the quality of the
AVMA’s accreditation standards and the
logic of requiring it for foreign
veterinary schools as most U.S. students
at those schools eventually practice in
the United States. However, several
non-Federal negotiators had concerns
about requiring AVMA accreditation as
it is a lengthy and expensive process,
many foreign accrediting agencies have
comparable standards, some schools
with a small number of U.S. students
would opt out of receiving Title IV, HEA
program funds thus limiting the options
for U.S. students, and it is difficult for
for-profit veterinary schools to obtain
AVMA accreditation because of the
research component. The non-Federal
negotiators suggested using other
measures such as pass rates on licensing
exams, licensure rates, or default rates
to determine eligibility of foreign
veterinary schools. The Department
noted that using measures such as pass
rates on licensing examinations can be
operationally complicated, raising
concerns over privacy rights, obtaining
exam results, and calculating pass rates
in ways that are not disadvantageous to
schools with low numbers of Title IV,
HEA program students. In addition, pass
rates would not necessarily be a reliable
indicator of the academic credentials of
the faculty at a foreign veterinary
school, and would provide no
indication that the facilities at the
veterinary school are adequate and safe
for the students or for the animals
housed in the facilities. Instead, the
Department accepted the
recommendation of some of the nonFederal negotiators to replace the
proposed requirement that a foreign
veterinary school be accredited or
provisionally accredited by the AVMA,
with a requirement that the school be
accredited or provisionally accredited
by an agency acceptable to the
Secretary. This gives the Department
some flexibility in evaluating school’s
compliance with the accreditation
requirement, and gives schools some
flexibility with regard to obtaining
accreditation. In addition, the
Department delayed the effective date of
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the accreditation requirement until July
1, 2015, giving foreign veterinary
schools that are currently in the Title IV,
HEA programs approximately five years
after final regulations are published to
obtain accreditation from an acceptable
accrediting agency.
Foreign Nursing Schools (§ 600.57):
As described in the preamble section
related to this provision, the Department
modeled the proposed language on
portions of the HEOA related to foreign
nursing schools and on existing
regulatory language related to foreign
medical and veterinary schools. For the
most part, the non-Federal negotiators
accepted this approach, but had some
concerns about the provisions specific
to foreign nursing programs. In
particular, the requirement for clinical
training to be provided in the United
States, the requirement that a foreign
nursing school reimburse the
Department for the cost of loan defaults
for loans included in the calculation of
a school’s cohort default rate, and the
status of loans post-default were subject
to extensive discussion.
Audited Financial Statements
(§ 668.23): The negotiators reached
agreement on the proposed regulatory
language on financial audits only after
extensive negotiations and significant
compromise. As detailed in the section
of the preamble related to this
provision, the Department initially
proposed to require audited financial
statements prepared in accordance with
the same requirements for domestic
institutions (U.S. GAAP) for public
institutions that received $1,000,000 or
more in U.S. Title IV, HEA program
funds, or private foreign institutions
that received $500,000 or more in U.S.
Title IV, HEA program funds, as well as
for any institution in its initial
provisional period of participation. For
public foreign institutions, if an
institution received at least $500,000 in
U.S. Title IV, program funds, but less
than $1,000,000 in U.S. Title IV, HEA
program funds during the institution’s
fiscal year preceding the audit period,
the institution would have been allowed
to submit audited financial statements
prepared in accordance with the
generally accepted accounting
principles of the institution’s home
country in lieu of financial statements
prepared in accordance with U.S.
GAAP. If there was an unpaid liability
due to the Secretary by any public
institution controlled by the same
government entity, all public
institutions controlled by that
government entity would be required to
submit audited financial statements
prepared in accordance with U.S.
GAAP. Non-Federal negotiators argued
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that foreign nonprofit institutions
should be treated the same as foreign
public institutions, the requirement to
submit audited financial statements
prepared in accordance with U.S. GAAP
was cost prohibitive, a non-U.S. GAAP
financial statement such as one
prepared in accordance with
International Financial Reporting
Standards (IFRS) would be comparable
and provide any information the
Department with the information it
needs, or that the audited financial
statement requirement should be tied to
cohort default rates.
After consideration of the feedback
from the non-Federal negotiators, the
Department revised its initial proposal
to treat nonprofit and public foreign
institutions alike, and eliminated the
provision that would have required all
public institutions controlled by the
same government entity to submit
audited financial statements prepared in
accordance with the same requirements
for domestic institutions if there is an
unpaid liability due to the Secretary by
any public institution controlled by the
same government entity. In addition, the
Department raised the threshold for
nonprofit and public foreign institutions
that would be allowed to submit audited
financial statements prepared in
accordance with the generally accepted
accounting principles of the
institution’s home country from
$1,000,000 to $3,000,000 in U.S. Title
IV, program funds. The Department also
clarified that it would require that
foreign institutions that would be
required to submit audited financial
statements prepared in accordance with
U.S. GAAP would also be required to
submit a copy of an institution’s audited
financial statements for the same period
that were prepared under the
institution’s home country standards,
allowing a comparative analysis to
determine if the requirement to provide
U.S. GAAP financial statements could
be changed in the future.
Non-Federal negotiators responded to
this revised proposal with additional
comments on the thresholds for audit
requirements and a suggestion to
eliminate the $3,000,000 cap and rely
entirely upon ‘‘exceptions’’ that would
permit the Secretary to require U.S.
GAAP financial statements on a case-bycase basis. The Department reiterated its
view that did not view the matter in
terms of rigor of accounting standards of
other countries, but a level of risk that
justified requiring submission of U.S.
GAAP financial statements. The
Department offered a final revised
proposal that modified the audit
submission requirements for public and
nonprofit institutions that receive at
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least $3,000,000 but less than
$5,000,000 in U.S. Title IV, HEA
program funds annually. Pursuant to the
revised proposal, institutions in this
group would submit financial
statements prepared in accordance with
home country accounting standards and
U.S. GAAP for one year, and then, if no
problems were identified, submit
financial statements prepared in
accordance with the home country
standards for the next two years and
once every three years, rather every
year, U.S. GAAP financial statements.
Benefits
Benefits provided in these regulations
include submission requirements for
compliance audits and audited financial
statements specific to foreign
institutions; a revised definition of a
foreign institution and a definition of
nonprofit status specific to foreign
institutions; the creation of a financial
responsibility standard for foreign
public institutions that is comparable to
the financial responsibility standard for
domestic public institutions; permission
for a single legal authorization for
groups of foreign institutions under the
purview of a single government entity;
the establishment of program eligibility
requirements specific to training
programs at foreign institutions;
institutional eligibility criteria specific
to foreign graduate medical schools,
foreign veterinary schools, and foreign
nursing schools; and revised maximum
certification periods for some foreign
institutions. The revised requirements
for audited financial statements improve
comparability between foreign and
domestic institutions and enhance the
security of Title IV, HEA program funds
while taking into account the burden on
foreign institutions of different sizes.
The specific eligibility criteria for
foreign graduate medical schools allow
students to benefit from exposure to
other medical environments and
cultures while ensuring a comparable
education to that available in domestic
institutions. It is difficult to quantify
benefits related to the new institutional
and other third-party requirements, as
there is little specific data available on
the effect of the provisions on
borrowers, institutions, or the Federal
taxpayer. The Department is interested
in receiving comments or data that
would support a more rigorous analysis
of the impact of these provisions.
As discussed in greater detail under
Net Budget Impacts below, these
proposed provisions result in net costs
to the government of $0.0 million over
2011–2015.
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Costs
Several of the provisions
implemented though this NPRM would
require regulated entities to update
existing policies and procedures related
to financial and compliance audits.
Other proposed regulations generally
would require discrete changes in
specific parameters associated with
existing requirements—such as changes
to clinical training programs,
application procedures, USMLE pass
rates, and notification requirements—
rather than wholly new requirements.
Accordingly, entities wishing to
continue to participate in the student
aid programs have already absorbed
many of the administrative costs related
to implementing these proposed
regulations. Marginal costs over this
baseline are primarily due to new
procedures that, while possibly
significant in some cases, are an
unavoidable cost of continued program
participation. As discussed above,
foreign nursing schools would be
required to reimburse the Department
for the costs of defaults for loans
included in the calculation of the
school’s cohort default rate for the
previous year. This is estimated to cost
the participating schools approximately
$3.1 to $3.9 million a year in gross
default costs. As the subsequent holders
of the loans, the schools would be able
to pursue recovery of those funds,
reducing the anticipated net costs to
approximately $1.7 to $2.2 million.
Some foreign institutions could choose
to withdraw from participation in the
Title IV, HEA programs as a result of
these provisions. However, the
Department believes the flexibility and
targeting of the negotiated provisions
should allow institutions to remain in
the programs while enhancing the
security of Title IV, HEA program funds
and ensuring compliance with statutory
requirements.
In assessing the potential impact of
these proposed regulations, the
Department recognizes that certain
provisions are likely to increase
workload for some program
participants, as described below. (This
additional workload is discussed in
more detail under the Paperwork
Reduction Act of 1995 section of this
preamble.) Additional workload would
normally be expected to result in
estimated costs associated with either
the hiring of additional employees or
independent auditors or opportunity
costs related to the reassignment of
existing staff from other activities. In
total, these changes are estimated to
increase burden on entities participating
in the Federal Student Assistance
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programs by 18,684 hours. Of this
increased burden, 18,364 hours are
associated with foreign institutions and
320 hours are associated with
borrowers, generally reflecting the time
required to read new disclosures or
submit required information.
Approximately 95 percent of this
burden is associated with the financial
and compliance audit requirements in
proposed § 668.23. As described in the
Paperwork Reduction Act section of this
NPRM, if the regulatory changes had not
been proposed, the burden associated
with the financial statement and
compliance audit requirements would
be significantly higher. The monetized
cost of this additional burden, using
loaded wage data developed by the
Bureau of Labor Statistics and used for
domestic institutions, is $466,569 of
which $461,321 is associated with
foreign institutions and $5,248 with
individuals. The wage data for foreign
institutions was assumed to be
comparable to domestic institutions as
many are located in developed
economies with wages similar to those
in the United States, institutions located
in countries with lower wage scales
have to compete for employees familiar
with the lending programs, and
substituting U.S. wage rates for those in
lower wage countries results in a
conservative estimate. For institutions,
an hourly rate of $24.88 was used to
monetize the burden of these
provisions. This was a blended rate
based on wages of $15.51 for office and
administrative staff and $36.33 for
managers and financial professionals,
assuming that office staff would perform
55 percent of the work affected by these
regulations. Given the limited data
available, the Department is particularly
interested in comments and supporting
information related to possible burden
stemming from the proposed
regulations. Estimates included in this
notice will be reevaluated based on any
information received during the public
comment period.
Net Budget Impacts
The provisions implemented by these
proposed regulations are estimated to
have a net budget impact of ¥$2.6
million over FY 2011–2015, from
savings associated with the assignment
of defaulted loans from foreign nursing
schools. 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. (A
cohort reflects all loans originated in a
given fiscal year.)
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These estimates were developed using
the Office of Management and Budget’s
Credit Subsidy Calculator. This
calculator will also be used for reestimates of prior-year costs, which will
be performed each year beginning in FY
2009. The OMB calculator takes
projected future cash flows from the
Department’s student loan cost
estimation model and produces
discounted subsidy rates reflecting the
net present value of all future Federal
costs associated with awards made in a
given fiscal year. Values are calculated
using a ‘‘basket of zeros’’ methodology
under which each cash flow is
discounted using the interest rate of a
zero-coupon Treasury bond with the
same maturity as that cash flow. To
ensure comparability across programs,
this methodology is incorporated into
the calculator and used governmentwide to develop estimates of the Federal
cost of credit programs. Accordingly,
the Department believes it is the
appropriate methodology to use in
developing estimates for these proposed
regulations. That said, however, in
developing the following Accounting
Statement, the Department consulted
with OMB on how to integrate our
discounting methodology with the
discounting methodology traditionally
used in developing regulatory impact
analyses.
Absent evidence on the impact of
these proposed regulations on student
behavior, budget cost estimates were
based on behavior as reflected in
various Department data sets and
longitudinal surveys listed under
Assumptions, Limitations, and Data
Sources. Program cost estimates were
generated by running projected cash
flows related to each provision through
the Department’s student loan cost
estimation model. Student loan cost
estimates are developed across five risk
categories: two-year proprietary
institutions, two-year public and private
institutions, not-for-profit; freshman and
sophomore at four-year institutions,
junior and senior at four-year
institutions, and graduate students. Risk
categories have separate assumptions
based on the historical pattern of
behavior—for example, the likelihood of
default or the likelihood to use statutory
deferment or discharge benefits—of
borrowers in each category.
Estimates indicate that three foreign
graduate medical schools may become
eligible under these provisions in the
next few years but that this would
potentially shift volume among schools
but not significantly increase the total
volume of loans. The Department
estimates no budgetary impact for most
of the proposed regulations included in
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42223
this NPRM as there is no data indicating
that the provisions will have any impact
on the volume or composition of
Federal student aid programs. The
provision requiring foreign nursing
schools to reimburse the Secretary for
defaulted loans is expected to generate
approximately $2.6 million in savings
for the Department between 2011 and
2015.
Assumptions, Limitations, and Data
Sources
Impact estimates provided in the
preceding section reflect a pre-statutory
baseline in which the HEOA changes
implemented in these proposed
regulations do not exist. Costs have been
quantified for five years. In general,
these estimates should be considered
preliminary; they will be reevaluated in
light of any comments or information
received by the Department prior to the
publication of the final regulations. The
final regulations will incorporate this
information in a revised analysis.
In developing these estimates, a wide
range of data sources were used,
including data from the National
Student Loan Data System; operational
and financial data from Department of
Education systems, including especially
the Fiscal Operations Report and
Application to Participate (FISAP); and
data from a range of surveys conducted
by the National Center for Education
Statistics such as the 2008 National
Postsecondary Student Aid Survey, the
1994 National Education Longitudinal
Study, and the 1996 Beginning
Postsecondary Student Survey. Data
from other sources, such as the U.S.
Census Bureau, were also used. Data on
administrative burden at participating
institutions are extremely limited;
accordingly, as noted earlier in this
discussion, the Department is
particularly interested in receiving
comments in this area.
Elsewhere in this SUPPLEMENTARY
INFORMATION section we identify and
explain burdens specifically associated
with information collection
requirements. See the heading
Paperwork Reduction Act of 1995.
Accounting Statement
As required by OMB Circular A–4
(available at https://
www.Whitehouse.gov/omb/Circulars/
a004/a-4.pdf), in Table 2, we have
prepared an accounting statement
showing the classification of the
expenditures associated with the
provisions of these proposed
regulations. This table provides our best
estimate of the changes in Federal
student aid payments as a result of these
proposed regulations. Expenditures are
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classified as transfers from the Federal
government to student loan borrowers.
TABLE 2—ACCOUNTING STATEMENT:
CLASSIFICATION OF ESTIMATED EXPENDITURES
[In millions]
Category
Annualized Monetized
Costs.
Annualized Monetized
Transfers.
From Whom To
Whom?
Transfers
$3.9.
Cost of defaults for
foreign nursing
schools and cost of
compliance with
paperwork requirements.
$0.
Federal Government
To Student Loan
Borrowers.
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Clarity of the Regulations
Executive Order 12866 and the
Presidential memorandum on ‘‘Plain
Language in Government Writing’’
require each agency to write regulations
that are easy to understand.
The Secretary invites comments on
how to make these proposed regulations
easier to understand, including answers
to questions such as the following:
• Are the requirements in the
proposed regulations clearly stated?
• Do the proposed regulations contain
technical terms or other wording that
interferes with their clarity?
• Does the format of the proposed
regulations (grouping and order of
sections, use of headings, paragraphing,
etc.) aid or reduce their clarity?
• Would the proposed regulations be
easier to understand if we divided them
into more (but shorter) sections? (A
‘‘section’’ is preceded by the symbol ‘‘§ ’’
and a numbered heading; for example,
§ 601.30.)
• 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 of this preamble.
Regulatory Flexibility Act Certification
The Secretary certifies that these
proposed regulations would not have a
significant economic impact on a
substantial number of small entities.
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These proposed regulations would affect
foreign institutions that participate in
Title IV, HEA programs and loan
borrowers. The definition of ‘‘small
entity’’ in the Regulatory Flexibility Act
encompasses ‘‘small businesses,’’ ‘‘small
organizations,’’ and ‘‘small governmental
jurisdictions.’’ The definition of ‘‘small
business’’ comes from the definition of
‘‘small business concern’’ under section
3 of the Small Business Act as well as
regulations issued by the U.S. Small
Business Administration. The SBA
defines a ‘‘small business concern’’ as
one that is ‘‘organized for profit; has a
place of business in the U.S.; operates
primarily within the U.S. or makes a
significant contribution to the U.S.
economy through payment of taxes or
use of American products, materials or
labor * * *’’ ‘‘Small organizations,’’ are
further defined as any ‘‘not-for-profit
enterprise that is independently owned
and operated and not dominant in its
field.’’ For the purposes of the
Regulatory Flexibility Act analysis, the
foreign institutions would not fall
within the definition of small
businesses or small organizations based
upon this definition of ‘‘small business
concern.’’
The definition of ‘‘small entity’’ also
includes ‘‘small governmental
jurisdictions,’’ which includes ‘‘school
districts with a population less than
50,000.’’ The definition of ‘‘small
governmental jurisdictions’’ is not
applicable to this rule. The Secretary
invites comments from small
institutions and other affected entities
as to whether they believe the proposed
changes would have a significant
economic impact on them and, if so,
requests evidence to support that belief.
Paperwork Reduction Act
Sections 600.20, 600.21, 600.54,
600.55, 600.56, 600.57, 668.13, 668.23,
and 668.171 contain information
collection requirements. Under the
Paperwork Reduction Act of 1995 (44
U.S.C. 3507(d)), the Department has
submitted a copy of these sections to
OMB for its review.
Section 600.20—Application
Procedures for Establishing,
Reestablishing, Maintaining, or
Expanding Institutional Eligibility and
Certification
Proposed § 600.20(a)(3) and
§ 600.20(b)(3) would provide that, for
initial certification or for recertification,
a foreign graduate medical school (i.e.,
a freestanding foreign graduate medical
school or a foreign institution that
includes a foreign graduate medical
school) be required to—
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• List on the application to
participate all educational sites and
where they are located, except for those
locations that are not used regularly, but
instead are chosen by individual
students who take no more than two
electives at the location for no more
than a total of eight weeks;
• Identify, for each clinical site
reported in the certification or
recertification application, the type of
clinical training (core, required clinical
rotation, not required clinical rotation)
offered at that site;
• Indicate whether it offers only postbaccalaureate/equivalent medical
programs, other types of programs that
lead to employment as a doctor of
osteopathic medicine, doctor or
medicine, or both;
• Provide copies of the affiliation
agreements with hospitals and clinics
that it is required to have as a part of
any application for initial certification
or recertification to participate in the
Title IV, HEA programs.
Proposed § 600.20(c)(5) would require
a foreign graduate medical school that
adds a location that offers all or a
portion of the school’s core clinical
training or required clinical rotations, to
apply to the Secretary and wait for
approval if it wishes to provide Title IV,
HEA program funds to the students at
that location, except for those locations
that are included in the accreditation of
a medical program accredited by the
LCME.
While we recognize that there would
be burden assessed under
§§ 600.20(a)(3) and 600.20(c)(5), we do
not anticipate either an initial eligibility
application or an application to expand
eligibility at this time.
We estimate that 58 public
institutions would take .58 hours (35
minutes) per institution to submit a
reapplication, which would increase
burden by 34 hours. We estimate that 10
private nonprofit institutions would
take .58 hours (35 minutes) per
institution to submit a reapplication,
which would increase burden by 6
hours. We estimate that 3 for-profit
institutions would take .58 hours (35
minutes) per institution to submit a
reapplication, which would increase
burden by 2 hours. There would be a
total 42 hours of burden associated with
§ 600.20(b)(3) in OMB Control Number
1845–0012.
Section 600.21—Updating Application
Information
Proposed § 600.21(a)(10) would
require, if a foreign graduate medical
school adds a location that offers all or
a portion of the school’s clinical
rotations that are not required, that the
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school notify the Department no later
than 10 days after the location is added,
except for those locations that are
included in the accreditation of a
medical program accredited by the
LCME, or those that are not used
regularly, but instead are chosen by
individual students who take no more
than two electives at the location for no
more than a combined total of eight
weeks. This requirement mirrors the
requirement of proposed § 600.20(c)(5).
We estimate that 6 public institutions
would take .17 hours (10 minutes) per
institution to fulfill the reporting
requirement, which would increase
burden by 1 hour. We estimate that 1
private nonprofit institution would take
.17 hours (10 minutes) to fulfill the
reporting requirement, which would
increase burden by 10 minutes. We
estimate 1 for-profit institution would
take .17 hours (10 minutes) to fulfill the
reporting requirement, which would
increase burden by 10 minutes.
Therefore, the proposed total increase in
burden would be 1 hour and 20 minutes
associated with § 600.21(a)(10) in OMB
Control Number 1845–0012.
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Section 600.54—Criteria for
Determining Whether a Foreign
Institution Is Eligible To Apply To
Participate in the FFEL Programs
Under proposed § 600.54(d)(3)(ii), a
foreign institution would have to
demonstrate to the satisfaction of the
Secretary (who would make programby-program determinations of
comparability) that the amount of
academic work required by a program it
seeks to qualify as eligible as at least a
one-academic-year training program is
equivalent to an academic year as
defined in § 668.3.
We estimate that 93 public
institutions would take .17 (10 minutes)
to demonstrate the comparability of the
academic work and would increase
burden by 16 hours. We estimate that 33
private institutions would take .17 (10
minutes) to demonstrate the
comparability of the academic work and
would increase burden by 6 hours.
Therefore, the proposed total increase in
burden would be 22 hours associated
with § 600.54(d)(3)(ii) in OMB 1845–
NEWA.
Section 600.55—Additional Criteria for
Determining Whether a Foreign
Graduate Medical School Is Eligible To
Apply To Participate in the Title IV,
HEA Programs
Proposed § 668.55(c)(2) would require
a foreign graduate medical school to
determine the consent requirements for,
and require the necessary consents of,
all students accepted for admission who
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are U.S. citizens, nationals, or eligible
permanent residents to enable the
school to comply with the collection
and submission requirements in
proposed § 600.55(d) for Medical
College Admission Test (MCAT) scores,
residency placement, and U.S. Medical
Licensing Examination (USMLE) scores.
We estimate that 58 public
institutions would take .50 hours (30
minutes) to develop this consent form
and would increase burden by 29 hours.
We estimate that 5 private nonprofit
institutions would take .50 hours (30
minutes) to develop this consent form
and would increase burden by 5 hours.
We estimate that 3 for-profit institutions
would take .50 hours (30 minutes) to
develop this consent form and would
increase burden by 2 hours. We estimate
that 2,800 individuals would take .08
hours (5 minutes) to complete this
consent form and would increase
burden by 224 hours. Therefore, the
total proposed burden increase would
be 260 hours associated with
§ 600.55(c)(2) in OMB 1845–NEWA.
Proposed § 600.55(d) would require a
foreign graduate medical school to
obtain, at its own expense, and by
September 30 of each year submit to its
accrediting authority for all students
who are U.S. citizens, nationals, or
eligible permanent residents: (1) MCAT
scores for students admitted during the
preceding award year and the number of
times each student took the exam; and
(2) the percentage of students graduating
during the preceding award year who
are placed in an accredited U.S. medical
residency. A school would have to
submit the data on MCAT scores and
placement in a U.S. residency program
to the Department only upon request. In
addition, proposed § 600.55(d) would
require a foreign graduate medical
school to obtain, at its own expense and
by September 30 of each year submit to
the Department, unless the Department
notifies schools that it will receive the
information directly from the ECFMG,
or other responsible third parties,
USMLE scores earned during the
preceding award year on the first
attempt by at least each student, and
each student who graduated during the
three preceding years, and the date each
student/graduate took each test,
including any failed tests. The USMLE
scores submitted would have to be
disaggregated by step/test for Step 1,
Step 2–Clinical Skills (Step 2–CS), and
Step 2–Clinical Knowledge (Step 2–CK),
and by attempt. A school would not be
required to submit data on the USMLE
Step 3.
We estimate that 58 public
institutions would require 1.25 hours (1
hour 15 minutes) to create this annual
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report and would increase burden by 73
hours. We estimate that 10 private
nonprofit institutions would require
1.25 hours (1 hour 15 minutes) to create
this annual report and would increase
burden 13 hours. We estimate that 3 forprofit institutions would require 1.25
hours (1 hour 15 minutes) to create this
annual report and would increase
burden by 4 hours. Therefore, the total
proposed burden increase would be 90
hours associated with § 600.55(d) in
OMB 1845–NEWA.
Proposed § 600.55(e)(2) would require
a foreign graduate medical school to
notify its accrediting body within one
year of any material changes in (1) the
educational programs, including
changes in clinical training programs;
and (2) the overseeing bodies and (3) the
formal affiliation agreements with
hospitals and clinics.
We estimate that 15 public
institutions would require .82 hours (50
minutes) to complete the accrediting
agency clinical training notifications
and would increase burden by 12 hours.
We estimate that 3 private nonprofit
institutions would require .82 hours (50
minutes) to complete the accrediting
agency clinical training notifications
and would increase burden by 3 hours.
We estimate that 1 for-profit institution
would require .82 hours (50 minutes) to
complete the accrediting agency clinical
training notifications and would
increase burden by 1 hour. Therefore,
the total proposed burden increase
would be 16 hours associated with
§ 600.55(e) in OMB 1845–NEWA.
Proposed § 600.55(g)(1) would require
a foreign graduate medical school to
apply the existing satisfactory academic
progress regulations in § 668.16(e) for
establishing a maximum timeframe in
which a student must complete their
educational program and require that a
student complete their educational
program within 150 percent of the
published length of the educational
program. In addition, proposed
§ 600.55(g)(2) would require a foreign
graduate medical school to document
the educational remediation it provides
to assist students in making satisfactory
academic progress.
We estimate that 58 public
institutions would require 2.5 hours
(2 hours 30 minutes) to update the
satisfactory academic policy and
document remediation provided to
student and would increase burden by
145 hours. We estimate that 10 for
private nonprofit institutions would
require 2.5 hours (2 hours 30 minutes)
to update the satisfactory academic
policy and document remediation
provided to student and would increase
burden by 25 hours. We estimate that 3
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for-profit institutions would require 2.5
hours (2 hours 30 minutes) to update
the satisfactory academic policy and
document remediation provided to
student and would increase burden by
7 hours and 30 minutes. The total
proposed burden for increase would be
177 hours and 30 minutes associated
with § 600.55(g)(1) and (2) in OMB
1845–NEW2.
Finally, proposed § 600.55(g)(3)
would require a foreign graduate
medical school to publish all the
languages in which instruction is
offered.
We estimate that 58 public
institutions would require .33 hours (20
minutes) to publish the languages in
which instruction is provided
increasing burden by 19 hours. We
estimate that 10 private nonprofit
institutions would require .33 hours (20
minutes) to publish the languages in
which instruction is provided
increasing burden by 3 hours. We
estimate that 3 for-profit institutions
would require .33 hours (20 minutes) to
publish the languages in which
instruction is provided increasing
burden by 1 hour. Therefore, the total
proposed burden increase would be 23
hours associated with § 600.55(g)(3) in
OMB 1845–NEWA.
In total, we estimate that proposed
§ 600.55 would increase by 389 hours in
OMB 1845–NEWA, and 177 hours and
30 minutes in OMB 1845–NEW2.
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Section 600.56—Additional Criteria for
Determining Whether a Foreign
Veterinary School Is Eligible To Apply
To Participate in the FFEL Programs
Proposed § 600.56(a)(4) would require
a foreign veterinary school to be
accredited or provisionally accredited
by an organization acceptable to the
Secretary. Proposed § 600.56(a)(4)
would also specify that the requirement
for accreditation or provisional
accreditation does not take effect until
July 1, 2015.
The Department has delayed the
effective date of the accreditation
requirement until July 1, 2015. This
allows foreign veterinary schools that
are currently in the Title IV, HEA
programs approximately five years after
final regulations are published to obtain
accreditation from an acceptable
accrediting agency. Therefore, no
burden assessment has been made at
this time, but the issue will be reviewed
closer to the effective date of this
section of the regulations thereby
enabling the Department to use a more
accurate number of participating
veterinary schools in its assessment.
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Section 600.57—Additional Criteria for
Determining Whether a Foreign
Nursing School Is Eligible To Apply To
Participate in the FFEL Program
The proposed regulations would add
a new § 600.57 specifying additional
Title IV, HEA program eligibility criteria
for foreign nursing schools. These
criteria include § 600.57(a)(6)(i), where
the school must determine the consent
requirements for, and require the
necessary consents of, all students
accepted for admission who are U.S.
citizens, nationals, or eligible
permanent residents, to enable the
school to comply with the requirements
for collection and submission of
National Council Licensure
Examination for registered Nurses
(NCLEX–RN) results or pass rates.
We estimate that 3 new nursing
institutions would require .50 hours (30
minutes) to develop the consent form
increasing burden by 1 hour and 30
minutes. We estimate that 1,200
individuals would require .08 hours (10
minutes) to respond to this consent form
and increasing burden by 96 hours in
OMB Control Number 1845–NEWA.
The foreign nursing school eligibility
also includes § 600.57(a)(6)(ii) where an
institution must annually, at its own
expense, obtain all results on the
NCLEX–RN achieved by students and
graduates who are U.S. citizens,
nationals, or eligible permanent
residents, together with the dates the
student has taken the examination
(including any failed examinations) and
provide the results to the Department.
As an alternative to obtaining the
NCLEX results individually, the school
may obtain a report or reports from the
National Council of State Boards of
Nursing (NCSB), or an NCSB affiliate or
NCSB contractor, reflecting the
percentage of the school’s students and
graduates taking the NCLEX–RN in the
preceding year who passed the
examination, or the data from which the
percentage could be derived, and
provide the report to the Department.
We estimate that 3 new nursing
institutions would require 1.5 hours
(1 hour 30 minutes) to compile this
annual report submission increasing
burden by 4 hours 30 minutes in OMB
Control Number 1845–NEWA. In total,
we estimate there would be 102 hours
of burden associated with § 600.57(a)(6)
in OMB Control Number 1845–NEWA.
In addition, proposed § 600.57(c)
would specify that after a school
reimburses the Department for the cost
of a loan default, the loan would be
assigned to the school. The borrower
would remain liable to the school for
the outstanding balance of the loan,
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under the terms and conditions
specified in the promissory note.
While burden would normally be
associated with notification and
collection activity, because there is no
history of Federal borrowing for
attendance at these schools and due to
the extended period of time prior to a
student borrower defaulting on a Title
IV, HEA loan at a newly approved
foreign nursing school during the first
year after the implementation of the
final regulations, we believe that it
would be inappropriate to project
burden to schools and individuals at
this time.
Section 668.13—Certification
Procedures
The proposed regulations would
amend § 668.13(b)(1) to specify that the
period of participation for a private, forprofit foreign institution expires three
years after the date the institution is
certified by the Department, rather than
the current six years.
While the duration of the approval
process is reduced from six years to
three years and, therefore, the time
associated with the submission for
recertification will be filed more often,
this proposed change in the regulations
does not represent a substantive impact
on the amount of annual burden
generated by these regulations. We do
not estimate a change in the burden as
a result of the proposed regulations to
OMB 1845–0022.
Section 668.23—Compliance Audits
and Audited Financial Statements
The proposed regulation in
§ 668.23(h)(1) would revise financial
statement submission requirements for
foreign institutions receiving Title IV,
HEA program funds in the most recently
completed fiscal year.
• In § 668.23(h)(1)(i)—For a public or
nonprofit foreign institution that
received less than $500,000 in U.S. Title
IV, HEA program funds during the
institution’s most recently completed
fiscal year, the audited financial
statements submission would be
waived, unless the institution is in its
initial provisional period of
participation and received Title IV, HEA
program funds during that year, in
which case the institution must submit,
in English, audited financial statements
prepared in accordance with the
generally accepted accounting
principles of the institution’s home
country.
• In § 668.23(h)(1)(iii)(A)—For a
public or nonprofit foreign institution
that received $500,000 or more in U.S.
Title IV, HEA program funds, but less
than $3,000,000 in U.S. Title IV, HEA
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Federal Register / Vol. 75, No. 138 / Tuesday, July 20, 2010 / Proposed Rules
program funds during its most recently
completed fiscal year, the institution
would be allowed to submit for that
year, in English, audited financial
statements prepared in accordance with
the generally accepted accounting
principles of the institution’s home
country in lieu of financial statements
prepared in accordance with U.S.
GAAP.
• In § 668.23(h)(1)(iii)(B)—For a
public or nonprofit foreign institution
that received at least $3,000,000 but less
than $5,000,000 in U.S. Title IV, HEA
program funds during its most recently
completed fiscal year, the institution
would be required to submit once every
three years audited financial statements
prepared in accordance with the
generally accepted accounting
principles of both the institution’s home
country and U.S. GAAP, but for the two
years in between would be allowed to
submit, in English, audited financial
statements prepared in accordance with
the generally accepted accounting
principles of the institution’s home
country in lieu of financial statements
prepared in accordance with U.S.
GAAP.
• In § 668.23(h)(1)(ii)—For a public or
nonprofit foreign institution that
received $5,000,000 or more in U.S.
Title IV, HEA program funds during its
most recently completed fiscal year, and
for any for-profit foreign institution, the
institution would be required to submit
for that year audited financial
statements prepared in accordance with
the generally accepted accounting
principles of both the institution’s home
country and U.S. GAAP.
We estimate that 15 public
institutions would require 35 hours for
the translation of financial statements to
English increasing burden by 525 hours.
We estimate that 15 private institutions
would require 35 hours for the
translation of financial statements to
English increasing burden by 525 hours
for a total of 1,050 hours.
We estimate 20 public institutions
would require 100 hours for the
preparation of the U.S. GAAP financial
statement increasing burden by 2,000
hours. We estimate that 8 private
nonprofit institutions would require 100
hours for the preparation of the U.S.
GAAP financial statement increasing
burden by 800 hours. We estimate that
four for-profit institutions require 100
hours for the preparation of the U.S.
GAAP financial statement increasing
burden by 400 hours for a total of 3,200
hours. Collectively, we estimate that
there would be 4,250 hours of burden
associated with proposed § 668.23(h)(1)
in OMB Control Number 1845–0038.
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Proposed § 668.23(h)(2) would
separate foreign institutions into two
groups, establishing new compliance
audit requirements for foreign
institutions based upon whether the
institution received less than $500,000
or $500,000 or more in U.S. Title IV,
HEA program funds during the
institution’s most recently completed
fiscal year.
For foreign institutions that receive
less than $500,000 per year in U.S. Title
IV, HEA program funds, under proposed
§ 668.23(h)(2)(ii) and (iii) they would be
required to submit compliance audits
under an alternative compliance audit
performed in accordance with the audit
guide from the Department’s Office of
Inspector General. The alternative
compliance audit is performed as an
agreed-upon procedures attestation
engagement, and the standard
compliance audit is performed as an
examination-level attestation
engagement. An alternative compliance
audit is an agreed-upon procedures
attestation engagement, which consists
of specific procedures performed on a
subject matter and is substantially
narrower in scope than a standard
compliance audit, which is an
examination level attestation.
The proposed regulations would
require an annual submission of the
compliance audit, except that, under
certain conditions as described in the
following paragraphs, an institution
would submit a compliance audit
annually for two consecutive years,
then, if notified by the Department,
would be permitted to submit a
cumulative compliance audit every
three years thereafter as long as the
institution continued to receive less
than $500,000 in U.S. Title IV funds
each fiscal year being audited.
We anticipate 269 public institutions
would require 25 hours to provide the
alternate compliance audit increasing
burden by 6,725 hours. We anticipate 81
private institutions would require 25
hours to provide the alternate
compliance audit increasing burden by
2,025 hours. Collectively we anticipate
a total of 8,750 hours of increased
burden for § 668.23(h)(2)(ii) and (iii) in
OMB Control Number 1845–0038.
For foreign institutions that receive
$500,000 or more per year in U.S. Title
IV, HEA program funds, as in the
current regulations, under proposed
§ 668.23(h)(2)(i) they would be required
to submit annual compliance audits
using the standard audit procedures for
foreign institutions set out in the audit
guide issued by the Office of Inspector
General. This compliance audit would
be submitted together with an
alternative compliance audit or audits
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42227
prepared in accordance with proposed
§ 668.23(h)(2)(ii) for any preceding fiscal
year or years in which the foreign
institution received less than $500,000
in U.S. Title IV, HEA program funds.
We estimate 90 public institutions
would require 40 hours to submit a full
compliance audit increasing burden by
3,600 hours. We estimate 29 private
nonprofit institutions would require 40
hours to submit a full compliance audit
increasing burden by 1,160 hours. We
estimate 4 for-profit institutions would
require 40 hours to submit a full
compliance audit increasing burden by
160 hours for a total of 4,920 hours.
Collectively, we estimate that there
would be 13,670 hours of increased
burden associated with § 668.23(h)(2)(i)
in OMB Control 1845–0038.
In total, we estimate that the burden
related to proposed § 668.23(h) would
increase by 17,920 hours in OMB
Control Number 1845–0038.
Although audited financial statements
and compliance audits have long been
required of foreign schools, no separate
calculation of the burden of those
requirements had been done until now.
As a result, by and large the burdens
estimated are not new. What is new is
the reduction in already-existing
burdens that would result from the
proposed regulations if finalized.
In relation to the proposed
requirement to submit audited financial
statements, if the proposed regulations
(allowing for alternate submissions for
institutions with funding over $500,000
in U.S. Title IV, HEA program funds)
had not been offered, there would have
been 123 foreign institutions required to
submit annually audited financial
statements prepared in accordance with
U.S. GAAP at a burden of 12,300 hours
(123 institutions × 100 hours = 12,300
hours). The proposed regulations reduce
that burden by 9,100 hours (proposed
burden of 3,200 hours subtracted from
estimated burden of 12,300 hours
required under current regulations).
In relation to the proposed
requirement to submit a compliance
audit, if the proposed regulations had
not been offered, there would have been
an annual standard compliance audit
submission requirement burden of
17,500 hours over two years (350
institutions × 25 hours annual burden ×
2 years) that foreign institutions
disbursing less than $500,000 in U.S.
Title IV, HEA program funds would
have had to complete. The proposed
regulations decrease burden by allowing
for submission of alternative
compliance audits once every three
years upon notification from the
Department.
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Federal Register / Vol. 75, No. 138 / Tuesday, July 20, 2010 / Proposed Rules
Section 668.171—General (Subpart L—
Financial Responsibility)
Proposed § 668.171 would consider a
public foreign institution to be
financially responsible if the institution:
(1) Notifies the Secretary that it is
designated as a public institution by the
country or other government entity that
has the legal authority to make that
designation; and (2) provides
documentation from an official of that
country or other government entity
confirming that the institution is a
public institution and is backed by the
full faith and credit of the country or
other government entity. A foreign
public institution would not meet this
standard of financial responsibility if it
was in violation of any past
performance requirements in § 668.174.
If a foreign public institution did not
meet the new requirements, its financial
responsibility would be determined
under the general requirements of
financial responsibility, including the
application of the equity, primary
reserve, and net income ratios. Although
the full faith and credit provision would
provide an alternate way of meeting the
financial responsibility standards for
public foreign institutions, it would not
excuse the institution from required
submissions of audited financial
statements. In addition, if a government
entity provided full faith and credit
backing, the entity would be held liable
for any Title IV, HEA program liabilities
that were not paid by the institution.
We estimate 13 public institutions
would require 16 hours to obtain
documentation from the applicable
government entity at an increase in
burden of 208 hours in OMB Control
Number 1845–0022.
COLLECTION OF INFORMATION
Regulatory section
Information collection
600.20—Application procedures for estab- This proposed regulation change would add
lishing, reestablishing, maintaining, or exinformation that must be collected to deterpanding institutional eligibility and certification.
mine the eligibility of foreign graduate medical schools to participate in Title IV programs.
600.21—Updating application information .........
This proposed regulation would identify when
a foreign graduate medical school must notify the Department of specific changes in
locations used by the school.
600.54—Criteria for determining whether a foreign institution is eligible to participate in the
FFEL programs.
This proposed regulation would require that
the foreign institution demonstrate that its
academic work for training program of at
least one-academic-year is equivalent to an
academic year as defined for domestic institutions.
This proposed regulation would require the
schools to provide a consent form allowing
the school to receive a copy of the students’ MCAT score; would require a medical school to produce annually and to provide to its accrediting agency a report with
data regarding its students who are US citizens, nationals, or eligible permanent residents, some of which data would be required to be submitted to the Department
on an annual basis; and would require the
school to notify their accrediting body within
one year of material changes to its educational program and formal affiliation
agreements. This section also would require schools to identify the languages in
which it provides instruction.
This proposed regulation would require the
foreign graduate medical schools to expand
the satisfactory academic progress policy
requirements to include foreign graduate
medical schools and calculations of maximum timeframes to complete the program,
and document any student remediation regarding SAP.
This proposed regulation would require the
schools to provide a consent form allowing
the school to receive a copy of the students’ NCLEX–RN results or pass rate and
would require a nursing school to annually
produce and provide to the Department a
report with data regarding the results of the
NCLEX–RN exam taken by its students and
graduates.
600.55—Additional criteria for determining
whether a foreign graduate medical school is
eligible to apply to participate in the Title IV,
HEA programs.
wwoods2 on DSKDVH8Z91PROD with PROPOSALS2
600.55(g)(2)—Additional criteria for determining
whether a foreign graduate medical school is
eligible to apply to participate in the Title IV,
HEA programs.
600.57—Additional criteria for determining
whether a foreign nursing school is eligible to
apply to participate in the FFEL program.
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Collection
OMB 1845–0012. The burden would increase
by 42 hours.
This regulatory change may require changes
to the form, but they cannot be completed
until the language of the final rule is determined.
OMB 1845–0012. The burden would increase
by 1 hour and 20 minutes.
This regulatory change may require changes
to the form, but they cannot be completed
until the language of the final rule is determined.
OMB 1845–NEWA. This would be a new collection. A separate 60-day Federal Register notice will be published to solicit comment. The burden would increase by 22
hours.
OMB 1845–NEWA. This would be a new collection. A separate 60-day Federal Register notice will be published to solicit comment. The burden would increase by 389
hours.
OMB 1845–NEW2. This would be a new collection. A separate 60-day Federal Register notice will be published to solicit comment. The burden would increase by 177
hours and 30 minutes.
OMB 1845–NEWA. This would be a new collection. A separate 60-day Federal Register notice will be published to solicit comment. The burden would increase by 102
hours.
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42229
COLLECTION OF INFORMATION—Continued
Regulatory section
Information collection
Collection
668.13—Certification procedures .......................
The proposed regulation would change the
certification time frame for for-profit schools
from 6 to 3 years.
The proposed regulation would change the requirements of institutions for submission of
audited financial statements to the Department and would change the requirements
of institutions for submission of compliance
audits to the Department.
The proposed regulation would provide an alternate method to show financial responsibility by showing that it is a public institution
designated by the proper governing authority in the country and by providing documentation of the full faith and credit of that
country.
OMB 1845–0022. We do not anticipate a
change in burden.
668.23(h)(1)—Compliance audits and audited
financial statements.
wwoods2 on DSKDVH8Z91PROD with PROPOSALS2
668.171—General (Subpart L—Financial Responsibility).
If you want to comment on the
proposed information collection
requirements, please send your
comments to the Office of Information
and Regulatory Affairs, OMB, Attention:
Desk Officer for U.S. Department of
Education. Send these comments by
e-mail to OIRA_DOCKET@omb.eop.gov
or by fax to (202) 395–6974. You may
also send a copy of these comments to
the Department contact named in the
ADDRESSES section of this preamble.
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 or other forms of information
technology (e.g., permitting electronic
submission of responses).
OMB is required to make a decision
concerning the collections of
information contained in these
proposed regulations between 30 and 60
days after publication of this document
in the Federal Register. Therefore, to
ensure that OMB gives your comments
full consideration, it is important that
OMB receives the comments within 30
days of publication. This does not affect
the deadline for your comments to us on
the proposed regulations.
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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.
Electronic Access to This Document:
You can view this document, as well as
all other Department of Education
documents published in the Federal
Register, in text or Adobe Portable
Document Format (PDF) on the Internet
at the following site: https://www.ed.gov/
news/fedregister. To use PDF you must
have Adobe Acrobat Reader, which is
available free at this site. If you have
questions about using PDF, call the U.S.
Government Printing Office (GPO), toll
free, at 1–888–293–6498; or in the
Washington, DC, area at (202) 512–1530.
Note: 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 on GPO
Access at: https://www.gpoaccess.gov/nara/
index.html.
Catalog of Federal Domestic Assistance
Numbers: 84.063 Federal Pell Grant Program;
84.033 Federal Work-Study Program; 84.379
TEACH Grant Program; 84.069 LEAP).
OMB 1845–0038. The burden would increase
by 17,920 hours.
OMB 1845–0022. The burden would increase
by 208 hours.
and recordkeeping requirements,
Student aid, Vocational education.
34 CFR Part 668
Administrative practice and
procedure, Aliens, Colleges and
universities, Consumer protection,
Grant programs—education, Loan
programs—education, Reporting and
recordkeeping requirements, Selective
Service System, Student aid, Vocational
education.
34 CFR Part 682
Administrative practice and
procedure, Colleges and universities,
Education, Loan programs—education,
Reporting and recordkeeping
requirements, Student aid.
Dated: July 12, 2010.
Arne Duncan,
Secretary of Education.
For the reasons discussed in the
preamble, the Secretary proposes to
amend parts 600, 668, and 682 of title
34 of the Code of Federal Regulations as
follows:
PART 600—INSTITUTIONAL
ELIGIBILITY UNDER THE HIGHER
EDUCATION ACT OF 1965, AS
AMENDED
1. The authority citation for part 600
continues to read as follows:
Authority: 20 U.S.C. 1001, 1002, 1003,
1088, 1091, 1094, 1099b, and 1099c, unless
otherwise noted.
List of Subjects
2. Section 600.2 is amended by
revising paragraphs (1) and (2) of the
definition of Nonprofit institution.
The revision reads as follows:
34 CFR Part 600
§ 600.2
Colleges and universities, Foreign
relations, Grant programs—education,
Loan programs—education, Reporting
*
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Definitions.
*
*
*
*
Nonprofit institution: An institution
that—
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Federal Register / Vol. 75, No. 138 / Tuesday, July 20, 2010 / Proposed Rules
(1)(i) Is owned and operated by one or
more nonprofit corporations or
associations, no part of the net earnings
of which benefits any private
shareholder or individual;
(ii) Is legally authorized to operate as
a nonprofit organization by each State in
which it is physically located; and
(iii) Is determined by the U.S. Internal
Revenue Service to be an organization to
which contributions are tax-deductible
in accordance with section 501(c)(3) of
the Internal Revenue Code (26 U.S.C.
501(c)(3)); or
(2) For a foreign institution—
(i) An institution that is owned and
operated only by one or more nonprofit
corporations or associations; and
(ii)(A) If a recognized tax authority of
the institution’s home country is
recognized by the Secretary for purposes
of making determinations of an
institution’s nonprofit status for title IV
purposes, is determined by that tax
authority to be a nonprofit educational
institution; or
(B) If no recognized tax authority of
the institution’s home country is
recognized by the Secretary for purposes
of making determinations of an
institution’s nonprofit status for title IV
purposes, the foreign institution
demonstrates to the satisfaction of the
Secretary that it is a nonprofit
educational institution.
*
*
*
*
*
3. Section 600.20 is amended by:
A. Revising paragraph (a).
B. Adding a new paragraph (b)(3).
C. In paragraph (c)(4), removing the
word ‘‘or’’.
D. Redesignating paragraph (c)(5) as
paragraph (c)(6).
E. Adding a new paragraph (c)(5).
The revision and additions read as
follows:
wwoods2 on DSKDVH8Z91PROD with PROPOSALS2
§ 600.20 Application procedures for
establishing, reestablishing, maintaining, or
expanding institutional eligibility and
certification.
(a) Initial eligibility application.
(1) An institution that wishes to
establish its eligibility to participate in
any HEA program must submit an
application to the Secretary for a
determination that it qualifies as an
eligible institution under this part.
(2) If the institution also wishes to be
certified to participate in the title IV,
HEA programs, it must indicate that
intent on the application, and submit all
the documentation indicated on the
application to enable the Secretary to
determine that it satisfies the relevant
certification requirements contained in
34 CFR part 668, subparts B and L.
(3) A freestanding foreign graduate
medical school, or a foreign institution
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that includes a foreign graduate medical
school, must include in its application
to participate—
(i)(A) A list of all educational sites
and where they are located, including
all sites at which its students receive
clinical training, except those clinical
training sites that are not used regularly,
but instead are chosen by individual
students who take no more than two
electives at the location for no more
than a total of eight weeks; and
(B) The type of clinical training (core,
required clinical rotation, not required
clinical rotation) offered at each site
listed on the application in accordance
with paragraph (a)(3)(i)(A) of this
section; and
(ii) Whether the school offers—
(A) Only post-baccalaureate/
equivalent medical programs, as defined
in § 600.52;
(B) Other types of programs that lead
to employment as a doctor of
osteopathic medicine or doctor of
medicine; or
(C) Both; and
(iii) Copies of the formal affiliation
agreements with hospitals or clinics
providing all or a portion of a clinical
training program required under
§ 600.55(e)(1).
(b) * * *
(3) A freestanding foreign graduate
medical school, or a foreign institution
that includes a foreign graduate medical
school, must include in its reapplication
to participate—
(i)(A) A list of all educational sites
and where they are located, including
all sites at which its students receive
clinical training, except those clinical
training sites that are not used regularly,
but instead are chosen by individual
students who take no more than two
electives at the location for no more
than a total of eight weeks; and
(B) The type of clinical training (core,
required clinical rotation, not required
clinical rotation) offered at each site
listed on the application in accordance
with paragraph (b)(3)(i)(A) of this
section; and
(ii) Whether the school offers—
(A) Only post-baccalaureate/
equivalent medical programs, as defined
in § 600.52;
(B) Other types of programs that lead
to employment as a doctor of
osteopathic medicine or doctor of
medicine; or
(C) Both; and
(iii) Copies of the formal affiliation
agreements with hospitals or clinics
providing all or a portion of a clinical
training program required under
§ 600.55(e)(1).
*
*
*
*
*
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(c) * * *
(5) For a freestanding foreign graduate
medical school, or a foreign institution
that includes a foreign graduate medical
school, add a location that offers all or
a portion of the school’s core clinical
training or required clinical rotations,
except for those locations that are
included in the accreditation of a
medical program accredited by the
Liaison Committee on Medical
Education (LCME); or
*
*
*
*
*
4. Section 600.21 is amended by
adding paragraph (a)(10) to read as
follows:
§ 600.21
Updating application information.
(a) * * *
(10) For a freestanding foreign
graduate medical school, or a foreign
institution that includes a foreign
graduate medical school, the school
adds a location that offers all or a
portion of the school’s clinical rotations
that are not required, except for those
that are included in the accreditation of
a medical program accredited by the
Liaison Committee on Medical
Education (LCME), or that are not used
regularly, but instead are chosen by
individual students who take no more
than two electives at the location for no
more than a total of eight weeks.
*
*
*
*
*
5. Section 600.51 is amended by
revising paragraph (c) to read as follows:
§ 600.51
Purpose and scope.
*
*
*
*
*
(c) A foreign institution must comply
with all requirements for eligible and
participating institutions except—
(1) To the extent those provisions are
inconsistent with this subpart or other
provisions of these regulations or the
HEA specific to foreign institutions; or
(2) When the Secretary, through a
notice in the Federal Register, identifies
specific provisions as inapplicable to
foreign institutions.
*
*
*
*
*
6. Section 600.52 is amended by:
A. Adding, in alphabetical order, a
definition of Associate degree school of
nursing.
B. Adding, in alphabetical order, a
definition of Clinical training.
C. Adding, in alphabetical order, a
definition of Collegiate school of
nursing.
D. Adding, in alphabetical order, a
definition of Diploma school of nursing.
E. Revising the definition of Foreign
graduate medical school.
F. Revising the definition of Foreign
institution.
G. Adding, in alphabetical order, a
definition of Foreign nursing school.
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H. Adding, in alphabetical order, a
definition of Foreign veterinary school.
I. Adding, in alphabetical order, a
definition of National Committee on
Foreign Medical Education and
Accreditation (NCFMEA).
J. Revising the definition of Passing
score.
K. Adding, in alphabetical order, a
definition of Post-baccalaureate/
equivalent medical program.
The additions and revisions read as
follows:
wwoods2 on DSKDVH8Z91PROD with PROPOSALS2
§ 600.52
Definitions.
Associate degree school of nursing: A
school that provides primarily or
exclusively a two-year program of
postsecondary education in professional
nursing leading to a degree equivalent to
an associate degree in the United States.
Clinical training: The portion of a
graduate medical education program
that counts as a clinical clerkship for
purposes of medical licensure
comprising core, required clinical
rotation, and not required clinical
rotation.
Collegiate school of nursing: A school
that provides primarily or exclusively a
minimum of a two-year program of
postsecondary education in professional
nursing leading to a degree equivalent to
a bachelor of arts, bachelor of science,
or bachelor of nursing in the United
States, or to a degree equivalent to a
graduate degree in nursing in the United
States, and including advanced training
related to the program of education
provided by the school.
Diploma school of nursing: A school
affiliated with a hospital or university,
or an independent school, which
provides primarily or exclusively a twoyear program of postsecondary
education in professional nursing
leading to the equivalent of a diploma
in the United States or to equivalent
indicia that the program has been
satisfactorily completed.
Foreign graduate medical school: A
foreign institution (or, for a foreign
institution that is a university, a
component of that foreign institution)
having as its sole mission providing an
educational program that leads to a
degree of medical doctor, doctor of
osteopathic medicine, or the equivalent.
A reference in these regulations to a
foreign graduate medical school as
‘‘freestanding’’ pertains solely to those
schools that qualify by themselves as
foreign institutions and not to schools
that are components of universities that
qualify as foreign institutions.
Foreign institution:
(1) For the purposes of students who
receive title IV aid, an institution that—
(i) Is not located in a State;
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(ii) Except as provided with respect to
clinical training offered under
§ 600.55(h)(1), § 600.56(b), or
§ 600.57(a)(2)—
(A) Has no U.S. location;
(B) Has no written arrangements,
within the meaning of § 668.5, with
institutions or organizations located in
the United States for students enrolling
at the foreign institution to take courses
from institutions located in the United
States;
(C) Does not permit students to enroll
in any course offered by the foreign
institution in the United States,
including research, work, internship,
externship, or special studies within the
United States, except that independent
research done by an individual student
in the United States for not more than
one academic year is permitted, if it is
conducted during the dissertation phase
of a doctoral program under the
guidance of faculty, and the research
can only be performed in a facility in
the United States;
(iii) Is legally authorized by the
education ministry, council, or
equivalent agency of the country in
which the institution is located to
provide an educational program beyond
the secondary education level;
(iv) Awards degrees, certificates, or
other recognized educational credentials
in accordance with § 600.54(d) that are
officially recognized by the country in
which the institution is located; and
(v) For any program designed to
prepare the student for employment in
a recognized occupation, with or
without licensure, provides a credential,
including a degree, that—
(A) Satisfies the educational
requirements in the country in which
the institution is located for entry into
that occupation, including educational
requirements for licensure; and
(B) Satisfies the educational
requirements, including requirements
for licensure, for entry into that
occupation in the United States; or
(2) If the educational enterprise
enrolls students both within a State and
outside a State, and the number of
students who would be eligible to
receive title IV, HEA program funds
attending locations outside a State is at
least twice the number of students
enrolled within a State, the locations
outside a State must apply to participate
as one or more foreign institutions and
must meet all requirements of paragraph
(1) of this definition, and the other
requirements of this part. For the
purposes of this paragraph, an
educational enterprise consists of two or
more locations offering all or part of an
educational program that are directly or
indirectly under common ownership.
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Foreign nursing school: A foreign
institution (or, for a foreign institution
that is a university, a component of that
foreign institution) that is an associate
degree school of nursing, a collegiate
school of nursing, or a diploma school
of nursing. A reference in these
regulations to a foreign nursing school
as ‘‘freestanding’’ pertains solely to those
schools that qualify by themselves as
foreign institutions and not to schools
that are components of universities that
qualify as foreign institutions.
Foreign veterinary school: A foreign
institution (or, for a foreign institution
that is a university, a component of that
foreign institution) having as its sole
mission providing an educational
program that leads to the degree of
doctor of veterinary medicine, or the
equivalent. A reference in these
regulations to a foreign veterinary
school as ‘‘freestanding’’ pertains solely
to those schools that qualify by
themselves as foreign institutions and
not to schools that are components of
universities that qualify as foreign
institutions.
National Committee on Foreign
Medical Education and Accreditation
(NCFMEA): The operational committee
of medical experts established by the
Secretary to determine whether the
medical school accrediting standards
used in other countries are comparable
to those applied to medical schools in
the U.S., for purposes of evaluating the
eligibility of accredited foreign graduate
medical schools to participate in the
title IV, HEA programs.
Passing score: The minimum passing
score as defined by the Educational
Commission for Foreign Medical
Graduates (ECFMG), or on the National
Council Licensure Examination for
Registered Nurses (NCLEX–RN), as
applicable.
Post-baccalaureate/equivalent
medical program: A program offered by
a foreign graduate medical school that
requires, as a condition of admission,
that its students have already completed
their non-medical undergraduate
studies and that consists solely of
courses and training leading to
employment as a doctor of medicine or
doctor of osteopathic medicine.
*
*
*
*
*
7. Section 600.54 is revised to read as
follows:
§ 600.54 Criteria for determining whether a
foreign institution is eligible to apply to
participate in the FFEL programs.
The Secretary considers a foreign
institution to be comparable to an
eligible institution of higher education
in the United States and eligible to
apply to participate in the FFEL
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programs if the foreign institution meets
the following requirements:
(a) Except for a freestanding foreign
graduate medical school, foreign
veterinary school, or foreign nursing
school, the foreign institution is a public
or private nonprofit educational
institution.
(b) The foreign institution admits as
regular students only persons who—
(1) Have a secondary school
completion credential; or
(2) Have the recognized equivalent of
a secondary school completion
credential.
(c)(1) Notwithstanding § 668.5, an
eligible foreign institution may not enter
into a written arrangement under which
an ineligible institution or organization
provides any portion of one or more of
the eligible foreign institution’s
programs. For the purposes of this
paragraph, written arrangements do not
include affiliation agreements for the
provision of clinical training for foreign
medical, veterinary, and nursing
schools.
(2) An additional location of a foreign
institution must separately meet the
definition of a foreign institution in
§ 600.52 if it is—
(i) Located outside of the country in
which the main campus is located,
except as provided in § 600.55(h)(1),
§ 600.56(b), § 600.57(a)(2),
§ 600.55(h)(3), and the definition of
foreign institution found in § 600.52; or
(ii) Located within the same country
as the main campus, but is not covered
by the legal authorization of the main
campus.
(d) The foreign institution provides an
eligible education program—
(1) For which the institution is legally
authorized to award a degree that is
equivalent to an associate,
baccalaureate, graduate, or professional
degree awarded in the United States;
(2) That is at least a two-academicyear program acceptable for full credit
toward the equivalent of a baccalaureate
degree awarded in the United States; or
(3)(i) That is equivalent to at least a
one-academic-year training program in
the United States that leads to a
certificate, degree, or other recognized
educational credential and prepares
students for gainful employment in a
recognized occupation.
(ii) An institution must demonstrate
to the satisfaction of the Secretary that
the amount of academic work required
by a program in paragraph (d)(3)(i) of
this section is equivalent to at least the
definition of an academic year in
§ 668.3.
(e) For a for-profit foreign medical,
veterinary, or nursing school—
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(1) No portion of an eligible medical
or veterinary program offered may be at
what would be an undergraduate level
in the United States; and
(2) The title IV, HEA program
eligibility does not extend to any joint
degree program.
(f) Proof that a foreign institution
meets the requirements of paragraph
(1)(iii) of the definition of a foreign
institution in § 600.52 may be provided
to the Secretary by a legal authorization
from the appropriate education
ministry, council, or equivalent
agency—
(i) For all eligible foreign institutions
in the country;
(ii) For all eligible foreign institutions
in a jurisdiction within the country; or
(iii) For each separate eligible foreign
institution in the country.
(Authority: 20 U.S.C. 1082, 1088)
8. Section 600.55 is revised to read as
follows:
§ 600.55 Additional criteria for determining
whether a foreign graduate medical school
is eligible to apply to participate in the title
IV, HEA programs.
(a) General. (1) The Secretary
considers a foreign graduate medical
school to be eligible to apply to
participate in the title IV, HEA programs
if, in addition to satisfying the criteria
of this part (except the criterion in
§ 600.54 that the institution be public or
private nonprofit), the school satisfies
the criteria of this section.
(2) A foreign graduate medical school
must provide, and in the normal course
require its students to complete, a
program of clinical training and
classroom medical instruction of not
less than 32 months in length, that is
supervised closely by members of the
school’s faculty and that—
(i) Is provided in facilities adequately
equipped and staffed to afford students
comprehensive clinical training and
classroom medical instruction;
(ii) Is approved by all medical
licensing boards and evaluating bodies
whose views are considered relevant by
the Secretary; and
(iii) As part of its clinical training,
does not offer more than two electives
consisting of no more than eight weeks
per student at a site located in a foreign
country other than the country in which
the main campus is located or in the
United States, unless that location is
included in the accreditation of a
medical program accredited by the
Liaison Committee on Medical
Education (LCME).
(3) A foreign graduate medical school
must appoint for the program described
in paragraph (a)(2) of this section only
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those faculty members whose academic
credentials are the equivalent of
credentials required of faculty members
teaching the same or similar courses at
medical schools in the United States.
(4) A foreign graduate medical school
must have graduated classes during
each of the two twelve-month periods
immediately preceding the date the
Secretary receives the school’s request
for an eligibility determination.
(b) Accreditation. A foreign graduate
medical school must—
(1) Be approved by an accrediting
body—
(i) That is legally authorized to
evaluate the quality of graduate medical
school educational programs and
facilities in the country where the
school is located; and
(ii) Whose standards of accreditation
of graduate medical schools have been
evaluated by the NCFMEA or its
successor committee of medical experts
and have been determined to be
comparable to standards of accreditation
applied to medical schools in the
United States; or
(2) Be a public or private nonprofit
educational institution that satisfies the
requirements in § 600.4(a)(5)(i).
(c) Admission criteria. (1) A foreign
graduate medical school having a postbaccalaureate/equivalent medical
program must require students accepted
for admission who are U.S. citizens,
nationals, or permanent residents to
have taken the Medical College
Admission Test (MCAT) and to have
reported their scores to the foreign
medical school; and
(2) A foreign graduate medical school
must determine the consent
requirements for and require the
necessary consents of all students
accepted for admission who are U.S.
citizens, nationals, or eligible
permanent residents to enable the
school to comply with the collection
and submission requirements of
paragraph (d) of this section.
(d) Collection and submission of data.
A foreign graduate medical school must
obtain, at its own expense, and by
September 30 of each year, submit—
(1) To its accrediting authority and,
on request, to the Secretary, the scores
on the MCAT or successor examination,
of all students admitted during the
preceding award year who are U.S.
citizens, nationals, or eligible
permanent residents, together with a
statement of the number of times each
student took the examination;
(2) To its accrediting authority and,
on request, to the Secretary, the
percentage of students graduating
during the preceding award year
(including at least all graduates who are
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U.S. citizens, nationals, or eligible
permanent residents) who obtain
placement in an accredited U.S. medical
residency program;
(3) To the Secretary, except upon
written notice from the Secretary that
the necessary information has been
obtained by the Secretary for the year
directly from the Educational
Commission for Foreign Medical
Graduates (ECFMG) or other responsible
third parties, all scores, disaggregated by
step/test—i.e., Step 1, Step 2—Clinical
Skills (Step 2—CS), and Step 2—
Clinical Knowledge (Step 2—CK), or the
successor examinations—and attempt,
earned during the preceding award year
by at least each student and graduate
who is a U.S. citizen, national, or
eligible permanent resident, on Step 1,
Step 2—CS, and Step 2—CK, or the
successor examinations, of the U.S.
Medical Licensing Examination
(USMLE), together with the dates the
student has taken each test, including
any failed tests;
(e) Requirements for clinical training.
(1)(i) A foreign graduate medical school
must have—
(A) A formal affiliation agreement
with any hospital or clinic at which all
or a portion of the school’s core clinical
training or required clinical rotations
are provided; and
(B) Either a formal affiliation
agreement or other written arrangements
with any hospital or clinic at which all
or a portion of its clinical rotations that
are not required are provided, except for
those locations that are not used
regularly, but instead are chosen by
individual students who take no more
than two electives at the location for no
more than a total of eight weeks.
(ii) The agreements described in
paragraph (e)(1)(i) of this section must
state how the following will be
addressed at each site—
(A) Maintenance of the school’s
standards;
(B) Appointment of faculty to the
medical school staff;
(C) Design of the curriculum;
(D) Supervision of students;
(E) Provision of liability insurance;
and
(F) Evaluation of student
performance.
(2) A foreign graduate medical school
must notify its accrediting body within
one year of any material changes in—
(i) The educational programs,
including changes in clinical training
programs; and
(ii) The overseeing bodies and in the
formal affiliation agreements with
hospitals and clinics described in
paragraph (e)(1)(i) of this section.
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(f) Citizenship and USMLE pass rate
percentages. (1)(i)(A) During the
academic year preceding the year for
which any of the school’s students seeks
an title IV, HEA program loan, at least
60 percent of those enrolled as full-time
regular students in the school and at
least 60 percent of the school’s most
recent graduating class must have been
persons who did not meet the
citizenship and residency criteria
contained in section 484(a)(5) of the
HEA, 20 U.S.C. 1091(a)(5); or
(B) The school must have had a
clinical training program approved by a
State prior to January 1, 2008, and must
continue to operate a clinical training
program in at least one State that
approves the program; and
(ii) Except as provided in paragraph
(f)(4) of this section, for a foreign
graduate medical school outside of
Canada, for Step 1, Step 2—CS, and
Step 2—CK, or the successor
examinations, of the USMLE
administered by the ECFMG, at least 75
percent of the school’s U.S. citizen,
national, or eligible permanent resident
students and graduates who took that
step/test of the examination in the year
preceding the year for which any of the
school’s students seeks a title IV, HEA
program loan must have received a
passing score on that step/test and are
taking the step/test for the first time; or
(2)(i) The school must have had a
clinical training program approved by a
State as of January 1, 1992; and
(ii) The school must continue to
operate a clinical training program in at
least one State that approves the
program.
(3) In performing the calculation
required in paragraph (f)(1)(ii) of this
section, a foreign graduate medical
school shall—
(i) Count as a graduate each U.S.
citizen, national, or eligible permanent
resident who graduated from the school
during the three years preceding the
year for which the calculation is
performed; and
(ii) Count each U.S. citizen, national,
or eligible permanent resident who
takes more than one step/test of the
USMLE examination in a year in the
denominator for each of those steps/
tests;
(4)(i) If the calculation described in
paragraph (f)(1)(ii) of this section would
result in any step/test pass rate based on
fewer than eight students, a single pass
rate for the school is determined instead
based on the performance of the
school’s U.S. citizen, national, and
eligible permanent resident students
and graduates on Step 1, Step 2—CS,
and Step 2—CK combined;
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(ii) If combining the results on all
three step/tests as permitted in
paragraph (f)(4)(i) of this section would
result in a pass rate based on fewer than
eight step/test results, the school is
deemed to have no pass rate for that
year and the results for the year are
combined with each subsequent year
until a pass rate based on at least eight
step/test results is derived.
(g) Other criteria. (1) As part of
establishing, publishing, and applying
reasonable satisfactory academic
progress standards, a foreign graduate
medical school must include as a
quantitative component a maximum
timeframe in which a student must
complete his or her educational program
that must—
(i) Be no longer than 150 percent of
the published length of the educational
program measured in academic years,
terms, credit hours attempted, clock
hours completed, etc., as appropriate;
and
(ii) Meet the requirements of
§ 668.16(e)(2)(ii)(B), (C) and (D).
(2) A foreign graduate medical school
must document the educational
remediation it provides to assist
students in making satisfactory
academic progress.
(3) A foreign graduate medical school
must publish all the languages in which
instruction is offered.
(h) Location of a program. (1) Except
as provided in paragraph (h)(3)(ii) of
this section, all portions of a graduate
medical education program offered to
U.S. students must be located in a
country whose medical school
accrediting standards are comparable to
standards used in the United States, as
determined by the NCFMEA, except for
clinical training sites located in the
United States.
(2) No portion of the graduate medical
educational program offered to U.S.
students, other than the clinical training
portion of the program, may be located
outside of the country in which the
main campus of the foreign medical
school is located.
(3)(i) Except as provided in paragraph
(h)(3)(ii) of this section, for any part of
the clinical training portion of the
educational program located in a foreign
country other than the country in which
the main campus is located or in the
United States, in order for students
attending the site to be eligible to
borrow title IV, HEA program funds—
(A) The site must be located in an
NCFMEA approved comparable foreign
country;
(B) The institution’s medical
accrediting agency must have conducted
an on-site evaluation and specifically
approved the clinical training site; and
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(C) Clinical instruction must be
offered in conjunction with medical
educational programs offered to
students enrolled in accredited medical
schools located in that approved foreign
country.
(ii) A clinical training site located in
a foreign country other than the country
in which the main campus is located or
in the United States is not required to
meet the requirements of paragraph
(h)(3)(i) of this section in order for
students attending that site to be eligible
to borrow title IV, HEA program funds
if—
(A) The location is included in the
accreditation of a medical program
accredited by the Liaison Committee on
Medical Education (LCME); or
(B) No individual student takes more
than two electives at the location and
the combined length of the electives
does not exceed eight weeks.
9. Section 600.56 is revised as
follows:
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§ 600.56 Additional criteria for determining
whether a foreign veterinary school is
eligible to apply to participate in the FFEL
programs.
(a) The Secretary considers a foreign
veterinary school to be eligible to apply
to participate in the FFEL programs if,
in addition to satisfying the criteria in
this part (except the criterion in § 600.54
that the institution be public or private
nonprofit), the school satisfies all of the
following criteria:
(1) The school provides, and in the
normal course requires its students to
complete, a program of clinical and
classroom veterinary instruction that is
supervised closely by members of the
school’s faculty, and that is provided in
facilities adequately equipped and
staffed to afford students comprehensive
clinical and classroom veterinary
instruction through a training program
for foreign veterinary students that has
been approved by all veterinary
licensing boards and evaluating bodies
whose views are considered relevant by
the Secretary.
(2) The school has graduated classes
during each of the two twelve-month
periods immediately preceding the date
the Secretary receives the school’s
request for an eligibility determination.
(3) The school employs for the
program described in paragraph (a)(1) of
this section only those faculty members
whose academic credentials are the
equivalent of credentials required of
faculty members teaching the same or
similar courses at veterinary schools in
the United States.
(4) Effective July 1, 2015, the school
is accredited or provisionally accredited
by an organization acceptable to the
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Secretary for the purpose of evaluating
veterinary programs.
(b)(1) No portion of the foreign
veterinary educational program offered
to U.S. students, other than the clinical
training portion of the program as
provided for in paragraph (b)(2) of this
section, may be located outside of the
country in which the main campus of
the foreign veterinary school is located;
(2)(i) For a veterinary school that is
neither public nor private nonprofit, the
school’s students must complete their
clinical training at an approved
veterinary school located in the United
States;
(ii) For a veterinary school that is
public or private nonprofit, the school’s
students may complete their clinical
training at an approved veterinary
school located—
(A) In the United States;
(B) In the home country; or
(C) Outside of the United States or the
home country, if no individual student
takes more than two electives at the
location and the combined length of the
elective does not exceed eight weeks.
Authority: 20 U.S.C. 1002 and 1092.
10. Section 600.57 is redesignated as
§ 600.58 and a new § 600.57 is added to
read as follows:
§ 600.57 Additional criteria for determining
whether a foreign nursing school is eligible
to apply to participate in the FFEL program.
(a) The Secretary considers a foreign
nursing school to be eligible to apply to
participate in the FFEL programs if, in
addition to satisfying the criteria in this
part (except the criterion in § 600.54
that the institution be public or private
nonprofit), the nursing school satisfies
all of the following criteria:
(1) The nursing school is an associate
degree school of nursing, a collegiate
school of nursing, or a diploma school
of nursing.
(2) The nursing school has an
agreement with a hospital located in the
United States or an accredited school of
nursing located in the United States that
requires students of the nursing school
to complete the student’s clinical
training at the hospital or accredited
school of nursing.
(3) The nursing school has an
agreement with an accredited school of
nursing located in the United States
providing that students graduating from
the nursing school located outside of the
United States also receive a degree from
the accredited school of nursing located
in the United States.
(4) The nursing school certifies only
Federal Stafford Loan program loans or
Federal PLUS program loans, as those
terms are defined in § 668.2, for
students attending the nursing school.
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(5) The nursing school reimburses the
Secretary for the cost of any loan
defaults for current and former students
included in the calculation of the
institution’s cohort default rate during
the previous fiscal year.
(6)(i) The nursing school determines
the consent requirements for and
requires the necessary consents of all
students accepted for admission who
are U.S. citizens, nationals, or eligible
permanent residents to enable the
school to comply with the collection
and submission requirements of
paragraph (a)(6)(ii) of this section.
(ii) The nursing school annually
either—
(A) Obtains, at its own expense, all
results achieved by students and
graduates who are U.S. citizens,
nationals, or eligible permanent
residents on the National Council
Licensure Examination for Registered
Nurses (NCLEX–RN), together with the
dates the student has taken the
examination, including any failed
examinations, and provides such results
to the Secretary; or
(B) Obtains a report or reports from
the National Council of State Boards of
Nursing (NCSB), or an NCSB affiliate or
NCSB contractor, reflecting the
percentage of the school’s students and
graduates taking the NCLEX–RN in the
preceding year who passed the
examination, or the data from which the
percentage could be derived, and
provides the report to the Secretary.
(7) Not less than 75 percent of the
school’s students and graduates who are
U.S. citizens, nationals, or eligible
permanent residents who took the
NCLEX–RN in the year preceding the
year for which the institution is
certifying a Federal Stafford Loan or a
Federal Plus Loan, passed the
examination.
(8) The school provides, including
under the agreements described in
paragraphs (a)(2) and (a)(3) of this
section, and in the normal course
requires its students to complete, a
program of clinical and classroom
nursing instruction that is supervised
closely by members of the school’s
faculty that is provided in facilities
adequately equipped and staffed to
afford students comprehensive clinical
and classroom nursing instruction,
through a training program for foreign
nursing students that has been approved
by all nurse licensing boards and
evaluating bodies whose views are
considered relevant by the Secretary.
(9) The school has graduated classes
during each of the two twelve-month
periods immediately preceding the date
the Secretary receives the school’s
request for an eligibility determination.
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(10) The school employs only those
faculty members whose academic
credentials are the equivalent of
credentials required of faculty members
teaching the same or similar courses at
nursing schools in the United States.
(b) For purposes of paragraph (a)(5) of
this section, the cost of a loan default is
the sum of the defaulted loan’s—
(1) Outstanding principal;
(2) Accrued interest;
(3) Unpaid late fees and collection
costs;
(4) Special allowance payments;
(5) Reinsurance payments; and
(6) Any related or similar payments
the Secretary is obligated to make on the
loan.
(c) After a school reimburses the
Secretary for the amount specified in
paragraph (b) of this section, the loan is
assigned to the school, and the borrower
remains liable to the school for the
outstanding balance of the loan, under
the terms and conditions specified in
the promissory note.
(d) No portion of the foreign nursing
program offered to U.S. students may be
located outside of the country in which
the main campus of the foreign nursing
school is located, except for clinical
sites located in the United States.
PART 668—STUDENT ASSISTANCE
GENERAL PROVISIONS
11. The authority citation for part 668
continues to read as follows:
Authority: 20 U.S.C. 1001, 1002, 1003,
1070g, 1085, 1088, 1091, 1092, 1094, 1099c,
and 1099c–1, unless otherwise noted.
12. Section 668.2 is amended by
adding the words ‘‘Foreign institution’’
immediately after ‘‘Federal Family
Education Loan (FFEL) programs’’ in the
list of definitions in paragraph (a).
13. Section 668.13(b) is revised to
read as follows:
§ 668.13
Certification procedures.
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*
*
*
*
*
(b) Period of participation. (1) If the
Secretary certifies that an institution
meets the standards of this subpart, the
Secretary also specifies the period for
which the institution may participate in
a title IV, HEA program. An institution’s
period of participation expires six years
after the date that the Secretary certifies
that the institution meets the standards
of this subpart, except that—
(i) The period of participation for a
private, for profit foreign institution
expires three years after the date of the
Secretary’s certification; and
(ii) The Secretary may specify a
shorter period.
(2) Provided that an institution has
submitted an application for a renewal
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of certification that is materially
complete at least 90 days prior to the
expiration of its current period of
participation, the institution’s existing
certification will be extended on a
month to month basis following the
expiration of the institution’s period of
participation until the end of the month
in which the Secretary issues a decision
on the application for recertification.
§ 668.15
[Amended]
14. Section 668.15 is amended by
removing paragraph (h).
15. Section 668.23 is amended by:
A. In paragraph (a)(5), removing the
words ‘‘ ‘‘Audits of Institutions of Higher
Education and Other Non-profit
Organizations’’; Office of Management
and Budget Circular A–128, ‘‘Audits of
State and Local Governments’’ ’’ and
adding, in their place, the words
‘‘Audits of States, Local Governments,
and Non-Profit Organizations’’ ’’.
B. In paragraph (d)(1)—
Adding the words ‘‘issued by the
Comptroller General of the United
States’’ after ‘‘with generally accepted
government auditing standards’’ and
removing the words ‘‘ ‘‘Audits of
Institutions of Higher Education and
Other Non-profit Organizations’’; Office
of Management and Budget Circular
A–128, ‘‘Audits of State and Local
Governments’’ ’’; and adding, in their
place, ‘‘Audits of States, Local
Governments, and Non-Profit
Organizations’’.
C. Removing paragraph (d)(3).
D. Redesignating paragraph (d)(4) as
paragraph (d)(3).
E. Redesignating paragraph (d)(5) as
paragraph (d)(4).
F. Adding paragraph (h).
The addition reads as follows:
§ 668.23 Compliance audits and audited
financial statements.
*
*
*
*
*
(h) Audit submission requirements for
foreign institutions. (1) Audited
financial statements. (i) The Secretary
waives for that fiscal year the
submission of audited financial
statements if the institution is a foreign
public or nonprofit institution that
received less than $500,000 in U.S. title
IV program funds during its most
recently completed fiscal year, unless
that foreign public or nonprofit
institution is in its initial provisional
period of participation, and received
title IV program funds during that year,
in which case the institution must
submit, in English, audited financial
statements prepared in accordance with
generally accepted accounting
principles of the institution’s home
country.
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Fmt 4701
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42235
(ii) Except as provided in paragraph
(h)(1)(iii) of this section, a foreign
institution that received $500,000 or
more in U.S. title IV program funds
during its most recently completed
fiscal year must submit, in English, for
each most recently completed fiscal year
in which it received title IV program
funds, audited financial statements
prepared in accordance with generally
accepted accounting principles of the
institution’s home country along with
corresponding audited financial
statements that meet the requirements of
paragraph (d) of this section.
(iii) In lieu of making the submission
required by paragraph (h)(1)(ii) of this
section, a public or private nonprofit
institution that received—
(A) $500,000 or more in U.S. title IV
program funds, but less than $3,000,000
in U.S. title IV program funds during its
most recently completed fiscal year,
may submit for that year, in English,
audited financial statements prepared in
accordance with the generally accepted
accounting principles of the
institution’s home country, and is not
required to submit the corresponding
audited financial statements that meet
the requirements of paragraph (d) of this
section;
(B) At least $3,000,000, but less than
$5,000,000 in U.S. title IV, program
funds during its most recently
completed fiscal year, must submit in
English, for each most recently
completed fiscal year, audited financial
statements prepared in accordance with
the generally accepted accounting
principles of the institution’s home
country along with corresponding
audited financial statements that meet
the requirements of paragraph (d) of this
section, except that an institution that
continues to receive at least $3,000,000
but less than $5,000,000, in U.S. title IV
funds during its most recently
completed fiscal year may omit the
audited financial statements that meet
the requirements of paragraph (d) of this
section for up to two consecutive years
following the submission of audited
financial statements that meet the
requirements of paragraph (d) of this
section.
(2) Compliance audits. A foreign
institution’s compliance audit must
cover, on a fiscal year basis, all title IV,
HEA program transactions, and must
cover all of those transactions that have
occurred since the period covered by
the institution’s last compliance audit.
A compliance audit that is due under
this paragraph must be submitted no
later than six months after the last day
of the institution’s fiscal year, and must
meet the following requirements:
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(i) If the foreign institution received
$500,000 or more in U.S. dollars in title
IV, HEA program funds during its most
recently completed fiscal year, it must
submit a standard compliance audit for
that year that is performed in
accordance with audit guides developed
by, and available from, the Department
of Education’s Office of Inspector
General, together with an alternative
compliance audit or audits prepared in
accordance with paragraph (h)(2)(ii) of
this section for any preceding fiscal year
or years in which the foreign institution
received less than $500,000 in U.S.
dollars in title IV, HEA program funds;
(ii) If the foreign institution received
less than $500,000 U.S. in title IV, HEA
program funds for its most recently
completed fiscal year, it must submit an
alternative compliance audit for that
prior fiscal year that is performed in
accordance with audit guides developed
by, and available from, the Department
of Education’s Office of Inspector
General, except as noted in paragraph
(h)(2)(iii) of this section.
(iii) If so notified by the Secretary, a
foreign institution may submit an
alternative compliance audit performed
in accordance with audit guides
developed by, and available from, the
Department of Education’s Office of
Inspector General, that covers a period
not to exceed three of the institution’s
consecutive fiscal years if such audit is
submitted either no later than six
months after the last day of the most
recent fiscal year, or contemporaneously
with a standard compliance audit timely
submitted under paragraph (h)(2)(i) or
(h)(3)(ii) of this section for the most
recently completed fiscal year, and if
the following conditions are met:
(A) The institution received less than
$500,000 in title IV, HEA program funds
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15:25 Jul 19, 2010
Jkt 221001
for its most recently completed fiscal
year.
(B) The institution has timely
submitted acceptable compliance audits
for two consecutive fiscal years, and
following such submission, has no
history of late submission since then.
(C) The institution is fully certified.
(3)(i) Exceptions. Notwithstanding the
provisions of paragraphs (h)(1)(i) and
(h)(1)(iii) of this section, the Secretary
may issue a letter to a foreign institution
that identifies problems with its
financial condition or financial
reporting and requires the submission of
audited financial statements in the
manner specified by the Secretary.
(ii) Notwithstanding the provisions of
paragraphs (h)(2)(ii) and (h)(2)(iii) of
this section, the Secretary may issue a
letter to a foreign institution that
identifies problems with its
administrative capability or compliance
reporting that may require the
compliance audit to be performed at a
higher level of engagement, and may
require the compliance audit to be
submitted annually.
16. Section 668.171 is amended by
revising paragraph (c) to read as follows:
§ 668.171
General.
*
*
*
*
*
(c) Public institutions. (1) The
Secretary considers a domestic public
institution to be financially responsible
if the institution—
(i)(A) Notifies the Secretary that it is
designated as a public institution by the
State, local, or municipal government
entity, tribal authority, or other
government entity that has the legal
authority to make that designation; and
(B) Provides a letter from an official
of that State or other government entity
confirming that the institution is a
public institution; and
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Fmt 4701
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(ii) Is not in violation of any past
performance requirement under
§ 668.174.
(2) The Secretary considers a foreign
public institution to be financially
responsible if the institution—
(i)(A) Notifies the Secretary that it is
designated as a public institution by the
country or other government entity that
has the legal authority to make that
designation; and
(B) Provides documentation from an
official of that country or other
government entity confirming that the
institution is a public institution and is
backed by the full faith and credit of the
country or other government entity; and
(ii) Is not in violation of any past
performance requirement under
§ 668.174.
*
*
*
*
*
PART 682—FEDERAL FAMILY
EDUCATION LOAN (FFEL) PROGRAM
17. The authority citation for part 682
continues to read as follows:
Authority: 20 U.S.C. 1071–1087–2, unless
otherwise noted.
18. Section 682.200 is amended by:
A. Adding the words ‘‘Foreign
institution’’ immediately after ‘‘Federal
Family Education Loan Program
(formerly known as the Guaranteed
Student Loan (GSL) Program’’ in the list
of definitions in paragraph (a)(2).
B. Removing the definition of Foreign
school in paragraph (b).
§ 682.611
[Removed]
19. Section 682.611 is removed and
reserved.
[FR Doc. 2010–17313 Filed 7–19–10; 8:45 am]
BILLING CODE 4000–01–P
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Agencies
[Federal Register Volume 75, Number 138 (Tuesday, July 20, 2010)]
[Proposed Rules]
[Pages 42190-42236]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-17313]
[[Page 42189]]
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Part II
Department of Education
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34 CFR Parts 600, 668, and 682
Foreign Institutions--Federal Student Aid Programs; Proposed Rule
Federal Register / Vol. 75 , No. 138 / Tuesday, July 20, 2010 /
Proposed Rules
[[Page 42190]]
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DEPARTMENT OF EDUCATION
34 CFR Parts 600, 668, and 682
RIN 1840-AD03
[Docket ID ED-2010-OPE-0009]
Foreign Institutions--Federal Student Aid Programs
AGENCY: Office of Postsecondary Education, Department of Education.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Secretary proposes to implement provisions related to the
eligibility of foreign institutions for participation in the Federal
student aid programs that were added to the Higher Education Act of
1965, as amended (HEA), by the Higher Education Opportunity Act of 2008
(HEOA), as well as other provisions related to the eligibility of a
foreign institution by amending the regulations for Institutional
Eligibility Under the Higher Education Act of 1965, the Student
Assistance General Provisions, and the Federal Family Education Loan
(FFEL) Program.
DATES: We must receive your comments on or before August 19, 2010.
ADDRESSES: Submit your comments through the Federal eRulemaking Portal
or via postal mail, commercial delivery, or hand delivery. We will not
accept comments by fax or by e-mail. Please submit your comments only
one time, in order to ensure that we do not receive duplicate copies.
In addition, please include the Docket ID at the top of your comments.
Federal eRulemaking Portal: Go to https://www.regulations.gov to submit your comments electronically. Information
on using Regulations.gov, including instructions for finding a
regulation, submitting a comment, finding a comment, and signing up for
e-mail alerts, is available on the site under ``How To Use
Regulations.gov'' in the Help section.
Postal Mail, Commercial Delivery, or Hand Delivery. If you
mail or deliver your comments about these proposed regulations, address
them to Wendy Macias, U.S. Department of Education, 1990 K Street, NW.,
room 8017, Washington, DC 20006-8502.
Privacy Note: The Department's policy for comments received from
members of the public (including those comments submitted by mail,
commercial delivery, or hand delivery) is to make these submissions
available for public viewing in their entirety on the Federal
eRulemaking Portal at https://www.regulations.gov. Therefore,
commenters should be careful to include in their comments only
information that they wish to make publicly available on the
Internet
.FOR FURTHER INFORMATION CONTACT: For general information or
information related to nonprofit status for foreign institutions,
public foreign institutions and financial responsibility, eligibility
of training programs at foreign institutions, and foreign graduate
medical schools, Wendy Macias. Telephone: (202) 502-7526 or via the
Internet at: Wendy.Macias@ed.gov.
For information related to audited financial statements and
compliance audits, Anthony Gargano. Telephone: (202) 502-7519, or via
the Internet at: Anthony.Gargano@ed.gov.
For information related to the definition of a foreign institution,
Gail McLarnon. Telephone: (202) 219-7048, or via the Internet at:
Gail.McLarnon@ed.gov.
For information related to single legal authorization for groups of
foreign institutions, foreign veterinary schools, foreign nursing
schools and certification of foreign institutions, Brian Smith.
Telephone: (202) 502-7551, or via the Internet at Brian.Smith@ed.gov.
If you use a telecommunications device for the deaf, call the
Federal Relay Service, toll free, at 1-800-877-8339.
Individuals with disabilities can obtain this document in an
accessible format (e.g., braille, large print, audiotape, or computer
diskette) on request to one of the contact persons listed under FOR
FURTHER INFORMATION CONTACT.
SUPPLEMENTARY INFORMATION:
Invitation To Comment
As outlined in the section of this notice entitled Negotiated
Rulemaking, significant public participation, through three public
hearings and three negotiated rulemaking sessions, has occurred in
developing this notice of proposed rulemaking (NPRM). In accordance
with the requirements of the Administrative Procedure Act, we invite
you to submit comments regarding these proposed regulations on or
before August 19, 2010. To ensure that your comments have maximum
effect in developing the final regulations, we urge you to identify
clearly the specific section or sections of the proposed regulations
that each of your comments addresses and to arrange your comments in
the same order as the proposed regulations.
We invite you to assist us in complying with the specific
requirements of Executive Order 12866, including its overall
requirements to assess both the costs and the benefits of the proposed
regulations and feasible alternatives, and to make a reasoned
determination that the benefits of these proposed regulations justify
their costs. Please let us know of any further opportunities we should
take to reduce potential costs or increase potential benefits while
preserving the effective and efficient administration of the programs.
During and after the comment period, you may inspect all public
comments about these proposed regulations by accessing Regulations.gov.
You may also inspect the comments, in person, in room 8031, 1990 K
Street, NW., Washington, DC, between the hours of 8:30 a.m. and 4:00
p.m., Eastern time, Monday through Friday of each week except Federal
holidays.
Assistance to Individuals With Disabilities in Reviewing the Rulemaking
Record
On request, we will supply an appropriate aid, such as a reader or
print magnifier, to an individual with a disability who needs
assistance to review the comments or other documents in the public
rulemaking record for these proposed regulations. If you want to
schedule an appointment for this type of aid, please contact one of the
persons listed under FOR FURTHER INFORMATION CONTACT.
Negotiated Rulemaking
Section 492 of the HEA requires the Secretary, before publishing
certain proposed regulations for programs authorized by Title IV of the
HEA, to obtain public involvement in the development of the proposed
regulations. After obtaining advice and recommendations from the
public, including individuals and representatives of groups involved in
the Federal student financial assistance programs, the Secretary in
many cases must subject the proposed regulations to a negotiated
rulemaking process. Proposed regulations that the Department publishes
on which the negotiators reached consensus must conform to final
agreements resulting from that process unless the Secretary reopens the
process or provides a written explanation to the participants stating
why the Secretary has decided to depart from the agreements. Further
information on the negotiated rulemaking process can be found at:
https://www.ed.gov/policy/highered/leg/hea08/.
On May 26, 2009, the Department published a notice in the Federal
Register (74 FR 24728) announcing our intent to establish two
negotiated rulemaking committees to prepare proposed regulations. One
committee would focus on issues related to
[[Page 42191]]
program integrity (Team I--Program Integrity Issues). A second
committee would focus on issues related to the eligibility of foreign
institutions for participation in the Title IV, HEA programs (Team II--
Foreign School Issues). On September 9, 2009, the Department published
a second notice in the Federal Register (74 FR 46399) listing the
topics the committees were likely to address and requested nominations
of individuals for membership on the committees who could represent the
interests of key stakeholder constituencies on each committee.
Team II--Foreign School Issues (Team II) met to develop proposed
regulations during the months of November 2009, January 2010, and
February 2010.
The Department developed a list of proposed regulatory provisions
based on the provisions contained in the HEOA and from advice and
recommendations submitted by individuals and organizations as testimony
to the Department in a series of three public hearings held on--
June 15-16, 2009, at the Community College of Denver in
Denver, Colorado;
June 18-19, 2009, at the University of Arkansas in Little
Rock, Arkansas;
June 22-23, 2009, at the Community College of Philadelphia
in Pennsylvania.
In addition, the Department accepted written comments on possible
regulatory provisions submitted directly to the Department by
interested parties and organizations. A summary of all comments
received orally and in writing is posted as background material in the
docket for this NPRM. Transcripts of the regional meetings can be
accessed at https://www.ed.gov/policy/highered/leg/hea08/.
Staff within the Department also identified issues for discussion
and negotiation.
At its first meeting, Team II reached agreement on its protocols.
The agenda included the issues identified for the Committee's
consideration.
Team II included the following members:
Harrison Wadsworth, representing the International
Education Council.
Yvonne Oberhollenzer and John Hayton (alternate),
Australian Education International North America, representing the
Embassy of Australia, the Embassy of New Zealand, the British Council
and the German Academic Exchange Service.
Judy Stymest, McGill University, and Alexander Leipziger
(alternate), Canadian Embassy, representing the Canadian Association of
Student Financial Aid Administrators.
Warren Ross and Jerry Thornton (alternate), representing
the International University of Nursing and the University of Medicine
and Health Sciences.
Cynthia Holden, American University of the Caribbean, and
James McIntyre (alternate), McIntyre Law Firm, PLLC, representing
American University of the Caribbean.
Nancy Perri, Ross University School of Medicine, and
William Clohan (alternate), DeVry Inc., representing Ross University
School of Medicine.
Steven Rodger, and Patrick Donnellan (alternate)
representing R3 Education Inc.
Ronald Blumenthal and Rebecca Campoverde (alternate)
representing Kaplan, Inc.
Charles Modica, representing St. George's University.
Betsy Mayotte, American Student Assistance, and Jacqueline
Fairbairn (alternate), Great Lakes Higher Education Guaranty
Corporation, representing guaranty agencies.
David Bergeron and Gail McLarnon (alternate), U.S.
Department of Education, representing the Federal Government.
The Committee's protocols provided that the Committee would operate
by consensus, meaning there must be no dissent by any member. Under the
protocols, if the Committee reaches consensus on all issues, the
Department will use the consensus-based language in the proposed
regulations and Committee members and the organizations whom they
represent will refrain from commenting negatively on the package,
except as provided for in the agreed upon protocols.
During the meetings, Team II reviewed and discussed drafts of
proposed regulations. At the final meeting in February 2010, Team II
reached consensus on the proposed regulations in this document.
More information on the work of Team II can be found at https://www2.ed.gov/policy/highered/reg/hearulemaking/2009/negreg-summerfall.html.
Summary of Proposed Changes
These proposed regulations would implement provisions related to
the eligibility of foreign institutions to participate in the Title IV,
HEA programs including--
Establishing submission requirements for compliance audits
and audited financial statements specific to foreign institutions;
Clarifying and revising the definition of a foreign
institution;
Establishing a definition of nonprofit status specific to
foreign institutions;
Establishing a financial responsibility standard for
foreign public institutions that is comparable to the financial
responsibility standard for domestic public institutions;
Permitting a single legal authorization for groups of
foreign institutions under the purview of a single government entity;
Establishing eligibility of training programs at foreign
institutions;
Establishing institutional eligibility criteria specific
to foreign graduate medical schools, foreign veterinary schools, and
foreign nursing schools; and
Revising the maximum certification period for some foreign
institutions.
Significant Proposed Regulations
We group major issues according to subject, with appropriate
sections of the proposed regulations referenced in parentheses. We
discuss other 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.
Until amended effective July 1, 2010, section 102(a)(1)(C) of the
HEA provided that foreign institutions may participate in the Title IV,
HEA programs ``only for purposes of part B of Title IV.'' Part B of
Title IV contains the statutory requirements for the FFEL Program. With
the enactment of the Health Care and Education Reconciliation Act of
2010 (Pub. L. 111-152) (HCERA) on March 30, 2010, as of July 1, 2010,
there will be no new originations of FFEL Program loans. All new
originations with a first disbursement on or after July 1, 2010, will
be made via the William D. Ford Federal Direct Loan (Direct Loan)
Program, including loans for students attending foreign institutions.
At the time these proposed regulations were negotiated, it was unclear
whether the proposed legislation that would end the FFEL Program would
be enacted. As a result, these proposed regulations reference
participation in the FFEL Program, except as noted. When the Department
publishes final regulations to implement these proposed regulations, it
will correct those references in the regulations resulting from these
proposed regulations to indicate participation in the Direct Loan
Program, rather than the FFEL Program. Any substantive or technical
changes to the Title IV, HEA program regulations
[[Page 42192]]
resulting from the HCERA will be addressed through future rulemaking
efforts. For more information about the transition of foreign
institutions to the Direct Loan Program, contact the Office of Federal
Student Aid's Foreign Schools Team at fsa.foreign.schools@ed.gov or
(202) 377-3168.
Part 600 Institutional Eligibility Under the Higher Education Act
of 1965, as Amended.
Nonprofit Status for Foreign Institutions (Sec. 600.2)
Statute: Section 102(a)(2)(A) of the HEA directs the Secretary to
establish criteria by regulation for the determination that foreign
institutions are comparable to an institution of higher education as
defined in section 101 of the HEA--which specifies that an institution
of higher education must be a public or other nonprofit institution--
except that foreign graduate medical schools, foreign veterinary
schools, and foreign nursing schools may be for-profit. Sections
101(a)(4) and 101(b)(2) of the HEA identify nonprofit institutions as
one type of institution that may be an institution of higher education
and, therefore, may be eligible to apply to participate in the Title
IV, HEA programs.
Current Regulations: Section 600.54 provides that, to participate
in the Title IV, HEA programs, a foreign institution must be a public
or private nonprofit educational institution. Foreign graduate medical
schools, foreign veterinary schools, and foreign nursing schools are
excepted from this requirement by section 102(a)(2)(A) of the HEA.
Section 600.2 defines a nonprofit institution as an institution that--
Is owned and operated by one or more nonprofit
corporations or associations, no part of the net earnings of which
benefits any private shareholder or individual;
Is legally authorized to operate as a nonprofit
organization by each State in which it is physically located; and
Is determined by the U.S. Internal Revenue Service (IRS)
to be an organization to which contributions are tax-deductible in
accordance with section 501(c)(3) of the Internal Revenue Code (26
U.S.C. 501(c)(3)).
Proposed Regulations: Under proposed Sec. 600.2, a new paragraph
(2) of the definition of a nonprofit institution would provide that if
a recognized tax authority of a foreign institution's home country is
recognized by the Secretary for purposes of making determinations of an
institution's nonprofit status for Title IV, HEA purposes, the
Secretary would automatically accept that tax authority's determination
of nonprofit educational status for any institution located in that
country. If a recognized tax authority of the institution's home
country is not recognized by the Secretary for purposes of making
determinations of an institution's nonprofit status for Title IV, HEA
program purposes, a foreign institution would have to demonstrate to
the satisfaction of the Secretary that it is a nonprofit educational
institution. The proposed regulations would also make clear that a
nonprofit foreign institution may not be owned by a for profit entity,
directly or indirectly. A foreign institution that did not meet this
definition of a nonprofit foreign institution would not be eligible to
participate in the Title IV, HEA programs unless it was a medical,
veterinary, or nursing school.
Reasons: As foreign institutions must be nonprofit institutions to
participate in the Title IV, HEA programs, unless they are medical,
veterinary, or nursing schools, the Department believes it is necessary
to delineate in regulations the requirements for demonstrating
nonprofit status for foreign institutions. Some non-Federal negotiators
originally suggested that the Department should always defer to any
determination by a foreign country that an institution is nonprofit.
The Department pointed out that a domestic institution must be
determined by the U.S. IRS to be a nonprofit organization in order to
be eligible as a nonprofit institution for participation in the Title
IV, HEA programs. The Department also noted that certain countries may
not have standards for the determination of nonprofit status that are
comparable to those used in the United States, and may not ensure that
the institution's net earnings do not benefit any private shareholder
or individual. Therefore, to make the proposed regulations as
comparable as possible to those applicable to domestic institutions,
the Department proposed, and the Committee agreed, that a determination
that an institution is nonprofit by an entity in the institution's
foreign country would qualify an institution as nonprofit only if the
determination is made by a recognized tax authority of the country, and
the Secretary has recognized that tax authority as one that can make a
determination using criteria that are similar to those used by the IRS.
In response to non-Federal negotiators pointing out that some countries
may have more than one recognized entity for the purpose of making
determinations of the nonprofit status of its institutions, the
Department made clear during the negotiations that under the language
proposed, the Secretary may recognize more than one tax authority in a
country. Some non-Federal negotiators suggested that the Department
allow a determination of nonprofit status to be made by an entity other
than a recognized tax authority of the country. The Department noted
that, as the proposed language was written, information submitted by
such entities would be taken into account by the Department; however,
this would be done as part of an individual determination of the
eligibility of an institution. The Department believes that the only
entities it should recognize across the board for making determinations
of nonprofit status are those that are responsible for administering
the country's tax laws.
Definition of a Foreign Institution (Sec. Sec. 600.51, 600.52, 600.54,
682.200 and 682.611)
Statute: Section 102(a)(1)(C) of the HEA provides that an
``institution of higher education,'' only for the purposes of part B of
Title IV, includes an institution outside the United States that is
comparable to an institution of higher education as that term is
defined in section 101 of the HEA and is an institution that has been
approved by the Secretary. Section 102(a)(2)(A) of the HEA requires the
Secretary to establish regulatory criteria for the approval of such
institutions and for the determination that they are comparable.
Current Regulations: Subpart E of 34 CFR part 600 (Sec. Sec.
600.51 through 600.57) contains the eligibility requirements that a
foreign institution must meet to participate in the FFEL Program.
Current Sec. 600.51 explains the purpose and scope of subpart E and
provides that a foreign institution is eligible to participate in the
FFEL Program if it is comparable to an eligible institution of higher
education located in the United States and has been approved by the
Secretary. Implementing a statutory provision in section 481(b)(4) of
the HEA, current Sec. 600.51 also provides that a program offered by a
foreign school through any use of a telecommunications or
correspondence course or through a direct assessment program is not an
eligible program.
Current Sec. 600.52 contains the definitions associated with
subpart E and defines foreign institution as an institution that is not
located in a State. State is defined in Sec. 600.2 as a State of the
Union, American Samoa, the Commonwealth of Puerto Rico, the District of
Columbia, Guam, the Virgin Islands, the Commonwealth of the
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Northern Mariana Islands, the Republic of the Marshall Islands, the
Federal States of Micronesia, and the Republic of Palau.
Current Sec. 600.54 contains the criteria the Secretary uses to
determine whether a foreign institution is eligible to apply to
participate in the FFEL Program. A public or private nonprofit foreign
institution may apply to participate in the FFEL Program if the
institution--
Admits as regular students only those students with a
secondary school completion credential or its recognized equivalent;
Is legally authorized by an appropriate authority to
provide an eligible program beyond the secondary school level in the
country in which the institution is located; and
Provides eligible programs for which the institution is
legally authorized to award the equivalent of an associate,
baccalaureate, graduate, or professional degree awarded in the United
States; provides an eligible program that is at least a two-academic
year program acceptable for full credit toward the equivalent of a
baccalaureate degree awarded in the United States; or, provides an
eligible program that is equivalent to at least a one-academic year
training program in the United States that leads to a certificate,
degree, or other recognized educational credential and prepares
students for gainful employment in a recognized occupation.
Currently, Sec. Sec. 668.2 and 682.200 do not contain a reference
to the definition of foreign institution in the list of definitions set
forth in 34 CFR part 600.
Lastly, current Sec. 682.611 provides that a foreign school is
required to comply with the provisions of part 682 unless the
regulations or other official Department of Education publications or
documents state otherwise.
Proposed Regulations: The proposed regulations would remove and
reserve Sec. 682.611, remove the definition of foreign school from
Sec. 682.200(b)(1), and add references to Sec. Sec. 668.2(a)(2) and
682.200(a)(2) specifying that the definition of foreign institution is
contained in regulations for Institutional Eligibility under the HEA,
as amended, 34 CFR part 600. These proposed revisions would consolidate
the requirements and definitions related to the eligibility of foreign
institutions to apply for Title IV, HEA program participation in
subpart E of 34 CFR part 600. The proposed regulations would revise
Sec. 600.51(c) to incorporate the provisions of removed Sec. 682.611,
i.e., that a foreign institution must comply with all requirements for
eligible and participating institutions except to the extent those
provisions are inconsistent with the HEA, 34 CFR part 600, or other
regulatory provisions specific to foreign institutions. Proposed Sec.
600.51(c) would also exempt foreign institutions from requirements that
the Secretary identifies through a notice in the Federal Register.
The proposed regulations would amend Sec. 600.52 to include a
detailed definition of foreign institution. Under the definition
proposed, foreign institution would mean, for the purposes of students
who receive Title IV, HEA program aid, an institution that--
Is not located in a State;
Except with respect to clinical training offered at
foreign graduate medical, veterinary, and nursing schools, has no U.S.
locations;
Has no written arrangements, within the meaning of Sec.
668.5, with institutions or organizations located in the U.S. for
students at foreign institutions to take a portion of the program from
institutions located in the U.S.;
Does not permit students to enroll in any course offered
by the foreign institution in the U.S. except for independent research
under very limited circumstances;
Is legally authorized by the education ministry, council,
or equivalent agency of its home country to provide an education
program beyond the secondary level;
Awards degrees, certificates, or other recognized
educational credentials in accordance with Sec. 600.54(d) that are
officially recognized by the institution's home country; and
For any program designed to prepare the student for
employment in a recognized occupation, provides a credential that
satisfies the educational requirements in the institution's home
country for entry into that occupation, including licensure; and
satisfies the educational requirements for entry into that occupation
in the U.S., including licensure.
The proposed definition of foreign institution would also require
that if an educational enterprise enrolls students both within a State
and outside a State, and the number of students who would be eligible
to receive Title IV, HEA program funds attending locations outside a
State is at least twice the number of students enrolled within a State,
the locations outside a State must apply to participate as one or more
foreign institutions and must meet all requirements of the definition
of foreign institution and other requirements of 34 CFR part 600. Under
the proposed regulations, educational enterprise would mean an
enterprise consisting of two or more locations offering all or part of
an educational program that are directly or indirectly under common
control.
The proposed regulations would amend the threshold criteria in
Sec. 600.54 for determining whether a foreign institution is
comparable to a domestic ``institution of higher education'' as that
term is defined in the HEA, and eligible for Title IV, HEA program
participation. Proposed Sec. 600.54(a) states that to be eligible, a
foreign institution that is not a freestanding foreign graduate
medical, veterinary, or nursing school must be a public or private
nonprofit educational institution (i.e., a for-profit foreign
institution may participate only if it is a freestanding foreign
graduate medical, veterinary, or nursing school). Proposed Sec.
600.54(c)(1) would prohibit an eligible foreign institution from
entering into a written arrangement under which an ineligible
institution or organization provides any portion of one or more of the
eligible foreign institution's programs. Written arrangements would not
include affiliation agreements for the provision of clinical training
for foreign graduate medical, veterinary, and nursing schools under
this proposed change. Proposed Sec. 600.54(c)(2) would require that an
additional location of a foreign institution must separately meet the
proposed definition of foreign institution in Sec. 600.52 if it is
located outside of the country in which the main campus is located,
except for clinical locations of foreign graduate medical, veterinary,
and nursing schools, as provided for in Sec. 600.55(h)(1), Sec.
600.56(b), Sec. 600.57(a)(2), Sec. 600.55(h)(3), and except for
locations at which independent research is conducted as part of a
doctoral program as provided for in the definition of foreign
institution in Sec. 600.52. Under proposed Sec. 600.52(c)(2), an
additional location of a foreign institution would also have to meet
separately the definition of foreign institution, even if that location
is within the same country as the main campus, if it is not covered by
the legal authorization of the main campus. Lastly, proposed Sec.
600.54(e) would prohibit any portion of an eligible for-profit foreign
graduate medical or veterinary program from being offered at what would
be an undergraduate level in the U.S. and would deny Title IV, HEA
program eligibility to any joint degree programs offered at for-profit
foreign graduate medical, veterinary, or nursing schools.
Reasons: Proposed Sec. Sec. 600.52 and 600.54, revising and adding
detail to the
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definition of foreign institution, are necessary to ensure that a
foreign institution is comparable to institutions in the United States,
in accordance with section 102(a)(1)(C) of the HEA, before the foreign
institution is allowed to apply for Title IV, HEA program
participation. The Department is concerned that a foreign institution
that is not comparable to a domestic institution, especially in terms
of the quality of its educational programs, may misuse Federal funds to
the detriment of its students who may have to borrow heavily in order
to attend the foreign institution. The proposed regulations also more
fully implement the scheme of the HEA, which distinguishes between
foreign and domestic institutions and includes provisions unique to
each. For example, these regulations would prevent a domestic
institution from claiming to be a foreign institution by virtue of the
fact that it has established an offshore location, thereby avoiding the
requirements applied to domestic institutions such as recognized
accreditation, but that sends its students to the United States for the
majority of the required coursework.
During the first round of negotiated rulemaking, the Federal
negotiator explained the need for a more detailed definition of foreign
institution and sought comments and feedback from the non-Federal
negotiators. Several negotiators urged the Department to define foreign
institution in a way that ensures quality control through high academic
standards and avoids abuse of the Title IV, HEA programs. The non-
Federal negotiators suggested requiring that foreign institutions be
subject to accreditation by accreditors recognized by the Department as
a means of ensuring comparability with domestic institutions. The
Federal negotiator explained that the Department does not recognize
U.S. accreditors for accreditation of institutions outside the United
States. In light of this fact, the non-Federal negotiators suggested a
requirement that foreign institutions be ``legally authorized'' by an
appropriate authority in the country in which the institution is
located, such as a Ministry of Education or other governmental agency.
Other non-Federal negotiators also urged the Department to be flexible
in this area because such authority could reside in different branches
of government depending on the country. Recognizing that there might be
pressure on some foreign governments to set minimal standards because
educational institutions are an important part of their economy,
several non-Federal negotiators suggested that the Department require
foreign countries to recognize the degrees and licenses offered by a
foreign institution.
In the second round of negotiations, the Department responded with
draft language that addressed many of the non-Federal negotiators'
suggestions from the first round of discussion. However, the
Department's inclusion of provisions prohibiting foreign institutions
from entering into written arrangements with institutions located in
the United States and preventing foreign institution students from
engaging in courses, research, work, and other pursuits within the
United States drew objections from the non-Federal negotiators. The
Federal negotiator explained that these provisions addressed abuses
witnessed by the Department whereby an institution sets up an offshore
campus to claim foreign institution status and thus avoids domestic
requirements even though the institution is, for all intents and
purposes, a domestic institution. The non-Federal negotiators felt the
language prohibiting students from engaging in pursuits within the U.S.
was too broad and urged the Department to make exceptions for research
conducted in the United States by PhD students. The non-Federal
negotiators also requested that the Department clarify what it meant by
``written arrangements'' in the provision that would prohibit foreign
institutions from having written arrangements with U.S. institutions or
organizations, noting that many foreign institutions have multiple
types of written arrangements with institutions in the U.S.
Based on comments received from the non-Federal negotiators at the
second round of negotiated rulemaking, the Department returned to the
last round with language that added a cross-reference to Sec. 668.5 in
draft paragraph (1)(iii) of the definition of foreign institution to
clarify the meaning of written arrangements. The proposed language also
added an exception in draft paragraph (1)(iv) of the definition of
foreign institution for independent research done under certain
circumstances during the dissertation phase of a doctoral program from
the general prohibition on enrolling students in courses offered by a
foreign institution in the United States. In draft paragraph (2) of the
definition of foreign institution, the Department sought to further
distinguish between foreign and domestic institutions by prohibiting
foreign locations of an educational enterprise from being considered
additional locations of a domestic location of the educational
enterprise if the enterprise has at least twice as many students
enrolled in foreign locations as those enrolled in domestic locations.
This provision would prevent a predominantly foreign educational
enterprise from establishing a minor presence within the United States
for the purpose of circumventing the statutory provision limiting
foreign institution participation to the Direct Loan program (or,
before July 1, 2010, to the FFEL program), so as to provide other Title
IV grant, loan, and work-study funds to students at what are really
foreign institutions. In addition, in response to requests by non-
Federal negotiators, the Department added clarity to the paragraph by
describing an ``educational enterprise'' as an entity that consists of
two or more locations offering all or part of an educational program
that are directly or indirectly under common ownership. Locations are
considered to be ``indirectly'' under common ownership if, at any
level, the locations are owned and controlled by the same parties, or
related parties, within the meaning of Sec. 600.31. In draft Sec.
600.54(c)(1), the Department clarified that written arrangements do not
include affiliation agreements for the provision of clinical training.
The non-Federal negotiators were comfortable with the majority of
the Department's proposed language but several non-Federal negotiators
continued to raise concerns about the proposed language prohibiting
U.S. locations of foreign institutions and written arrangements with
institutions located in the United States. The Federal negotiator
stated that foreign institutions are free to establish U.S. locations
and have written arrangements with institutions located in the United
States, but that such locations and institutions would need to be
separately certified and meet the requirements applicable to domestic
institutions in order for U.S. students attending them to receive Title
IV, HEA program funds. In this regard, the Department does not want a
foreign institution to send its U.S. students to a U.S. location of a
foreign institution, or to a U.S. institution with which it has an
agreement for their training, because students enrolled in a foreign
institution are only eligible for Direct Loan program (or, before July
1, 2010, FFEL program) loans. Instead the Department wants U.S.
students attending postsecondary institutions in the United States to
be eligible for the full range of Title IV, HEA program funds available
to domestic institutions. The Federal negotiator noted that it would be
acceptable for a U.S. student to transfer officially from a foreign
institution to an
[[Page 42195]]
institution in the U.S. that would be separately certified as a
domestic institution. The non-Federal negotiators asked the Department
to clarify that the proposed definition of foreign institution would
apply only for the purposes of students who receive Title IV, HEA
program funds. For example, a foreign institution would not be
prohibited from having U.S. locations, but the locations would not be
recognized as part of the institution for Title IV purposes, so no
student attending the location, or enrolled in a program designed to be
offered there in whole or in part, would be eligible to receive Title
IV, HEA program funds. Similarly, a foreign institution may also
maintain agreements with a U.S. institution or organization so that
students of the foreign institution may continue to engage in exchange
opportunities offered by U.S. institutions, but the agreement would not
be recognized for Title IV, HEA purposes, so no student attending the
U.S. institution, or enrolled in a program designed to be offered there
in whole or in part, would be eligible to receive Title IV, HEA program
funds. The Department noted that the Title IV, HEA program regulations
are always applicable for Title IV, HEA program purposes only, but
agreed to add the clarification.
Certification of Foreign Institutions (Sec. Sec. 600.52 and 668.13)
Statute: Section 102(a)(5) of the HEA requires the Secretary to
certify an institution's qualifications as an institution of higher
education in accordance with subpart 3, part H of Title IV. Under
section 498(g)(1) of the HEA, the Secretary is authorized to certify an
institution's eligibility for purposes of participating in the Title
IV, HEA programs for a period of up to six years.
Current Regulations: Section 600.52 of the Institutional
Eligibility regulations defines foreign graduate medical school as a
foreign institution that is listed in the most current edition of the
World Directory of Medical Schools. Foreign nursing school and foreign
veterinary school are not currently defined in Sec. 600.52.
Section 668.13(b)(1) of the General Provisions regulations
specifies that an institution's period of participation expires six
years after the date of certification, except that the Secretary may
specify a shorter period.
Proposed Regulations: The proposed regulations would modify the
definition of foreign graduate medical school and add definitions for
the terms foreign nursing school and foreign veterinary school in Sec.
600.52. In addition, the proposed regulations would modify the
regulations governing certification procedures in Sec. 668.13.
The proposed definition of foreign graduate medical school in Sec.
600.52 would be modified by removing the reference to the World
Directory of Medical Schools (see the discussion under Foreign Graduate
Medical Schools below) and replacing it with language specifying that a
foreign graduate medical school is a foreign institution or component
of a foreign institution that has, as its sole mission, providing an
educational program that leads to a degree of medical doctor, doctor of
osteopathy, or its equivalent. The proposed definition would clarify
that references to a foreign graduate medical school as
``freestanding'' pertain solely to a school that qualifies by itself as
a foreign institution, and not to a school that is a component of a
larger university that qualifies as a foreign institution. Similar
language is included in the proposed definitions for the terms foreign
nursing school and foreign veterinary school.
The proposed regulations would amend Sec. 668.13(b)(1) to specify
that the period of participation for a private, for-profit foreign
institution expires three years after the date the institution is
certified by the Secretary, rather than the current six years.
Reasons: The National Committee on Foreign Medical Education and
Accreditation (NCFMEA) recommended that a foreign graduate medical
school that is a component of a larger foreign institution be certified
as a separate institution of higher education from the larger
institution (Recommendation 14(a)). The Department initially proposed
implementing this recommendation and applying it to foreign nursing and
veterinary schools as well. Under that proposal, a graduate medical,
nursing, or veterinary school that is part of a larger institution
would be given its own OPEID number. Cohort default rates for the
graduate medical, nursing, or veterinary school would be calculated
independently of the cohort default rate for the larger foreign
institution.
After discussions with the non-Federal negotiators regarding the
administrative burdens that separate certification of non-freestanding
graduate medical, veterinary, and nursing schools would entail, the
Department decided to withdraw this proposal. Instead, the Department
will track such graduate medical, veterinary, and nursing schools
separately from the larger institution. To facilitate this, the
Department proposed regulations that clarify the distinction between
``freestanding'' graduate medical, veterinary, and nursing schools and
graduate medical, veterinary, and nursing schools that are components
of a larger foreign institution.
The NCFMEA also recommended that all foreign graduate medical
schools be certified for a period of no more than three years
(Recommendation 14(b)). The Department initially proposed reducing the
certification period for all foreign institutions from six years to
three years to provide the Department with more oversight over foreign
institutions. Non-Federal negotiators noted that the Department's
proposal to decrease the certification period would be administratively
burdensome for institutions. Some non-Federal negotiators felt that the
increased administrative burden might lead foreign institutions that
enroll small numbers of Title IV borrowers to reconsider participating
in the Title IV, HEA programs. Non-Federal negotiators also noted that
for-profit foreign institutions might have difficulty raising capital
based on three-year certifications rather than six-year certifications.
Non-Federal negotiators also contended that the reduction in the
certification period would not provide much benefit to the Department.
They felt that the relevant information for an institution would not be
likely to change significantly in three years. The non-Federal
negotiators also pointed out that this change would increase the
workload for the Department staff who review and approve institutional
eligibility applications for foreign institutions.
The Department continues to believe that reducing the certification
period will give the Department better oversight over foreign
institutions, particularly over institutions that enroll large numbers
of Title IV borrowers. However, the Department acknowledges that
decreasing the certification period from six to three years would be
unnecessary for certain types of institutions. Therefore, the
Department revised its proposal by limiting the three-year
certification period to private, for-profit medical, veterinary, and
nursing schools. These institutions, among all participating foreign
institutions, continue to receive by far the largest amounts of Title
IV, HEA program funds. Under the revised proposal, public and nonprofit
institutions would continue to be recertified every six years.
[[Page 42196]]
Single Legal Authorization for Groups of Foreign Institutions (Sec.
600.54)
Statute: Section 101(a)(2) of the HEA requires a domestic
institution of higher education to be legally authorized by the State
in which it is located to provide a program of postsecondary education.
Section 102(a)(2)(A) of the HEA requires the Secretary, through
regulation, to develop eligibility criteria for foreign institutions of
higher education that are comparable to the eligibility criteria for
U.S. institutions of higher education. Section 498(a) and (b) of the
HEA require the Secretary to determine whether an institution is
legally authorized and to prepare and prescribe an application form for
purposes of determining that the requirements of eligibility,
accreditation, financial responsibility, and administrative capability
are met.
Current Regulations: Section 600.54(b) of the current regulations
requires a foreign institution to be legally authorized by an
appropriate authority to provide postsecondary education in the country
where the institution is located.
Proposed Regulations: Proposed Sec. 600.54(f) would provide three
different methods for a foreign institution to prove that it is legally
authorized to provide postsecondary education in the country where the
institution is located. The documentation from a foreign country's
education ministry, council, or equivalent agency may either be--
A single legal authorization that covers all eligible
foreign institutions in the country;
A single legal authorization that covers all eligible
foreign institutions in a jurisdiction within the country; or
Separate legal authorizations for each eligible foreign
institution in the country.
Reasons: To ease administrative burden for foreign institutions,
the Department sought to determine if compliance with any of the
foreign institution eligibility criteria could be demonstrated at a
nationwide level, for all eligible institutions within a country,
rather than at the individual institution level. After discussions with
the non-Federal negotiators and our own internal review of the Title IV
institutional eligibility criteria, the Department determined that the
requirement for proof of legal authorization to provide postsecondary
education could be provided this way.
Non-Federal negotiators were generally supportive of the
Department's proposal. However, they did raise some concerns. Some non-
Federal negotiators felt that institutions should not have to rely on a
national government to develop a nationwide list of institutions
legally authorized to provide postsecondary education in the country.
They contended that some national governments might not have the
resources to develop and maintain such a list. The non-Federal
negotiators argued that for institutions in some countries, it might be
cumbersome and time-consuming to obtain such a list from the national
government. This would have the effect of slowing down the eligibility
certification processes for some foreign institutions. These non-
Federal negotiators recommended that institutions retain the option of
providing the Department with their own individual legal
authorizations, rather than relying on a nationwide list.
Other non-Federal negotiators believed that it was too constricting
to limit the authority for developing the list of institutions to an
agency of the national government. They noted that in some countries,
such as Canada, legal authorization to provide postsecondary education
is provided by the provincial governments, not by the national
government. These non-Federal negotiators requested that the Department
make provision for legal authorizations from government entities at a
provincial level, not at the national level.
The Department agreed with these recommendations. In addition to
allowing proof of legal authorization to be provided on a nationwide
basis, the proposed regulations allow for proof of legal authorization
to be provided for all eligible institutions in a jurisdiction within
the country, and continue to allow proof of legal authorization to be
provided separately for each eligible institution in a country.
Eligibility of Training Programs at Foreign Institutions (Sec. 600.54)
Statute: Section 101(b)(1) of the HEA provides, in part, that one
type of educational program that a Title IV ``institution of higher
education'' may provide to be eligible to apply to participate in the
Title IV, HEA programs is a training program of at least one year that
prepares students for gainful employment in a recognized occupation.
Section 102(a)(2)(A) provides for participation in the Title IV, HEA
programs by entities that are comparable to such institutions under
regulations prescribed by the Secretary.
Current Regulations: Section 600.54 provides that, in order to be
eligible to apply to participate in the Title IV, HEA programs, a
foreign institution must provide an eligible educational program that
leads to a degree that is equivalent to a U.S. degree, or be at least a
two-academic-year program acceptable for full credit toward the
equivalent of a U.S. baccalaureate degree, or be equivalent to at least
a one-academic-year training program that leads to a certificate,
degree, or other recognized educational credential and prepares
students for gainful employment in a recognized occupation.
Section 668.3 defines an academic year as--
For a program offered in credit hours, a minimum of 30
weeks of instructional time and, for an undergraduate program, an
amount of instructional time whereby a full-time student is expected to
complete at least 24 semester or trimester credit hours or 36 quarter
credit hours; or
For a program offered in clock hours, a minimum of 26
weeks of instructional time and, for an undergraduate program, an
amount of instructional time whereby a full-time student is expected to
complete at least 900 clock hours.
Proposed Regulations: Under the proposed regulations, a foreign
institution would have to demonstrate to the satisfaction of the
Secretary (who would make program-by-program determinations of
comparability) that the amount of academic work required by a program
it seeks to qualify as eligible is at least a one-academic-year
training program that is equivalent to--
For a program offered in credit hours, a minimum of 30
weeks of instructional time and, for an undergraduate program, an
amount of instructional time whereby a full-time student is expected to
complete at least 24 semester or trimester credit hours or 36 quarter
credit hours; or
For a program offered in clock hours, a minimum of 26
weeks of instructional time and, for an undergraduate program, an
amount of instructional time whereby a full-time student is expected to
complete at least 900 clock hours.
Reasons: The Department believes the proposed regulations are
necessary because many foreign institutions use educational
measurements other than conventional U.S. semester, trimester, quarter
credits and clock-hours. As the definition of an academic year--the
program length measurement used here--specifically references these
U.S. measurements, it is necessary to make some sort of comparability
determination in order to determine the eligibility of these programs
at foreign institutions, and the eligibility of those foreign
institutions that do not offer any other type of Title IV, HEA eligible
program. The non-Federal negotiators
[[Page 42197]]
provided the Department with information regarding the definition of
non-degree programs by different countries, units of measurement for
programs in other countries, and evaluation and comparability
determinations made by private entities. The information provided
consistently indicates that the assignment of credits or other measures
of academic work by foreign institutions vary greatly. As a result,
under the proposed regulations, the Secretary would make determinations
of comparability on a program-by-program basis, based on information
provided by a foreign institution to demonstrate that the amount of
academic work required by a program it seeks to qualify as eligible is
comparable to at least a one-academic-year training program that is
equivalent to the academic work required for eligibility of these
programs at domestic institutions.
Two of the issues under negotiation by the Team I negotiating
committee (Program Integrity Issues)--the definition of what it means
to ``provide gainful employment in a recognized occupation'' and the
definition of a credit hour for Title IV, HEA program purposes--could
impact the eligibility of all programs, offered at foreign and domestic
institutions, that are eligible because they are at least one academic
year in length and prepare students for gainful employment in a
recognized occupation. These Team I issues are distinct from the issue
negotiated here by Team II--i.e., the translation of credits or other
measures of academic work by foreign institutions for purposes of
determining program length (a measure of both weeks and credit hours).
Foreign Graduate Medical Schools (Sec. Sec. 600.20, 600.21, 600.52,
600.55)
Statute: Section 102(a)(2)(A) of the HEA provides that the
Secretary shall establish criteria by regulation for the approval of
institutions outside the United States and for the determination that
such institutions are comparable to an ``institution of higher
education'' as defined in section 101 of the HEA, except that a foreign
graduate medical, veterinary or nursing school may be for-profit. That
section also provides that, except for foreign graduate medical schools
that had a clinical training program that was approved by a State as of
January 1, 1992, at least 60 percent of students and graduates must not
be persons described in section 484(a)(5) of the HEA in the year
preceding the year for which students are seeking Title IV, HEA program
loans, and that at least 60 percent of students and graduates taking
the United States Medical Licensing Examination (USMLE) administered by
the Educational Commission for Foreign Medical Graduates (ECFMG) must
have received a passing score in that preceding year.
Effective July 1, 2010, the HEOA amended sections 102(a)(2)(A) and
(B) of the HEA to (1) increase the pass rate threshold for the USMLE
from 60 percent to 75 percent; (2) allow a foreign graduate medical
school that was eligible based on having a clinical training program
approved by a State as of July 1, 1992, to continue to be eligible as
long as it has continuously operated a clinical training program in at
least one State that approves the program; and (3) allow for the
promulgation, through regulations, of new eligibility criteria for
foreign graduate medical schools that have a clinical training program
approved by a State prior to January 1, 2008, but that would not meet
the otherwise--applicable requirement that at least 60 percent of their
students and graduates not be persons described in section 484(a)(5) of
the HEA in the year preceding the year for which students are seeking
Title IV, HEA program loans. Section 102(a)(2)(B)(iii)(IV)(aa) of the
HEA provides that such new eligibility criteria must be based on the
recommendations contained in a report to be prepared by August 14,
2009, by the NCFMEA. The NCFMEA is a panel of medical experts that
evaluates the medical school accrediting agency standards used in the
foreign country where medical education is provided to determine
comparability to the standards of accreditation applied to medical
schools in the United States. The statute required the NCFMEA's report
to address: entrance requirements; retention and graduation rates;
successful placement of students in U.S. medical residency programs;
passage rate of students on the USMLE; the assessment of program
quality by State medical boards; the extent to which graduates would be
unable to practice medicine in one or more States, based on the
judgment of a State medical board; any areas recommended by the
Comptroller General (i.e., head of the Government Accountability Office
(GAO)) under section 1101 of the HEOA; and any additional areas the
Secretary may require. The statute provides that the regulations must,
at a minimum, require a USMLE pass rate of at least 75 percent.
The HEOA also provides that the Department may issue an NPRM
addressing the new eligibility criteria for foreign graduate medical
schools no earlier than 180 days after the submission of the report,
and may issue final regulations no earlier than one year after the
issuance of the NPRM.
Current Regulations: Neither Sec. 600.20, which addresses the
application procedures for establishing, reestablishing, maintaining,
or expanding institutional eligibility and certification, nor Sec.
600.21, which addresses when and how an institution must update
application information, currently include any provisions specific to
foreign graduate medical schools. Section 600.52 defines a foreign
graduate medical school as a foreign institution that qualifies to be
listed in, and is listed as a medical school in, the most current
edition of the World Directory of Medical Schools published by the
World Health Organization (WHO). The regulations do not currently
include a definition of clinical training, the NCFMEA, or a post-
baccalaureate/equivalent medical program. Section 600.55(a)(5) contains
the additional criteria for determining whether a foreign graduate
medical school is eligible to apply to participate in the Title IV, HEA
programs. Currently, a foreign graduate medical school generally must,
in addition to satisfying the criteria in Sec. 600.54 for determining
a foreign institution's eligibility (except the criterion that the
institution be public or private nonprofit), satisfy all of the
following criteria:
Provide, and require its students to complete a program of
clinical and classroom medical instruction of not less than 32 months
that is supervised closely by members of the school's faculty and that
is provided either (1) Outside the United States, in facilities
adequately equipped and staffed to afford students comprehensive
clinical and classroom medical instruction; or (2) In the United
States, through a training program for foreign medical students that
has been approved by all medical licensing boards and evaluating bodies
whose views are considered relevant by the Secretary.
Have graduated classes during each of the two twelve-month
periods immediately preceding the date the Secretary receives the
school's request for an eligibility determination.
Employ only those faculty members whose academic
credentials are the equivalent of credentials required of faculty
members teaching the same or similar courses at medical schools in the
United States;
Be approved by an accrediting body (1) that is legally
authorized to evaluate the quality of graduate medical school
educational programs and facilities in the country where the school is
located; and (2) whose standards of accreditation
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of graduate medical schools have been evaluated by the advisory panel
of medical experts established by the Secretary and have been
determined to be comparable to standards of accreditation applied to
medical schools in the United States.
In addition, current regulations provide that foreign graduate
medical schools that do not have a clinical training program that has
been continuously approved by a State since January 1, 1992, must--
During the academic year preceding the year for which any
of the school's students seeks a FFEL program loan, have at least 60
percent of those enrolled as full-time regular students in the school
and at least 60 percent of the school's most recent graduating class be
persons who did not meet the citizenship and residency criteria
contained in section 484(a)(5) of the HEA, 20 U.S.C. 1091(a)(5); and
For a foreign graduate medical school outside of Canada,
have at least 60 percent of the school's students and graduates who
took any step of the USMLE administered by the ECFMG (including the
ECFMG English test) in the year preceding the year for which any of the
school's students seeks a FFEL program loan to have received passing
scores on the exams. In performing the calculation, a foreign graduate
medical school must count as a graduate each person who graduated from
the school during the three years preceding the year for which the
calculation is performed.
Proposed Regulations: Location of a graduate medical education
program, affiliation agreements, and application and notification
procedures for foreign graduate medical schools
Section 600.55(h)(2) of the proposed regulations would provide that
no portion of the medical education program offered to U.S. students by
a foreign graduate medical school, other than the clinical training
portion of the program, would be allowed to be located outside of the
country in which the main campus of the school is located.
For clinical training sites located outside the United States,
proposed Sec. 600.55(h)(1) would require that, with two exceptions,
all portions of the medical education program offered to U.S. students
must be located in a country whose medical school accrediting standards
are comparable to standards used in the United States, as determined by
the NCFMEA. Under proposed Sec. 600.55(h)(3), with the same two
exceptions, if any portion of the clinical training portion of the
educational program is located in an approved comparable foreign
country other than the country in which the main campus is located, the
institution's medical accrediting agency must have conducted an on-site
evaluation and specifically approved the clinical training sites in
order for students attending the site to be eligible to borrow Title
IV, HEA program funds. Furthermore, clinical instruction offered at a
site in a foreign NCFMEA-approved country must be offered in
conjunction with medical educational programs offered to students
enrolled in accredited medical schools located in that approved foreign
country. The two exceptions are that these criteria would not have to
be met if the clinical training location is included in the
accreditation of a medical program accredited by the Liaison Committee
on Medical Education (LCME), or if no individual student takes more
than two electives at the cl