Foreign Institutions-Federal Student Aid Programs, 67170-67200 [2010-26796]

Agencies

• DEPARTMENT OF EDUCATION

[Federal Register Volume 75, Number 210 (Monday, November 1, 2010)]
[Rules and Regulations]
[Pages 67170-67200]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-26796]



[[Page 67169]]

-----------------------------------------------------------------------

Part II





Department of Education





-----------------------------------------------------------------------



34 CFR Parts 600, 668, 682, et al.



Foreign Institutions--Federal Student Aid Programs; Final Rule

Federal Register / Vol. 75 , No. 210 / Monday, November 1, 2010 / 
Rules and Regulations

[[Page 67170]]


-----------------------------------------------------------------------

DEPARTMENT OF EDUCATION

34 CFR Parts 600, 668, 682 and 685

[Docket ID ED--2010--OPE--0009]
RIN 1840-AD03


Foreign Institutions--Federal Student Aid Programs

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Final regulations.

-----------------------------------------------------------------------

SUMMARY: The Secretary amends the regulations for Institutional 
Eligibility Under the Higher Education Act of 1965, the Student 
Assistance General Provisions, the Federal Family Education Loan (FFEL) 
Program, and the William D. Ford Federal Direct Loan (Direct Loan) 
Program 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 (Pub. L. 110-315) (HEOA), 
as well as other provisions related to the eligibility of foreign 
institutions.

DATES: Effective Date: These regulations are effective July 1, 2011, 
except as follows: The amendments to Sec.  600.20, Sec.  600.21, and 
Sec.  600.55 become effective July 20, 2011; Sec.  600.56(a)(4) becomes 
effective July 1, 2015. For Sec.  668.23, these final regulations are 
applicable for compliance audits and audited financial statements due 
on or after July 1, 2011. However, affected parties do not have to 
comply with the information collection requirements in Sec. Sec.  
600.20, 600.21, 600.54, 600.55, 600.56, 600.57, 668.13, 668.23, 668.171 
until the Department of Education publishes in the Federal Register the 
control number assigned by the Office of Management and Budget (OMB) to 
these information collection requirements. Publication of the control 
number notifies the public that OMB has approved these information 
collection requirements under the Paperwork Reduction Act of 1995.
    Implementation date: The Secretary has determined, in accordance 
with section 482(c)(2)(A) of the HEA, that institutions may, at their 
discretion, choose to implement the new and amended provisions of these 
regulations on or after November 1, 2010, except Sec.  
600.55(f)(1)(i)(B), with respect to a foreign graduate medical school 
having a clinical training program that was not approved by a State 
until after January 1, 1992. For further information, see the section 
entitled Implementation Date of These Regulations in the SUPPLEMENTARY 
INFORMATION section of this preamble.

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 (FRS), 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: On July 20, 2010, the Secretary published a 
notice of proposed rulemaking (NPRM) for issues related to foreign 
institutions in the Federal Register (75 FR 42190).
    In the preamble to the NPRM, the Secretary discussed on pages 42191 
through 42213 the major changes proposed in that document, including 
the following:
     Amending Sec.  668.23 to establish submission requirements 
for compliance audits and audited financial statements specific to 
foreign institutions;
     Amending Sec. Sec.  600.51, 600.52, 600.54, 682.200, and 
682.611 to clarify and revise the definition of a foreign institution;
     Amending Sec.  600.2 to establish a definition of 
nonprofit status specific to foreign institutions;
     Amending Sec.  668.171 to establish a financial 
responsibility standard for foreign public institutions that is 
comparable to the financial responsibility standard for domestic public 
institutions;
     Amending Sec.  600.54 to permit a single legal 
authorization for groups of foreign institutions under the purview of a 
single government entity;
     Amending Sec.  600.54 to establish eligibility of training 
programs at foreign institutions;
     Amending Sec. Sec.  600.52 and 668.13 to establish 
institutional eligibility criteria specific to foreign graduate medical 
schools;
     Amending Sec.  600.56 to establish institutional 
eligibility criteria specific to foreign veterinary schools;
     Amending Sec.  600.57 to establish institutional 
eligibility criteria specific to foreign nursing schools; and
     Amending Sec. Sec.  600.52 and 668.13 to revise the 
maximum certification period for some foreign institutions.

Implementation Date of These Regulations

    Section 482(c) of the HEA requires that regulations affecting 
programs under Title IV of the HEA be published in final form by 
November 1 prior to the start of the award year (July 1) to which they 
apply. However, that section also permits the Secretary to designate a 
regulation as one that an entity subject to the regulation may choose 
to implement earlier and the conditions under which the entity may 
implement the provisions early.
    Consistent with the intent of this regulatory effort to strengthen 
and improve the administration of the Title IV, HEA programs, the 
Secretary is using the authority granted him under section 482(c) of 
the HEA to designate the regulations included in this document as 
permissible for implementation before July 1, 2011 at the discretion of 
each institution, except that foreign graduate medical schools having 
training programs continuously approved by a State or States beginning 
only after January 1, 1992, may not apply Sec.  600.56(f)(1)(i)(B) 
until July 20, 2011, as a result of a statutory effective date 
provision in HEA Section 102(a)(2)(B)(iii)(IV)(bb) that does not leave 
the Secretary discretion under HEA section 482(c) to designate 
provisions conferring eligibility on that group of foreign medical 
schools for implementation before July 20, 2011.

Analysis of Comments and Changes

    The regulations in this document were developed through the use of 
negotiated rulemaking. Under section 492 of the HEA, before publishing 
most proposed regulations to implement programs under Title IV of the 
HEA, the Secretary must obtain public involvement in the development of 
the proposed regulations. In such cases,

[[Page 67171]]

after obtaining advice and recommendations, the Secretary must conduct 
a negotiated rulemaking process to develop the proposed regulations. 
All proposed regulations must conform to agreements resulting from the 
negotiated rulemaking process unless the Secretary reopens that process 
or explains any departure from the agreements to the negotiated 
rulemaking participants.
    These regulations were published in proposed form on July 20, 2010, 
in conformance with the consensus of the negotiated rulemaking 
committee. Under the committee's protocols, consensus means that no 
member of the committee dissented from the agreed-upon language. The 
Secretary invited comments on the proposed regulations by August 19, 
2010, and 60 parties submitted comments. The Department received many 
comments from entities that were represented by individuals serving as 
non-Federal negotiators in the negotiated rulemaking sessions. The 
negotiated rulemaking protocols, unanimously agreed to by the 
negotiating committee, provided that if the committee reached a final 
consensus on all issues, the Department would use the consensus-based 
language in its proposed regulations, and committee members and the 
organizations whom they represented would refrain from commenting 
negatively on the consensus-based regulatory language. Final consensus 
was reached, and the Department used the consensus-based language in 
its NPRM; as a result, the obligation of the non-Federal negotiators 
and the entities they represented to refrain from commenting negatively 
applies. As a result, the Department will not discuss in this preamble 
negative comments received from entities represented on the committee. 
The Department notes that many such comments are duplicative of 
comments received from individuals or entities not bound by the 
protocols, and that the comments of those individuals or entities are 
addressed here. In addition, the Department reviewed and considered all 
comments received, regardless of their source. An analysis of the 
comments and the changes in the regulations since publication of the 
NPRM follows.
    We group major issues according to subject, with appropriate 
sections of the regulations referenced in parentheses. We discuss other 
substantive issues under the sections of the regulations to which they 
pertain. Generally, we do not address minor, non-substantive changes, 
recommended changes that the law does not authorize the Secretary to 
make, or comments pertaining to operational processes. We also do not 
address comments pertaining to issues that were not within the scope of 
the NPRM.
    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 are no new originations of FFEL Program loans. All new 
originations with a first disbursement on or after July 1, 2010, are 
made via the Direct Loan Program, including loans for students 
attending foreign institutions. At the time the proposed regulations 
were negotiated, it was unclear whether the proposed legislation that 
would end the FFEL Program would be enacted. As a result, with a few 
exceptions, the proposed regulations referenced participation in the 
FFEL Program. These final regulations correct those references in the 
proposed regulations to indicate participation in the Direct Loan 
Program, rather than the FFEL Program. In addition, these final 
regulations make technical corrections to the Direct Loan Program 
regulations in response to statutory directives addressed specifically 
to foreign institutions. These corrections reflect changes made by the 
Higher Education Reconciliation Act of 2005 (Pub. L. 109-17) which (1) 
eliminated the option for foreign institutions to make single 
disbursements of Title IV, HEA program loan funds; and (2) eliminated 
the exemption for foreign institutions from the ``30-day delayed 
disbursement requirement'' which prohibits institutions from disbursing 
the first installment of a Direct Subsidized or Direct Unsubsidized 
Loan until a student has completed 30 calendar days of the student's 
program of study, if the student is in the first year of an 
undergraduate program and is a first-time FFEL Stafford loan, Direct 
Subsidized or Direct Unsubsidized borrower. These changes have been 
made to Sec.  685.301 and Sec.  685.303, respectively.
    Substantive and technical changes to the Title IV, HEA program 
regulations 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

Definition of a Foreign Institution (Sec. Sec.  600.51, 600.52, 600.54, 
682.200 and 682.611)

    Comments: Several commenters had concerns with paragraph (1)(ii)(B) 
of the definition of foreign institution in Sec.  600.52, which states 
that a foreign institution cannot have written arrangements, within the 
meaning of Sec.  668.5, with institutions or organizations located in 
the United States under which students enrolling at the foreign 
institution would take courses from institutions located in the United 
States. One commenter asked that we add language to paragraph 
(1)(ii)(B) specifying that this paragraph applies only to U.S. students 
receiving Title IV, HEA program funds. Another commenter asked the 
Department to explain what ``written arrangements, within the meaning 
of Sec.  668.5'' means. One commenter asked for clarification as to 
whether study abroad and student exchange agreements would be permitted 
under paragraph (1)(ii)(B). The commenter also asked if paragraph 
(1)(ii)(B) would prohibit foreign institutions from stair-casing 
students under articulation agreements from partial programs in the 
United States into full degree programs with credit recognition in 
foreign institutions. Stair-casing is a process that allows a student 
to earn a degree by completing educational programs and earning 
credentials with each completed program of study acceptable for full 
credit toward the next program and each credential earned subsumed into 
the subsequent credential upon successful completion of each program.
    Discussion: We do not agree that it is necessary to add language 
specifying that paragraph (1)(ii)(B) of the definition of foreign 
institution applies only to U.S. students receiving Title IV, HEA 
program funds is necessary. Lead-in paragraph (1) of the definition, 
which applies to all of the subsequent paragraphs, already specifies 
that the definition applies to foreign institutions ``for the purposes 
of students who receive Title IV aid.''
    For clarification regarding ``written arrangements, within the 
meaning of Sec.  668.5,'' a ``written arrangement'' under Sec.  
668.5(a) means a consortium or contractual agreement entered into by 
two or more institutions to allow a student to receive Title IV, HEA 
program funds even though part of the

[[Page 67172]]

student's program is being provided by an institution other than the 
one at which the student is enrolled. Section 668.5(a) provides that, 
if an eligible institution enters into a written arrangement with 
another eligible institution or with a consortium of eligible 
institutions under which the other eligible institution or consortium 
provides all or part of the educational program for the former 
institution, the Secretary considers that educational program to be an 
eligible program if the program otherwise satisfies the requirements of 
program eligibility found in Sec.  668.8.
    However, these final regulations modify Sec.  668.5(a) for foreign 
institutions in that, under paragraph (1)(ii)(B) of the definition of 
foreign institution in Sec.  600.52, a foreign institution cannot have 
written arrangements, within the meaning of Sec.  668.5, with 
institutions or organizations located in the United States, for 
students who receive Title IV, HEA program funds who enroll at the 
foreign institution to take courses from institutions located in the 
United States. We note that Sec.  668.5(a) may undergo further 
revisions applicable to all institutions. In an NPRM published on June 
18, 2010 in the Federal Register (75 FR 34806), the Department proposed 
to amend Sec.  668.5(a) to specify that if a written arrangement is 
between two or more eligible institutions that are owned or controlled 
by the same individual, partnership, or corporation, the institution 
that grants the degree or certificate must provide more than 50 percent 
of the educational program.
    Section 668.5(c) addresses written arrangements between an eligible 
institution (an institution that meets the requirements of 
participation in the Title IV, HEA programs in 34 CFR 600) and an 
ineligible institution or organization (an institution or organization 
that does not participate in the Title IV, HEA programs), under which 
the ineligible institution or organization provides part of the 
educational program of students enrolled at the eligible institution. 
Although under Sec.  668.5(c) the Secretary considers such an 
educational program to be an eligible program in certain circumstances, 
under these final regulations, Sec.  600.54(c)(1) provides that 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. 
Thus, foreign institutions are not permitted to enter into the written 
arrangements described in Sec.  668.5(c).
    Further, with respect to ``written arrangements under 668.5,'' 
written arrangements do not include affiliation agreements for the 
provision of clinical training for foreign medical, veterinary, and 
nursing schools; these affiliation agreements are addressed separately 
in Sec.  600.55(h)(1), Sec.  600.56(b), Sec.  600.57(a)(2). In 
addition, and pertinent to all written arrangements under Sec.  668.5, 
in the NPRM published on June 18, 2010 in the Federal Register (75 FR 
34806), the Department proposed to add a new paragraph Sec.  668.5(e), 
which would require an institution that enters into a written 
arrangement under Sec.  668.5 to provide the consumer information 
described in Sec.  668.43(a)(12) to enrolled and prospective students.
    In response to the request for clarification as to whether study 
abroad and student exchange agreements would be permitted under 
paragraph (1)(ii)(B) of the definition of foreign institution, these 
agreements are discussed generally in section 668.5(b), which provides 
that under a study abroad program, if an eligible institution enters 
into a written arrangement with a ``foreign institution'' or an 
organization acting on behalf of a foreign institution under which a 
foreign institution provides part of the educational program of 
students enrolled in the eligible institution, the Secretary considers 
that educational program to be an eligible program if it meets the 
limitations in Sec.  668.5(c). The Department notes that the use of 
``foreign institution'' in Sec.  668.5(b) pre-dates these regulations 
and, in contrast to the meaning of that term as defined in these 
regulations, refers more generally to an agreement between an eligible 
institution and an institution or organization in another country. The 
Department is therefore making a technical change to Sec.  668.5(b) to 
replace the phrase ``foreign institution'' with language to reflect the 
more general meaning that paragraph has always had.
    With that clarification made, under paragraph (1)(ii)(B) of the 
definition of ``foreign institution,'' for the purposes of students who 
receive Title IV, HEA program aid, a foreign institution may enter into 
a consortium agreement for study abroad and student exchange purposes, 
but only with another eligible institution located and offering 
eligible programs outside the United States. Moreover, the study abroad 
and student exchange provisions of Sec.  668.5 do not apply to foreign 
medical, veterinary, and nursing schools, because such schools are 
generally prohibited under the regulations from offering portions of 
their programs in third countries, and from offering the non-clinical 
portions of their program in the United States.
    In response to the comment about whether paragraph (1)(ii)(B) of 
the definition of foreign institution would prohibit foreign 
institutions from stair-casing students under articulation agreements, 
because paragraph (1)(ii)(B) prohibits a foreign institution from 
having written arrangements 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, a 
foreign institution would not be permitted to stair-case students under 
articulation agreements that required students taking the beginning of 
their programs in the United States to complete their programs through 
credit recognition in foreign institutions. However, a foreign 
institution would be permitted to accept transfer credits earned by 
individual students in eligible programs offered by eligible U.S. 
institutions, and generally to stair-case students under articulation 
agreements offered by an eligible institution outside the United States 
into full degree programs with credit recognition in the foreign 
institution, as long as both eligible foreign institutions each 
provided all Title IV, HEA program recipients with an eligible program 
leading to a recognized credential. As stated earlier in this 
discussion, Sec.  600.54(c)(1) would prohibit an ineligible institution 
from providing any portion of one or more of the eligible foreign 
institution's programs, and this prohibition would extend to 
articulation agreements.
    Changes: We have made a technical amendment to Sec.  668.5(b), to 
remove the reference to ``foreign institution'' and replace it with 
``institution in another country.''
    Comments: One commenter asked why the Department added paragraph 
(1)(ii)(C) to the definition of foreign institution in Sec.  600.52. 
Under paragraph (1)(ii)(C), a foreign institution cannot permit 
students who receive Title IV, HEA program funds to enroll in any 
course offered by the foreign institution in the United States, 
including research, work, internship, externship, or special studies 
with 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.
    Discussion: The general intent of paragraph (1)(ii)(C) in the 
definition of foreign institution is to address abuses

[[Page 67173]]

that the Department has seen whereby a U.S. institution sets up an 
offshore campus to claim foreign institution status and thus avoid 
domestic requirements even though the institution is, for all intents 
and purposes, a domestic institution. In addition, the Department does 
not want a foreign institution to send its U.S. students to a U.S. 
location of a foreign institution, because the Department wants U.S. 
students attending a U.S. institution to be eligible for the full range 
of Title IV, HEA program funds, rather than limited to Direct Loan 
Program funds, as, by statute, students attending foreign institutions 
are. The Department was persuaded, however, at the request of several 
non-Federal negotiators, to carve out a narrow exception for 
independent research done by an individual student in the United States 
for not more than one academic year, 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.
    Changes: None.
    Comments: One commenter requested clarification of paragraphs 
(1)(v)(A) and (B) of the definition of foreign institution in proposed 
Sec.  600.52, which, for the purposes of students who receive Title IV, 
HEA program funds, requires a foreign institution that offers any 
program designed to prepare a student for employment in a recognized 
occupation, with or without licensure, to provide a credential or 
degree that satisfies both the educational requirements, including 
requirements for licensure, for entry into that occupation in the 
country in which the institution is located and the United States. The 
commenter noted that, unless there is a mutual recognition agreement in 
place among the relevant professional authorities, meeting the 
requirements for professional licensure in the United States is not 
guaranteed by the successful completion of many otherwise eligible 
programs offered by foreign institutions. The commenter requested 
clarification as to what types of foreign institutions and what types 
of programs would be covered by both paragraphs (1)(v)(A) and (B) of 
the definition of foreign institution, and if there were any foreign 
institutions that could offer programs that satisfied either paragraph 
(A) or (B) and still meet the definition's requirements.
    Discussion: After further consideration and in light of the comment 
received, we believe that our original concern, that students attending 
a foreign institution would not be able to enter a recognized 
occupation without further study, is addressed in other areas of the 
regulations, and we have therefore eliminated paragraphs (1)(v)(A) and 
(B) of the definition of foreign institution in Sec.  600.52 of these 
final regulations. In particular, the Department's concerns are 
addressed in paragraph (1)(iv) of the definition of foreign 
institution, which requires a foreign institution to award degrees, 
certificates, or other recognized educational credentials in accordance 
with Sec.  600.54(e) that are officially recognized by the country in 
which the institution is located. Other applicable provisions of the 
Student Assistance General Provisions (34 CFR part 668) which address 
our concerns include, but are not limited to, subpart F, which 
prohibits any substantial misrepresentation made by an institution 
regarding the nature of its educational program, its financial charges 
or the employability of its graduates.
    Changes: We have removed paragraphs (1)(v)(A) and (B) of the 
definition of foreign institution in Sec.  600.52.
    Comment: None.
    Discussion: Section 600.51(c)(1), as proposed in the NPRM, 
specified that foreign institutions must comply with all of the 
requirements that apply to eligible and participating domestic 
institutions unless provisions regarding foreign institutions in the 
HEA or the Department's regulations were inconsistent. In addition, 
proposed Sec.  600.52(c)(2) provided that a foreign institution would 
not be required to comply with Title IV, HEA program requirements that 
the Secretary, through a notice in the Federal Register, identifies as 
inapplicable to foreign institutions.
    To more clearly set forth existing law specifically regarding 
foreign institutions' regulatory responsibilities with regard to their 
participation in the Title IV, HEA programs, we are making several 
technical changes. We are consolidating proposed paragraphs Sec.  
600.51(c)(1) and (2) to state that foreign institutions must comply 
with all requirements for eligible and participating institutions 
except where made inapplicable by the HEA, or when the Secretary, 
through regulations or a notice in the Federal Register, indentifies 
specific provisions as inapplicable to foreign institutions. In 
addition, because many requirements pertaining to institutions that are 
participating, or seeking to participate, in the Title IV, HEA programs 
are framed as requirements applicable to public and non-profit 
``institutions of higher education,'' as defined in Sec.  600.4, or to 
for-profit ``proprietary institutions of higher education,'' as defined 
in Sec.  600.5, we are adding new paragraph Sec.  600.51(c)(2), to make 
clear that, to be considered an ``institution of higher education'' in 
order to be eligible to participate in the Title IV, HEA programs, 
public or nonprofit foreign institutions must meet both the applicable 
requirements of Sec.  600.4 and the applicable requirements of subpart 
E, and that, to be considered a ``proprietary institution'' in order to 
be eligible to participate in the Title IV, HEA programs, a for-profit 
foreign institution must meet both the applicable requirements of Sec.  
600.5 and the applicable requirements of subpart E. These changes 
reflect the Department's past and current interpretation of the law.
    In addition, we are revising Sec.  600.54(a) to specify which 
requirements in Sec.  600.4 and Sec.  600.5 foreign institutions must 
meet and which they need not. The provisions of Sec.  600.4 and Sec.  
600.5 that are not applicable to public or private nonprofit foreign 
institutions, and for-profit foreign institutions, respectively are: 
(1) The requirement that an institution be in a State (Sec.  
600.4(a)(1), and Sec.  600.5(a)(2)) because, by definition, a foreign 
institution is an institution that is not located in a State (see 
paragraph (1) of the definition of foreign institution in Sec.  
600.52); (2) the requirement that an institution admit as regular 
students only persons who have a high school diploma, have the 
recognized equivalent of a high school diploma, or are beyond the age 
of compulsory school attendance in the State in which the institution 
is physically located (Sec.  600.4(a)(2) and Sec.  600.5(a)(3)) 
because, as reflected by Sec.  600.54(b), most students enrolling in 
foreign institutions will have a secondary school completion credential 
or its equivalent, rather than a high school diploma and, as foreign 
institutions are not located in a State, the provision allowing the 
admission of students without a high school diploma or its equivalent 
if the student is beyond the age of compulsory school attendance in the 
State in which the institution is physically located is inapplicable; 
(3) the requirement that an institution be legally authorized by the 
State in which it is located (Sec.  600.4 (a)(3), and Sec.  
600.5(a)(4)) again, because, by definition, a foreign institution is an 
institution that is not located in a State, and paragraph (1)(iii) of 
the definition of foreign institution in Sec.  600.52 instead requires 
a foreign institution to be legally authorized by the education 
ministry, council or equivalent agency

[[Page 67174]]

of the country in which the institution is located; (4) the requirement 
that an institution may provide a comprehensive transition and 
postsecondary program, as described in 34 CFR part 668, subpart O 
(Sec.  600.4(a)(4)(ii) and Sec.  600.5(a)(5)(ii)), because under the 
HEA these programs are not available to Direct Loan borrowers, and 
because foreign institutions are not eligible for programs other than 
Direct Loans; (5) accreditation requirements (Sec.  600.4(a)(5), and 
Sec.  600.5(a)(6)) because the Secretary does not recognize accrediting 
agencies for the purpose of accrediting foreign institutions; (6) the 
conditions under which an institution is considered to be located in a 
State (Sec.  600.4(b), and Sec.  600.5(c)) again, because, by 
definition, a foreign institution is an institution that is not located 
in a State; and (7) the conditions under which the Secretary recognizes 
an institution's accreditation (Sec.  600.4(c), and Sec.  600.5(d)) 
again, because the Secretary does not recognize accrediting agencies 
for the purpose of accrediting foreign institutions. In addition, for a 
for-profit foreign institution, Sec.  600.5(a)(5)(i)(B), which allows 
an institution to meet the definition of a for-profit institution by 
providing a program leading to a baccalaureate degree in liberal arts, 
is not applicable because the Secretary does not recognize accrediting 
agencies for the purpose of accrediting foreign institutions and, in 
order to meet this provision, an institution must be accredited by a 
recognized regional accrediting agency or association, and have 
continuously held such accreditation since October 1, 2007, or earlier.
    Changes: We have revised Sec.  600.51(c) to more explicitly set 
forth current law by stating that foreign institutions must comply with 
all requirements for eligible and participating institutions except 
where provided for in the HEA, and when the Secretary, through 
regulations or a notice in the Federal Register, indentifies specific 
provisions as inapplicable to foreign institutions, and to make clear 
that requirements applicable to ``institutions of higher education'' 
apply to foreign public and non-profit institutions, and that 
requirements applicable to ``proprietary institutions of higher 
education'' apply to foreign for-profit institutions, for purposes of 
determining eligibility to participate in the Title IV, HEA programs, 
as well as for determining applicability of other Title IV requirements 
not related to institutional eligibility. Finally, in Sec.  600.54, we 
are revising paragraph (a) to specify which requirements in Sec.  600.4 
and Sec.  600.5 foreign institutions must meet and which they need not.

Foreign Graduate Medical Schools (Sec. Sec.  600.20, 600.21, 600.52, 
and 600.55)

General
    Comments: One commenter, the Federation of State Medical Boards, 
applauded the Department's initiative to strengthen the eligibility 
criteria specific to foreign graduate medical schools, but was 
concerned about the requirement in Sec.  600.55(a)(2)(ii) that requires 
that a foreign graduate medical school program offered by a foreign 
graduate medical school be approved by all medical licensing boards and 
evaluating bodies whose views are considered relevant by the Secretary. 
The commenter believed that the regulatory provision was unclear. The 
commenter noted that the Federation of State Medical Boards and its 
member licensing boards require U.S. medical students attending U.S. 
and Canadian medical schools to graduate from medical schools 
accredited by the Liaison Committee on Medical Education (LCME) or the 
American Osteopathic Association (AOA). The commenter asserted that, if 
the intent of the proposed regulations was to extend the approval of 
foreign graduate medical schools to State medical boards, it may not be 
administratively feasible. The commenter noted that there are currently 
no mechanisms or resources available for the majority of State medical 
boards to approve individual foreign graduate medical school programs 
and establishing and implementing such a mechanism could be a complex, 
costly, time consuming, and burdensome process.
    Discussion: The provision in Sec.  600.55(a)(2)(ii), requiring that 
a foreign graduate medical school program offered by a foreign graduate 
medical school be approved by all medical licensing boards and 
evaluating bodies whose views are considered relevant by the Secretary, 
does not require State medical boards to approve programs from foreign 
graduate medical schools. Rather, the provision gives the Secretary 
discretion to take into account the views of relevant medical licensing 
boards and evaluating bodies if they are available. We note that this 
provision has been in the regulations for some time and no changes to 
it were proposed in the NPRM.
    Changes: None.
Location of a Graduate Medical Education Program, Affiliation 
Agreements, and Application and Notification Procedures for Foreign 
Graduate Medical Schools
    Comments: One commenter believed that an exception to the 
provisions in the regulations that limit the location of foreign 
graduate medical school clinical training should be made for locations 
included in the accreditation of the AOA, as was proposed for locations 
included in the accreditation of the LCME.
    One commenter asked the Department to remove the sections of the 
proposed regulations that place limitations on the location of graduate 
medical education programs, as Recommendation 12(a) of the National 
Committee on Foreign Medical Education and Accreditation's (NCFMEA) 
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), 
on which those regulations were based, was outside the scope of the 
charge provided by Congress to the NCFMEA. (The NCFMEA report is 
available at https://www2.ed.gov/about/bdscomm/list/ncfmea-dir/reporttocongress2009.pdf.) The commenter felt that limitations to pre-
clinical coursework are inconsistent with section 484(o) of the HEA, 
Sec.  668.5(b) of the regulations, and guidance in the Federal Student 
Aid Handbook addressing study abroad, which permit eligible 
institutions to enter into written arrangements with institutions in 
other countries to offer part of a program. The commenter believed the 
proposed limitations to be arbitrary, as they are only applicable to 
foreign graduate medical schools. The commenter also believed that the 
limitations prohibit cooperative international medical education 
efforts without any statutory basis, and are inconsistent with the 
standard of comparability that the HEA attempts to establish between 
foreign and U.S. institutions. The commenter also felt the proposed 
limitations to be discriminatory to foreign graduate medical schools 
located in small countries, many of which have a long history of multi-
lateral and regional cooperation in the areas of health care and 
education. The commenter felt that the limitations on clinical training 
would prevent efforts to expand medical services in developing 
countries and discourage cooperative efforts in

[[Page 67175]]

international education. The commenter asked that the Department modify 
the proposed limitations in the regulations that are applicable only to 
foreign graduate medical schools to allow students at such schools to 
take coursework outside of the country in which the school is located 
as long as the requirements for written agreements between schools to 
provide educational programs in Sec.  668.5, or comparable standards 
for foreign graduate medical schools, are met.
    One commenter, an organization representing all twenty universities 
in Australia and New Zealand that confer professional, entry-level 
medical degrees, stated that the proposed requirements addressing 
affiliation agreements between foreign graduate medical schools and 
hospitals or clinics for clinical training would impose a significant 
administrative burden on their schools, as some of the proposed 
requirements are not normally included in most affiliation agreements 
between their schools and health services, particularly agreements 
covering long-term, general-practice placements. Another commenter, 
representing a foreign graduate medical school in Australia, felt it 
was unnecessarily bureaucratic to impose detailed reporting 
requirements, such as the information that would have to be included in 
an affiliation agreement, and the requirement that a foreign graduate 
medical school notify its accrediting body within one year of any 
material changes in the program. The commenter felt that, despite 
Australia's stringent accreditation processes, this approach fails to 
reflect that the commenter's school is a professional institution of 
high standing, teaching to standards recognized as comparable to U.S. 
standards.
    Discussion: We agree that an exception to the provisions in the 
regulations that limit the location of foreign graduate medical school 
clinical training should be made for locations included in the 
accreditation of the AOA. The Department's rationale for making an 
exception for locations included in the accreditation of the LCME was 
because LCME is an accrediting agency that accredits U.S. medical 
schools. As the Federation of State Medical Boards recognizes both the 
LCME and the AOA for accreditation of domestic medical schools, the 
Department agrees that locations accredited by the AOA should also be 
exempt from the provisions in the regulations that limit the location 
of foreign graduate medical school clinical training.
    Although the majority of the regulations addressing the location of 
medical education programs offered by foreign graduate medical schools 
are supported by Recommendation 12(a) of the NCFMEA report, the 
regulations also represent, with some variation, the Department's 
current policy. The Department continues to believe that many of the 
reasons for that current policy are sound and support the positions 
taken in these final regulations. That is, because of the lack of 
direct authority of an accrediting body over educational sites located 
outside the country in which the main campus is located, the basic 
science portion of a medical program offered by a foreign graduate 
medical school must be located in the same country as the school's main 
campus to ensure that the majority of classroom instruction will be 
under the direct authority of the school's accrediting body. Also, it 
is acceptable for the Department to balance the benefits of closer 
oversight by the school's accrediting agency of the clinical training 
parts of the program with the benefits to students of exposure to other 
medical environments, and to craft its regulations to permit clinical 
sites to be located in countries other than the country in which the 
main campus is located in specified circumstances. Whereas foreign 
institutions other than foreign graduate medical schools (and, by July 
1, 2015, foreign veterinary schools) are not required to be accredited 
to be eligible to participate in the Title IV, HEA programs, foreign 
graduate medical schools are required to be accredited (section 
102(a)(2)(B) of the HEA). Thus, the Secretary believes it is 
appropriate to place restrictions on foreign graduate medical schools 
when the authority of the school's accrediting agency to provide 
oversight is in question.
    In accordance with the Guidelines of the NCFMEA, the entity that 
determines whether the medical school accrediting standards used in 
other countries are comparable to those applied to medical schools in 
the United States for purposes of evaluating the eligibility of 
accredited foreign graduate medical schools to participate in the Title 
IV, HEA programs, a foreign medical school's accrediting body must have 
standards comparable to LCME standards, including the standard that a 
medical school must have approved affiliation agreements with each 
teaching hospital or clinical facility it uses that define the 
responsibilities of each party. The Department believes that the 
responsibilities that the regulations require a foreign graduate 
medical school to include in affiliation agreements with hospitals or 
clinics at which all or a portion of the school's clinical training is 
provided are essential responsibilities that must be addressed in order 
to ensure the quality of the clinical training portion of the program. 
NCFMEA Guidelines also require foreign medical school accrediting 
bodies to demonstrate that their accreditation/approval processes 
require medical schools to notify the appropriate authorities of any 
substantive changes to the educational program, student body, or 
resources, and to review the substantive changes to determine if the 
accredited schools remain in compliance with the standards. The 
Secretary believes that requiring a foreign graduate medical school to 
notify its accrediting body within one year of any material changes in 
educational programs is a reasonable minimum standard. The NCFMEA 
Guidelines can be accessed at https://www2.ed.gov/about/bdscomm/list/ncfmea.html#review.
    Changes: We have revised Sec. Sec.  600.20(c)(5), 600.21(a)(10), 
600.55(a)(2)(iii), and 600.55(h)(3)(ii)(A) to provide an exception to 
the provisions limiting the location of foreign graduate medical school 
clinical training sites. The new exception applies to locations 
included in accreditation granted by the AOA.
Admission Criteria and Collection and Submission of Data
    Comments: A few commenters objected to the proposed regulations 
addressing admission criteria and the collection and submission of 
data. One commenter also felt that obtaining information about 
residency placements when students have left the school and the country 
would be extremely challenging.
    One commenter, representing a school in Australia, believed it was 
unreasonable to require a foreign graduate medical school to require 
U.S. students accepted for admission to have taken the Medical College 
Admission Test (MCAT) and to have reported their scores for each time 
they took the test. The commenter felt that some form of equivalency 
should be granted the test it requires for admission, the International 
Student Admissions Test (ISAT). One commenter, an organization 
representing all twenty universities in Australia and New Zealand that 
confer professional, entry-level medical degrees, stated that requiring 
foreign graduate medical schools to collect and submit data on MCAT 
scores, United States Medical Licensing Examination (USMLE) pass rates, 
and U.S. medical

[[Page 67176]]

residency placements would be administratively onerous for their 
institutions. The commenter noted that Australian universities are 
subject to stringent privacy legislation, which precludes institutions 
from supplying individual data on students to third parties without the 
student's written permission. The commenter stated that the economics 
of compliance as well as the complexity of the proposed regulations 
would discourage participation of their schools in the Title IV, HEA 
programs. Another commenter representing an institution in Australia 
recommended that foreign graduate medical schools with small numbers of 
Title IV, HEA program recipients be exempt from collecting and 
submitting data on MCAT scores and U.S. medical residency placements. 
The commenter stated that the MCAT is not an admission requirement for 
entry into its medical program and, therefore, the results are not 
provided to the school.
    Discussion: The Department continues to believe that analysis of 
the submitted data is essential for the development of future statutory 
and regulatory provisions, as well as strengthening of the 
accreditation process, resulting in a more accurate assessment of the 
quality of education being provided to students attending foreign 
graduate medical schools. As such, the Department believes it is 
beneficial to have data on all foreign graduate medical schools that 
participate in the Title IV, HEA programs, regardless of the number of 
Title IV, HEA program fund recipients. Although obtaining information 
about residency placements will require foreign graduate medical 
schools that do not already track this information to now do so, we 
believe the added burden is justified in light of these long-term 
benefits. In order for the comparison of data on entry tests to be 
useful, it must be for results on a common test. As the Department's 
interest in this area is in U.S. students, the test given to U.S. 
students to determine entry to U.S. medical schools, the MCAT, is the 
most appropriate test for this purpose. We note that a foreign graduate 
medical school is required to have U.S. students report only one MCAT 
score; they are not required to collect scores for each time a student 
took the MCAT.
    To the extent that a foreign country has privacy laws requiring 
student consent to release the required data, Sec.  600.55(c)(2) 
requires a foreign graduate medical school to determine those consent 
requirements and require the necessary consents of all students 
accepted for admission for whom the school must report to enable the 
school to comply with the required collection and submission of data. 
If a foreign country's privacy laws preclude obtaining the information 
and materials necessary for establishing compliance, the institutions 
located in those countries will not qualify for participation in the 
Title IV, HEA programs.
    Changes: None.
Citizenship and USMLE Pass Rate Percentages
    Comments: One commenter supported the provisions in the proposed 
regulations that address institutions with small numbers of USMLE test-
takers.
    A few commenters asserted that the proposed calculation of the 
USMLE pass rate was likely to restrict American students' ability to 
enroll in or complete their education at select, prestigious foreign 
graduate medical schools because it would make institutions ineligible 
for participation in the Direct Loan Program. More specifically, some 
of the commenters felt that an aggregate USMLE pass rate, rather than 
one that requires a foreign graduate medical school to have a 75-
percent pass rate on each step/test, would give the Department a better 
assessment of the quality of a foreign graduate medical school 
education. One of these commenters felt that an evaluation of the 
combined scores would reduce the variance in test scores based on 
student variability--a concern expressed by the NCFMEA in their report 
and by the U.S. Government Accountability Office (GAO) in their report 
entitled, ``Foreign Medical Schools: Education Should Improve 
Monitoring of Schools That Participate in the Federal Student Loan 
Program'' (GAO-10-412) (GAO report), available at https://www.gao.gov/new.items/d10412.pdf. One commenter noted that, while USMLE pass rates 
can be useful for determining the quality of education offered to 
American students at foreign graduate medical schools, the data must be 
properly interpreted to ensure that it accounts for the differences in 
medical education curricula, the sequencing of curricula, and different 
methods of student assessment in different countries. The commenter, 
who represented an institution in Ireland, stated that the medical 
education in Ireland is provided in a different sequence and uses 
different types of examination and assessment. More specifically, the 
commenter noted that although Irish medical schools may use multiple 
choice question (MCQ) examinations, which are similar to the USMLE, 
other methods of assessment--including continuous assessment, modified 
essay questions (MEQs), essays, and Objective Structured Clinical Exams 
(OSCEs)--are given greater weight, so their students have significantly 
less experience with a USMLE-type examination and, therefore, are 
disadvantaged, particularly on Step 1, the pre-clinical exam, which is 
entirely MCQ. The commenter noted that their school's pass rates on 
Step 2-Clinical Knowledge (Step 2-CK) and Step 2-Clinical Skills (Step 
2-CS) are comparable to U.S. universities. Thus, an aggregate pass rate 
would better reflect the quality of the education provided. The 
commenter felt that this position was supported by the GAO report, 
which states that many factors contribute to a graduate medical 
education program's USMLE pass rate, including ``the extent to which 
foreign schools may or may not focus on preparing students for the 
exam.'' In addition, the commenter pointed out that the report notes 
the burden these requirements place on schools with a small proportion 
of the American students who study medicine abroad. The commenter also 
noted that the GAO report analysis states ``that the new pass rate 
requirement may dissuade or even disqualify many schools from 
participating in the loan program,'' thus reducing the foreign graduate 
medical school options available to U.S. students. The commenter asked 
the Department to seriously consider the GAO report in the development 
of these final regulations. One commenter, a member of the Committee 
that negotiated and came to consensus on the NPRM, supported the 
proposal to require a foreign graduate medical school to have a 75 
percent pass rate on each step/test, and felt it and the other proposed 
regulations were critical toward ensuring the availability of high-
quality international programs of medical education.
    A couple of commenters objected to the proposal to include only 
first-time test takers in the calculation of USMLE pass rates. The 
commenters stated that, in contrast to the assertions made by non-
Federal negotiators that the pass rates of students in subsequent 
attempts are typically quite low, the commenter's school has had many 
high-performing students and graduates who have passed the exam only on 
the second or third attempts. The commenters believed that the non-
Federal negotiators' assertion was also in conflict with the National 
Board of Medical Examiners (NBME) Annual Report on USMLE Performance. 
The commenter recommended that the Department adopt Recommendation 4(b) 
of the NCFMEA report--that each

[[Page 67177]]

student or graduate who repeats a step in a particular year only be 
counted once in the denominator for that year for that step, and be 
counted once in the numerator if he/she passes. The commenter felt 
that, at a minimum, the Department should examine the validity of using 
such a method to determine the effectiveness of the testing procedure 
as a means of defining eligibility for foreign graduate medical 
schools.
    One commenter supported the proposed change to limit the USMLE pass 
rates calculation to U.S. citizens, nationals, and eligible permanent 
residents. Two commenters opposed the proposed change to limit the 
USMLE pass rate calculation to U.S. citizens, nationals, and eligible 
permanent residents, arguing that it goes beyond the plain language of 
the statute. These commenters felt that the exclusion of other students 
creates an administrative burden on foreign graduate medical schools 
and excludes from the calculation a true representative sample of a 
school's students and graduates, creating an incomplete picture of a 
school's level of training. The commenters felt that the calculation of 
the USMLE pass rate should include all students, with data for U.S. 
citizens, nationals, and eligible permanent residents treated as 
supplementary information.
    One commenter felt that the USMLE pass rate was not an appropriate 
measure of the quality of foreign medical schools, and that 75 percent 
is not an appropriate benchmark for Title IV, HEA program eligibility. 
A few commenters asked the Department to consider phasing in the 75-
percent pass rate requirement through 2014, as was suggested by the 
NCFMEA report. One of these commenters believed that the Department 
could enter into informal compliance agreements to allow foreign 
graduate medical schools that initially do not meet the 75-percent 
threshold to continue to participate in the Title IV, HEA programs, 
conditioned upon compliance with a written agreement that the school 
will make certain changes in its policies designed to boost its USMLE 
pass rate by 2014.
    A few commenters asked the Department to expand the exemption from 
the USMLE pass rate requirement for foreign graduate medical schools 
that had a clinical training program that has been continuously 
approved by a State as of January 1, 1992. A couple of these commenters 
asked that the exemption be expanded to include public foreign graduate 
medical schools that had clinical programs in their own countries well 
before January 1, 1992, and that had graduates practicing in the United 
States well before the exempted foreign graduate medical schools were 
even established. One commenter felt that participation in the Fifth 
Pathway Program should qualify a school for the exemption.
    Discussion: The GAO, as a result of the report referenced by the 
commenter, made four recommendations to the Department. The GAO 
recommended that the Department:
    1. Collect consumer information, such as aggregate student debt 
level and graduation rates, from foreign medical schools participating 
in the federal student loan program and make it publically available.
    2. Require foreign medical schools to submit aggregate 
institutional pass rate data to the Department annually.
    3. Verify data submitted by schools, for example by entering into a 
data-sharing agreement with the testing organizations.
    4. Evaluate the potential impact of the 75 percent pass rate 
requirement on school participation in the federal student loan program 
and advise Congress of any needed revisions to the requirement.
    The Department agreed with all four recommendations. The Department 
is committed to collecting and examining data on the USMLE pass rate to 
provide Congress with recommendations for change, if necessary. 
However, as noted in the GAO report, complete data have not been 
available to all schools to provide to the Department until recently. 
As such information is now available, in June of this year, the 
Department sent a letter to foreign graduate medical schools requiring 
that USMLE pass rate information be supplied annually, starting with 
exams taken during calendar year 2009. The letter required foreign 
graduate medical schools to submit the information for 2009 to the 
Department by September 30, 2010. The Department will study this data, 
as well as data submitted for 2010, to determine what changes we will 
recommend to Congress.
    The Department does not support using an aggregate USMLE pass rate 
of 75 percent in lieu of a required pass rate of 75 percent on each 
step/test. The Department believes that an individual assessment of 
each step/test is a better measure, precisely because such an approach 
provides an assessment of the sequential performance on the USMLE. The 
Department agrees with the NCFMEA's opinion in Recommendation 4(c) of 
the NCFMEA report, ``The USMLE examinations are taken at different 
stages of the student's progress toward becoming a licensed medical 
practitioner and reflect the quality of education delivered by related, 
but different, sequential processes. As such, the Committee feels that 
separately reporting performance on each step examination will allow 
the Department to more adequately judge the performance of each school 
in preparing students for future clinical performance.''
    Although the Department believes that Recommendation 4(b) of the 
NCFMEA report--to include each student or graduate who repeats a step 
in a particular year once in the denominator for that year, and in the 
numerator if he/she passes--would be an acceptable approach to 
calculating the USMLE pass rate, we believe that including only first-
time test takers is a better approach. While a couple of commenters 
believed that recognizing subsequent attempts on steps/tests of the 
USMLE would more accurately reflect the quality of education at foreign 
graduate medical schools, data presented in the 2009 Annual Report of 
the National Board of Medical Examiners (pages 56-59) indicate that 
repeat examinees from non-U.S. and Canadian schools pass at lower rates 
than first-time test takers. For example, the 2008 pass rate on Step 1 
for repeat examinations was 37 percent as opposed to 73 percent for 
first-time test takers, and 36 percent as opposed to 73 percent in 
2009. The 2009 Annual Report is available at https://www.nbme.org/PDF/2009AnnualReport.pdf. Thus, the Department is persuaded that, 
generally, for students attending foreign graduate medical schools, the 
pass rates in subsequent attempts on steps/tests of the USMLE are low, 
and therefore redundant and less indicative of the quality of 
instruction than first-time test scores.
    After further consideration of the issue, the Department agrees 
with the commenters who believed that the USMLE pass rate score should 
not be limited to U.S. citizens, nationals, and eligible permanent 
residents. The Department believes that the inclusion of U.S. and non-
U.S. students provides a fair evaluation of a foreign graduate medical 
school's program, while reducing burden on schools by not requiring the 
separation of pass rates by citizenship. Although the Department heard 
from non-Federal negotiators that the USMLE pass rates for non-U.S. 
students at some foreign institutions are lower than those of U.S. 
students, data provided in the 2009 Annual Report of the Education 
Commission for Foreign Graduate Medical Graduates (ECFMG) (available 
at: https://www.ecfmg.org/annuals/ECFMG2009.pdf) indicate that,

[[Page 67178]]

generally, that is not the case for two of the three steps/tests for 
which a pass rate is determined. For Step 1, U.S. citizens who are 
first-time test takers have a pass rate of 67 percent, compared to a 
pass rate of 75 percent for foreign citizens who are first-time test 
takers, while for Step 2-CK, U.S. citizens who are first-time test 
takers have a pass rate of 76 percent, compared to a pass rate of 85 
percent for foreign citizens who are first-time test takers. For Step 
2-CS, scores generally are lower. U.S. citizens who are first-time test 
takers have a pass rate of 82 percent, compared to a pass rate of 70 
percent for foreign citizens who are first-time test takers.
    As noted in the preamble to the NPRM, the HEA does not currently 
provide an exemption for any foreign graduate medical schools, even 
those with small numbers of U.S. students, from the USMLE pass rate 
requirement, with the exception of those that have a clinical training 
program that had State approval continuously since January 1, 1992. The 
Department does not have the authority to expand that statutory 
exemption to include other schools, delay implementation of the 75-
percent threshold, or enter into compliance agreements allowing schools 
that do not meet the statutory requirement to continue participation. 
While the NCFMEA report did recommend delaying the implementation of 
the increased 75-percent threshold until 2014 to allow a stepped 
approach to the higher threshold, the recommendation recognized that 
Congress would need to change the law before this recommendation could 
be implemented.
    In addition, participation in the American Medical Association's 
(AMA) ``Fifth Pathway'' program does not satisfy the criteria for the 
pass rate exemption. Individuals participating in the Fifth Pathway 
program do not complete a foreign graduate medical school's program and 
do not receive the school's credential, so are not considered to have 
been attending a Title IV, HEA eligible program. In addition, we note 
that the AMA has decided that it will not support the Fifth Pathway 
program as a route to residency for individuals pursuing the Fifth 
Pathway program after December, 2009. Finally, the Department continues 
to believe that the methodology established in the proposed regulations 
allowing for combined step/test pass rate results for foreign graduate 
medical schools with small numbers of U.S. students sufficiently 
addresses concerns as to the reliability of pass rates as indicators of 
quality at such schools.
    Changes: We have revised Sec.  600.55(d)(1)(iii), (f)(1)(ii), and 
(f)(3) to require foreign graduate medical schools to report on USMLE 
pass rates for all students and graduates, regardless of their 
citizenship.
    Comments: None.
    Discussion: These final regulations require a foreign graduate 
medical school to submit USMLE pass rate information for a calendar 
year, rather than an award year, as was proposed. The Department is 
making this change for consistency with the Department's current 
request for pass rate information, which requires information for the 
2009 calendar year. The change will allow the Department to evaluate 
data from a consistent period to facilitate its evaluation of the 
potential impact of the 75-percent pass rate requirement and to advise 
Congress of any necessary statutory changes to t