Shoptalk 530, November 17, 2009

Industry Update

Fall 2009 Negotiated Rulemaking on school-related issues is underway: Part I

As reported recently in Shoptalk, ED has established two committees, or "teams," to develop proposed regulations on a variety of issues through the Negotiated Rulemaking (Neg Reg) process. Team I will discuss issues relating to institutional program integrity, while Team II will consider topics specific to foreign institutions. Team I held its first meeting on November 2-6. The overview below offers a partial summary of the issues this Neg Reg committee has begun discussing. The remaining issues will be considered in a subsequent Shoptalk article.

Definition of high school diploma for the purpose of establishing institutional eligibility to participate in the Title IV programs, and student eligibility to receive Title IV aid
Should ED develop regulations that define a "high school diploma" for the purpose of establishing an institution's eligibility to participate in the federal student aid programs and to ensure that only eligible students receive federal student aid? Also, what steps can ED, the states, and the education community take to confirm the validity of high school diplomas and identify credentials obtained through diploma mills?
Ability to benefit
How should regulations address concerns raised by the Government Accountability Office (GAO) about the ability-to-benefit (ATB) test publishers prepare and submit to ED? Should certification requirements for ATB test administrators be strengthened?

Additionally, what should be considered in implementing the ATB provision included in the Higher Education Opportunity Act (HEOA) that permits students to demonstrate ATB by satisfactory completion of six credit hours or the equivalent coursework applicable toward a degree or certificate offered by the institution?
Misrepresentation of information to students and prospective students
Should ED revise the regulations or provide additional guidance about the types of statements and communications that could constitute "misrepresentation"? If so, should ED harmonize those rules with similar rules issued by the Federal Trade Commission that apply to privately owned institutions that do not offer a degree program?
Incentive compensation
One component of an institution's Program Participation Agreement is a prohibition on providing any commission, bonus, or other incentive payment to any individual or entity engaged in recruiting or admission activities or in making decisions regarding the award of Title IV funds, when that payment is based directly or indirectly on success in securing enrollments or financial aid. The regulations implementing this provision of the HEA specify twelve types of payment and compensation plans that do not violate this statutory prohibition, as detailed in 34 CFR 668.14(b)(22)(ii). Should these "safe harbors" be reexamined?
State authorization as a component of institutional eligibility
To begin and continue to participate in the Title IV student aid programs, the HEA requires an institution (with the exception of a foreign institution) to be legally authorized to provide a postsecondary educational program within the state in which it is located. However, some states do not expressly "authorize" institutions, instead relying upon other entities, such as accrediting agencies, for approval of institutions. Should the oversight provided by accrediting agencies be considered sufficient to fulfill the state authorization requirement? If not, should ED require that in order for an institution to be allowed to participate in the Title IV programs, a state must explicitly license or otherwise authorize an institution to offer postsecondary programs? If such an approach is taken, what should constitute "state authorization"?
Gainful employment in a recognized occupation
Some postsecondary education or training programs qualify students to receive federal student aid by virtue of the fact that they "prepare students for gainful employment in a recognized occupation." Accrediting agencies exercise considerable control over approval of such programs by evaluating curricula and student outcomes. But should ED attempt to establish a standard for what constitutes "gainful employment"? And should ED require that institutions cite the occupational names and codes for such training programs per the U.S. Department of Labor's (DOL) Standard Occupational Classification (SOC) system? Finally, should additional disclosures to prospective students about a program's cost, placement rate, and salary expectations be required, and if so, how should these disclosures be made?
Definition of a credit hour
Credit hours are used to measure degree completion and to award Title IV aid, but there is no commonly accepted definition of a "credit hour." Should ED establish minimum standards to define a credit hour for purposes of federal student aid, or is the oversight currently provided by state authorities and accrediting agencies sufficient? Also, should ED revisit the clock hour to credit hour conversion formula?

More information
Team I will hold its second session on December 7-11, 2009. ED has developed a Team I Web page, available at www.ed.gov/policy/highered/reg/hearulemaking/2009/integrity.html, that includes the Team I list of negotiators, the committee's draft organizational protocol, and the issue summaries developed by ED (excerpts of which were provided above).

A similar page exists for the Team II committee, which will hold its first session on November 16-20, 2009, at www.ed.gov/policy/highered/reg/hearulemaking/2009/foreign-schools.html.

To provide comments on the issues under consideration, please consult the list of negotiators provided on ED's Neg Reg Web page for the appropriate team.

Once the Neg Reg sessions have concluded, ED will publish proposed rules and provide an opportunity for community review and comment. Final rules will be published no later than November 1, 2010, and will be effective July 1, 2011.

ED releases announcement regarding increased aid for students whose parent or guardian died as a result of military service in Iraq or Afghanistan

On November 6, ED released an electronic announcement on the "Operational Implementation of Increased Title IV Student Assistance to Children of Certain Deceased Members of the U.S. Military" as provided by recent amendments made to the Higher Education Act.

Under these provisions, otherwise eligible students whose parent or guardian died as a result of U.S. military service in Iraq or Afghanistan after September 11, 2001, and who meet certain age and enrollment requirements, may be eligible to receive increased amounts of Title IV student financial assistance. To be eligible for increased Title IV aid under these provisions, the student must have completed a Free Application for Federal Student Aid (FAFSA), not previously have received a bachelor's degree (except for certain teacher certification candidates), and meet all Title IV student eligibility requirements. Such students are eligible for increased aid under these provisions if the student was 23 years of age or younger when the parent or guardian died, or, if the student was over age 23, he or she was enrolled at an institution of higher education at the time of the parent or guardian's death.

The types and amounts of increased assistance depend on the student's calculated Expected Family Contribution (EFC) and the award year, as described in the announcement.

The announcement also describes ED's process for identifying eligible students, the origination and disbursement of maximum Pell grant awards for 2009-10, and process enhancements for 2010-11 and beyond.

More information
The announcement, including contact information for questions about various operational components of this program, is available on the Information for Financial Aid Professionals website at http://ifap.ed.gov/eannouncements/110609DODMatch.html.

ED announces IRS data retrieval process for 2009-10 FAFSA on the Web

On November 5, ED announced its plans to initiate a process that will enable Title IV student aid applicants and parents of dependent applicants to transfer certain tax return information from an Internal Revenue Service (IRS) website directly to their 2009-10 Free Application for Federal Student Aid (FAFSA) on the Web application. ED notes that allowing applicants to transfer information directly from the IRS' database into the FAFSA will reduce time, effort, and data entry for FAFSA applicants and their parents. The process change will also improve data accuracy and consistency and reduce the need for corrections.

IRS data retrieval functionality will be implemented in the 2009-10 version of FAFSA on the Web for initial and renewal applications on or about January 24, 2010. During this initial pilot period, ED will analyze 2009-10 application submissions in order to determine usage and performance, gather feedback from users (both applicants and schools), and identify potential future improvements. In the summer of 2010, ED will implement IRS data retrieval functionality for the 2010-11 processing cycle.

The announcement also includes more information regarding the IRS data retrieval process for 2009-10 in a question and answer format, addressing such issues as:

Who is eligible to use the IRS data retrieval process
Who cannot use the IRS data retrieval process
Who should not use the IRS data retrieval process
How the IRS data retrieval will process work
What output students and financial aid administrators will receive as a result of the use of the IRS data retrieval process
Whether the verification process will change as a result of IRS data retrieval functionality

More information
The full announcement is available on the Information for Financial Aid Professionals website at http://ifap.ed.gov/eannouncements/110509OverviewIRSDataRetrieval0910.html.

For more information, schools should contact CPS/SAIG Technical Support at (800) 330-5947 (TDD/TTY (800)511-5806), or send an email message to CPSSAIG@ed.gov. Students may contact the Federal Student Aid Information Center at (800) 4-FEDAID ((800) 433-3243)), or send an email message to FederalStudentAidCustomerService@ed.gov. TDD/TTY service is also available at (800) 730-8913.