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Shoptalk 602, May 3, 2011


Industry Update

ED issues important guidance regarding changes to Federal Pell Grant Program

On April 27, 2011, ED published Dear Colleague Letter (DCL) P-11-02, which provides guidance about recent legislative changes that affect the Federal Pell Grant Program. These changes are a result of the Department of Defense and Full-Year Continuing Appropriations Act of 2011 (Public Law 112-10), which was signed by the president on April 15, 2011.

This new law does not change either the maximum award or the maximum expected family contribution (EFC) that are outlined in the 2011-12 Pell payment and disbursement schedules. However, it does contain a provision that repeals Section 401 (b)(5) of the Higher Education Act (HEA), which allows an eligible student to receive up to two Pell grant scheduled awards in an award year. This change is effective with award year (AY) 2011-12.

To help schools implement this significant change and lessen the impact on students, the DCL explains that a student may still receive a second Pell grant scheduled award for a crossover payment period that is assigned to AY 2010-11. Additionally, the new law waives the regulatory requirement that a school assign a crossover payment period to the award year in which the student will receive a greater Pell grant payment for the payment period. Schools are encouraged to review the examples ED provides in the DCL to understand the implications associated with the assignment of the summer crossover period to AY 2010-11 versus AY 2011-12.

Finally, ED reminds schools that AY 2010-11 is the last award year for the Academic Competitiveness Grant (ACG) and National SMART Grant programs. Therefore, any awards for a 2011 crossover payment period must be assigned to AY 2010-11.

Learn more
The letter is available on ED's Information for Financial Aid Professionals website. For questions, schools may contact ED's Research and Customer Care Center at (800) 433-7327, or send an email to fsa.customer.support@ed.gov.

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New guidance on state authorization rule issued

On April 20, 2011, ED issued guidance in Dear Colleague Letter (DCL) GEN-11-11 to clarify the Program Integrity final rule topic of state authorization as it relates to distance education. Schools offering distance education through online learning or correspondence study are encouraged to review the DCL closely.

In DCL GEN-11-11, ED reminds schools that state authorization is a Title IV-program eligibility requirement for students enrolled in any educational program, including a program offered via distance education. ED also refers to recent guidance published in DCL GEN-11-05 on the topic of state authorization, which includes a subsection on distance education and defines good-faith efforts by schools to comply with the new rules if approvals cannot be obtained by July 1, 2011, the effective date of the state authorization regulations (see questions 15 - 23). ED reiterates that for purposes of complying with the institution-level requirements of the new rules described in §600.9(a) and (b), schools unable to obtain appropriate state authorization by July 1, 2011, may request up to two one-year extensions to demonstrate compliance no later than July 1, 2013 (see discussion on pp. 66833 and 66863 of the preamble to the final rules).

ED's latest guidance in DCL GEN-11-11 acknowledges that schools may be facing particular challenges in obtaining state approval for distance education offerings as required in §600.9(c) for a number of reasons, including the following:

  • Some states are in the process of establishing new requirements or creating additional application procedures.
  • Some states are considering steps to modify or update authorization requirements to coordinate such authorizations with other states and streamline authorization processes.
  • Some higher education associations and schools are preparing information on states' requirements in an effort to assist schools with compliance efforts.

Taking into consideration these challenges, ED stated in DCL GEN-11-11 that it will not initiate any action to establish school repayment liabilities or limit student eligibility for distance education activities undertaken before July 1, 2014, so long as the school is making good-faith efforts to identify and obtain necessary state approval before that date. Evidence of good-faith efforts by a school could include any one or more of the following items:

  • Documentation that a school is developing a distance education management process for tracking students' place of residence when engaged in distance education
  • Documentation that a school has contacted a state directly to discuss programs the school is providing to students in that state to determine if authorization is needed
  • An application submitted to a state, even if it is not yet approved
  • Documentation from a state that a submitted application is pending approval

Consistent with previous guidance, DCL GEN-11-11 indicates that, if a state has no applicable regulation or law, then no action on the part of a school is required for that state. Additionally, if a state is in the process of establishing new requirements or creating application procedures, good-faith efforts would require a school to seek authorization only after the new requirements or procedures are established.

ED will carefully review instances where it does not appear that a school is making good-faith efforts to comply with the new rules, such as where documents show that a school knew of a state requirement and willfully refused to comply with it.

Finally, ED indicates its willingness to work with states and other appropriate parties to support their efforts to develop a comprehensive directory of requirements that assists schools in complying with individual state requirements. ED is also supportive of state efforts to coordinate activities and develop common applications or state rules wherever possible to facilitate school compliance.

To learn more
For more information on the Program Integrity final rules and to obtain this and other DCLs, visit TG's Program Integrity Final Rules Web page. For questions, please contact TG's Customer Assistance team at (800) 845-6267, or send an email message to cust.assist@tgslc.org.

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Gainful employment focus: Determining if an educational program is subject to GE rules

In Shoptalk edition 601, TG provided a brief announcement about the release of Dear Colleague Letter (DCL) GEN-11-10, which provides guidance on the gainful employment (GE) rules that are effective July 1, 2011. The Higher Education Act (HEA) and current federal regulations specify that a Title IV-eligible program must either lead to a degree or prepare students for gainful employment in a recognized occupation. This article will focus on the three types of schools eligible to participate in the Title IV programs, and outline which of their programs are subject to the GE rules. Remaining issues included in the DCL will be covered in a follow-up Shoptalk article.

Institution of higher education
An "institution of higher education," as defined in federal regulations at §600.4, is a public or private, nonprofit educational institution that provides associate, baccalaureate, graduate, or professional degree programs. In addition, such a school may:

"Provide an educational program … that is at least a one academic year training program that leads to a certificate, or other nondegree recognized credential, and prepares students for gainful employment in a recognized occupation."

While the regulations make clear that all Title IV-eligible certificate and nondegree programs offered by these schools are intended to prepare students for gainful employment in a recognized occupation, the DCL describes the specific types of certificate programs that are affected, which include:

  • Undergraduate, post-baccalaureate, graduate, and post-graduate certificate programs. Teacher certification programs subject to the GE rules include those in which a school provides the credential itself and those consisting of necessary coursework for a student to receive a teaching credential or certification from the state.
  • Approved comprehensive transition programs offered to students with intellectual disabilities.

ED also clarifies that:

  • Awarding a certificate as part of a degree program does not create a GE program based on the awarding of the certificate.
  • A program at least two academic years in length, in which all courses are acceptable for full credit toward a bachelor's degree, is not subject to the GE rules.
  • Preparatory coursework for enrollment in an eligible program is not considered to be a GE program.

Lastly, while this type of school primarily offers degree programs, it is likely that such a school will have one or more programs affected by the GE rules. Thus, this type of school needs to take inventory of its Title IV-eligible nondegree and certificate programs to ensure that it is prepared to comply with the GE data-reporting and disclosure requirements applicable to these programs.

Proprietary institution of higher education
A "proprietary institution of higher education," as defined in federal regulations at §600.5, is a for-profit educational institution that:

"Provides an eligible program of training, as defined in §668.8, to prepare students for gainful employment in a recognized occupation."

In accordance with the statutory definition of this type of school, the DCL provides that virtually all programs offered by proprietary institutions are subject to the GE rules, including:

  • Undergraduate and graduate degree programs
  • All certificate programs, including undergraduate, post-baccalaureate, graduate, and post-graduate programs. Teacher certification programs subject to the GE rules include those in which a school provides the credential itself and those consisting of necessary coursework for a student to receive a teaching credential or certification from the state.
  • Approved comprehensive transition programs offered to students with intellectual disabilities.

Based on a statutory provision, there are certain circumstances described in the DCL in which a program leading to a baccalaureate degree in liberal arts is exempt from the GE rules.

Additionally, preparatory coursework for enrollment in an eligible program is not considered to be a GE program.

Postsecondary vocational institution
A "postsecondary vocational institution," as defined in federal regulations at §600.6, is a public or private nonprofit educational institution that:

"Provides an eligible program of training, as defined in §668.8, to prepare students for gainful employment in a recognized occupation."

Similar to the definition of "proprietary institution of higher education," the following programs offered by postsecondary vocational institutions are subject to the GE rules:

  • Undergraduate and graduate degree programs
  • All certificate programs, including undergraduate, post-baccalaureate, graduate, and post-graduate programs. Teacher certification programs subject to the GE rules include those in which a school provides the credential itself and those consisting of necessary coursework for a student to receive a teaching credential or certification from the state.
  • Approved comprehensive transition programs offered to students with intellectual disabilities

Preparatory coursework for enrollment in an eligible program is not considered to be a GE program.

Learn more
For more information on the Program Integrity final rules and to obtain these and other DCLs, visit TG's Program Integrity Final Rules Web page. For questions, please contact TG's Customer Assistance team at (800) 845-6267, or send an email message to cust.assist@tgslc.org.

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