FEDERAL PROGRAM INTEGRITY REGULATIONS

FEDERAL PROGRAM INTEGRITY REGULATIONS

Spring 2011Webinar Series

Webinar 1

PI REGS: AGENDA

• Background• Definition of a Credit Hour §600.2, 602.24• Clock/Credit Hour Conversion §668.8• Adding New Programs §600.10, 600.20• Incentive Compensation §668.14

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PI REGS: BACKGROUND

• US Department of Education held regional hearings in 2009 to solicit public input

• USED formed two Negotiated Rulemaking Committees– Team One focused on Program Integrity– Meetings in 11/09, 12/09, 01/10

• 14 issues—committee did not reach consensus

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PI REGS: BACKGROUND

• These regulations do not implement legislation – Administration’s agenda

• Two NPRMs: – 06/18/10 - Program Integrity Regulations – 07/26/10 - Gainful Employment Regulations

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PI REGS: BACKGROUND

• Final Regs 10/29/10– Effective 07/01/11– Program Integrity Regs

• DCL GEN-11-05 and DCL GEN-1106

– Gainful Employment—Adding New Programs

• Gainful Employment final regs not yet published– USED estimates late March 2011 – Earliest effective date is 07/01/12

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PI REGS: DEFINITION OF A CREDIT HOUR

• Establishes a minimum basis for a credit hour• Used to determine eligibility for and amount of

federal financial aid• Applies to all credit hour educational programs at

all Title IV eligible programs– Includes degrees– Includes programs offered via distance education, in

whole or in part

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• Institution can use different measure for academic purposes– ACCET uses 15/30/45:1 for semester credits,

10/20/30:1 for quarter credits– Some states mandate a clock/credit hour conversion

ratio

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• In 34 CFR §600.2, a credit hour is defined as

“an amount of work represented in intended learning outcomes and verified by evidence of student achievement that is an institutionally established equivalency that reasonably approximates not less than--

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(1) One hour of classroom or direct faculty instruction and a minimum of two hours of out of class student work each week for approximately fifteen weeks for one semester or trimester hour of credit, or ten to twelve weeks for one quarter hour of credit, or the equivalent amount of work over a different amount of time; or

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(2) At least an equivalent amount of work as required in paragraph (1) of this definition for other academic activities as established by the institution including laboratory work, internships, practica, studio work, and other academic work leading to the award of credit hours.”

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• Accrediting agency requirements (§602.24):

As part of initial accreditation or renewal of accreditation, the agency is required to conduct “an effective review and evaluation of the reliability and accuracy of the institution’s assignment of credit hours.” The agency meets this requirement if it:

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– Reviews the institution’s policies and procedures for assigning credit hours

– Reviews the application of the policies and procedures to the institution’s programs and courses

– Makes a reasonable determination of whether the institution’s assignment of credit hours conforms to commonly accepted practice in higher education

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• The accrediting agency:– May use sampling or other methods in this evaluation– Must take actions it deems appropriate to address

deficiencies it identifies as part of its review and evaluation

– Must promptly notify the USED if it detects systemic noncompliance with the agency’s policies or significant noncompliance regarding one or more of the institution’s programs

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• If an institution’s accreditor is not compliant by 07/01/11, the institution must apply the mandatory clock/credit hour conversion ratio in §668.8(l)(1)

• ACCET Document 15– Drafted following the December 2010 Commission

meeting– Will be reviewed and finalized at April 2011 meeting

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PI REGS: CLOCK/CREDIT HOUR CONVERSION

• Eligible program offered in credit hours--§668.8– At least a two year program that leads to an associate

degree, bachelor’s degree, professional degree, or equivalent degree; OR

– Each course within the program is acceptable for full credit toward a degree offered by the institution; OR

– Institution uses the clock/credit hour formula contained in §668.8 paragraph (l)

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• Courses fully acceptable toward a degree:– The degree requires at least two academic years of

study AND– The institution demonstrates that students enroll in,

and graduate from, the degree program.

• Adding certificate/diploma and degree at the same time—– Certificate/diploma cannot use this option until the

degree program has graduates

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• Exception: a program is considered to be a clock hour program for Title IV purposes if:– The program is required to measure student progress

in clock hours when receiving federal or state approval or licensure to offer the program; OR

– “Completing clock hours is a requirement for graduates to apply for licensure or the authorization to practice the occupation that the student is intending to pursue;” OR

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– The credit hours awarded by the institution for the program are not in compliance with §600.2; OR

– The institution does not provide the clock hours that are the basis for the credit hours awarded for the program and requires attendance in the clock hours on which the credit hours are based, except under the excused absence policy in §668.4(e)

• Does not apply if a “limited component” of the program must include a minimum number of clock hours

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• From the comments: “. . .an institution must require attendance in the clock hours that are the basis for credit hours awarded, except as provided in current §668.4(e). . .These programs are still required to contain the clock hours that support the conversion under the regulations, and institutions are expected to make sure that those clock hours are completed by students, subject to the institution’s existing policies for excused absences and make-up classes.”

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• §668.4(e): an institution does not have to require that students make up excused absences if1. The institution has a written policy that permits

excused absences; and2. The number of excused absences does not exceed

the lesser of a) The accrediting agency’s policy on excused absences; orb) The state agency’s policy on excused absences; orc) 10% of the clock hours in the payment period

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• “An institution should ensure that students taking a program in credit hours are still completing the clock hours associated with the conversion, and excused absences from the classes should be within the tolerance permitted in the clock hour regulations.”

• These programs can be offered in credit hours for academic or other purposes, even though they must be measured in clock hours for financial aid

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• 668.8(l) formula:

– 37.5:1 for semester credit hours(under current regulations, 30:1)

– 25:1 for quarter credit hours(under current regulations, 20:1)

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• OR less than 37.5:1 or 25:1 IF:– The accrediting agency has not identified any

deficiencies in the institution’s policies and procedures, or their implementation, for determining credit hours; AND

– the clock hours of in-class instruction combined with the out-of-class student work equal or exceed the 37.5:1 or 25:1 (900 clock hours for one academic year); AND

– the institution’s conversion uses at least 30:1 for semester credits or 20:1 for quarter credits

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• GEN-11-06– Published March 18, 2011– Provides background on why the USED developed

these regulations—IG reviews at 3 of 7 regional accrediting agencies found the oversight of institutional credit hour assignment “insufficient”—these 3 agencies account for more than 70% of all federal student aid

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– USED is “explicitly providing institutions the flexibility to demonstrate alternative methods of measuring student learning”--the key is “verifiable student achievement of institutionally established learning outcomes”

– “Credits may be awarded on the basis of documentation of the amount of work a typical student is expected to complete within a specified amount of academically engaged time, or on the basis of documented student learning calibrated to that amount of academically engaged time for a typical student.”

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• For 2011-2012, if a school is in the process of complying with these requirements, the USED will consider the institution to be making a good-faith effort, and “Department staff will take this effort into consideration when reviewing an institution’s or accrediting agency’s implementation of the regulations.”

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• Guidance for accrediting agencies in the DCL:– Not expected to review every course and related

documentation; agency is to review the policies and procedures that the institution uses to assign credit hours, and to review the application “by a sampling of the institution’s degree and nondegree programs to encompass a variety of academic activities, disciplines, and delivery modes.”

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• ACCET Proposed Credit Hour/Clock Hour Policy.

• Example of a Lesson Plan with homework hours & how they relate to the credit hour conversion.

• Example of a Grade Sheet showing how homework hours impact the overall module grade.


• Medical Assisting (MA) Program example

– 810 clock hours over 36 weeks– First 30 weeks is ½ lecture, ½ lab, total of 690 hours– Classes meet 5 days a week, approximately

4.5 hours per day for classroom portion– Last 6 weeks is 120 hours of externship

– Program is 37 academic credit hours for ACCET

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– School wants to use 30:1 semester credit hour conversion (instead of 37.5:1) for financial aid credit hours

– New regs require MINIMUM of 900 total hours of in-class and out-of-class work, so homework MINIMUM is 90 hours

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– Institution’s policies require documentation of homework for lecture and lab hours (no assigned homework for externship hours)

– Program includes 690 clock hours of lecture/lab, which equates to 23 FA semester credits

– 23 x 7.5 [hours of outside of class work] = 172.50 presumably will comply with ACCET Document 15

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– How does this work for the student? – 172.5 hours of homework over 30 classroom weeks is

5.75 hours per week of homework, or 1.15 hours per night on average

– School is documenting actual homework now, and estimates total homework hours will be between 200 and 300 hours for this MA program

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GE REGS: ADDING NEW PROGRAMS

• Separate final regs published 10/29/10• Remaining issues of GE regulations – Final regs yet to be published– Anticipated date is late March 2011– USED received over 90,000 comments to NPRM

• Implements GE new program regs 07/01/11– These interim requirements will remain in place until

“performance based standards can be implemented for approving additional programs using gainful employment measures”

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• USED’s position:– “the Department is concerned that some institutions

might attempt to circumvent the proposed gainful employment standards. . .by adding new programs before those standards take effect.”

– BUT—for most schools with “good records administering their programs”, new programs will meet the requirements and will not need to be approved by the USED

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• Schools must notify USED of intent to add new gainful employment programs (668.8(c)(3) or (d))– These programs must lead to gainful employment in

order to be eligible for Title IV aid– All certificate and diploma programs; all degree

programs at for-profit schools (ex. BA in liberal arts) – Notice must be submitted at least 90 days before the

first date of classes– School must include the date of the first day of class

of the new program

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• Notice must describe how:– The institution determined the need for the program– The program was designed to meet local market

needs (or for online programs, regional or national market needs)

– The program was “reviewed or approved by, or developed in conjunction with, business advisory committees, program integrity boards, public or private oversight or regulatory agencies, and businesses that would likely employ graduates of the program.”

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• Notice must include:– Documentation of approval from accrediting agency– Description of “any wage analysis it may have

performed, including any consideration of BLS wage data that is related to the new program.”

– Information that describes “how the program would be offered in connection with, or in response to, an initiative by a governmental entity”

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• USED will:– Notify the school at least 30 days before the first day

of class if the program is required to be approved, and treat the school’s notice of the program addition as an application for the program

– Review the program notice or application taking into consideration the following factors:1. “The institution’s demonstrated financial responsibility

and administrative capability in operating its existing programs,

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2. Whether the additional educational program is one of several new programs that will replace similar programs currently provided by the institution, as opposed to supplementing or expanding the current programs provided by the institution,

3. Whether the number of additional educational programs being added is inconsistent with the institution’s historic program offerings, growth, and operations, and

4. Whether the process and determination by the institution to offer an additional educational program that leads to gainful employment in a recognized occupation is sufficient.”

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• If the institution’s notice to add the new program is not timely—not submitted at least 90 days before the first day of class—the program must be approved by USED to be Title IV eligible

• USED will take 45 to 90 days to review the notice or program application (per regulatory update workshop)

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• USED may request additional information from the school, or consult with the accrediting agency, state, BLS or any entity listed in the institution’s notice during their review

• If USED denies the new program application, the school will be able to respond to the reasons for the denial and request reconsideration– The school can still offer the program—but it is not

eligible for Title IV aid until the USED approves it

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• What is a new program?– CIP code different from any other program offered by

the institution (see ECAR for CIP codes);– A program with the same CIP code as another

program offered by the school, but leads to a different degree or certificate; or

– A program that the school’s accrediting agency determines to be an additional program.

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PI REGS: INCENTIVE COMPENSATION

• USED is revising the current regulations to align with the statute

• Eliminates all safe harbors currently allowable– “the Department’s experience has demonstrated that

unscrupulous actors routinely rely upon these safe harbors to circumvent the intent of [the law].”

– Revised regs “comprehensively ban the use of commissions, bonuses, and other direct forms of compensation based on success in securing enrollments or the award of financial aid.”

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• Prohibition applies to recruitment for non-Title IV as well as Title IV eligible programs (institutional eligibility requirement contained in PPA)

– Only exception is the recruitment of foreign non-Title IV aid eligible students in a foreign country

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• USED has developed a two-part test for determining if a payment is an incentive, bonus or commission:– “(1) Whether it is a commission, bonus, or other

incentive payment, defined as an award of a sum of money or something of value paid to or given to a person or entity for services rendered; and

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– “(2) Whether the commission, bonus, or other incentive payment is provided to any person based in any part, directly or indirectly, upon success in securing enrollments or the award of financial aid, which are defined as activities engaged in for the purpose of the admission or matriculation of students for any period of time or the award of financial aid.

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– If the answer to each of these questions is yes, the commission, bonus, or incentive payment would not be permitted under the statute.”

• Permitted practices under the safe harbors “will neither be automatically prohibited, nor automatically permitted.”

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• “Securing enrollments” has been defined:– “to specifically include (as examples) contact through

preadmission or advising activities, scheduling an appointment for the prospective student to visit the enrollment office or any other office of the institution, attendance at such an appointment, or involvement in a prospective student’s signing of an enrollment agreement or financial aid application”

– “includes activities through the completion of an educational program”

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• What a school CANNOT do:– Pay incentives based on retention or graduation– Provide gifts or awards to students or alumni for

referrals– Adjust employee compensation multiple times a year– “(C)ompensation must not be based in any part,

directly or indirectly, on success in securing enrollments or the award of financial aid.”

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• What a school CANNOT do:– Pay a commission, bonus, or incentive payment to any

entity, institution or organization “that undertakes the recruiting or the admitting of students or that makes decisions about and awards title IV, HEA program funds”

– Pay a commission, bonus or incentive payment to any “higher level employee with responsibility for recruitment or admission of students, or making decisions about awarding title IV, HEA program funds”

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• What a school CAN do:– Have a hierarchy of recruitment personnel with

varying salary scales– Promote and demote recruitment personnel– Pay for internet-based services based on “clicks”– Pay recruitment personnel a fixed salary “to ensure

that their ability to focus on what is in a student’s best interest is not compromised.”

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• What a school CAN do:– Make merit-based adjustments to employee

compensation (“provided that such adjustments are not based in any part, directly or indirectly upon success in securing enrollments or the award of financial aid”).

– Base salary adjustments on seniority or length of employment

– Use “standard evaluative factors” to measure employee performance

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• What a school CAN do:– Make profit-sharing payments “so long as they are

not provided to any person who is engaged in student recruitment or admission activity or in making decisions regarding the award of title IV, HEA program funds.”

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• GEN-11-05– Published March 17, 2011

– Provides additional guidance on state authorization, incentive compensation and misrepresentation

– Includes tables of “covered” and “exempt” activities for incentive compensation

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• GEN-11-05 – exempt activities:

“Profit-sharing plans, including 401(k) type plans, from which distributions are made to individuals on a basis that is neutral with respect to the role the recipient plays in student recruitment or the securing of financial aid”

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• GEN-11-05 – exempt activities:

“Employee benefits plans offered to all employees on a basis that is neutral with respect to the role the recipient plays in student recruitment or the securing of financial aid”

“Payments to senior executives with responsibility for the development of policies that affect recruitment, enrollment, or financial aid”

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CONTACT INFORMATION

Judy Hendrickson [email protected]

Kris Strom [email protected]

Peggy Tiderman [email protected]

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mailto:[email protected]



FEDERAL PROGRAM INTEGRITY REGULATIONS

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