Posted: October 20, 2022
Author: Federal Student Aid
Subject: Final, Correction: Federal Student Loan Programs and Student Assistance General Provisions
The Department of Education (Department) corrects the text in regulations issued under the Higher Education Act of 1965, as amended (HEA) and published in the Federal Register on: September 23, 2019, for provisions relating to Borrower Defense to Repayment and Financial Responsibility; November 1, 2019, for provisions relating to Accreditation, State Authorization, and the Student Assistance General Provisions; and September 2, 2020, for provisions relating to Distance Education and Innovation, Institutional Eligibility, and the Student Assistance General Provisions.
To view this Federal Register publication, click here.
Summary of Corrections
The Department’s Borrower Defense to Repayment Rule, published in the Federal Register on September 23, 2019, (84 FR 49788) contains the following errors:
1. The regulations in 34 CFR 668.175(c) mistakenly suggest that an institution that is not financially responsible may participate as a financially responsible institution by providing any of the financial protections included in 34 CFR 668.175(h). However, under Section 498(c) of the HEA, some options included in 34 CFR 668.175(h) do not make an institution financially responsible. To conform the regulations to the provisions of the HEA, the reference in 34 CFR 668.175(c) is corrected to refer only to the surety provisions in 34 CFR 668.175(h)(2)(i).
2. The audit requirements in 34 CFR 668.23(d) do not specify that the Supplemental Schedule is part of the audited financial statements submission, as required under 34 CFR 668.172(a) and Section 2 of Appendix A and B to subpart L of the General Provisions regulations, and do not cite the current audit guidance and accounting standards. This correction updates 34 CFR 668.23(d).
3. The financial ratios in 34 CFR 668.172(b) do not conform to the related revisions to the accounting terminology and to the definition of terms as specified in Appendices A and B to subpart L of the General Provisions regulations. This correction updates 34 CFR 668.172(b).
4. Two of the terms described in 34 CFR 668.172(c)(1), “extraordinary gains and losses”, and “income or losses from discontinued operations” do not reflect changes in accounting standards. The accounting standards eliminated “extraordinary gains and losses” and modified the requirements for “income and losses from discontinued operations.” This correction updates 34 CFR 668.172(c) to conform to accounting standards.
The Department’s Accreditation and State Authorization Rule, published in the Federal Register on November 1, 2019, (84 FR 58834) contained the following errors:
1. The regulations in 34 CFR 602.32(h)(4)(ii) relating, in part, to the disposition of an accrediting agency’s recognition conflict with related provisions in 34 CFR 602.34, Advisory Committee meetings, and 34 CFR 602.36, Senior Department Official’s decision. Under 34 CFR 602.23(h)(4)(iii), Department staff have the option to recommend that the senior Department official renew an agency with compliance reporting, but that option is not aligned with 34 CFR 602.34(g) and 34 CFR 602.36(e), which require continuing recognition pending submission of a compliance report. This correction updates 34 CFR 602 (h)(4)(ii) to conform with the provisions in 602.34(g) and 602.36(e). We note that we acknowledged that 34 CFR 602.32(h)(4)(ii) did not align with 602.36(e) at page 27437 of the proposed rule (84 FR 27404) and it was an oversight that we did not correct this inconsistency at that time. Additionally, allowing renewal under 34 CFR 602.32(h)(4)(ii), when there are noncompliant issues would violate section 496b(d) of the HEA (20 U.S.C. 1099b), which provides that no accrediting agency or association may be determined by the Secretary to be a reliable authority, unless the agency or association meets criteria established by the Secretary.
2. The eligible program regulations in 34 CFR 668.8(d)(4)(i) were not updated to conform to a related revision to 34 CFR 602.11. The amendment to § 602.11 revised the requirements for establishing the geographic area of an accrediting agency’s activities that may cause accrediting agencies previously defined as “regional agencies” to be defined instead as agencies whose activities extend throughout the United States. This correction updates 34 CFR 668.8(d)(4)(i) to conform with the current provisions in 34 CFR 602.11 by referring to accrediting agencies that were defined as regional areas on October 1, 2007 rather than referring to agencies that were previously defined as “regional.”
3. The provisional certification provisions in 34 CFR 668.13(c)(2)(i) erroneously reference paragraph (c)(1)(i) instead of paragraph (c)(1)(i)(A). The correction updates 34 CFR 668.13(c)(2)(i) with the correct cross-reference applicable to institutions seeking initial participation in the Title IV, HEA programs.
4. The provisional certification provisions in 34 CFR 668.13(c)(2)(ii) erroneously reference “paragraphs (c)(1)(ii), (iii), (iv) or (e)(2)” instead of referencing “paragraphs (c)(1)(i)(B), (C), (D) or (c)(1)(ii).” The correction updates 34 CFR 668.13(c)(2)(ii) with the correct cross-references.
5. The provisional certification provisions in 34 CFR 668.13(c)(2)(iii) erroneously reference paragraph (c)(1)(v) instead of paragraph (c)(1)(i)(E). The correction updates 34 CFR 668.13(c)(2)(iii) with the correct cross-reference.
6. The provisional certification provisions in 34 CFR 668.13(c)(1)(i)(E) erroneously reference 34 CFR part 603 instead of 34 CFR part 602. The correction updates 34 CFR 668.13(c)(1)(i)(E) with the correct cross-reference.
The Department’s Distance Education and Innovation Rule, published in the Federal Register on September 2, 2020, (85 FR 54742) contained the following errors:
1. The amendatory instructions at the end of the rule mistakenly instructed the Office of the Federal Register to revise § 600.10(c)(1)(iii) with language that was supposed to amend paragraph (c)(1)(ii). Consequently, § 600.10(c)(1)(ii) was not amended and the substance of § 600.10(c)(iii) was instead removed from the regulations. This correction restores the text in paragraph (c)(1)(iii) relating to the Secretary’s approval of short-term programs and revises paragraph (c)(1)(ii). These changes ensure that the language in § 600.10(c) reflects the language that the negotiated committee reached consensus on. For more information about the substance of the amendment to § 600.10(c)(2)(ii), please see discussion of this change in the Department’s April 2, 2020, notice of proposed rulemaking (85 FR 18650).
2. The accrediting agency regulations under 34 CFR 602.22(a)(1)(ii)(J) were not updated to conform to a related change made to the written arrangement provisions under 34 CFR 668.5(c)(3)(ii)(A). Current § 668.5(c)(3)(ii)(A) allows an ineligible institution or organization to provide more than 25 percent but less than 50 percent of an educational program in accordance with 34 CFR 602.22(a)(1)(ii)(J). However, accrediting agency approval of such an arrangement is required under 34 CFR 602.22(a)(1)(ii)(J). Notably, the negotiated rulemaking committee for the Distance Education and Innovation Rule reached consensus on the revisions to current § 668.5(c)(3)(ii)(A). This correction updates 34 CFR 602.22(a)(1)(ii)(J) to align with § 668.5(c)(3)(ii)(A), which is the language that the negotiated rulemaking committee agreed to.
Waiver of Proposed Rulemaking, Negotiated Rulemaking and Delayed Effective Date
In accordance with the Administrative Procedure Act, 5 U.S.C. 553, the Department generally offers interested parties the opportunity to comment on proposed regulations. However, the APA provides that an agency is not required to conduct notice-and-comment rulemaking when the agency, for good cause, finds that notice and public comment thereon are impracticable, unnecessary, or contrary to the public interest (5 U.S.C. 553(b)(B)). There is good cause to waive rulemaking here as unnecessary.
Rulemaking is “unnecessary” in those situations in which “the administrative rule is a routine determination, insignificant in nature and impact, and inconsequential to the industry and to the public.” Utility Solid Waste Activities Group v. EPA, 236 F.3d 749, 755 (D.C. Cir. 2001), quoting U.S. Department of Justice, Attorney General’s Manual on the Administrative Procedure Act 31 (1947) and South Carolina v. Block, 558 F. Supp. 1004, 1016 (D.S.C. 1983). However, the regulatory changes in this document are necessary to correct errors and to make routine technical updates. Thus, the Department has determined that publication of a proposed rule is unnecessary under 5 U.S.C. 553(b)(B).
In addition, under section 492 of the HEA (20 U.S.C. 1098a), all regulations proposed by the Department for programs authorized under title IV of the HEA are subject to negotiated rulemaking requirements. Section 492(b)(2) of the HEA provides that negotiated rulemaking may be waived for good cause when doing so would be “impracticable, unnecessary, or contrary to the public interest.” There is likewise good cause to waive the negotiated rulemaking requirement in this case, since, as explained above, notice and comment rulemaking is unnecessary.
The APA generally requires that regulations be published at least 30 days before their effective date, unless the agency has good cause to implement its regulations sooner (5 U.S.C. 553(d)(3)). As previously stated, because the final regulations correct errors and make routine technical updates, there is good cause to waive the delayed effective date in the APA and make the final regulations effective upon publication.
Sources:
Announcement: Final, Correction: Federal Student Loan Programs and Student Assistance General Provisions
Federal Registrar: Student Assistance General Provisions, Federal Family Education Loan Program, and William D. Ford Federal Direct Loan Program; Student Assistance General Provisions, The Secretary’s Recognition of Accrediting Agencies, The Secretary’s Recognition Procedures for State Agencies; Distance Education and Innovation; Corrections