2024-16102. Program Integrity and Institutional Quality: Distance Education, Return of Title IV, HEA Funds, and Federal TRIO Programs

Provision	Regulatory section	Description of proposed provision
Distance Education
Definitions	§ 600.2	Would add virtual locations to the definition of “additional location”; remove from the definition of “clock hour” asynchronous distance education options; and add a definition of “distance education course.”
Academic year	§ 668.3	Would make conforming changes to reflect that asynchronous coursework via distance education can only occur in credit-hour programs.
Reporting information	§ 668.41	Would establish a requirement for institutions to report to the Department students' enrollment in distance education and correspondence coursework.
R2T4
Treatment of title IV grant and loan funds if the recipient does not begin attendance	§ 668.21	Would allow a student who received a loan disbursement but never began attendance in a payment period or period of enrollment to repay loans funds they received under the terms of a promissory note.
Withdrawal Exemption	§ 668.22	Would exempt institutions from performing a return of title IV funds (R2T4) calculation in the event that (1) a student is treated as never having begun attendance; (2) the institution returns all tile IV aid disbursed to the student for that payment period or period of enrollments; (3) the institution refunds all institutional charges to the student for that payment period or period of enrollment; and (4)the institution writes off or cancels any current year balance owed by the student to the institutions due to the institution's return of title IV funds to the Department.
Last Date of Attendance	§ 668.22	Would codify that an institution that is required to take attendance must, within 14 days of a student's last date of attendance, document the student's withdrawal date.
Attendance Taking for Distance Education	§ 668.22	Would require that an institution is required to take attendance for each course offered entirely through distance education, except for doctoral dissertation research courses.
Leave of Absence for Confined or Incarcerated Individuals	§ 668.22	Would allow a confined or incarcerated individual, in a term-based setting, to not have to return from the leave of absence to where the student left off, and instead, the individual could return to a different point in their PEP.
Percentage of Payment Period Completed for Clock-Hour Programs	§ 668.22	Would streamline how institutions determine the percentage of the payment period completed for a clock-hour program.
R2T4 and Modules	§ 668.22	Would modify the regulations to consider a module part of the payment period (the denominator of the R2T4 calculation) so long as a student attends the module.
Federal TRIO programs
Talent Search program	§ 643.3(vi)	Would extend program eligibility to individuals who are enrolled in or seek to enroll in a high school in the United States, territories, or Freely Associated States.
Educational Opportunity Centers program	§ 644.3(vi)	Would extend program eligibility to individuals who are enrolled in or seek to enroll in a high school in the United States, territories, or Freely Associated States.
Upward Bound program	§ 645.3(6)	Would extend program eligibility to individuals who are enrolled in or seek to enroll in a high school in the United States, territories, or Freely Associated States. These individuals would not be eligible for direct cash stipends.

3. Discussion of Costs, Benefits, and Transfers

The Department has analyzed the costs and benefits of complying with the proposed regulations. Although many of the associated costs and benefits are not easily quantifiable, the Department currently believes that the benefits derived from the proposed regulations outweigh the associated costs, as discussed in sections 3.B. and 3.C. below.

The proposed regulations, which would apply to over 6,000 postsecondary institutions, would help ensure students are well served by the institutions of higher education they attend, increase access to postsecondary education for disadvantaged students, and ensure that the Federal Student Aid programs work in the best interests of students.

Due to the large number of affected recipients (6,003, as discussed more fully in the discussion of Establishing the Baseline (Section 3.A)), the variation in likely responses to any regulatory change, and the limited information available about current practices, the Department is not able to precisely estimate the likely costs, benefits, and other effects of the proposed regulations. Despite these limitations and based on the best available evidence as explained in the discussion of Establishing a Baseline (Section 3.A), the Department estimates present value net benefits of $148,421,308 over ten years at a 2 percent discount rate. This is equivalent to an annualized net benefit of $16,523,227 over ten years. The proposed regulations are expected to result in estimated costs of $128,216,509 in the first year following publication of the proposed regulations and yield significant benefits beginning in year five as set forth in the below table.^[21]

Year	Net annual costs
Year 1	$128,216,509
Year 2	109,169,616
Year 3	55,133,908
Year 4	55,133,908
Year 5	(26,004,836)
Year 6	(52,009,672)
Year 7	(78,014,508)
Year 8	(104,019,344)
Year 9	(130,024,180)
Year 10	(156,029,016)
Total Net Present Value (NPV), 2 percent	(148,421,308)
Annualized, 2 percent	(16,523,227)

As discussed in the Cost Estimates section (Section 3.B), the Year 1 costs include one-time costs associated with reviewing and making necessary changes to policies, procedures, and training to implement the proposed regulations. In addition to these estimated costs, the Department estimates benefits, which arise from the expanded eligibility for TRIO programs and ensuing long-term benefits to TRIO participants that would result from the proposed rule.

The assumptions, data, methodology, and other relevant materials, as applicable, on which the Department relied in developing its estimates are described throughout this Regulatory Impact Analysis (RIA).

3.A. Establishing a Baseline

3.A.1. Number of Affected Entities

Institutions of higher education would be subject to the proposed regulations. For purposes of establishing a baseline, this includes the number of institutions of higher education participating in programs under title IV of the HEA (such as Direct Loans, Federal Work Study, and Pell grants).

For purposes of this analysis, the Department bases its analysis of “postsecondary entities” on “institutions of higher education” as defined in section 102 of the HEA. It is assumed that 6,003 postsecondary institutions would be impacted by the proposed regulations. Among postsecondary institutions, institutions range from small, private, professional schools with fewer than 5 students enrolled in the fall of 2022 to large, public research universities with enrollments of more than 71,000 students and institutions operating mostly virtually with enrollments in excess of 156,000 students.

It is important to note that, across postsecondary institutions, there is wide variation in the number of students served, the number of employees, administrative structure, and annual revenue. This wide variation makes estimating the effects of the proposed regulations challenging, and the Department notes that the estimates provided are intended to reflect the average burden across the full spectrum of affected entities. As a result, estimates may be lower than the actual burden realized by, for example, larger institutions or institutions with more complex administrative structures, and larger than those actually realized by smaller institutions with less complex administrative structures.

3.A.2. Wage Rates

Unless otherwise specified, the Department's model uses mean hourly wages for personnel employed in the education sector as reported by the Bureau of Labor Statistics (BLS) ^[22] and a loading factor of 2.0 to account for the employer cost of employee compensation and benefits and indirect costs ( e.g., physical space, equipment, technology costs). When appropriate, the Department identifies the specific occupation used by the BLS in its tables to support the reader's analysis. The Department assumes that inflation-adjusted wage rates remain constant for the duration of the time horizon.

3.A.3. Other Information

In addition, throughout this RIA, some described calculations have results that are fractions. To improve readability, the Department presents these results as rounded totals in the text ( e.g., 1.95 or 3,450 instead of 1.9478 or 3,449.6786), but retains the unrounded value for purposes of its underlying calculations.

The Department invites comment on all estimates provided herein to ensure that they accurately reflect realistic assumptions about average burdens the proposed regulations would impose on the full range of affected entities.

3.B. Costs of the Proposed Regulations

In this section, the Department estimates monetized cost burdens associated with the proposed regulations. To assist the public in reviewing these estimates, the Department has subdivided this analysis, when appropriate, into the relevant subparts. As described below, the Department estimates a first-year cost of $19,046,893, with no estimated costs in subsequent years. The Department estimates proposed changes would result in a total annualized cost of $2,078,849.

The Department estimates that, upon promulgation of the proposed regulations, all affected entities would need time to read and understand the rule. Based on the Department's administrative experience, we assume this would require, on average, six hours from an education administrator (educational administrator (postsecondary), loaded wage rate of $117.32/hour) and six hours from a lawyer (postsecondary, loaded wage rate of $172.76/hour) for each of the 6,003 IHEs. For loan servicers, we assume this would require, on average, six hours from an education administrator (business administrator (Business Operations Specialists loaded wage rate of $85.70/hour)) and six hours from a lawyer (finance sector, loaded wage rate of $197.84/hour) for each of the seven loan servicers. In total, the Department estimates that reading and understanding the proposed rule will have a one-time cumulative cost of approximately $10,458,957 across all institutions of higher education.

Distance Education—Reporting and Disclosure of Information

As a result of proposed changes to § 668.41 to require institutions to report the enrollment status of students in distance education or correspondence courses, the Department estimates that each IHE will need to review and revise reporting policies and procedures. At the IHE level, we assume this would require half an hour from the education administrator and 1 hour from an administrative assistant (loaded wage rate of $43.58/hour) for each of the 3,732 IHEs that reported offering at least one distance education course. In total, the Department estimates reviewing and revising these procedures will cost approximately $381,560 in the first year across all impacted IHEs.

Distance Education—Definition of Clock-Hour Program

The proposed changes to the definitions in § 600.2 would remove asynchronous learning from clock-hour programs offered through distance education. The Department believes that there are very few institutions with clock-hour programs that use distance learning to provide portions of the program, because there are few State or professional licensing boards that permit distance learning for clock-hour programs. Based on data available to the Department, there are approximately 8,000 clock-hour programs operating at approximately 1,700 institutions. The Department does not have data available on how many of these institutions or programs are offered through asynchronous learning to estimate costs, and requests comment on these effects.

Return of Title IV Funds When Student Does not Begin Attendance

Proposed changes to § 668.21 would allow students that do not begin attendance at an institution to repay any disbursed loan funds directly received according to the terms of their master promissory note. Under current regulations, borrowers in this situation would receive a demand letter from the Department and be required to immediately repay the loan balance in full. The Department would require the Department's seven loan servicers to update their policies and procedures to align with the proposed requirements. The Department estimates that the proposed change would require two hours from a lawyer and half an hour from a business administrator (Business Operations Specialists $85.70/hour) for each loan servicer for a total first year cost of approximately $2,719 across all loan servicers. The Department would ultimately realize these additional costs through increased contractual costs.

Return of Title IV Funds When Student Withdraws

The proposed addition of § 668.22(a)(2)(ii)(A)( 6) would potentially incentivize institutions to not collect debts resulting from a student withdrawal by providing flexibility in conducting R2T4 calculations when certain conditions are met. The Department assumes that IHEs would need to review and revise their R2T4 policies and procedures. The Department estimates that the proposed change would require eight hours from an education administrators and two hours from a lawyer for each IHE for a total first year cost of approximately $7,708,332 across all institutions.

Any institution that used the cumulative method to determine the percentage of the payment period completed for a clock-hour program would be required to update their procedures and policies to only use the payment period method. The Department does not believe that many institutions use the cumulative method, however, for those that do, the Department believes costs would be negligible because institutions would have until July 1, 2025, to update policies. For more information on both methods, please see the applicable “reasons” discussion in the Significant Proposed Regulations section.

Institutions that offer programs with modules would need to update their policies and procedures to account for adjustments in how to determine the denominator in R2T4 calculations. The Department believes this would result in overall cost savings because institutions would no longer need to navigate a complex set of Department rules to determine whether or not the days in a module should be included in an R2T4 calculation. However, the Department does not maintain comprehensive information on the use of modules at eligible postsecondary institutions and therefore cannot estimate the scope of these effects.

Institutions that currently participate in the Second Chance Pell experimental site and that offer eligible PEPs in a term-based setting would need to update policies and procedures to allow more flexibility when students return from a leave of absence. The Department believes the cost would be negligible.

Federal TRIO Programs—Talent Search (TS), Educational Opportunity Centers (EOC), Upward Bound (UB) Participant eligibility

Proposed changes to §§ 643.3, 643.4, and 643.5 would expand eligibility for TS, EOC, and UB to any individual who is enrolled in or seeks to enroll in a high school located in the United States, territories, or Freely Associated States. The Department believes that these proposed changes would require current TS, EOC, and UB grantees to review and revise their participant recruitment and enrollment policies and procedures. At the grantee level, the Department assumes this would require two hours from an education administrator for each of the 2,111 grantees administering TS, EOC, or UB TRIO projects. In total, the Department estimates that revising project procedures would cost approximately $495,325.

The proposed regulations would impose minimal additional costs to TRIO grant recipients under TS, EOC, and UB. While it would increase the number of students who are eligible to participate, the effect is only distributional as the funds provided from Congress and to grantees would be distributed across grantees. This could mean different or additional participants receive the benefits of TRIO services, but it would not affect the overall appropriations.

Eligible grantees that offer the Talent Search program, the Educational Opportunity Centers program, and the Upward Bound program would be required to update their applications to account for students who have enrolled in or who seek to enroll in a high school in the United States, territories, or Freely Associated States. The Department believe costs would be negligible because grantees already have an application process for students to participate in these programs, and we request comment on any costs in this area.

3.C. Benefits of the Proposed Regulations

The Department believes that these proposed regulations would likely have a wide range of benefits both for students, parents and caregivers, and the public at large. The discussion that follows discusses the benefits the Department has attempted to quantify and monetize.

3.C.1. Monetized Benefits

In this section, the Department discusses monetizable benefits likely to result from the proposed regulations. In total, the Department estimates, after accounting for anticipated costs resulting from enrolling in postsecondary education, annualized benefits from the proposed regulations of $17,664,756 over the next ten years.

Year	Annual costs and benefits 23
Year 1 Cost	$109,696,616
Year 2 Cost	109,696,616
Year 3 Cost	55,133,908
Year 4 Cost	55,133,908
Year 5 Benefit	(26,004,836)
Year 6 Benefit	(52,009,672)
Year 7 Benefit	(78,014,508)
Year 8 Benefit	(104,019,344)
Year 9 Benefit	(130,024,180)
Year 10 Benefit	(156,029,016)
Annualized, 2%	(17,664,756)
Total NPV, 2%	(158,675,187)

Federal TRIO Programs (TS, EOC, UB) Expanded Eligibility

Benefits arise from increased earnings from improved educational attainment of students without status previously ineligible to receive TRIO program services higher levels of educational attainment and associated higher wages. The Department believes expanding TS, EOC, and UB eligibility to students previously ineligible to receive TRIO program services would result in a net benefit to the public due to the capacity within TS, EOC, and UB projects to enroll additional participants.

The Department assumes that the approximately 500,000 elementary and secondary students without status previously ineligible to receive TRIO program services are evenly distributed across each high school grade level ( i.e.,1/4 of the population is currently in each of the 9th through 12th grades). According to data from the Migration Policy Institute,^[24] only 78 percent of students without status graduate from high school within four years, compared with 87 percent of all public high school students. As a result, the Department estimates that, in the absence of the proposed regulations, approximately 98,000 students without status previously ineligible to receive TRIO program services would graduate from high school each year.

For the 2021-2022 reporting period, TS, UB, and EOC projects that did not meet their enrollment targets had the capacity to serve an additional 104,111 participants. According to data from the Migration Policy Institute, fifteen States (See Table 1 footnote) account for 81 percent of all high school graduates without status.^[25] For the purpose of this analysis and to ensure that we do not overstate the capacity of these TRIO programs to enroll students without status, the Department limits the pool of potential enrollees to TRIO projects operating in these fifteen States.

Table 1—2021-22 TS, UB, and EOC Participation Rates

Program	Funded to serve	Actual served	Capacity to serve additional students 26	Capacity to serve additional students in 15 states 27
TS	338,427	287,019	54,416	36,628
UB 28	82,391	79,590	5,175	2,652
EOC	209,735	167,576	44,520	16,473
Total	630,553	534,185	104,111	55,753

For the purposes of this analysis, the Department assumes that TS, UB, and EOC projects could enroll a maximum of 55,753 participants without status as a result of this proposed rule and utilizes this figure as the universe of potential participants.

Table 2—Sensitivity Analysis of Potential Number of TRIO Enrollments Resulting From Proposed Rule Using 2021-22 TS, UB, and EOC Participation Rates

Program	Capacity to serve additional students	Sensitivity analysis—potential number of TRIO enrollments resulting from proposed rule
		1%	5%	10%
TS	36,628	366	1,831	3,663
UB	2,652	27	133	265
EOC	16,473	165	824	1,647
Total	55,753	558	2,788	5,575

The Department conducted a sensitivity analysis of the possible impact of the proposed rule on TS, UB, or EOC enrollment. We assume that 55,753 is the maximum number of students without status that could potentially enroll in TS, UB, or EOC as a result of the proposed rule. The Department assumes that there are a variety of reasons that a student that would be otherwise eligible as a result of the proposed rule would ultimately not enroll in TS, UB, or EOC. Therefore, the Department conducted a sensitivity analysis that analyzed program enrollment rates of 1, 5, or 10 percent of the universe of eligible participants. As described below, the benefits of the rule grow as the size of the TRIO enrollment effect increases. For the purposes of this RIA we estimate that 5 percent, or 2,788 students without status, would enroll in TS, UB, or EOC as a result of this rule.

The Department therefore estimates that of the 55,753 estimated capacity of TS, UB, and EOC projects in States likely to serve students without status, 1,831 would enroll in TS, 133 would enroll in UB (including UBMS), and 824 would enroll in EOC. In total, the Department estimates that this proposed rule would result in 2,788 additional high school students without status previously ineligible to receive TRIO services enrolling in TS, UB, or EOC. For the purposes of this analysis the Department assumes that the 2,788 included as part of this analysis are students that would not have otherwise graduated from postsecondary education. The Department invites comments on this assumption.

Table 3—Estimated Additional TRIO Program Participants Based on Proposed Rule

Program	TRIO program participants	Postsecondary enrollment rate	Postsecondary enrollees
TS	1831	68	1245
UB	133	75	99
EOC	824	57	469
Total	2,788		1,813

According to data from NCES,^[29] in 2020, approximately 43 percent of high school completers immediately enrolled in a 4-year college or university and an additional 20 percent immediately enrolled in a 2-year program. In comparison, according to data from TRIO performance reports for 2022, 68 percent of TS participants enrolled in college, 75 percent of UB (including UBMS and VUB) participants enrolled in college, and 57 percent of EOC participants enrolled in college. EOC enrollment rates are typically lower than TS and UB as EOC participants include adults who are not connected to formal education systems.^[30] Therefore, the Department estimates that a total of 1,813 students without status would enroll in postsecondary education as a result of their participation in TS, UB, or EOC.

For those 1,813 additional students that would enroll in postsecondary education, the Department assumes that these students would earn at least some college credit from a 2- or 4-year institution. Among the 2012 UB cohort, 35 percent of UB participants that enrolled in postsecondary education earned a degree at a 4-year IHE while 7 percent of UB participants earned a degree at a 2-year IHE. For the purposes of this analysis, and due to lack of data, the Department assumes that postsecondary graduation rates are comparable between TS, UB, and EOC. We request comment on this assumption. Therefore, we assume that 58 percent of UB participants did not complete a bachelor's degree, associate's degree, or certificate within six years of initial enrollment. For our analysis we identify those that did not complete a degree or certificate as earning some college credit.

Table 4—Estimated Additional Postsecondary Completers Based on Proposed Rule

Postsecondary completers	Estimated completers
Some College	1,052
Certificate/Associate's Degree	126
Bachelor's Degree	635
Total	1,813

For several analyses, the Department relies on estimated wages by educational attainment. For these analyses, the Department relies on data from BLS ^[31] regarding earnings differences across individuals with different educational attainment. The relevant data are reproduced in Table 5. Estimated Weekly Earnings of Postsecondary Enrollees by Highest Level of Attainment, below for easier reference.

Table 5—Estimated Weekly Earnings of Postsecondary Enrollees by Highest Level of Educational Attainment

Highest education attainment	Individuals	Median usual weekly earnings	Unemployment rate (%)	Total estimated weekly earnings 32
HS Diploma	0	899	3.9	n/a
Some College	1,052	992	3.3	1,008,864
Certificate/Associate's Degree	126	1,058	2.7	130,134
Bachelor's Degree	635	1,493	2.2	927,153
Total	1,813	n/a	n/a	2,066,151

The Department estimates that these proposed regulations would directly result in an additional 1,813 students enrolling in and completing as least some postsecondary education. In addition, the Department assumes that affected individuals would have average earnings and employment rates equal to those at high school diploma level in the baseline, and average earnings and employment rates equal to their new educational attainment level following implementation of the rule. The Department estimates that the total weekly earnings of these students if they had only earned a high school diploma would be $1,566,058. These students' enrollment in postsecondary education would result in total weekly earnings of $2,066,151, an increase of $500,093 per week

Based on the earnings and unemployment information described in Earnings and unemployment rates by educational attainment from the U.S. Bureau of Labor Statistics,^[33] the Department estimates that the additional 1,813 students enrolled in postsecondary education could annually earn, in total, $26,004,836 more than they would have had they not enrolled in postsecondary education. We request comment on the assumptions leading to this result. The Department assumes that these benefits would not accrue until Year 5 and then would annually compound in future years as additional cohorts of students without status previously ineligible to receive TRIO services graduate at higher rates. To the extent that additional individuals complete postsecondary education before Year 5, this assumption will underestimate actual benefits from the proposed regulations.

The Department estimates that the benefits of the proposed rule described above would outweigh costs resulting from lost wages from delaying entry into the workforce and tuition costs.

Under the proposed changes to §§ 643.3, 643.4, and 643.5, the Department estimates that newly eligible recipients that enroll postsecondary education would realize an opportunity cost from the loss of wages they would otherwise receive as a high school graduate immediately entering into the workforce. The Department estimates that an additional 1,813 students without status would enroll in postsecondary education each year as a result of the proposed rule. The Department assumes that of these students, 1,742 would find employment and earn a median wage of $899 per week as a high school graduate for total weekly earnings of $1,566,058. The Department estimates that annual costs of $81,435,016 during the first two years after the implementation of the proposed rule to account for students enrolled in both four-year and two-year postsecondary education. The Department assumes for the purposes of this analysis that 50 percent of these students are enrolled at a four-year IHE and therefore will realize an opportunity cost of $40,717,508 in years three and four. The Department requests comment on these assumptions.

In addition, under the proposed changes to §§ 643.3, 643.4, and 643.5, the Department estimates that newly eligible recipients that enroll postsecondary education would realize postsecondary tuition costs. Due to a lack of available data, the Department assumes that the 1,813 students without status estimated to enroll in postsecondary education each year as a result of the proposed rule will be equally divided across four-year public IHEs, four-year private nonprofit IHEs, two-year public IHEs, and two-year private nonprofit IHEs. The Department requests comment on these assumptions. Based on NCES data,^[34] the Department assumes that the average net price to enrolled students of $11,000 for students at four-year public IHEs, $20,800 for students at four-year private nonprofit IHEs,^[35] $8,300 for students at two-year public IHEs, and 21,100 for students at two-year private IHEs.

Type of IHE	Students	Net price to student	Total
Four-year public IHE	454	11,000	4,994,000
Four-year private nonprofit IHE	453	20,800	9,422,400
Two-year public IHE	453	8,300	3,759,900
Two-year private IHE	453	21,100	9,558,300
Total	1,813		27,734,600

The Department estimates that annual costs of $27,734,600 during the first two years after the implementation of the proposed rule to account for students enrolled in both four-year and two-year postsecondary education. The Department assumes for the purposes of this analysis that 50 percent of these students are enrolled at a four-year IHE and therefore will realize tuition costs of $14,416,400 in years three and four. The Department requests comment on these assumptions.

3.C.2 Non-Monetized Benefits

Distance Education

Changes proposed to provide better data on student outcomes for students enrolled in distance education would provide benefits for students in allowing reporting and evaluations of outcomes for students depending on their enrollment in distance education, traditional on-site instruction, or a combination of the two. Such analysis is increasingly advantageous to determine the educational and cost effectiveness of postsecondary instruction as it becomes more available at a distance.

Students can also benefit from the change to only allow synchronous instruction in clock-hour programs offered through distance education. Because studies have shown better student outcomes when comparing synchronous and asynchronous instruction, students would likely have greater persistence and completion, and would also likely benefit from improved labor market outcomes.^[36]

R2T4

Benefits to Students

Students would benefit from these regulations under several of the proposed regulations. If institutions choose to implement the optional withdrawal exemption, students who withdraw would not owe any balance related to any returned title IV, HEA aid to the Department or the institution. This would alleviate students from the burden of having to repay title IV, HEA dollars or owing an institutional debt related to a payment period or period of enrollment that they did not complete.

If a school chooses not to implement the optional withdrawal exemption, students that received a Direct Loan but did not begin attendance in their program would be able to repay their loans under the terms of a promissory note as opposed to the current practice of receiving a demand letter for the full payment. Students would be able to benefit from an income-driven repayment plan, or standard payment plans with payments that could potentially be paid over 30 years.

Students who are incarcerated at times may need to (or be forced to) take a break in their PEP, including activities out of their control such as prison-wide lockdowns or involuntary transfers to other facilities. The proposed regulations would benefit incarcerated students allowing them to not have to come back from the leave of absence where they left off (as current regulations require), and instead, the student could come back at a different point in their eligible prison education program, affording greater flexibility in their academic progression.

Benefits to Institutions

Institutions would benefit under several of these proposed regulations. Currently, an institution offering clock- hour programs may use two methods to determine the percentage of the payment period completed: cumulative, and by payment period. The proposed regulations would require institutions to use the payment period method when calculating the number of scheduled hours completed in clock-hour programs. This change would reduce the complexity of the R2T4 calculations and the inconsistency in the manner in which the calculation is done for clock-hour programs at different institutions.

Currently institutions implement complex sub-regulatory guidance to determine the number of days in the payment period for a program offered in modules, even if the student did not attend the module. The proposed regulations would benefit institutions through the requirement that the student actually attend the module for the days in the module to be included in the payment period. It would also eliminate the need for a “freeze date” (explained in the discussion section), further reducing complexity.

Benefits to the Taxpayer

Overall, we believe that the more accurate calculations and reductions in complexity would benefit the taxpayer by reducing errors in R2T4 calculations, resulting in more accurate amounts being returned to the Department and further supporting the integrity of the title IV, HEA programs. R2T4 consistently ranks in the Top 10 compliance findings,^[37] costing the Federal government time and money to provide assistance through training and conducting program reviews in an effort to identify and correct R2T4 errors committed by institutions. We believe the proposed changes would also help alleviate some compliance issues related to R2T4.

For example, we have proposed a requirement that schools that offer distance education courses entirely online begin taking attendance for those courses. As a result, we anticipate more accurate calculations through the use of actual withdrawal dates from attendance records, thus providing taxpayers a more accurate accounting of title IV, HEA funds returned.

TRIO

As discussed above, the proposed changes to TRIO would align TRIO programs that serve students in the elementary or secondary context with other Federal K-12 spending programs that allow recipients (such as SEAs and LEAs) to spend funds on K-12 students without regard to immigration status. This would eliminate the administrative burden of separating out students who are enrolled in public schools but not eligible for TRIO services under the current rule.

4. Accounting Statement

As required by OMB Circular A-4, the Department has prepared an accounting statement showing the classification of the expenditures associated with the provisions of these regulations. This table provides the best estimate of the changes in annual monetized benefits and costs of these proposed regulations.

Provision	Annualized benefits
	2% discount rate
TRIO Expanded eligibility—Postsecondary earnings	$17,664,756
	Annualized costs
	2% discount rate
Reading and Understanding the New Rule	$1,141,529
Distance Education—Reporting and disclosure of information	41,645
R2T4—Student does not begin attendance	297
R2T4—Student withdrawal	841,316
TRIO Expanded Eligibility	35,105,062

5. Alternatives Considered

As part of the development of these proposed regulations, the Department engaged in a negotiated rulemaking process in which we received comments and proposals from non-Federal negotiators representing numerous impacted constituencies. These included higher education institutions, consumer advocates, students, financial aid administrators, accrediting agencies, and State attorneys general. Non-Federal negotiators submitted a variety of proposals relating to the issues under discussion. Information about these proposals is available on our negotiated rulemaking website at www2.ed.gov/​policy/​highered/​reg/​hearulemaking/​2023/​index.html.

5.1 Distance Education

During negotiations there was no disagreement with the Department's proposal to amend the definition of “additional location” to separately identify virtual locations and to define “distance education course” (which was based on a negotiator suggestion), so there was little discussion on these topics.

The negotiators also did not disagree with the general idea of requiring institutions to report students' enrollment in distance education. There were suggestions about what that reporting should entail, including more detailed data about the extent of students' enrollment in distance education and not just whether they are in-person or distance education students. The discussion settled on reporting students as having one of three statuses: fully in-person, fully at a distance, or a hybrid of the two. This would be a simple determination for schools that would also provide sufficient information for the Department. Because specific details about this reporting are yet to be determined, the proposed regulation establishes the general requirement and notes that reporting will be in accordance with procedures to be established by the Secretary.

Some negotiators disagreed with the proposed elimination of asynchronous distance education in the definition of clock-hour programs in § 600.2. Negotiators representing various institutional sectors contended that instruction in clock-hour programs need not be entirely hands-on, that there is a didactic component that lends itself to asynchronous instruction, and that schools have been able to master the technology necessary for close accounting of student academic engagement. These negotiators suggested limiting the amount of a clock-hour program that can occur asynchronously to 50 percent. Based on our review of clock-hour programs that delivered substandard education with little direct instructor interaction, we disagree that schools have the technology and resources to adequately monitor student academic engagement, as discussed in the section above on the proposed revisions to distance education. Allowing 50 percent of instruction to be asynchronous would still permit substandard education to occur. We thus reaffirmed that elimination of asynchronous distance education in clock-hour programs would be appropriate.

5.2 R2T4

Confined or Incarcerated Individuals and R2T4

The Department initially proposed to exempt confined or incarcerated individuals from R2T4 if the students withdrew from a program due to circumstances outside of their control, such as a correctional facility-wide lockdown or an involuntary transfer to a different facility. Upon further review, we determined that we do not have the legal authority to waive R2T4 requirements for a targeted group of students. In addition, the Department heard concerns from several negotiators that confined or incarcerated individuals may reach their Pell grant lifetime eligibility used (LEU) faster under this proposal without obtaining an academic credential. And finally, the Department heard from some additional negotiators that some postsecondary institutions have already established policies that account for involuntary breaks in PEPs, such as waiving all charges related to the affected payment period, and our initial proposal might have caused institutions to revise or remove beneficial student polices already in place.

To address the negotiators' concerns, the Department instead proposed a new condition under the leave of absence provisions (§ 668.22(d)), targeted at confined or incarcerated individuals that take a break from their PEP due to events at their correctional facility, which would give students and institutions, especially in term-based settings, more flexibility when students return from a leave of absence. In term-based settings, the proposal would allow a confined or incarcerated individual to not have to come back from the leave of absence resuming where the student left off, and instead, the individual could resume at a different point in their PEP. The postsecondary institution would still have to adhere to all other requirements of a leave of absence as we propose they remain unchanged.

Direct Assessment Programs and R2T4

The Department considered exempting direct assessment programs offered through distance education from the proposed requirement under § 668.22(b)(3)(i)(D) that would require an institution to take attendance for each course offered entirely through distance education. A negotiator stated three concerns: (1) requiring an R2T4 calculation that is artificially based on dates of attendance, in a program structure that is not designed around seat time, would disincentivize progression and punish students who complete program requirements more quickly than anticipated; (2) requiring attendance in direct assessment programs would not increase the accuracy of R2T4 calculations, because the amount of funds earned by these students is not correlated to time and an attendance-based calculation does not accurately reflect the actual amount of coursework completion for students who take advantage of self-paced instruction; and (3) to offset these negative effects, institutions may feel compelled to add pedagogically unnecessary content or participation requirements to courses in order to increase the frequency of attendance-taking opportunities. The negotiator argued that doing so would undermine the advantages of self-paced direct assessment programs and could unnecessarily increase program length and cost.

The Department is not persuaded by these arguments, because all distance education courses are still required to provide regular and substantive interaction. Direct assessment programs offered through distance education do not pose unique attendance-based challenges that justify exemption from the requirement. Direct assessment programs, like all other programs, are required to determine a withdrawal date, which is the last date of academic attendance as determined by the institution's academic records. The Department believes that institutions that offer direct assessment programs through distance education already have systems in place that sufficiently monitor academic engagement and thus can easily determine attendance and, by extension, a student's withdrawal date.

Withdrawal Exemptions and R2T4

As part of our 2019 negotiated rulemaking, the Department adopted a withdrawal exemption for programs offered in modules that treat a student as not withdrawn if the student successfully completes one or more modules that make up 49 percent or more of the number of days in the payment period. The Department's initial proposal with negotiators suggested removing the 49 percent withdrawal exemption, which, for students that do not qualify for another withdrawal exemption, would mean that more money would be returned to the Department and students would not exhaust their aid eligibility as quickly. The Department also believed that removing the 49 percent withdrawal exemption would eliminate observed confusion between this figure and the 60 percent completion requirement under the R2T4 calculation, and eliminate the continued need for significant guidance and training on how to determine whether a student qualifies for the exemption.

Many negotiators disagreed with the elimination of the 49 percent withdrawal exemption. Negotiators stated that their institutions had already updated systems and policies to account for the exemption and that it was serving students well. Negotiators also pointed out that the exemption has only been in regulation since 2021 and, instead of eliminating the exemption, the Department should provide more guidance and training to assist those institutions that may be having some difficulty implementing this regulatory requirement. In light of these negotiator concerns and suggestions, the Department decided to retain this exemption.

5.3 TRIO

Expanding the Eligibility Proposal to All TRIO Programs

The current proposal for the Upward Bound Program, the Educational Opportunity Centers, and the Talent Search program would allow an individual to participle in these programs if they are enrolled in, or seek to enroll in, high school in the United States. All of these three TRIO programs serve students at the secondary school level. The Department also considered, at the suggestion of a negotiator, expanding the eligibility proposal to Student Support Services and the McNair Scholars Program, which are postsecondary level TRIO programs.

The Department determined to limit eligibility expansion to the three identified secondary school programs based on our belief that all children who attend high school in the United States should have the same access to public TRIO services to assist in their path toward postsecondary education. This proposal also aligns TRIO with the treatment of students in other Federal K-12 spending programs, which allow recipients (such as State education agencies and local education agencies) to spend funds on K-12 students without regard to immigration status.

The TRIO programs have limited resources, with the TRIO programs currently serving less than 10 percent of the eligible population. The Department is proposing to expand eligible participants to focus on the most vulnerable population: children who do not yet have the basic education that comes from high school completion, which is a necessary step toward postsecondary education.

Not Regulating TRIO

The Department considered not regulating, but as noted in the previous section, K-12 public schools are open to students regardless of their immigration status. As such, the Department believes that all children who attend high school in the United States should have the same access to TRIO services to assist their pathway into postsecondary education.

6. Regulatory Flexibility Act

This section considers the effects that the proposed regulations may have on small entities in the educational sector as required by the Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq. The purpose of the RFA is to establish as a principle of regulation that agencies should tailor regulatory and informational requirements to the size of entities, consistent with the objectives of a particular regulation and applicable statutes. The RFA generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a “significant impact on a substantial number of small entities.” As noted in the RIA, the Department does not expect that the regulatory action will have a significant budgetary impact, but there are some costs to small institutions that are described in this Initial Regulatory Flexibility Analysis.

Description of the Reasons for Agency Action

The Secretary is proposing new regulations to ensure students are well served by the institutions of higher education they attend, increase access to postsecondary education for disadvantaged students, and ensure that Federal Student Aid programs work in the best interests of students. Proposed regulations for distance education would help the Department better measure and account for student outcomes, improve oversight over distance education, and ensure students are receiving effective education by requiring additional reporting of programs offered entirely through online education, requiring students' distance education enrollment status, and disallowing asynchronous distance education in clock-hour programs for title IV, HEA purposes. The proposed R2T4 regulations would help withdrawn students repay outstanding Direct Loan credit balances, increase the accuracy and simplicity of performing R2TV calculations, add additional clarity to institutions on reporting, and codify longstanding policies. The proposed TRIO regulations would expand student eligibility and provide greater access to postsecondary education for disadvantaged students who have enrolled or seek to enroll in a high school in the United States, territories, or Freely Associated States.

Succinct Statement of the Objectives of, and Legal Basis for, the Regulations

Through the proposed regulations, the Department aims to address inequities and inadequate protections for students to ensure the Federal Student Aid programs work to accomplish postsecondary access and completion. This includes ensure the Department, students, and families have the information needed to answer important questions about enrollment in and success with distance education, the ability provide closed school discharges where a program closes, that students that withdraw are able to repay their debt, and that disadvantaged students have the opportunity to access and succeed in postsecondary education.

The Department's authority to the proposed regulations stems primarily from multiple statutory enactments: first, 20 U.S.C. 1070-1099d (sections 400-499 of the HEA) which authorizes the Federal government's major student financial aid programs; second, 20 U.S.C. 1070(b) (section 400(b) of the HEA) which outline the Secretary's broad authority to carry out program requirements; and third, the sections that govern the Department's oversight responsibility under title IV 20 U.S.C. 1099c, 1099c-1, 1099c-2 (sections 498, 498A, and 498B of the HEA). The specific statutory sources of this authority are detailed in the Authority for This Regulatory Action section above.

Description of and, Where Feasible, an Estimate of the Number of Small Entities to Which the Regulations Will Apply as noted above, SBA defines small proprietary institutions of higher education (IHEs) based on revenue. These regulations apply, however, to all IHEs, which cannot be compared across institutions and sectors using the SBA revenue size standard because the RFA does not measure non-profit and public sector IHEs based on revenue. As a result, for purposes of the proposed regulations, the Department defines “small entities” by reference to enrollment, as it has done in other rulemakings, to allow meaningful comparison of regulatory impact across all types of IHEs in the for-profit, non-profit, and public sectors.^[38] The Department notes that enrollment and revenue are correlated for all IHES and that IHEs with higher enrollment tend to have the resources and infrastructure in place to more easily comply with the Department's regulations in general and the proposed regulations in particular. Since enrollment data is more readily available to the Department for all IHEs, the Department has used enrollment as the basis to identify small IHEs in prior rulemakings and continues to use enrollment to identify small IHEs in the proposed regulations. This approach also allows the Department to use the same metric to identify small IHEs across the for-profit, non-profit, and public sectors, and it treats public IHEs operated at the behest of jurisdictions with a population of more than 50,000 but with low enrollment as small, which the SBA's standard would not treat as small. Lastly, the North American Industry Classification System (NAICS), under which SBA's revenue standards in 13 CFR 121.201 are generally established, set different revenue thresholds for IHEs that provide different areas of instruction ( e.g., cosmetology, computer training, and similar programs) and there is no existing data that aligns those different revenue standards to the different types of regulated IHEs. Similarly, where an institution provides instruction in several of these areas, it is unclear which revenue threshold to apply for purposes of the Department's RFA analysis.

As explained above, the enrollment-based size standard remains the most relevant standard for identifying all IHEs subject to the proposed regulations. Therefore, instead of the SBA's revenue-based size standard, which applies only to proprietary IHEs, the Department has defined “small IHE” as (1) a less-than-two-year institution with an enrollment of fewer than 750 students, or (2) an at-least two-year but less-than-four-year institution, or a four-year institution, with enrollment of fewer than 1,000 students.^[39] As a result of discussions with the SBA Office of Advocacy, this is an update from the standard used in some prior rules, such as the “Financial Value Transparency and Gainful Employment (GE), Financial Responsibility, Administrative Capability, Certification Procedures, Ability to Benefit (ATB),” published in the Federal Register on May 19, 2023, 88 FR 32300, “Improving Income Driven Repayment for the William D. Ford Federal Direct Loan Program and the Federal Family Education Loan (FFEL) Program, published in the Federal Register on July 10, 2023, 88 FR 43820, and the proposed regulations, “Pell Grants for Prison Education Programs; Determining the Amount of Federal Education Assistance Funds Received by Institutions of Higher Education (90/10); Change in Ownership and Change in Control,” published in the Federal Register on October 28, 2022. 87 FR 65426. Those prior regulations applied an enrollment standard for a small two-year institution of less than 500 full-time-equivalent (FTE) students and for a small 4-year institution, less than 1,000 FTE students.^[40] The Department consulted with the SBA Office of Advocacy on the alternative standard for this rulemaking. The Department continues to believe this approach most accurately reflects a common basis for determining size categories that is linked to the provision of educational services and that it captures a similar universe of small entities as the SBA's revenue standard. In accordance with section 601 of the RFA, the Department seeks comment on the appropriateness of this alternative size standard as it relates to this rule.

We note that the Department's revised alternative size standard and the SBA's revenue standard identify a similar number of total proprietary IHEs, with greater than 93 percent agreement between the two standards. Using the Department's revised alternative size standard, approximately 61 percent of all IHEs would be classified as small for these purposes. Based on data from NCES, in 2022, small IHEs had an average enrollment of approximately 289 students. In contrast, all other IHEs had an average enrollment of approximately 5,509 students.

Table 1—Number of Small IHEs Under Enrollment-Based Definition

	4-year	2-year	Less than 2-year	Total
Not Small	1,548	639	84	2,271
Small	1,219	936	1,577	3,732
Total	2,767	1,575	1,661	6,003
Source: 2022 IPEDS data reported to the Department.

In addition, the following tables show the breakdown of this 93 percent agreement, using institutional-level data relating to the 2,334 private for-profit IHEs that were identified using 2022 IPEDS data.^[41] The enrollment size standard identifies 2,073 for-profit IHEs as small, and the revenue size standard identifies 2,044 for-profit IHEs as small, with a core of the same 1,917 for-profit IHEs identified as small under both standards. There are 156 IHEs that are only identified as small under the enrollment standard and 127 IHEs that are only identified as small under the revenue standard. Below are descriptive statistics of those for-profit IHEs identified as small by only one of the measures.

Table 2 shows the distribution of revenues and the average enrollments of the 156 for-profit IHEs identified as small under only the enrollment size standard. A large majority of these for-profit IHEs do not have revenue data available in IPEDS. The average enrollment for this group with no revenue data available is 210 students.

Table 2—Small IHEs Under Enrollment Size Standard Only

Revenue category	Number of IHEs	Average enrollment
No Data	149	210
$35-40 million	4	580
$41-55 million	2	696
Above $55 million	1	320
Total	156	226

Table 3 shows the distribution of enrollments and the average revenues of the 127 for-profit IHEs identified as small under only the revenue size standard. Six of these 127 IHEs do not have enrollment data available through IPEDS. There are 57 IHEs in the bin of “1,000-1,249 students”, which is closest to the enrollment threshold for for-profits, and average revenue for these IHEs is $13.3 million. To the extent that the proposed alternative size standard covers for-profit IHEs that would not otherwise be covered (and the revenue standard covers for-profit IHEs that would not be covered by the enrollment standard), the Department proposes to treat certain for-profit IHEs as small and others as not small because of the reasons for proposing an alternative size standard explained in this section above.

Table 3—Small IHEs Under Revenue Size Standard Only

Enrollment category	Number of IHEs	Average revenue
No Data	6	$1,206,508
1,000-1,249 students	57	13,269,753
1,250-1,499 students	23	19,122,831
1,500-1,749 students	13	19,247,730
1,750-1,999 students	14	23,287,464
Above 2,000 students	14	23,527,952
Total	127	16,606,901

Tables 4 and 5 show the distribution of institution levels for for-profit IHEs identified as small by the enrollment size standard only and by the revenue size standard only, respectively.

Table 4—Level of For-Profit IHEs Identified as Small Under the Enrollment Size Standard Only

Level	Number of IHEs
Less than 2 years (below associate)	73
At least 2 but less than 4 years	45
Four or more years	38
Total	156

Table 5—Level of For-Profit IHEs Identified as Small Under the Revenue Size Standard Only

Level	Number of IHEs
Less than 2 years (below associate)	50
At least 2 but less than 4 years	50
Four or more years	27
Total	127

Notably, the five states with the most IHEs that are identified as small under only the enrollment standard are California (34), Texas (15), Florida (13), New Jersey (7), and Puerto Rico (7). The five states with the most IHEs that are identified as small under only the revenue standard are California (28), Florida (18), Texas (11), Arizona (8), and Illinois (6).

Description of the Projected Reporting, Recordkeeping, and Other Compliance Requirements of the Regulations, Including of the Classes of Small Entities That Will Be Subject to the Requirement and the Type of Professional Skills Necessary for Preparation of the Report or Record

Based on the model described in the discussion of RIA, an IHE would see a minimum net increase in costs of approximately $3,361 in year 1 for all IHEs, as explained in more detail in the 3.B. COSTS OF THE PROPOSED REGULATIONS section of this Regulatory Impact Analysis and included in the table below:

Table 6—Estimated Net Increase in Costs

Category	Year 1
Reading and Understanding the New Rule	$1,740	Total cost of $10,458,957 divided by the total institutions effected
Distance Education—Reporting and Disclosure of Information	102	Total cost of $381,560 divided by the total institutions offering distance education
Return of Title IV Funds When Student Withdraws	1,284	Total cost of $7,708,332 divided by the total institutions effected
TRIO Expanded Eligibility	235	Total cost of $495,325 divided by total grantees impacted
Total	3,361

For purposes of assessing the impacts on small entities, the Department defines a “small IHE” as a less than two-year IHE with an enrollment of less than 750 FTE and two-year or four-year IHEs with an enrollment of less than 1,000 FTE, based on official 2022 FTE enrollment. According to data from the IPEDS, in FY 2022, small IHEs had, on average, total revenues of approximately $8,691,634.^[42] Therefore, the Department estimates that the proposed regulations could generate a net cost for small IHEs equal to approximately 0.04 of annual revenue.

Table 7—Estimated Net Increase in Costs

Entities by sector	Number of institutions	Average total revenue	Net cost percentage %
Private for-profit, 2-year	431	$4,282,808	0.08
Private for-profit, 4-year or above	238	9,747,215	0.03
Private for-profit, less-than 2-year	1,304	1,751,544	0.19
Private not-for-profit, 2-year	121	3,980,612	0.08
Private not-for-profit, 4-year or above	821	14,778,833	0.02
Private not-for-profit, less-than 2-year	55	1,907,257	0.18
Public, 2-year	365	23,541,752	0.01
Public, 4-year or above	109	33,836,210	0.01
Public, less-than 2-year	218	4,215,979	0.08
Grand Total	3,662	8,691,634	0.04

According to data from IPEDS, approximately 458 small IHEs had total reported annual revenues of less than $597,100 for which the costs estimated above will potentially exceed 1 percent of total revenues. The average enrollment across these 458 small IHEs was 48 students.

Identification, to the Extent Practicable, of All Relevant Federal Regulations That May Duplicate, Overlap, or Conflict With the Regulations

The regulations will not conflict with or duplicate existing Federal regulations.

Alternatives Considered

As described in section 5 in the Regulatory Impact Analysis above, “Alternatives Considered”, the Department considered several alternative provisions and approaches but rejected those alternatives for the reasons considered above. Most relevant to small entities were the alternatives to limit proposed changes. For example, under distance education, the Department considered exempting direct assessment programs offered through distance education from the proposed requirement under § 668.22(b)(3)(i)(D) that would require an institution to take attendance for each course offered entirely through distance education. However, the Department rejected this consideration in part because it ultimately would not reduce burden including to small entities since all distance education courses are still required to provide regular and substantive interaction and believes that institutions that offer direct assessment programs through distance education already have systems in place to monitor academic engagement.

Similarly, under R2T4, the Department proposed removing the 49 percent withdrawal exemption, which would in part eliminate observed confusion between this figure and the 60 percent completion requirement under the R2T4 calculation and eliminate the continued need for significant guidance and training on how to determine whether a student qualifies for the exemption, thereby reducing institutional burden. Negotiators, however, disagreed stating that institutions had already updated systems and policies to account for the exemption and that it was serving students well. As a result, the Department eliminated the proposal.

Paperwork Reduction Act of 1995

As part of its continuing effort to reduce paperwork and respondent burden, the Department provides the general public and Federal agencies with an opportunity to comment on proposed and continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)). This helps ensure that the public understands the Department's collection instructions, respondents can provide the requested data in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the Department can properly assess the impact of collection requirements on respondents.

Proposed §§ 668.22 and 668.41 contain information collection requirements. Under the PRA, the Department has or will at the required time submit a copy of these sections and Information Collection requests to OMB for its review. A Federal agency may not conduct or sponsor a collection of information unless OMB approves the collection under the PRA and the corresponding information collection instrument displays a currently valid OMB control number. Notwithstanding any other provision of law, no person is required to comply with, or is subject to penalty for failure to comply with, a collection of information if the collection instrument does not display a currently valid OMB control number. In the final regulations, we would display the control numbers assigned by OMB to any information collection requirements proposed in this NPRM and adopted in the final regulations.

Section 668.22 Treatment of title IV funds when a student withdraws.

Requirements: Proposed § 668.22(b)(3)(ii) would require institutions to take attendance in distance education courses, which would require schools to use actual attendance data to determine a student's withdrawal date for students enrolled entirely in online courses for a particular payment period or period of enrollment. The requirement would not apply to dissertation research courses that are part of a doctoral program. The Department believes that this change would improve Return of title IV funds (R2T4) calculations, limit instances of inaccurate calculations by schools, and better protect student and taxpayer funds. Regarding distance education courses, institutions can often easily determine when students stop attending because a school's systems can often identify when students submit assignments or interact with instructors and students during lectures and course discussions, and students are often continuously monitored to track academic engagement. Also, some institutions with online courses are already required to take attendance in certain situations as described under 34 CFR 668.22(b)(3).

Burden Calculation: The proposed regulatory change would add a burden for institutions. The Award Year 2022 IPEDS reporting has 3,732 institutions offering one or more distance education courses. The Department estimates that each of the institutions would be required to do an initial review of their distance education system to ensure that attendance is being collected and potentially develop or add attendance taking to the system. The Department expects that this would require an average of 10 hours per institution as a one-time burden. The Department estimates it would take 684 Proprietary institutions 6,840 hours to perform this review function (684 institutions × 10 hours = 6,840 hours). The Department estimates it would take 1,414 Private institutions 14,140 hours to perform this review function (1,414 × 10 hours = 14,140). The Department estimates it would take 1,634 Public institutions 16,340 hours to perform this review function (1,634 × 10 hours = 16,340).

Due to the highly automated delivery of these types of courses, and the availability of such coursework on a daily basis, the Department estimates half of the institutions offering distance education courses would already be performing this task. Therefore, the Department estimates it would take the remaining fifty percent of institutions offering distance education about 10 minutes on a daily basis to capture attendance information for their records. The Department estimates it would take 342 Proprietary institutions 21,221 hours annually to perform this recordkeeping function (684/2 institutions × 365 days × .17 (10 minutes) = 21,221 hours). The Department estimates it would take 707 Private institutions 43,869 hours annually to perform this recordkeeping function (1,414/2 × 365 × .17 (10 minutes) = 43,869). The Department estimates it would take 817 Public institutions 50,695 hours annually to perform this recordkeeping function (1,634/2 × 365 × .17 (10 minutes) = 50,695). The total estimated burden to be added to OMB Control Number 1845-0022 is 153,105 hours.

Student Assistance General Provisions—1845-0022

Affected entity	Respondent	Responses	Burden hours	Cost $49.33 per entity
Proprietary	684	125,514	28,061	$1,384,249
Private non-profit	1,414	259,469	58,009	2,861,584
Public	1,634	299,839	67,035	3,306,836
Total	3,732	684,822	153,105	7,552,669

Section 668.41 Reporting and disclosure of information.

Requirements: The Department proposes adding a new paragraph § 668.41(h) that would require institutions to report their enrollment in distance education or correspondence courses. The Department expects that this provision would be implemented no earlier than July 1, 2026. This change would provide the Department with expanded information to better answer questions about college access, persistence, and success, and to better inform student-centered policies. This reporting requirement also would improve the Department's ability to determine whether institutions have reached the 50 percent threshold for distance education enrollment. When institutions enroll at least 50 percent of their students in distance education, offer at least 50 percent of their courses, or 50 percent of a program via distance education, they must obtain further accreditor approval beyond the initial approval to deliver distance education programs.

Burden Hours: The proposed regulatory change would add a burden for institutions. Because we expect to delay implementation of this new requirement until at least July 1, 2026, we are not estimating the implementation burden at this time. As development of the reporting mechanism progresses, a separate information collection will be submitted for full public comment closer to implementation of the data collection, incorporating more useful and specific information.

Consistent with the discussions above, the following chart describes the sections of the proposed regulations involving information collections, the information being collected and the collections that the Department would submit to OMB for approval and public comment under the PRA, and the estimated costs associated with the information collections. The monetized net cost of the increased burden for institutions, lenders, guaranty agencies and students, using wage data developed using Bureau of Labor Statistics (BLS) data. For institutions the Department is using the median hourly wage for Education Administrators, Postsecondary, $49.33 per hour according to BLS. https://www.bls.gov/​oes/​current/​oes119033.htm.

Collection of Information

Regulatory section	Information collection	OMB control number and estimated burden	Estimated cost $49.33 per entity
§ 668.22	Proposed § 668.22(b)(3)(ii) would require institutions with distance education courses to take attendance for each course offered entirely through distance education, except for dissertation research courses that are part of a doctoral program	1845-0022; 153,105 hours	$7,552,669
§ 668.41	The Department proposes adding a new paragraph (h) that would require institutions to report their enrollment in distance education or correspondence courses. The Department plans to implement this provision no earlier than July 1, 2026	None—will develop closer to implementation

Total Burden Hours and Change in Burden Hours Associated With Each OMB Control Number Affected by the Proposed Regulations in 1845-0022

Control No.	Total burden hours	Change in burden hours
1845-0022	2,738,785	+153,105
Total	2,738,785	+153,105