94-1459. Secretary's Procedures and Criteria for Recognition of Accrediting Agencies; Proposed Rule DEPARTMENT OF EDUCATION  

  • [Federal Register Volume 59, Number 15 (Monday, January 24, 1994)]
    [Unknown Section]
    [Page 0]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 94-1459]
    
    
    [[Page Unknown]]
    
    [Federal Register: January 24, 1994]
    
    
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    Part II
    
    
    
    
    
    Department of Education
    
    
    
    
    
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    34 CFR Part 602
    
    
    
    
    Secretary's Procedures and Criteria for Recognition of Accrediting 
    Agencies; Proposed Rule
    DEPARTMENT OF EDUCATION
    
    34 CFR Part 602
    
    RIN 1840-AB82
    
     
    Secretary's Procedures and Criteria for Recognition of 
    Accrediting Agencies
    
    AGENCY: Education.
    
    ACTION: Notice of proposed rulemaking.
    
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    SUMMARY: The Secretary proposes to amend the regulations governing the 
    Secretary's recognition of accrediting agencies. The proposed 
    regulations are needed to implement provisions added to the Higher 
    Education Act of 1965 (HEA) by the Higher Education Amendments of 1992. 
    The purpose of the Secretary's recognition of accrediting agencies is 
    to assure that those agencies are, for HEA and other Federal purposes, 
    reliable authorities as to the quality of education or training offered 
    by the institutions of higher education or higher education programs 
    they accredit.
    
    DATES: Comments must be received on or before March 21, 1994.
    
    ADDRESSES: All comments concerning these proposed regulations should be 
    addressed to Karen W. Kershenstein, U.S. Department of Education, 400 
    Maryland Avenue, SW., room 3036, ROB-3, Washington, DC 20202-5244.
        A copy of any comments that concern information collection 
    requirements should also be sent to the Office of Management and Budget 
    at the address listed in the Paperwork Reduction Act section of this 
    preamble.
    FOR FURTHER INFORMATION CONTACT: Karen W. Kershenstein. Telephone: 
    (202) 708-7417. Individuals who use a telecommunications device for the 
    deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-
    800-877-8339 between 8 a.m. and 8 p.m., Eastern time, Monday through 
    Friday.
    
    SUPPLEMENTARY INFORMATION: In order to approve a postsecondary 
    education institution to participate in the student financial 
    assistance (SFA) programs authorized under Title IV of the HEA and many 
    other Federal programs, the Secretary must determine, in part, that the 
    institution satisfies the statutory definition of an ``institution of 
    higher education.'' Under the HEA and other Federal statutes, one 
    element of that definition requires an eligible institution of higher 
    education to be accredited or preaccredited by an accrediting agency 
    recognized by the Secretary as a reliable authority as to the quality 
    of the education or training provided by the institution. Another 
    element requires an eligible institution to be legally authorized to 
    provide an educational program beyond the secondary level in the State 
    in which it is located. Thus, the statutory definition of an 
    institution of higher education provides the framework for a shared 
    responsibility among accrediting agencies, States, and the Federal 
    government to ensure that the ``gate'' to SFA programs is opened to 
    only those institutions that provide students with quality education or 
    training worth the time, energy, and money they invest in it. The three 
    ``gatekeepers'' sharing this responsibility have traditionally been 
    referred to as ``the triad.'' While the concept of a triad of entities 
    responsible for gatekeeping has had a long history, the triad has not 
    always worked as effectively as it should to ensure educational 
    quality, nor has it served as an effective deterrent to abuse by 
    institutions participating in SFA programs.
        For several years, certain institutions participating in SFA 
    programs have failed to provide students with education or training of 
    an acceptable level of quality; they have also failed to treat students 
    fairly. In addition, they have failed to meet acceptable standards of 
    financial responsibility and administrative capability and to 
    adequately protect the SFA program funds entrusted to them. The 
    institutions that have engaged in these abusive practices are not 
    restricted to a particular sector of higher education. Rather, the 
    abuses have been found in all types of institutions participating in 
    SFA programs, including those in the private non-profit and public 
    sectors of higher education as well as those in the proprietary sector.
        At the same time, gatekeeping functions have not been carried out 
    effectively. For example, some accrediting agencies have not taken 
    sufficient care to ensure the quality of the education or training 
    provided by the institutions or programs they accredit or to protect 
    student interests when they accredit particular institutions or 
    programs. Moreover, some States have also not taken sufficient care to 
    ensure the quality of the education or training provided by the 
    institutions they authorize or license to operate in the State or to 
    protect student interests. Finally, the Federal government's management 
    of its responsibilities to determine eligibility and to certify 
    institutions to participate in SFA programs has not always been 
    adequate to prevent abusive practices at institutions that participate 
    in SFA programs.
        Consequently, in the Higher Education Amendments of 1992, Public 
    Law 102-325, Congress amended the HEA to provide for a new part H of 
    Title IV entitled ``Program Integrity Triad.'' Under that part, States 
    and accrediting agencies are required to assume major new oversight 
    responsibilities, and States, accrediting associations, and the 
    Secretary are linked to create a stronger and more coordinated 
    evaluation of institutions that participate or wish to participate in 
    the SFA programs. The Secretary believes that the most appropriate 
    approach to this coordinated evaluation of institutions by the three 
    components of the triad is a complementary one with each component 
    focusing its evaluation on its obligations within the context of the 
    HEA. Thus, the focus for accrediting agencies is the quality of 
    education or training provided by the institutions or programs they 
    accredit. For States, which already had responsibility for determining 
    that institutions have the legal authority to operate within the State, 
    the HEA added a new focus: reviewing institutions that meet certain 
    statutory review criteria. The focus of the Secretary's evaluation of 
    institutions is the administrative and financial capacity of those 
    institutions to participate in the SFA programs.
        The statute allocates legal responsibility among the entities that 
    compose the program integrity triad. While specific statutory 
    responsibilities for the three triad entities may overlap, when viewed 
    as a whole the triad brings together in a coordinated fashion three 
    different but very important aspects of institutional review. Within 
    this statutory scheme, the Secretary has sought to assure that the 
    gatekeeping system operates as efficiently as possible, with maximum 
    integration among the three triad entities and without unnecessary 
    burden on postsecondary institutions. In order to assist the Secretary 
    in designing a final regulation that achieves these goals, the 
    Secretary specifically requests comment on the following questions:
        (1) In several areas, the statute specifically requires each triad 
    entity to evaluate an institution under the same or similar standards. 
    For example, a SPRE and an accrediting agency may establish different 
    standards for evaluating the financial responsibility of an institution 
    or for evaluating the success of an institution's educational program. 
    Thus, a reviewed institution would need to satisfy the SPRE's and the 
    accrediting agency's standards even though those standards address the 
    same areas. How should final regulations be structured to both reduce 
    the burden on institutions and enable the triad entities to carry out 
    effectively their statutory functions?
        (2) Should the final regulations be more explicit in identifying 
    levels, characteristics, or definitions for any of the assessment or 
    review criteria that a triad entity is expected to consider in its 
    evaluation of an institution?
        Subpart 1 of part H establishes a State Postsecondary Review 
    Program under which each State designates a single State postsecondary 
    review entity that is responsible for reviewing institutions of higher 
    education that the Secretary identifies as meeting certain review 
    criteria and for determining whether those institutions should continue 
    to participate in the SFA programs. Subpart 3 specifies the procedures 
    the Secretary uses to determine whether an institution meets the 
    eligibility requirements and has the administrative capacity and 
    financial responsibility to administer the SFA programs.
        In subpart 2 of part H, the Secretary is charged with making a 
    comprehensive and careful evaluation of an accrediting agency before 
    recognizing that agency as a reliable authority as to the quality of 
    the education or training offered by institutions or programs that the 
    agency accredits. Moreover, as part of this evaluation, the Secretary 
    is charged with establishing recognition standards that must include 
    ``an appropriate measure or measures of student achievement.'' 
    Accordingly, the standards that the Secretary proposes in this notice 
    of proposed rulemaking require an accrediting agency to make a detailed 
    and careful evaluation of the institutions or programs it accredits and 
    to include in that evaluation ``appropriate measure or measures of 
    student achievement.''
        These proposed regulations were subject to the negotiated 
    rulemaking process set forth in section 492 of the HEA. Under that 
    process, the Secretary convened four regional meetings in September, 
    1992 to obtain public involvement in the development of these proposed 
    regulations. The meetings were held in San Francisco, Atlanta, New 
    York, and Kansas City. Before convening the meetings, the Secretary 
    held a meeting in Washington, DC in August 1992 to invite comments from 
    interested parties as to the key issues that should be addressed at the 
    regional meetings.
        At the four regional meetings, the Secretary provided attendees 
    with a list of issues that needed to be addressed in these proposed 
    regulations. A summary of the responses of the attendees is contained 
    in Appendix A to these proposed regulations.
        Individuals and groups who attended the regional meetings nominated 
    individuals to participate in the negotiated rulemaking process. The 
    Secretary selected negotiators from the list of nominees to reflect all 
    the groups that are involved in the SFA programs. With regard to these 
    proposed regulations, the Secretary chose negotiators who reflected the 
    diversity of the accrediting community as well as the interests of 
    States, higher education institutions, and students.
        In accordance with section 492(b) of the HEA, the Secretary 
    prepared a draft proposed regulation and negotiated the provisions of 
    that draft with the negotiators. Two negotiating sessions were held: 
    one in January 1993 and one in February 1993. During those sessions, 
    consensus was reached on several of the provisions that are included in 
    this notice of proposed rulemaking. On the remaining provisions, 
    however, the negotiators agreed to disagree. Where agreement was not 
    reached on a particular provision, that fact is noted in the discussion 
    that follows.
        On several issues that were negotiated, there was general 
    discussion on various approaches to take with regard to those issues. 
    The Secretary believes those issues are important enough to include in 
    this preamble possible alternative approaches in order to give the 
    public a fuller understanding of the issues and the available potential 
    solutions. Finally, on most issues where consensus was reached, the 
    negotiators also reached general agreement on the language of a 
    proposed regulatory provision. However, the Secretary wishes to 
    reiterate the remarks of the Federal negotiators that the agreed-to 
    language with regard to a specific provision would be subject to change 
    in the proposed regulations for technical reasons but the substance of 
    the provision would remain unchanged, wherever possible. Where a 
    substantive change was made in a particular provision, that fact is 
    noted in the discussion that follows, and an explanation of the reasons 
    for the change is provided.
    
    Significant Changes Proposed by the Regulations
    
        The following discussion reflects proposed significant changes to 
    the existing regulations governing the Secretary's Procedures and 
    Criteria for Recognition of Accrediting Agencies. The changes are 
    discussed in the order in which they appear in the proposed 
    regulations. If a provision applies to more than one section or is 
    included in more than one section, it is discussed the first time it 
    appears with an appropriate cross-reference to its other appearances. 
    The general format for the discussion of each section is to state the 
    appropriate statutory provision for that section and to explain any 
    provisions that interpret or clarify the statute that the Secretary 
    believes are necessary to implement the statutory provision through 
    regulation.
        In developing these proposed regulations, the Secretary has 
    regulated as little as possible. He has regulated narrowly to the law, 
    except where the Secretary deems further interpretation is necessary. 
    In these cases, either the proposed regulations include the specific 
    language agreed to by negotiators during negotiated rulemaking, if an 
    agreement was reached, or the Secretary proposes language where 
    agreement was not reached. In both cases, the Secretary solicits 
    comments on the clarifications and interpretations included in the 
    proposed regulations.
    
    Subpart A--General Provisions
    
    Section 602.1  Purpose
        Current regulations permit the Secretary to recognize any 
    accrediting agency the Secretary determines to be a reliable authority 
    as to the quality of postsecondary education or training provided by 
    the institutions or programs it accredits. However, section 496(m) of 
    the HEA now authorizes the Secretary to recognize only those agencies 
    that accredit institutions of higher education or higher education 
    programs for the purpose of enabling those institutions or programs to 
    establish eligibility to participate in programs administered either by 
    the Secretary or by other Federal agencies. In Sec. 602.1 of the 
    proposed regulations, the Secretary reiterates the statutory provision.
    Section 602.2  Definitions
        Most of the definitions included in the proposed regulations are 
    self-explanatory. Three, however, warrant additional comment based on 
    the discussions that took place during the negotiated rulemaking 
    sessions.
        Institution of higher education. In the proposed regulations, the 
    Secretary defines an institution of higher education to be an 
    educational institution that qualifies or may qualify as an eligible 
    institution under 34 CFR part 600, Institutional Eligibility under the 
    Higher Education Act of 1965, as amended. Some of the non-Federal 
    negotiators, however, pointed out that it is not clear that this 
    definition includes certain types of hospitals and health care 
    facilities. For this reason, the Secretary wishes to make clear that a 
    hospital or health care facility may qualify as an eligible institution 
    of higher education if the hospital or facility satisfies any 
    definition of that term, i.e., a ``public or nonprofit private 
    institution of higher education,'' a ``proprietary institution of 
    higher education,'' or a ``postsecondary vocational institution.''
        Prebaccalaureate vocational education programs and vocational 
    education programs.
        In Sec. 602.2, the Secretary proposes to define the term 
    ``vocational education program'' based upon the statutory provision 
    included in the definition of various types of eligible institutions of 
    higher education. Thus, the Secretary defines a vocational education 
    program as a program that ``prepares students for gainful employment in 
    a recognized occupation.'' (See, for example, section 481(b)(1) of the 
    HEA for a ``proprietary institution of higher education;'' section 
    481(c)(1) for a ``postsecondary vocational institution;'' and the 
    second sentence of section 1201(a) of the HEA for a ``public and 
    private nonprofit institution of higher education.'')
        This definition, if read literally, could be viewed as including 
    all postsecondary programs. To avoid this overreaching conclusion, the 
    Secretary proposes that the vocational education programs that trigger 
    actions under these regulations are prebaccalaureate vocational 
    education programs. See, for example, Sec. 602.24(c). This latter term 
    is defined as a vocational education program that leads to a 
    certificate, degree, or other education credential that is less than a 
    bachelor's degree. The Secretary invites comment on these definitions, 
    as well as alternative definitions, in light of the fact that the non-
    Federal negotiators could not agree among themselves as to the 
    acceptability of these definitions.
        One alternative definition for prebaccalaureate vocational 
    education that the Secretary is considering is ``undergraduate 
    vocational education that leads to a certificate or other educational 
    credential but not to a degree.'' The Secretary is considering this 
    definition in order to ease the burden on institutions whose vocational 
    education programs leading to an associate degree would also trigger 
    special action under the proposed regulations.
        If this alternative definition were to be adopted, however, the 
    Secretary is concerned that some institutions might try to stretch 
    their non-degree programs into associate-degree programs simply to 
    avoid the additional requirements that, as a result of these proposed 
    regulations, accrediting agencies will have to impose on institutions 
    that provide prebaccalaureate vocational education. The Secretary 
    invites comments on the alternative definition of prebaccalaureate 
    vocational education and suggestions for preventing unwarranted course 
    or program stretching, should the alternative definition be adopted. 
    The Secretary also wishes to know if commenters believe there are other 
    risks associated with adopting the alternative definition that might 
    outweigh any benefits derived by the degree-granting sector of the 
    higher education community through its adoption.
        The Secretary acknowledges that the definition of ``vocational 
    education'' in these proposed regulations differs from the definition 
    of ``vocational program'' as that term is defined in the proposed 
    regulations for the State Postsecondary Review Program (``an 
    educational program below the baccalaureate degree level, that is not 
    classified as a professional program, that prepares students for 
    gainful employment in a recognized profession''). The Secretary 
    requests specific comment on whether the same definition should be used 
    in both regulations and, if so, what that definition should be.
    Section 602.3  Organization and Membership
        Section 496(a) of the HEA requires accrediting agencies whose 
    accreditation enables the institutions they accredit to participate in 
    programs authorized under the HEA to be administratively and 
    financially separate from and independent of any related, associated, 
    or affiliated trade association or membership organization. The term 
    ``separate and independent'' is defined in section 496(b) of the HEA. 
    In Sec. 602.3 (a), (b), and (c) of the proposed regulations, the 
    Secretary reiterates the statutory requirement and definition.
        During the negotiated rulemaking sessions, non-Federal negotiators 
    expressed concern that the ``separate and independent'' requirement 
    would prevent any joint use of personnel, services, equipment, or 
    facilities by an accrediting agency and a related, associated, or 
    affiliated trade association or membership organization, a practice 
    that is fairly common among accrediting agencies and helps reduce the 
    cost of accreditation. To address this concern, in Sec. 602.3(d) the 
    Secretary proposes conditions that accrediting agencies must meet 
    regarding the joint use of personnel, services, equipment, or 
    facilities if that use is not to be considered a violation of the 
    ``separate and independent'' requirement. The Secretary believes this 
    approach respects the intent of Congress yet eases the financial burden 
    on agencies to implement the new requirement.
        Section 496(a) of the HEA permits the Secretary to waive the 
    ``separate and independent'' requirement if the agency is one that, for 
    purposes of determining eligibility for SFA programs, either conducts 
    accreditation through a voluntary membership organization of 
    individuals participating in a profession or has as its principal 
    purpose the accreditation of programs within institutions that are 
    accredited by another agency recognized by the Secretary. In 
    Sec. 602.3(e) of the proposed regulations, the Secretary proposes 
    conditions under which the Secretary may waive the ``separate and 
    independent'' requirement. Specifically, the Secretary proposes to 
    grant an agency's request for a waiver if the agency demonstrates to 
    the Secretary's satisfaction that the existing relationship between the 
    agency and the trade association or membership organization has not 
    compromised the independence of its accreditation process.
        In providing comments with regard to this section, the Secretary 
    advises commenters that only the type of accrediting agency described 
    in Sec. 602.3(b)(4) may seek a waiver of the separate and independent 
    requirement under the law. Thus, the Secretary is precluded by statute 
    from waiving this requirement for any other type of accrediting agency.
        Finally, the Secretary wishes to note that the language in 
    Sec. 602.3(c)(2) specifying that no less than one-seventh of an 
    agency's decision-making body must consist of representatives of the 
    public is derived from language in the Conference Report stating that 
    the House agrees to the requirement in the Senate bill that ``at least 
    one out of every seven members of an accreditation association's board 
    be members of the general public.''
    Section 602.4  Submission of Information to the Secretary by Recognized 
    Accrediting Agencies
        Section 496 does not specifically address the type of information 
    that a recognized accrediting agency must submit to the Secretary to 
    enable the Secretary to evaluate whether the agency continues to comply 
    with the requirements for recognition throughout its recognition 
    period. In Sec. 602.4 (a),(b), (c), (d), and (f) of the proposed 
    regulations, the Secretary proposes various types of information that 
    recognized agencies must routinely submit to the Secretary during their 
    recognition period. All of the items on the list were agreed to by the 
    negotiators, who did not perceive them to be particularly burdensome to 
    agencies to provide.
        Of particular note is the requirement in Sec. 602.4(e) that 
    accrediting agencies must submit to the Secretary, upon request, 
    information to assist the Secretary in resolving problems with any 
    institution or program accredited by the agency, provided the 
    Secretary's request does not conflict with the agency's policies on 
    confidentiality with respect to its records on its institutions or 
    programs. This provision reflects the agreement of negotiators. 
    However, the Secretary has reconsidered the ``confidentiality'' aspect 
    of this provision because of a concern that certain information that 
    the Secretary may need to resolve a problem with a particular 
    institution or program may not be obtainable from an agency because of 
    its confidentiality policies. The Secretary believes this situation is 
    untenable because it allows agencies to withhold information that the 
    Secretary may need to carry out the Secretary's responsibilities under 
    the Act, such as determining whether an institution or program 
    accredited by the agency should remain eligible to participate in SFA 
    programs. The Secretary seeks suggestions for resolving this dilemma in 
    a manner that respects both the agency's need for confidentiality and 
    the Secretary's need for information.
        The Secretary also is considering adding to this section a 
    requirement that an accrediting agency must refer to the Department's 
    Office of Inspector General any fraudulent activities it discovers on 
    the part of an institution or program that it accredits, if the 
    institution or program participates in Department programs. The 
    Secretary invites comments on this possible additional requirement and 
    alternative approaches to sharing information among members of the 
    triad concerning suspected fraudulent activity by an institution or 
    program.
    
    Subpart B--Recognition and Termination Procedures
    
        Section 496(o) of the HEA requires the Secretary to provide, by 
    regulation, the procedures the Secretary uses for recognizing 
    accrediting agencies. In the proposed regulations, the Secretary 
    proposes to specify procedures for recognizing accrediting agencies in 
    far greater detail than in current or previous regulations. The 
    Secretary believes this greater detail is necessary to ensure that all 
    agencies applying for recognition, as well as other interested parties, 
    have a clear understanding of the entire process.
        The Secretary acknowledges that the application for recognition 
    constitutes a significant burden on agencies seeking recognition by the 
    Secretary. For this reason, the Secretary is considering ways to 
    minimize the burden. One approach under consideration is to allow an 
    agency to provide a simple statement of assurance, along with 
    supporting documentation, that it meets certain requirements for 
    recognition. The Secretary estimates that at least two-thirds of the 
    requirements in the proposed regulations are amenable to this type of 
    approach, and the resultant savings in time, effort, and cost to 
    prepare an application for recognition would be significant. The 
    Secretary invites comments on this approach and alternative methods for 
    minimizing the burden on agencies of the application process without 
    adversely affecting the Secretary's ability to conduct a thorough 
    evaluation of the agency.
        The recognition process, as described in subpart B of the proposed 
    regulations, consists of an application to the Secretary by the agency, 
    an analysis of the application by a designated Department official, an 
    opportunity for a written response to that analysis by the applicant 
    agency, a review of the agency's application by the National Advisory 
    Committee on Institutional Quality and Integrity (Advisory Committee), 
    a recommendation to the Secretary by the Advisory Committee with regard 
    to that application, an opportunity to contest the Advisory Committee's 
    recommendation by either the agency or the designated Department 
    official, and, finally, a decision on that application by the 
    Secretary. The analysis of an agency's application by the designated 
    Department official includes publication of a notice of the agency's 
    application in the Federal Register inviting comment on the agency's 
    compliance with the requirements for recognition and a review by the 
    designated Department official of any public comment received. The 
    Secretary believes the new procedures for recognition allow an agency a 
    full and fair review of its application.
        Additional appeal procedures. The proposed regulations add two key 
    new steps to the recognition process. First, in Sec. 602.11(b) the 
    Secretary gives an accrediting agency seeking recognition by the 
    Secretary an opportunity to respond in writing to the designated 
    Department official's analysis of its application for recognition 
    before the application is reviewed by the Advisory Committee. Second, 
    in Sec. 602.13(b), after the Advisory Committee completes its review of 
    the agency's application and makes a recommendation to the Secretary on 
    the agency's application, the Secretary gives both the agency and the 
    designated Department official an opportunity to contest the Advisory 
    Committee's recommendation. The contesting party, however, may not 
    submit any evidence to the Secretary that it did not submit to the 
    Advisory Committee. This restriction is to ensure that the Advisory 
    Committee's authority is not circumvented. The Secretary believes that 
    in general the only reasonable grounds for contesting an Advisory 
    Committee recommendation would be if the contesting party could 
    demonstrate that the Advisory Committee either misunderstood or did not 
    take into proper account certain information presented by the 
    contesting party.
        The negotiators reached consensus during the negotiated rulemaking 
    sessions on the first step. The Secretary added the second step after 
    the negotiated rulemaking sessions ended to address the non-Federal 
    negotiators' concerns about the lack of sufficient appeal mechanisms 
    for agencies prior to the Secretary's final decision. The Secretary 
    believes that these two new steps in the proposed recognition process 
    provide agencies with sufficient opportunity to present any concerns 
    they might have regarding the recommendation of either the designated 
    Department official or the Advisory Committee before the Secretary 
    reaches a decision on the agency's application.
        Announced and unannounced site visits by the Secretary. Section 
    496(n) of the HEA requires the Secretary to conduct an independent 
    analysis of an agency's application for recognition, which must include 
    a site visit to the accrediting agency and may, at the Secretary's 
    discretion, include site visits to representative institutions or 
    programs accredited by the agency. Section 496(n) of the HEA also 
    provides that the site visits may be unannounced, as appropriate. 
    Accordingly, both Sec. 602.10(b) and Sec. 602.11(b) of the proposed 
    regulations provide for unannounced site visits. Specifically, the 
    Secretary proposes to conduct unannounced site visits only, where 
    necessary in the judgment of the Secretary, to obtain information to 
    verify the agency's compliance with the requirements for recognition 
    and the information would not be forthcoming in an announced site 
    visit. The Secretary wishes to make it clear that this Secretarial 
    judgment is not subject to challenge by an accrediting agency.
        In Sec. 602.11(b), the Secretary also proposes that the Secretary's 
    evaluation of an agency may include a review of information directly 
    related to the institutions or programs accredited by the agency, as 
    this information relates to the institution's or program's compliance 
    with the agency's standards, the effectiveness of those standards, or 
    the agency's application of those standards. The Secretary believes 
    that the inclusion of this language in the proposed regulations, which 
    was agreed to by negotiators, provides the agency, the institutions and 
    programs it accredits, and the general public with a clear 
    understanding of the scope of the Secretary's evaluation of an agency.
        In sum, to implement section 496(n) of the HEA, the proposed 
    regulations make it clear that in evaluating an agency's application 
    for recognition, the Secretary may not and does not depend solely on 
    written submissions from the accrediting agency or on announced visits 
    to the agency or its member institutions or programs. The Secretary 
    makes a more thorough and independent evaluation of an agency's 
    application for recognition, including, where appropriate, unannounced 
    visits to ensure that information available to the designated 
    Department official is comprehensive, accurate, and unbiased, and to 
    ensure that the agency is actually carrying out its stated policies and 
    procedures.
        Scope of recognition requirements. Under Sec. 602.10(b) of the 
    current regulations, in order for an accrediting agency to be 
    recognized by the Secretary, the agency has to meet each recognition 
    criterion taken as a whole unless it can demonstrate to the Secretary's 
    satisfaction that one or more criteria should not be applied. In 
    Sec. 602.13(c) of the proposed regulations, the Secretary requires an 
    agency to meet each of the requirements contained in this part. 
    However, in Sec. 602.13(e) the Secretary proposes that the Secretary 
    may exercise discretion and grant recognition to an agency that does 
    not comply with each requirement if the Secretary determines that the 
    agency's effectiveness is not impaired by its noncompliance. Such 
    discretion might, for example, be exercised if an accrediting agency is 
    unable to conduct an unannounced site visit, as required by 
    Sec. 602.24, because the program being evaluated is offered on a 
    military installation that requires prior approval before any visitors 
    are permitted on the installation. The Secretary believes that 
    Secretarial discretion provides the desired flexibility that non-
    Federal negotiators sought during the negotiated rulemaking sessions.
        Consensus was reached by negotiators regarding the elements to be 
    included in the scope of recognition the Secretary grants to an agency, 
    i.e., geographic area, the degrees or certificates awarded, the types 
    of courses or programs offered, and the length of the recognition 
    period. In the proposed regulations, the Secretary has clarified that 
    an agency's scope of recognition does not automatically extend to any 
    preaccreditation status it offers. Rather, when an agency formally 
    applies for recognition, it must include the types of preaccreditation 
    status for which it seeks recognition, and the Secretary grants 
    recognition to an agency for each preaccreditation status if the agency 
    complies with all the requirements for recognition with regard to that 
    preaccreditation status.
    Section 602.14   Limitation, Suspension, or Termination of Recognition.
        Section 496(l) of the HEA permits the Secretary to limit, suspend, 
    or terminate the Secretary's recognition of an accrediting agency 
    before the completion of the agency's recognition period if the 
    Secretary determines that the agency has failed to meet any of the 
    requirements of part 602. In Sec. 602.14 of the proposed regulations, 
    the Secretary establishes the procedures to be followed before the 
    Secretary may limit, suspend, or terminate an agency's recognition. The 
    proposed procedures allow the agency to request a hearing to contest 
    that action.
        The Secretary proposes that, if an agency requests a hearing, the 
    hearing will be conducted by the Advisory Committee. However, the 
    Secretary further proposes that the hearing may be conducted by a 
    subcommittee of the Advisory Committee, consisting of three members of 
    the Advisory Committee, if the schedule of the full Advisory Committee 
    would not permit a hearing to be held in a timely manner. After 
    evaluating the evidence presented before it, the Advisory Committee or 
    subcommittee makes a recommendation to the Secretary as to whether the 
    sanction proposed by the designated Department official, no sanction, 
    or another sanction is warranted. Any hearing held under this section 
    is open to the public.
        After the negotiated rulemaking sessions, in response to non-
    Federal negotiators' concerns about the lack of sufficient appeal 
    mechanisms, the Secretary added to this section a provision that either 
    party in a hearing may appeal the Advisory Committee's or 
    subcommittee's recommendation to the Secretary.
    Section602.15  Requests for Reconsideration of the Secretary's Decision
        Section 496(o) of the HEA requires the Secretary to provide in 
    regulation the procedures to be followed by an accrediting agency for 
    the appeal of the Secretary's decision regarding its application for 
    recognition. Accordingly, in Sec. 602.15 of the proposed regulations, 
    the Secretary permits an agency to request reconsideration of a final 
    decision of the Secretary regarding either the agency's application for 
    recognition or the limitation, suspension, or termination of the 
    agency's recognition. However, Sec. 602.15(a)(2) proposes that a 
    request for reconsideration may be made only under limited conditions. 
    Under these limited conditions, the agency may request reconsideration 
    only if it demonstrates that it has new information that could not have 
    been presented previously and that the information is likely to result 
    in reversal of the Secretary's decision.
        While, as noted by the non-Federal negotiators at the negotiated 
    rulemaking sessions, the grounds for reconsideration are narrow, the 
    Secretary believes the narrow grounds are appropriate. Adverse 
    decisions regarding an agency's application for recognition are made by 
    the Advisory Committee and forwarded to the Secretary. Under 
    Sec. 602.13, the agency may appeal the Advisory Committee's 
    recommendation to the Secretary. Similarly, under Sec. 602.14, the 
    agency may appeal an adverse Advisory Committee or subcommittee 
    recommendation to the Secretary under a limitation, suspension or 
    termination proceeding. Therefore, the Secretary believes that 
    reconsideration requests should be narrowly circumscribed. The 
    Secretary notes that non-Federal negotiators requested opportunities 
    for agencies to request reconsideration in cases where the Secretary 
    had not established appeal procedures. Given the provisions for appeal 
    that are now in the proposed regulations, the Secretary requests public 
    comment on whether reconsideration procedures are necessary.
        The Secretary wishes to make clear that any agency that fails to 
    notify the Secretary of its intent to file a written request for 
    reconsideration within the 10-day time frame specified in the 
    regulations forfeits its right to reconsideration. Additionally, the 
    Secretary wishes to reiterate that, in general, any failure to meet a 
    required deadline date in any appeal to the Secretary results in a 
    forfeiture of that appeal right.
        While consensus was reached during the negotiated rulemaking 
    sessions that an agency should have 45 days to submit its written 
    request for reconsideration, the Secretary questions whether a shorter 
    period--30 days--is sufficient for the agency to prepare an adequate 
    request, given the fact that 30 days is the usual time frame specified 
    by the Department for other types of appeals to the Secretary. The 
    Secretary requests comments on the shorter period.
        Because requests for reconsideration are restricted to instances 
    where the Secretary's decision involves denial, limitation, suspension, 
    or termination of an agency's recognition, it is anticipated that, due 
    to the extensive material that must be reviewed, the Secretary will 
    require more than 30 days to reach a final decision on an agency's 
    request for reconsideration. Non-Federal negotiators were concerned 
    that there be some time limit imposed to bring the issue to closure. 
    Accordingly, the Secretary is proposing a 60-day time frame for 
    reaching a final decision on an agency's request for reconsideration.
    Section 602.16.  Appeals Procedures.
        As mentioned in Sec. 602.15, section 496(o) of the HEA requires the 
    Secretary to provide for the appeal of the Secretary's decision 
    regarding an accrediting agency's application for recognition. In 
    Sec. 602.16 of the proposed regulations, the Secretary provides for an 
    appeal to the Federal courts of all final decisions of the Secretary 
    regarding an agency's application for recognition. During the 
    negotiated rulemaking sessions, non-Federal negotiators urged an 
    appeals procedure other than through the courts, as, for example, 
    through an administrative law judge. However, the Secretary believes 
    that there can be no administrative appeal within the Department of a 
    Secretarial decision since the Secretary, as head of the Department of 
    Education, makes all final decisions on behalf of the Department. It 
    should be noted, however, that in response to the non-Federal 
    negotiators' concerns, the Secretary has modified the proposed 
    recognition procedures to include an opportunity for an agency to 
    appeal an Advisory Committee's recommendation to the Secretary before 
    the Secretary reaches a final decision on the agency's application. The 
    proposed limitation, suspension, and termination procedures also have 
    been modified to provide for an appeal to the Secretary of an Advisory 
    Committee or subcommittee recommendation.
    
    Subpart C--Criteria for Secretarial Recognition
    
    Section 602.22  Demonstration of Accreditation Experience
        Section 496(a)(1) of the HEA requires accrediting agencies to 
    demonstrate experience in operating as an accrediting agency as a 
    condition for recognition. In Sec. 602.22 of the proposed regulations, 
    the Secretary defines what a demonstration of accrediting experience 
    must include, basically reiterating the requirements for experience set 
    forth in Sec. 602.14 of the current regulations. However, Sec. 602.22 
    does not contain the requirement set forth in Sec. 602.14(c) of the 
    current regulations that agencies must demonstrate that their policies, 
    evaluation methods, and decisions are accepted throughout the United 
    States by recognized accrediting agencies. The Secretary is aware, as 
    argued by the non-Federal negotiators, that this requirement is an 
    important indicator of an agency's acceptance. On the other hand, this 
    requirement has been subject to criticism by persons and institutions 
    interested in forming new accrediting agencies. These individuals and 
    agencies have often expressed concern to the Secretary that this 
    requirement imposes unfair hurdles for them and unduly stifles 
    competition among accrediting agencies. The Secretary proposes to 
    eliminate this requirement because the Secretary believes that it is 
    inappropriate to require acceptance by recognized agencies as a 
    condition for recognition even though evidence of acceptance by 
    recognized accrediting agencies provides some measure of an agency's 
    reliability.
    Section 602.23  Application of Standards
        Current regulations require accrediting agencies to maintain a 
    systematic program of review designed to assess the validity and 
    reliability of their criteria, procedures, and standards and their 
    relevance to the educational and training needs of affected students. 
    As this requirement is fundamental to sound accrediting practice, there 
    was consensus among negotiators that it should continue to be part of 
    any regulations governing the accrediting agency recognition process. 
    However, the language of the requirement has been changed in the 
    proposed regulations from the language of the current regulations in 
    response to the non-Federal negotiators' concerns about various 
    technical interpretations of the words ``validity and reliability.'' 
    The substance of the requirement, as expressed in Sec. 602.23(b)(5), is 
    unchanged. The Secretary wishes to emphasize the importance of this 
    requirement, which is fundamental to the establishment of sound 
    standards for the accreditation process and the determination of 
    educational quality.
    Section 602.24  Accreditation Processes
        Section 496(c)(1) of the HEA requires that, in addition to the 
    announced on-site review that is part of the regular accreditation 
    process, an accrediting agency whose accreditation enables the 
    institutions it accredits to participate in programs authorized under 
    the HEA must conduct, some time during any accreditation or 
    preaccreditation period, at least one unannounced on-site review at 
    each institution that provides vocational education or training. 
    Accordingly, in Sec. 602.24(c) of the proposed regulations, the 
    Secretary requires unannounced site visits by these accrediting 
    agencies. However, as noted in the discussion of Sec. 602.2, if the 
    term ``vocational education'' is interpreted literally, it could be 
    viewed as including all postsecondary education, and, under this 
    interpretation, accrediting agencies would have to conduct unannounced 
    site visits to all institutions. To avoid this outcome, in 
    Sec. 602.24(c) of the proposed regulations, the Secretary limits the 
    type of vocational education programs that trigger unannounced visits 
    to the prebaccalaureate level. As non-Federal negotiators were divided 
    among themselves as to the definition of vocational education, they did 
    not reach consensus on this point.
        As mentioned in the discussion under Sec. 602.2, the Secretary is 
    considering an alternative definition of prebaccalaureate vocational 
    education that would not require unannounced site visits to degree-
    granting institutions whose prebaccalaureate vocational programs lead 
    to the associate degree. This would minimize the burden of the new 
    requirement for unannounced visits, hopefully without any adverse 
    consequences. The Secretary invites comments on this approach and 
    suggestions for alternative ways of reducing the burden without 
    eliminating from review those institutions offering vocational 
    education that have abused the Title IV program.
    Section 602.25  Additions to or Substantive Changes in Educational 
    Programs
        Section 496(a) of the HEA authorizes the Secretary to recognize 
    accrediting agencies that are reliable authorities as to the quality of 
    the education or training provided by the institutions or programs they 
    accredit. Section 496 does not specifically address the manner in which 
    accrediting agencies evaluate either new programs begun by institutions 
    after their last grant of accreditation or preaccreditation or programs 
    that are substantially changed after the institution is accredited or 
    preaccredited. However, the Secretary believes that an agency cannot be 
    a reliable authority as to the quality of education or training offered 
    by an institution if the agency does not assess those new or 
    substantively changed programs. Accordingly, in Sec. 602.25 of the 
    proposed regulations, the Secretary establishes the framework for a 
    policy that accrediting agencies must have to address additions to and 
    substantive changes in educational programs. Specifically, in 
    Sec. 602.25(a) the Secretary proposes that an accrediting agency may 
    include within its previous grant of accreditation or preaccreditation 
    an educational program that an institution initially offers or 
    substantively changes after that grant of accreditation or 
    preaccreditation only if the agency specifically evaluates and approves 
    the program. The Secretary proposes this requirement based upon the 
    past actions of some accrediting agencies.
        Certain accrediting agencies that accredit institutions offering 
    specific prebaccalaureate vocational education programs have, on 
    occasion, extended their accreditation to additional programs that 
    these institutions offered after being accredited, without evaluating 
    the quality of those additional programs, even though the additional 
    programs were totally unrelated to the programs initially accredited. 
    For example, an accrediting agency that accredited an institution that 
    offered cosmetology courses extended its accreditation to additional 
    programs that the institution subsequently offered in jet airplane 
    mechanics and air conditioning and refrigeration without ever 
    evaluating the quality of those additional programs. The Secretary 
    believes that this practice violates the purpose of accreditation.
        On the other hand, the Secretary believes that prior approval of 
    programs is not necessary in all circumstances, a belief shared by 
    negotiators, although no consensus was reached as to the circumstances. 
    In Sec. 602.25(b) the Secretary proposes an exception to this 
    requirement if the institution notifies the accrediting agency of the 
    new or substantially changed program before it is offered, and the new 
    or substantially changed program does not provide prebaccalaureate 
    vocational education. The Secretary proposes this exception because the 
    Secretary believes that new bachelor and higher degree programs are 
    thoroughly reviewed by a variety of entities before they may be 
    offered. Most institutional accrediting agencies, for example, require 
    institutions to have thorough internal reviews of all new degree 
    programs by curriculum committees, governing boards, and other 
    appropriate units within the institution and to obtain appropriate 
    state authorization for those new degree programs before they are 
    offered. However, even though an accrediting agency may not be required 
    by these proposed regulations to evaluate a new or substantially 
    changed program before it is offered under Sec. 602.25(b), accrediting 
    agencies are certainly free, and encouraged, to do so under their own 
    policies.
        The Secretary acknowledges that the task of deciding which programs 
    should require preapproval by accrediting agencies is a difficult one 
    and seeks suggestions from commenters. For commenters who suggest that 
    preapproval be allowed for prebaccalaureate vocational education 
    programs that are ``related'' to a previously accredited program, the 
    Secretary requests specific suggestions on how to determine whether the 
    new or substantially changed program is ``related'' to the other 
    program.
        The Secretary notes that most accrediting agencies already have a 
    definition of ``substantive change'' but observes that there is 
    considerable variation among agencies as to what this term means. Most 
    agencies' definitions generally include the following kinds of changes: 
    a substantial change in the length of a program, its content, or both, 
    as, for example, when a secretarial program increases from 1200 clock 
    hours to 1600 clock hours to provide a 400-hour component in office 
    automation; a change from a traditional 15-week semester format to an 
    alternate weekend format; and a change from a certificate program to an 
    associate degree program. The Secretary seeks to require preapproval 
    for these and similar types of changes and proposes that an agency's 
    definition of a substantive change in an educational program include, 
    at a minimum, a substantial change in the number of clock or credit 
    hours, the number of weeks, or the content of a program, a change in 
    the type of program offered, a change in the credential awarded for 
    completion of the program, and a change in the manner in which the 
    institution measures the educational quantity of the program from clock 
    hours to credit hours. The Secretary invites comments on this approach 
    as well as suggestions for alternative approaches to defining which 
    types of programs require preapproval.
        Finally, the Secretary acknowledges that the proposed requirement 
    for a substantive change policy may result in increased costs to 
    agencies and, in turn, institutions. However, for the reasons noted 
    above, the Secretary believes the benefits far outweigh the costs. The 
    Secretary also wishes to note that there was general consensus among 
    non-Federal negotiators about the appropriateness of including a 
    substantive change requirement in the proposed regulations. However, 
    not all of the negotiators agreed that the approach proposed by the 
    Secretary was appropriate.
    Section 602.26  Required Accreditation Standards
        Section 496 of the HEA authorizes the Secretary to recognize 
    accrediting agencies that are reliable authorities as to the quality of 
    the education or training provided by the institutions or programs only 
    if the agencies satisfy standards established by the Secretary. Section 
    496(a) specifically requires the Secretary to establish standards and 
    requires the standards to include ``an appropriate measure or measures 
    of student achievement.''
        Section 496(a)(5) of the HEA provides that the Secretary's 
    standards for recognition of accrediting agencies must require that an 
    accrediting agency establish accreditation standards that assess 12 
    areas pertaining to the institutions or programs it accredits. These 
    areas are: (1) Curricula; (2) faculty; (3) facilities, equipment and 
    supplies; (4) fiscal and administrative capacity as appropriate to the 
    specified scale of operation; (5) student support services; (6) 
    recruiting and admissions practices, academic calendars, catalogs, 
    publications, grading and advertising; (7) program length and tuition 
    and fees in relation to the subject matters taught and the objectives 
    of the degrees or credentials offered; (8) measures of program length 
    in clock hours or credit hours; (9) success with respect to student 
    achievement in relation to the institution's mission; (10) default 
    rates in student loan programs under Title IV of the HEA; (11) record 
    of student complaints received by, or available to, the accrediting 
    agency; and (12) the institution's compliance with its program 
    responsibilities under title IV of the HEA. However, under section 
    496(a)(5), accrediting agencies that have as their principal purpose 
    the accrediting of institutions of higher education or higher education 
    programs to enable them to participate in Federal programs not 
    authorized under the HEA are exempt from the requirement to have 
    standards for the areas listed in (7), (8), (9), (10), and (12).
        The Secretary notes that most accrediting agencies already have 
    standards addressing many of these areas. However, to the extent that 
    an agency does not have standards for all of them, there is an 
    increased cost to that agency to develop and implement the new 
    standards. The Secretary believes that the proposed regulations 
    minimize the increased cost by allowing agencies maximum flexibility to 
    set their standards to best suit their needs and the needs of the 
    institutions or programs they accredit.
        If the ultimate purpose of section 496 is to authorize the 
    Secretary to recognize accrediting agencies that are reliable 
    authorities as to the quality of the education or training provided by 
    the institutions or programs they accredit, so that recognized agencies 
    only accredit institutions or programs of demonstrated quality, then 
    the Secretary believes that each agency's standard for a particular 
    area listed in section 496(a)(5) must evaluate the quality of the 
    effort the institution or program is making in that area.
        Accordingly, in Sec. 602.26 of the proposed regulations, the 
    Secretary requires accrediting agencies to have standards assessing the 
    12 areas cited in section 496(a)(5) of the HEA. In Sec. 602.26(a)(3), 
    the Secretary exempts accrediting agencies whose accreditation enables 
    their institutions or programs to participate only in Federal programs 
    not authorized under the HEA from having to establish standards for the 
    areas listed under (7), (8), (10), and (12). However, the Secretary 
    does not exempt these agencies from the requirement to establish 
    standards that assess success with respect to student achievement. The 
    Secretary believes that the standards specified in Sec. 602.26(b)(9) 
    fulfill the requirement in section 496(a) of the HEA that the Secretary 
    recognize accrediting agencies that meet the Secretary's standards, 
    which must include ``an appropriate measure or measures of student 
    achievement.'' Furthermore, the Secretary believes that any 
    determination by an accrediting agency that the program or institution 
    it accredits provides quality education or training must be based, in 
    part, on an assessment of the achievement of students enrolled in the 
    institution or program. The Secretary notes that the exemption provided 
    in section 496(a)(5) of the HEA for certain standards was not discussed 
    during negotiated rulemaking because it was added as a technical 
    legislative amendment after the negotiations took place.
        Each of the 12 required standards is discussed below. The title for 
    each standard is based on the statutory language used in section 
    496(a)(5) for that standard. Unless otherwise noted, consensus was 
    reached among negotiators as to language for each of the standards.
        The proposed regulatory language in Sec. 602.26(b) for standards 
    addressing areas (1), (2), (3), and (5) follows the recommendations of 
    negotiators and simply restates the law. These four provisions require 
    that, to be recognized by the Secretary, an accrediting agency must 
    adopt standards under which it evaluates the quality of an 
    institution's or program's curricula; faculty; facilities, equipment, 
    and supplies; and student support services. The Secretary has 
    reexamined the manner in which these four standards are described in 
    the proposed regulations and believes that it may be more useful to 
    provide guidance as to the manner in which quality may or should be 
    discussed under these standards than to simply restate the law. The 
    Secretary requests comment on this matter. To assist commenters in this 
    regard, for each of the four areas, the Secretary examined the 
    standards of several accrediting agencies to determine how these 
    agencies addressed quality standards for those areas and presents the 
    results of that examination under the appropriate topic. The Secretary 
    invites comments on those approaches and additional suggestions for 
    focusing on quality assessment.
        Section 602.26(b)(1)  Curricula. The Secretary found that the 
    standards most accrediting agencies have adopted to evaluate an 
    institution's or program's curricula relate to the overall quality of 
    the curricula, its appropriateness in light of an institution's or 
    program's educational objectives and the specific degrees or 
    certificates awarded, and the mechanisms the institution or program 
    uses to evaluate the curricula and make modifications. The Secretary 
    considers all of these to be elements of good practice in the 
    assessment of an institution's or program's curricula. Accordingly, the 
    Secretary requests specific comment as to whether the manner in which 
    these agencies handle standards for curricula would be a useful 
    addition to these regulations. The Secretary also invites additional 
    comments regarding other elements that the Secretary should include in 
    the evaluation of accrediting agencies for compliance with this 
    requirement.
        Section 602.26(b)(2) Faculty. The Secretary found that the 
    standards most accrediting agencies have adopted to evaluate an 
    institution's or program's faculty relate to the overall quality of the 
    faculty, the extent to which the institution or program relies on part-
    time faculty to teach students, and the effectiveness of the teaching 
    provided by all faculty. Some agencies also include in their standards 
    an assessment of the procedures an institution or program uses for the 
    hiring, promotion, evaluation, and professional development of faculty, 
    while other agencies merely examine these issues in light of whether 
    the institution's or program's policies provide for the fair and 
    equitable treatment of faculty. The Secretary considers all of these to 
    be elements of good practice in the assessment of an institution's or 
    program's faculty. Accordingly, the Secretary requests specific comment 
    as to whether the manner in which these agencies handle standards for 
    faculty would be a useful addition to these regulations. The Secretary 
    also invites additional comments regarding other elements that the 
    Secretary should include in the evaluation of accrediting agencies for 
    compliance with this requirement.
        Section 602.26(b)(3)  Facilities, equipment, and supplies. The 
    Secretary found that the standards most accrediting agencies have 
    adopted to evaluate an institution's or program's facilities, 
    equipment, and supplies relate to the overall quality of these support 
    areas. Specifically, the Secretary found that most accrediting agencies 
    assess, in light of an institution's or program's educational 
    objectives, the adequacy and appropriateness of: libraries, learning 
    resource centers, and other academic and instructional support 
    facilities; the equipment and supplies that support the instructional 
    program; and any other physical resources the institution or program 
    uses to achieve its educational objectives. The Secretary considers all 
    of these elements to be good practices for the assessment of 
    facilities, equipment, and supplies. Accordingly, the Secretary 
    requests specific comment as to whether the manner in which these 
    agencies handle standards for this area would be a useful addition to 
    these regulations. The Secretary also invites additional comments 
    regarding other elements that the Secretary should include in the 
    evaluation of accrediting agencies for compliance with this 
    requirement.
        Section 602.26(b)(4)  Fiscal and administrative capacity as 
    appropriate to the specified scale of operations. Section 496(a)(5)(D) 
    requires an accrediting agency to have standards that address the 
    fiscal and administrative capacity of an institution or program in 
    relation to its scale of operation. It is the Secretary's view that the 
    purpose of this requirement is to enable the agency to determine 
    whether the institution or program is fiscally and administratively 
    sound and will likely remain so for a future period. Because the 
    financial condition of an institution is subject to change, the 
    Secretary proposes that an agency must make this determination each 
    time it grants accreditation, preaccreditation, or reaccreditation. The 
    Secretary also proposes that an agency must examine each institution's 
    financial capacity in sufficient depth on an annual basis to determine 
    if the financial capacity of the institution threatens the ability of 
    the institution or program to continue to meet the agency's standards 
    and, if so, to take appropriate follow-up action. The Secretary invites 
    comments as to whether this follow-up action should include notifying 
    the Secretary of the institution's financial condition.
        The Secretary believes that the enhanced financial monitoring by 
    accrediting agencies that is required by these proposed regulations 
    will provide increased protection to students with regard to problems 
    arising from an institution's financial instability.
        Section 602.26(b)(5)  Student support services. The Secretary found 
    that the standards most accrediting agencies have adopted to evaluate 
    an institution's or program's student support services relate to the 
    overall quality and extent of the services provided and their 
    appropriateness in light of the institution's or program's mission and 
    the types of students it admits. The Secretary considers all of these 
    elements to be good practices for the assessment of student support 
    services. Accordingly, the Secretary requests specific comment as to 
    whether the manner in which these agencies handle standards for this 
    area would be a useful addition to these regulations. The Secretary 
    also invites additional comments regarding other elements that the 
    Secretary should include in the evaluation of accrediting agencies for 
    compliance with this requirement.
        Section 602.26(b)(6)  Recruiting and admission practices; and 
    academic calendars, catalogs, publications, grading, and advertising. 
    Section 496(a)(5)(F) requires an accrediting agency to have standards 
    that address an institution's or program's recruiting and admissions 
    practices, as well as its academic calendars, catalogs, publications, 
    grading, and advertising. The Secretary believes this statutory 
    provision contains two different standards. One standard relates to the 
    appropriateness of the institution's or program's recruiting and 
    admission practices. Under this standard, the agency must determine 
    whether an institution's practices are reasonable in light of the 
    institution's or program's educational mission.
        The other standard relates to the institution's academic calendars, 
    catalogs, publications, grading, and advertising. Under that standard, 
    which is in the nature of consumer protection, the agency must evaluate 
    whether those items are accurate, complete, and consistent with the 
    institution's actual practice.
        Section 602.26(b)(7)  Program length and tuition and fees in 
    relation to the subject matters taught and the objectives of the 
    degrees or credentials offered. Section 496(a)(5)(G) requires an 
    accrediting agency to have standards that address program length and 
    tuition and fees in relation to the subject matters taught and the 
    objectives of the degree or credential offered. It is the Secretary's 
    view that one of the purposes of this requirement is to eliminate 
    certain abuses that have been discovered at institutions participating 
    in Title IV, HEA programs.
        These abusive practices fall into three main categories. One 
    category involves accredited institutions that offer prebaccalaureate 
    vocational programs and charge an excessive amount of tuition and fees 
    for programs that lead to dead end or very low-paying jobs. In some 
    cases, the tuition and fees for a short-term program to prepare 
    students for a particular job exceeded the annual income that a person 
    employed in that job could expect to earn.
        Another category involves accredited institutions that offer 
    prebaccalaureate vocational education programs and inflate either the 
    clock or credit hours for the program or the length of the program 
    without educational justification, simply to increase the amount of SFA 
    funds these institutions may receive. The third category involves 
    accredited institutions that offer prebaccalaureate vocational 
    education that are simply too short to be able to provide training that 
    has any value in the workplace.
        The Secretary proposes to address the statutory requirement for 
    standards related to program length and tuition and fees by requiring 
    an accrediting agency to establish minimum and maximum program lengths 
    for prebaccalaureate vocational programs. In this context, program 
    length means both the number of clock hours or credit hours in a 
    program and the number of weeks that a program is offered. The 
    Secretary invites specific comments with regard to this requirement. 
    The topic of standards for establishing minimum and maximum program 
    lengths was not discussed during the negotiated rulemaking sessions, 
    and the Secretary invites comments on this topic as well.
        During the negotiated rulemaking sessions, consensus was reached on 
    various factors that should be considered when an agency establishes 
    its standard for program length in relation to tuition and fees. These 
    factors are listed under Sec. 602.26(b)(7) (i), (ii), (iii), and (iv). 
    The Secretary has reconsidered this matter and now proposes two 
    additional factors. The first concerns any applicable Federal statutes 
    and regulations. The Secretary does not believe the addition of a 
    requirement for agencies to take into account applicable statutes and 
    regulations when developing their standards goes beyond the intent of 
    the HEA because it does not require agencies to adopt the Federal 
    policies but simply to take them into account. The second factor 
    concerns the relationship between tuition and fees for a 
    prebaccalaureate vocational program and the remuneration that a 
    graduate of that program can reasonably be expected to receive. The 
    Secretary is concerned about this issue for this type of program 
    because the very purpose of a prebaccalaureate vocational program is to 
    prepare a student for gainful employment in a recognized occupation. 
    Moreover, the Secretary is concerned that tuition and fees being 
    charged for prebaccalaureate vocational programs may be excessive given 
    the type of job for which a graduate of the program qualifies. 
    Accordingly, the Secretary requests specific comment regarding 
    standards that address tuition and fee charges for a prebaccalaureate 
    vocational program vis-a-vis the remuneration that graduates of a 
    program may receive.
        The Secretary requests comments on the various factors proposed for 
    standards that assess program length and tuition and fees. In calling 
    for comments with regard to this standard, the Secretary wishes to 
    remind commenters that a violation of a standard does not necessarily 
    preclude an agency from accrediting an institution or program. The 
    violation would, however, at least require the institution to justify 
    its tuition and fee charges to the agency.
        The Secretary acknowledges that the development of standards for 
    this area involves very complex issues. For the purpose of stimulating 
    discussion in this area, the Secretary offers the following possible 
    approaches to the development of standards. Under one approach, the 
    standard might require that annualized tuition and fees for a program 
    not exceed a percentage of the annualized minimum wage. Under another 
    approach, the standard might require that annualized tuition and fees 
    for a program not exceed a percentage of the program's graduates' 
    average earnings for their first year of employment. Under still 
    another approach, annualized tuition and fees for a program could not 
    exceed a percentage of the average annualized wages, as reported by the 
    U.S. Bureau of Labor Statistics, in occupations for which the program 
    prepares students. In suggesting possible approaches to the 
    establishment of standards for this area, the Secretary reminds 
    commenters of the difficulty in obtaining employment information, 
    including salaries and wages, from graduates of an institution for 
    periods beyond the first year after graduation.
        The Secretary is considering establishing in other regulations 
    requirements governing program length and tuition and fees for programs 
    that are eligible to participate in the SFA programs. Accordingly, if 
    those regulatory requirements are established, the Secretary would 
    consider requiring an accrediting agency to notify the Secretary if it 
    knows that an institution's program is too long or too short under that 
    requirement, or if it knows that an institution's tuition and fee 
    charges violate that other requirement. The Secretary invites comments 
    about the feasibility of adding this notification requirement or any 
    alternative method of obtaining this information.
        Finally, the Secretary notes that the requirement to establish a 
    standard for program length and tuition and fees applies only to those 
    accrediting agencies whose accreditation enables the institutions they 
    accredit to participate in programs authorized under the HEA.
        Section 602.26(b)(8) Measures of program length in clock hours or 
    credit hours. Section 496(a)(5)(H) requires an accrediting agency to 
    have standards that address measures of program length in clock or 
    credit hours. It is the Secretary's view that the purpose of this 
    requirement is to enable the agency to determine if an institution take 
    into proper account, as appropriate, factors such as program objectives 
    and content, the types and locations of instructional delivery, and the 
    knowledge and skills necessary for students to reach competence in the 
    field being taught when determining the length of its programs in clock 
    or credit hours. General agreement was reached by negotiators with 
    regard to the substance of this standard. However, the Secretary has 
    reconsidered this matter and now proposes an additional factor: any 
    applicable Federal statutes and regulations. The Secretary does not 
    believe the addition of a requirement for agencies to take into account 
    applicable statutes and regulations when developing their standards 
    goes beyond the HEA because it does not require agencies to adopt the 
    Federal policies but simply to take them into account. The Secretary 
    invites comments on this proposed addition.
        To the extent that the Secretary regulates this area in other 
    regulations governing the SFA programs, these regulations may need to 
    be modified. Moreover, as indicated with regard to Sec. 602.26(b)(7), 
    if those other regulations are established, the Secretary may consider 
    requiring an accrediting agency to notify the Secretary if it knows 
    that an institution's measure of the number of credits hours in its 
    programs does not satisfy that other regulatory requirement. The 
    Secretary invites comments about the feasibility of adding this 
    notification requirement or on alternative methods of obtaining this 
    information.
        The Secretary notes that the requirement to establish a standard 
    for measures of program length in clock or credit hours applies only to 
    those accrediting agencies whose accreditation enables the institutions 
    they accredit to participate in programs authorized under the HEA.
        Section 602.26(b)(9) Success with respect to student achievement in 
    relation to mission. Section 496(a)(5)(I) of the HEA requires an 
    accrediting agency to have standards that address success with respect 
    to student achievement in relation to mission, including, as 
    appropriate, consideration of course completion rates, pass rates on 
    State licensing examinations, and job placement rates. It is the 
    Secretary's view that standards for student achievement are the most 
    important of all accreditation standards because the true success of an 
    institution or program is measured by the success of its students. For 
    institutions that offer prebaccalaureate vocational programs, the 
    Secretary proposes to require agencies to establish minimum 
    quantitative standards for completion rates, job placement rates, and 
    pass rates on State licensing examinations for those programs, since 
    gainful employment is the purpose of those programs. The Secretary 
    proposes this additional requirement for institutions offering 
    prebaccalaureate vocational education programs because, as noted in the 
    discussion under Sec. 602.26(b)(7), these institutions have often 
    engaged in abusive practices. The Secretary notes that the concept of 
    minimum quantitative standards, even when restricted to 
    prebaccalaureate vocational education, was not supported by non-Federal 
    negotiators.
        The Secretary acknowledges that there are many possible approaches 
    to the establishment of the standards for measuring success in 
    prebaccalaureate vocational programs, both in terms of the information 
    collected and the minimum standard selected. For example, if an 
    institution's students are mainly first-time, full-time students in 
    short-term programs, agencies could use data collected by institutions 
    under the Student Right-to-Know and Campus Security Act of 1990 for 
    calculating completion rates. Minimum job placement rate standards 
    might be developed using three-year moving averages, adjusted for 
    regional unemployment rates as computed by the Bureau of Labor 
    Statistics of the U.S. Department of Labor. Further, a job placement 
    rate could be calculated only for those jobs in the areas for which 
    training was offered, all jobs obtained by graduates, or a combination 
    of the two.
        The Secretary specifically invites suggestions for standards in 
    this area. Further, the Secretary understands that developing 
    appropriate standards in these areas is not easy and requests 
    suggestions with regard to specific rates for the standards in these 
    areas. The Secretary suggests as a reference point for completion and 
    placement rates the statutory requirement, contained in section 
    481(e)(2) of the HEA, that, to be an eligible short-term vocational 
    program under the SFA programs, a program must have a 70 percent 
    completion and a 70 percent placement rate.
        Section 602.26(b)(10)  Default rates in the student loan programs 
    established under Title IV of the HEA. Section 496(a)(5)(J) of the HEA 
    requires an accrediting agency to have standards that address an 
    institution's default rates in the student loan programs established 
    under Title IV of the HEA. It is the Secretary's view that the purpose 
    of this requirement is to enable the agency to determine if an 
    institution is out of compliance with its accrediting standards when 
    the institution's latest cohort default rate under the Federal Family 
    Education Loan (FFEL) programs exceeds a certain threshold or has 
    increased significantly over its previous rate. The Secretary proposes 
    to require an agency to conduct a review if an institution's latest 
    cohort default rate equals or exceeds 25 percent. The Secretary 
    establishes this rate as the trigger for review because that is the 
    rate, beginning in fiscal year 1994, i.e. October 1, 1993, at which an 
    institution will be disqualified from participating in the FFEL 
    programs. An accrediting agency is free, of course, to set its trigger 
    for review at a default rate below 25 percent.
        The Secretary also is concerned that a significant change in an 
    institution's default rate could be an indication of other serious 
    problems that may affect the institution's compliance with an agency's 
    standards. For this reason, the Secretary proposes to require an agency 
    to conduct a review when the institution's latest cohort default rate 
    increases significantly over its rate the previous year. The Secretary 
    does not propose to define the term ``significant increase'' in the 
    proposed regulations but invites comments on an appropriate definition. 
    One possibility that the Secretary is considering is to require an 
    agency to conduct a review when the institution's default rate 
    increases by more than 50 percent from its previous rate, provided that 
    previous rate exceeds 10 percent. The Secretary believes that a cohort 
    default rate below 10 percent is not necessarily an indication that the 
    institution may be in violation of its accrediting agency's standards. 
    Therefore, this provision would apply only if the institution's latest 
    cohort default rate exceeds 15 percent and has increased by more than 
    50 percent from its previous rate. The Secretary invites comments on 
    this approach and other approaches that will provide guidance to 
    agencies on what constitutes a significant increase in default rate.
        The Secretary notes that the requirement to establish a standard 
    for this area applies only to those accrediting agencies whose 
    accreditation permits the institutions they accredit to participate in 
    programs authorized under the HEA.
        Section 602.26(b)(11)  Record of student complaints received by, or 
    available to, an agency. Section 496(a)(5)(K) of the HEA requires an 
    accrediting agency to have standards that address the record of student 
    complaints received by, or available to, an agency concerning an 
    institution or program it accredits. It is the Secretary's view that 
    the purpose of this requirement is to enable an agency to focus its 
    evaluation of the institution or program on the matters that gave rise 
    to the student complaints when the agency undertakes its next 
    evaluation of the institution or program.
        Section 602.26(b)(12)  Compliance with an institution's program 
    responsibilities under Title IV of the Act. Section 496(a)(5)(L) of the 
    HEA requires an accrediting agency to have standards that address an 
    institution's compliance with its program responsibilities under Title 
    IV of the Act. It is the Secretary's view that an institution's failure 
    to comply with its Title IV responsibilities should be a factor in an 
    accrediting agency's determination as to whether that institution 
    should continue to be accredited by the agency. The Secretary 
    recognizes that accrediting agencies do not have the responsibility, 
    expertise, personnel, or time to evaluate, on a routine basis, whether 
    the institutions they accredit are in compliance with their Title IV 
    responsibilities. On the other hand, agencies may not ignore 
    information provided to them regarding the lack of compliance of those 
    institutions. Accordingly, the Secretary proposes that, in assessing an 
    institution's compliance under this standard, the agency relies on 
    documentation forwarded to it by the Secretary. The Secretary wishes to 
    make it clear that this section of the proposed regulations does not 
    require accrediting agencies to review an institution to determine 
    whether the institution is fulfilling its responsibilities under the 
    SFA programs, as, for example, by verifying that an institution is 
    calculating Pell distributions properly. Rather, the Secretary expects 
    agencies to use the information provided by the Secretary on the 
    institution to trigger a review of the institution for compliance with 
    agency standards if the documentation provided by the Secretary 
    indicates a problem that is related to one or more of the agency's 
    standards.
        The Secretary notes that the requirement to establish standards for 
    this area applies only to those accrediting agencies whose 
    accreditation enables the institutions they accredit to participate in 
    programs authorized under the HEA.
        Section 602.26(b)(13)  The institution's practice of making refunds 
    to students. Under section 484B of the HEA, an institution 
    participating in the SFA programs must have a fair and equitable refund 
    policy. An institution's refund policy is judged to be fair and 
    equitable if it provides a refund in an amount of at least the largest 
    of the amounts provided under ``(1) the requirements of applicable 
    State law; (2) the specific refund requirements established by the 
    institution's nationally recognized accrediting agency and approved by 
    the Secretary; or (3) the pro rata refund calculation'' described 
    elsewhere in section 484B. To permit an institution to satisfy the fair 
    and equitable refund requirement using this criterion, the Secretary 
    proposes not to recognize an accrediting agency unless the agency has a 
    refund policy that provides for a fair and equitable refund to a 
    student of tuition, fees, and other institutional charges. Thus, the 
    Secretary's recognition of an agency means that the Secretary has 
    approved that agency's refund policy. Non-Federal negotiators objected 
    to the inclusion of this requirement in the proposed regulations on the 
    grounds that section 496(g) of the HEA explicitly states that the 
    Secretary may not establish standards for accrediting agencies that are 
    not required by section 496. The Secretary believes, however, that the 
    inclusion of a requirement for a standard addressing an institution's 
    refund policy in the proposed regulations is necessary to comply with 
    section 484B of the HEA.
        Section 602.26(c)  Time limit on correcting deficiencies. In 
    Sec. 602.26(c), the Secretary proposes that, when an institution or 
    program fails to meet an agency standard, the agency may permit the 
    institution or program a period, which may not exceed 18 months, during 
    which time it must take corrective action to bring itself back into 
    compliance with the standard. The agency is free to set the time frame 
    for coming into compliance at less than 18 months. If the institution 
    or program fails to bring itself into compliance during the specified 
    period, the agency must take adverse action, unless it finds that the 
    time frame for achieving compliance should be extended for cause. Of 
    course, the agency may take adverse action against an institution or 
    program, either immediately or in less than 18 months, without offering 
    the institution or program the opportunity to take corrective action if 
    the agency believes that the adverse action is necessary.
        The Secretary believes that the 18-month time frame is necessary to 
    ensure that institutions and programs make serious efforts to improve 
    the quality of their offerings and to ensure that accrediting agencies 
    take adverse actions when institutions fail to make those efforts. 
    Accordingly, the Secretary anticipates that extensions beyond 18 months 
    for cause will not be routinely granted. Additionally, the Secretary 
    anticipates that for violations that are easily correctable, the 
    appropriate period will be significantly less than 18 months.
        The Secretary is considering adding to this section a requirement 
    that an accrediting agency must take action not only if it determines 
    that an institution or program is not in compliance with a standard but 
    also if it determines that an institution or program may currently meet 
    the standard but is unlikely to be able to continue to meet the 
    standard. The Secretary invites comments on this possible addition to 
    the section.
    Section 602.27  Required Operating Procedures
        Section 496(c) of the HEA requires accrediting agencies whose 
    accreditation enables institutions to participate in Title IV, HEA 
    programs to take special action whenever institutions establish new 
    branch campuses or undergo changes in ownership that result in changes 
    in control. Accordingly, in Sec. 602.27 of the proposed regulations, 
    the Secretary reiterates the requirement for special action set forth 
    in that section. For purposes of this section, the Secretary notes that 
    the term ``branch campus'' includes any ``additional location,'' which 
    the Secretary defines to be a location that is geographically apart 
    from the main campus, that has its own separate administrative 
    structure, services, and facilities, and at which the institution plans 
    to offer a complete educational program. The Secretary believes the 
    inclusion of additional locations in this requirement is consistent 
    with the intent of Congress. The close scrutiny of branch campuses and 
    additional locations includes the requirement contained in sections 
    496(c)((2) and (3) to approve a business plan for a branch prior to its 
    opening; to extend accreditation to the branch only after determining 
    that it has sufficient educational, financial, operations, management, 
    and physical resources to provide education or training consistent with 
    the accreditation standards; and to conduct on-site reviews within six 
    months for all new branches and all institutions that change ownership 
    that results in a change in control.
        Another requirement of section 496(c) of the HEA is that any 
    institution participating in Title IV, HEA programs that enters into a 
    teach-out agreement with another institution must agree to submit to 
    its accrediting agency for approval a teach-out agreement that is 
    consistent with applicable standards and regulations. In Sec. 602.27(b) 
    of the proposed regulations, the Secretary reiterates this requirement.
    Section 602.28  Due Process for Institutions and Programs
        Section 496(a)(6) of the HEA requires an accrediting agency seeking 
    recognition by the Secretary to use procedures throughout its 
    accreditation process that satisfy due process requirements. 
    Accordingly, in Sec. 602.28 of the proposed regulations, the Secretary 
    sets out this due process requirement. Specifically, in Sec. 602.28 the 
    Secretary requires an agency to set forth in writing all of its 
    procedures governing its accreditation and preaccreditation processes, 
    including its processes for the appeal of an adverse action it takes 
    against an institution or program, to notify an institution or program 
    in writing of any adverse action the agency takes against it, and to 
    afford the institution or program the opportunity to appeal the adverse 
    action. In accordance with section 496(a)(6)(D) of the HEA, in 
    Sec. 602.28(b)(5) the Secretary specifically requires that an agency 
    permit an institution or program the right to representation by counsel 
    during an appeal of an adverse action.
        The Secretary acknowledges that the cost to an agency when an 
    institution or program appeals an adverse action can be substantial. To 
    minimize this cost, the Secretary has included in Sec. 602.28(b)(5) a 
    provision, suggested by non-Federal negotiators, that agencies be given 
    the discretion to determine when an appeal may be made only in writing.
    Section 602.29  Notification of Accrediting Decisions
        Section 496(a)(7) of the HEA requires accrediting agencies to 
    notify the Secretary, the appropriate State postsecondary review 
    entities, and the public of any final adverse accrediting action 
    regarding an institution or program. Accordingly, in Sec. 602.29(a) of 
    the proposed regulations, the Secretary establishes this notification 
    requirement. The Secretary proposes an additional requirement in 
    Sec. 602.29(a) that is not specified in the law: that accrediting 
    agencies notify other appropriate accrediting agencies of all final 
    adverse actions. The Secretary believes this additional notification 
    requirement, which was suggested after the negotiated rulemaking 
    sessions by one of the non-Federal negotiators, is necessary because of 
    the requirement, implied in section 496(l)(2) of the HEA, that an 
    accrediting agency must take into account the adverse accrediting 
    actions of other accrediting agencies in making its own accrediting 
    decisions.
        Section 496(a)(8) of the HEA requires accrediting agencies to make 
    available to the Secretary, the appropriate State postsecondary review 
    entity and, upon request, the public a brief statement supporting any 
    decision to deny, withdraw, suspend, or terminate the accreditation or 
    preaccreditation of an institution or program, together with the 
    comments of the affected institution or program concerning that 
    decision. Accordingly, in Sec. 602.29 of the proposed regulations, the 
    Secretary establishes this requirement. To ensure that the statement is 
    made available in a timely fashion, the Secretary proposes to require 
    that the statement be made available within 60 days of an agency's 
    final decision.
        The Secretary is considering adding to this section a requirement 
    that agencies notify the Secretary prior to taking final adverse action 
    against an institution when the information that caused the agency to 
    take the adverse action may relate to the institution's continued 
    participation in Title IV, HEA programs, as, for example, in the case 
    of fraud or gross mismanagement of Federal funds. The Secretary is 
    considering this additional notification requirement because of the 
    length of time it often takes agencies to reach a final adverse 
    decision, due to an institution's rights under due process, even when 
    circumstances indicate a gross violation of agency standards. The 
    Secretary invites comments on this additional requirement and 
    alternative approaches to notifying the Secretary when an agency has 
    such serious concerns about an institution that it initiates an adverse 
    action.
        Finally, the Secretary is considering adding to this section a 
    requirement that an accrediting agency must notify the Secretary and 
    the appropriate State postsecondary review entity of any final adverse 
    accrediting action at the same time the agency notifies the institution 
    of this action. The Secretary believes this addition would prevent 
    excessive draw-down of SFA funds by an institution after it loses 
    accreditation. The Secretary notes that, while this topic was not 
    discussed during negotiated rulemaking, many negotiators have told 
    Department staff that this additional requirement would not present an 
    undue hardship to their agencies. The Secretary invites comments on 
    this proposed additional requirement and suggestions for alternative 
    approaches to prevent unwarranted expenditure of SFA funds by 
    institutions that have lost accreditation.
    Section 602.30  Regard for Decisions of States and Other Accrediting 
    Agencies
        Section 496(l)(2) of the HEA implies that accrediting agencies are 
    responsible for knowing what actions other recognized accrediting 
    agencies have taken against an institution. The Secretary addresses 
    this issue in Sec. 602.30 by proposing that all agencies, including 
    those that accredit only programs, take into account the decisions of 
    States and other accrediting agencies when making any accreditation or 
    preaccreditation decision involving an institution or program. The 
    Secretary believes the inclusion of programmatic accrediting agencies 
    in this requirement is essential to ensure that the problems that 
    caused a programmatic accrediting agency to take adverse action against 
    a program within an institution are promptly reviewed by the 
    institutional accrediting agency that accredits the institution to 
    determine if the institution is still in compliance with the latter 
    agency's standards.
        In Sec. 602.30(a)(3) of the proposed regulations, the Secretary 
    requires that agencies routinely share with other appropriate 
    recognized accrediting agencies and State agencies information about 
    any actions they have taken regarding an institution's or programs's 
    accreditation or preaccreditation. The Secretary is considering adding 
    to this section a requirement that agencies share information about 
    actions they are taking or are about to take regarding an institution's 
    or program's accreditation or preaccreditation. The Secretary invites 
    comments on this additional requirement and alternative approaches to 
    sharing information with the other members of the triad regarding 
    actions either under way or planned by the agency with respect to an 
    institution or program.
        Finally, in Sec. 602.30(b) the Secretary proposes that agencies are 
    subject to the requirements in Sec. 602.30(a) if they ``knew, or should 
    have known,'' of the actions being taken by another recognized 
    accrediting agency or State agency. The Secretary believes that it is 
    reasonable to expect an agency to have known of these actions if there 
    is evidence that the other agencies have sent information concerning 
    these actions to the agency.
    
    Other Issues
    
        The following discussion addresses other issues either discussed by 
    negotiators or raised by the Secretary after the negotiations. None of 
    the issues, however, involves a significant change from the current 
    policies and procedures governing the accrediting agency recognition 
    process, and thus none warrants inclusion in the previous section.
    Section 602.2  Definitions
        Accrediting agency. While the definition in the proposed 
    regulations eliminates the language in the current regulations 
    describing the type of entity that may comprise an agency, the 
    Secretary wishes to make clear that the legal entity that is an 
    accrediting agency may be an association, council, commission, or 
    corporation.
        Designated Department official. While this term is not used in the 
    current regulations, the Secretary proposes to use it in subpart B on 
    recognition and termination procedures to describe much of what has, in 
    fact, been the Department's practice with respect to the accrediting 
    agency recognition process. For example, the Assistant Secretary for 
    Postsecondary Education has, on occasion, presented the summary of the 
    preliminary analysis of an accrediting agency to the Advisory 
    Committee; on other occasions, the Assistant Secretary has delegated 
    that responsibility to a member of the Assistant Secretary's staff. 
    After the Advisory Committee meeting, the Assistant Secretary has 
    routinely forwarded to the Secretary the Advisory Committee's 
    recommendation on an agency's application for recognition, along with 
    the Assistant Secretary's recommendation. Finally, the Assistant 
    Secretary has routinely advised the Secretary on issues related to the 
    recognition of agencies. The Secretary believes that the inclusion of 
    the term ``designated Department official'' and its use throughout 
    subpart B clarifies the longstanding involvement of individuals other 
    than the Secretary in the accrediting agency recognition process.
        Representative of the public. The Secretary wishes to make clear 
    that under an agency's policy on conflicts of interest, a 
    representative of the public may not participate in any accrediting 
    decisions pertaining to an institution or program with which he or she 
    may have any direct or indirect affiliation.
    Section 602.21  Administrative and Fiscal Responsibility
        Consensus was reached by negotiators regarding the provisions 
    specified in this section for demonstrating that an accrediting agency 
    has the necessary administrative and fiscal resources to carry out its 
    accrediting responsibilities. However, the Secretary is concerned that 
    the provisions contained in this section do not adequately address 
    whether an agency's personnel and fiscal resources will continue to be 
    adequate during any recognition period granted. The Secretary invites 
    suggestions on how to address this concern.
    
    Executive Order 12866
    
        These proposed regulations have been reviewed in accordance with 
    Executive Order 12866. An assessment of the potential costs and 
    benefits of the various requirements contained in the proposed 
    regulations has been incorporated into the relevant sections of this 
    preamble. The Secretary notes that, as these proposed regulations were 
    subject to negotiated rulemaking, the costs and benefits of the various 
    requirements were discussed thoroughly by negotiators. The resultant 
    consensus reached on a particular requirement reflected agreement on 
    the best possible approach to that requirement in terms of cost and 
    benefit.
    
    Regulatory Flexibility Act Certification
    
        The Secretary certifies that these proposed regulations would not 
    have a significant economic impact on a substantial number of small 
    entities. The small number of entities that would be affected by these 
    proposed regulations are accrediting agencies that apply for 
    recognition by the Secretary. The regulations would not have a 
    significant economic impact on the institutions affected because the 
    regulations would not impose excessive regulatory burdens or require 
    unnecessary Federal supervision. The regulations would impose the 
    minimum requirements needed to ensure the proper implementation of the 
    Secretary's statutory mandate to recognize accrediting agencies.
    
    Paperwork Reduction Act of 1980
    
        Sections 602.4, 602.10, 602.26, and 602.27 contain information 
    collection requirements. In addition, section 602.21(b)(7) contains 
    specific record retention requirements. As required by the Paperwork 
    Reduction Act of 1980, the Department of Education will submit a copy 
    of these sections to the Office of Management and Budget for its 
    review. (44 U.S.C. 3504(h))
        These proposed regulations contain substantial information 
    collection requirements for accrediting agencies applying for 
    recognition by the Secretary, as well as additional requirements for 
    recognized agencies during their recognition period. The Department 
    needs and uses the information collected to determine whether an agency 
    seeking recognition by the Secretary meets the requirements for 
    recognition and whether, if the agency is recognized, it continues to 
    operate in compliance with the requirements for recognition throughout 
    its recognition period.
        Organizations and individuals desiring to submit comments on the 
    information collection requirements should direct them to the Office of 
    Information and Regulatory Affairs, OMB, room 3002, New Executive 
    Office Building, Washington, DC 20503; Attention: Daniel J. Chenok.
    
    Invitation to Comment
    
        Interested persons are invited to submit comments and 
    recommendations regarding these proposed regulations.
        All comments submitted in response to these proposed regulations 
    will be available for public inspection, during and after the comment 
    period, in room 3069, ROB-3, 7th & D Streets, SW., Washington, DC, 
    between the hours of 8:30 a.m. and 4 p.m., Monday through Friday of 
    each week except Federal holidays.
        To assist the Department in complying with the specific 
    requirements of Executive Order 12866, the Secretary invites comments 
    on whether there may be further opportunities to reduce any potential 
    costs or increase potential benefits resulting from these proposed 
    regulations without impeding the effective and efficient administration 
    of the accrediting agency recognition process.
    
    Assessment of Educational Impact
    
        The Secretary particularly requests comments on whether the 
    proposed regulations in this document would require transmission of 
    information that is being gathered by or is available from any other 
    agency or authority of the United States.
    
    List of Subjects in 34 CFR Part 602
    
        Colleges and universities, Education, Reporting and recordkeeping 
    requirements.
    
    
    [Catalog of Federal Domestic Assistance Number does not apply.]
    
        Dated: January 14, 1994.
    Richard W. Riley,
    Secretary of Education.
    
        The Secretary proposes to amend title 34 of the Code of Federal 
    Regulations by revising part 602 to read as follows:
    
    PART 602--SECRETARY'S PROCEDURES AND CRITERIA FOR THE RECOGNITION 
    OF ACCREDITING AGENCIES
    
    Subpart A--General Provisions
    
    Sec.
    602.1  Purpose.
    602.2  Definitions.
    602.3  Organization and membership.
    602.4  Submission of information to the Secretary by recognized 
    accrediting agencies.
    
    Subpart B--Recognition and Termination Procedures
    
    602.10  Application for recognition.
    602.11  Preliminary review by the Secretary.
    602.12  Review by the National Advisory Committee on Institutional 
    Quality and Integrity.
    602.13  Review and decision by the Secretary.
    602.14  Limitation, suspension, or termination of recognition.
    602.15  Requests for reconsideration of the Secretary's decisions.
    602.16  Appeals procedures.
    602.17  Publication of list of recognized agencies.
    
    Subpart C--Criteria for Secretarial Recognition
    
    602.20  Geographic scope of accrediting activities.
    602.21  Administrative and fiscal responsibility.
    602.22  Accreditation experience.
    602.23  Application of standards.
    602.24  Accreditation processes.
    602.25  Additions to or substantive changes in educational programs.
    602.26  Required accreditation standards.
    602.27  Additional required operating procedures.
    602.28  Due process for institutions and programs.
    602.29  Notification of accrediting agency decisions.
    602.30  Regard for decisions of States and other accrediting 
    agencies.
    
        Authority: 20 U.S.C. 1058, 1061, 1085, 1088, 1099b, 1141, 1401, 
    2471, and 3381, unless otherwise noted.
    
    Subpart A--General Provisions
    
    
    Sec. 602.1  Purpose.
    
        (a)(1) This part establishes procedures and criteria for the 
    Secretary's recognition of accrediting agencies. The purpose of the 
    Secretary's recognition of agencies is to assure that these agencies 
    are, for the purposes of the Higher Education Act of 1965, as amended 
    (HEA), or for other Federal purposes, reliable authorities as to the 
    quality of education or training offered by the institutions of higher 
    education or the higher education programs they accredit.
        (2) The Secretary's recognition of an accrediting agency is based 
    on the Secretary's determination that the agency satisfies the 
    requirements of this part.
        (b) The Secretary grants recognition only to those agencies that--
        (1) Accredit institutions of higher education for the purpose of 
    enabling them to establish eligibility to participate in HEA programs; 
    or
        (2) Accredit institutions of higher education or higher education 
    programs for the purpose of enabling them to establish eligibility to 
    participate in other programs administered by the Department or by 
    other Federal agencies.
    
    
    (Authority: 20 U.S.C. 1099b)
    
    
    Sec. 602.2  Definitions.
    
        The following definitions apply to terms used in this part:
        Accreditation means the status of public recognition that an 
    accrediting agency grants to an educational institution or program that 
    meets the agency's established qualifications and standards.
        Accrediting agency or agency means a legal entity, or that part of 
    a legal entity, that conducts accrediting activities through voluntary, 
    non-Federal peer evaluations and makes decisions concerning the 
    accreditation or preaccreditation status of institutions, programs, or 
    both.
        Act means the Higher Education Act of 1965, as amended.
        Adverse accrediting action means the denial, withdrawal, 
    suspension, or termination of accreditation or preaccreditation, or any 
    comparable accrediting action an agency may take against an institution 
    or program, except that placing an institution or program on probation 
    or issuing a show cause order against an institution or program is not 
    an adverse accrediting action unless it is so defined by the 
    accrediting agency.
        Advisory Committee means the National Advisory Committee on 
    Institutional Quality and Integrity.
        Branch campus means a location of an institution of higher 
    education that is geographically apart from and independent of the main 
    campus of the institution. The Secretary considers a location of an 
    institution to be independent of the main campus if the location (1) is 
    permanent in nature; (2) offers courses in educational programs leading 
    to a degree, certificate, or other recognized educational credential; 
    (3) has its own faculty and administrative or supervisory organization; 
    and (4) has its own budgetary and hiring authority.
        Designated Department official means the official in the Department 
    of Education to whom the Secretary has delegated the responsibilities 
    indicated in this part.
        Institution of higher education or institution means an educational 
    institution that qualifies or may qualify as an eligible institution 
    under 34 CFR part 600.
        Institutional accrediting agency means an agency that accredits 
    institutions of higher education.
        Nationally recognized accrediting agency, nationally recognized 
    agency, or recognized agency means an accrediting agency that is 
    recognized by the Secretary under this part.
        Part means part 602 of title 34 of the Code of Federal Regulations 
    governing the Secretary's procedures and criteria for the recognition 
    of accrediting agencies.
        Preaccreditation means the status of public recognition that an 
    accrediting agency grants to an institution or program for a limited 
    period of time that signifies that the agency has determined that the 
    institution or program is progressing towards accreditation and is 
    likely to attain accreditation within a reasonable period of time.
        Prebaccalaureate vocational education means vocational education 
    that leads to a certificate, degree, or other credential that is less 
    than a bachelor's degree.
        Program means a postsecondary educational program offered by an 
    institution that leads to an academic or professional degree, 
    vocational certificate, or other recognized educational credential.
        Programmatic accrediting agency means an agency that accredits 
    specific educational programs that prepare students for entry into a 
    profession, occupation, or vocation.
        Representative of the public means a person who is not (1) an 
    employee, member of the governing board, owner, or shareholder of, or 
    consultant to, an institution or program that either is accredited by 
    the agency or has applied for accreditation; or (2) a member of any 
    trade association or membership organization related to, affiliated 
    with, or associated with the accrediting agency.
        Secretary means the Secretary of the U.S. Department of Education 
    or any official or employee of the Department acting for the Secretary 
    under a delegation of authority.
        State means a State of the Union, American Samoa, the Commonwealth 
    of Puerto Rico, the District of Columbia, Guam, the Trust Territory of 
    the Pacific Islands, the Virgin Islands, and the Commonwealth of the 
    Northern Mariana Islands.
        Teach-out agreement means a written agreement between accredited 
    institutions that provides for the equitable treatment of students if 
    one of those institutions stops offering an educational program before 
    all students enrolled in that program complete the program.
        Title IV, HEA program means any of the programs set forth in 34 CFR 
    668.1(c).
        Vocational education means education or training that prepares 
    students for gainful employment in a recognized occupation.
    
    
    (Authority: 20 U.S.C. 1099b)
    
    
    Sec. 602.3  Organization and membership.
    
        (a) The Secretary recognizes only the accrediting agencies 
    described in paragraph (b) of this section that--
        (1) Accredit institutions of higher education or higher education 
    programs for the purpose described in Sec. 601.1(b); and
        (2) Satisfy the criteria for Secretarial recognition contained in 
    subpart C of this part.
        (b) The accrediting agencies referred to in paragraph (a) of this 
    section are--
        (1) A State agency that--
        (i) Has as a principal purpose the accrediting of institutions of 
    higher education, higher education programs, or both; and
        (ii) Has been listed by the Secretary as a nationally recognized 
    accrediting agency on or before October 1, 1991;
        (2) An accrediting agency that--
        (i) Has a voluntary membership of institutions of higher education;
        (ii) Has as a principal purpose the accrediting of institutions of 
    higher education to enable them to participate in programs authorized 
    under this Act; and
        (iii) Satisfies the ``separate and independent'' requirements 
    contained in paragraph (c) of this section;
        (3) An accrediting agency that--
        (i) Has a voluntary membership; and
        (ii) Has as its principal purpose the accrediting of higher 
    education programs, or higher education programs and institutions of 
    higher education to enable them to participate in Federal programs not 
    authorized under this Act; and
        (4) An accrediting agency that, for purposes of determining 
    eligibility for Title IV, HEA programs--
        (i)(A) Has a voluntary membership of individuals participating in a 
    profession; or
        (B) Has as its principal purpose the accrediting of programs within 
    institutions that are accredited by another nationally recognized 
    accrediting agency; and
        (ii)(A) Satisfies the ``separate and independent'' requirements 
    contained in paragraph (c) of this section; or
        (B) Obtains a waiver from the Secretary under paragraph (e) of this 
    section of the ``separate and independent'' requirements contained in 
    paragraph (c) of this section.
        (c) For purposes of this section, ``separate and independent'' 
    means that--
        (1) The members of the agency's decision-making body--who make its 
    accrediting decisions, establish its accreditation policies, or both--
    are not elected or selected by the board or chief executive officer of 
    any related, associated, or affiliated trade association or membership 
    organization;
        (2) At least one member of the agency's decision-making body is a 
    representative of the public, with no less than one-seventh of the body 
    consisting of representatives of the public;
        (3) The agency has established and implemented guidelines for each 
    member of the decision-making body to avoid conflicts of interest in 
    making decisions;
        (4) The agency's dues are paid separately from any dues paid to any 
    related, associated, or affiliated trade association or membership 
    organization; and
        (5) The agency's budget is developed and determined by the agency 
    without review by or consultation with any other entity or 
    organization.
        (d) The Secretary considers that any joint use of personnel, 
    services, equipment, or facilities by an accrediting agency and a 
    related, associated, or affiliated trade association or membership 
    organization does not violate the provisions of paragraph (c) of this 
    section if--
        (1) The agency pays the fair market value for its proportionate 
    share of the joint use; and
        (2) The joint use does not compromise the independence and 
    confidentiality of the accreditation process.
        (e)(1) Upon request of an accrediting agency described in paragraph 
    (b)(4) of this section, the Secretary waives the ``separate and 
    independent'' requirements of this section if the agency demonstrates 
    that--
        (i) The agency has been listed by the Secretary as a nationally 
    recognized agency on or before October 1, 1991; and
        (ii) The existing relationship between the agency and the related, 
    associated, or affiliated trade association or membership organization 
    does not compromise the independence of the accreditation process.
        (2) To demonstrate that the existing relationship between the 
    agency and the related, associated, or affiliated trade association or 
    membership organization does not compromise the independence of the 
    accreditation process, the agency must show that--
        (i) The related, associated, or affiliated trade association or 
    membership organization plays no role in making or ratifying the 
    accreditation decisions of the agency;
        (ii) The agency has sufficient budget and administrative autonomy 
    to carry out its accrediting functions; and
        (iii) The agency provides to the related, associated, or affiliated 
    trade association or membership organization only information it makes 
    available to the public.
    
    (Authority: 20 U.S.C. 1099b)
    
    
    Sec. 602.4  Submission of information to the Secretary by recognized 
    accrediting agencies.
    
        Each accrediting agency recognized by the Secretary shall submit to 
    the Secretary--
        (a) Reports of final accrediting actions taken by the agency with 
    respect to the institutions and programs it accredits;
        (b) A copy of any annual report prepared by the agency;
        (c) A copy, updated annually, of the agency's directory of 
    accredited institutions and programs;
        (d) A summary of the agency's major accrediting activities during 
    the previous year (an annual data summary), if so requested by the 
    Secretary to carry out the Secretary's responsibilities related to this 
    part;
        (e) Upon request, information to assist the Secretary in resolving 
    problems with any institution or program accredited by the agency, 
    provided that the request does not conflict with the agency's policies 
    on confidentiality with respect to its records on those institutions or 
    programs; and
        (f) Any proposed change that might alter the agency's--
        (1) Scope of recognition; or
        (2) Compliance with the requirements of this part.
    
    
    (Authority: 20 U.S.C. 1099b)
    
    Subpart B--Recognition and Termination Procedures
    
    
    Sec. 602.10  Application for recognition.
    
        (a) An accrediting agency seeking initial or renewed recognition by 
    the Secretary as a nationally recognized accrediting agency submits a 
    written application to the Secretary. The application for recognition 
    consists of--
        (1) A statement of the agency's requested scope of recognition;
        (2) An analysis of the agency's compliance with the criteria for 
    recognition set forth in this part; and
        (3) Supporting documentation.
        (b)(1) An accrediting agency's application for recognition 
    constitutes a grant of authority to the Secretary to conduct site 
    visits and to gain access to agency records, personnel, and facilities 
    on an announced or unannounced basis.
        (2) The Secretary conducts an unannounced site visit only, where 
    necessary in the judgment of the Secretary, to obtain information to 
    verify that the agency is in compliance with the requirements of this 
    part and the information cannot be obtained or substantiated in an 
    announced site visit.
        (c) The Secretary does not make available to the public any 
    confidential agency materials examined by Department personnel or the 
    Secretary as part of the evaluation of an accrediting agency's 
    application for recognition.
    
    
    (Authority: 20 U.S.C. 1099b)
    
    
    Sec. 602.11  Preliminary review by the Secretary.
    
        (a) Upon receipt of an accrediting agency's application for 
    recognition, the Secretary--
        (1) Establishes a schedule for the review of the agency by the 
    designated Department official, the National Advisory Committee on 
    Institutional Quality and Integrity, and the Secretary; and
        (2) Publishes a notice of the agency's application in the Federal 
    Register inviting public comment on the agency's compliance with the 
    requirements for recognition.
        (b)(1) The designated Department official analyzes the accrediting 
    agency's application to determine whether the agency satisfies the 
    requirements of this part, taking into account all available relevant 
    information concerning the compliance of the agency with the 
    requirements for recognition. The analysis includes--
        (i) Site visits, on an announced or unannounced basis, to the 
    agency and, at the Secretary's discretion, representative institutions 
    or programs it accredits;
        (ii) Review of public comment and other third-party information 
    solicited by the Secretary, as well as any other information provided 
    to the Secretary, concerning the performance of the agency in relation 
    to the requirements of this part; and
        (iii) Review of complaints or legal actions involving the agency.
        (2) The designated Department official's evaluation may also 
    include a review of information directly related to institutions or 
    programs accredited or preaccredited by the agency, relative to their 
    compliance with the accrediting agency's standards, the effectiveness 
    of the agency's standards, or the agency's application of those 
    standards.
        (c) The designated Department official--
        (1) Prepares a written analysis of the accrediting agency;
        (2) Sends the analysis and all supporting documentation, including 
    all third-party comments received by the Secretary, to the agency in 
    advance of the Advisory Committee meeting; and
        (3) Specifies a time period before the Advisory Committee meeting 
    during which the agency may provide the designated Department official 
    with any written comments on the analysis.
        (d) The accrediting agency provides any written comments it chooses 
    to make to the designated Department official before the expiration of 
    the time period specified in paragraph (c)(3) of this section.
        (e) The designated Department official provides the Advisory 
    Committee with the accrediting agency's application and supporting 
    documentation, the designated Department official's analysis of the 
    application, all information relied upon in developing the analysis, 
    any response by the agency to the analysis, any Department rebuttal to 
    the agency's response, and any third-party information the Secretary 
    receives regarding the agency.
        (f) The designated Department official provides the agency with a 
    copy of any Department rebuttal provided to the Advisory Committee 
    under paragraph (e) of this section.
    
    (Authority: 20 U.S.C. 1099b)
    
    
    Sec. 602.12  Review by the National Advisory Committee on Institutional 
    Quality and Integrity.
    
        (a)(1) The Advisory Committee considers an accrediting agency's 
    application at a public meeting and invites the designated Department 
    official, the agency, and other interested parties to make oral 
    presentations at the meeting.
        (2) The designated Department official arranges for a transcript to 
    be made of the Advisory Committee meeting.
        (b) At the conclusion of the meeting, the Advisory Committee 
    recommends that the Secretary approve or deny recognition of the 
    accrediting agency or defer a decision on the agency's application.
        (c)(1) If the Advisory Committee recommends recognition, the 
    Advisory Committee also recommends the scope of recognition for the 
    agency and a recognition period.
        (2) If the Advisory Committee recommends recognition despite 
    finding that the agency failed to comply with each of the requirements 
    of this part, the Advisory Committee provides the Secretary with a 
    detailed explanation as to why it believes the agency's failure to 
    comply with the particular requirement(s) does not require denial or 
    deferral.
        (3) If the Advisory Committee recommends denial of recognition, the 
    Advisory Committee specifies the reasons for the recommendation and the 
    requirements of this part that the agency failed to meet.
        (4) If the Advisory Committee recommends deferral of a decision on 
    the agency's application, the Advisory Committee specifies the reasons 
    for the recommendation, the requirements of this part that it believes 
    the agency has not met, and a recommended deferral period.
        (d) After the meeting, the Advisory Committee forwards its written 
    recommendations concerning recognition to the Secretary.
    
    (Authority: 20 U.S.C. 1099b, 1145)
    
    
    Sec. 602.13  Review and decision by the Secretary.
    
        (a) The Secretary determines whether to grant national recognition 
    to an applicant accrediting agency based on the Advisory Committee's 
    recommendation and the full record of the agency's application, 
    including all oral and written presentations to the Advisory Committee 
    by the agency, the designated Department official, and interested third 
    parties.
        (b)(1) Before making a final decision, the Secretary affords both 
    the designated Department official and the accrediting agency an 
    opportunity to contest, in writing, the Advisory Committee's 
    recommendation. If either the agency or the designated Department 
    official wishes to contest the recommendation, that party shall notify 
    the Secretary and the other party no later than 10 days after the 
    Advisory Committee meeting.
        (2) If the party contesting the Advisory Committee's recommendation 
    wishes to make a written submission to the Secretary, the Secretary 
    must receive that submission no later than 30 days after the Advisory 
    Committee meeting. However, the contesting party may not submit any 
    evidence to the Secretary that it did not submit to the Advisory 
    Committee. The contesting party shall simultaneously provide a copy of 
    its submission to the other party.
        (3) If the noncontesting party wishes to respond in writing to the 
    Secretary, the Secretary must receive that submission no later than 30 
    days after the noncontesting party receives the contesting party's 
    submission. However, the noncontesting party may not submit any 
    evidence to the Secretary that it did not submit to the Advisory 
    Committee. The noncontesting party shall simultaneously provide a copy 
    of its response to the contesting party.
        (4) If the Advisory Committee's recommendation is contested, the 
    Secretary renders a final decision after taking into account the two 
    parties' written submissions, if any.
        (c) The Secretary approves the accrediting agency for national 
    recognition if the Secretary determines that the agency satisfies each 
    of the requirements contained in this part.
        (d) The Secretary approves the accrediting agency for national 
    recognition even if the agency does not satisfy each of the 
    requirements contained in this part if the Secretary determines that 
    the agency's effectiveness is not impaired by the noncompliance.
        (e) If the Secretary approves the accrediting agency for national 
    recognition, the Secretary defines-
        (1) The scope of recognition, which may include the--
        (i) Geographic area;
        (ii) Degrees and certificates awarded;
        (iii) Types of institutions the agency may accredit;
        (iv) Types of programs the agency may accredit; and
        (v) Preaccreditation status(es), if any, that the Secretary 
    approves for recognition; and
        (2) The recognition period, which does not exceed five years.
        (f)(1) If the Secretary denies recognition to the accrediting 
    agency or grants recognition for a scope narrower than that requested 
    by the agency, the Secretary indicates in writing the reasons for that 
    decision.
        (2) The agency described in paragraph (f)(1) of this section may 
    request that the Secretary reconsider the decision under the provisions 
    of Sec. 602.15.
        (g) If the Secretary defers a decision on the accrediting agency's 
    application, the Secretary--
        (1) Indicates in writing the reasons for the deferral and the 
    deferral period; and
        (2) Automatically extends any previously granted recognition period 
    until the Secretary reaches a decision on the renewal application.
        (h) If the Secretary does not reach a final decision on an 
    accrediting agency's application for renewal of recognition before the 
    expiration of the agency's recognition period, the Secretary 
    automatically extends the previously granted recognition period until 
    the Secretary reaches a decision on the renewal application.
    
    (Authority: 20 U.S.C. 1099b)
    
    
    Sec. 602.14  Limitation, suspension, or termination of recognition.
    
        (a)(1) The Secretary may limit, suspend, or terminate the 
    recognition of an accrediting agency before completion of its 
    previously granted recognition period if the Secretary determines, 
    after notice and opportunity for a hearing, that the agency fails or 
    has failed to satisfy any of the requirements of this part.
        (2) If the agency requests a hearing--
        (i) The hearing is conducted by the Advisory Committee or by a 
    subcommittee of three members of the Advisory Committee, appointed by 
    the Secretary, if the Secretary determines that a more timely hearing 
    is necessary than can be accommodated by the schedule of the full 
    Advisory Committee; and
        (ii) The designated Department official arranges for a transcript 
    to be made of the hearing.
        (b) The designated Department official begins a limitation, 
    suspension, or termination proceeding against an accrediting agency by 
    sending the agency a notice that--
        (1) Informs the agency of the Secretary's intent to limit, suspend, 
    or terminate its recognition;
        (2) Identifies the alleged violations of the governing regulations 
    that constitute the basis for the action;
        (3) Describes the limits to be imposed if the Secretary seeks to 
    limit the accrediting agency;
        (4) Specifies the effective date of the limitation, suspension, or 
    termination; and
        (5) Informs the agency that it may--
        (i) Submit to the designated Department official a written response 
    to the notice no later than 30 days after it receives the notice; and
        (ii) Request a hearing, which shall take place in Washington, DC, 
    before the Advisory Committee or subcommittee if the agency submits a 
    hearing request to the designated Department official no later than 30 
    days after it receives the notice.
        (c)(1) As part of its response to the limitation, suspension, or 
    termination notice or its hearing request, if any, the accrediting 
    agency shall identify the issues and facts in dispute and its position 
    with regard to those issues and facts.
        (2) After receipt of the agency's response and hearing request, if 
    any, the designated Department official--
        (i) Transmits the limitation, suspension, or termination notice and 
    the agency's response, if any, to that notice to the Advisory Committee 
    or subcommittee; and
        (ii) Establishes the date and time of any hearing before the 
    Advisory Committee or subcommittee.
        (d)(1) Except as provided in paragraph (d)(2) of this section, if a 
    hearing is held, the Advisory Committee or subcommittee shall allow the 
    designated Department official, the accrediting agency, and any 
    interested party to make an oral or written presentation. That 
    presentation may include the introduction of written and oral evidence.
        (2) If the designated Department official and the accrediting 
    agency each agree, the Advisory Committee or subcommittee review shall 
    be based solely on the written materials submitted to it under 
    paragraph (c)(2)(i) of this section.
        (e)(1) After the Advisory Committee or subcommittee reviews the 
    presentations, it shall issue an opinion in which it--
        (i) Makes findings of fact based upon the evidence presented;
        (ii) Recommends whether a limitation, suspension, or termination of 
    the agency's recognition is warranted; and
        (iii) Provides the reasons for that recommendation.
        (2) The Advisory Committee or subcommittee shall--
        (i) Transmit its written opinion to the Secretary; and
        (ii) Provide a copy of its opinion to the designated Department 
    official and the accrediting agency.
        (f)(1) After receiving the Advisory Committee's recommendation, the 
    Secretary issues a decision on whether to limit, suspend, or terminate 
    the agency's recognition, based upon the recommendation of the Advisory 
    Committee and the full record before the Advisory Committee.
        (2) Either the accrediting agency or the designated Department 
    official may appeal the Advisory Committee's recommendation by filing a 
    notice of appeal with the Secretary within 10 days of receipt of the 
    Advisory Committee's or subcommittee's recommendation. If either party 
    files an appeal with the Secretary, that party shall simultaneously 
    provide a copy of the notice of appeal to the other party.
        (3) The party appealing the Advisory Committee's or subcommittee's 
    recommendation has 30 days after its receipt of the recommendation to 
    make a written submission to the Secretary challenging the 
    recommendation. However, the appealing party may not submit any 
    evidence that was not submitted to the Advisory Committee or 
    subcommittee. The appealing party shall simultaneously provide a copy 
    of the submission to the other party.
        (4) The nonappealing party has 30 days from the date it receives 
    the appealing party's submission to file a written response to the 
    Secretary regarding the submissions of the appealing party and shall 
    simultaneously provide the appealing party with a copy of its response. 
    The nonappealing party may not submit any evidence that was not 
    submitted to the Advisory Committee or subcommittee.
        (5) If the Advisory Committee's or subcommittee's recommendation is 
    appealed, the Secretary renders a final decision after taking into 
    account that recommendation and the parties' written submissions on 
    appeal.
        (g) If the Secretary limits, suspends, or terminates an accrediting 
    agency's recognition during its recognition period, the agency may 
    request that the Secretary reconsider this decision under Sec. 602.15.
    
    (Authority: 20 U.S.C. 1099b)
    
    
    Sec. 602.15  Requests for reconsideration of the Secretary's decisions.
    
        (a)(1) An accrediting agency may request a reconsideration of a 
    Secretarial decision if the Secretary--
        (i) Denies its application for recognition;
        (ii) Does not grant its requested scope of recognition; or
        (iii) Limits, suspends, or terminates the agency's recognition 
    during its recognition period.
        (2) The agency may request reconsideration only if the agency 
    demonstrates that--
        (i) It has new information that could not have been presented 
    previously; and
        (ii) The new information is likely to result in reversal of the 
    Secretary's decision.
        (b) To request a reconsideration, the accrediting agency shall--
        (1) Notify the Secretary of its intent no later than 10 days after 
    its receipt of the Secretary's decision; and
        (2) Submit its written request for reconsideration and the reasons 
    for that request no later than 45 days after receipt of the Secretary's 
    decision.
        (c)(1) Within 60 days after receipt of the accrediting agency's 
    written request for reconsideration, the Secretary renders a final 
    decision based on the information contained in the agency's request and 
    the entire record before both the Advisory Committee or subcommittee 
    and the Secretary.
        (2) The Secretary may request the opinion of the designated 
    Department official, the Advisory Committee, or the subcommittee before 
    rendering a final decision.
    
    (Authority: 20 U.S.C. 1099b)
    
    
    Sec. 602.16  Appeals procedures.
    
        An accrediting agency may appeal the Secretary's final decision 
    under this part regarding the agency's recognition to the Federal 
    courts as a final decision in accordance with applicable Federal law.
    
    (Authority: 20 U.S.C. 1099b)
    
    
    Sec. 602.17  Publication of list of recognized agencies.
    
        (a) The Secretary periodically publishes in the Federal Register a 
    list of recognized accrediting agencies and each agency's scope of 
    recognition.
        (b) If the Secretary denies recognition to a previously recognized 
    accrediting agency, or limits, suspends, or terminates its recognition 
    during a previously granted recognition period, the Secretary publishes 
    a notice of that action in the Federal Register and makes available to 
    the public, upon request, the Secretary's determination.
    
    
    (Authority: 20 U.S.C. 1099b)
    
    Subpart C--Criteria for Secretarial Recognition
    
    
    Sec. 602.20  Geographic scope of accrediting activities.
    
        To be listed by the Secretary as a nationally recognized 
    accrediting agency, an accrediting agency must demonstrate to the 
    Secretary that the geographical scope of its accrediting activities 
    covers--
        (a) A State, if the agency is a component of a State government;
        (b) A region of the United States that includes at least three 
    States that are contiguous or in close geographical proximity to one 
    another; or
        (c) The United States.
    
    (Authority: 20 U.S.C. 1099b)
    
    
    Sec. 602.21  Administrative and fiscal responsibility.
    
        (a) To be listed by the Secretary as a nationally recognized 
    accrediting agency, an accrediting agency must demonstrate to the 
    Secretary that it has the administrative and fiscal capability to carry 
    out its accreditation activities in light of its requested scope of 
    recognition.
        (b) The Secretary considers that an accrediting agency meets the 
    requirements of paragraph (a) of this section if it has, and will 
    likely continue to have--
        (1) Adequate administrative staff to--
        (i) Carry out its accrediting responsibilities effectively; and
        (ii) Manage its finances effectively;
        (2) Competent and knowledgeable individuals, qualified by 
    experience and training, responsible for on-site evaluation, policy-
    making, and decision-making regarding accreditation and 
    preaccreditation status;
        (3) Representation on its evaluation, policy, and decision-making 
    bodies of--
        (i) For an institutional accrediting agency, both academic and 
    administrative personnel; and
        (ii) For a programmatic accrediting agency, both educators and 
    practitioners;
        (4) Representation of the public on all decision-making bodies;
        (5) Clear and effective controls against conflicts of interest or 
    the appearance of conflicts of interest by the agency's board members, 
    commissioners, evaluation team members, consultants, administrative 
    staff, and other agency representatives;
        (6) Adequate financial resources to carry out its accrediting 
    responsibilities, taking into account the funds required to conduct the 
    range of accrediting activities specified in the requested scope of 
    recognition and the income necessary to meet the anticipated costs of 
    its activities in the future; and
        (7) Complete and accurate records of--
        (i) Its last two full accreditation or preaccreditation reviews of 
    each institution or program, including self-study reports, on-site 
    evaluation team reports, institution or program responses to on-site 
    reports, periodic review reports, and any reports of special review 
    conducted by the agency between regular reviews; and
        (ii) Its decisions with respect to all preaccreditation and 
    accreditation actions, including all adverse actions.
    
    (Authority: 20 U.S.C. 1099b)
    
    
    Sec. 602.22  Accreditation experience.
    
        (a) To be listed by the Secretary as a nationally recognized 
    accrediting agency, an accrediting agency must demonstrate to the 
    Secretary that it has adequate experience in accrediting institutions, 
    programs, or both.
        (b) The Secretary considers that an accrediting agency satisfies 
    the requirements of paragraph (a) of this section if it has--
        (1) Granted accreditation or preaccreditation status to 
    institutions or programs in the geographical area for which it seeks 
    recognition;
        (2) Conducted accreditation activities covering the range of the 
    specific degrees, certificates, and programs for which it seeks 
    recognition, including--
        (i) Granting accreditation or preaccreditation status; and
        (ii) Providing technical assistance related to accreditation to 
    institutions, programs, or both; and
        (3) Policies, evaluative criteria, and procedures, and has made 
    evaluative decisions, that are accepted throughout the United States 
    by--
        (i) Educators and educational institutions; and
        (ii) Licensing bodies, practitioners, and employers in the 
    professional or vocational fields for which the educational 
    institutions or programs within the agency's jurisdiction prepare their 
    students.
    
    (Authority: 20 U.S.C. 1099b)
    
    
    Sec. 602.23  Application of standards.
    
        (a) To be listed by the Secretary as a nationally recognized 
    accrediting agency, an accrediting agency must demonstrate to the 
    Secretary that it consistently applies and enforces written standards 
    that ensure that the education or training offered by an institution or 
    program is of sufficient quality to achieve, for the duration of any 
    accreditation period granted by the agency, the stated objective for 
    which it is offered.
        (b) The Secretary considers that an accrediting agency meets the 
    requirements of paragraph (a) of this section if--
        (1) The agency's written standards and procedures for accreditation 
    and preaccreditation, if that latter status is offered, comply with the 
    requirements of this part;
        (2) The agency's preaccreditation standards, if offered, are 
    appropriately related to the agency's accreditation standards, with a 
    limit on preaccreditation status of no more than five years for any 
    institution or program;
        (3) The agency's organizations, functions, and procedures include 
    effective controls against the inconsistent application of its criteria 
    and standards;
        (4) The agency bases its decisions regarding accreditation or 
    preaccreditation on its published criteria; and
        (5) The agency maintains a systematic program of review designed to 
    ensure that its criteria and standards are appropriate and sufficiently 
    comprehensive to evaluate the quality of the education or training 
    provided by the institutions or programs it accredits and are relevant 
    to the education or training needs of affected students.
    
    (Authority: 20 U.S.C. 1099b)
    
    
    Sec. 602.24  Accreditation processes.
    
        (a)(1) To be listed by the Secretary as a nationally recognized 
    accrediting agency, an accrediting agency must demonstrate to the 
    Secretary that it has effective mechanisms for evaluating compliance 
    with its standards and those mechanisms cover the full range of an 
    institution's or program's offerings, including those offerings 
    conducted at branch campuses and additional locations.
        (2) The Secretary considers that an accrediting agency meets the 
    requirements of paragraph (a) of this section if it meets the 
    requirements contained in paragraphs (b) through (f) of this section.
        (b)(1) In determining whether to grant initial or renewed 
    accreditation, the accrediting agency evaluates whether an institution 
    or program--
        (i) Maintains clearly specified educational objectives consistent 
    with its mission and appropriate in light of the degrees or 
    certificates it awards;
        (ii) Is successful in achieving its stated objectives;
        (iii) Maintains degree and certificate requirements that at least 
    conform to commonly accepted standards; and
        (iv) Complies with the agency's criteria.
        (2) In reaching its determination to grant initial or renewed 
    accreditation, the accrediting agency--
        (i) Requires an in-depth self-study by each institution or program 
    in accordance with guidance provided by the agency, with particular 
    focus on the assessment of educational quality and the continuing 
    improvement of educational quality;
        (ii) Conducts at least one on-site review of the institution or 
    program at which the agency obtains sufficient information to enable it 
    to determine if the institution or program complies with the agency's 
    criteria;
        (iii) Conducts its own analyses and evaluations of the self-study 
    and supporting documentation furnished by the institution or program, 
    and any other appropriate information from other sources, to determine 
    whether the institution or program complies with the agency's 
    standards; and
        (iv) Provides to the institution or program a detailed written 
    report on its review assessing--
        (A) The institution's or program's compliance with the agency's 
    standards, including areas needing improvement; and
        (B) The institution's or program's performance with respect to 
    student achievement.
        (c) In addition to the on-site visit described in paragraph 
    (b)(2)(ii) of this section, an institutional accrediting agency whose 
    accreditation enables the institutions it accredits to seek eligibility 
    to participate in Title IV, HEA programs conducts--during the interval 
    between the agency's award of accreditation or preaccreditation to the 
    institution or program and the expiration of the accreditation or 
    preaccreditation period--at least one unannounced on-site review at 
    each institution that provides prebaccalaureate vocational education or 
    training for the purpose of determining the institution's or program's 
    continued compliance with the agency's standards.
        (d) The accrediting agency--
        (1) Monitors institutions or programs throughout the accreditation 
    or preaccreditation period to ensure continuing compliance with the 
    agency's standards or criteria; and
        (2) Conducts special evaluations, site visits, or both, as 
    necessary.
        (e) The accrediting agency regularly reevaluates institutions or 
    programs that have been granted accreditation or preaccreditation.
    
    (Authority: 20 U.S.C. 1099b)
    
    
    Sec. 602.25  Additions to or substantive changes in educational 
    programs.
    
        (a) To be listed by the Secretary as a nationally recognized 
    accrediting agency, an accrediting agency must demonstrate to the 
    Secretary that, except as provided in paragraph (b) of this section, it 
    includes within its previous grant of accreditation or preaccreditation 
    to an institution an educational program that an institution initially 
    offers, or substantively changes after that grant of accreditation or 
    preaccreditation, only after--
        (1) The institution notifies the accrediting agency of the addition 
    of the new program or the substantive change in the existing program; 
    and
        (2) The accrediting agency evaluates the new or substantively 
    changed program and determines that it does not adversely affect the 
    institution's capacity to meet the agency's standards.
        (b) An accrediting agency may extend accreditation to an 
    educational program that an institution initially offers or 
    substantively changes after it received the agency's last grant of 
    accreditation or preaccreditation without specifically evaluating and 
    approving that program if--
        (1) The institution notifies the agency of that program; and
        (2) The program does not provide prebaccalaureate vocational 
    education.
        (c) For purposes of this section, an accrediting agency defines a 
    substantive change in an educational program, but the definition must 
    include--
        (1) A substantial change in the number of clock or credit hours, 
    the number of weeks, and the content of that program;
        (2) A change in the type of program offered;
        (3) A change in the credential awarded for the successful 
    completion of the program; and
        (4) A change from clock hours to credit hours or vice versa.
    
    (Authority: 20 U.S.C. 1099b)
    
    
    Sec. 602.26  Required accreditation standards.
    
        (a)(1) To be listed by the Secretary as a nationally recognized 
    accrediting agency, an accrediting agency must demonstrate to the 
    Secretary that its accreditation or preaccreditation standards, or 
    both, are sufficiently rigorous to ensure that the agency is a reliable 
    authority as to the quality of the education or training provided by 
    the institutions or programs it accredits.
        (2) For a programmatic accrediting agency that does not serve as an 
    institutional accrediting agency for any of the programs it accredits, 
    the standards must address the areas contained in paragraph (b) of this 
    section in terms of the type and level of the program rather than in 
    terms of the institution.
        (3) If none of the institutions an agency accredits participates in 
    any Title IV, HEA program, or if the agency only accredits programs 
    within institutions accredited by an accrediting agency recognized by 
    the Secretary, the accrediting agency is not required to have the 
    standards described in paragraphs (b)(7), (b)(8), (b)(10), (b)(12), and 
    (b)(13) of this section.
        (b) In order to assure that an accrediting agency is a reliable 
    authority as to the quality of the education or training provided by an 
    institution or program it accredits, the agency must have standards 
    that effectively address the quality of an institution or program in 
    the following areas:
        (1) Curricula.
        (2) Faculty.
        (3) Facilities, equipment, and supplies.
        (4) Fiscal and administrative capacity as appropriate to the 
    specified scale of operations. The agency shall--
        (i) Have standards addressing the institution's or program's 
    finances and management that enable it to assess an institution's or 
    program's fiscal and administrative capacity, as appropriate to its 
    scale of operations, for the purpose of determining whether--
        (A) The institution or program appears able to continue to be an 
    ongoing, economically viable entity; and
        (B) The finances of the institution or program appear to be 
    sufficient for it to continue to meet the agency's standards;
        (ii) Make a determination under this standard--
        (A) When it initially evaluates an institution or program for 
    accreditation or preaccreditation; and
        (B) When it periodically reevaluates the institution or program for 
    accreditation or preaccreditation;
        (iii) Require an institution or program to submit on an annual 
    basis sufficient financial information, which may include the annual 
    audited financial statement the institution or program submits to the 
    Secretary under the Title IV, HEA programs, to enable the agency to 
    determine if the financial capacity of the institution threatens the 
    ability of the institution or program to continue to meet the agency's 
    standards; and
        (iv) Review, as appropriate on an annual basis, the information 
    obtained under paragraph (b)(4)(iii) of this section to determine if 
    there is reason to take any follow-up action based on a reduced 
    financial capacity.
        (5) Student support services.
        (6) Recruiting and admissions practices, academic calendars, 
    catalogs, publications, grading, and advertising. The agency shall have 
    standards that enable it to assess an institution's or program's 
    recruiting and admissions practices, academic calendars, catalogs, 
    publications, grading, and advertising in terms of--
        (i) Whether the institution's or program's academic calendar, 
    catalogs, publications, and advertising are accurate, complete, and 
    consistent with actual practice and agency standards, particularly with 
    respect to costs, financial obligations, refunds, graduation rates, 
    employment prospects, and other statements regarding educational 
    effectiveness; and
        (ii) Whether the institution's or program's admissions policies and 
    standards are reasonable in light of the institution's or program's 
    educational mission.
        (7) Program length and tuition and fees in relation to the subject 
    matters taught and the objectives of the degrees or credentials 
    offered. The agency shall have standards that establish minimum and 
    maximum program lengths for prebaccalaureate vocational education 
    programs and have other standards to enable the agency to assess an 
    institution's or program's length of program and tuition and fee 
    charges. In developing these standards, the agency shall take into 
    account such factors as--
        (i) Program objectives and content;
        (ii) The types and locations of instructional delivery;
        (iii) The knowledge and skills necessary for students to reach 
    competence in the field being taught;
        (iv) Generally accepted practices in higher education;
        (v) Any applicable Federal statutes or regulations; and
        (vi) For any prebaccalaureate vocational education program, 
    consideration of the remuneration that can reasonably be expected by 
    students who complete the program.
        (8) Measures of program length in clock hours or credit hours. The 
    agency shall have standards that enable it to assess an institution's 
    or program's measurement of program length. In developing these 
    standards, the agency shall take into account such factors as--
        (i) Program goals, objectives, and content;
        (ii) The types and combinations of instructional methodologies and 
    delivery systems, including outside preparation as appropriate;
        (iii) The knowledge and skills necessary for students to reach 
    competence in the field being taught;
        (iv) Generally accepted practices in higher education; and
        (v) Any applicable Federal statutes or regulations.
        (9) Success with respect to student achievement in relation to 
    mission. The agency shall have standards that enable it to assess an 
    institution's or program's success with respect to student achievement. 
    Under these standards, the agency shall--
        (i) Require the institution or program to document and assess the 
    educational achievement of students in verifiable and consistent ways, 
    such as--
        (A) Student grades, grade point averages, theses, or portfolios;
        (B) Results of admissions tests for graduate or professional school 
    or other standardized tests;
        (C) Transfer rates to institutions offering higher level programs; 
    and
        (D) Job placement rates, completion rates, results of licensing 
    examinations, evaluations by employers, follow-up studies of alumni, 
    and other recognized measures of educational outcomes;
        (ii) Require the institution or program to use effectively the 
    information obtained under paragraph (b)(9)(i) of this section to 
    improve student achievement with respect to the degrees or certificates 
    offered;
        (iii) Systematically monitor institutional or program performance 
    with respect to student achievement to determine if performance is 
    consistent with both the institution's or program's mission and 
    objectives and the agency's objective measures of performance of 
    student achievement; and
        (iv) For any prebaccalaureate vocational education program 
    accredited by the agency or provided by an institution the agency 
    accredits, establish minimum quantitative standards for--
        (A) Completion rates;
        (B) Job placement rates; and
        (C) Pass rates on State licensing examinations or other appropriate 
    measures of occupational competency.
        (10) Default rates in the student loan programs established under 
    Title IV of the Act, based on the most recent data provided by the 
    Secretary. The agency shall have standards that require it to evaluate 
    an institution to determine whether the institution is out of 
    compliance with its accrediting standards if the institution's latest 
    cohort default rate under the Federal Stafford Loan or Federal 
    Supplemental Loans for Students program--
        (i) Equals or exceeds 25 percent; or
        (ii) Has increased significantly in relation to its rate in the 
    previous year.
        (11) Record of student complaints received by, or available to, the 
    agency. The agency shall have standards that enable it to assess an 
    institution's or program's record of student complaints received by or 
    made available to the agency. Under these standards, the agency shall--
        (i) Review student complaints that relate to the agency's 
    standards;
        (ii) Take appropriate follow-up action with regard to those 
    complaints;
        (iii) If considered necessary by the agency, refer complainants to 
    appropriate Federal, State, and other agencies if the complaints do not 
    relate to the agency's standards; and
        (iv) Require institutions or programs to make available to students 
    the agency's mailing address or telephone number for complaints.
        (12) Compliance with the institution's program responsibilities 
    under Title IV of the Act. The agency shall have standards that require 
    institutions to be in compliance with their responsibilities under the 
    Title IV, HEA programs. The agency's assessment under these standards 
    shall be based on program reviews, financial and compliance audits, 
    audited financial statements, and any other information that the 
    Secretary provides.
        (13) The institution's practice of making refunds to students. The 
    agency shall have--
        (i) A refund policy, that must be approved by the Secretary, that 
    provides for a fair and equitable refund to a student of tuition, fees, 
    and other institutional charges; and
        (ii) Standards that enable it to assess whether an institution 
    complies with its refund policy.
        (c)(1) An accrediting agency shall take appropriate action if its 
    review of an institution or program under any standard indicates that 
    the institution or program is not in compliance with that standard.
        (2) If the agency believes that the institution or program is not 
    in compliance with the standards, the agency shall--
        (i) Take prompt adverse action against the institution or program; 
    or
        (ii) Require the institution or program to take appropriate action 
    to bring itself into compliance, or to ensure its continued compliance, 
    with the agency's standards within a time frame specified by the 
    agency.
        (3) The accrediting agency has sole discretion to determine the 
    time frame specified in paragraph (c)(2)(ii) of this section for the 
    institution or program to bring itself into compliance with agency 
    standards. However, except as indicated in paragraph (c)(4) of this 
    section, the specified period may not exceed 18 months.
        (4) If the institution or program does not bring itself into 
    compliance within the specified period, the agency must take adverse 
    action unless the agency extends the period for achieving compliance 
    for good cause.
        (d) An accrediting agency shall have a reasonable basis for 
    determining that the information it relies on for making the 
    assessments described in paragraphs (b) and (c) of this section is 
    accurate.
        (e) An accrediting agency that has established and applies the 
    standards in paragraph (b) of this section may establish any additional 
    accreditation standards as it deems appropriate.
    
    (Authority: 20 U.S.C. 1091, 1099b)
    
    
    Sec. 602.27  Additional required operating procedures.
    
        (a) To be listed by the Secretary as a nationally recognized 
    accrediting agency, an accrediting agency must demonstrate to the 
    Secretary that it satisfies the procedural requirements contained in 
    other provisions of this part and the additional requirements contained 
    in paragraphs (b) through (h) of this section.
        (b) If the accrediting agency accredits institutions and that 
    accreditation enables those institutions to seek eligibility to 
    participate in Title IV, HEA programs--
        (1) The agency requires the institution to--
        (i) Notify the agency if the institution plans to establish a 
    branch campus or an additional location; and
        (ii) Submit a business plan described in paragraph (b)(2) of this 
    section if the institution plans to operate a branch campus or 
    additional location--
        (A) That is geographically apart from the main campus;
        (B) That has its own separate administrative structure, services, 
    and facilities, and
        (C) At which the institution plans to offer a complete educational 
    program;
        (2) The business plan that an institution submits under paragraph 
    (b)(1)(ii) of this section must contain a description of--
        (i) The educational program to be offered at the branch campus or 
    location;
        (ii) The projected revenues and expenditures and cash flow at the 
    branch campus or location; and
        (iii) The operation, management, and physical resources at the 
    branch campus or location;
        (3) The agency extends accreditation to the branch campus or 
    additional location only after evaluating the business plan and taking 
    other necessary actions to permit the agency to determine that the 
    branch campus or additional location has sufficient educational, 
    financial, operational, management, and physical resources to satisfy 
    the accrediting agency's standards for accreditation;
        (4) The agency undertakes a site visit of the branch campus or 
    additional location as soon as practicable, but no later than six 
    months after the establishment of that branch campus or additional 
    location;
        (5) The agency undertakes a site visit of an institution that has 
    undergone a change of ownership that resulted in a change of control as 
    soon as practicable, but no later than six months after the change of 
    ownership; and
        (6) The agency requires any institution it accredits that enters 
    into a teach-out agreement with another institution to submit to the 
    accrediting agency for approval a teach-out agreement that is 
    consistent with applicable standards and regulations.
        (c) The accrediting agency maintains and makes publicly available 
    written materials describing--
        (1) Each type of accreditation and preaccreditation granted by the 
    agency;
        (2) Its procedures for applying for accreditation or 
    preaccreditation;
        (3) The criteria and procedures used by the agency for determining 
    whether to grant, reaffirm, reinstate, deny, restrict, revoke, or take 
    any other action related to each type of accreditation and 
    preaccreditation that the agency grants;
        (4) The names, academic and professional qualifications, and 
    relevant employment and organizational affiliations of the members of 
    the agency's policy and decisionmaking bodies as well as the agency's 
    principal administrative staff; and
        (5) The institutions or programs that the agency currently 
    accredits or preaccredits and the date when the agency will review or 
    reconsider the accreditation or preaccreditation of each institution or 
    program.
        (d) In accordance with agency policy, the accrediting agency 
    publishes the year when an institution or program subject to its 
    jurisdiction is being considered for accreditation or preaccreditation 
    and provides an opportunity for public comment concerning the 
    institution's or program's qualifications for accreditation or 
    preaccreditation.
        (e) The accrediting agency provides advance public notice of 
    proposed new or revised criteria, giving interested parties adequate 
    opportunity to comment on these proposals prior to their adoption.
        (f) The accrediting agency--
        (1) Reviews any complaint against an accredited institution or 
    program, or the agency itself, that is related to the agency's 
    standards, criteria, or procedures; and
        (2) Resolves the complaint in a timely, fair, and equitable manner.
        (g) The accrediting agency ensures that if an institution or 
    program elects to make a public disclosure of its accreditation or 
    preaccreditation status granted by the agency, the institution or 
    program discloses that status accurately, including the specific 
    academic or instructional programs covered by that status.
        (h) The accrediting agency provides for the public correction of 
    incorrect or misleading information about--
        (1) The accreditation status of an accredited or preaccredited 
    institution or program;
        (2) The contents of reports of site team visitors; and
        (3) The agency's accrediting actions.
    
    (Authority: 20 U.S.C. 1099b)
    
    
    Sec. 602.28  Due process for institutions and programs.
    
        (a) To be listed by the Secretary as a nationally recognized 
    accrediting agency, an accrediting agency must demonstrate to the 
    Secretary that the procedures it uses throughout the accrediting 
    process satisfy due process requirements.
        (b) The Secretary considers that an accrediting agency's procedures 
    satisfy due process requirements if--
        (1) The agency sets forth in writing its procedures governing its 
    accreditation or preaccreditation processes;
        (2) The agency's procedures afford an institution or program a 
    reasonable period of time to comply with agency requests for 
    information and documents;
        (3) The agency notifies the institution or program in writing of 
    any adverse accrediting action;
        (4) The agency's notice describes with particularity the basis for 
    any adverse accrediting action;
        (5) The agency permits the institution or program the opportunity 
    to appeal an adverse accrediting action, and the right to 
    representation by counsel during an appeal, except that the agency, at 
    its sole discretion, may limit the appeal to a written appeal; and
        (6) The agency notifies the applicant in writing of the result of 
    the appeal and the basis for that result.
    
    (Authority: 20 U.S.C. 1099b)
    
    
    Sec. 602.29  Notification of accrediting agency decisions.
    
        (a) To be listed by the Secretary as a nationally recognized 
    accrediting agency, an accrediting agency must demonstrate to the 
    Secretary that its written policies, procedures, and practices require 
    it to notify the Secretary, the appropriate State postsecondary review 
    entity, the appropriate accrediting agencies, and the public of the 
    following types of decisions, no later than 30 days after a decision is 
    made:
        (1) A decision by the agency to award initial accreditation or 
    preaccreditation to an institution or program.
        (2) A final decision by the agency to--
        (i) Deny, withdraw, suspend, or terminate the accreditation or 
    preaccreditation of an institution or program; or
        (ii) Take other adverse action against an institution or program.
        (3) A decision by the agency to place an institution or program on 
    probation.
        (4) A decision by an accredited institution or program to withdraw 
    voluntarily from accreditation or formal preaccreditation status.
        (5) A decision by an accredited institution or program to let its 
    accreditation or preaccreditation lapse.
        (b) No later than 60 days after a final decision, the accrediting 
    agency makes available to the Secretary, the appropriate State 
    postsecondary review entity, and the public upon request, a brief 
    statement supporting the agency's determination to deny, withdraw, 
    suspend, or terminate the accreditation or preaccreditation of an 
    institution or program and the comments of the affected institution or 
    program with regard to that decision.
    
    (Authority: 20 U.S.C. 1099b)
    
    
    Sec. 602.30  Regard for decisions of States and other accrediting 
    agencies.
    
        (a) To be listed by the Secretary as a nationally recognized 
    accrediting agency, an accrediting agency must demonstrate to the 
    Secretary that--
        (1) If the accrediting agency accredits institutions--
        (i) The agency accredits only those institutions that are legally 
    authorized under applicable State law to provide a program of education 
    beyond the secondary level;
        (ii) The agency does not renew, under the conditions described in 
    paragraph (b) of this section, the accreditation or preaccreditation of 
    an institution during a period in which the institution--
        (A) Is the subject of an interim action by a recognized 
    institutional accrediting agency potentially leading to the suspension, 
    revocation, or termination of accreditation or preaccreditation or by a 
    State agency potentially leading to the suspension, revocation, or 
    termination of the institution's legal authority to provide 
    postsecondary education; or
        (B) Has been notified of the loss of accreditation, or the 
    suspension, revocation, or termination by the State of the 
    institution's legal authority to provide postsecondary education, and 
    the due process procedures required by the action have not been 
    completed;
        (iii) In considering whether to grant initial accreditation or 
    preaccreditation to an institution, the agency takes into account 
    actions by--
        (A) Recognized institutional accrediting agencies that have denied 
    accreditation or preaccreditation to the institution, placed the 
    institution on public probationary status, or revoked the accreditation 
    or preaccreditation of the institution; and
        (B) A State agency that has suspended, revoked, or terminated the 
    institution's legal authority to provide postsecondary education; and
        (iv) If the agency grants accreditation or preaccreditation to an 
    institution notwithstanding the actions described in paragraph 
    (a)(1)(ii) or (a)(1)(iii) of this section, the agency shall provide to 
    the Secretary a thorough explanation, consistent with its accreditation 
    standards, why the previous action by a recognized institutional 
    accrediting agency or the State does not preclude the agency's grant of 
    accreditation or preaccreditation; and
        (v) If a recognized institutional accrediting agency takes an 
    adverse action with respect to a dually-accredited institution or 
    places the institution on public probationary status, or if a 
    programmatic accrediting agency takes an adverse action with respect to 
    a program offered by the institution or places the program on public 
    probation for reasons associated with the overall institution rather 
    than the specific program, the agency shall promptly review its 
    accreditation or preaccreditation of the institution to determine if it 
    should also take adverse action against the institution.
        (2) If the accrediting agency accredits programs--
        (i) The agency does not renew, under the conditions described in 
    paragraph (b) of this section, the accreditation or preaccreditation 
    status of a program during any period in which the institution offering 
    the program--
        (A) Is the subject of an interim action by a recognized 
    institutional accrediting agency potentially leading to the suspension, 
    revocation, or termination of accreditation or preaccreditation or by a 
    State agency potentially leading to the suspension, revocation, or 
    termination of the institution's legal authority to provide 
    postsecondary education; or
        (B) Has been notified of the loss of accreditation, or the 
    suspension, revocation, or termination by the State of the 
    institution's legal authority to provide postsecondary education, and 
    the due process procedures required by the action have not been 
    completed;
        (ii) In considering whether to grant initial accreditation or 
    preaccreditation to a program, the agency takes into account actions 
    by--
        (A) Recognized institutional accrediting agencies that have denied 
    accreditation or preaccreditation to the institution offering the 
    program, placed the institution on public probationary status, or 
    revoked the accreditation or preaccreditation of the institution; and
        (B) A State agency that has suspended, revoked, or terminated the 
    institution's legal authority to provide postsecondary education;
        (iii) If the agency grants accreditation or preaccreditation to a 
    program notwithstanding the actions described in paragraph (a)(2)(ii) 
    of this section, the agency provides to the Secretary a thorough 
    explanation, consistent with its accreditation standards, why the 
    previous action by a recognized institutional accrediting agency or the 
    State does not preclude the agency's grant of accreditation or 
    preaccreditation; and
        (iv) If a recognized institutional accrediting agency takes adverse 
    action with respect to the institution offering the program or places 
    the institution on public probationary status, the agency promptly 
    reviews its accreditation or preaccreditation of the program to 
    determine if it should take adverse action against the program.
        (3) The agency routinely shares information with other appropriate 
    recognized accrediting agencies and State agencies information about 
    the accreditation or preaccreditation status of an institution or 
    program and any actions it has taken regarding the institution's or 
    program's accreditation or preaccreditation.
        (b) An accrediting agency is subject to the requirements contained 
    in paragraph (a) of this section if the accrediting agency knew, or 
    should have known, of the actions being taken by another recognized 
    accrediting agency or State agency.
    
    (Authority: 20 U.S.C. 1099b)
    
        Note: This appendix will not appear in the Code of Federal 
    Regulations.
    
    Appendix A to Preamble--Major Issues Discussed at the Regional 
    Meetings
    
        The Department convened four regional meetings in September 1992 to 
    obtain public involvement in the development of regulations to 
    implement Title IV, part H, subpart 2 of the Higher Education Act of 
    1965, as amended by the Higher Education Amendments of 1992, Public Law 
    102-325. This subpart describes the procedures and criteria to be used 
    for the Secretary's recognition of accrediting agencies.
        The Department invited individuals and representatives of groups 
    involved in student financial assistance programs to the four regional 
    meetings. At each meeting, the Department provided for a comprehensive 
    discussion and exchange of information regarding the implementation of 
    subpart 2 by providing participants with an issue paper that raised 
    issues and questions with regard to the statutory provisions included 
    in subpart 2. The following is a summary of the information provided to 
    the Department by participants at the regional meetings. The section of 
    the proposed regulations that is the subject of the information is 
    provided as a reference.
        Separate and independent requirement--Sec. 602.3. Participants in 
    the regional meetings suggested that, in order for an accrediting 
    agency to obtain a waiver of the requirement that it be separate from 
    and independent of, both administratively and financially, any related, 
    associated, affiliated, trade association or membership organization, 
    an agency should have to demonstrate that (a) its parent body has no 
    role in making or ratifying its accrediting decisions, (b) it has 
    sufficient budget and administrative autonomy to carry out its required 
    accrediting responsibilities, and (c) information obtained in the 
    course of its accrediting process is not made available to the parent 
    body unless it is public information.
        Unannounced visits by the Secretary--Sec. 602.10. Participants 
    discussed the conditions under which an unannounced visit to either an 
    accrediting agency or an institution or program that it accredits, as 
    part of the Secretary's comprehensive review and evaluation of the 
    agency, was appropriate and suggested that such a visit would be 
    appropriate only if (a) the Secretary had evidence of the agency's non-
    compliance with the statute or Departmental regulations and (b) an 
    unannounced site visit would assist in investigating the non-
    compliance.
        Review by the National Advisory Committee on Institutional Quality 
    and Integrity--Sec. 602.12. Participants discussed the role of the 
    National Advisory Committee on Institutional Quality and Integrity in 
    reviewing the applications of accrediting agencies seeking recognition 
    by the Secretary and suggested that an agency should have an 
    opportunity to appeal the Advisory Committee's recommendation before 
    the Secretary reaches a final decision.
        Limitation, suspension, or termination of recognition--Sec. 602.14. 
    Participants discussed the process the Secretary should use in 
    determining whether to limit, suspend, or terminate an accrediting 
    agency's recognition if the Secretary determines, after notice and 
    opportunity for a hearing, that the agency has failed to satisfy one or 
    more of the requirements for recognition. They suggested that the 
    proposed regulations should afford the agency due process by providing 
    (a) written notice to the agency, (b) opportunity for the agency to 
    respond in writing, (c) public review by the Advisory Committee, (d) a 
    written decision by the Advisory Committee, and (e) an appeal to the 
    Secretary.
        Ability and experience--Sec. 602.21-Sec. 602.22. Participants 
    discussed what standards the Secretary should use to determine whether 
    an accrediting agency demonstrates sufficient ability and experience in 
    operating as an accrediting agency. Most favored retention of the 
    language contained in the current regulations on these issues, but a 
    minority expressed concern that these requirements placed undue burden 
    on new agencies seeking initial recognition.
        Unannounced site visits by accrediting agencies--Sec. 602.24. 
    Participants discussed whether the proposed regulations should contain 
    specific guidance on how and when accrediting agencies were to conduct 
    unannounced site visits to institutions that offer vocational education 
    and training and also what institutions were to be visited. They were 
    in agreement that the agency should have discretion to decide how and 
    when the visits took place; they were divided on the definition of 
    institutions that offer vocational education, so they were divided on 
    what institutions should be visited.
        Required accreditation standards--Sec. 602.26. Participants 
    discussed the standards that accrediting agencies must have for 13 
    specific areas. They felt that programmatic accrediting agencies and 
    those agencies that do not accredit for purposes of Title IV should be 
    exempt from the standards that address default rates, institutional 
    compliance with its program responsibilities under Title IV, and refund 
    policies. Their comments on specific standards were as follows:
        Program length and tuition and fees--Sec. 602.26(b)(7). 
    Participants felt that accrediting agencies should assess these in 
    relation to the subject matter taught and the objectives of the degrees 
    or credentials offered. They also felt that the proposed regulations 
    should protect agencies against lawsuits alleging violation of anti-
    trust laws.
        Measures of program length in clock hours or credit hours--
    Sec. 602.26(b)(8). Participants felt that accrediting agencies should 
    be expected to evaluate program length at non-degree granting 
    institutions for consistency with the time required to develop the 
    knowledge base and skills necessary for entry level to the vocation for 
    which the students are being prepared. In the case of degree-granting 
    institutions, participants felt that agencies should evaluate program 
    length for consistency with usual practice in higher education.
        Success with respect to student achievement--Sec. 602.26(b)(9). 
    Participants felt that accrediting agencies should be required to 
    consider completion rates, job placement rates, and State licensing 
    examination pass rates for institutions or programs that purport to 
    train individuals for occupations, vocations, or professions. Most 
    participants felt that agencies should be given the flexibility to 
    establish standards for these areas, but a minority felt that the 
    proposed regulations should contain specific requirements.
        Default rates--Sec. 602.26(b)(10). Most participants felt that 
    accrediting agencies should review schools for compliance with agency 
    standards if their default rate exceeded a certain rate, but some felt 
    that agencies should have to remove accreditation if the default rate 
    exceeded a certain value.
        Due process for institutions and programs--Sec. 602.28. 
    Participants felt that accrediting agencies should be expected to 
    adhere to principles of fundamental procedural fairness in dealing with 
    institutions or programs. They also felt that any opportunity for a 
    hearing that an agency might provide did not necessarily imply a 
    personal appearance by representatives of the institution or program.
        Implementation of the regulations. Participants felt that 
    accrediting agencies should have 8-12 months from the effective date of 
    the regulations to come into compliance.
        Preamble. Participants felt that a preamble should be included to 
    establish the context for the interpretation of the regulations.
    
    [FR Doc. 94-1459 Filed 1-21-94; 10:00 am]
    BILLING CODE 4000-01-P
    
    
    

Document Information

Published:
01/24/1994
Entry Type:
Uncategorized Document
Action:
Notice of proposed rulemaking.
Document Number:
94-1459
Dates:
Comments must be received on or before March 21, 1994.
Pages:
0-0 (1 pages)
Docket Numbers:
Federal Register: January 24, 1994
CFR: (33)
34 CFR 602.29(a)
34 CFR 602.25(a)
34 CFR 602.28(b)(5)
34 CFR 602.26(b)(8)
34 CFR 668.1(c)
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