Program Integrity and Student Aid

Publication Number 13 November 3, 2010

U.S. Department of Education Final Regulations on Program Integrity and Student Aid

On October 29, 2010, the U.S. Department of Education (USDE) published final regulations addressing program integrity and student aid programs. The regulations – that become effective on July 1, 2011 – provide rules and definitions covering a wide range of issues affecting colleges and universities as well as accrediting organizations. The final regulations were published in two parts: the final rule and shorter final regulations addressing gainful employment – new programs.

These new regulations are the outgrowth of a round of negotiated rulemaking – during which the federal government consults with constituents to draft or revise regulations – held by USDE from late 2009 to early 2010. USDE published proposed rules on June 18, 2010, and the Council for Higher Education Accreditation (CHEA) provided written comments to USDE during the 45-day comment period that closed on August 2, 2010.

CHEA has tracked key accreditation-related provisions throughout the negotiated rulemaking and subsequent issuing of proposed rules (see Federal Updates #8, #9 and #11). The following describes the final regulations in these areas.

Credit Hour

The final regulations:

  • stablish a federal definition of a credit hour that is consistent with the Carnegie Unit (“one hour of classroom or direct faculty instruction and a minimum of two hours of out of class student work each week for approximately 15 weeks for one semester or trimester hour of credit, or ten to twelve weeks for one quarter hour of credit, or the equivalent amount of work over a different amount of time”).
  • Affirm that (1) credit hour determination is an institutional responsibility, (2) the definition is intended for federal purposes only, (3) the definition constitutes a minimum expectation and (4) credit hour policies and procedures will be reviewed by accreditors.
  • Describe credit hour as “an amount of work represented in intended learning outcomes and verified by evidence of student achievement,” establishing a “quantifiable minimum basis” and as a means to “quantify academic activity for purposes of determining federal funding.”
  • Do not require institutions to adopt USDE’s definition of a credit hour in lieu of existing institutional measurements.
  • With regard to accreditation, require these organizations, as part of accreditation reviews, to evaluate the reliability and accuracy of the institution’s assignment of credit hours and take action to address any deficiencies identified. Accreditors must report to USDE systematic noncompliance by institutions regarding criteria for assigning credit hours. Failure to do so may result in USDE restricting or removing the accreditor’s recognition.

In sum, institutions must use the federal definition of credit hour as their starting point for making academic judgments about the credits associated with courses and programs if the schools are to continue to be eligible for federal funding such as student aid.

State Authorization

The final regulations:

  • Describe what constitutes state authorization of an institution to operate and grant certifications for Title IV eligibility.
  • Require that all institutions offering postsecondary education through “distance or correspondence education” in states in which the institution is not physically located provide evidence that they can meet those states’ authorization requirements.
  • Permit states to exempt institutions that they have established by name from any state approval or licensure requirements “based on the institution’s accreditation by one or more accrediting agencies recognized by the Secretary or based upon the institution being in operation for at least 20 years.” States now are required to have in place a process to review and act on complaints about institutions and the institutions must be subject to adverse action by the state.
  • Exempt tribal colleges and religious institutions from state authorization requirements. The exemption of religious institutions refers only to schools that award “only religious degrees or certificates” such as a certificate of Talmudic studies or a bachelor of religious studies.

In sum, the rules call for expanded state oversight of higher education if a state is to participate in federal programs. However, CHEA is seeking further clarification from USDE regarding these complex new regulations, particularly any differences in treatment among public, private nonprofit and private for-profit institutions.


The final regulations:

  • Define “misrepresentation” as “any false, erroneous or misleading statement made to a student, prospective student or any member of the public, or to an accrediting agency, a State Agency or to the Secretary by the institution, one of its representatives or persons with whom the eligible institution has an agreement to provide educational programs, or to provide marketing, advertising, recruiting, or admissions services.”
  • Define “substantial misrepresentation” as “any misrepresentation on which the person to whom it was made could reasonably be expected to rely, or has reasonably relied, to that person’s detriment.”
  • State that USDE can limit or revoke an institution’s eligibility to participate in Title IV if the institution has “engaged in substantial misrepresentation.”
  • Specifically disallow false, erroneous or misleading statements about an institution’s accredited status. Failure by an institution to disclose that a degree in a program area requires specialized accreditation also is categorized as a misrepresentation.
  • Directly address misrepresentations regarding transfer of credit: “whether a student may transfer course credits earned at the institution to any other institution” and “conditions under which the institution will accept transfer credits earned at another institution.”
  • Include in “misrepresentation” false, erroneous or misleading statements about whether successful completion of a course of instruction qualifies a student to receive, apply to take or take licensure examinations or nongovernmental certification required as a precondition for certain types of employment.

In sum, institutions now have significant additional responsibility with regard to what is said about the college, university or program and who makes statements about the institution, involving both the content of a representation and who makes the representation.  

Incentive Compensation

The final regulations:

  • Eliminate the existing 12 “safe harbor” provisions that allowed institutions to compensate college recruiters and admissions officers based on success in enrolling students.
  • Allow for merit-based adjustments to employee compensation as long as such payments are not based, in any part, directly or indirectly upon success in securing enrollments or the award of financial aid.
  • Define those covered by incentive compensation rules as “an entity or person engaged in any student recruitment or admission activity or in making decisions about the award of financial aid.”
  • Disallow incentive payments “based in any part, directly or indirectly” upon success in securing enrollments or the award of financial aid.

In sum, institutions are required to take steps to further assure decoupling of financial compensation and the results of recruitment efforts. The regulations apply to all employees of an institution, including presidents of colleges and universities and athletic staff.

Gainful Employment

“Gainful employment” – one of most controversial issues during the negotiated rulemaking – was not covered in its entirety by the final regulations published by USDE on October 29, 2010. The final regulations address additional program reporting, but not eligibility for student aid. USDE received more than 90,000 comments on proposed regulations published on July 26, 2010. Publication of final regulations addressing the remaining issues related to gainful employment is expected early in 2011, to become effective on or around July 1, 2012.

The final regulations:

  • Define “additional program” as “an educational program that prepares students for gainful employment in a recognized occupation.”
  • Establish a process for institutions to notify or apply for approval from USDE to offer a new educational program that prepares students for gainful employment. The program may be offered unless USDE has concerns. If so, the institution will be asked to formally apply for new program approval. The notice process requires an institution to provide information about: (1) how the institution determined the need for the program, (2) how the program meets local or (in the case of distance learning) regional or national needs and provide a wage analysis, (3) how the program was developed, including consultation with business advisory committees, oversight and regulatory bodies and likely employers and (4) the program's accreditation or inclusion in institutional accreditation or, as appropriate, approval by a state agency.
  • Require institutions to disclose, among other things: (1) the on-time graduation rates for students completing the program, (2) the placement rate for students completing the program and the methodology used to determine that rate and (3) the median loan debt for students who completed the program. Institutions must provide this information on the home page of their Website, along with a link to other Web pages containing general academic or admissions information about the program.

In sum, institutions are now required to provide substantive information to USDE about new programs and the justification for adding these programs, as well as enhanced public disclosure of information about programs designed to prepare students for gainful employment.


On November 4-5, 2010, USDE will hold two public meetings in Washington, DC on the remaining proposed regulations addressing gainful employment (see above item). The meetings “will give people the opportunity to clarify the comments they’ve already submitted and respond to clarifying questions from Department officials,” USDE noted. CHEA will participate in the meetings.

SENATE HELP COMMITTEE: likely fourth hearing on for-profit higher education

The Senate Health, Education, Labor and Pensions (HELP) Committee is likely to hold another hearing in December, 2010 to address for-profit higher education.

The HELP Committee held previous hearings on September 30, August 4 and June 24, 2010. As a part of the September 30 hearing, Committee chair Senator Tom Harkin (D-Iowa) released a report titled “The Return on the Federal Investment in For-Profit Education.” The report drew on data requested by Senator Harkin from 30 for-profit colleges and universities, addressing issues including enrollment and graduation rates. The June 24 hearing focused on a Government Accountability Office (GAO) report on student recruiting practices at for-profit colleges, based on undercover tests conducted by GAO. This report also was requested by Senator Harkin.


The National Advisory Committee on Institutional Quality and Integrity (NACIQI) will meet by teleconference on November 8, 2010. During the teleconference, it is expected that a chair for the committee will be elected. 

NACIQI is the federal advisory body to the Secretary of Education that provides recommendations on the recognition of accrediting organizations. The newly constituted NACIQI is made up of 18 members who are appointed by the U.S. Senate, the U.S. House of Representatives and USDE.

The first full meeting of the committee is scheduled for December 1-3, 2010 in Washington, DC.


Gains by Republicans in both the U.S. Senate and House of Representatives will affect the makeup of key education committees. While final election results will not be available for all races for some time, Republicans have won enough seats that they will be the majority party in the House of Representatives. Representative John Kline (R-Minnesota), who has been the Ranking Member of the House Education and Labor Committee, is expected to become the committee’s new chair. Other Republicans likely will join the committee. It is expected that Democrats will continue to be majority party in the Senate; however, as Republicans have won seats previously held by Democrats, Republican members likely will be added to the Senate Health, Education, Labor and Pensions Committee. CHEA will provide more information on the makeup of key Senate and House education committees as that information becomes available.