Office of Postsecondary Education - U.S. Department of Education
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Office of Postsecondary Education - U.S. Department of Education

Office of Postsecondary Education - U.S. Department of Education Office of Postsecondary Education - U.S. Department of Education

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66958 Federal Register / Vol. 75, No. 209 / Friday, October 29, 2010 / Rules and RegulationsWReier-Aviles on DSKGBLS3C1PROD with RULES2§ 668.60 Deadlines for submittingdocumentation and the consequences offailing to provide documentation.(a) An institution must require anapplicant selected for verification tosubmit to it, within the period of timeit or the Secretary specifies, thedocumentation set forth in § 668.57 thatis requested by the institution.(b) For purposes of the subsidizedstudent financial assistance programs,excluding the Federal Pell GrantProgram—(1) If an applicant fails to provide therequested documentation within areasonable time period established bythe institution—(i) The institution may not—(A) Disburse any additional FederalPerkins Loan or FSEOG Program fundsto the applicant;(B) Employ, continue to employ orallow an employer to employ theapplicant under FWS; or(C) Originate the applicant’s DirectSubsidized Loan or disburse anyadditional Direct Subsidized Loanproceeds for the applicant; and(ii) The applicant must repay to theinstitution any Federal Perkins Loan orFSEOG received for that award year;(2) If the applicant provides therequested documentation after the timeperiod established by the institution, theinstitution may, at its option, disburseaid to the applicant notwithstandingparagraph (b)(1) of this section; and(3) If an institution has receivedproceeds for a Direct Subsidized Loanon behalf of an applicant, the institutionmust return all or a portion of thosefunds as provided under § 668.166(b) ifthe applicant does not completeverification within the time periodspecified.(c) For purposes of the Federal PellGrant Program—(1) An applicant may submit a validSAR to the institution or the institutionmay receive a valid ISIR after theapplicable deadline specified in 34 CFR690.61 but within an establishedadditional time period set by theSecretary through publication of anotice in the Federal Register; and(2) If the applicant does not provideto the institution the requesteddocumentation and, if necessary, a validSAR or the institution does not receivea valid ISIR, within the additional timeperiod referenced in paragraph (c)(1) ofthis section, the applicant—(i) Forfeits the Federal Pell Grant forthe award year; and(ii) Must return any Federal Pell Grantpayments previously received for thataward year.(d) The Secretary may determine notto process FAFSA information of anapplicant who has been requested toprovide documentation until theapplicant provides the documentationor the Secretary decides that there is nolonger a need for the documentation.(e) If an applicant selected forverification for an award year diesbefore the deadline for completingverification without completing thatprocess, the institution may not—(1) Make any further disbursementson behalf of that applicant;(2) Originate that applicant’s DirectSubsidized Loan, or disburse thatapplicant’s Direct Subsidized Loanproceeds; or(3) Consider any funds it disbursed tothat applicant under § 668.58(a)(2) as anoverpayment.(Authority: 20 U.S.C. 1094)§ 668.61 Recovery of funds from interimdisbursements.(a) If an institution discovers, as aresult of verification, that an applicantreceived under § 668.58(a)(2)(i)(B) morefinancial aid than the applicant waseligible to receive, the institution musteliminate the Federal Pell Grant, FederalPerkins Loan, or FSEOG overpaymentby—(1) Adjusting subsequentdisbursements in the award year inwhich the overpayment occurred; or(2) Reimbursing the appropriateprogram account by—(i) Requiring the applicant to returnthe overpayment to the institution if theinstitution cannot correct theoverpayment under paragraph (a)(1) ofthis section; or(ii) Making restitution from its ownfunds, by the earlier of the followingdates, if the applicant does not returnthe overpayment:(A) Sixty days after the applicant’slast day of attendance.(B) The last day of the award year inwhich the institution disbursed FederalPell Grant, Federal Perkins Loan, orFSEOG Program funds to the applicant.(b) If an institution discovers, as aresult of verification, that an applicantreceived under § 668.58(a)(2)(ii) morefinancial aid than the applicant waseligible to receive, the institution musteliminate the FWS overpayment by—(1) Adjusting the applicant’s otherfinancial aid; or(2) Reimbursing the FWS programaccount by making restitution from itsown funds, if the institution cannotcorrect the overpayment underparagraph (b)(1) of this section. Theapplicant must still be paid for all workperformed under the institution’s ownpayroll account.(c) If an institution disbursedsubsidized student financial assistanceVerDate Mar2010 14:10 Oct 28, 2010 Jkt 223001 PO 00000 Frm 00128 Fmt 4701 Sfmt 4700 E:\FR\FM\29OCR2.SGM 29OCR2to an applicant under § 668.58(a)(3), anddid not receive the valid SAR or validISIR reflecting corrections within thedeadlines established under § 668.60,the institution must reimburse theappropriate program account by makingrestitution from its own funds. Theapplicant must still be paid for all workperformed under the institution’s ownpayroll account.(Approved by the Office of Management andBudget under control number 1845–0041)(Authority: 20 U.S.C. 1094)■ 24. Subpart F of part 668 is revised toread as follows:Subpart F—MisrepresentationSec.668.71 Scope and special definitions.668.72 Nature of educational program.668.73 Nature of financial charges.668.74 Employability of graduates.668.75 Relationship with the Department ofEducation.Subpart F—Misrepresentation§ 668.71 Scope and special definitions.(a) If the Secretary determines that aneligible institution has engaged insubstantial misrepresentation, theSecretary may—(1) Revoke the eligible institution’sprogram participation agreement;(2) Impose limitations on theinstitution’s participation in the title IV,HEA programs;(3) Deny participation applicationsmade on behalf of the institution; or(4) Initiate a proceeding against theeligible institution under subpart G ofthis part.(b) This subpart establishes the typesof activities that constitute substantialmisrepresentation by an eligibleinstitution. An eligible institution isdeemed to have engaged in substantialmisrepresentation when the institutionitself, one of its representatives, or anyineligible institution, organization, orperson with whom the eligibleinstitution has an agreement to provideeducational programs, marketing,advertising, recruiting or admissionsservices, makes a substantialmisrepresentation regarding the eligibleinstitution, including about the natureof its educational program, its financialcharges, or the employability of itsgraduates. Substantialmisrepresentations are prohibited in allforms, including those made in anyadvertising, promotional materials, or inthe marketing or sale of courses orprograms of instruction offered by theinstitution.(c) The following definitions apply tothis subpart:

Federal Register / Vol. 75, No. 209 / Friday, October 29, 2010 / Rules and Regulations66959WReier-Aviles on DSKGBLS3C1PROD with RULES2Misrepresentation: Any false,erroneous or misleading statement aneligible institution, one of itsrepresentatives, or any ineligibleinstitution, organization, or person withwhom the eligible institution has anagreement to provide educationalprograms, or to provide marketing,advertising, recruiting or admissionsservices makes directly or indirectly toa student, prospective student or anymember of the public, or to anaccrediting agency, to a State agency, orto the Secretary. A misleading statementincludes any statement that has thelikelihood or tendency to deceive orconfuse. A statement is anycommunication made in writing,visually, orally, or through other means.Misrepresentation includes thedissemination of a student endorsementor testimonial that a student gives eitherunder duress or because the institutionrequired the student to make such anendorsement or testimonial toparticipate in a program.Prospective student: Any individualwho has contacted an eligibleinstitution for the purpose of requestinginformation about enrolling at theinstitution or who has been contacteddirectly by the institution or indirectlythrough advertising about enrolling atthe institution.Substantial misrepresentation: Anymisrepresentation on which the personto whom it was made could reasonablybe expected to rely, or has reasonablyrelied, to that person’s detriment.(Authority: 20 U.S.C. 1094)§ 668.72 Nature of educational program.Misrepresentation concerning thenature of an eligible institution’seducational program includes, but is notlimited to, false, erroneous ormisleading statements concerning—(a) The particular type(s), specificsource(s), nature and extent of itsinstitutional, programmatic, orspecialized accreditation;(b)(1) Whether a student may transfercourse credits earned at the institutionto any other institution;(2) Conditions under which theinstitution will accept transfer creditsearned at another institution;(c) Whether successful completion ofa course of instruction qualifies astudent—(1) For acceptance to a labor union orsimilar organization; or(2) To receive, to apply to take or totake the examination required toreceive, a local, State, or Federal license,or a nongovernmental certificationrequired as a precondition foremployment, or to perform certainfunctions in the States in which theeducational program is offered, or tomeet additional conditions that theinstitution knows or reasonably shouldknow are generally needed to secureemployment in a recognized occupationfor which the program is represented toprepare students;(d) The requirements for successfullycompleting the course of study orprogram and the circumstances thatwould constitute grounds forterminating the student’s enrollment;(e) Whether its courses arerecommended or have been the subjectof unsolicited testimonials orendorsements by—(1) Vocational counselors, highschools, colleges, educationalorganizations, employment agencies,members of a particular industry,students, former students, or others; or(2) Governmental officials forgovernmental employment;(f) Its size, location, facilities, orequipment;(g) The availability, frequency, andappropriateness of its courses andprograms to the employment objectivesthat it states its programs are designedto meet;(h) The nature, age, and availability ofits training devices or equipment andtheir appropriateness to theemployment objectives that it states itsprograms and courses are designed tomeet;(i) The number, availability, andqualifications, including the trainingand experience, of its faculty and otherpersonnel;(j) The availability of part-timeemployment or other forms of financialassistance;(k) The nature and availability of anytutorial or specialized instruction,guidance and counseling, or othersupplementary assistance it will provideits students before, during or after thecompletion of a course;(l) The nature or extent of anyprerequisites established for enrollmentin any course;(m) The subject matter, content of thecourse of study, or any other fact relatedto the degree, diploma, certificate ofcompletion, or any similar documentthat the student is to be, or is, awardedupon completion of the course of study;(n) Whether the academic,professional, or occupational degree thatthe institution will confer uponcompletion of the course of study hasbeen authorized by the appropriate Stateeducational agency. This type ofmisrepresentation includes, in the caseof a degree that has not been authorizedby the appropriate State educationalagency or that requires specializedaccreditation, any failure by an eligibleVerDate Mar2010 14:10 Oct 28, 2010 Jkt 223001 PO 00000 Frm 00129 Fmt 4701 Sfmt 4700 E:\FR\FM\29OCR2.SGM 29OCR2institution to disclose these facts in anyadvertising or promotional materialsthat reference such degree; or(o) Any matters required to bedisclosed to prospective students under§§ 668.42 and 668.43 of this part.(Authority: 20 U.S.C. 1094)§ 668.73 Nature of financial charges.Misrepresentation concerning thenature of an eligible institution’sfinancial charges includes, but is notlimited to, false, erroneous, ormisleading statements concerning—(a) Offers of scholarships to pay all orpart of a course charge;(b) Whether a particular charge is thecustomary charge at the institution for acourse;(c) The cost of the program and theinstitution’s refund policy if the studentdoes not complete the program;(d) The availability or nature of anyfinancial assistance offered to students,including a student’s responsibility torepay any loans, regardless of whetherthe student is successful in completingthe program and obtaining employment;or(e) The student’s right to reject anyparticular type of financial aid or otherassistance, or whether the student mustapply for a particular type of financialaid, such as financing offered by theinstitution.(Authority: 20 U.S.C. 1094)§ 668.74 Employability of graduates.Misrepresentation regarding theemployability of an eligible institution’sgraduates includes, but is not limited to,false, erroneous, or misleadingstatements concerning—(a) The institution’s relationship withany organization, employment agency,or other agency providing authorizedtraining leading directly to employment;(b) The institution’s plans to maintaina placement service for graduates orotherwise assist its graduates to obtainemployment;(c) The institution’s knowledge aboutthe current or likely future conditions,compensation, or employmentopportunities in the industry oroccupation for which the students arebeing prepared;(d) Whether employment is beingoffered by the institution or that a talenthunt or contest is being conducted,including, but not limited to, throughthe use of phrases such as ‘‘Men/womenwanted to train for * * *,’’ ‘‘HelpWanted,’’ ‘‘Employment,’’ or ‘‘BusinessOpportunities’’;(e) Government job market statisticsin relation to the potential placement ofits graduates; or

66958 Federal Register / Vol. 75, No. 209 / Friday, October 29, 2010 / Rules and RegulationsWReier-Aviles on DSKGBLS3C1PROD with RULES2§ 668.60 Deadlines for submittingdocumentation and the consequences <strong>of</strong>failing to provide documentation.(a) An institution must require anapplicant selected for verification tosubmit to it, within the period <strong>of</strong> timeit or the Secretary specifies, thedocumentation set forth in § 668.57 thatis requested by the institution.(b) For purposes <strong>of</strong> the subsidizedstudent financial assistance programs,excluding the Federal Pell GrantProgram—(1) If an applicant fails to provide therequested documentation within areasonable time period established bythe institution—(i) The institution may not—(A) Disburse any additional FederalPerkins Loan or FSEOG Program fundsto the applicant;(B) Employ, continue to employ orallow an employer to employ theapplicant under FWS; or(C) Originate the applicant’s DirectSubsidized Loan or disburse anyadditional Direct Subsidized Loanproceeds for the applicant; and(ii) The applicant must repay to theinstitution any Federal Perkins Loan orFSEOG received for that award year;(2) If the applicant provides therequested documentation after the timeperiod established by the institution, theinstitution may, at its option, disburseaid to the applicant notwithstandingparagraph (b)(1) <strong>of</strong> this section; and(3) If an institution has receivedproceeds for a Direct Subsidized Loanon behalf <strong>of</strong> an applicant, the institutionmust return all or a portion <strong>of</strong> thosefunds as provided under § 668.166(b) ifthe applicant does not completeverification within the time periodspecified.(c) For purposes <strong>of</strong> the Federal PellGrant Program—(1) An applicant may submit a validSAR to the institution or the institutionmay receive a valid ISIR after theapplicable deadline specified in 34 CFR690.61 but within an establishedadditional time period set by theSecretary through publication <strong>of</strong> anotice in the Federal Register; and(2) If the applicant does not provideto the institution the requesteddocumentation and, if necessary, a validSAR or the institution does not receivea valid ISIR, within the additional timeperiod referenced in paragraph (c)(1) <strong>of</strong>this section, the applicant—(i) Forfeits the Federal Pell Grant forthe award year; and(ii) Must return any Federal Pell Grantpayments previously received for thataward year.(d) The Secretary may determine notto process FAFSA information <strong>of</strong> anapplicant who has been requested toprovide documentation until theapplicant provides the documentationor the Secretary decides that there is nolonger a need for the documentation.(e) If an applicant selected forverification for an award year diesbefore the deadline for completingverification without completing thatprocess, the institution may not—(1) Make any further disbursementson behalf <strong>of</strong> that applicant;(2) Originate that applicant’s DirectSubsidized Loan, or disburse thatapplicant’s Direct Subsidized Loanproceeds; or(3) Consider any funds it disbursed tothat applicant under § 668.58(a)(2) as anoverpayment.(Authority: 20 U.S.C. 1094)§ 668.61 Recovery <strong>of</strong> funds from interimdisbursements.(a) If an institution discovers, as aresult <strong>of</strong> verification, that an applicantreceived under § 668.58(a)(2)(i)(B) morefinancial aid than the applicant waseligible to receive, the institution musteliminate the Federal Pell Grant, FederalPerkins Loan, or FSEOG overpaymentby—(1) Adjusting subsequentdisbursements in the award year inwhich the overpayment occurred; or(2) Reimbursing the appropriateprogram account by—(i) Requiring the applicant to returnthe overpayment to the institution if theinstitution cannot correct theoverpayment under paragraph (a)(1) <strong>of</strong>this section; or(ii) Making restitution from its ownfunds, by the earlier <strong>of</strong> the followingdates, if the applicant does not returnthe overpayment:(A) Sixty days after the applicant’slast day <strong>of</strong> attendance.(B) The last day <strong>of</strong> the award year inwhich the institution disbursed FederalPell Grant, Federal Perkins Loan, orFSEOG Program funds to the applicant.(b) If an institution discovers, as aresult <strong>of</strong> verification, that an applicantreceived under § 668.58(a)(2)(ii) morefinancial aid than the applicant waseligible to receive, the institution musteliminate the FWS overpayment by—(1) Adjusting the applicant’s otherfinancial aid; or(2) Reimbursing the FWS programaccount by making restitution from itsown funds, if the institution cannotcorrect the overpayment underparagraph (b)(1) <strong>of</strong> this section. Theapplicant must still be paid for all workperformed under the institution’s ownpayroll account.(c) If an institution disbursedsubsidized student financial assistanceVerDate Mar2010 14:10 Oct 28, 2010 Jkt 223001 PO 00000 Frm 00128 Fmt 4701 Sfmt 4700 E:\FR\FM\29OCR2.SGM 29OCR2to an applicant under § 668.58(a)(3), anddid not receive the valid SAR or validISIR reflecting corrections within thedeadlines established under § 668.60,the institution must reimburse theappropriate program account by makingrestitution from its own funds. Theapplicant must still be paid for all workperformed under the institution’s ownpayroll account.(Approved by the <strong>Office</strong> <strong>of</strong> Management andBudget under control number 1845–0041)(Authority: 20 U.S.C. 1094)■ 24. Subpart F <strong>of</strong> part 668 is revised toread as follows:Subpart F—MisrepresentationSec.668.71 Scope and special definitions.668.72 Nature <strong>of</strong> educational program.668.73 Nature <strong>of</strong> financial charges.668.74 Employability <strong>of</strong> graduates.668.75 Relationship with the <strong>Department</strong> <strong>of</strong><strong>Education</strong>.Subpart F—Misrepresentation§ 668.71 Scope and special definitions.(a) If the Secretary determines that aneligible institution has engaged insubstantial misrepresentation, theSecretary may—(1) Revoke the eligible institution’sprogram participation agreement;(2) Impose limitations on theinstitution’s participation in the title IV,HEA programs;(3) Deny participation applicationsmade on behalf <strong>of</strong> the institution; or(4) Initiate a proceeding against theeligible institution under subpart G <strong>of</strong>this part.(b) This subpart establishes the types<strong>of</strong> activities that constitute substantialmisrepresentation by an eligibleinstitution. An eligible institution isdeemed to have engaged in substantialmisrepresentation when the institutionitself, one <strong>of</strong> its representatives, or anyineligible institution, organization, orperson with whom the eligibleinstitution has an agreement to provideeducational programs, marketing,advertising, recruiting or admissionsservices, makes a substantialmisrepresentation regarding the eligibleinstitution, including about the nature<strong>of</strong> its educational program, its financialcharges, or the employability <strong>of</strong> itsgraduates. Substantialmisrepresentations are prohibited in allforms, including those made in anyadvertising, promotional materials, or inthe marketing or sale <strong>of</strong> courses orprograms <strong>of</strong> instruction <strong>of</strong>fered by theinstitution.(c) The following definitions apply tothis subpart:

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