Institutional Eligibility for Participation in
Title IV Student Financial Aid Programs

Updated February 7, 2019
Congressional Research Service
https://crsreports.congress.gov
R43159

Institutional Eligibility for Participation in Title IV Student Financial Aid Programs

Summary
Title IV of the Higher Education Act (HEA) authorizes programs that provide financial assistance
to students to assist them in obtaining a postsecondary education at certain institutions of higher
education (IHEs). These IHEs include public, private nonprofit, and proprietary institutions. For
students attending such institutions to be able to receive Title IV assistance, an institution must
meet basic criteria, including offering at least one eligible program of education (e.g., programs
leading to a degree or preparing a student for gainful employment in a recognized occupation).
In addition, an IHE must satisfy the program integrity triad, under which it must be
 licensed or otherwise legally authorized to operate in the state in which it is
physically located,
 accredited or preaccredited by an agency recognized for that purpose by the
Department of Education (ED), and
 certified by ED as eligible to participate in Title IV programs.
These requirements are intended to provide a balance between consumer protection, quality
assurance, and oversight and compliance in postsecondary education providers participating in
Title IV student aid programs.
An IHE must also fulfill a variety of other related requirements, including those that relate to
institutional recruiting practices, student policies and procedures, and the administration of the
Title IV student aid programs.
Finally, additional criteria may apply to an institution depending on its control or the type of
educational programs it offers. For example, proprietary institutions must meet HEA
requirements that are otherwise inapplicable to public and private nonprofit institutions, including
deriving at least 10% of their revenues from non-Title IV funds (also known as the 90/10 rule).
While an institution is ineligible to participate in Title IV programs if more than 50% of its
courses are offered by correspondence or if 50% or more of its students are enrolled in
correspondence courses.
This report first describes the types of institutions eligible to participate in Title IV programs and
discusses the program integrity triad. It then discusses additional issues related to institutional
eligibility, including program participations agreements, required campus safety policies and
crime reporting, and distance and correspondence education.
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Institutional Eligibility for Participation in Title IV Student Financial Aid Programs

Overview
Title IV of the Higher Education Act (HEA; P.L. 89-329), as amended, authorizes programs that
provide financial assistance to students to attend certain institutions of higher education (IHEs).
6,760 institutions were classified as Title IV eligible IHEs in academic year (AY) 2016-2017.1 Of
those IHEs eligible to participate in Title IV programs, approximately 29.4% were public
institutions, 27.8% were private nonprofit institutions, and 42.9% were proprietary (or private,
for-profit) institutions. It is estimated that $122.5 billion was made available to students through
Title IV federal student aid in FY2017.2
To be able to receive Title IV assistance, students must attend an institution that is eligible to
participate in the Title IV programs. IHEs must meet a variety of requirements to participate in
the Title IV programs. First, an IHE must meet basic eligibility criteria, including offering at least
one eligible program of education.
In addition, an IHE must satisfy the program integrity triad, under which it must be
 legally authorized to provide a postsecondary education in the state in which it is
located;
 accredited or preaccredited by an agency recognized by the Department of
Education (ED) for such purposes,3 and
 certified by ED as eligible to participate in Title IV programs.
The state authorization and accreditation components of the triad were developed independently
to address the issues of quality assurance and consumer protection, and the federal government
(ED specifically) generally relies on states and accrediting agencies to determine standards of
educational program quality. The federal government’s only direct role in determining Title IV
eligibility is through the process of certification of eligibility and ensuring IHEs meet some
additional Title IV requirements. Certification, as a component of the program integrity triad,
focuses on an institution’s fiscal responsibility and administrative capacity to administer Title IV
funds.
An IHE must fulfill a variety of other related requirements, including those that relate to
institutional recruiting practices, student policies and procedures, and Title IV program
administration. Finally, additional criteria may apply to an institution depending on its control or
the type of educational programs it offers. For instance, proprietary institutions must derive at
least 10% of their revenues from non-Title IV funds (also known as the 90/10 rule). Failure to
fulfill some of these requirements does not necessarily end an IHE’s participation in the Title IV

1 Although 6,760 institutions were eligible to participate in Title IV FSA programs in AY2016-2017 (July 1, 2016-June
30, 2017), 5,963 institutions participated in and received funds through Title IV FSA programs in FY2017 (October 1,
2016-September 30, 2017). U.S. Department of Education, National Center for Education Statistics, Postsecondary
Institutions and Cost of Attendance in 2016-2017; Degrees and Other Awards Conferred: 2015-16; and 12-Month
Enrollment: 2015-16, First Look (Provisional Data), NCES 2017-075rev, Table 1, https://nces.ed.gov/pubs2017/
2017075rev.pdf and U.S. Department of Education, Federal Student Aid, Annual Report FY 2018, Washington, DC,
November 15, 2018, p. 3, https://www2.ed.gov/about/reports/annual/2018report/fsa-report.pdf.
2 This includes federal loans, work-study, and grants. See U.S. Department of Education, Federal Student Aid, Annual
Report 2018, Washington, DC, November 15, 2018, p. 8, https://www2.ed.gov/about/reports/annual/2018report/fsa-
report.pdf.
3 ED recognizes accrediting agencies both for Title IV and non-Title IV purposes. There are some differences in criteria
for ED recognition for each. ED-recognition of accrediting agencies for purposes of participation in non-Title IV
programs are beyond the scope of this report.
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Institutional Eligibility for Participation in Title IV Student Financial Aid Programs

programs, but may lead to additional oversight from ED and/or restrictions placed an IHE’s Title
IV participation.
This report provides a general overview of HEA provisions that affect a postsecondary
institution’s eligibility for participation in Title IV student aid programs. It first describes general
eligibility criteria at both the institutional and programmatic level and then, in more detail, the
program integrity triad. Next, it discusses several issues that are closely related to institutional
eligibility: Program Participation Agreements, campus safety policies and crime reporting
required under the Clery Act, the return of Title IV funds, and distance education.
Eligibility Criteria
To be eligible to participate in HEA Title IV student aid programs, institutions must meet several
criteria. These criteria include requirements related to programs offered by the institutions,
student enrollment, institutional operations, and the length of academic programs. This section
discusses the definition of an eligible IHE for the purposes of Title IV participation and program
eligibility requirements.
Eligible Institutions
The HEA contains two definitions of institutions of higher education. Section 101 provides a
general definition of IHE that applies to institutional eligibility for participation in HEA programs
other than Title IV programs.4 The Section 102 definition of IHE is used only to determine
institutional eligibility to participate in HEA Title IV programs.
Section 101 Institutions
Section 101 of the HEA provides a general definition of IHE. This definition applies to
institutional participation in non-Title IV HEA programs. Section 101 IHEs can be public or
private nonprofit educational institutions. Section 101 specifies criteria both public and private
nonprofit educational institutions must meet to be considered IHEs.
Public Institutions of Higher Education
Neither the HEA nor regulations specifically define a public institution of higher education.
However, in general, public institutions can be described as those whose educational programs
are operated by states or other government entities and are primarily supported by public funds.5
Private Nonprofit Institutions of Higher Education
Regulations define a nonprofit IHE as one that (1) is owned and operated by a nonprofit
corporation or association, with no part of the corporation’s or association’s net earnings
benefiting a private shareholder or individual, (2) is determined by the Internal Revenue Service
to be a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code (IRC), and

4 The Section 101 definition is also commonly used as a reference in many other non-HEA programs.
5 U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary Education Data
System, 2018-19 Glossary, “Public institution.”
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(3) is legally authorized to operate as a nonprofit organization by each state in which it is
physically located.6
Section 101 Institution of Higher Education
To be considered a Section 101 IHE, public and private nonprofit educational institutions must
 admit as regular students only individuals with a high school diploma or its
equivalent, individuals beyond the age of compulsory school attendance, or
individuals who are dually or concurrently enrolled in both the institution and in
a secondary school;
 be legally authorized to provide a postsecondary education within the state in
which they are located;
 offer a bachelor’s degree, provide a program of at least two-years that is
acceptable for full credit toward a bachelor’s degree, award a degree that is
accepted for admission to a graduate or professional program, or provide a
training program of at least a one-year that prepares students for gainful
employment in a recognized occupation; and
 be accredited or preaccredited by an accrediting agency recognized by ED to
grant accreditation or preaccreditation status7
Section 102 Institutions
Section 102 of the HEA defines IHE only for the purposes of Title IV participation. The Section
102 definition includes all institutions included in the Section 101 definition (i.e., public and
private nonprofit IHEs) and also includes proprietary institutions, postsecondary vocational
institutions, and foreign institutions that have been approved by ED.8 Section 102 specifies that
proprietary and postsecondary vocational institutions must meet many of the same Section 101
requirements that are applicable to public and private nonprofit institutions. In addition, Section
102 specifies other criteria that all types of educational institutions must meet to be considered
Title IV eligible IHEs.
Proprietary Institutions of Higher Education
HEA Section 102 specifies that a proprietary IHEs is an institution that is neither a public nor a
private nonprofit institution.9 In addition to the basic Title IV eligibility criteria that all IHEs must
meet (e.g., state authorization, accreditation by an ED-recognized accrediting agency),
proprietary IHEs must meet additional criteria to be considered Title IV eligible. Specifically, a
proprietary IHE must (1) provide an eligible program of training “to prepare students for gainful
employment in a recognized occupation”10 or (2) provide a program leading to a baccalaureate
degree in liberal arts that has been continuously accredited by a regional accrediting agency since

6 34 C.F.R. §600.2. Under IRC Section 501(c)(3), an organization is exempt from federal taxation if no part of its
earnings insures to the benefit of an individual or private shareholder and if it is organized and operated exclusively for,
among other potential items, educational purposes.
7 HEA §101; 20 U.S.C. §1001.
8 HEA §102(a)(2); 20 U.S.C. §1002(a)(1). Department of Education, 2017-2018 Federal Student Aid Handbook, vol. 2,
pp. 3-5, https://ifap.ed.gov/fsahandbook/attachments/1718FSAHbkActiveIndex.pdf (hereinafter FSA Handbook).
9 HEA §102(b)(1)(C); 20 U.S.C. §1002(b)(1)(C).
10 HEA §102(b)(1)(A); 20 U.S.C. §1002(b)(1)(A).
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October 1, 2007, and have provided the program continuously since January 1, 2009.
Additionally, it must have been legally authorized to provide (and have continuously been
providing) the same or a substantially similar educational program for at least two consecutive
years.11
Postsecondary Vocational Institutions
HEA Section 102 defines a postsecondary vocational institution as a public or private nonprofit
institution that provides an eligible program of training “to prepare students for gainful
employment in a recognized occupation,”12 and has been legally authorized to provide (and has
continuously been providing) the same or a substantially similar educational program for at least
two consecutive years.13 It is possible for a public or private nonprofit IHE that offers a degree
program (e.g., an associate’s or bachelor’s degree) to also qualify as a postsecondary vocational
institution by offering programs that are less than one academic year and that lead to a nondegree
recognized credential such as a certificate.
Foreign Institutions
Institutional participation in Title IV student aid programs allows students from the United States
to borrow through the federal Direct Loan program to attend postsecondary institutions located
outside of the United States.14 In general, a foreign institution is eligible to participate in the
Direct Loan program if it is comparable to an eligible IHE (as defined in HEA Section 101)
within the United States, is a public or private nonprofit institution,15 and has been approved by
ED. Foreign graduate medical schools, veterinary schools, and nursing schools are also eligible to
participate in Title IV student aid programs, but must meet additional requirements. Freestanding
foreign graduate medical schools, veterinary schools, and nursing schools may be proprietary
institutions.16 Additional requirements for foreign institutions to participate in Title IV student aid
programs are beyond the scope of this report and, generally, will not be discussed hereinafter.
Section 102 Institution of Higher Education
The definitions of proprietary institutions and postsecondary vocational institutions contained in
Section 102 have several overlapping components with the Section 101 definition of IHE.17 For
instance, both proprietary and postsecondary vocational institutions must (1) admit as regular
students only those individuals with a high school diploma or its equivalent, individuals beyond

11 HEA §102(b)(1)(E) and 34 C.F.R. § 600.5(b). See also FSA Handbook, vol. 2, p. 11.
12 HEA §102(c); 20 U.S.C. §1002(c).
13 HEA §102(b)(1)(E) and 34 C.F.R. § 600.6(b). See also FSA Handbook, vol. 2, p. 11.
14 Institutions can choose to participate in Title IV programs or can choose to be designated by ED as “eligibility-only.”
An eligibility-only designation allows an institution and its eligible students to qualify to participate in non-Title IV
programs and benefits, such as the American Opportunity Tax Credit. Additionally, students attending eligibility-only
institutions qualify for in-school deferment of payment on their federal student loans that they have previously
borrowed.
15 A foreign nonprofit institution is one that is owned and operated only by one or more nonprofit corporations of
associations and (1) is determined to be a nonprofit educational institution by the ED-recognized tax authority of the
institution’s home country or (2) if there is no ED-recognized tax authority of the institution’s home country, the
institution demonstrates to ED that it is a nonprofit educational institution. 34 C.F.R. §600.2.
16 HEA §102(a)(2); 20 U.S.C. §1002(a)(2). 34 C.F.R. §600.54.
17 Eligibility requirements differ somewhat for foreign institutions; a complete description of these differences is
beyond the scope of this report.
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the age of compulsory school attendance, or individuals who are dually or concurrently enrolled
in both the institution and in a secondary school; (2) be legally authorized to provide a
postsecondary education by the state in which they are located; and (3) be accredited or
preaccredited by an accrediting agency recognized by ED to grant such statuses.18
In addition, all types of institutions (including public and private nonprofit institutions) must meet
requirements related to the course of study offered at the institution and student enrollment to be
considered Title IV eligible under Section 102. In general, any type of institution is considered
ineligible to participate in Title IV programs if more than 25% of its enrolled students are
incarcerated, or if more than 50% of the its enrolled students do not have a secondary school
diploma or equivalent and the institution does not provide a two-year associate’s degree or a four-
year bachelor’s degree. Also, in general, an institution is ineligible if more than 50% of the
courses offered are correspondence courses or if 50% or more of its students are enrolled in
correspondence courses. These “50% rules” are discussed in more detail in the distance education
section of this report.19 Finally, an institution is considered ineligible to participate in Title IV
programs if the institution has filed for bankruptcy or the institution (or its owner or chief
executive officer) has been convicted of or pled no contest or guilty to a crime involving the use
of Title IV funds.20
While the above-described criteria generally apply to most types of Section 102 institutions,
specific criteria apply to individual types of Section 102 institutions. The following sections
provide information on Title IV eligibility criteria that apply to those additional types of IHEs not
specified in Section 101, but specified in Section 102: proprietary IHEs, postsecondary vocational
institutions, and foreign institutions.
Hereinafter, unless otherwise noted, the term “institution of high education (IHE)” only refers to
Section 102 institutions.
Eligible Programs
To qualify as an eligible institution for Title IV participation, an institution must offer at least one
eligible program, but overall institutional eligibility does not necessarily extend to all programs
offered by the institution. Not all of an institution’s programs must meet program eligibility
requirements for an IHE to participate in Title IV, but, in general, students enrolled solely in
ineligible programs cannot receive Title IV student aid.21 To be Title IV eligible, a program must
lead to a degree (e.g., an associate’s or bachelor’s degree) or certificate or prepare students for
gainful employment in a recognized occupation.
Before awarding Title IV aid to students, an IHE must determine that the program in which a
student is participating is Title IV eligible, ensure that the program is included in its accreditation
notice, and ensure that the the IHE is authorized by the appropriate state to offer the program.22

18 HEA §102(b) and (c).
19 HEA §102(a)(3); 20 U.S.C. §1002(a)(3).
20 HEA §102(a)(4); 20 U.S.C. §1002(a)(4).
21 HEA §484(a)(1); 20 U.S.C. §1091(a)(1). Students enrolled in certain preparatory or teacher certification courses,
may be eligible to receive limited forms of student aid. FSA Handbook, vol. 2, p. 19.
22 FSA Handbook, vol. 2, p. 19.
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In addition to the general criteria for all types of institutions, a program must meet specific
eligibility requirements depending on whether the institution at which it is offered is a public or
private nonprofit IHE, a proprietary IHE, or a postsecondary vocational IHE.23
Public and Private Nonprofit Institutions of Higher Education
At a public or private nonprofit IHE, the following types of programs are Title IV eligible: (1)
programs that lead to an associate’s, bachelor’s, professional, or graduate degree; (2) transfer
programs that are at least two academic years24 in length and for which the institution does not
award a credential but that are acceptable for full credit toward a bachelor’s degree; (3) programs
that lead to a certificate or other recognized nondegree credential, that prepare students for
gainful employment in a recognized occupation, and that are at least one academic year in length;
(4) certificate or diploma training programs that are less than one year in length, if the institution
also meets the definition of a postsecondary vocational institution; and (5) programs consisting of
courses required for elementary or secondary teacher certification in the state in which the student
intends to teach.25
For all of these, an academic year must also require an undergraduate course of study to contain
an amount of instructional time in which a full-time student is expected to complete at least 24
semester or trimester credit hours, 36 quarter credit hours, or 900 clock hours.
Proprietary and Postsecondary Vocational Institutions
In general, eligible programs at proprietary and postsecondary vocational institutions must meet a
specified number of weeks of instruction and must provide training that prepares students for
gainful employment in a recognized occupation (described below).26 At proprietary and
postsecondary vocational institutions, the following types of programs are Title IV eligible:
 undergraduate programs that provide at least 600 clock hours, 16 semester or
trimester hours, or 24 quarter hours of instruction offered over a minimum of at
least 15 weeks27; such programs may admit, as regular students, individuals who
have not completed the equivalent of an associate’s degree;
 programs that provide at least 300 clock hours, 8 semester hours, or 12 quarter
hours of instruction offered over a minimum of 10 weeks; such programs must be
graduate or professional programs or must admit as regular students only
individuals who have completed the equivalent of an associate’s degree;

23 In general, many of the eligible program requirements discussed herein may also apply to foreign IHEs.
24 In general, an academic year must be at least 30 weeks of instructional time for a program measured in credit hours
or via direct assessment and at least 26 weeks of instructional time for a program measured in clock hours. For both of
these, an academic year must also require an undergraduate course of study to contain an amount of instructional time
in which a full-time student is expected to complete at least 24 semester or trimester credit hours, 36 quarter credit
hours, or 900 clock hours. HEA §481(a)(2); 20 U.S.C. §1088(a)(2). 34 C.F.R. §668.10(a)(3)(i). Regulations define the
terms credit and clock hours. See 34 C.F.R. §600.2.
25 These programs must be offered in credit or clock hours. 34 C.F.R. §668.8(c); FSA Handbook, vol. 2, p 20.
26 As with public and private nonprofit IHEs, an academic year for programs at proprietary and postsecondary
vocational IHEs must require an undergraduate course of study to contain an amount of instructional time in which a
full-time student is expected to complete at least 24 semester or trimester credit hours, 36 quarter credit hours, or 900
clock hours over a period of at least 30 weeks for credit hour programs or 26 weeks for clock hour programs.
27 Regulations define the terms clock hours, semester hours, trimester hours, and quarter hours. See 34 C.F.R. §§600.2
and 668.8
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 short-term programs that provide between 300 and 600 clock hours of instruction
over a minimum of 10 weeks28; such programs must have been in existence for at
least one year, have verified completion and placement rates of at least 70%, may
not last more than 50% longer than the minimum training period required by the
state or federal agency for the occupation for which the program is being offered,
and must admit as regular students some individuals who have not completed the
equivalent of an associate’s degree; and
 programs offered by accredited proprietary IHEs that lead to a bachelor’s degree
in liberal arts; the school must have been continuously accredited by an ED-
recognized accrediting agency since at least October 1, 2007 and must have
provided the program continuously since January 1, 2009.29
Programs Required to Prepare Students for Gainful Employment
Most nondegree programs offered by public and private nonprofit IHEs30 must prepare students
for “gainful employment in a recognized occupation.”31 Gainful employment requirements also
apply to almost all programs offered by proprietary and postsecondary vocational institutions,
regardless of whether they lead to a degree.32
Status of Gainful Employment Regulations
In response to concerns about the quality of programs that prepare students for gainful
employment and the level of student debt assumed by individuals who attend these programs, ED
issued final rules on gainful employment on October 31, 2014.33 The regulations require that
educational programs subject to gainful employment requirements offered by IHEs meet
minimum performance standards to be considered offering education that prepares students for
gainful employment in a recognized occupation. They also require IHEs to disclose specified
information about each of its gainful employment programs to enrolled or prospective students.

28 Short-term programs are only eligible to participate in the Direct Loan Program. 34 C.F.R. §668.8(d)(3).
29 34 C.F.R. §668.8(d); FSA Handbook, vol. 2, p. 21.
30 The following types of nondegree programs offered by public and private nonprofit IHEs are not subject to gainful
employment requirements: (1) preparatory classwork necessary for enrollment in a Title IV eligible program; (2)
approved comprehensive transition and postsecondary programs for students with intellectual disabilities; (3) transfer
programs that are at least two academic years in length and for which the school does not award a credential but that
are designed to be acceptable for full credit toward a bachelor’s degree; and (4) teacher certification programs for
which the institution does not award a credential. FSA Handbook, vol. 2, p. 23.
31 HEA §§101(b)(1); 20 U.S.C. §§1001(b)(1).
32 HEA §§ 102(b)(1)(A)(i) and 102(c)(1)(A); 20 U.S.C. §§ 1002(b)(1)(A)(i) and 1002(c)(1). The following programs
offered by proprietary IHEs are not subject to gainful employment requirements: (1) programs offered by proprietary
IHEs accredited by an ED-recognized regional accrediting agency that lead to a bachelor’s degree in liberal arts. The
school must have been continuously accredited by an ED-recognized accrediting agency since at least October 1, 2007,
and must have provided the program continuously since January 1, 2009; (2) preparatory classwork necessary for
enrollment in a Title IV eligible program; and (3) approved comprehensive transition and postsecondary programs for
students with intellectual disabilities. FSA Handbook, vol. 2, p. 23.
33 Previously, ED had issued rules on gainful employment in late 2010 and early 2011. On June 30, 2012, the day
before the final regulations related to gainful employment performance metrics were to go into effect, the U.S. District
Court for the District of Columbia vacated most of the gainful employment regulations. Association of Private Colleges
& Universities v. Duncan, 2012 U.S. Dist. LEXIS 90434 (D.C. 2012). Rather than appealing the decision, ED
promulgated new gainful employment rules.
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Finally, the gainful employment rules require IHEs to report information to ED necessary to
calculate the debt-to-earnings ratios.
Although the gainful employment regulations became effective July 1, 2015, various aspects of
them have not yet been fully implemented or have been delayed in implementation. For example,
ED delayed until July 1, 2019, some portions of the rule relating to certain disclosure
requirements.34 Additionally, to enable ED to calculate whether an IHE’s programs meet the
minimum performance standards (discussed below), regulations specify that ED obtains data
from the Social Security Administration (SSA).35 However, a memorandum of understanding
relating to data sharing between ED and SSA lapsed in 2018.36
In August 2018, ED issued a Notice of Proposed Rulemaking that proposes to rescind the gainful
employment rules in their entirety.37 Based on HEA requirements relating to the implementation
date for Title IV regulations,38 the earliest possible date the proposed rules could go into effect is
July 1, 2020.39
Current Gainful Employment Regulations
The gainful employment regulations establish a framework within which educational programs
offered by IHEs must meet minimum performance standards to be considered offering education
that prepares students for gainful employment in a recognized occupation. Under the framework,
ED annually calculates two debt-to-earnings (D/E) rates for each gainful employment program
offered by an IHE, the discretionary income rate and the annual earnings rate.40 These rates
measure a gainful employment program’s completers’ debt41 (their annual loan payments) as a
percentage of their post-completion earnings. Using these measures, institutions will be
determined to be “passing,” “in the zone,” or “failing.” Thresholds for each category are as
follows:

34 Department of Education, “Program Integrity: Gainful Employment,” 83 Federal Register 28177, June 18, 2018.
35 34 C.F.R. §668.404(c)(1).
36 Emily Wilkins, “Student Loan, Gainful Employment Rules Delayed, Official Says,” Bloomberg Government,
October 2, 2018, https://about.bgov.com/blog/student-loan-rules-delayed-official-says/.
37 Department of Education, “Program Integrity: Gainful Employment,” 83 Federal Register 40167, August 14, 2018.
38 HEA §492(c); 20 U.S.C. §1089(c).
39 Emily Wilkins, “Student Loan, Gainful Employment Rules Delayed, Official Says,” Bloomberg Government,
October 2, 2018, https://about.bgov.com/blog/student-loan-rules-delayed-official-says/.
40 34 C.F.R. Part 668, Subpart Q.
41 To be included in a program’s D/E calculation, a program completer must have received Title IV aid to enroll in the
program. Program completer debt used in the D/E rates include both Title IV loans and private education loans. 34
C.F.R. §§668.402 & 668.404.
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 Passing: Programs whose completers have annual loan payments42 less than or
equal to 8% of annual earnings43 (the annual earnings rate) or less than or equal
to 20% of discretionary income44 (the discretionary income rate).
 In the zone: Programs whose completers have annual loan payments greater than
8% but less than or equal to 12% of annual earnings or greater than 20% but less
than or equal to 30% of discretionary income.
 Failing: Programs whose completers have annual loan payments greater than
12% of annual earnings and greater than 30% of discretionary income.
Programs that are failing in two out of any three consecutive years or that are in the zone for four
consecutive years will be ineligible for Title IV participation for three years.
The gainful employment rules also contain several disclosure requirements. For any year in which
ED notifies an IHE that a gainful employment program could become ineligible in the next year
based on its debt-to-earnings ratios (i.e., one year of failure or three years in the zone), the IHE
must provide a warning to current and prospective students that the program does not meet the
gainful employment standards and that if the program does not meet the gainful employment
standards in the future, students would not be able to receive Title IV aid.45
In addition, an IHE must disclose specified information about each of its gainful employment
programs to enrolled and prospective students. Information to be disclosed includes the
following46:
 the primary occupation that the program prepares students to enter;
 whether the program satisfies applicable educational prerequisites for
professional licensure or certification in each state within the institution’s
metropolitan statistical area (MSA);
 program length and number of clock or credit hours, or equivalent, in the
program;
 the program’s completion rates for full-time and less-than-full-time students and
the program’s withdrawal rates;

42 Annual loan payments are calculated by determining the median loan debt of a program’s completers during the
cohort period (two or four years, depending on number of program completers) and amortizing the median loan debt
over a specified repayment period, depending on the credential offered by the program (i.e., over a 10-year repayment
period for a program that leads to an undergraduate certificate, a post-baccalaureate certificate, an associate’s degree, or
a graduate certificate; over a 15-year repayment period for a program that leads to a bachelor’s or a master’s degree; or
over a 20-year period for a program that leads to a doctoral or first-professional degree). 34 C.F.R. §668.404(b).
43 Annual earnings are the greater of the mean or median annual earnings. ED obtains the earnings of gainful
employment program completers during the cohort period from the Social Security Administration. 34 C.F.R.
§668.404(c).
44 Discretionary income is the difference between the greater of the mean or median annual earnings and 150% of the
Federal Poverty Guidelines. 34 C.F.R. §668.404(a).
45 Additional information required in the warning includes descriptions of the academic and financial options available
to enrolled students to continue in another program at the IHE or to transfer credits to another IHE. An IHE must
provide prospective students with similar information and may not enroll, register, or enter into a financial commitment
with a prospective student earlier than (a) three business days after it provided the prospective student with the warning
or (b) if 30 days have passed from the date the IHE first provided the warning to the prospective student, three business
days after it provides the prospective student with a second warning. 34 C.F.R. §668.410(a)(6).
46 34 C.F.R. §668.412.
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 Federal Family Education Loan (FFEL) and Direct Loan program loan
repayment rates for all students who entered repayment on Title IV loans and
who enrolled in the program, for those who withdrew from the program, and for
those who completed the program;47
 the program tuition, fees, and additional costs incurred by a student who
completes the program within the program’s published length;
 the job placement rate for the program, if otherwise required by the institution’s
accrediting agency or state;
 the percentage of enrolled students who received Title IV or private loans for
enrollment in the program;
 the median loan debt and mean or median earnings of students who completed
the program, of students who withdrew from the program, and of both groups
combined;
 the program cohort default rate; and
 the annual earnings rate for the program.48
Institutions must also certify that each of their gainful employment programs is included in the
IHE’s accreditation, meets any state or federal entity accreditation requirements, and meets any
state licensing and certification requirements for the state in which the IHE is located.
Program Integrity Triad
Title IV of the HEA sets forth three requirements to ensure program integrity in postsecondary
education, known as the program integrity triad. The three requirements are state authorization,
accreditation by an accrediting agency recognized by ED, and eligibility and certification by ED.
This triad is intended to provide a balance in the Title IV eligibility requirements. The states’ role
is to provide consumer protection, the accrediting agencies’ role is to provide quality assurance,
and the federal government’s role is to provide oversight of compliance to ensure administrative
and fiscal integrity of Title IV programs at IHEs.
State Authorization
The state role in the program integrity triad is to provide legal authority for an institution to
operate a postsecondary educational program in the state in which it is physically located.49
There are two basic requirements for an IHE to be considered legally authorized by a state:
1. the state must authorize the IHE by name to operate postsecondary educational
programs, and
2. the state must have in place a process to review and address complaints
concerning IHEs, including enforcing applicable state law.50

47 For information on how the loan repayment rate is calculated, see 34 C.F.R. §668.413.
48 The annual earnings rate is the percentage of a gainful employment program’s annual loan payments divided by the
higher of the mean or median annual earnings of the program’s completers during the applicable cohort period.
49 34 C.F.R. §600.9.
50 These two requirements do not apply to (1) institutions authorized by the federal government by name to operate
postsecondary educational programs and (2) institutions authorized by name by an Indian tribe to operate
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An IHE can be authorized by name through a state charter, statute, constitutional provision, or
other action by an appropriate state agency (e.g., authorization to conduct business or operate as a
nonprofit organization). Additionally, an institution must also comply with any applicable state
approval or licensure requirements.51
The state agency responsible for the authorization of postsecondary institutions must also perform
three additional functions:
 upon request, provide the Secretary with information about the process it uses to
authorize institutions to operate within its borders;
 notify the Secretary if it has evidence to believe that an institution within its
borders has committed fraud in the administration of Title IV programs; and
 notify the Secretary if it revokes an institution’s authorization to operate.52
On December 19, 2016, ED issued final regulations related to state authorization for IHEs
offering postsecondary distance or correspondence education (discussed later in this report). The
regulations would require an IHE offering postsecondary distance or correspondence education to
students residing in a state in which the IHE is not physically located to meet any requirements
within the student’s state of residence. Under the rules, an IHE may meet this requirement if it
participates in a state authorization reciprocity agreement.53 These regulations were scheduled to
become effective July 1, 2018. However, on July 3, 2018 (and effective June 29, 2018), the
Secretary of Education (Secretary) issued a final rule delaying the implementation of these
requirements until July 1, 2020.54
Accreditation
The second component of the program integrity triad is accreditation by an ED-recognized
accrediting agency or association.55 In higher education, accreditation is intended to help ensure
an acceptable level of quality within IHEs. For Title IV purposes, an institution must be
accredited or preaccredited by an ED-recognized accrediting agency. Each accrediting agency
must meet HEA-specified standards to be recognized by ED.

postsecondary educational programs, provided they are located on tribal lands and the tribal government has a process
to review and address complaints concerning the IHEs and enforces applicable tribal law. Additionally, religious
institutions are considered authorized to operate postsecondary educational programs within a state if they are exempt
under state law from state authorization as religious institutions. Federal Student Aid Handbook, vol. 2, pp. 5-6.
51 States may exempt institutions established through a state charter, statute, or constitutional provision from state
approval or licensure requirements based on the IHE’s having been in operation for at least 20 years or based on its
accreditation by one or more ED-recognized accrediting agencies. If the IHE was authorized by the state to conduct
business or operate as a nonprofit organization, the state may not exempt the IHE from state approval or licensure
requirements based on years in operation, accreditation, or comparable exemptions. Federal Student Aid Handbook,
vol. 2, p. 6.
52 HEA §495; 20 U.S.C. §1099a.
53 A state reciprocity agreement is “an agreement between two or more states that authorizes institutions located and
legally authorized in a state covered by the agreement to provide postsecondary education through distance education
or correspondence courses to students residing in other states covered by the agreement.” U.S. Department of
Education, “Program Integrity and Improvement,” 81 Federal Register 92262, December 19, 2016.
54 Department of Education, “Program Integrity and Improvement,” 83 Federal Register 31296, July 3, 2018.
55 For additional information on accreditation and the federal government’s role, see CRS Report R43826, An Overview
of Accreditation of Higher Education in the United States, by Alexandra Hegji.
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Background
From its inception, accreditation has been a voluntary process. It developed with the formation of
associations that distinguished between IHEs that merited the designation of college or university
from those that did not. Since then, accreditation has been used as a form of “external quality
review ... to scrutinize colleges, universities and programs for quality assurance and quality
improvement.”56
In 1952, shortly after the passage of the Veterans’ Readjustment Act of 1952 (the Korean GI Bill;
P.L. 82-550), the federal government began formally recognizing accrediting agencies. This was
done as one means to assess higher education quality and link it to determining which institutions
would qualify to receive federal aid under the Korean GI Bill. Rather than creating a centralized
authority to assess quality, the federal government chose to rely in part on the existing expertise
of accrediting agencies.57 Today, ED’s formal recognition of accrediting agencies is important,
because an IHE’s Title IV eligibility is conditioned upon accreditation from an ED-recognized
accreditation organization.58
As part of the accreditation system’s development, three types of accrediting agencies have
emerged:
 Regional accrediting agencies. These operate in six regions of the United States,
with each agency concentrating on a specific region. Generally, these accredit
entire public and private nonprofit degree-granting IHEs.
 National accrediting agencies. These operate across the United States and also
accredit entire institutions. There are two types of national accrediting agencies:
faith-based agencies that accredit religiously affiliated or doctrinally based
institutions, which are typically private nonprofit degree-granting institutions,
and career-related agencies that typically accredit proprietary, career-based,
degree- and nondegree-granting institutions.
 Specialized or programmatic accrediting agencies. These operate throughout
the United States and accredit individual educational programs (e.g., law) and
single-purpose institutions (e.g., freestanding medical schools). Specific
educational programs are often accredited by a specialized accrediting agency,
and the institution at which the program is offered is accredited by a regional or
national accrediting organization.59
Accreditation Process
Generally, an institution must be accredited by an ED-recognized accrediting agency that has the
authority to cover all of the institution’s programs.60 Alternatively, a public or private nonprofit
IHE may be preaccredited by an agency recognized by ED to grant such preaccreditation, and a

56 Judith S. Eaton, An Overview of U.S. Accreditation, Council for Higher Education Accreditation, Washington, DC,
November 2015, p. 1, http://chea.org/pdf/Overview%20of%20US%20Accreditation%202015.pdf (hereinafter CHEA,
An Overview of U.S. Accreditation).
57 For additional information on the history of accreditation and the federal role, see John R. Proffit, The Federal
Connection for Accreditation, The Journal of Higher Education, 1979, http://www.jstor.org/stable/1980935?seq=1.
58 HEA §101(a)(5); 20 U.S.C. §1001(a)(5).
59 CHEA, An Overview of U.S. Accreditation, p. 2.
60 Such an agency is known as the institution’s primary accrediting agency.
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public postsecondary vocational institution may be accredited by a state agency61that ED
determines is a reliable authority. Proprietary institutions must be accredited by an ED-recognized
accrediting agency.62
The accreditation process begins with an institution or program requesting accreditation.
Institutional accreditation is cyclical, with a cycle ranging from every few years up to 10 years.
Initial accreditation does not guarantee subsequent renewal of the accredited status.63
Typically, an institution seeking accreditation will first perform a self-assessment to determine
whether its operations and performance meet the basic standards required by the relevant
accrediting agency. Next, an outside group of higher education peers (e.g., faculty and
administrators) and members of the public conduct an on-site visit at the institution during which
the team determines whether the accrediting organization’s standards are being met. Based on the
results of the self-assessment and site visit, the accrediting organization determines whether
accreditation will be awarded, renewed, denied, or provisionally awarded to an institution.64
Educational programs within institutions can be accredited by programmatic accrediting agencies;
however, a program is not required to be accredited by a programmatic accrediting agency for
Title IV purposes. Rather, it only needs to be covered by the IHE’s primary accrediting agency.65
Frequently, programmatic accrediting agencies review a specific program within an IHE that is
accredited by a regional or national accrediting agency.
An institution that has had its accreditation revoked or terminated for cause cannot be recertified
as an IHE eligible to participate in Title IV programs for 24 months following the loss of
accreditation, unless the accrediting agency rescinds the loss. The same rules apply if an
institution voluntarily withdraws its accreditation. The Secretary can, however, continue the
eligibility of a religious institution whose loss of accreditation, whether voluntary or not, is
related to its religious mission and not to the HEA accreditation standards.66 If an institution’s
accrediting agency loses its recognition from ED, it has up to 18 months to obtain accreditation
from another ED-recognized agency.67
Federal Recognition of Accrediting Agencies
Although the federal government does not set specific standards for institutional or programmatic
accreditation, generally, it does require that institutions be accredited or preaccredited by a

61 This requirement is distinct from the state authorization requirement.
62 FSA Handbook, vol. 2, p. 8.
63 CHEA, An Overview of U.S. Accreditation, p. 4.
64 Ibid., pp. 4-5. Accrediting agency terms such as “award” or “deny” that are used in this report are meant to provide
general descriptions of the types of actions taken by accrediting agencies, as accrediting agencies’ definitions for these
terms may vary.
65 Generally, although institutions are not required to have their programs accredited by programmatic accrediting
agencies, they may wish to have a program accredited for various reasons. For instance, many employers require
prospective employees to be graduates of an accredited program, and licensure requirements for some occupations in
certain states require programmatic accreditation. Under the gainful employment regulations, however, an institution
must certify to ED that each gainful employment program it operates is programmatically accredited, if such
accreditation is required by a federal government entity or by the state in which the institution is located to participate
in the Title IV student aid programs. This certification requirement effectively requires programmatic accreditation for
Title IV eligibility in certain instances. 34 C.F.R. §668.414(d)(1).
66 20 U.S.C. §1099b(j).
67 HEA §498(h)(2); 20 U.S.C. §1099c(h)(2).
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recognized accrediting organization to be eligible for Title IV participation. ED’s primary role in
accreditation is to recognize an accrediting agency as a “reliable authority regarding the quality of
education or training offered” at IHEs through the processes and conditions set forth in the HEA
and federal regulations.68
For ED recognition, Section 496 of the HEA specifically requires that an accrediting agency be a
state, regional, or national agency that demonstrates the ability to operate as an accrediting
agency within the relevant state or region or nationally. Additionally, agencies must meet one of
the following criteria:
 IHE membership with the agency must be voluntary, and one of the primary
purposes of the agency must be accreditation of the IHEs.69
 The agency must be a state agency approved by the Secretary as an accrediting
agency on or before October 1, 1991.
 The agency must either conduct accreditation through a voluntary membership of
individuals in a profession, or it must have as its primary purpose the
accreditation of programs within institutions that have already been accredited by
another ED-recognized agency.
Agencies that meet the first or third criterion listed above must also be administratively and
financially separate and independent of any related trade association or membership
organization.70 For an agency that meets the third criterion and that was ED-recognized on or
before October 1, 1991, the Secretary may waive the requirement that the agency be
administratively and financially independent of any related organization, but only if the agency
can show that the existing relationship with the related organization has not compromised its
independence in the accreditation process.
All types of accrediting agencies must show that they consistently apply and enforce standards
that ensure that the education programs, training, or courses of study offered by an IHE are of
sufficient quality to meet the stated objectives for which the programs, training, or courses are
offered. The standards used by the accrediting agencies must assess student achievement in
relation to the institution’s mission; this may include course completion, job placement rates, and
passage rates of state licensing exams. Agencies must also consider curricula, faculty, facilities,
fiscal and administrative capacity, student support services, and admissions practices.
Accrediting agencies must also meet requirements that focus on the review of an institution’s
operating procedures, including reviewing an institution’s policies and procedures for
determining credit hours, the application of those policies and procedures to programs and

68 HEA §496; 20 U.S.C. §1099b; 34 C.F.R. §602.1.
69 ED also recognizes accrediting agencies for the purpose of participating in other federal programs. ED-recognition of
accrediting agencies for purposes of participating in non-Title IV programs are beyond the scope of this report.
70 Section 496 of the HEA (20 U.S.C. §1099b) sets forth four criteria for an accrediting agency to be considered
“separate and independent.” They are (1) members of the postsecondary education governing body of the agency
cannot be elected or selected by the board or chief executive officer of any related or affiliated trade association or
membership organization; (2) for every six members of the board of the agency, at least one must be a member of the
public; (3) dues to the agency must be paid separately from dues to any related or associated trade association or
membership organization; and (4) the agency’s budget must be developed and determined by the agency, without
review or consultation from another entity or organization.
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coursework, and reviewing any newly established branch campuses.71 They must also perform
regular on-site visits that focus on the quality of education and program effectiveness.72
Eligibility and Certification by ED
The final component of the program integrity triad is eligibility and certification by ED. Here, ED
is responsible for verifying an institution’s legal authority to operate within a state and its
accreditation status. ED also evaluates an institution’s financial responsibility and administrative
capability to administer Title IV student aid programs. An institution can be certified to
participate in Title IV for up to six years before applying for recertification.
Financial Responsibility
ED determines an IHE’s financial responsibility based on its ability to provide the services
described in its official publications, to administer the Title IV programs in which it participates,
and to meet all of its financial obligations.73 A public IHE is deemed financially responsible if its
debts and liabilities are backed by the full faith and credit of the state or another government
entity.74 A proprietary or private nonprofit IHE is financially responsible if it meets specific
financial ratios (e.g., equity ratio) established by ED,75 has sufficient cash reserves to make any
required refunds (including the return of Title IV funds), is meeting all of its financial obligations,
and is current on its debt payments.76
Even if an institution meets the above requirements, ED does not consider it financially
responsible if the IHE does not meet third-party financial audit requirements or if the IHE
violated past performance requirements, such as failing to satisfactorily resolve any compliance
issues identified in program reviews or audits.77
Alternatively, if an institution does not meet the above standards of financial responsibility, ED
may still consider it financially responsible or give it provisional certification, under which it may
operate for a time, if it qualifies under an alternative standard. These alternative standards include
submitting an irrevocable letter of credit to ED that is equal to at least 50% of the FSA program
funds that the IHE received during its most recently completed fiscal year, meeting specific
monitoring requirements, or participating in the Title IV programs under provisional
certification.78

71 34 C.F.R. §602.24.
72 34 C.F.R. §602.17.
73 HEA §498(c); 20 U.S.C. §1099c(c); 34 C.F.R. §668, Subpart L.
74 An IHE is considered to have the full faith and credit backing if it notifies ED that it is designated as a public
institution by the state, local, or municipal government entity; tribal authority; or other government entity that has the
legal authority to make such a designation. The IHE must provide ED with a letter from an appropriate official
confirming its status as a public institution. FSA Handbook, vol. 2, p. 89.
75 In evaluating an IHE’s financial responsibility, ED will calculate a composite score based on its equity, primary, and
net income ratios. 34 C.F.R. §668.172.
76 FSA Handbook, vol. 2, p. 90.
77 FSA Handbook, vol. 2, pp. 89-90; 100-101.
78 FSA Handbook, vol. 2, pp. 96-99.
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Administrative Capability
Along with demonstrating financial responsibility, an institution must demonstrate its ability to
properly administer the Title IV programs in which it participates and to provide the education it
describes in public documents (e.g., marketing brochures). Administrative capability focuses on
the processes, procedures, and personnel used in administering Title IV funds and indicators of
student success.79
Administrative capability standards address numerous aspects of Title IV administration. For
example, to administer Title IV programs an institution must use ED’s electronic processes80 and
develop a system to identify and resolve discrepancies in Title IV information received by various
institutional offices. The IHE must also refer cases of Title IV student fraud or criminal
misconduct to ED’s Office of Inspector General for resolution, and it must provide all enrolled
and prospective students financial aid counseling. Finally, the IHE must have an adequate internal
system of checks and balances that includes dividing the functions of authorizing payments and
disbursing funds between two separate offices.81
Institutions are required to have a capable staff member to administer Title IV programs and
coordinate those programs with other aid received by students.82 This person must also have an
adequate number of qualified staff to assist with aid administration. Before receiving Title IV
funds, an IHE must certify that neither it nor its employees have been debarred or suspended by a
federal agency; similar limitations apply to lenders, loan servicers, and third-party servicers.83
Relating to indicators of student success, an institution must have satisfactory academic progress
(SAP) standards for students receiving Title IV funds. In general, IHEs must develop SAP
standards that establish a minimum grade point average (or its equivalent) for students and a
maximum time frame in which students must complete their educational programs. A student who
fails to meet the SAP requirements becomes ineligible to receive Title IV funds.84 Also related to
student success indicators, an institution that seeks to participate in Title IV programs for the first
time may not have an undergraduate withdrawal rate for regular students that is greater than 33%
during its most recently completed award year.85
Cohort Default Rate
An institution may be deemed administratively incapable if it has a high cohort default rate
(CDR). In general, the CDR is the number of an IHE’s federal loan recipients who enter
repayment in a given fiscal year (the cohort fiscal year) and who default within a certain period of

79 HEA §498(d); 20 U.S.C. § 1099c(d); 34 C.F.R. §668.16.
80 Some of the required electronic processes include establishment of a Student Aid Internet Gateway mailbox to
transmit student data records to ED, use of the E-App to submit and update an institution’s eligibility information, and
use of the Default Management website to receive draft and official cohort default rate data. A list of required
electronic processes can be found at FSA Handbook, vol. 2, p. 64.
81 34 C.F.R. §668.16.
82 ED considers an individual capable for purposes of Title IV administration if the individual: (1) is certified as a
financial aid administrator, if the institution’s state requires such certification; (2) has successfully completed an ED-
provided or ED-approved Title IV training program; or (3) has previous experience and success in administering Title
IV programs. This list is not definitive; ED may consider other relevant factors. 34 C.F.R. §668.16(b)(1).
83 FSA Handbook, vol. 2, pp. 50-58.
84 For more information about SAP and student eligibility for FSA programs, see FSA Handbook, vol. 1.
85 Withdrawal occurs when students drop out of all Title IV eligible coursework during an academic term. FSA
Handbook, vol. 2, p. 2-14.
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time after entering repayment (cohort default period; CDP), divided by the total number of
borrowers who entered repayment in the cohort fiscal year.86
Since 2014, ED has used a three-year CDP in calculating an institution’s CDR.87 An IHE will be
found administratively incapable if one of the following conditions is met:
1. an institution’s CDR is greater than 40% in one year for loans made under the
FFEL and Direct Loans programs;88
2. an institution’s CDR is 30% or greater for each of the three most recent fiscal
years for loans made under the FFEL and Direct Loans programs; or
3. an institution’s CDR is 15% or greater in any single year for loans made under
the Federal Perkins Loan Program.
When an IHE is determined to be administratively incapable due to a high CDR, it may become
ineligible to participate in the Direct Loan, Pell Grant, and/or Perkins Loan programs (but not
other Title IV programs). ED may grant provisional certification for up to three years to an
institution that would be deemed administratively capable except for its high cohort default
rates.89
Provisional Certification
If an institution is seeking initial certification, ED can grant it up to one year of provisional
certification. ED can also grant an institution provisional certification for up to three years if ED
is determining the IHE’s administrative capacity and financial responsibility for the first time, if
the IHE has experienced a partial or total change in ownership, or if ED determines that the
administrative or financial condition of the IHE may hinder its ability to meet its financial
responsibilities. Additionally, if an accrediting agency loses its ED recognition, any institution
that was accredited by that agency may continue to participate in Title IV programs for up to 18
months after ED’s withdrawal of recognition.90
Program Reviews
To ensure that an institution is conforming to eligibility requirements, ED can conduct program
reviews. During a program review, ED evaluates an institution’s compliance with Title IV
requirements and identifies actions the IHE must take to correct any problem(s). Review priority
is given to those institutions with high cohort default rates; IHEs with significant fluctuations in
Pell Grant awards or Direct Loan volume that are not accounted for by changes in programs
offered; IHEs that are reported to have deficiencies or financial aid problems by their state or

86 For institutions with fewer than 30 students entering repayment in a given cohort fiscal year, an “average rate” CDR
is used, which is calculated by dividing the number of borrowers who entered repayment in the current cohort fiscal
year and the two preceding cohort fiscal years, by the number who defaulted in the CDP for the cohort fiscal year in
which they entered repayment. HEA § 434(m)(1)(A); 20 U.S.C. §1085(m)(1)(A).
87 For instance, the 2013 cohort fiscal year includes the number of borrowers who entered repayment in 2013 and who
defaulted in 2013, 2014, or 2015. In 2016, the CDR for the 2013 cohort fiscal year was used to determine whether an
institution is administratively incapable based on that information. Prior to 2014, ED used a two-year CDP in
calculating an institution’s CDR.
88 These first two CDRs are calculated for Federal Family Education Loan program Subsidized and Unsubsidized
Stafford Loans and Direct Loan program Subsidized and Unsubsidized Loans. An institution may be subject to
provisional certification if two of the three of its most recent CDRs are 30% or greater. 34 C.F.R. §668.16(m).
89 34 C.F.R. §668.16(m)(2)(i).
90 34 C.F.R. §668.13(c).
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accrediting agency; IHEs with high annual dropout rates;91 and IHEs determined by ED to pose a
significant risk of failing to comply with the administrative capability or financial responsibility
requirements.92 If, during a review, ED determines that an institution is not administratively
capable or financially responsible or is violating Title IV program rules, ED may grant it
provisional certification, take corrective actions, or impose sanctions.
Sanctions and Corrective Actions
ED has the authority to impose a variety of sanctions and corrective actions on an institution that
violates Title IV program rules, a Program Participation Agreement (discussed later in this report)
or any other agreement made under the laws or regulations, or if it substantially misrepresents the
nature of its educational programs, financial charges, or graduates’ employability. Sanctions
include fines, limitations, suspensions, emergency actions, and terminations. ED can also sanction
third-party servicers performing tasks related to the institution’s Title IV programs.
Fines, Limitations, and Suspensions
ED may impose several types of sanctions on institutions for statutory and regulatory violations,
including fines, limitations, and suspensions. ED can fine an institution up to $55,907 for each
statutory or regulatory violation it commits, depending on the size of the IHE and the seriousness
of the violation.93
Under a limitation, ED imposes specific conditions or restrictions on an institution related to its
administration of Title IV funds. A limitation lasts for at least 12 months, and if an institution fails
to abide by the limitation, ED may initiate a termination proceeding.
Finally, under a suspension, an institution is not allowed to participate in Title IV programs for up
to 60 days.
Each of these sanctions may require an institution to take corrective actions as well, which may
include repaying illegally used funds or making payments to eligible students from the IHE’s own
funds.94
Emergency Action
ED can take emergency action to withhold Title IV funds from an institution if it receives reliable
information that an IHE is violating applicable laws or regulations, agreements, or limitations. ED
must determine that the institution is misusing federal funds, that immediate action is necessary to
stop misuses, and that the potential losses outweigh the importance of using established
procedures for limitation, suspension, or termination. An emergency action suspends an

91 “High annual dropout rates” is undefined.
92 HEA §498A(a)(2); 20 U.S.C. §1099c-1(a)(2).
93 HEA Section 487(c)(3)(B) (20 U.S.C. §1094(c)(3)(B)) specifies that fines may equal up to $25,000 for each
violation. However, the Inflation Adjustment Act (20 U.S.C. §2461, note) requires that each federal agency annually
adjust for inflation their civil monetary penalties. The $55,907 fine for institutional Title IV violations represents ED’s
most recent adjustment to its civil monetary penalties. Department of Education, “Adjustment to Civil Monetary
Penalties for Inflation,” 83 Federal Register 2062, January 16, 2018.
94 FSA Handbook, vol. 2, p. 212.
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institution’s participation in Title IV programs and prohibits it from disbursing such funds.
Typically, the emergency action may not last more than 30 days.95
Termination of Title IV Participation
The final action ED can take is the termination of an institution’s participation in Title IV
programs. Generally, an institution that has had its participation terminated cannot reapply to be
reinstated for at least 18 months. To request reinstatement, an institution must submit a fully
completed application to ED and demonstrate that it has corrected the violation(s) for which its
participation was terminated. ED may then approve, approve subject to limitations, or deny the
institution’s request.96
Other Related Issues
Several other requirements affect institutional eligibility for Title IV programs. Some of these
requirements include institution Program Participation Agreements, which include provisions
related to incentive compensation and campus crime reporting requirements; return of Title IV
funds; and distance education. The failure to meet the requirements for any of these may result in
the loss of Title IV eligibility or other sanctions.
Program Participation Agreements
HEA Section 487 specifies that each institution wanting to participate in Title IV student aid
programs is required to have a current Program Participation Agreement (PPA). A PPA is a
document in which the institution agrees to comply with the laws, regulations, and policies
applicable to the Title IV programs; it applies to an IHE’s branch campuses and locations that
meet Title IV requirements, as well as its main campus. It also lists all of the Title IV programs in
which the IHE is eligible to participate, the date on which the PPA expires, and the date on which
the IHE must reapply for participation.
By signing a PPA, an institution agrees that it will act as a fiduciary responsible for properly
administering Title IV funds, will not charge students a processing fee to determine a student’s
eligibility for such funds, and will establish and maintain administrative and fiscal procedures to
ensure the proper administration of Title IV programs. The PPA reiterates many provisions
required for institutional eligibility and ED certification discussed earlier in this report and
contains several additional notable requirements that may affect an IHE’s Title IV eligibility,
which are described below. Along with the general participation requirements with which an
institution must comply, a PPA may also contain institution-specific requirements.97
90/10 Rule
As part of their PPAs, domestic and foreign proprietary IHEs must agree to derive at least 10% of
their revenue from non-Title IV funds (i.e., no more than 90% of their revenue can come from
Title IV funds). This is known as the 90/10 rule. Examples of non-Title IV funds include private
education loans and some military and veterans’ benefits, such as benefits provided under the
Post-9/11 GI Bill program. If an IHE violates the 90/10 rule in one year, it does not immediately

95 Ibid.
96 Ibid.
97 34 C.F.R. §668.14.
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lose its Title IV eligibility. Rather, it is placed on a provisional eligibility status for two years. If
the IHE violates the 90/10 rule for two consecutive years, it loses its eligibility for at least two
years.98
Incentive Compensation
In a PPA, an IHE must agree it will not provide any commission or incentive compensation to
individuals based directly or indirectly on their success in enrolling students or the enrolled
students’ obtaining financial aid; however, some exceptions apply to this general rule. For
instance, IHEs can provide incentive compensation to individuals for the recruitment of foreign
students who are ineligible to receive Title IV funds or they can provide incentive compensation
through a profit-sharing plan.99
The ban on incentive compensation only applies to the activities of securing enrollment
(recruitment) and securing financial aid. Other activities are not banned, and ED draws a
distinction between activities that involve directly working with individual students and policy-
level determinations that affect recruitment and financial aid awards. For instance, an individual
who is responsible for contacting potential student applicants or assisting students in filling out an
enrollment application cannot receive incentive compensation, but an individual who conducts
marketing activities, such as the broad dissemination of informational brochures or the collection
of contact information, can receive incentive compensation.100
Clery Act Requirements
HEA Section 485(f), referred to as the Clery Act,101 requires domestic Title IV participating IHEs
(1) to report to ED campus crime statistics and (2) establish and disseminate campus safety and
security policies. Both the campus crime statistics and campus safety and security policies must
be compiled and disseminated to current and prospective students and employees in an IHE’s
annual security report (ASR).
Campus crime statistics required to be reported to ED and included in an ASR include data on the
occurrence on campus102 of a range of offenses specified in statute, including murder, burglary,
robbery, domestic violence, rape, and other forms of sexual violence.
In addition to campus crime statistics, ASRs must include statements of campus safety and
security policies regarding, for example,

98 20 U.S.C. §1094(a)(24) and (d)(2). Of the 1,764 IHEs reporting revenues for purposes of the 90/10 rule, between
July 1, 2016, and June 30, 2017, a total of 12 had Title IV revenues that were greater than 90%, and all remained Title
IV eligible because they satisfied the 90/10 rule in the previous year. Source: Letter from Diane Auer Jones, Principal
Deputy Under Secretary, Delegate the Duties of Under Secretary, U.S. Department of Education, to Virginia Foxx,
Chairwoman, Committee on Education and the Workforce, U.S. House of Representatives, December 10, 2018, and
Office of Federal Student Aid, Data Center, 2016-2017 Award Year: Report and Summary Chart.
99 34 C.F.R. §668.14(22).
100 For a detailed list of activities covered by the incentive compensation prohibition, see FSA Handbook, vol. 2, pp. 59-
62, Tables 1-3 and U.S. Department of Education, “Higher Education: Program Integrity Questions and Answers—
Incentive Compensation,” http://www2.ed.gov/policy/highered/reg/hearulemaking/2009/compensation.html.
101 For additional information, see Department of Education, The Handbook for Campus Safety and Security Report:
2016 Edition, June 2016.
102 For purposes of the Clery Act, “campus” includes campus areas, noncampus areas, and public property, if certain
criteria are met. HEA §485(f)(6)(A)(ii); 20 U.S.C. §1092(f)(6)(A)(ii).
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 procedures and facilities for students and others to report criminal actions or
other emergencies occurring on campus and an IHE’s response to such reports;
 security and access to campus facilities;
 campus law enforcement, including the law enforcement authority of campus
security personnel, and the working relationship between campus security
personnel and state and local law enforcement;
 programs designed to inform students and employees about the prevention of
crimes; and
 the possession, use, and sale of alcoholic beverages and illegal drugs;
enforcement of state underage drinking laws; enforcement of federal and state
drug laws; and any drug or alcohol abuse education programs required under the
HEA.103
An ASR must also include statements of policies specifically relating to incidence of domestic
and sexual violence. For example, an ASR must include statements of policy regarding
 programs to prevent such incidents;
 procedures a victim should follow if such an incident as occurred;
 procedures an IHE will follow once such an incident has been reported and
procedures for institutional disciplinary actions in cases of alleged incidents
(including a statement of the standard of evidence that will be used in any school
proceeding arising from the incident report); and
 possible sanctions and protective measures that an IHE may impose following a
final determination in an institutional proceeding regarding such incidences.
The Clery Act prohibits the Secretary of Education from requiring IHEs to adopt particular
policies, procedures, or practices; and prohibits retaliation against anyone exercising his or her
rights or responsibilities under the act.
Return of Title IV Funds
HEA Section 484B specifies that when a Title IV aid recipient withdraws from an IHE before the
end of the payment or enrollment period for which funds were disbursed, Title IV funds must be
returned to ED according to a statutorily prescribed schedule. In general, when a student
withdraws from an IHE, an IHE first determines the portion of Title IV aid considered to be
“earned” by the student while enrolled and the portion considered to be “unearned.” Unearned aid
must be returned to ED. Up to the 60% point of a payment or enrollment period, unearned funds
must be returned on a pro rata schedule. After the 60% point of a payment or enrollment period,
the total amount of funds awarded is considered to have been earned by the student and no funds
are required to be returned. Whether an IHE and/or the student is required to return the funds to
ED depends on a variety of circumstances, including whether Title IV funds have been applied
directly to a student’s institutional charges.104 Unearned funds must be returned to their respective
programs in a specified order, with loans being returned first, followed by Pell Grants, and then

103 HEA Section 120 requires that IHEs adopt and implement a program to prevent the use of illicit drugs and the abuse
of alcohol by students and employees.
104 Generally, institutional charges are defined as charges for tuition and fees, institution-provided or contracted room
and board, and other educational expenses that are paid directly to the institution (e.g., charges for supplies, equipment,
and materials).
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other Title IV aid.105 In some instances, a student may have earned more aid than has been
disbursed, and the difference is disbursed to the student after the student withdraws.106
Distance Education and Correspondence Education
Generally, distance education and correspondence education refers to educational instruction with
a separation in time, place, or both between the student and instructor. It is a way in which
institutions can increase student access to postsecondary education by offering alternatives to
traditional on-campus instruction. Recently, due to the greater availability of new technologies,
there has been substantial growth in the amount and types of courses institutions offer.
Section 103(7)(A) and (B) of the HEA and the accompanying regulations define distance
education as instruction that uses “(1) the internet; (2) one-way and two-way transmissions
through open broadcast, closed circuit, cable, microwave, broadband lines, fiber optics, satellite,
or wireless communications devices; [or] ... (3) audio conferencing” to deliver instruction to
students separated from the instructor. A course taught through a video cassette, DVD, or CD-
ROM is considered a distance education course if one of the above-mentioned technologies is
used to support student-instructor interaction. Regardless of the technology used, “regular and
substantive interaction between the students and the instructor” must be ensured.107
Correspondence courses are expressly excluded from the definition of distance education.108 A
correspondence course is one for which an institution provides instructional materials and exams
for students who do not physically attend classes at the IHE, but does not include those courses
that are delivered with “regular and substantive interaction between the students and the
instructor” via one of the above-described technologies.109

105 Under certain circumstances, portions of Federal Supplemental Educational Opportunity Grants are excluded from
the return of Title IV calculations. Federal Work-Study funds are not included in the calculation. FSA Handbook, vol.
5, p. 27.
106 For additional information on the return of Title IV funds, including examples of how to calculate the amount of
Title IV funds to be returned, see FSA Handbook, vol. 5.
107 HEA §103(7); 20 U.S.C. §1003(7); 34 C.F.R. §600.2.
108 The original HEA definition of distance education did not reference correspondence courses and courses offered via
telecommunications; rather, such courses were considered subsets of distance education. Before July 1, 2010, Section
484(l)(4) of the HEA defined a telecommunications course as one offered principally through television, audio, or
computer transmission, and a correspondence course was defined as a home-study course in which an IHE provided
students who were separated from their instructor with instructional materials, including examinations, either by mail
or electronic transmission. For correspondence courses and telecommunications courses, students completed the
instructional materials and corresponding examinations and returned the examinations to the IHE for grading.
Interaction between the instructor and the student was not regular and substantive, and the correspondence course was
predominantly offered by an IHE via print-based media. For the purposes of Title IV aid eligibility,
telecommunications programs were treated the same as traditional on-campus programs, while correspondence courses
were subject to stricter requirements. With the substantial growth in the use of technology for educational instruction,
the separate definition of telecommunications courses became unnecessary. Therefore in 2010, the Higher Education
Opportunity Act (P.L. 110-315) eliminated the separate definition for telecommunications and incorporated the various
technologies referenced in that definition into the definition of distance education. Department of Education, “Federal
Student Aid Programs,” 71 Federal Register 45667, August 9, 2006.
109 34 C.F.R. §600.2. In certain instances, elements of a correspondence course may be combined with non-
correspondence course elements. These multi-component courses may or may not be considered correspondence
courses for the purposes of Title IV eligibility. For specific examples of such courses, see FSA Handbook, vol. 2, p. 37.
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50% Rule for Correspondence Courses
In 1992, partially in response to cases of some correspondence institutions’ fraudulent and
abusive practices used to attract unqualified students to enroll in programs of poor or questionable
quality, Congress incorporated provisions referred to as the “50% rules” into the HEA. The rules
affected both the eligibility of institutions offering correspondence courses and their students’
eligibility for Title IV aid. In general, under the rules, an institution is ineligible for Title IV aid if
more than 50% of its courses are offered by correspondence,110 or if 50% or more of its students
are enrolled in correspondence courses.111
State Authorization for Correspondence and Distance Education Courses
As discussed earlier in this report, rules promulgated in 2016 would have required an IHE
offering postsecondary distance or correspondence education in a state in which it is not
physically located to meet any state authorization requirements within that state. Under the
regulations, an IHE could meet this requirement if it participates in a state authorization
reciprocity agreement. These regulations were scheduled to become effective July 1, 2018.
However, on July 3, 2018 (and effective June 29, 2018), the Secretary of Education issued a final
rule delaying the implementation of these requirements until July 1, 2020.112
Foreign IHE Eligibility
The distinction between distance education and traditional instruction is also important for the
purposes of Title IV program eligibility. Distance education programs provided by domestic IHEs
are eligible for Title IV participation if they have been accredited by an accrediting agency
recognized by ED to evaluate distance education programs.113 A program offered by a foreign
IHE, in whole or in part, through distance education (including telecommunications) or
correspondence is ineligible for Title IV participation.114

110 HEA § 102(a)(3)(A) and (B); 20 U.S.C. §1002(a)(3)(A) and (B). This rule does not apply to “a public nonprofit
technical institution or career and technical education school used exclusively or principally for the provision of career
and technical education to individuals who have completed or left secondary school and who are available for study in
preparation for entering the labor market.” 20 U.S.C. §2302(3)(C).
111 34 C.F.R. 600.7(a)(1)(i) and (ii). This second limitation may be waived if an IHE offers a two-year associate’s
degree or four-year bachelor’s degree program and it demonstrates to ED that in the award year, students who were
enrolled in correspondence courses received 5% or less of the total FSA funds received by all of the IHE’s students.
ED, FSA Handbook, vol. 2, p. 103.
112 Department of Education, “Program Integrity and Improvement,” 83 Federal Register 31296, July 3, 2018.
113 FSA Handbook, vol. 2, 36.
114 34 C.F.R. §600.51(d).
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Author Information

Alexandra Hegji

Analyst in Social Policy

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