Institutional Eligibility for Participation in Title February 8, 2023
IV Student Financial Aid Programs
Alexandra Hegji
Title IV of the Higher Education Act (HEA) authorizes programs that provide financial
Analyst in Social Policy
assistance to students to aid them in obtaining a postsecondary education at qualifying

institutions of higher education (IHEs). Title IV financial assistance is the largest source
of federal aid to postsecondary students, and the Title IV eligibility and participation

requirements for institutions establish a framework of federal oversight for a significant
portion of the postsecondary schools. Thus, the framework serves as a vehicle to which a number of requirements
affecting broad aspects of postsecondary education for all students have been attached. Qualifying 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).
An IHE also must satisfy the program integrity triad: state authorization, accreditation or preaccreditation, and
certification by the Department of Education (ED). These requirements are intended to provide a balance between
consumer protection, quality assurance, and oversight and compliance among postsecondary education providers
participating in Title IV student aid programs.
Under state authorization, an IHE must be authorized to operate a postsecondary educational program in the state
in which it is physically located. Special considerations apply for IHEs that offer distance or correspondence
education.
With accreditation, generally, an IHE must be accredited (or preaccredited if public or private nonprofit) by an
ED-recognized accrediting agency that meets HEA-specified standards. Accrediting agencies are
nongovernmental entities that develop evaluation criteria for institutional quality and assess whether institutions
meet those standards. Such standards relate to a variety of factors, including student achievement in relation to an
institution’s mission, fiscal and administrative capacity, and inputs such as faculty and facilities.
For certification, ED verifies an institution’s state authorization and accreditation status and evaluates an
institution’s financial responsibility and administrative capability to administer the Title IV student aid programs.
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. ED determines an IHE’s administrative capability by evaluating an IHE’s processes, procedures, and
personnel used in administering Title IV funds, and indicators of student success.
In addition, IHEs participating in the Title IV programs must have a current program participation agreement with
ED. In the agreement, the IHE agrees to comply with the laws, regulations, and policies applicable to the Title IV
programs. The agreement contains an array of additional Title IV requirements, such as provisions relating to
institutional recruiting practices and student policies and procedures.
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 tuition and fees revenues from
non-federal funds (also known as the 90/10 rule).

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Institutional Eligibility for Participation in Title IV Student Financial Aid Programs

Introduction
Title IV of the Higher Education Act (HEA; P.L. 89-329), as amended, authorizes programs that
provide financial assistance to students to pursue postsecondary education at eligible institutions
of higher education (IHEs). In academic year (AY) 2020-2021 (July 1, 2020-June 30, 2021),
6,063 domestic institutions had written agreements with the Department of Education (ED) that
allow them to participate in any of the Title IV federal student financial assistance programs.1 Of
these IHEs, approximately 32% were public institutions, 30% were private nonprofit institutions,
and 39% were proprietary (or private, for-profit) institutions.2 It is estimated that $115.6 billion
was made available to students through Title IV federal student aid in FY2020.3 Title IV financial
assistance is the largest source of federal aid to postsecondary students, and the Title IV eligibility
and participation requirements for institutions establish a framework of federal oversight for a
significant portion of the postsecondary schools. Thus, the framework serves as a vehicle to
which a number of requirements affecting broad aspects of postsecondary education for all
students have been attached as conditions for receiving Title IV student financial assistance.
To receive Title IV assistance, students must attend an institution that participates in the Title IV
programs. IHEs must meet a variety of requirements to be eligible to participate in the Title IV
programs (eligibility requirements) and additional requirements to participate in those programs
(participation requirements).4 Both eligibility and participation requirements cover a range of
institutional practices and operations but generally are intended to ensure that students are using
Title IV funds to attend schools of sufficient quality and to ensure that schools are responsibly
administering Title IV aid.
This report provides a general overview of HEA Title IV institutional eligibility requirements, as
well as some institutional Title IV student aid program participation requirements. 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, including the 90/10 rule and campus
safety policies and crime reporting required under the Clery Act, and distance education.

1 These 6,063 institutions were located in the United States and other U.S. jurisdictions. Foreign institutions are also
eligible to participate in the Title IV programs. Department of Education, National Center for Education Statistics,
IPEDS Data Explorer, Table 1, “Number and percentage distribution of Title IV institutions, by control of institution,
level of institution, and region; United States and other U.S. jurisdictions, academic year 2020-2021,”
https://nces.ed.gov/ipeds/search?query=Tables+Library%3Ddate_desc&query2=&resultType=all&page=1&sortBy=
date_desc&overlayTableId=28457.
2 Percentages do not add to 100% due to rounding.
3 This includes federal loans, work-study, and grants. See U.S. Department of Education, Federal Student Aid, Annual
Report 2018, Washington, DC, November 19, 2021, p. 8, https://www2.ed.gov/about/reports/annual/2021report/fsa-
report.pdf.
4 Title IV eligible 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
previously borrowed. Department of Education, 2022-2023 Federal Student Aid Handbook, vol. 2, p. 3,
https://fsapartners.ed.gov/sites/default/files/2022-2023/2022-2023_Federal_Student_Aid_Handbook/_knowledge-
center_fsa-handbook_2022-2023_vol2.pdf (hereinafter, FSA Handbook).
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General 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 student enrollment, programs offered by
the institutions, and the length of academic programs. This section discusses the definition of an
IHE for the purposes of Title IV participation and program eligibility requirements.
Eligible Institutions
The HEA contains two definitions of institution of higher education. Section 101 provides a
general definition of IHE that applies to institutional eligibility for participation in HEA programs
other than the Title IV programs.5 The Section 102 definition of IHE is used only to determine
institutional eligibility to participate in HEA Title IV programs.
Section 101 Institutions of Higher Education
Section 101 of the HEA provides a general definition of IHE. This definition applies to
institutional eligibility to participate in non-Title IV HEA programs. Section 101 IHEs can be
public or other nonprofit educational institutions (often referred to as private nonprofit
institutions). Section 101 specifies criteria both public and other nonprofit educational institutions
must meet to be considered IHEs.
Public Institutions
Neither the HEA nor regulations specifically define a public institution. 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.6
Private Nonprofit Institutions
The HEA defines the term nonprofit. Under Section 103 of the HEA, nonprofit as applied to an
institution means an “institution owned and operated by one or more nonprofit corporations or
associations, no part of the net earnings of which inures, or may lawfully inure, to the benefit of
any private shareholder or individual.”
Current regulations expand on this by defining a nonprofit institution as one that (1) meets the
above criterion, (2) is determined by the Internal Revenue Service (IRS) to be a tax-exempt
organization under Section 501(c)(3) of the Internal Revenue Code (IRC), and (3) is legally
authorized to operate as a nonprofit organization by each state in which it is physically located.7

5 The Section 101 definition is commonly used as a reference in many other non-HEA programs.
6 U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary Education Data
System, 2022-23 Glossary, “Public institution.”
7 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 inures to the benefit of an individual or private shareholder and if it is organized and operated exclusively for,
among other potential items, educational purposes.
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Effective July 1, 2023, an updated regulatory definition of nonprofit institution8 is to apply.9 The
new definition specifies that an institution is nonprofit if ED determines‒based on the entirety of
the relationship between the institution, entities in its ownership structure, and other parties–that
no part of its net earnings benefit any private entity or natural person. It then lists several
examples of relationships that might disqualify an institution as nonprofit.10 The new definition
would explicitly apply to both public and private institutions. The updated regulations then
specify that a private institution is considered nonprofit only if it (1) meets the above criterion
relating to inurement of net earnings, (2) is owned and operated by one or more nonprofit
corporations or associations, (3) is legally authorized to operate as a nonprofit organization by
each state in which it is physically located, and (4) is determined by the IRS to be a tax-exempt
organization under IRC Section 501(c)(3).
Section 101 Institution of Higher Education
To be considered a Section 101 IHE, a public or private nonprofit educational institution 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 educational program within the
state in which it is physically located;
 offer an associate’s, bachelor’s, graduate, or professional degree;11 provide a
program of at least two years that is acceptable for full credit toward a bachelor’s
degree; or provide a training program of at least a one-year that prepares students
for gainful employment in a recognized occupation12; and
 be accredited or preaccredited by an accrediting agency recognized by ED to
grant accreditation or preaccreditation status.13
Section 102 Institutions of Higher Education
Section 102 of the HEA defines IHE only for the purposes of institutional eligibility to participate
in the Title IV programs. 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.14 Section 102 specifies that proprietary and postsecondary vocational

8 ED made these changes “to address risks that some changes in ownership of postsecondary institutions present to
students and taxpayers and to address the growing complexity of those transactions.” Department of Education, “Pell
Grants for Prison Education Programs; Determining the Amount of Federal Education Assistance Funds Received by
Institutions of Higher Education (90/10); Change in Ownership and Change in Control,” 87 Federal Register 65427
October 28, 2022 (hereinafter “ED, 2022 Regulations”).
9 ED, 2022 Regulations, pp. 65485-65486.
10 For example, the new regulations specify that a nonprofit institution is generally not an institution that “is an obligor
... on debt owed to a former owner of the institution or a natural person or entity related to or affiliated with the former
owner of the institution.” ED, 2022 Regulations, pp. 65485-65486.
11 34 C.F.R. §600.4(a)(4).
12 See the “Programs Required to Prepare Students for Gainful Employment” section.
13 HEA §101; 20 U.S.C. §1001.
14 HEA §102(a)(2); 20 U.S.C. §1002(a)(1). FSA Handbook, vol. 2, pp. 3-5.
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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
HEA Section 102 specifies that a proprietary IHE is an institution that is neither a public nor a
private nonprofit institution.15 In addition to the basic Title IV eligibility criteria that all IHEs
must meet (e.g., types of students admitted as regular students, state authorization, accreditation
by an ED-recognized accrediting agency16), 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”17 or (2)
provide a program leading to a baccalaureate degree in liberal arts that has been continuously
accredited by an ED-recognized accrediting agency since October 1, 2007,18 and has provided the
program continuously since January 1, 2009. Additionally, a proprietary IHE 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.19
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,”20 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.21 In addition, a postsecondary vocational institution must meet the basic
Title IV eligibility criteria that all IHEs must meet (e.g., types of students admitted as regular
students, state authorization, accreditation or preaccreditation by an ED-recognized accrediting
agency).
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. In general, a foreign institution is eligible to participate in the Direct

15 HEA §102(b)(1)(C); 20 U.S.C. §1002(b)(1)(C).
16 Unlike public, private nonprofit, and postsecondary vocational institutions, proprietary institutions may not be
preaccredited for Title IV eligibility purposes.
17 HEA §102(b)(1)(A); 20 U.S.C. §1002(b)(1)(A).
18 The accrediting agency must have been one that previously was defined as a regional accrediting agency on October
1, 2007. 34 C.F.R. §668.8(d)(4)(i).
19 HEA §102(b)(1)(E) and 34 C.F.R. § 600.5(b). See also FSA Handbook, vol. 2, p. 12.
20 HEA §102(c); 20 U.S.C. §1002(c).
21 HEA §102(c)(1)(C) and 34 C.F.R. § 600.6(b). See also FSA Handbook, vol. 2, p. 12.
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Loan program if it is comparable to an IHE (as defined in HEA Section 101) within the United
States, is a public or private nonprofit institution,22 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.23 Hereinafter, this report generally will not discuss additional requirements for
foreign institutions to participate in Title IV student aid programs, as they are beyond the scope of
this report.
Section 102 Institution of Higher Education
The definitions of proprietary institution and postsecondary vocational institution contained in
Section 102 have several overlapping components with the Section 101 definition of IHE.24 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
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, as applicable,25 by an accrediting agency recognized by ED to grant such
statuses.26
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 regular enrolled students are
incarcerated,27 or if more than 50% of its regular 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, an institution generally is ineligible if more than 50% of the courses
offered are correspondence courses or if 50% or more of its regular students are enrolled in
correspondence courses. These 50% rules are discussed in more detail in the distance education
section of this report.28 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

22 Effective July 1, 2023, a foreign institution is nonprofit if, in addition to meeting criteria relating to inurement of net
earnings, it is an institution that is owned and operated only by one or more nonprofit corporations or 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. ED, 2022 Regulations, pp. 65485-65486.
23 HEA §102(a)(2); 20 U.S.C. §1002(a)(2). 34 C.F.R. §600.54.
24 Eligibility requirements differ somewhat for foreign institutions; a complete description of these differences is
beyond the scope of this report.
25 Proprietary institutions must be accredited by an ED-recognized accrediting agency; for Title IV purposes, they may
not be preaccredited.
26 HEA §102(b) and (c); 20 U.S.C. §1002(b) and (c).
27 HEA Section 102(a)(3)(C) specifies that ED may waive this requirement for nonprofit institutions that provide a
two- or four-year program of instruction for which the institution awards a bachelor’s or associate’s degree or a
postsecondary diploma. Effective July 1, 2023, regulations will update the waivers available for this requirement to
account for prison education programs (discussed later in this report). ED, 2022 Regulations, p. 65486.
28 HEA §102(a)(3); 20 U.S.C. §1002(a)(3).
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executive officer) has been convicted of or pled no contest or guilty to a crime involving the use
of Title IV funds.29
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 all types of Section 102
institutions, as well as criteria that only apply to specific types of Section 102 IHEs (e.g.,
proprietary IHEs).
Hereinafter, unless otherwise noted, the term institution of higher 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. 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.30 To be Title IV eligible, a program must lead to a
degree (e.g., an associate’s, bachelor’s, or graduate 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 enrolled is Title IV eligible, ensure that the program is included in its accreditation
notice, and ensure that it is authorized by the appropriate state to offer the program.31
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 institution.32 Finally,
postsecondary educational programs for confined or incarcerated individuals (known as prison
education programs) must meet additional criteria to qualify to participate in the Pell Grant
program.
Public and Private Nonprofit IHEs
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 years33 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;

29 HEA §102(a)(4); 20 U.S.C. §1002(a)(4).
30 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. 18.
31 FSA Handbook, vol. 2, p. 18.
32 In general, many of the eligible program requirements discussed herein may also apply to foreign IHEs.
33 In general, an academic year must be at least 30 weeks of instructional time for a program measured in credit hours
or 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). Regulations define the terms credit and clock hours. See 34 C.F.R.
§600.2.
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(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.34
Proprietary IHEs and Postsecondary Vocational Institutions
In general, eligible programs at proprietary IHEs 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).35 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 weeks36; 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;
 short-term programs that provide between 300 and 600 clock hours of instruction
over a minimum of 10 weeks37; 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 proprietary IHEs that lead to a bachelor’s degree in liberal
arts; the school must have been continuously accredited by an ED-recognized
accrediting agency38 since at least October 1, 2007, and must have provided the
program continuously since January 1, 2009.39
Programs Required to Prepare Students for Gainful Employment
Most nondegree programs offered by public and private nonprofit IHEs40 and almost all programs
offered by proprietary and postsecondary vocational institutions, regardless of whether they lead

34 These programs must be offered in credit or clock hours. 34 C.F.R. §668.8(c); FSA Handbook, vol. 2, p. 19.
35 As with public and private nonprofit IHEs, an academic year for programs at proprietary IHEs and postsecondary
vocational institutions 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.
36 Regulations define the terms clock hours, semester hours, trimester hours, and quarter hours. See 34 C.F.R. §§600.2
and 668.8
37 Short-term programs are only eligible to participate in the Direct Loan Program. 34 C.F.R. §668.8(d)(3).
38 The accrediting agency must have been one that previously was defined as a regional accrediting agency on October
1, 2007. 34 C.F.R. §668.8(d)(4)(i).
39 34 C.F.R. §668.8(d); FSA Handbook, vol. 2, pp. 19-20.
40 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)
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to a degree, must prepare students for “gainful employment in a recognized occupation.”41
Currently, neither the HEA nor regulations specify criteria to demonstrate that a program prepares
students for gainful employment in a recognized occupation, but previous regulations have done
so.
In early 2022, ED conducted negotiated rulemaking42 to develop new gainful employment
regulations.43 Negotiators did not reach consensus on proposed gainful employment rules; thus,
ED may now publish proposed gainful employment rules on its own, without conducting further
negotiations with a negotiated rulemaking committee. ED has stated it intends to propose new
gainful employment regulations by April 2023.44
History of Gainful Employment Regulations
Prior to 2010, neither Congress nor ED had established specific parameters regarding when certain programs
were considered to prepare students for “gainful employment in a recognized occupation,” as the term is used in
the HEA. In response to concerns about the quality of programs intended to prepare students for gainful
employment (gainful employment programs; GE programs) and the level of student debt assumed by individuals
who attend these programs, ED issued a series of regulations in 2010 and 2011relating to GE programs. Among
other provisions, the regulations established student loan repayment rate and student loan debt-to-earnings
performance metrics for GE programs to meet for continued participation in the Title IV aid programs45 and
required the disclosure of GE program performance information (e.g., program costs, placement rates, and median
student loan debt for program completers) to prospective students.46
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; although, it upheld the disclosure requirements.47 Rather than appealing the decision, ED promulgated
new gainful employment regulations in 2014.
The 2014 gainful employment regulations48 retained and updated the previous disclosure requirements and once
again required that GE programs meet performance standards for Title IV participation. While some elements of
the 2014 performance standards were similar to those of the 2010/2011 standards, others differed. Perhaps most

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. 21.
41 HEA §§101(b)(1), 102(b)(1)(A)(i) and 102(c)(1)(A); 20 U.S.C. §§1001(b)(1), 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 that
lead to a bachelor’s degree in liberal arts, if the school has been continuously accredited by an ED-recognized
accrediting agency (that was defined as a regional accrediting agency on October 1, 2007) since at least October 1,
2007, and has 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. 21.
42 For information on negotiated rulemaking, see CRS Report R46756, Negotiated Rulemaking: In Brief.
43 Department of Education, “Negotiated Rulemaking for Higher Education 2021-22: Institutional and Programmatic
Eligibility Committee,” https://www2.ed.gov/policy/highered/reg/hearulemaking/2021/index.html?src=rn#ipec,
accessed December 30, 2022.
44 Department of Education, “Unified Agenda of Federal Regulatory and Deregulatory Actions,” 87 Federal Register
48273, August 8, 2022.
45 Department of Education, “Program Integrity: Gainful Employment—Debt Measures,” 76 Federal Register 34385,
June 13, 2011.
46 Department of Education, “Program Integrity Issues,” 75 Federal Register 66831, October 29, 2010. See also
Department of Education, “Program Integrity: Gainful Employment—New Programs,” 75 Federal Register 66665,
October 29, 2010.
47 Association of Private Colleges & Universities v. Duncan, 2012 U.S. Dist. LEXIS 90434 (D.C. 2012).
48 Department of Education, “Program Integrity: Gainful Employment,” 79 Federal Register 64889, October 31, 2014.
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notably, while both the 2014 and 2010/2011 standards contained debt-to-earnings performance measures, the
2014 standards did not contain a student loan repayment rate performance measure.
On July 1, 2019, before the 2014 gainful employment regulations could be ful y implemented, ED rescinded the
regulations in their entirety. In doing so, ED stated that the formula to determine the debt-to-earnings measures
was, among other things, “fundamentally flawed” and “wrongful y target[ed] some academic programs and
institutions while ignoring other programs that may result in lesser outcomes and higher student debt.” 49 Thus,
since July 1, 2020, there have been no regulations delineating when ED considers a program to prepare students
for gainful employment in a recognized occupation.50
Prison Education Programs
In 2020, the FAFSA Simplification Act (Title VII, Division FF of P.L. 116-260) amended the
HEA to newly authorize individuals in correctional institutions to receive Pell Grants51 for
enrollment in prison education programs (PEPs). Thus, effective July 1, 2023, qualifying
confined or incarcerated individuals may receive Pell Grants while enrolled in PEPs offered by
qualifying IHEs, so long as the programs meet specified requirements.52
For purposes of Pell Grant program eligibility, public, nonprofit, and postsecondary vocational
institutions may offer PEPs. Proprietary institutions do not qualify. Along with meeting general
programmatic eligibility criteria (e.g., leading to a degree or preparing students for gainful
employment in a recognized occupation), PEPs must
 be offered by an institution that is approved to operate in a correctional facility
by the relevant entity responsible for overseeing the correctional facility
(oversight entity);
 have been determined by the relevant oversight entity to be operating “in the best
interest of students”53;
 offer transferability of credits to at least one IHE in the state in which the
correctional facility is located;
 satisfy any applicable educational requirements for professional licensure or
certification in the state in which the correctional facility is located;

49 Department of Education, “Program Integrity: Gainful Employment,” 84 Federal Register 31392, July 1, 2019.
50 The 2014 gainful employment regulations became effective July 1, 2015, but leading up to the full rescission of the
gainful employment regulations, various aspects of the 2014 gainful employment regulations were not fully
implemented or were delayed in implementation for a variety of reasons. For example, ED delayed until July 1, 2019,
some portions of the rule relating to certain disclosures requirements. (Department of Education, “Program Integrity:
Gainful Employment,” 83 Federal Register 28177, June 18, 2018.) Additionally, to enable ED to calculate whether a
program met the minimum performance standards, the 2014 regulations specified that ED was to obtain data from the
Social Security Administration (SSA). However, a memorandum of understanding relating to data sharing between ED
and SSA lapsed in 2018. (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/.)
51 Prior to 1994, certain incarcerated individuals were eligible to receive Pell Grants. The Violent Crime Control and
Law Enforcement Act of 1994 (P.L. 103-322) made them ineligible to receive Pell Grants. For additional information
on this topic, see CRS Report R45737, Prisoners’ Eligibility for Pell Grants: Issues for Congress.
52 ED, 2022 Regulations, pp. 65495-65498.
53 Regulations specify a variety of criteria for determining whether a PEP is operating in the best interest of students.
For example, the relevant oversight entity must assess, among others, whether aspects of a PEP (such as instructor
experience, transferability of credits, and academic and career advising services) are substantially similar to other
programs offered by the IHE, accounting for the geographic and other constraints of the PEP. The oversight entity may
also assess, for example, student recidivism rates, completion rates, and job placement rates.
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 not offer education that is designed to lead to licensure or employment for a
specific job in the state, if such job typically involves prohibitions on the
licensure or employment of formerly confined or incarcerated individuals in the
state where the correctional facility is located54; and
 meet the accreditation requirements of the IHE’s accrediting agency.
Program Integrity Triad
Title IV of the HEA establishes the program integrity triad, which comprises three requirements
to ensure program integrity in postsecondary education. The three requirements are state
authorization, accreditation by an accrediting agency recognized by ED, and certification by ED.
This triad is intended to provide a balance in the Title IV eligibility and participation
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
For Title IV purposes, consumer protection is accomplished by states providing the legal
authority for an institution to operate a postsecondary educational program in the state in which it
is physically located.55
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 physically located within the state, including enforcing
applicable state law.56
A state may authorize an IHE 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 comply with any applicable state
approval or licensure requirements.57
IHEs that offer postsecondary distance or correspondence education (discussed later in this

54 In the case of a federal correctional facility, this and the previous two requirements relate to the state where most of
the confined or incarcerated individuals in the facility reside upon release, rather than the state in which the facility is
located.
55 34 C.F.R. §600.9.
56 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
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, p. 5.
57 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 state authorized an IHE 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.
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report) to students located in a state in which the IHE is not physically located must meet any
requirements for the state in which the student is located.58 An IHE may meet this requirement if
it participates in a state authorization reciprocity agreement.59
The state agency responsible for the authorization of postsecondary institutions must also perform
three additional functions:
 upon request, provide the Secretary of Education (the Secretary) with
information about the process it uses to authorize institutions to operate within
the state;
 notify the Secretary if it has evidence to believe that an institution within the state
has committed fraud in the administration of Title IV programs; and
 notify the Secretary if it revokes an institution’s authorization to operate.60
Accreditation
The second component of the program integrity triad is accreditation by an ED-recognized
accrediting agency or association.61 In higher education, accreditation is intended to help ensure
an acceptable level of quality of education and training within IHEs and is a form of “quality
review ... to scrutinize colleges, universities and programs for quality assurance and quality
improvement.”62 Rather than creating a centralized authority to assess quality, the federal
government has chosen to rely, in part, on the existing expertise of accrediting agencies, which
are nongovernmental entities that “develop evaluation criteria and conduct peer evaluations to
assess whether or not those criteria are met” by institutions within parameters provided by the
federal government.63 For Title IV purposes, an institution must be accredited or, if applicable,
preaccredited by an ED-recognized accrediting agency. Each accrediting agency must meet HEA-
specified standards to be recognized by ED.
Institutional vs. Programmatic Accreditation
Institutional accrediting agencies grant accreditation status to an entire institution. For Title IV purposes, an
institution generally must be accredited or, if applicable, preaccredited by an ED-recognized institutional
accrediting agency. Institutional accrediting agencies comprise accrediting agencies that stakeholders and
practitioners refer to as regional and national accreditors. Regional accreditors generally concentrate on specific
regions of the country; although, they are not required to do so. National accreditors operate across the United
States and generally review either religiously affiliated or doctrinally based institutions, or proprietary institutions
and career-based single purpose institutions.

58 34 C.F.R. §600.9(c).
59 A state authorization reciprocity agreement is “an agreement between two or more states that authorizes an
institution located and legally authorized in a State covered by the agreement to provide postsecondary education
through distance education or correspondence courses to students located in other States covered by the agreement and
cannot prohibit any member State of the agreement from enforcing its own general-purpose State laws and regulations
outside of the State authorization of distance education.” 34 C.F.R. §600.2.
60 HEA §495; 20 U.S.C. §1099a.
61 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.
62 Judith S. Eaton, An Overview of U.S. Accreditation, Council for Higher Education Accreditation (CHEA),
Washington, DC, November 2015, p. 1, https://www.chea.org/overview-us-accreditation (hereinafter “CHEA, An
Overview of U.S. Accreditation”).
63 Department of Education, “Accreditation in the United States: Overview of Accreditation in the United States,”
https://www2.ed.gov/admins/finaid/accred/accreditation.html#Overview, accessed January 3, 2023.
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Programmatic accrediting agencies grant accreditation status to individual educational programs and single-purpose
institutions (e.g., freestanding law schools).
A program is not required to be accredited by a programmatic accrediting agency for Title IV purposes64; rather,
it only needs to be covered by the IHE’s institutional accrediting agency.65 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.
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.66 Alternatively, a public or private nonprofit
IHE may be preaccredited by an agency recognized by ED to grant such preaccreditation,67 and a
public postsecondary vocational institution may be accredited by a state agency68 that ED
determines is a reliable authority. Proprietary institutions must be accredited by an ED-recognized
accrediting agency.69
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.70
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 institution meets the accrediting organization’s standards. Based
on the results of the self-assessment and site visit, the accrediting organization determines
whether to award, renew, deny, or provisionally award accreditation to an institution.71
An institution that has had its accreditation withdrawn, revoked, or terminated for cause is
ineligible 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, however, can continue the eligibility of a religious

64 In limited circumstances, programmatic accreditation from an ED-recognized programmatic accrediting agency may
be used by an institution to establish Title IV eligibility. This generally applies to single-purpose institutions. See
Department of Education, “Accreditation in the United States: Programmatic Accrediting Agencies,”
https://www2.ed.gov/admins/finaid/accred/accreditation_pg4.html#National_Institutional, accessed January 3, 2023.
65 In many instances, particular programs (e.g., medicine) are accredited by a programmatic accrediting agency, while
the institution at which the program is offered is accredited by an institutional accrediting agency.
66 Such an agency is known as the institution’s primary accrediting agency. Some educational programs offered by the
institution are not covered by an institution’s accreditation. Such programs generally are not offered for credit. A
noncredit course provides no credit applicable toward a degree, diploma, certificate, or other recognized postsecondary
credential.
67 HEA §101(a)(5); 20 U.S.C. §1001(a)(5).
68 This requirement is distinct from the state authorization requirement. 34 C.F.R. §600.6(c)(5)(ii).
69 HEA §102(b)(1)(D); 20 U.S.C. §1002(b)(1)(D). See also FSA Handbook, vol. 2, pp. 8-9.
70 CHEA, An Overview of U.S. Accreditation, p. 4.
71 CHEA, An Overview of U.S. Accreditation, 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.
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institution whose loss of accreditation, whether voluntary or not, is related to its religious mission
and not to the HEA accreditation standards.72 If an institution’s accrediting agency loses its
recognition from ED, the institution has up to 18 months to obtain accreditation from another ED-
recognized agency.73
Federal Recognition of Accrediting Agencies
Although the federal government does not set specific standards for accrediting agencies,
generally, it does require that institutions be accredited or, if applicable, preaccredited by a
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.74
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.75
 The agency must be a state agency approved by the Secretary as an accrediting
agency on or before October 1, 1991.
 Either the agency must 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.76 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

72 HEA §496(j); 20 U.S.C. §1099b(j).
73 HEA §498(h)(2); 20 U.S.C. §1099c(h)(2).
74 HEA §496; 20 U.S.C. §1099b; 34 C.F.R. §602.1.
75 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.
76 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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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.77
Accrediting agencies must also meet requirements that focus on the review of an institution’s
operating procedures, including reviewing newly established branch campuses78 and requiring
IHEs to submit a teach-out plan in certain circumstances.79 They must also perform regular on-
site visits that focus on the quality of education and program effectiveness.80
Certification by ED
The final component of the program integrity triad is 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. ED can certify an institution to participate in Title IV
aid programs for up to six years.81
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 its financial obligations.82 IHEs provide ED with the information necessary to
evaluate their financial responsibility through annual audited financial statements.83 A public IHE
is financially responsible if its debts and liabilities are backed by the full faith and credit of the
state or another government entity.84 A proprietary or private nonprofit IHE is financially
responsible if it meets specific financial ratios (e.g., equity ratio) established by ED,85 has
sufficient cash reserves to make any required return of unearned Title IV funds86, and is able to

77 HEA §496(a)(4)-(5); 20 U.S.C. §1099b(a)(4)-(5).
78 HEA §496(c)(4) & (5); 20 U.S.C. §1099b(c)(4) & (5).
79 A teach-out plan is a written plan developed by an institution that provides for the equitable treatment of its own
students if it, or one of its locations that provides 100% of at least one program, ceases to operate before all students
have completed their program of study. HEA §487(f)(2); 20 U.S.C. §1094(f)(2). Instances in which an IHE is required
to submit a teach-out plan include, but are not limited to the following: (1) ED notifies the accrediting agency that ED
has initiated a Title IV emergency, limitation, suspension, or termination action against the institution; (2) the
accrediting agency acts to withdraw, terminate, or suspend the accreditation of the institution; and (3) the institution
notifies the accrediting agency that the institution intends to cease operations. HEA §496(c)(3); 20 U.S.C.
§1099b(c)(3).
80 HEA §496(c)(1); 20 U.S.C. §1099b(c)(1).
81 HEA §498(g)(1); 20 U.S.C. §1099c(g)(1).
82 HEA §498(c); 20 U.S.C. §1099c(c); 34 C.F.R. §668, Subpart L.
83 FSA Handbook, vol. 2, p. 69.
84 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. 79.
85 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.
86 See the “Return of Title IV Funds” section.
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meet all of its financial obligations and provide the administrative resources necessary to comply
with Title IV requirements.87
Even if an institution meets the above requirements, ED does not consider it financially
responsible if the IHE violates past performance requirements (e.g., failing to resolve
satisfactorily any compliance issues identified in program reviews or audits)88 and in the case of
proprietary and private nonprofits institutions, if the IHE does not meet third-party financial audit
standards.89
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 may
include, for example, submitting an irrevocable letter of credit to ED that is equal to at least 50%
of the Title IV student aid 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.90
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.91
Administrative capability standards address numerous aspects of Title IV administration. For
example, to administer Title IV programs an institution must use ED’s electronic processes92 and
develop a system to identify and resolve discrepancies in Title IV information received by various
institutional offices. An 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, an 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.93
Institutions are required to have a capable staff member to administer Title IV programs and
coordinate those programs with other aid received by students.94 This person must also have an
adequate number of qualified staff to assist with aid administration. Before receiving Title IV

87 FSA Handbook, vol. 2, p. 80.
88 34 C.F.R. §668.171(b)(4), (g)(1)(ii), and (h).
89 FSA Handbook, vol. 2, p. 80.
90 FSA Handbook, vol. 2, pp. 88-92.
91 HEA §498(d); 20 U.S.C. § 1099c(d); 34 C.F.R. §668.16.
92 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, pp. 58-59.
93 34 C.F.R. §668.16.
94 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).
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funds, an IHE must certify that neither it nor its employees have been debarred or suspended by a
federal agency; similar limitations apply to third parties with whom an IHE may contract to
administer aspects of the IHE’s Title IV participation.95
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) that students must meet
at a specified point in their program 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.96 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.97
Cohort Default Rate
ED may deem an institution administratively incapable if it has a high cohort default rate (CDR).
In general, the CDR is the percentage of an IHE’s qualifying Federal Family Education Loan
(FFEL) program and Direct Loan program borrowers who enter repayment in a given fiscal year
and who default within three years98 after entering repayment.99 Sanctions for high CDRs vary
depending on the circumstances, and can include loss of eligibility to participate in some Title IV
programs.
An IHE
 loses eligibility to participate in the Direct Loan program if its CDR is greater
than or equal to 40% in a single fiscal year;100 and
 loses eligibility to participate in the Direct Loan and Pell Grant programs if its
CDR is greater than or equal to 30% for three consecutive fiscal years.101
Even if an IHE does not lose eligibility based on the above thresholds, it is not considered
administratively capable if its CDR equals or exceeds 30% for two of the three most recent fiscal

95 FSA Handbook, vol. 2, pp. 48-53.
96 For more information about SAP and student eligibility for FSA programs, see FSA Handbook, vol. 1.
97 Withdrawal occurs when students drop out of all Title IV eligible coursework during an academic term. 34 C.F.R.
§668.16(l). See also FSA Handbook, vol. 2, p. 14.
98 For instance, the 2019 CDR represents the percentage of borrowers who entered repayment in FY2019 and defaulted
in FY2019, FY2020, or FY2021. In 2022, the CDR for the 2019 cohort fiscal year was used to determine whether an
institution is administratively incapable based on that information.
99 For institutions with fewer than 30 borrowers entering repayment in a given cohort fiscal year, an “average rate”
CDR is used, which is the percentage of borrowers who entered repayment in the current fiscal year or either of the two
preceding fiscal years and defaulted within three years of the fiscal year in which they entered repayment. HEA
§434(m)(1)(A); 20 U.S.C. §1085(m)(1)(A).
100 This and the following CDR measure are calculated for FFEL program Subsidized and Unsubsidized Stafford Loans
and Consolidation Loans used to repay those loans and Direct Loan program Subsidized and Unsubsidized Loans and
Consolidation Loans used to repay those loans. 34 C.F.R. §668.187.
101 A different CDR measure applies to institutional participation in the Perkins Loan program. For additional
information, see 34 C.F.R. §674.5.
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years.102 When this happens, ED may grant provisional certification to an institution that would
be deemed administratively capable except for its high cohort default rates.103
Provisional Certification
Under provisional certification, ED certifies that an IHE has demonstrated it is capable of
meeting HEA Title IV institutional participation standards within a specified time frame and is
able to meet its responsibilities under its program participation agreement (discussed later in this
report). If an institution is seeking initial certification, ED can grant it up to one year of
provisional certification.104 Other instances in which ED may grant an institution provisional
certification include if the IHE has experienced a partial or total change in ownership that results
in a change in control or if ED determines that the administrative or financial condition of the
IHE may jeopardize its ability to meet its financial responsibilities. Additionally, if an accrediting
agency loses its ED recognition, ED may grant provisional certification to an institution that was
accredited by that agency for up to 18 months after ED’s withdraws the agency’s recognition.105
Program Reviews
To ensure that an institution is conforming to eligibility and participation requirements, ED can
conduct program reviews.106 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). ED
gives review priority 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
those programs; IHEs that are reported to have deficiencies or financial aid problems by their
state or accrediting agency; IHEs with high annual dropout rates;107 and IHEs determined by ED
to pose a significant risk of failing to comply with the administrative capability or financial
responsibility requirements.108 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

102 An IHE similarly is not considered administratively capable if its CDR is 15% in a single year for loans made under
the Federal Perkins Loan program.
103 34 C.F.R. §668.16(m)(2)(i).
104 An IHE may be required to meet “additional conditions specified in the institution’s program participation
agreement that the Secretary requires the institution to meet in order for the institution to participate under provisional
certification.” These additional conditions may include, for example, meeting additional reporting requirements. 34
C.F.R. §668.13(c)(4)(ii).
105 34 C.F.R. §668.13(c).
106 For additional information on program reviews, see FSA Handbook, vol. 2, pp. 179-184.
107 “High annual dropout rates” is undefined.
108 HEA §498A(a)(2); 20 U.S.C. §1099c-1(a)(2).
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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.109
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 $59,017 for each
statutory or regulatory violation it commits, depending on the size of the IHE and the seriousness
of the violation.110 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 improperly used funds or making payments to eligible students from
the IHE’s own funds.111
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, special arrangements,
agreements, or limitations. ED must determine that the institution is misusing federal funds, that
immediate action is necessary to stop misuse, and that the “potential losses outweigh[] the
importance of using established procedures for limitation, suspension, or termination.”112 An
emergency action suspends an 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.113
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 apply for
recertification 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.114
Other Related Issues
Several other requirements affect institutional eligibility for and participation in Title IV
programs. Some of these requirements are institution Program Participation Agreements (PPAs),
which include provisions related to incentive compensation, campus crime reporting

109 FSA Handbook, vol. 2, p. 184.
110 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 $59,017 fine for institutional Title IV violations represents ED’s
most recent adjustment to its civil monetary penalties. Department of Education, “Adjustment of Civil Monetary
Penalties for Inflation,” 87 Federal Register 23451, April 20, 2022.
111 FSA Handbook, vol. 2, pp. 184-185.
112 FSA Handbook, vol. 2, p. 185.
113 FSA Handbook, vol. 2, pp. 184-185.
114 FSA Handbook, vol. 2, p. 185.
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requirements, and 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 must enter into a PPA with ED. 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 use any funds received under a Title IV
program (along with any interest or other earnings thereon) only for the purpose specified for the
particular Title IV program, 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 requirements that may affect an IHE’s Title IV eligibility, some of
which are described below. Along with the general participation requirements with which an
institution must comply, a PPA may also contain institution-specific requirements.115
90/10 Rule
Currently, as part of their PPAs, proprietary IHEs must agree that in any given institutional fiscal
year, that they will not derive more than 90% of their tuition and fees revenues from Title IV
funds (i.e., at least 10% of their tuition and fees revenues must come from non-Title IV sources).
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.
Effective July 1, 2023, for institutional fiscal years beginning on or after January 1, 2023,
proprietary IHEs may not derive more than 90% of their tuition and fees revenues from federal
education assistance funds.116 Federal education assistance funds include HEA Title IV student
aid, and “any other education assistance funds provided by a Federal agency directly to an
institution or a student” but exclude non-Title IV federal funds provided directly to a student to
cover expenses other than tuition, fees, and other institutional charges.117 ED publishes in the
Federal Register a list of the federal education assistance funds. These funds include, among
others, benefits provided under the Post-9/11 GI Bill program, Department of Defense Military
Tuition Assistance benefits, Chafee Education and Training Vouchers, and Trade Adjustment
Assistance benefits,118 to the extent they are not funds provided directly to a student to cover
expenses other than tuition, fees, and other institutional charges.

115 34 C.F.R. §668.14. See also FSA Handbook, vol. 2, pp. 14-17.
116 HEA §487(a)(24); 20 U.S.C. §1094(a)(24).
117 ED, 2022 Regulations, p. 65491.
118 Department of Education, “List of Federal Education Assistance for Proprietary Institutions of Higher Education to
Include as Federal Revenue,” 87 Federal Register 78096, December 21, 2022.
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Under both the current 90/10 rule and the updated rule, if an IHE violates the 90/10 rule for one
institutional fiscal year,119 ED provisionally certifies it for two years. If the IHE violates the 90/10
rule for two consecutive institutional fiscal years, it loses its Title IV eligibility for at least two
years.120
Incentive Compensation
In a PPA, an IHE must agree it will not provide any commission, bonus, or other incentive
compensation to individuals or entities 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.121
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.122
Clery Act Requirements
HEA Section 485(f), referred to as the Clery Act,123 requires domestic Title IV participating IHEs
to (1) collect and report to ED campus crime statistics and (2) create an annual security report
(ASR) that contains those statistics, as well as information on campus safety and security policies.
The ASR must be disseminated to current and prospective students and employees.
Campus crime statistics required to be reported to ED and included in an ASR include data on the
on-campus124 occurrence of a range of offenses specified in statute, including murder, burglary,
robbery, domestic violence, and sex offenses (e.g., rape).
In addition to campus crime statistics, ASRs must include statements of campus safety and
security policies regarding, for example,
 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;

119 An institutional fiscal year is a one-year period that an IHE uses for financial reporting and budgeting. An IHE may
set its own institutional fiscal year.
120 HEA §487(a)(24) and (d)(2); 20 U.S.C. §1094(a)(24) and (d)(2).
121 34 C.F.R. §668.14(b)(22).
122 For a detailed list of activities covered by the incentive compensation prohibition, see FSA Handbook, vol. 2, pp. 54-
57, 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, accessed
January 4, 2023.
123 For additional information, see Department of Education, Clery Act Appendix for the FSA Handbook, October 2020,
https://www2.ed.gov/admins/lead/safety/cleryappendixfinal.pdf.
124 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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 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.125
An ASR must also include statements of policies specifically relating to the incidence of dating
violence, domestic violence, sexual assault, and stalking. For example, an ASR must include
statements of policy regarding
 programs to prevent such incidents;
 procedures a victim should follow if such an incident has 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 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, the IHE and/or the
student must return Title IV funds 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. Through 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.126 Unearned funds
must be returned to their respective programs in a specified order, with loans being returned first,
followed by Pell Grants, and then other Title IV aid.127 In some instances, a student may have

125 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.
126 Generally, institutional charges are 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).
127 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.
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earned more aid than has been disbursed, and the difference is disbursed to the student after the
student withdraws.128
Distance Education and Correspondence Education
Generally, distance education and correspondence education refer to educational instruction with
a separation in time, place, or both between the student and instructor. They are ways in which
institutions can increase student access to postsecondary education by offering alternatives to
traditional on-campus instruction.
Section 103(7)(A) and (B) of the HEA and the accompanying regulations define distance
education as education that uses one or more of several enumerated technologies, including the
internet and audio conferencing, to deliver instruction to students separated from the instructor
and to support “regular and substantive interaction between the students and the instructor.”129
The definition of distance education excludes correspondence courses.130 A correspondence
course is one for which an institution provides instructional materials via mail or electronic
transmission to students who are separated from their instructors 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.131
Specific Title IV requirements apply to IHEs with respect to distance and correspondence
education. Among others, the 50% rules affect 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

5, p. 27.
128 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.
129 HEA §103(7); 20 U.S.C. §1003(7); 34 C.F.R. §600.2.
130 HEA §484(l); 20 U.S.C. §1091(l). 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.
131 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, pp.
35-36.
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correspondence,132 or if 50% or more of its students are enrolled in correspondence courses.133 In
addition, as discussed earlier in this report, IHEs that offer postsecondary correspondence or
distance education to students located in a state in which the IHE is not physically located must
meet any state authorization requirements for the state in which the student is located.134 An IHE
may meet this requirement if it participates in a state authorization reciprocity agreement.135

Author Information

Alexandra Hegji

Analyst in Social Policy

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132 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).
133 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. 95.
134 34 C.F.R. §600.9(c).
135 A state reciprocity agreement is “an agreement between two or more states that authorizes an institution located and
legally authorized in a State covered by the agreement to provide postsecondary education through distance education
or correspondence courses to students located in other States covered by the agreement and cannot prohibit any
member State of the agreement from enforcing its own general-purpose State laws and regulations outside of the State
authorization of distance education.” 34 C.F.R. §600.2.
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