Chapter 2

Program Eligibility, Written Arrangements, and Distance Education

Many of the program eligibility requirements are derived from the institutional definitions that we discussed in Chapter 1. However, bear in mind that institutional eligibility does not mean that all programs at the school are eligible. A financial aid office should have a process to confirm the eligibility of an educational program before paying any FSA funds to students enrolled in that program and should promptly report changes to the Department following the procedures in Chapter 5.

Determining Program Eligibility

To qualify as eligible institutions, schools must offer at least one eligible program. Not all programs at a school must be eligible, but at least one must meet the eligible program requirements. And students must be enrolled in an eligible program to receive FSA funds (except for students enrolled in certain preparatory or teacher certification courses; see Volume 1, Chapter 1). Schools are responsible for ensuring a program is eligible before awarding FSA funds to students in that program.

In addition to determining that the program meets the eligible program criteria given in this chapter, the school should make certain that the program is included under the notice of accreditation from a nationally recognized accrediting agency (unless the agency does not require that particular program be accredited).

The school should also make certain that it is authorized by the appropriate state to offer the program (if the state licenses individual programs at postsecondary institutions). In some instances a school or program may need a general authorization as well as licensure for a specific program approval. (See the chart on eligible institutions and the discussion under Legal Authorization By a State in Chapter 1.)

A school’s eligibility extends to all eligible programs and locations on its E-App, unless the school participation division (SPD) determines that certain programs or locations did not meet the eligibility requirements or it has not approved the expansion’s FSA eligibility. Generally, the school’s eligible nondegree programs and locations are specifically named on the Eligibility and Certification Approval Report (ECAR). Additional locations and programs may be added later. Once the SPD has approved the program/location, it will notify the school and an updated ECAR can be printed. See the discussion under Changes to Educational Programs in Chapter 5 for a discussion of when and how a school must notify the Department when adding programs and when the school must wait for approval from the Department. Note that all GE programs must be reported to ED and all direct assessment programs, comprehensive transition and postsecondary programs, and short-term programs must be reported to and approved by ED.

If a program offered through distance or continuing education meets the definition of an eligible program, students enrolled in that program must be considered for FSA program assistance on the same basis as students enrolled in eligible programs offered through traditional modes. With some limitations, if a correspondence program meets the definition of an eligible program, students enrolled in that program are considered eligible (see Distance Education & Correspondence Study in this chapter).

Program eligibility
34 CFR 668.8
See also 232(a), 600.10, 668.232, and 691.2(b).

Schools must accurately report their programs’ published length

The Department’s regulations require each school to have established a normal time for completion for each of its academic programs. 34 CFR 668.41(a) defines normal time as “the amount of time necessary for a student to complete all requirements for a degree or certificate according to the school’s catalog.” The definition goes on to say, “This is typically four years for a bachelor’s degree…two years for an associate degree… and the various scheduled times for certificate programs.” Therefore, a school must have established a program’s published length in time (years, months, or weeks), not just in credit or clock hours, to comply with 34 CFR 668.41(d)(4) and 668.45 and must report that published length in time to COD and NSLDS.

  • If the school has published, in its catalog, on its website, or in any promotional materials, the length of the program in weeks, months, or years, the program length to be reported to COD and NSLDS must be the same as the program length that the school has published. Note: For gainful employment programs, the school must have published the program’s length in weeks, months, or years on the school’s website.

  • If the school has not published a program length and the program is an associate or bachelor’s degree program, the program length to be reported should be 2 years or 4 years, respectively, unless the academic design of the program makes it longer or shorter than the typical, 2-year associate degree program or 4-year bachelor’s degree program.

  • For all other programs for which the school has not published a program length, the program length is based on the school’s determination of how long, in weeks, months, or years, the program is designed for a full-time student to complete.

Basic Types of Eligible Programs

There is a wide variety of programs that are eligible for Title IV aid. This section explains some of the most common for each type of institution. Later in the chapter we explain others, such as direct assessment programs and comprehensive transition and postsecondary programs.

Eligible programs at an institution of higher education

At a public or private nonprofit institution of higher education, the following types of programs are Title IV-eligible:

  • a program that leads to an associate, bachelor’s, professional, or graduate degree,

  • a transfer program of at least two academic years in duration that does not award a credential and is acceptable for full credit toward a bachelor’s degree,

  • a program of at least one academic year in duration that leads to a certificate or other nondegree recognized credential and prepares students for gainful employment in a recognized occupation,

  • a program consisting of courses required for elementary or secondary teacher certification or recertification in the state where the student plans to teach that is offered in credit or clock hours, or

  • a certificate or diploma training program that is less than one year and prepares students for gainful employment in a recognized occupation (if the school also meets the definition of a postsecondary vocational institution).

Note that with a few exceptions detailed later in this chapter, a nondegree program at a public or private nonprofit institution is subject to the rules for a gainful employment program.

Eligible programs at a proprietary or postsecondary vocational institution

There are several types of eligible programs at a proprietary institution or a postsecondary vocational institution. Generally these programs must have a specified number of weeks of instruction and must provide training that prepares a student for gainful employment in a recognized occupation.

  • The program provides at least 600 clock hours, 16 semester or trimester hours, or 24 quarter hours of undergraduate instruction offered during a minimum of 15 weeks of instruction. The program may admit as regular students persons who have not completed the equivalent of an associate degree.

Completion and Placement Rates for Short-Term Programs

For the purpose of demonstrating compliance with the standards for short-term (at least 300 but less than 600 clock hours), a school must calculate the completion and placement rates for the award year. The independent auditor who prepares the school’s compliance audit report must attest to the accuracy of the school’s calculation of completion and placement rates. See 34 CFR 668.8(e), (f ), and (g).

Number of regular students who earned credentials for successfully completing the program within 150% of its length ÷ Number of regular students enrolled in the program for the award year, including the number of regular students who withdrew with a 100% refund of tuition and fees and the number of regular students enrolled at the end of the award year = Completion Rate

Number of students who obtained employment* within 180 days of receiving credential and who are employed (or have been employed) for at least 13 weeks following receipt of credential ÷ Number of regular students who received credential for successfully completing the program during the award year = Placement Rate

*in the recognized occupation for which they were trained or in a related comparable occupation

The school must document the employment of any student it includes as employed in the placement rate calculation. Examples of such documentation include but are not limited to a written statement from the employer, signed copies of state or federal income tax forms, or written evidence of payment of Social Security taxes.

The school must reasonably determine whether a related occupation is comparable. For instance, for a student who was trained as an auto mechanic, it is reasonable to determine that a job as a boat mechanic is comparable. However, for a person trained in retail sales management, a counter-service job at a fast-food restaurant is not comparable.

An auditor may use his or her discretion to choose the award year used to calculate a program’s completion and placement rates under 34 CFR 668.8(e), (f ), and (g) based on the circumstances and appropriate audit standards, with these caveats:

  • The auditor must use the same procedure from year to year; and

  • The auditor may not use the rates from award years that ended more than two years prior to the institution’s fiscal year end date.

For example, for a fiscal year that ends on 8/31/16, the auditor could calculate rates from the 2015-2016 award year or the 2014-2015 award year, but not from the 2013-2014 award year or any award year prior to that.

  • The program provides at least 300 clock hours, 8 semester hours, or 12 quarter hours of instruction during a minimum of 10 weeks of instruction. The program must be a graduate or professional program or must admit as regular students only persons who have completed the equivalent of an associate degree.

  • The program is known as a short-term program, which qualifies for the Direct Loan program only. This type of program must provide at least 300 but less than 600 clock hours of instruction offered during a minimum of 10 weeks of instruction. The program must admit as regular students some persons who have not completed the equivalent of an associate degree. It must also have been in existence for at least one year, have verified completion and placement rates of at least 70% (see below), and not be more than 50% longer than the minimum training period required by the state or federal agency, if any, for the occupation for which the program of instruction is intended.

Lastly, a program that leads to a baccalaureate degree in liberal arts at an accredited proprietary institution is an eligible (non-GE) program. The school must have been continuously accredited by a recognized regional accrediting agency or association since at least October 1, 2007, and have provided the program continuously since January 1, 2009.

Programs Leading to Gainful Employment

To be eligible for Title IV funding, an educational program at a postsecondary school must lead to a degree—associate, bachelor’s, graduate, or professional degree from a public or non-profit institution— or prepare students for “gainful employment in a recognized occupation.” We refer to the latter as “gainful employment programs” or “GE programs” for short. They include nondegree programs offered by public and private nonprofit institutions and almost all academic programs offered by proprietary institutions; see below for details. See the May 20, 2015, announcement, which identifies GE programs.

Programs offered by for-profit institutions

All educational programs offered by for-profit (proprietary) institutions are GE programs with the following three exceptions:

  1. Preparatory coursework necessary for enrollment in a Title IVeligible program [34 CFR 668.32(a)(1)(ii)];

  2. Approved Comprehensive Transition and Postsecondary (CTP) programs for students with intellectual disabilities [34 CFR 668.231]; and

  3. A limited number of liberal arts bachelor degree programs if offered since January 2009 and the school has been regionally accredited since October 2007 [34 CFR 600.5(a)(5)(i)(B)].

Programs offered by public and private nonprofit institutions

All non-degree educational programs offered by public or private non-profit institutions are GE programs with the following four exceptions:

  1. Preparatory coursework as noted under (1) above;

  2. Approved CTP programs as noted under (2) above;

  3. Programs that are at least two years long and designed to be fully transferable to a bachelor’s degree program and for which the school does not confer a credential [34 CFR 668.8(b)(1)(ii)]; and

  4. Teacher certification programs the institution does not award a credential for [34 CFR 668.32(a)(1)(iii)].

A general instructional program falling within one or more of the following generally accepted instructional categories:

  1. A program that is a structured combination of the arts, biological and physical sciences, social sciences, and humanities, emphasizing breadth of study.

  2. An undifferentiated program that includes instruction in the general arts or general science.

  3. A program that focuses on combined studies and research in humanities subjects as distinguished from the social and physical sciences, emphasizing languages, literature, art, music, philosophy, and religion.

  4. Any single instructional program in liberal arts and sciences, general studies, and humanities not listed in 1 through 3 above.

Instruction must be in a regular program, not an independently designed or individualized program or unstructured studies. 34 CFR 600.5(e)

One that is

  • identified by a Standard Occupational Classification (SOC) code established by the Office of Management and Budget or an Occupational Information Network ONET–SOC code established by the Department of Labor and available at ONET OnLine or its successor site, or

  • considered by ED, in consultation with the Department of Labor, to be a recognized occupation.

If the title of the program does not clearly indicate the specific occupation that the program prepares the student for, that information must appear on the E-App.

One who

  1. has a cognitive impairment characterized by significant limitations in

    • intellectual and cognitive functioning and

    • adaptive behavior as expressed in conceptual, social, and practical adaptive skills; and

  2. is currently, or was formerly, eligible for special education and related services under the Individuals with Disabilities Education Act (IDEA) (20 U.S.C. 1401), including a student who was determined eligible for special education or related services under the IDEA but was home-schooled or attended private school.

Some public and private nonprofit institutions offer degree programs in which students may also be awarded a non-degree credential (e.g., certificate, diploma) after completing a portion of the degree program. These are not GE programs as long as a significant number of the students enrolled in the program earn the degree rather than withdraw after obtaining the certificate. If a significant number of students enrolled in the program do not earn the degree, all of the students are considered to be enrolled in a non-degree program, that is, a GE program.

GE programs at foreign schools

The only programs at foreign proprietary institutions that are eligible for FSA loan funds are degree programs in medicine, nursing, and veterinary science. All Title IV-eligible programs at these schools are GE programs. The determination of a GE program at a foreign public or nonprofit institution is the same as for domestic public and nonprofit institutions.

State requirements and program length

The school must demonstrate a reasonable relationship between the length of the GE program and entry level requirements for which the program prepares the student. The Secretary considers the relationship to be reasonable if the number of clock hours provided in the program does not exceed by more than 50% the minimum number of clock hours required for training in the recognized occupation for which the program prepares the student, as established by the state in which the program is offered, or as established by any federal agency (if applicable). This limitation applies to both clock-hour and credit-hour GE programs.

34 CFR 668.14(b)(26)

Additional Eligibility Requirements

There are additional FSA program eligibility requirements for specific educational programs. For example, only undergraduate educational programs are eligible under the Pell Grant and FSEOG programs. Correspondence programs are not eligible unless they meet the general requirements for an eligible program and are required for the student’s regular program of study leading to a degree.

TEACH Grant eligible programs

One of the eligibility requirements for a student to receive a TEACH Grant is that the student must be enrolled in a TEACH Grant-eligible program. A TEACH Grant-eligible program is an eligible program that is

  • designed to prepare an individual to teach as a highly qualified teacher in a high-need field and lead to a baccalaureate or master’s degree (including 2-year programs of study that are acceptable for full credit toward a baccalaureate degree), or

  • post-baccalaureate program of study for students who have completed a baccalaureate degree.

A postbaccalaureate program consists of courses required by a state for a student to receive a professional certification or licensing credential that is needed for employment as a teacher in an elementary or secondary school in that state. It must be a program that is treated as an undergraduate program for FSA purposes and may not lead to a graduate degree. Note that the program cannot be considered a postbaccalaureate program if the school offers a baccalaureate degree in education.

For additional TEACH grant student eligibility requirements, see Volume 1, Chapter 6.

Programs for students with intellectual disabilities

A student with an intellectual disability who enrolls in a comprehensive transition and postsecondary (CTP) program at a school that participates in the FSA programs is eligible for non-loan assistance (Pell Grants, FSEOG, and Federal Work-Study). As discussed in Volume 1, the student is exempt from some student eligibility requirements.

A CTP program is a degree, certificate, non-degree, or non-certificate program that is designed to support students with intellectual disabilities who want to continue their instruction (academic, career and technical, and independent living) at a postsecondary school to prepare for gainful employment. Schools must apply to the Department to have such a program judged eligible. To do so, they must follow the procedures in 34 CFR 600.20 and provide the information described in 34 CFR 668.232. See the June 6, 2011, announcement.

The program must be delivered to students physically attending the institution, include an advising and curriculum structure, and provide students with intellectual disabilities opportunities to participate in coursework and other activities with students without disabilities.

Such programs must require that at least half of the students’ participation in the program, as determined by the school, focuses on academic components through one or more of the following activities:

  • taking credit-bearing courses with students without disabilities,

  • auditing, or otherwise participating in, courses the student does not receive regular academic credit for with students without disabilities,

  • taking non-credit-bearing, nondegree courses with students without disabilities, and

  • participating in internships or work-based training in settings with individuals without disabilities.

ESL programs

Students enrolled in a program that consists solely of English as a second language (ESL) instruction are only eligible for Pell Grants. An ESL program must meet the general requirements for eligible programs (e.g., it must lead to a degree or other credential), and a school must request an eligibility determination for it from the Department. The program may admit only students who need instruction in English to be able to use the knowledge, training, or skills they already have. The school must document its determination that the ESL instruction is necessary for each student enrolled.

Schools should pay attention to the effect that awarding Pell Grants for more than one academic year of attendance in an ESL program has on a student’s Pell LEU (See Volume 3).

See Chapter 3 for a discussion of the requirement that schools define the effect of non-credit remedial courses (including ESL on a student’s academic progress.

Competency-based education programs

Competency-based education (CBE) is an innovative approach in higher education that organizes academic content according to competencies—what a student knows and can do—rather than following a more traditional scheme, such as by course.

As with all Title IV-eligible programs (except correspondence programs), CBE programs must be designed to ensure that there is regular and substantive interaction between students and instructors. Interaction that is wholly optional, initiated primarily by the student, or occurring only upon the request of the student is not sufficient.

Some schools use a CBE model where instructors perform different roles and no single faculty member is responsible for all aspects of a course or competency. Such a model may be used, but schools must ensure that regular and substantive interaction between students and instructors occurs, that instructors meet accrediting agency standards for instruction in their subject, and that the faculty resources dedicated to the program are sufficient for the accrediting agency. Interactions between students and personnel who don’t meet accrediting agency standards for providing instruction in the subject area would not be considered substantive interaction with an instructor.

FSA funds may be awarded only for learning that results from instruction provided or overseen by the school. FSA funds cannot be awarded for any portion of the program based on study or life experience prior to enrollment in the program or based on tests of learning that are not associated with educational activities overseen by the school.

A school must ensure that the instructional materials and faculty support necessary for academic engagement are available to students every week that the school counts toward its defined payment period or academic year. Educational activity in a CBE program includes but is not limited to

  • participating in regularly scheduled learning sessions (where there is an opportunity for direct interaction between the student and the faculty member);

  • submitting an academic assignment;

  • taking an exam, an interactive tutorial, or computer-assisted instruction;

  • attending a study group that is assigned by the institution;

  • participating in an online discussion about academic matters;

  • consultations with a faculty mentor to discuss academic course content; and

  • participation in faculty-guided independent study (as defined in 34 CFR 668.10(a)(3)(iii)).

For direct assessment programs only, educational activity also includes development, in consultation with a qualified faculty member, of an academic action plan that addresses competencies identified by the school.

As with other types of eligible programs, CBE programs may be offered as nonterm or as standard or nonstandard term programs. Such programs may also last less than a year if all applicable requirements are met. See DCL GEN-14-23 for more information, including guidance about CBE programs and cost of attendance, satisfactory academic progress, return of Title IV funds, and direct assessment programs.

Types of CBE programs

There are two types of CBE programs: those that measure progress using clock or credit hours and direct assessment programs.

Credit- or clock-hour CBE programs

These are organized by competency but measure student progress using clock or credit hours. In such programs, Title IV aid must be administered under normal statutory and regulatory provisions for credit-or clock-hour programs.

An institution offering a CBE program using credit hours must ensure that for Title IV purposes each credit hour in the program requires sufficient educational activity to fulfill the federal definition of a credit hour (See the discussion under Determining program eligibility and Clock-Hour to Credit-Hour Conversions later in this chapter.) and must reasonably approximate not less than one hour of classroom instruction and two hours of out-of-class work each week. A credit hour in a CBE program might not require structured class sessions but must still require sufficient academic activity—for instance, reading and writing assignments with feedback from an instructor—to reasonably approximate three hours of expected academic engagement per week for each credit hour. The CBE program could allow this work to be completed more flexibly and at the student’s pace as long as he is making satisfactory academic progress.

Direct assessment programs

These are a type of CBE program that does not use credit or clock hours. Progress in a direct assessment program is measured solely by assessing whether students can demonstrate that they have a command of a specific subject, content area, or skill or can demonstrate a specific quality associated with the subject matter of the program. Therefore, unlike a CBE program measured in credit hours, a direct assessment program does not specify the level of educational activity a student is expected to engage in to complete the program.

34 CFR 668.10

Because direct assessment programs do not use credit or clock hours, schools must establish credit- or clock-hour equivalencies for the programs and provide a factual basis for that to the Department as part of the application process for direct assessment programs. The equivalencies must be approved by a school’s accrediting agency, and the school must document that approval. See GEN-14-23 for more about equivalencies.

The entire program must be provided by direct assessment—one offered partly with credit or clock hours is not Title IV-eligible—and the assessment must be consistent with the accreditation of the institution or program.

A direct assessment program may use learning resources (e.g., courses or portions of courses) that are provided by entities other than the school providing the direct assessment program without regard to the limitations on contracting for part of an educational program (see Written Arrangements Between Schools later in this chapter).

Several types of programs and coursework that might otherwise be eligible for FSA purposes are not eligible if they involve direct assessment:

  • Programs at foreign schools.

  • Preparatory coursework required for entry into an eligible program (see Volume 1, Chapter 6).

  • Courses necessary for an elementary or secondary school teaching credential or certificate (see Volume 1, Chapter 6).

  • Remedial coursework measured through direct assessment.

However, remedial instruction offered in credit or clock hours in conjunction with a direct assessment program is eligible for FSA funds.

A school that wishes to award FSA funds for a program using direct assessment must submit an updated E-App to the Department to apply for approval of the program. In addition to updating the E-App, the school will email to the case teams supporting documentation: a detailed program description (recommended length not to exceed 20 pages), a detailed description of financial aid administration (not to exceed 5 pages), and documentation that the school’s accrediting agency has evaluated and approved the program and agrees with the school’s credit- or clock-hour equivalency. See DCL GEN-13-10 for complete instructions.

The detailed program description will be a succinct narrative clearly indicating the name of the program and how it meets the regulatory requirements of 34 CFR 668.10(b). Each requirement must be specifically identified in the narrative; for example, there must be a description of how the assessment of learning is done [668.10(b)(2)].

The detailed description of financial aid administration for the program explains how the program meets the Title IV requirements. For example, the school must provide a basis for its credit- or clock-hour equivalent for the program or portion thereof (the clock or credit hours will be used as the basis for the FSA award calculations described in Volume 3, Chapter 1).

If a school plans to change any aspect of the program, it must obtain prior approval from the Department by reapplying.

Apprenticeships

An apprenticeship combines job-related instruction with on-thejob experience. Postsecondary schools may provide related classroom instruction, technical training, or other certified training. If all or part of an apprenticeship meets an academic requirement of a Title IV-eligible educational program, students enrolled in that program may receive Title IV aid for the entire program, including for the apprenticeship portion. For more information see Dear Colleague Letter GEN-14-22 and Volume 6, Chapter 2, of the Handbook.

Since student aid is partly determined by the number of credit or clock hours in the program, the structured on-the-job portion must be associated with a defined number of credit or clock hours. For clock-hour programs, students’ completion of the clock hours associated with the on-the- job training must be under the supervision of school faculty.

Except as may be required by the accrediting agency or state, there is no limit on the percentage of the program that consists of on-the-job training as long as the school provides the training. Note that schools must report to the Department any location at which 50% or more of an educational program is provided, including any on-the-job component. If an entity other than the school provides the on-the-job training, that component must be 25% of the program or less or, with specific permission of the institution’s accrediting agency, over 25% but less than 50% of the program.

In such contracted situations, the school must enter into a written arrangement with the entity providing the on-the-job training. If the program is offered in credit hours, the written arrangement should establish the equivalent credit hours for the non-coursework portion of the program. A school’s policies for establishing credit hours must meet all requirements and standards set by its accrediting agency. See the discussion under Written Arrangements Between Schools later in this chapter for additional information.

Study-abroad programs

A participating institution may establish study-abroad programs for which students are eligible to receive FSA funds. The study-abroad program does not have to be a required part of the eligible program at the home school for the student to be eligible to receive FSA funds, but the credits earned through the study-abroad or exchange program must apply toward graduation in the student’s program at the home school. In addition, students in the study-abroad program must remain concurrently enrolled at their home school. Moreover, the school must mention the availability of FSA funds in the information it provides to students about the study-abroad program.

Study-abroad references
Arrangements with a study-abroad organization 34 CFR 668.5(b)
Student eligibility in study-abroad programs 34 CFR 668.39
FSEOG maximum awards 34 CFR 676.20

Types of study-abroad programs

Study-abroad program configurations include the following:

  • A home school sends students to a study-abroad program at an eligible or ineligible foreign host school. The home school must have a contractual agreement with the foreign school. A written arrangement between a domestic institution and one in another country is always considered a contractual agreement in which the domestic institution is the home school.

  • A home school has, instead of a separate agreement with each foreign school, a written arrangement with a study-abroad organization that represents one or more foreign schools. The arrangement must adequately describe the duties and responsibilities of each entity and meet the requirements of the regulations.

In a direct assessment program, this consists of a minimum of 30 weeks of instructional time, during which a full-time student is expected to complete the equivalent of at least 24 semester or trimester credit hours or 36 quarter credit hours for an undergraduate program.

any seven-day period in which at least one day of educational activity occurs.

This includes assessments, regularly scheduled learning sessions, faculty-guided independent study, consultations with a faculty mentor, and development of an academic action plan addressed to the competencies identified by the school.

This occurs when a student follows a course of study and works with a faculty member to decide how the student will meet defined course objectives. Both agree on what the student will do (e.g., readings, research, and work products), how the student’s work will be evaluated, and the time frame for completion. The student must interact with the faculty member on a regular and substantive basis to assure progress within the course or program.

one who is carrying a full-time academic workload, as determined by the school, that is the standard for all students in the program. For undergraduate students, the school’s standard must equal or exceed the minimum requirements in the definition of full-time student in 34 CFR 668.2, based on the credit- or clock-hour equivalency for the program.

  • A variant of the study-abroad program occurs when a home school sends faculty and students to a foreign site. This is not a consortium or contractual study-abroad program; rather, the foreign site is considered an additional location under 34 CFR 600.32.

A study-abroad program must be part of a written contractual agreement between two or more schools. If a study-abroad program has higher costs than the home school, those should be reflected in the student’s cost of attendance. This may result in the student being eligible for additional FSA funds.

The maximum FSEOG for a full academic year is usually $4,000. However, a school may award as much as $4,400 to a student participating in a study-abroad program that is approved for credit by the home school.

Some eligible students have had problems receiving FSA funds for study-abroad programs because neither their home school nor the school they were temporarily attending documented that they were enrolled in an eligible program of study. The Program Participation Agreement requires participating schools to establish procedures that ensure that students participating in study-abroad programs receive the FSA funds to which they are entitled.

Flight school programs

A flight school program must maintain current valid certification by the Federal Aviation Administration to be eligible.

34 CFR 668.8(i)

Written Arrangements Between Schools

Under a consortium or contractual agreement (including those for study-abroad programs), the home school must give credit for courses taken at the other schools on the same basis as if it provided the training. The assumption of such an agreement is that the home school has found the other school’s or organization’s academic standards equivalent to its own and the instruction an acceptable substitute for its own.

34 CFR 668.5

A home school may decline to give credit for courses in which a student earns a grade that is not acceptable at the home school even though the host school has a policy of accepting that grade for its resident students. Also, although grades received through consortium or contractual agreements do not have to be included in a student’s grade point average, they must be included when calculating the quantitative component (the percentage of credits earned vs. attempted) of her satisfactory academic progress.

If not written for an individual student or group of students, agreements between schools can go on indefinitely. These agreements do not have to be renewed unless the terms of the agreement change.

A school must provide enrolled and prospective students with a description of the written arrangements it has entered into, including

  • the portion of the educational program that the school that grants the degree or certificate is not providing,

  • the name and location of the other schools or organizations that are providing that portion of the educational program,

  • the method of delivery of that part of the educational program, and

  • estimated additional costs students may incur by enrolling in an educational program provided under the written arrangement.

34 CFR 668.43(a)(12)

Consortium agreement

A consortium agreement can apply to all FSA programs. Under a consortium agreement, a student may take courses at another school and have them count toward the degree or certificate at the home school. A student can receive FSA funds only for courses that apply to his certificate or degree program.

A consortium agreement can be a blanket agreement between two or more eligible schools, or it can be written for a specific student. Such an agreement is often used when a student takes related courses at neighboring schools or when a student is enrolled in an exchange program with another eligible school for a term or more. A school could have one agreement for each student, a separate agreement with each host school, or a blanket agreement with a group of schools.

In a consortium agreement there is no limit on the portion of the eligible program that may be provided by eligible schools other than the home school. Agreement contents can vary widely and will depend upon the interests of the schools involved and the accrediting or state agency standards. The Department does not dictate the format of the agreement (which can be executed by several different offices) or where the agreement is kept. However, the following information should be included in all agreements:

  • The school that will grant the degree or certificate

  • The student’s tuition, fees, and room and board at each school

  • The student’s enrollment status at each school

  • The school that will be responsible for disbursing aid and monitoring student eligibility

  • The procedures for calculating awards, disbursing aid, monitoring satisfactory progress and other student eligibility requirements, keeping records, and returning funds when the student withdraws

The school that disburses an FSA award is responsible for maintaining information on the student’s eligibility, how the award was calculated, what money has been disbursed, and any other documentation associated with the award, even if some of that documentation comes from other schools. Moreover, the school paying the student must return FSA funds if required, for example, in refund/return or overpayment situations. For determining enrollment status under a consortium agreement, see Volume 3, Chapter 3.

Usually the home school is responsible for disbursing funds, but if the student is enrolled for a full term or academic year at the host school, it may be easier for the host school to monitor his eligibility and make payments.

If the written arrangement is between two or more eligible institutions that are owned or controlled by the same individual, partnership, or corporation, the Department considers the educational program to be eligible if the school that grants the degree or certificate provides more than 50% of the program and it otherwise satisfies the requirements of an eligible program described in this chapter.

When there is a written arrangement between eligible schools, any of the schools participating in the written arrangement may make FSA calculations and disbursements without that school being considered a third-party servicer. This is true even if the student is not currently taking courses at the school that is calculating and disbursing the aid.

Contractual agreement

If the limitations in the following paragraphs are adhered to, an eligible school may enter into a contractual agreement with an ineligible school or organization that provides part of the educational program of students enrolled at the eligible school.

Such a contract is prohibited with an ineligible school or organization whose

  • eligibility or certification to participate in the FSA programs has been terminated or revoked by the Department or

  • application for certification or recertification to participate in the FSA programs was denied by the Department.

Similarly, an eligible school is prohibited from entering into a contract with an ineligible school or organization that has voluntarily withdrawn from participation in the FSA programs under a termination, show-cause, suspension, or similar proceeding initiated by the Department or the school’s state licensing agency, accrediting agency, or guarantor.

Under a contractual agreement, the eligible school is always the home school. It performs all the aid processing and disbursement for students attending the ineligible school and is responsible for maintaining all records necessary to document student eligibility and receipt of aid (see Chapter 7).

With a contractual agreement, the ineligible school can in general provide no more than 25% of the educational program. However, it may provide more than 25% but less than 50% of the program as long as (1) the home and ineligible schools are not owned or controlled by the same individual, partnership, or corporation; and (2) the home school’s accrediting agency or state agency (in the case of a public postsecondary vocational institution) determines and confirms in writing that the agreement meets its standards for contracting out education services.

Schools sometimes contract with providers of software platforms designed to support distance education programs. When such a contractor provides only the software or platform for coursework and instruction in the program is still performed by the school’s own faculty under the school’s supervision, such an arrangement is not considered a written arrangement under 34 CFR 668.5. However, if the contractor’s staff provides instruction as part of its provision of software or other services, the school must have a contractual agreement in place that establishes the proportion of the program provided by the contractor and ensures it does not exceed the legal limits.

Written arrangements between domestic and foreign schools

An eligible U.S. school may have a written arrangement with a foreign school or organization that is acting on behalf of a foreign school, but such an arrangement is always considered to be one between an eligible domestic school where the student enrolls and an ineligible foreign school, even if the latter is otherwise Title IV-eligible. Therefore, these arrangements are considered contractual agreements that must follow the rules that apply to such. See DCL GEN-11-18 for more information about Title IV eligibility of programs offered through written arrangements between U.S. and foreign schools.

Internships and externships

Internships and externships that are part of a program and are provided by organizations other than the institution are subject to the written arrangement requirements. However, an internship or externship portion of a program does not have to meet the written arrangement requirements if it is governed by explicit accrediting agency standards that require the oversight and supervision of the school, which is responsible for the internship or externship, and where students are monitored by qualified school personnel.

a written agreement between two or more eligible schools.

a written agreement between an eligible school and an ineligible school.

the school where the student is enrolled in a degree or certificate program.

the school where the student is taking part of his or her program requirements through either a consortium or contractual agreement.

a partnership between a two-year and a four-year school that facilitates a student’s completing the last two years of the student’s four-year degree.

Distance Education and Correspondence Study

Schools use distance education and correspondence courses to respond to students’ needs for alternatives to the schedules and locations at which courses traditionally have been offered. A school may not refuse to provide FSA funds to a student because she is enrolled in correspondence or distance education courses unless the courses are not part of an eligible program.

Some participating institutions contract with distance education providers that are not eligible to participate in the FSA programs. These participating institutions must ensure that they do not exceed the limitations on contractual arrangements (see the previous section).

Distance education

A distance education program at a domestic school is considered an eligible FSA program if it has been accredited by an accrediting agency recognized by the Department for accreditation of distance education. It is not subject to the rules that apply to correspondence coursework, which are discussed in the next section. Distance education programs must be evaluated by an accrediting agency that is recognized by ED for the purpose of evaluating distance education, just as an agency must be specifically reviewed and recognized for the evaluation of correspondence education. Dear Colleague Letter GEN-06-17 includes specific instructions on notifying ED if the school intends to seek new accreditation and updating the E-App to reflect changes to the school’s accreditation.

Distance education means education that uses certain technologies to deliver instruction to students who are separated from the instructor and to support regular and substantive interaction between the students and the instructor. The interaction may be synchronous (student and instructor are in communication at the same time) or asynchronous. The technologies may include

  1. the Internet;

  2. audio conferencing; or

  3. one-way and two-way transmissions through open broadcast, closed circuit, cable, microwave, broadband lines, fiber optics, satellite, or wireless communications devices.

A course taught through video cassettes or discs is also considered a distance education course but only if one of the three technologies listed is used to support interaction between the students and the instructor.

Correspondence courses

Correspondence courses and institutional eligibility
34 CFR 600.2, “Correspondence course”
34 CFR 600.7(a)(1)(i) and (ii)
34 CFR 602.3, “Correspondence education”
HEA Sec. 102(a)(3)(A) and (B)

Unlike distance education courses, which are treated the same as all other eligible programs, some restrictions apply to correspondence courses. A correspondence program at a domestic school is considered an eligible FSA program if it has been accredited by an accrediting agency recognized by the Department for accreditation of correspondence education.

A correspondence course is a home-study course for which the school provides instructional materials, including examinations on the materials, to students who are not physically attending classes at the school. Interaction between the instructor and student is limited, not regular and substantive, and primarily initiated by the student.

Correspondence courses are typically self-paced. When a student completes a portion of the instructional materials, the student takes the examinations that relate to that portion of the materials and returns the examinations to the school for grading.

If a course is part correspondence and part residential training, the course is considered to be a correspondence course. For example, a school offers a truck driving program, the first part of which is offered via correspondence. After completing that part of the program, the student has to attend a residential site where he learns how to drive trucks. This is a correspondence program.

If a school adds distance education technology, such as electronic delivery of course materials or an online discussion board, to a correspondence course, the school must ascertain the predominant method of instruction (correspondence or distance education), keeping in mind that a distance education course must use technology to support regular and substantive interaction between the students and instructor. The school must use the rules for the predominant method in administering the FSA programs.

If a school offers more than 50% of its courses by correspondence or if 50% or more of its students are enrolled in its correspondence courses, the school loses its eligibility to participate in the FSA programs (see Chapter 1).

Note that correspondence students enrolled in certificate programs are not eligible for FSA funds. For a full discussion of when a school may pay a student for correspondence study, see Volume 1, Chapter 1. Also see Volume 3, Chapter 2 for limitations on the cost of attendance for correspondence students and Volume 3, Chapter 1 for the timing of disbursements to correspondence students.

Determining Program Eligibility and Clock-Hour to Credit-Hour Conversions

The credit hour definition and the clock-hour to credit-hour conversion rules serve two purposes: to determine program eligibility and to determine the award amount for certain FSA programs. See the program integrity Q’s & A’s for more information.

In this section, we discuss the first of these topics—the use of the clock-hour to credit-hour conversion rules in determining if a program meets the minimum program length requirements discussed earlier in the chapter.

Definition of a clock hour

A clock hour is defined as a period of time consisting of

  1. a 50- to 60-minute class, lecture, or recitation in a 60-minute period;

  2. a 50- to 60-minute faculty-supervised laboratory, shop training, or internship in a 60-minute period; or

  3. sixty minutes of preparation in a correspondence course.

Definition of a credit hour

A credit hour is an amount of work that reasonably approximates not less than

  1. one hour of classroom or direct faculty instruction and a minimum of two hours of out-of-class work each week for approximately 15 weeks for one semester or trimester hour of credit, or 10 to 12 weeks for one quarter hour of credit, or at least the equivalent amount of work over a different amount of time; or

  2. at least an equivalent amount of work as required in paragraph (1) of this definition for other academic activities as established by the institution including laboratory work, internships, practica, studio work, and other academic work leading to the award of credit hours.

Note that the classroom/direct faculty instruction time and outof- class student work requirement in #1 does not mean you must have a certain number of hours of those specific types of instruction every week; it is an average required over the length of the course and may be institutionally established equivalencies that reasonably approximate the minimum standard using different measures of student work.

You may set a higher standard that requires more student work per credit-hour, and you may use a measure or metric different from this definition for academic and non-federal aid purposes. The regulations make an exception to this definition in the case of programs that the clock-hour to credit-hour conversion formula, as described in the following text.

Measuring attendance in clock hours

A student’s period of attendance is measured according to one of several commonly accepted academic standards. A clock hour is based on an actual hour of attendance (though each hour may include a 10-minute break). Credit hours are typically based on two hours of homework for each hour of class attendance.

A school is not permitted to count more than one clock hour per 60-minute period; in other words, a school may not schedule several hours of instruction without breaks and then count clock hours in 50-minute increments. For instance, a school could not consider seven consecutive hours of instruction to be 8.4 hours by dividing 50 minutes into 420 minutes. Seven 60-minute periods of instruction may not count for more than seven clock hours.

Clock-hour to credit-hour conversions in determining program eligibility

If your school offers an undergraduate educational program in credit hours that is considered a GE program, it must use one of the following conversion formulas unless

  • the program is at least two academic years in length and provides an associate degree, a bachelor’s degree, a professional degree, or an equivalent degree as determined by the Department (Note that this does not permit a school to ask for a determination that a non-degree program is equivalent to a degree program.); or

  • each course within the program is acceptable for full credit toward a single associate degree, bachelor’s degree, professional degree provided by that institution, or equivalent degree as determined by the Department, provided that 1) the school’s degree requires at least two academic years of study; and 2) the school demonstrates that students enroll in, and graduate from, the degree program.

Clock-hour to credit-hour conversions
34 CFR 668.8(k) & (l)
Definitions of clock hour and credit hour
34 CFR 600.2

The formula will determine if, after the conversion, the program includes the minimum number of credit hours to qualify as an eligible program for FSA purposes. The formula also determines the number of Title IV credit hours associated with each class that an institution can use to determine a student’s enrollment status during the program.

For determining the number of credit hours in that educational program

  • a semester hour must include at least 37.5 clock hours of instruction,

  • a trimester hour must include at least 37.5 clock hours of instruction, and

  • a quarter hour must include at least 25 clock hours of instruction.

For more information on how to perform the clock-hour/credit-hour conversion, see the Clock-Hour to Credit-Hour Conversion Example at the end of this chapter.

Credits approved by state and accrediting agencies

When states and accrediting agencies approve programs, they sometimes also approve the number of credits in those programs. The credits approved by states and accrediting agencies are not necessarily the credits that will be approved if the program becomes eligible for Title IV aid. For Title IV purposes, the number of credits in the program will be those determined by the clock-hour to credit-hour conversion formula, but they will never be more than those approved by a state or accrediting agency. The regulations for state and accreditation agencies explain how an agency reviews a school’s assignment of credit hours.

34 CFR 602.24 and 603.24

State requirements and clock-hour to credit-hour conversions

If a state requires that a program that prepares students for a recognized occupation be composed of a minimum number of hours of training and a school offers a GE program that prepares a student for that occupation, the number of hours in the program cannot exceed the state minimum by more than 50%. For example, if Alaska requires that students preparing for a career in air conditioning and refrigeration repair complete 1,000 hours of training, the Department will not approve Title IV participation for any GE program (clock hour or credit hour) in air conditioning and refrigeration repair that is composed of more than 1,500 hours (150% X 1,000).

If a school provides a credit-hour GE program that is subject to the clock-hour to credit-hour conversion, and the school includes out-of-class hours in the conversion calculation (using the “full formula” described at the end of this chapter), the school must include those outof- class hours when determining whether the hours in the program exceed the minimum hours required by the state by more than 50%.

If a school’s credit-hour GE program is not subject to the conversion but is still subject to the limitation because its state has established a minimum number of clock hours required for training, the school has options for demonstrating compliance. If the state has established its own clock-to-credit hour equivalency, the school may use that equivalency to demonstrate that the program’s hours do not exceed the limitation. A school can also show that the clock hours (in-class hours) associated with the program’s coursework do not exceed the maximum allowed. If no other method can be used to demonstrate compliance, the school must multiply the number of credit hours in the program by 37.5 (if a semester-hour program) or 25 (if a quarter-hour program) and ensure that the result does exceed the state-required hours by more than 50%.

If a school applies the appropriate formula and finds that a program is eligible, the converted credit hours are used to determine the amount of FSA funds that a student who is enrolled in the program is eligible to receive as explained in Volume 3, Chapter 1.

Out-of-class student work

The school’s minimum number of clock hours of instruction per credit may be less if its designated accrediting agency or recognized state agency for the approval of public postsecondary vocational institutions for participation in the FSA programs has not identified any deficiencies with the school’s policies and procedures for determining the credit hours that the school awards for programs and courses. In such cases student work outside of class combined with the clock hours of instruction must meet or exceed the numeric requirements (37.5 or 25), and

  • a semester hour must include at least 30 clock hours of instruction,

  • a trimester hour must include at least 30 clock hours of instruction, and

  • a quarter hour must include at least 20 hours of instruction.

Merely having coursework that is outside of class does not mean a school can automatically divide by 30 or 20. The minimum may be higher than 20 or 30 depending on the amount of out-of-class work that is expected in the different educational activities of a program and may vary depending on the particular activity. The case study that follows illustrates a method for accurately accounting for any out-of-class work a student may have in a course.

Also, the amount of out-of-class work in a particular course or activity in a program does not carry over to other courses or activities.

Rounding

A school must have a policy that specififies the number of decimal places it will use in the steps of its calculation, and round at each of the steps in the calculation to that number.

Because the results of these formulas determine the eligibility of a program, the resulting number of credit hours both in each step and fifinal result may not be rounded up.

Since the E-app accepts whole numbers only, when reporting on the E-app, a school must round down to the whole number.

In determining a student’s enrollment level, a school must use the exact number of decimal places specified in its policy on rounding.

Clock-Hour to Credit-Hour Conversion Example

Prejean Community College (PCC), a public institution located in Louisiana that offers its courses in a semester format, has been told by the state that it must begin offering a 27 semester-hour career-training program previously offered in a clock-hour format by a post-secondary vocational-technical school. The program does not lead to a degree, and all of its courses do not transfer into a single degree program at the institution. Therefore, the program is subject to the clock-hour to credit-hour conversion.

Alice Defontes, PCC’s financial aid officer discovers that a school has two options when performing a clockhour/ credit-hour conversion—a Default Formula and a Full Formula. Alice decides to perform the calculation both ways in order to determine which option would most benefit students, and that she will ultimately select.

Neither the state or PCC’s accrediting agency specifies rounding rules, but PCC’s policies and procedures state that PCC performs calculations to 2 decimal points and awards credits using whole credit hours.

The program’s information is as follows:

Course

Hours of Classroom Instruction

Out-of-Class Hours in Course

Credits assigned by school

1

105

30

4

2

83

18

4

3

78

25

4

4

111

35

2

5

195

45

6

Externship

375

0

7

Total

947

153

27

The first four courses are offered in the first semester, and the fifth course and the externship are offered in the second semester.

To apply the Default Formula, Alice ignores the out-of-class hours and simply divides the number of hours of inclass instruction by 37.5 and rounds down to the nearest whole number. As she performs the calculation using the Default Formula, Alice must keep in mind the following rules:

Using the Default Formula for the conversion

  • A school must perform the calculations on each individual component (course) in the program.

  • Regardless of the results of the conversion calculation, a school cannot award more credit for Title IV purposes than the academic credit assigned to a course by the school and/or approved by its state or accrediting agency.

  • A school must have a policy that specifies the number of decimal places (fractions of credit hours) it will use in its calculation.

  • A school that elects to round its calculations, when determining student eligibility, must round down at the level of each individual course or educational activity. The school must not wait until the last step and round the total.

Default Formula

Semester 1

Course

Hours of Classroom Instruction

Credits assigned by school

Conversion Calculation

1

105

4

105÷37.5 = 2.80 rounded to 2

2

83

4

83÷37.5 = 2.21 rounded to 2

3

78

4

78÷37.5 = 2.08 rounded to 2

4

111

2

111÷37.5 = 2.96 rounded to 2

Totals

377

14

8

Semester 2

Course

Hours of Classroom Instruction

Credits assigned by school

Conversion Calculation

5

195

6

195÷37.5 = 5.20 rounded to 5

Externship

375

7

375÷37.5 = 10.0 limited to 71

Totals

570

13

12

Program Totals

947

27

20

1 Regardless of the results of the conversion calculation, a school cannot award more credit for Title IV purposes than the academic credit assigned to a course by the institution, and/or approved by a state or accrediting agency.

After applying the Default Formula, Alice finds that during the first semester of the program, students are eligible to be paid for only 8 credit hours of instruction. Because this is less than the full-time student minimum of 12 credit hours, students who attend the first semester are eligible to be paid for only half-time attendance. In the second semester of the program, students are eligible to be paid for 12 credit hours of instruction. Students attending the second semester can be paid as full-time students.

Alice must follow some additional rules when applying the Full Formula. Since Alice cross trains her staff, she gathers Barry, Jack, Lucille, Agnes and Miles, and together they make the following list of the rules:

Using the Full Formula for the conversion

  • A school must perform the calculations on each individual component (course) in the program.

  • Regardless of the results of the conversion calculation, a school cannot award more credit for Title IV purposes than the academic credit assigned to a course by the school and/or approved by its state or accrediting agency.

  • A school must satisfy the requirement that a credit hour must include at least 30 in-class hours of instruction for a program offered in semesters or trimesters or 20 clock-hours of instruction for a program offered in quarters.

  • A school may include in the conversion calculation only 7.5 out-of-class hours for every 30 in-class hours for a semester program, and 5 out-of-class hours for every 20 in-class hours in a quarter hour program.

  • A school must have a policy that specifies the number of decimal places (fractions of credit hours) it will use in its calculation.

  • A school that elects to round its calculations, when determining student eligibility, must round down at the level of each individual course or educational activity. The school must not wait until the last step and round the total.

As Alice calculates the program’s eligibility using the Full Formula, she will proceed through the following steps:

Step 1 For each course, calculate the maximum number of credits your course could be eligible for by dividing the hours of classroom instruction by 30 if the course is offered in semester or trimesters and 20 if the course is offered in quarters.

Step 2 Multiply the maximum number of credits by 7.5 to find the number of out-of-class hours required for the course to be worth that maximum number of credit hours.

Step 3 If, after rounding, the number of out-of-class hours is equal to or greater than the number of out-of-class hours required, then the course is worth the number of credits established in Step 1. If not, go to Step 4.

Step 4 Sum the in-class hours and out-of-class hours and divide by 37.5 hours (for a program offered in semesters or trimesters) or 25 hours (for a course offered in quarters) and go to step 5.

Step 5 Apply school’s rounding policy—either one mandated by the state or the accrediting agency or otherwise chosen by the school and included in its policies and procedures. You must round down to the whole number or decimal specified in your school’s policies.

Full Formula

Semester 1

Course

Hours of Classroom Instruction

Out-of-Class Hours in Course

Out-of class hours after limit applied

Credits assigned by school

Conversion Calculation

1

105

30

26.251

4

(105+26.25)/37.5 = 3.50 rounded to 3

2

83

18

18.00

4

(83+18)/37.5=2.69 rounded to 2

3

78

25

19.501

4

(78+19.5)/37.5=2.60 rounded to 2

4

111

35

27.751

2

(111+27.75)/37.5=3.7 limited to 22

Totals

377

108

91.501

14

9 credit hours

Semester 2

Course

Hours of Classroom Instruction

Out-of-Class Hours in Course

Out-of class hours after limit applied

Credits assigned by school

Conversion Calculation

5

195

45

45.00

6

(195+45)/37.5=6.4 rounded to 6

Externship

375

0

n/a

7

(375+0)/37.5=10 limited to 72

Totals

570

45

45.00

13

13

Program Totals

947

153

136.5

27

22

1The rules permit an institution to include in the conversion calculation only 7.5 out-of-class hours for every 30 in-class hours. For example, 105 in-class hours divided by 30 equals 3.5, which multiplied by 7.5 equals 26.25. For this class, the maximum number of out-of-class hours that may be considered is 26.25.
2Regardless of the results of the conversion calculation, a school cannot award more credit for Title IV purposes than the academic credit assigned to a course by the institution, and/or approved by a state or accrediting agency.

For the first semester of the program, students are eligible for payment for only 9 credit hours of instruction. Because this is less than the full-time student minimum of 12 credit hours, students who attend the first semester are eligible to be paid for only 3/4-time attendance.

In the second semester of the program, students are eligible to be paid for 13 credit hours of instruction. Students attending the second semester can be paid as full-time students.

The state of Louisiana requires 700 clock hours for employment in the occupation for which the program prepares students. Therefore, the maximum number of hours included in the conversion calculation cannot be more than 150% of 700 or 1,050 hours.

Since the sum of the number of classroom hours and out-of-class hours (after the limits are applied) in the Full Formula is 1,065.5 (377 + 91.5 + 570 + 45) and that total exceeds 1,050, Alice cannot use the Full Formula results unless the school reduces the number of in-class or out-of-class hours in the program to the point at which the sum of the number of classroom hours and out-of-class hours (after the limits are applied) is less than or equal to 1,050.

References
References
34 CFR 668.8(k)
34 CFR 668.8(l)(1)(i), (ii), and (iii)
34 CFR 668.14(b)(26)

Published: 03/28/2021