Institutional Eligibility

This chapter discusses the three types of institutions that are eligible to participate in the Title IV programs. If circumstances change and a participating school no longer qualifies as an eligible institution, it must notify the Department of Education (the Department; see Chapter 5) and carry out the closeout procedures described in Chapter 8.

Schools must apply to and receive approval from the Department to be eligible to participate in the Title IV programs before they can be certified for participation. Some schools apply only for designation as an eligible institution—they do not seek to participate—so their students may receive deferments on Title IV program loans or be eligible for the American Opportunity and Lifetime Learning tax credits or other non-Title IV programs that require schools to be Title IV-eligible. The same application is used to apply for both eligibility and certification for participation (see Chapter 2).

To assess your school’s compliance with this chapter’s provisions, see the institutional eligibility module on the FSA Assessments website.

The law defines three kinds of eligible institutions—institutions of higher education, proprietary institutions of higher education, and postsecondary vocational institutions. Each type of school is eligible to participate in all of the Title IV programs, provided it offers the appropriate type of program. This section covers the key elements of the three definitions, giving special attention to those requirements that affect the definition of an eligible program.

Although the criteria for the three types of institutions differ, it is possible that an institution of higher education can also qualify as a postsecondary vocational institution by offering programs that are less than an academic year in length and lead to a certificate or other nondegree recognized credential.

The control and ownership of an institution distinguishes whether it is public or private and nonprofit or for-profit. By definition, an institution of higher education or a postsecondary vocational institution can be either public or private but is always nonprofit. A proprietary institution of higher education is always a private, for-profit institution.

To be eligible an institution must

These requirements are discussed in the following sections.

Generally, an eligible institution must be located in a state. A school is physically located in a state if it has a campus or instructional site in that state. There are certain limitations and exceptions:

There are two basic requirements for an institution to be considered legally authorized by a state for the purpose of Title IV program eligibility: (1) the state must authorize the institution by name to operate postsecondary educational programs; and (2) the state must have a process to review and act on complaints concerning the institution, including enforcing applicable state laws. The following are exempt from both of these requirements:

Religious institutions must comply with (2) but are exempt from (1) above—i.e., they are already considered to be legally authorized to operate postsecondary educational programs—if they are exempt from state authorization as religious institutions under the state constitution or by state law.

A school can be established by name as an educational institution through a state charter, statute, constitutional provision, or other action by an appropriate state entity. See DCL GEN-13-20 for an explication of “other action.” The school must be authorized to operate educational programs beyond the secondary level, including programs leading to a degree or certificate. In addition, the institution must comply with any applicable state approval or licensure requirement, although the state may exempt the school from that approval or requirement based on the school being in operation for at least 20 years or on its accreditation by one or more accrediting agencies recognized by the Department.

If a school was not established by name as an educational institution but was established by a state on the basis of an authorization to conduct business or to operate as a nonprofit charitable organization, it must show that the state took an active role in approving or licensing it to offer programs beyond secondary education, including programs leading to a degree or certificate. Again, see DCL GEN-13-20 for more. Such a school can’t be exempted from state approval or licensure requirements based on accreditation, years in operation, or a comparable exemption.

A school must have documentation that it has the authority to operate in a state at the time of its certification to participate in the Title IV programs. For more information on applying for participation in the Title IV programs, see the New School Guide. Existing Title IV schools should ensure that they are currently in compliance with the regulations, but they are not required to immediately update their Eligibility and Certification Approval Report (ECAR). Instead, they can include the information showing their state authorization when they next submit their application for approval to participate in the Title IV programs. For questions about documenting state legal authorization, schools should contact their participation division.

If a school offers coursework through distance education or correspondence courses to students in a state in which the school is not physically located or is otherwise subject to that state’s jurisdiction, the school must meet any of the state’s requirements for it to offer postsecondary distance education or correspondence courses there. A school is considered to meet state authorization requirements for distance education or correspondence courses if the state participates in an authorization reciprocity agreement and the school is covered by the agreement (subject to any limitations in the agreement and to any additional requirements the state has that do not relate to authorization of distance education).

A school must, upon request, provide documentation to the Department that it has met a state’s authorization requirements, including by coverage under a reciprocity agreement.

The state must have a process to review and act on complaints (for example, about fraud or false advertising) concerning a school, which must provide the contact information for filing those complaints to enrolled and prospective students. Complaints can be handled by the state attorney general’s office or a state agency as long as that entity can review, investigate, and resolve complaints against the school. There may be different complaint processes for different types of schools. Whatever entity handles complaints, the state must have the final authority for the process. See DCL GEN-14-04 for more information.

Previously states had to have a process for reviewing and acting on complaints by its students against out-of-state schools that were providing them distance education. With the state authorization regulations that became effective July 1, 2020, that is no longer a requirement. A school is required to document that a state-based complaint process exists in every state that it has a physical location, but it is not required to document that a state has a complaint process where the school does not have a physical location but where it does have students enrolled in distance education and correspondence courses. The complaint process in the school’s home state is expected to receive and act upon complaints from those students. Note that 34 CFR 668.43(b) requires an institution to provide its students or prospective students with contact information for filing complaints with its state approval or licensing agency and any other state official or agency that would appropriately handle a student’s complaint.

A school must determine what state its students are located in so that it can ensure that it complies with each state’s authorization requirements. This determination must accord with the school’s policies and procedures and must be applied consistently to all students. The school must determine each student’s state when they initially enroll in an educational program and, if applicable, upon formal receipt of information from the student, according to school procedures, that their location has changed to another state. The school must document the basis for its determination of a student’s location and must, upon request, provide that documentation to the Department.

Generally, a school must be accredited or pre-accredited by a nationally recognized accrediting agency or association (both referred to here as agencies) to be eligible.

Except as provided here, a school must be accredited by an agency that has the authority to cover all of the institution’s programs. An agency such as this is referred to as the school’s primary accrediting agency. A school can have only one primary accreditor.

A school may also be accredited by one or more programmatic accrediting agencies. A programmatic accrediting agency is one that accredits only individual educational programs that prepare students for entry into a profession, occupation, or vocation. § 668.14(b)(32)(i) requires all programs that prepare students for occupations requiring programmatic accreditation to meet those requirements.

If a school is seeking to change primary accreditors, it must first provide the Department and the agencies all materials documenting the reasons for the change. You can find information on accreditation changes in Chapter 5.

The law provides two statutory alternatives to accreditation by a recognized accrediting agency. First, a public or private nonprofit institution may be pre-accredited by an agency or association that has been approved by the Department to grant such pre-accreditation. Second, public postsecondary vocational educational institutions may be eligible for Title IV funds if accredited by a state agency that the Department determines to be a reliable authority.

The primary accreditor typically is an accrediting agency whose scope is institution-wide rather than only programmatic. A participating institution must tell the Department which accrediting agency it wants to serve as its primary accrediting agency for Title IV eligibility. If a school offers only programs of a singular nature, the school’s primary accreditor may be an agency that accredits only those specific educational programs.

If a school is accredited by two agencies at the same time, the school must designate which agency’s accreditation will be used in determining institutional eligibility for Title IV funds and must inform the Department via the E-App. Further, the school must provide to the Department and to both agencies all materials documenting the reasons for dual accreditation before the school adds the additional accreditation. See Chapter 5 for more on changes in accreditation and loss of eligibility.

The Department periodically publishes a list of nationally recognized accrediting bodies based on criteria in 34 CFR Part 602 in the Federal Register. The list of accrediting agencies recognized for Title IV purposes is on the U.S. Department of Education website.

An eligible institution may admit as regular students only persons who have a high school diploma or its recognized equivalent, are beyond the age of compulsory school attendance in the state in which the school is located, or are dually enrolled in the college and a secondary school. See “Limitation on Students Admitted Without a High School Diploma or Equivalent” in Chapter 4.

An eligible student must have a high school diploma or its recognized equivalent or be beyond the age of compulsory attendance and meet the criteria for homeschooled students. A student dually enrolled in high school and college is not eligible for Title IV funds. See Volume 1, of the FSA Handbook, Chapter 1.

A high school diploma is a document recognized by the state in which the high school is located. Unless required by its accrediting or state licensing agency, the college is not required to keep a copy of a student’s high school diploma or recognized equivalent of a high school diploma (see below). Rather, the college may rely on the student’s certification (including that on the FAFSA) that they received the credential and a copy of the certification must be kept on file. This certification need not be a separate document. It may be collected on the college’s admissions application. The college may also require the student to provide supporting documentation.

The following are the equivalent of a high school diploma:

As stated in 34 CFR 668.16(p), a college must develop and follow adequate procedures to evaluate the validity of a student’s high school completion if the college or the Department has reason to believe that the high school diploma is not valid or was not obtained from an entity that provides secondary school education. This is discussed in detail in Volume 1, Chapter 1 of the FSA Handbook.

The college must develop and follow adequate procedures to evaluate the validity of a student's high school diploma if it or the Department has reason to believe that the high school diploma is not valid or was not obtained from an entity that provides secondary school education, consistent with the following requirements:

Obtaining documentation from the high school that confirms the validity of the high school diploma, including at least one of the following:

If the high school is regulated or overseen by a State agency, Tribal agency, or Bureau of Indian Education, the college must confirm with, or receive documentation from that agency that the high school is recognized or meets requirements established by that agency.

If the Department has published a list of high schools that issue invalid high school diplomas, the college must confirm that the high school does not appear on that list.

A high school diploma is not valid if it:

The Department considers a homeschooled student to be beyond the age of compulsory school attendance if the state in which the college is located does not consider them truant once they have completed homeschooling.

For instance, if your state requires children to attend school until age 17, you may admit as a regular student a child who completes their secondary homeschooling curriculum at age 16 if your state would not consider them truant and would not require them to go to high school or continue homeschooling until age 17.

You may rely on a homeschooled student’s self-certification that he completed secondary school in a homeschool setting, as discussed in Volume 1, Chapter 1, under “Academic Qualifications.”

Effective July 1, 2024, the regulations at 34 CFR 668.2 added a new definition of an eligible career pathway program (ECPP). An ECCP is defined as a program that combines rigorous and high-quality education, training, and other services that:

Students enrolled in an eligible Ability to Benefit (ATB) career pathway program who are not high school graduates and don’t have a diploma equivalent may be eligible to receive Title IV aid if they fulfill one of the following ATB alternatives:

Institutions relying on the ATB ECPP alternatives to establish student eligibility for Title IV funds must be able to document that each ATB ECPP offered by the institution meets the eligibility requirements detailed in the cited regulation. That documentation must be provided to the Department when obtaining initial approval for the ATB ECPP or when requested by the Department.

Institutions that offered one or more ATB ECPPs prior to July 1, 2024, must apply to the Department to have one of its ECPPs certified as eligible for Title IV purposes by the earlier of:

At that time, institutions will need to upload documentation using the E-App to demonstrate that one of its ECPPs meets the eligibility requirements. The institution will also be expected to provide a list of all other ATB ECPPs and certify that they meet the regulatory requirements. The Department reserves the right to request documentation for other programs if circumstances warrant. If the Department determines that the ECPPs don’t meet the regulatory requirements, students enrolling in the programs may not use the ATB alternatives to establish Title IV eligibility. Students already enrolled under the ATB ECPP alternatives will remain eligible for Title IV funding.

For institutions that have not offered an ATB ECPP prior to July 1, 2024, the institution must submit an E-App with supporting documentation and receive approval from the Department prior to awarding Title IV aid to prospective students. After the first CPP has been approved as eligible, the institution can offer more ATB ECPPs without approval. The institution must notify the Department of additional programs and certify that all other ATB ECPPs meet the regulatory eligibility requirements. The Department may choose to review any subsequent ATB ECPPs offered by your institution for any reason.

If the Department does not approve an ATB ECPP for eligibility purposes, the institution may appeal that decision by contacting its appropriate regional office to initiate the appeal.

See DCL GEN-24-08 Ability to Benefit State Process and Eligible Career Pathway Programs for more information, including a list of Q’s and A’s about eligible career pathway programs.

A school that admits students without a high school diploma or its recognized equivalent (except homeschooled students) must make available to them a program that has proven successful in helping students obtain the equivalent of a high school diploma.

For example, such a program might assist a student in obtaining a GED certificate or the state certificate mentioned earlier. It could be a preparatory program conducted by state and local secondary school authorities, or any other program for which the school has documentation that statistically demonstrates success. The school must provide information about the availability of the program to interested students.

The school does not have to provide the program or pay for its cost. The program must be offered at a place that is convenient for students, and the school must take reasonable steps to ensure that they have access to it, such as coordinating the timing of school programs and the preparatory program.

The law does not require a school to verify that a student is enrolled in a preparatory program or to monitor his progress in it. A student who does not have a high school diploma or its recognized equivalent is not required by law to enroll in such a program, but the school may make this an admission requirement.

A student may not receive Title IV funds for the program, and a school cannot include the cost of the program in a student’s cost of attendance.

To be eligible as a proprietary institution or a postsecondary vocational institution, a school must be legally authorized to give (and have continuously been giving) the same postsecondary instruction for at least two consecutive years prior to its application. The educational program(s) offered must remain substantially the same in length and subject matter except for changes made because of new technology or requirements of other federal agencies. A school subject to the two-year rule may not award Title IV funds to a student in a program that is not included in the school’s approval documents.

If a school is subject to the two-year rule, during the school’s initial period of participation in the Title IV programs, the Department will not approve additional programs that would expand the institution’s eligibility. An exception would be considered if the school demonstrates that the program has been legally authorized and continuously provided for at least two years prior to the date of the request.

A branch campus of an eligible proprietary institution or postsecondary vocational institution seeking status as a main campus or freestanding institution is subject to the two-year rule. It must be designated as a branch campus for two years after certification as such by the Department before it can seek certification as a main or freestanding school.

An additional location must obtain approval from the Department to become a branch campus. A branch campus then must satisfy the two-year rule before it may be considered for status as a freestanding institution. Time as an additional location of an eligible proprietary institution or postsecondary vocational institution does not count toward the two years.

An otherwise eligible institution becomes ineligible if it violates, among other requirements,

The school must demonstrate compliance with these limitations, and its calculations must be attested to by the independent auditor. Under certain circumstances, waivers are available for each limitation. Chapter 4 explains the calculations and waivers and how the school must notify the Department of a failure to meet any of these requirements. See also 34 CFR 600.7(h).

A school is not eligible if it files for relief in bankruptcy or has entered against it an order for bankruptcy. The school is also ineligible if either of these circumstances apply to an affiliate of the school that has the power, by contract or ownership interest, to direct or cause the direction of the management of policies of the school.

A school also loses eligibility if it, its owner, or its executive officer has

If a school becomes ineligible for any of these reasons, it must notify the Department of the change within 10 days. A school that becomes ineligible because of one of these factors must immediately stop awarding Title IV funds and must follow the requirements for a school that has lost its Title IV participation (see Chapter 8). The loss of eligibility is effective as of the date of the bankruptcy or the date the school or individual pleads guilty to, or is found responsible for, the crime, as applicable. A loss of eligibility for these two reasons is permanent—the school’s eligibility cannot be reinstated.

See Chapter 3 for information about the prohibition on schools having as principals—or contracting with other organizations that employ—individuals who have been involved in crimes pertaining to the use of government funds generally.

Eligibility for the Teacher Education Assistance for College and Higher Education (TEACH) Grant program is not automatically extended to a Title IV-eligible postsecondary school. A school qualifies as a “TEACH Grant-eligible institution” if it offers a high-quality teacher preparation program at either the baccalaureate or master’s level that provides supervision and support services to teachers (or assists in the provision of such services). The teacher preparation program must also be accredited by a specialized accrediting agency recognized by the Department for the accreditation of professional teacher education programs or be approved by a state and meet certain other requirements.

If a school does not have a teacher preparation program, it can qualify as a TEACH Grants-eligible institution if it

At present, there are no agencies for the accreditation of high-quality teacher preparation programs that are recognized by the Department. Thus, a school that offers a high-quality teacher preparation program at the baccalaureate or master’s degree level can only qualify as a TEACH Grant-eligible institution if the teacher preparation program is approved by a state, includes a minimum of 10 weeks of full-time pre-clinical experience, or its equivalent, and provides either pedagogical coursework or assistance in the provision of such coursework. See DCL GEN-08-07.

Some schools choose to establish their eligibility for Title IV programs but elect not to participate in them because designation as an eligible institution qualifies a school or its students to take advantage of non-Title IV programs or benefits, such as the American Opportunity and Lifetime Learning tax credits. In addition, only students attending eligible institutions qualify for in-school deferments of payments on their federal education loans.

A school wishing to be designated an eligible nonparticipating institution may submit an E-App to the Department at any time. The application must be materially complete.

The Department will contact the school, generally within 90 days of receiving the application, if it has additional questions. If it approves the school’s application, it will send an electronic notice to the president and financial aid officer stating that the school is eligible and that its approval letter and ECAR must be printed and maintained. If the Department does not approve the school’s application, it will tell the school why.

Students are considered to have withdrawn if they officially withdraw, unofficially drop out, are expelled from the school, or receive a 100% refund of their tuition and fees. Those who withdraw from one or more courses or programs but do not withdraw entirely from the school (e.g., the students reduced their credit hours from 12 to 6) do not meet the definition of withdrawn. Instead, this action is considered a change in enrollment status.

New schools (those seeking to participate in a Title IV program for the first time) must have an undergraduate withdrawal rate for regular students of no more than 33% during the last completed award year.

When calculating the withdrawal rate, the school must include all regular, enrolled students. For the purpose of withdrawal rates, students are considered enrolled when they complete the school’s registration requirements. Correspondence students are enrolled if they have been admitted to the program and have submitted one lesson (that was completed without the assistance of a school representative). The definition of enrolled does not require either payment of tuition or class attendance; therefore, the withdrawal rate calculation must include enrolled students who have not yet paid tuition or begun attending classes.

To be Title IV-eligible, schools must have a current program participation agreement (PPA), signed by their president, chief executive officer, or chancellor and an authorized representative of the Secretary of Education. Note that the PPA and the E-App (see Chapter 5) are not the same thing. The E-App is used to apply to participate in the Title IV programs initially (which results in a PPA) and to update a current approval; it’s also used for recertification, reinstatement, change in ownership, and designation as an eligible nonparticipating institution.

By enterening into the PPA the school agrees to comply with the laws, regulations, and policies governing the Title IV programs. After being certified for Title IV program participation, the school must administer Title IV program funds in a prudent and responsible manner. A PPA contains critical information such as the effective date of a school’s approval, the date when the approval expires, and the date by which the school must reapply for participation; the PPA also includes the Title IV programs in which the school is eligible to participate. The Title IV programs are:

A school may make Pell and TEACH Grant disbursements to students for the payment period in which the PPA is signed by the Secretary. Schools receiving initial certification can participate in the Campus-Based programs in the next award year that funds become available (provided the Fiscal Operations Report and Application to Participate is completed by the deadline for that year). Direct Loan disbursements may begin in the loan period that the PPA is signed.

A PPA must be signed by the official at the institution who has the authority to sign on behalf of the institution. That individual is typically the institution’s chief executive officer, president, chancellor, or other designated official. In appropriate cases, FSA also requires an authorized representative of any entity with direct or indirect ownership of a private institution to sign a PPA.

By entering into a PPA, an institution agrees that it will comply with the provisions of 34 CFR Part 668, Subpart L relating to factors of financial responsibility and that it will comply with the provisions of 34 CFR 668.16 relating to standards of administrative capability. Thus, to ensure financial responsibility, the Department may in certain cases require signatures from corporations or other legal entities that have, or could have, a direct or indirect effect on the institution’s financial responsibility.

For more information about these signature requirements, please review Electronic Announcement (GENERAL-22-16) and Electronic Announcement (GENERAL-23-11).

Either the school or the Department may terminate the PPA. The agreement automatically terminates if the school loses eligibility. The PPA also expires on the date that

A school’s PPA no longer covers an additional location as of the date on which that location ceases to be a part of the school.

The Experimental Sites Initiative permits statutory and regulatory flexibility for schools participating in the experiments. This gives the Department data for judging the effectiveness of certain laws and regulations and whether they should change. For example, the Second Chance Pell Experiment allows participating colleges to provide Federal Pell Grant funding to otherwise eligible students who are incarcerated in Federal or State penal institutions. Visit the ESI website for more information and to review a listing of other experiments.