Important
The guidance in this letter and the corresponding questions and answers supersedes the Department’s original guidance on written arrangements between U.S. and foreign institutions in Dear Colleague Letter GEN-11-18 and guidance regarding ineligible courses at foreign institutions in Dear Colleague Letter GEN-14-20.
For guidance on written arrangements not involving foreign institutions, see Dear Colleague Letter GEN-22-07.
Dear Colleague:
On September 2, 2020, the Department published in the Federal Register final regulations making changes to the requirements for foreign institutions that participate in the William D. Ford Direct Loan (Direct Loan) Program (85 FR 54742). These regulations were effective July 1, 2021, although agencies and institutions had the option to early implement changes under the new Final Rule beginning on September 2, 2020.
This letter provides guidance on the Title IV, HEA eligibility of educational programs offered through written arrangements between U.S. and foreign institutions under the new and previously existing regulations. This guidance is provided to assist institutions with understanding the changes to the regulations in this area and does not make any changes to the regulations.
The final regulations are codified in 34 CFR Parts 600, 602, and 668.
Please note that although the Final Rule, as well as this letter, contains references to the "Title IV, HEA programs," the only Title IV, HEA program in which foreign institutions have been authorized to provide financial assistance since July 1, 2010, is the Direct Loan Program. In addition, please note that although the Department's regulations on foreign institutions as codified in the Code of Federal Regulations at 34 CFR Part 600, Subpart E, continue to contain a number of references to the Federal Family Education Loan Program, those references are obsolete.
Ineligible Courses
All programs offered by foreign institutions to Direct Loan recipients must meet the Department’s program eligibility requirements. The Department’s regulations regarding the eligibility of foreign institutions to apply to participate in the Direct Loan Program contain certain restrictions on programs in which Direct Loan recipients may enroll:
-
Under 34 CFR 600.51(d), a program offered by a foreign institution may not include any use of a distance education course, correspondence course, or direct assessment, except that distance education technologies may be used to supplement and support instruction in a classroom located in the foreign country where the students and instructor are physically present.
-
Under 34 CFR 600.52, a foreign institution may not permit students to exceed 25 percent of a program through any combination of coursework, research, work, or special studies provided by eligible institutions located in the United States and internships or externships in the United States, including those provided by an ineligible organization under 34 CFR 668.5(h)(2). Despite this prohibition, independent research done by an individual student in the United States for not more than one academic year is permissible if it is conducted during the dissertation phase of a doctoral program under the guidance of faculty and the research can only be performed in the United States. Institutions should note, however, that these two provisions may not be stacked to amount to both one year of research and up to 25 percent of coursework completed in the United States. For additional information and illustrative examples, institutions should review the preamble language to the September 2, 2020 Final Rule at page 54781.
-
Under 34 CFR 600.54(c), an eligible foreign institution may not enter into an arrangement under which a Title IV-ineligible entity provides any portion of the eligible institution’s programs, except for affiliation agreements for the provision of clinical training for foreign medical, veterinary, and nursing schools and written arrangements in which the ineligible entity is an institution that meets the requirements in paragraphs (1)(iii) and (iv) of the definition of “foreign institution” in 34 CFR 600.52 and provides 25 percent or less of the eligible foreign institution’s educational program.
All courses that fall under one or more of these restrictions are referred to generally as “ineligible courses.” Any program offered by a foreign institution that permits a student to take such ineligible courses for credit toward a credential is not considered a Title IV-eligible program. Otherwise-eligible students who are enrolled in an ineligible program may not receive Direct Loan funds for enrollment in that program.
If you have questions regarding the information provided in this letter, you may contact your School Participation Division or CaseTeams@ed.gov. Foreign institutions may also contact the Office of Federal Student Aid's Foreign Schools Team at FSA.Foreign.Schools.Team@ed.gov.
Questions and Answers Related to this Dear Colleague Letter
Q1: What changes did the September 2, 2020 final regulations addressing requirements for foreign institutions make regarding arrangements between U.S. and foreign institutions?
Q1: What changes did the September 2, 2020 final regulations addressing requirements for foreign institutions make regarding arrangements between U.S. and foreign institutions?
The September 2, 2020 final rule permits foreign schools to offer up to 25% of a Title IV-eligible program in the United States through a written arrangement with a host school in the United States. Note that, as explained in the preamble to the final rule, this may not be stacked with other allowable portions of a foreign school’s program in the United States. Students may not, for example, enroll in coursework comprising 25 percent of their program at an institution in the United States as permitted under 34 CFR 600.52 and then conduct a year of dissertation research under the conditions specified in 34 CFR 600.52.
Under the 2020 final rule, internships completed in the United States under a written arrangement no longer need to be with eligible entities under certain conditions. The Department recognizes that most internships would be with private businesses and nonprofits, not necessarily with Title IV-eligible postsecondary institutions, and removing the limitation allows students the same opportunities to pursue internships in the United States as abroad. To qualify, the internship must be subject to the oversight and supervision of the foreign school and be governed by the standards of an outside oversight entity, such as an accrediting agency or government entity. The school must maintain responsibility for the internship and students must be monitored by qualified institutional personnel (and the institution must comply with these standards).
Coursework completed in the United States through written arrangement is limited to eligible institutions. Coursework provided by a foreign institution using distance education remains ineligible for Title IV aid because of the prohibition in the Higher Education Act of 1965, as amended (HEA), except under certain emergency circumstances discussed further in Question 5 below.
Q2: Do the September 2, 2020 foreign institutions regulations prohibit foreign institutions that participate in the Title IV, HEA programs from offering a program in whole or in part in the U.S.?
Q2: Do the September 2, 2020 foreign institutions regulations prohibit foreign institutions that participate in the Title IV, HEA programs from offering a program in whole or in part in the U.S.?
No. A foreign institution may offer programs in whole or in part in the U.S., but the regulations provide that such a program is not recognized for Title IV, HEA program purposes if the coursework in the United States is provided by the foreign school (with limited exceptions for clinical training). Direct Loan recipients enrolled in an eligible program at a foreign school seeking to complete coursework in the United States must do so through a written arrangement with an eligible institution in the United States, and the amount of the student’s enrollment in the U.S. institution that would be eligible for Title IV aid is limited to 25 percent of the coursework in the foreign institution’s program.
Please note that when a foreign institution provides instruction to its own students using its own instructors at a U.S. institution, that would not be considered a written arrangement under the requirements of 34 CFR 668.5. Since for Title IV aid purposes that is considered to be an additional location of the home institution, and since section (1)(ii) of the definition of foreign institution under 34 CFR 600.52 does not permit a foreign institution to have U.S. locations other than in the applicable clinical training context, students in this scenario would not be eligible for Title IV aid.
When a student is enrolled to obtain a degree or credential from a foreign institution, and that institution enters into a written arrangement with a U.S. institution, the foreign institution is always considered the “home” institution and must assume responsibility for administering the student’s Direct Loan funds. Students enrolled through such an arrangement are eligible only for Direct Loan funds and do not qualify for other types of Title IV aid.
To calculate the percentage of a foreign institution’s program that may be offered in the U.S., the foreign institution must use the formula provided under 34 CFR 668.5(g). The percentage is calculated by dividing the number of semester, trimester, or quarter credit hours, clock hours, or the equivalent that are provided by the U.S. institution by the total number of semester, trimester, or quarter credit hours, clock hours, or the equivalent required for completion of the foreign institution’s program.
Q4: May a U.S. institution still have written arrangements with a foreign institution or organization acting on behalf of a foreign institution for a foreign institution to offer a part of the U.S. institution’s program that is Title IV eligible?
Q4: May a U.S. institution still have written arrangements with a foreign institution or organization acting on behalf of a foreign institution for a foreign institution to offer a part of the U.S. institution’s program that is Title IV eligible?
Yes. A Title IV-eligible U.S. institution may have written arrangements with a foreign institution or organization acting on behalf of a foreign institution whereby the foreign institution provides part of the U.S. institution’s educational program so that the students enrolled in that program may receive Title IV, HEA program funds. In this case, as described in greater detail in the table below and in the answer to Q5, the limitations described in 34 CFR 668.5(c) apply, and the foreign institution may offer no more than 25 percent of the program, or between 25 and 50 percent of the program if the U.S. institution’s accrediting agency has specifically determined that the institution's arrangement meets the agency's standards for executing a written arrangement with an ineligible institution or organization and the U.S. institution and the foreign institution are not owned or controlled by the same individual, partnership, or corporation.
The following table provides additional information on the requirements for a U.S. institution to enter into a written arrangement with a foreign institution or organization.
Summary of Current Requirements for Written Arrangements Between a U.S. Institution and a Foreign Institution Where the U.S. Institution is the “Home” School
With what type of foreign entity has the home U.S. institution entered into a written arrangement? |
What are the limitations on the amount of the program that the host institution (or entity) may offer? |
An eligible or ineligible foreign institution or organization that has:
|
The host organization may not offer any part of the home institution’s program for Title IV, HEA purposes. |
An eligible or ineligible foreign institution or organization that does not meet any of the criteria above. |
The host institution may offer up to 25% of the home institution’s program, or between 25 and 50% of the program if the U.S. institution and the foreign institution or organization are not owned or controlled by the same individual, partnership, or corporation and the U.S. institution’s accrediting agency has specifically determined that the institution's arrangement meets the agency's standards for executing a written arrangement with an ineligible institution or organization. |
Note that an agreement where a U.S. institution provides instruction to its own students using its own instructors at a foreign location is not considered a written arrangement with the foreign institution that is subject to the requirements under 34 CFR 668.5. Instead, such an agreement would be considered a foreign location of a domestic institution, and the U.S. institution would be required to report the location where it is providing instruction to the Department under the requirements in 34 CFR 600.21 if a student was permitted to complete at least 50 percent of a Title IV-eligible program at that location.
Q5: What are the requirements of 34 CFR 668.5 regarding written arrangements and how do they apply to arrangements between U.S. and foreign institutions?
Q5: What are the requirements of 34 CFR 668.5 regarding written arrangements and how do they apply to arrangements between U.S. and foreign institutions?
For Title IV, HEA program purposes, for a program offered through a written arrangement between an eligible institution and an ineligible institution or organization (commonly referred to as a contractual agreement), the eligible institution is always the "home" institution. This means that a student must be continuously enrolled at the “home” institution as a regular student - i.e., enrolled for purposes of obtaining a degree, certificate, or other recognized educational credential offered by that institution.
The home institution must also perform all the functions related to the delivery of Title IV, HEA program funds. For example, the home institution must determine the student's eligibility for Title IV, HEA program funds, and must calculate and disburse the funds to the student, taking into account all the hours in which the student enrolls at each institution or organization that apply to the student's degree or certificate when determining the student's enrollment status and cost of attendance. As noted above in the answer to Q3, both U.S. and foreign institutions must use the formula described under 34 CFR 668.5(g) when determining the percentage of a program that is provided under a written arrangement.
The home institution is also responsible for maintaining all records necessary to document student eligibility and receipt of Title IV, HEA program funds. Upon completion of the program, the student must receive a degree from the home institution, although he or she may receive a credential from the host institution as well. Note that while a U.S. institution may enter a written arrangement with an ineligible foreign institution to offer some of a Title IV-eligible program abroad, a foreign institution seeking to enter a written arrangement with a school in the United States to offer some of its Title IV-eligible program is limited to Title IV-eligible host schools. This restriction does not apply to internship or externship hosts, who do not need to be Title IV-eligible institutions.
In addition, in the case of a written arrangement between an eligible U.S. institution and a foreign institution where the U.S. institution is the “home” school, there is a limit on the portion of the program that can be offered by the foreign institution through the arrangement. If both the U.S. and the foreign institution are owned or controlled by the same individual, partnership, or corporation, the ineligible institution or organization may provide no more than 25 percent of the program. If there is no common ownership or control, the foreign institution may provide up to 50 percent of the program. However, in the case of separately owned or controlled institutions, if the foreign institution provides more than 25 percent of the program, the eligible institution's accrediting agency must specifically determine that the institution's arrangement meets the agency's standards for the contracting out of educational services. Of course, the program must be otherwise Title IV, HEA program eligible (i.e., satisfy the requirements of 34 CFR 668.8 for an eligible program).
Please note that other factors may also prevent a foreign institution from providing a portion of a program under a written arrangement with a U.S. institution. A program offered through a contractual agreement is not Title IV eligible if the ineligible institution or organization (1) has had its eligibility to participate in the Title IV, HEA programs terminated by the Department; or (2) has voluntarily withdrawn from participation in the Title IV, HEA programs under a termination, show-cause, suspension, or similar proceeding initiated by the institution's State licensing agency, accrediting agency, guarantor, or by the Department. In addition, a program offered through a written arrangement between a U.S. institution and a foreign institution is not Title IV eligible if the foreign institution has had its certification to participate in the Title IV, HEA programs revoked by the Department, or had its application for certification or recertification to participate in the Title IV, HEA programs denied by the Department.
Finally, institutions are also required to make information about written arrangements available to students. An institution must provide to enrolled and prospective students a description of the written arrangements the institution has entered into, including, but not limited to, information on:
-
The portion of the educational program that the institution that grants the degree or certificate is not providing;
-
The name and location of the other institutions or organizations that are providing the portion of the educational program that the institution that grants the degree or certificate is not providing;
-
The method of delivery of the portion of the educational program that the institution that grants the degree or certificate is not providing; and
-
Estimated additional costs students may incur as the result of enrolling in an educational program that is provided, in part, under the written arrangement.
Q6: What additional flexibilities were given to foreign schools to assist with challenges presented by the COVID-19 pandemic?
Section 3510 of the CARES Act, as later amended by the Consolidated Appropriations Act of 2021 and the Consolidated Appropriations Act of 2022, provides certain circumstances under which foreign schools may offer an otherwise eligible program via distance education, which would otherwise not be permitted under the Higher Education Act. This flexibility applies when the applicable government authorities in the country in which the foreign institution is located have declared a public health emergency, major disaster or emergency, or national emergency, and lasts through the end of the covered period applicable to the institution. Following the most recent amendments, the covered period lasts until the later of June 30, 2023 or the last day of the payment period following the end of the emergency or disaster declared by the applicable government authorities in the country in which the foreign institution is located.
Section 3510, as amended, also allows the Secretary to permit an eligible foreign institution to enter into a written arrangement with an institution in the United States participating in the Federal Direct Loan program for the purposes of allowing Title IV recipients to take courses from the institution in the United States during a covered period. Institutions using this provision must report it the Department; for the 2020-2021 award year onward this must be within 30 days of its use. The Department used this provision to allow students to continue their coursework at an eligible US institution or at an ineligible foreign institution so that students whose primary institution suspended operations could continue their education prior to the implementation date of the September 2, 2020 regulations on July 1, 2021. However, under the September 2, 2020 Final Rule, regardless of whether it is during a covered period, Title IV students at foreign schools are now permitted to take courses in the United States under a written arrangement so long as the time in the United States comprises no more than 25 percent of the student’s time in the program. The option to continue to use the waiver flexibility under the CARES Act, as amended, remains for the duration of the covered period for institutions following its reporting requirement; outside of a covered period, institutions are limited to the 25 percent allowed under the September 2, 2020 Final Rule.
Q7: Are eligible foreign institutions permitted to enter into written arrangements with other foreign institutions? If so, what are the requirements for such arrangements?
Q7: Are eligible foreign institutions permitted to enter into written arrangements with other foreign institutions? If so, what are the requirements for such arrangements?
Yes, two foreign institutions may enter into a written arrangement for Title IV, HEA purposes. If two Title IV-eligible foreign institutions enter into a written arrangement, there are no restrictions on the amount of a program that may be offered by the host school except that the home foreign institution must offer at least some portion of the program under the requirements for an eligible program in 34 CFR 668.8.
If an eligible foreign institution enters into a written arrangement with an ineligible foreign institution, the ineligible foreign institution must meet the definition of a foreign institution under 34 CFR 600.52, and the portion of the program offered by the ineligible foreign institution may not exceed 25 percent.
An eligible institution may not enter into a written arrangement with an ineligible institution or organization that does not meet the definition of a foreign institution under 34 CFR 600.52 unless the arrangement is for an internship or externship, as described in the answer to Q1.
The following table provides additional information on the requirements for a foreign institution to enter into a written arrangement with any other entity.
Summary of Current Requirements for Written Arrangements Where a Foreign Institution is the “Home” School
With what type of entity has the home foreign institution entered into a written arrangement? |
What are the limitations on the amount of the program that the host institution (or entity) may offer? |
An ineligible organization or an ineligible foreign postsecondary institution that does not meet the definition of a foreign institution in 34 CFR 600.52 |
The host organization may not offer any part of the home institution’s program. |
An ineligible foreign postsecondary institution that meets the definition of a foreign institution in 34 CFR 600.52 |
The host institution may offer no more than 25% of the home institution’s program. The host institution may not have previously had its eligibility to participate in Title IV, HEA programs terminated by the Secretary or be covered by any of the other disqualifiers in 34 CFR 668.5(c)(1). |
An eligible foreign institution 34 CFR 668.5(a) |
There is no limitation on the amount of the program that may be offered by the host institution. However, the home institution must provide the degree or recognized credential and offer at least some portion of the program. |
An eligible institution in the United States where the student is enrolling in the coursework, research, work, or special studies offered by that institution, but the student is not conducting dissertation research as part of a doctoral program (34 CFR 600.52; See definition of a Foreign institution – section (1)(ii)(B)) |
The host institution in the United States may offer up to 25% of the home institution’s program. Note that, notwithstanding this restriction, an individual student is permitted to perform independent research in the United States for not more than one academic year is permitted if that research is conducted during the dissertation phase of a doctoral program under the guidance of faculty, and the research is performed only in a facility in the United States. The home institution is not required to establish a written arrangement with the host institution in this circumstance. |
An ineligible organization that is offering an internship or externship that is governed by the standards of an outside oversight entity, such as an accrediting agency or government entity, that require the oversight and supervision of the home institution, where the home institution is responsible for the internship or externship and students are monitored by qualified institutional personnel (34 CFR 600.52; See definition of a Foreign institution – section 1(ii)(C)(2)) |
The host organization may offer up to 25% of the home institution’s program. |
Q8: May a foreign institution offer ineligible courses in a program as long as it does not permit Direct Loan recipients to take those courses?
A program that contains ineligible courses is not a Title IV-eligible program. However, it is permissible for a foreign institution to offer two separate versions of a program, one of which does not permit students who are Direct Loan recipients to enroll in the ineligible courses for credit toward completion of the program. In that case, the version of the program that does not permit Direct Loan recipients to enroll in ineligible courses would not contain any ineligible courses, and would, therefore, be an eligible program if the program otherwise met the Title IV program eligibility requirements.
Please note that for the purposes of this guidance, a course is considered to be “for credit” if successful completion of the course yields credit toward completion of the program or otherwise fulfills a requirement for graduation from that program.
A foreign institution is ultimately responsible for ensuring that Direct Loan funds are not disbursed to students who enroll in any Title IV ineligible courses as a part of their program and should ensure that any students who may be applying for Direct Loan funds are aware of the restrictions on enrollment.
The institution must provide to students information on the academic program of the institution (34 CFR 668.43(a)(5)), as well as the Title IV student eligibility requirements (34 CFR 668.42(b)). If a foreign institution chooses to offer a Title IV-eligible version of a program for Direct Loan recipients, this information must make clear that a student will not be eligible for Direct Loan funds if the student enrolls in the ineligible version. The institution is required to make this information readily available to enrolled and prospective students through appropriate publications, mailings, or electronic media (34 CFR 668.41(d)). In addition, a brief description of this information must be included in the notice that an institution must provide to enrolled students listing the categories of information required to be made available to them, together with an explanation of how to obtain the information (34 CFR 668.41(c)).
Q9: May a foreign institution award credit to a Direct Loan recipient for ineligible courses the student completed at another institution?
Yes. The Department does not restrict an institution’s discretion to award credit for courses completed at other institutions, but Title IV funds may not be provided for the transferred credits. If a student independently completes a Title IV-ineligible course at an unaffiliated institution, those credits may be transferred into the student’s program at the eligible foreign institution provided that the student does not receive Direct Loan funds for those credits.
Institutions are free to enter into articulation agreements with other institutions, including agreements for a foreign institution to accept credits earned from an institution in the United States, but are reminded that articulation agreements may solely cover transfer of earned credits and may not include any transfer of funds to the institution accepting the transfer credits.
Q10: What are the consequences to a foreign institution if a Direct Loan recipient takes an ineligible course as a part of his or her program at a foreign institution?
A foreign institution is responsible for ensuring that Direct Loan funds are not disbursed to students who enroll in any ineligible courses as a part of their educational program. A program that permits Direct Loan recipients to take an ineligible course for credit, regardless of whether the course is optional or required, would be considered ineligible for Direct Loan funds.
Enforcement consequences range from fines and liability for cost of aid distributed to individual students, to termination of program or institutional eligibility and liability for cost of all funds awarded.
Thank you for your continued support of the Title IV programs.
Sincerely,
Annmarie Weisman
Deputy Assistant Secretary for Policy, Planning, and Innovation
Office of Postsecondary Education