20 U.S.C. § 1094 : US Code - Section 1094: Program participation agreements

Search 20 U.S.C. § 1094 : US Code - Section 1094: Program participation agreements

(a) Required for programs of assistance; contents
In order to be an eligible institution for the purposes of any
program authorized under this subchapter and part C of subchapter I
of chapter 34 of title 42, an institution must be an institution of
higher education or an eligible institution (as that term is
defined for the purpose of that program) and shall, except with
respect to a program under subpart 4 of part A of this subchapter,
enter into a program participation agreement with the Secretary.
The agreement shall condition the initial and continuing
eligibility of an institution to participate in a program upon
compliance with the following requirements:
(1) The institution will use funds received by it for any
program under this subchapter and part C of subchapter I of
chapter 34 of title 42 and any interest or other earnings thereon
solely for the purpose specified in and in accordance with the
provision of that program.
(2) The institution shall not charge any student a fee for
processing or handling any application, form, or data required to
determine the student's eligibility for assistance under this
subchapter and part C of subchapter I of chapter 34 of title 42
or the amount of such assistance.
(3) The institution will establish and maintain such
administrative and fiscal procedures and records as may be
necessary to ensure proper and efficient administration of funds
received from the Secretary or from students under this
subchapter and part C of subchapter I of chapter 34 of title 42,
together with assurances that the institution will provide, upon
request and in a timely fashion, information relating to the
administrative capability and financial responsibility of the
institution to -
(A) the Secretary;
(B) the appropriate guaranty agency; and
(C) the appropriate accrediting agency or association.
(4) The institution will comply with the provisions of
subsection (c) of this section and the regulations prescribed
under that subsection, relating to fiscal eligibility.
(5) The institution will submit reports to the Secretary and,
in the case of an institution participating in a program under
part B or part D of this subchapter, to holders of loans made to
the institution's students under such parts at such times and
containing such information as the Secretary may reasonably
require to carry out the purpose of this subchapter and part C of
subchapter I of chapter 34 of title 42.
(6) The institution will not provide any student with any
statement or certification to any lender under part B of this
subchapter that qualifies the student for a loan or loans in
excess of the amount that student is eligible to borrow in
accordance with sections 1075(a), 1078(a)(2), and 1078(b)(1)(A)
and (B) of this title.
(7) The institution will comply with the requirements of
section 1092 of this title.
(8) In the case of an institution that advertises job placement
rates as a means of attracting students to enroll in the
institution, the institution will make available to prospective
students, at or before the time of application (A) the most
recent available data concerning employment statistics,
graduation statistics, and any other information necessary to
substantiate the truthfulness of the advertisements, and (B)
relevant State licensing requirements of the State in which such
institution is located for any job for which the course of
instruction is designed to prepare such prospective students.
(9) In the case of an institution participating in a program
under part B or C of this subchapter, the institution will inform
all eligible borrowers enrolled in the institution about the
availability and eligibility of such borrowers for State grant
assistance from the State in which the institution is located,
and will inform such borrowers from another State of the source
for further information concerning such assistance from that
State.
(10) The institution certifies that it has in operation a drug
abuse prevention program that is determined by the institution to
be accessible to any officer, employee, or student at the
institution.
(11) In the case of any institution whose students receive
financial assistance pursuant to section 1091(d) of this title,
the institution will make available to such students a program
proven successful in assisting students in obtaining a
certificate of high school equivalency.
(12) The institution certifies that -
(A) the institution has established a campus security policy;
and
(B) the institution has complied with the disclosure
requirements of section 1092(f) of this title.
(13) The institution will not deny any form of Federal
financial aid to any student who meets the eligibility
requirements of this subchapter and part C of subchapter I of
chapter 34 of title 42 on the grounds that the student is
participating in a program of study abroad approved for credit by
the institution.
(14)(A) The institution, in order to participate as an eligible
institution under part B or C of this subchapter, will develop a
Default Management Plan for approval by the Secretary as part of
its initial application for certification as an eligible
institution and will implement such Plan for two years
thereafter.
(B) Any institution of higher education which changes ownership
and any eligible institution which changes its status as a parent
or subordinate institution shall, in order to participate as an
eligible institution under part B or C of this subchapter,
develop a Default Management Plan for approval by the Secretary
and implement such Plan for two years after its change of
ownership or status.
(C) This paragraph shall not apply in the case of an
institution in which (i) neither the parent nor the subordinate
institution has a cohort default rate in excess of 10 percent,
and (ii) the new owner of such parent or subordinate institution
does not, and has not, owned any other institution with a cohort
default rate in excess of 10 percent.
(15) The institution acknowledges the authority of the
Secretary, guaranty agencies, lenders, accrediting agencies, the
Secretary of Veterans Affairs, and the State agencies under
subpart 1 of part G of this subchapter to share with each other
any information pertaining to the institution's eligibility to
participate in programs under this subchapter and part C of
subchapter I of chapter 34 of title 42 or any information on
fraud and abuse.
(16)(A) The institution will not knowingly employ an individual
in a capacity that involves the administration of programs under
this subchapter and part C of subchapter I of chapter 34 of title
42, or the receipt of program funds under this subchapter and
part C of subchapter I of chapter 34 of title 42, who has been
convicted of, or has pled nolo contendere or guilty to, a crime
involving the acquisition, use, or expenditure of funds under
this subchapter and part C of subchapter I of chapter 34 of title
42, or has been judicially determined to have committed fraud
involving funds under this subchapter and part C of subchapter I
of chapter 34 of title 42 or contract with an institution or
third party servicer that has been terminated under section 1082
of this title involving the acquisition, use, or expenditure of
funds under this subchapter and part C of subchapter I of chapter
34 of title 42, or who has been judicially determined to have
committed fraud involving funds under this subchapter and part C
of subchapter I of chapter 34 of title 42.
(B) The institution will not knowingly contract with or employ
any individual, agency, or organization that has been, or whose
officers or employees have been -
(i) convicted of, or pled nolo contendere or guilty to, a
crime involving the acquisition, use, or expenditure of funds
under this subchapter and part C of subchapter I of chapter 34
of title 42; or
(ii) judicially determined to have committed fraud involving
funds under this subchapter and part C of subchapter I of
chapter 34 of title 42.
(17) The institution will complete surveys conducted as a part
of the Integrated Postsecondary Education Data System (IPEDS) or
any other Federal postsecondary institution data collection
effort, as designated by the Secretary, in a timely manner and to
the satisfaction of the Secretary.
(18) The institution will meet the requirements established
pursuant to section 1092(g) of this title.
(19) The institution will not impose any penalty, including the
assessment of late fees, the denial of access to classes,
libraries, or other institutional facilities, or the requirement
that the student borrow additional funds, on any student because
of the student's inability to meet his or her financial
obligations to the institution as a result of the delayed
disbursement of the proceeds of a loan made under this subchapter
and part C of subchapter I of chapter 34 of title 42 due to
compliance with the provisions of this subchapter and part C of
subchapter I of chapter 34 of title 42, or delays attributable to
the institution.
(20) The institution will not provide any commission, bonus, or
other incentive payment based directly or indirectly on success
in securing enrollments or financial aid to any persons or
entities engaged in any student recruiting or admission
activities or in making decisions regarding the award of student
financial assistance, except that this paragraph shall not apply
to the recruitment of foreign students residing in foreign
countries who are not eligible to receive Federal student
assistance.
(21) The institution will meet the requirements established by
the Secretary and accrediting agencies or associations, and will
provide evidence to the Secretary that the institution has the
authority to operate within a State.
(22) The institution will comply with the refund policy
established pursuant to section 1091b of this title.
(23)(A) The institution, if located in a State to which section
1973gg-2(b) (!1) of title 42 does not apply, will make a good
faith effort to distribute a mail voter registration form,
requested and received from the State, to each student enrolled
in a degree or certificate program and physically in attendance
at the institution, and to make such forms widely available to
students at the institution.
(B) The institution shall request the forms from the State 120
days prior to the deadline for registering to vote within the
State. If an institution has not received a sufficient quantity
of forms to fulfill this section from the State within 60 days
prior to the deadline for registering to vote in the State, the
institution shall not be held liable for not meeting the
requirements of this section during that election year.
(C) This paragraph shall apply to general and special elections
for Federal office, as defined in section 431(3) of title 2, and
to the elections for Governor or other chief executive within
such State).(!2)
(b) Hearings
(1) An institution that has received written notice of a final
audit or program review determination and that desires to have such
determination reviewed by the Secretary shall submit to the
Secretary a written request for review not later than 45 days after
receipt of notification of the final audit or program review
determination.
(2) The Secretary shall, upon receipt of written notice under
paragraph (1), arrange for a hearing and notify the institution
within 30 days of receipt of such notice the date, time, and place
of such hearing. Such hearing shall take place not later than 120
days from the date upon which the Secretary notifies the
institution.
(c) Audits; financial responsibility; enforcement of standards
(1) Notwithstanding any other provisions of this subchapter and
part C of subchapter I of chapter 34 of title 42, the Secretary
shall prescribe such regulations as may be necessary to provide for
-
(A)(i) except as provided in clauses (ii) and (iii), a
financial audit of an eligible institution with regard to the
financial condition of the institution in its entirety, and a
compliance audit of such institution with regard to any funds
obtained by it under this subchapter and part C of subchapter I
of chapter 34 of title 42 or obtained from a student or a parent
who has a loan insured or guaranteed by the Secretary under this
subchapter and part C of subchapter I of chapter 34 of title 42,
on at least an annual basis and covering the period since the
most recent audit, conducted by a qualified, independent
organization or person in accordance with standards established
by the Comptroller General for the audit of governmental
organizations, programs, and functions, and as prescribed in
regulations of the Secretary, the results of which shall be
submitted to the Secretary and shall be available to cognizant
guaranty agencies, eligible lenders, State agencies, and the
appropriate State agency notifying the Secretary under subpart 1
of part G of this subchapter;
(ii) with regard to an eligible institution which is audited
under chapter 75 of title 31, deeming such audit to satisfy the
requirements of clause (i) for the period covered by such audit;
or
(iii) at the discretion of the Secretary, with regard to an
eligible institution (other than an eligible institution
described in section 1002(a)(1)(C) of this title) that has
obtained less than $200,000 in funds under this subchapter and
part C of subchapter I of chapter 34 of title 42 during each of
the 2 award years that precede the audit period and submits a
letter of credit payable to the Secretary equal to not less than
1/2 of the annual potential liabilities of such institution as
determined by the Secretary, deeming an audit conducted every 3
years to satisfy the requirements of clause (i), except for the
award year immediately preceding renewal of the institution's
eligibility under section 1099c(g) of this title;
(B) in matters not governed by specific program provisions, the
establishment of reasonable standards of financial responsibility
and appropriate institutional capability for the administration
by an eligible institution of a program of student financial aid
under this subchapter and part C of subchapter I of chapter 34 of
title 42, including any matter the Secretary deems necessary to
the sound administration of the financial aid programs, such as
the pertinent actions of any owner, shareholder, or person
exercising control over an eligible institution;
(C)(i) except as provided in clause (ii), a compliance audit of
a third party servicer (other than with respect to the servicer's
functions as a lender if such functions are otherwise audited
under this part and such audits meet the requirements of this
clause), with regard to any contract with an eligible
institution, guaranty agency, or lender for administering or
servicing any aspect of the student assistance programs under
this subchapter and part C of subchapter I of chapter 34 of title
42, at least once every year and covering the period since the
most recent audit, conducted by a qualified, independent
organization or person in accordance with standards established
by the Comptroller General for the audit of governmental
organizations, programs, and functions, and as prescribed in
regulations of the Secretary, the results of which shall be
submitted to the Secretary; or
(ii) with regard to a third party servicer that is audited
under chapter 75 of title 31, such audit shall be deemed to
satisfy the requirements of clause (i) for the period covered by
such audit;
(D)(i) a compliance audit of a secondary market with regard to
its transactions involving, and its servicing and collection of,
loans made under this subchapter and part C of subchapter I of
chapter 34 of title 42, at least once a year and covering the
period since the most recent audit, conducted by a qualified,
independent organization or person in accordance with standards
established by the Comptroller General for the audit of
governmental organizations, programs, and functions, and as
prescribed in regulations of the Secretary, the results of which
shall be submitted to the Secretary; or
(ii) with regard to a secondary market that is audited under
chapter 75 of title 31, such audit shall be deemed to satisfy the
requirements of clause (i) for the period covered by the audit;
(E) the establishment, by each eligible institution under part
B of this subchapter responsible for furnishing to the lender the
statement required by section 1078(a)(2)(A)(i) of this title, of
policies and procedures by which the latest known address and
enrollment status of any student who has had a loan insured under
this part and who has either formally terminated his enrollment,
or failed to re-enroll on at least a half-time basis, at such
institution, shall be furnished either to the holder (or if
unknown, the insurer) of the note, not later than 60 days after
such termination or failure to re-enroll;
(F) the limitation, suspension, or termination of the
participation in any program under this subchapter and part C of
subchapter I of chapter 34 of title 42 of an eligible
institution, or the imposition of a civil penalty under paragraph
(2)(B) whenever the Secretary has determined, after reasonable
notice and opportunity for hearing, that such institution has
violated or failed to carry out any provision of this subchapter
and part C of subchapter I of chapter 34 of title 42, any
regulation prescribed under this subchapter and part C of
subchapter I of chapter 34 of title 42, or any applicable special
arrangement, agreement, or limitation, except that no period of
suspension under this section shall exceed 60 days unless the
institution and the Secretary agree to an extension or unless
limitation or termination proceedings are initiated by the
Secretary within that period of time;
(G) an emergency action against an institution, under which the
Secretary shall, effective on the date on which a notice and
statement of the basis of the action is mailed to the institution
(by registered mail, return receipt requested), withhold funds
from the institution or its students and withdraw the
institution's authority to obligate funds under any program under
this subchapter and part C of subchapter I of chapter 34 of title
42, if the Secretary -
(i) receives information, determined by the Secretary to be
reliable, that the institution is violating any provision of
this subchapter and part C of subchapter I of chapter 34 of
title 42, any regulation prescribed under this subchapter and
part C of subchapter I of chapter 34 of title 42, or any
applicable special arrangement, agreement, or limitation,
(ii) determines that immediate action is necessary to prevent
misuse of Federal funds, and
(iii) determines that the likelihood of loss outweighs the
importance of the procedures prescribed under subparagraph (D)
for limitation, suspension, or termination,
except that an emergency action shall not exceed 30 days unless
limitation, suspension, or termination proceedings are initiated
by the Secretary against the institution within that period of
time, and except that the Secretary shall provide the institution
an opportunity to show cause, if it so requests, that the
emergency action is unwarranted;
(H) the limitation, suspension, or termination of the
eligibility of a third party servicer to contract with any
institution to administer any aspect of an institution's student
assistance program under this subchapter and part C of subchapter
I of chapter 34 of title 42, or the imposition of a civil penalty
under paragraph (2)(B), whenever the Secretary has determined,
after reasonable notice and opportunity for a hearing, that such
organization, acting on behalf of an institution, has violated or
failed to carry out any provision of this subchapter and part C
of subchapter I of chapter 34 of title 42, any regulation
prescribed under this subchapter and part C of subchapter I of
chapter 34 of title 42, or any applicable special arrangement,
agreement, or limitation, except that no period of suspension
under this subparagraph shall exceed 60 days unless the
organization and the Secretary agree to an extension, or unless
limitation or termination proceedings are initiated by the
Secretary against the individual or organization within that
period of time; and
(I) an emergency action against a third party servicer that has
contracted with an institution to administer any aspect of the
institution's student assistance program under this subchapter
and part C of subchapter I of chapter 34 of title 42, under which
the Secretary shall, effective on the date on which a notice and
statement of the basis of the action is mailed to such individual
or organization (by registered mail, return receipt requested),
withhold funds from the individual or organization and withdraw
the individual or organization's authority to act on behalf of an
institution under any program under this subchapter and part C of
subchapter I of chapter 34 of title 42, if the Secretary -
(i) receives information, determined by the Secretary to be
reliable, that the individual or organization, acting on behalf
of an institution, is violating any provision of this
subchapter and part C of subchapter I of chapter 34 of title
42, any regulation prescribed under this subchapter and part C
of subchapter I of chapter 34 of title 42, or any applicable
special arrangement, agreement, or limitation,
(ii) determines that immediate action is necessary to prevent
misuse of Federal funds, and
(iii) determines that the likelihood of loss outweighs the
importance of the procedures prescribed under subparagraph (F),
for limitation, suspension, or termination,
except that an emergency action shall not exceed 30 days unless
the limitation, suspension, or termination proceedings are
initiated by the Secretary against the individual or organization
within that period of time, and except that the Secretary shall
provide the individual or organization an opportunity to show
cause, if it so requests, that the emergency action is
unwarranted.
(2) If an individual who, or entity that, exercises substantial
control, as determined by the Secretary in accordance with the
definition of substantial control in subpart 3 of part G of this
subchapter, over one or more institutions participating in any
program under this subchapter and part C of subchapter I of chapter
34 of title 42, or, for purposes of paragraphs (1)(H) and (I), over
one or more organizations that contract with an institution to
administer any aspect of the institution's student assistance
program under this subchapter and part C of subchapter I of chapter
34 of title 42, is determined to have committed one or more
violations of the requirements of any program under this subchapter
and part C of subchapter I of chapter 34 of title 42, or has been
suspended or debarred in accordance with the regulations of the
Secretary, the Secretary may use such determination, suspension, or
debarment as the basis for imposing an emergency action on, or
limiting, suspending, or terminating, in a single proceeding, the
participation of any or all institutions under the substantial
control of that individual or entity.
(3)(A) Upon determination, after reasonable notice and
opportunity for a hearing, that an eligible institution has engaged
in substantial misrepresentation of the nature of its educational
program, its financial charges, or the employability of its
graduates, the Secretary may suspend or terminate the eligibility
status for any or all programs under this subchapter and part C of
subchapter I of chapter 34 of title 42 of any otherwise eligible
institution, in accordance with procedures specified in paragraph
(1)(D) of this subsection, until the Secretary finds that such
practices have been corrected.
(B)(i) Upon determination, after reasonable notice and
opportunity for a hearing, that an eligible institution -
(I) has violated or failed to carry out any provision of this
subchapter and part C of subchapter I of chapter 34 of title 42
or any regulation prescribed under this subchapter and part C of
subchapter I of chapter 34 of title 42; or
(II) has engaged in substantial misrepresentation of the nature
of its educational program, its financial charges, and the
employability of its graduates,
the Secretary may impose a civil penalty upon such institution of
not to exceed $25,000 for each violation or misrepresentation.
(ii) Any civil penalty may be compromised by the Secretary. In
determining the amount of such penalty, or the amount agreed upon
in compromise, the appropriateness of the penalty to the size of
the institution of higher education subject to the determination,
and the gravity of the violation, failure, or misrepresentation
shall be considered. The amount of such penalty, when finally
determined, or the amount agreed upon in compromise, may be
deducted from any sums owing by the United States to the
institution charged.
(4) The Secretary shall publish a list of State agencies which
the Secretary determines to be reliable authority as to the quality
of public postsecondary vocational education in their respective
States for the purpose of determining eligibility for all Federal
student assistance programs.
(5) The Secretary shall make readily available to appropriate
guaranty agencies, eligible lenders, State agencies notifying the
Secretary under subpart 1 of part G of this subchapter, and
accrediting agencies or associations the results of the audits of
eligible institutions conducted pursuant to paragraph (1)(A).
(6) The Secretary is authorized to provide any information
collected as a result of audits conducted under this section,
together with audit information collected by guaranty agencies, to
any Federal or State agency having responsibilities with respect to
student financial assistance, including those referred to in
subsection (a)(15) of this section.
(7) Effective with respect to any audit conducted under this
subsection after December 31, 1988, if, in the course of conducting
any such audit, the personnel of the Department of Education
discover, or are informed of, grants or other assistance provided
by an institution in accordance with this subchapter and part C of
subchapter I of chapter 34 of title 42 for which the institution
has not received funds appropriated under this subchapter and part
C of subchapter I of chapter 34 of title 42 (in the amount
necessary to provide such assistance), including funds for which
reimbursement was not requested prior to such discovery or
information, such institution shall be permitted to offset that
amount against any sums determined to be owed by the institution
pursuant to such audit, or to receive reimbursement for that amount
(if the institution does not owe any such sums).
(d) "Eligible institution" defined
For the purpose of this section, the term "eligible institution"
means any such institution described in section 1002 of this title.
(e) Construction
Nothing in the amendments made by the Higher Education Amendments
of 1992 shall be construed to prohibit an institution from
recording, at the cost of the institution, a hearing referred to in
subsection (b)(2), subsection (c)(1)(D), or subparagraph (A) or
(B)(i) of subsection (c)(2), of this section to create a record of
the hearing, except the unavailability of a recording shall not
serve to delay the completion of the proceeding. The Secretary
shall allow the institution to use any reasonable means, including
stenographers, of recording the hearing.