20 U.S.C. § 1099c — Eligibility and certification procedures

Page 738 TITLE 20—EDUCATION § 1099c Subsec. (n)(3). Pub. L. 105–244, § 492(d)(6)(A), (B), sub- stituted ‘‘criteria’’ for ‘‘standards’’ in two places, ‘‘rec- ognition process’’ for ‘‘approval process’’, and ‘‘recogni- tion or denial of recognition’’ for ‘‘approval or dis- approval’’, and inserted at end ‘‘When the Secretary de- cides to recognize an accrediting agency or association, the Secretary shall determine the agency or associa- tion’s scope of recognition. If the agency or association reviews institutions offering distance education courses or programs and the Secretary determines that the agency or association meets the requirements of this section, then the agency shall be recognized and the scope of recognition shall include accreditation of institutions offering distance education courses or pro- grams.’’ Subsec. (n)(4). Pub. L. 105–244, § 492(d)(6)(C), added par. (4) and struck out former par. (4) which read as follows: ‘‘The Secretary shall maintain sufficient documenta- tion to support the conclusions reached in the approval process, and, upon disapproval of any accreditation agency or association, shall make publicly available the reason for such disapproval, including reference to the specific standards under this section which have not been fulfilled.’’ 1993—Subsec. (a)(2)(A)(i). Pub. L. 103–208, § 2(i)(3), in- serted ‘‘of institutions of higher education’’ after ‘‘membership’’. Subsec. (a)(3)(A). Pub. L. 103–208, § 2(i)(4), substituted ‘‘subparagraph (A)(i)’’ for ‘‘subparagraph (A)’’. Subsec. (a)(5). Pub. L. 103–208, § 2(i)(5), substituted a semicolon for the period at end of subpar. (L) and in- serted after subpar. (L) the following: ‘‘except that sub- paragraphs (G), (H), (I), (J), and (L) shall not apply to agencies or associations described in paragraph (2)(A)(ii) of this subsection;’’. Subsec. (c). Pub. L. 103–208, § 2(i)(6), substituted ‘‘as a reliable authority as to the quality of education or training offered by an institution seeking to partici- pate in the programs authorized under this subchapter’’ for ‘‘for the purpose of this subchapter’’. Subsec. (l)(2). Pub. L. 103–208, § 2(i)(7), substituted ‘‘in- stitution’’ for ‘‘institutution’’ and ‘‘association, de- scribed in paragraph (2)(A)(i), (2)(B), or (2)(C) of sub- section (a) of this section, leading to the suspension’’ for ‘‘association leading to the suspension’’. Subsec. (n)(1)(B). Pub. L. 103–208, § 2(i)(8), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: ‘‘site visits at both the accrediting agency or association and member institutions, includ- ing unannounced visits where appropriate.’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2009 AMENDMENT Amendment by Pub. L. 111–39 effective as if enacted on the date of enactment of Pub. L. 110–315 (Aug. 14, 2008), see section 3 of Pub. L. 111–39, set out as a note under section 1001 of this title. EFFECTIVE DATE OF 1998 AMENDMENT Amendment by Pub. L. 105–244 effective Oct. 1, 1998, except as otherwise provided in Pub. L. 105–244, see sec- tion 3 of Pub. L. 105–244, set out as a note under section 1001 of this title. EFFECTIVE DATE OF 1993 AMENDMENT Amendment by Pub. L. 103–208 effective as if included in the Higher Education Amendments of 1992, Pub. L. 102–325, except as otherwise provided, see section 5(a) of Pub. L. 103–208, set out as a note under section 1051 of this title. EFFECTIVE DATE Section effective Oct. 1, 1992, see section 2 of Pub. L. 102–325, set out as an Effective Date of 1992 Amendment note under section 1001 of this title. STUDY OF TRANSFER OF CREDITS Pub. L. 105–244, title VIII, § 804, Oct. 7, 1998, 112 Stat. 1806, which directed the Secretary of Education to con- duct a study regarding the treatment of the transfer of credits from one institution of higher education to an- other and to report to Congress, not later than one year after Oct. 7, 1998, was repealed by Pub. L. 110–315, title IX, § 931(1), Aug. 14, 2008, 122 Stat. 3456. SUBPART 3—ELIGIBILITY AND CERTIFICATION PROCEDURES § 1099c. Eligibility and certification procedures (a) General requirement For purposes of qualifying institutions of higher education for participation in programs under this subchapter, the Secretary shall deter- mine the legal authority to operate within a State, the accreditation status, and the admin- istrative capability and financial responsibility of an institution of higher education in accord- ance with the requirements of this section. (b) Single application form The Secretary shall prepare and prescribe a single application form which— (1) requires sufficient information and docu- mentation to determine that the requirements of eligibility, accreditation, financial respon- sibility, and administrative capability of the institution of higher education are met; (2) requires a specific description of the rela- tionship between a main campus of an institu- tion of higher education and all of its branches, including a description of the stu- dent aid processing that is performed by the main campus and that which is performed at its branches; (3) requires— (A) a description of the third party servicers of an institution of higher edu- cation; and (B) the institution to maintain a copy of any contract with a financial aid service provider or loan servicer, and provide a copy of any such contract to the Secretary upon request; (4) requires such other information as the Secretary determines will ensure compliance with the requirements of this subchapter with respect to eligibility, accreditation, adminis- trative capability and financial responsibility; and (5) provides, at the option of the institution, for participation in one or more of the pro- grams under part B or D. (c) Financial responsibility standards (1) The Secretary shall determine whether an institution has the financial responsibility re- quired by this subchapter on the basis of wheth- er the institution is able— (A) to provide the services described in its official publications and statements; (B) to provide the administrative resources necessary to comply with the requirements of this subchapter; and (C) to meet all of its financial obligations, including (but not limited to) refunds of insti- tutional charges and repayments to the Sec- retary for liabilities and debts incurred in pro- grams administered by the Secretary. (2) Notwithstanding paragraph (1), if an insti- tution fails to meet criteria prescribed by the Page 739 TITLE 20—EDUCATION § 1099c Secretary regarding ratios that demonstrate fi- nancial responsibility, then the institution shall provide the Secretary with satisfactory evidence of its financial responsibility in accordance with paragraph (3). Such criteria shall take into ac- count any differences in generally accepted ac- counting principles, and the financial state- ments required thereunder, that are applicable to for-profit, public, and nonprofit institutions. The Secretary shall take into account an insti- tution’s total financial circumstances in making a determination of its ability to meet the stand- ards herein required. (3) The Secretary shall determine an institu- tion to be financially responsible, notwith- standing the institution’s failure to meet the criteria under paragraphs (1) and (2), if— (A) such institution submits to the Sec- retary third-party financial guarantees that the Secretary determines are reasonable, such as performance bonds or letters of credit pay- able to the Secretary, which third-party finan- cial guarantees shall equal not less than one- half of the annual potential liabilities of such institution to the Secretary for funds under this subchapter, including loan obligations discharged pursuant to section 1087 of this title, and to students for refunds of institu- tional charges, including funds under this sub- chapter; (B) such institution has its liabilities backed by the full faith and credit of a State, or its equivalent; (C) such institution establishes to the satis- faction of the Secretary, with the support of a financial statement audited by an independent certified public accountant in accordance with generally accepted auditing standards, that the institution has sufficient resources to en- sure against the precipitous closure of the in- stitution, including the ability to meet all of its financial obligations (including refunds of institutional charges and repayments to the Secretary for liabilities and debts incurred in programs administered by the Secretary); or (D) such institution has met standards of fi- nancial responsibility, prescribed by the Sec- retary by regulation, that indicate a level of financial strength not less than those required in paragraph (2). (4) If an institution of higher education that provides a 2-year or 4-year program of instruc- tion for which the institution awards an asso- ciate or baccalaureate degree fails to meet the criteria imposed by the Secretary pursuant to paragraph (2), the Secretary shall waive that particular requirement for that institution if the institution demonstrates to the satisfaction of the Secretary that— (A) there is no reasonable doubt as to its continued solvency and ability to deliver qual- ity educational services; (B) it is current in its payment of all current liabilities, including student refunds, repay- ments to the Secretary, payroll, and payment of trade creditors and withholding taxes; and (C) it has substantial equity in school-occu- pied facilities, the acquisition of which was the direct cause of its failure to meet the cri- teria. (5) The determination as to whether an insti- tution has met the standards of financial re- sponsibility provided for in paragraphs (2) and (3)(C) shall be based on an audited and certified financial statement of the institution. Such audit shall be conducted by a qualified inde- pendent organization or person in accordance with standards established by the American In- stitute of Certified Public Accountants. Such statement shall be submitted to the Secretary at the time such institution is considered for certification or recertification under this sec- tion. If the institution is permitted to be cer- tified (provisionally or otherwise) and such audit does not establish compliance with para- graph (2), the Secretary may require that addi- tional audits be submitted. (6)(A) The Secretary shall establish require- ments for the maintenance by an institution of higher education of sufficient cash reserves to ensure repayment of any required refunds. (B) The Secretary shall provide for a process under which the Secretary shall exempt an in- stitution of higher education from the require- ments described in subparagraph (A) if the Sec- retary determines that the institution— (i) is located in a State that has a tuition re- covery fund that ensures that the institution meets the requirements of subparagraph (A); (ii) contributes to the fund; and (iii) otherwise has legal authority to operate within the State. (d) Administrative capacity standard The Secretary is authorized— (1) to establish procedures and requirements relating to the administrative capacities of in- stitutions of higher education, including— (A) consideration of past performance of institutions or persons in control of such in- stitutions with respect to student aid pro- grams; and (B) maintenance of records; and (2) to establish such other reasonable proce- dures as the Secretary determines will con- tribute to ensuring that the institution of higher education will comply with administra- tive capability required by this subchapter. (e) Financial guarantees from owners (1) Notwithstanding any other provision of law, the Secretary may, to the extent necessary to protect the financial interest of the United States, require— (A) financial guarantees from an institution participating, or seeking to participate, in a program under this subchapter, or from one or more individuals who the Secretary deter- mines, in accordance with paragraph (2), exer- cise substantial control over such institution, or both, in an amount determined by the Sec- retary to be sufficient to satisfy the institu- tion’s potential liability to the Federal Gov- ernment, student assistance recipients, and other program participants for funds under this subchapter; and (B) the assumption of personal liability, by one or more individuals who exercise substan- tial control over such institution, as deter- mined by the Secretary in accordance with paragraph (2), for financial losses to the Fed- Page 740 TITLE 20—EDUCATION § 1099c eral Government, student assistance recipi- ents, and other program participants for funds under this subchapter, and civil and criminal monetary penalties authorized under this sub- chapter. (2)(A) The Secretary may determine that an individual exercises substantial control over one or more institutions participating in a program under this subchapter if the Secretary deter- mines that— (i) the individual directly or indirectly con- trols a substantial ownership interest in the institution; (ii) the individual, either alone or together with other individuals, represents, under a voting trust, power of attorney, proxy, or similar agreement, one or more persons who have, individually or in combination with the other persons represented or the individual representing them, a substantial ownership in- terest in the institution; or (iii) the individual is a member of the board of directors, the chief executive officer, or other executive officer of the institution or of an entity that holds a substantial ownership interest in the institution. (B) The Secretary may determine that an enti- ty exercises substantial control over one or more institutions participating in a program under this subchapter if the Secretary deter- mines that the entity directly or indirectly holds a substantial ownership interest in the in- stitution. (3) For purposes of this subsection, an owner- ship interest is defined as a share of the legal or beneficial ownership or control of, or a right to share in the proceeds of the operation of, an in- stitution or institution’s parent corporation. An ownership interest may include, but is not lim- ited to— (A) a sole proprietorship; (B) an interest as a tenant-in-common, joint tenant, or tenant by the entireties; (C) a partnership; or (D) an interest in a trust. (4) The Secretary shall not impose the require- ments described in subparagraphs (A) and (B) of paragraph (1) on an institution that— (A) has not been subjected to a limitation, suspension, or termination action by the Sec- retary or a guaranty agency within the pre- ceding 5 years; (B) has not had, during its 2 most recent au- dits of the institutions conduct of programs under this subchapter, an audit finding that resulted in the institution being required to repay an amount greater than 5 percent of the funds the institution received from programs under this subchapter for any year; (C) meets and has met, for the preceding 5 years, the financial responsibility standards under subsection (c); and (D) has not been cited during the preceding 5 years for failure to submit audits required under this subchapter in a timely fashion. (5) For purposes of section 1094(c)(1)(G) of this title, this section shall also apply to individuals or organizations that contract with an institu- tion to administer any aspect of an institution’s student assistance program under this sub- chapter. (6) Notwithstanding any other provision of law, any individual who— (A) the Secretary determines, in accordance with paragraph (2), exercises substantial con- trol over an institution participating in, or seeking to participate in, a program under this subchapter; (B) is required to pay, on behalf of a student or borrower, a refund of unearned institutional charges to a lender, or to the Secretary; and (C) willfully fails to pay such refund or will- fully attempts in any manner to evade pay- ment of such refund, shall, in addition to other penalties provided by law, be liable to the Secretary for the amount of the refund not paid, to the same extent with re- spect to such refund that such an individual would be liable as a responsible person for a pen- alty under section 6672(a) of title 26 with respect to the nonpayment of taxes. (f) Actions on applications and site visits The Secretary shall ensure that prompt action is taken by the Department on any application required under subsection (b). The personnel of the Department of Education may conduct a site visit at each institution before certifying or recertifying its eligibility for purposes of any program under this subchapter. The Secretary shall establish priorities by which institutions are to receive site visits, and shall, to the extent practicable, coordinate such visits with site vis- its by States, guaranty agencies, and accred- iting bodies in order to eliminate duplication, and reduce administrative burden. (g) Time limitations on, and renewal of, eligi- bility (1) General rule After the expiration of the certification of any institution under the schedule prescribed under this section (as this section was in ef- fect prior to October 7, 1998), or upon request for initial certification from an institution not previously certified, the Secretary may certify the eligibility for the purposes of any program authorized under this subchapter of each such institution for a period not to ex- ceed 6 years. (2) Notification The Secretary shall notify each institution of higher education not later than 6 months prior to the date of the expiration of the insti- tution’s certification. (3) Institutions outside the United States The Secretary shall promulgate regulations regarding the recertification requirements ap- plicable to an institution of higher education outside of the United States that meets the re- quirements of section 1002(a)(1)(C) of this title and received less than $500,000 in funds under part B for the most recent year for which data are available. (h) Provisional certification of institutional eligi- bility (1) Notwithstanding subsections (d) and (g), the Secretary may provisionally certify an in- Page 741 TITLE 20—EDUCATION § 1099c 1 See References in Text note below. stitution’s eligibility to participate in programs under this subchapter— (A) for not more than one complete award year in the case of an institution of higher education seeking an initial certification; and (B) for not more than 3 complete award years if— (i) the institution’s administrative capa- bility and financial responsibility is being determined for the first time; (ii) there is a complete or partial change of ownership, as defined under subsection (i), of an eligible institution; or (iii) the Secretary determines that an in- stitution that seeks to renew its certifi- cation is, in the judgment of the Secretary, in an administrative or financial condition that may jeopardize its ability to perform its financial responsibilities under a pro- gram participation agreement. (2) Whenever the Secretary withdraws the rec- ognition of any accrediting agency, an institu- tion of higher education which meets the re- quirements of accreditation, eligibility, and cer- tification on the day prior to such withdrawal, the Secretary may, notwithstanding the with- drawal, continue the eligibility of the institu- tion of higher education to participate in the programs authorized by this subchapter for a pe- riod not to exceed 18 months from the date of the withdrawal of recognition. (3) If, prior to the end of a period of provi- sional certification under this subsection, the Secretary determines that the institution is un- able to meet its responsibilities under its pro- gram participation agreement, the Secretary may terminate the institution’s participation in programs under this subchapter. (i) Treatment of changes of ownership (1) An eligible institution of higher education that has had a change in ownership resulting in a change of control shall not qualify to partici- pate in programs under this subchapter after the change in control (except as provided in para- graph (3)) unless it establishes that it meets the requirements of section 1002 of this title (other than the requirements in subsections (b)(5) and (c)(3) 1) and this section after such change in control. (2) An action resulting in a change in control may include (but is not limited to)— (A) the sale of the institution or the major- ity of its assets; (B) the transfer of the controlling interest of stock of the institution or its parent corpora- tion; (C) the merger of two or more eligible insti- tutions; (D) the division of one or more institutions into two or more institutions; (E) the transfer of the controlling interest of stock of the institutions to its parent corpora- tion; or (F) the transfer of the liabilities of the insti- tution to its parent corporation. (3) An action that may be treated as not re- sulting in a change in control includes (but is not limited to)— (A) the sale or transfer, upon the death of an owner of an institution, of the ownership in- terest of the deceased in that institution to a family member or to a person holding an own- ership interest in that institution; or (B) another action determined by the Sec- retary to be a routine business practice. (4)(A) The Secretary may provisionally certify an institution seeking approval of a change in ownership based on the preliminary review by the Secretary of a materially complete applica- tion that is received by the Secretary within 10 business days of the transaction for which the approval is sought. (B) A provisional certification under this para- graph shall expire not later than the end of the month following the month in which the trans- action occurred, except that if the Secretary has not issued a decision on the application for the change of ownership within that period, the Sec- retary may continue such provisional certifi- cation on a month-to-month basis until such de- cision has been issued. (j) Treatment of branches (1) A branch of an eligible institution of higher education, as defined pursuant to regulations of the Secretary, shall be certified under this sub- part before it may participate as part of such in- stitution in a program under this subchapter, except that such branch shall not be required to meet the requirements of sections 1002(b)(1)(E) and 1002(c)(1)(C) of this title prior to seeking such certification. Such branch is required to be in existence at least 2 years after the branch is certified by the Secretary as a branch campus participating in a program under this sub- chapter, prior to seeking certification as a main campus or free-standing institution. (2) The Secretary may waive the requirement of section 1001(a)(2) of this title for a branch that (A) is not located in a State, (B) is affili- ated with an eligible institution, and (C) was participating in one or more programs under this subchapter on or before January 1, 1992. (k) Treatment of teach-outs at additional loca- tions (1) In general A location of a closed institution of higher education shall be eligible as an additional lo- cation of an eligible institution of higher edu- cation, as defined pursuant to regulations of the Secretary, for the purposes of a teach-out described in section 1094(f) of this title, if such teach-out has been approved by the institu- tion’s accrediting agency. (2) Special rule An institution of higher education that con- ducts a teach-out through the establishment of an additional location described in para- graph (1) shall be permitted to establish a per- manent additional location at a closed institu- tion and shall not be required— (A) to meet the requirements of sections 1002(b)(1)(E) and 1002(c)(1)(C) of this title for such additional location; or (B) to assume the liabilities of the closed institution. (Pub. L. 89–329, title IV, § 498, as added Pub. L. 102–325, title IV, § 499, July 23, 1992, 106 Stat. 647; Page 742 TITLE 20—EDUCATION § 1099c amended Pub. L. 103–208, § 2(i)(9)–(14), Dec. 20, 1993, 107 Stat. 2479, 2480; Pub. L. 105–244, title I, § 102(a)(6)(B), (b)(6), (7), title IV, § 493(a)–(c)(1), (d)–(h), Oct. 7, 1998, 112 Stat. 1618, 1622, 1761–1763; Pub. L. 110–315, title IV, § 496, Aug. 14, 2008, 122 Stat. 3327; Pub. L. 111–39, title IV, § 408(2), July 1, 2009, 123 Stat. 1953.) Editorial Notes REFERENCES IN TEXT Subsections (b)(5) and (c)(3), referred to in subsec. (i)(1), originally meant subsections (b)(5) and (c)(3) of section 1088 of this title, see 1998 Amendment note below for subsec. (i)(1). Pub. L. 105–244, title I, § 101(c), Oct. 7, 1998, 112 Stat. 1617, amended section 1088 by striking out subsecs. (b) and (c) and redesignating sub- secs. (e) and (f) as (b) and (c), respectively. Section 1002 of this title does not contain a subsec. (b)(5) or (c)(3), but provisions similar to those appearing in former subsecs. (b)(5) and (c)(3) of section 1088 are contained in subsecs. (b)(1)(E) and (c)(1)(C) of section 1002. AMENDMENTS 2009—Subsec. (c)(2). Pub. L. 111–39 substituted ‘‘for- profit’’ for ‘‘for profit’’. 2008—Subsec. (d)(1)(B). Pub. L. 110–315, § 496(1), in- serted ‘‘and’’ after semicolon. Subsec. (k). Pub. L. 110–315, § 496(2), added subsec. (k). 1998—Subsec. (b)(1). Pub. L. 105–244, § 493(a)(1), sub- stituted ‘‘financial responsibility, and administrative capability’’ for ‘‘and capability’’. Subsec. (b)(3). Pub. L. 105–244, § 493(a)(2), amended par. (3) generally. Prior to amendment, par. (3) read as fol- lows: ‘‘requires a description of third party servicers of an institution of higher education, together with a copy of any contract with the institution of higher edu- cation and a financial aid service provider or loan servicer; and’’. Subsec. (b)(5). Pub. L. 105–244, § 493(a)(3), (4), added par. (5). Subsec. (c)(2). Pub. L. 105–244, § 493(b)(1)(B), inserted ‘‘, public,’’ after ‘‘for profit’’ in second sentence. Pub. L. 105–244, § 493(b)(1)(A), which directed amend- ment of first sentence by substituting ‘‘regarding ra- tios that demonstrate financial responsibility,’’ for ‘‘with respect to operating losses, net worth, asset-to- liabilities ratios, or operating fund deficits’’, was exe- cuted by making the substitution for text which read ‘‘asset-to-liabilities ratios’’ rather than ‘‘asset to li- abilities ratios’’, to reflect the probable intent of Con- gress. Subsec. (c)(3)(A). Pub. L. 105–244, § 493(b)(2), inserted ‘‘that the Secretary determines are reasonable’’ after ‘‘Secretary third-party financial guarantees’’. Subsec. (c)(4). Pub. L. 105–244, § 493(b)(3)(A), sub- stituted ‘‘criteria’’ for ‘‘ratio of current assets to cur- rent liabilities’’ in introductory provisions. Subsec. (c)(4)(C). Pub. L. 105–244, § 493(b)(3)(B), sub- stituted ‘‘criteria’’ for ‘‘current operating ratio re- quirement’’. Subsec. (e)(6). Pub. L. 105–244, § 493(c)(1), added par. (6). Subsec. (f). Pub. L. 105–244, § 493(d), substituted ‘‘and site visits’’ for ‘‘; site visits and fees’’ in heading, ‘‘may’’ for ‘‘shall’’ in second sentence, and ‘‘shall estab- lish’’ for ‘‘may establish’’ and ‘‘shall, to the extent practicable, coordinate’’ for ‘‘may coordinate’’ in third sentence, and struck out at end ‘‘The Secretary may charge reasonable fees to cover the expenses of certifi- cation and site visits and, to the extent permitted by appropriations Acts, may retain such fees to cover such expenses.’’ Subsec. (g). Pub. L. 105–244, § 493(e), amended heading and text of subsec. (g) generally. Prior to amendment, text read as follows: ‘‘(1) The eligibility for the purposes of any program authorized under this subchapter of any institution that is participating in any such program on July 23, 1992, shall expire in accordance with the schedule pre- scribed by the Secretary in accordance with paragraph (2), but not later than 5 years after July 23, 1992. ‘‘(2) The Secretary shall establish a schedule for the expiration of the eligibility for purposes of any such program of all institutions of higher education within the 5-year period specified in paragraph (1). Such sched- ule shall place a priority for the expiration of the cer- tification of institutions on those that meet the fol- lowing criteria: ‘‘(A) institutions subject to review by a State post- secondary review entity pursuant to subpart 1 of this part; or ‘‘(B) other categories of institutions which the Sec- retary deems necessary. ‘‘(3) After the expiration of the certification of any institution under the schedule prescribed under this subsection, or upon request for initial certification from an institution not previously certified, the Sec- retary may certify the eligibility for the purposes of any program authorized under this subchapter of each such institution for a period not to exceed 4 years.’’ Subsec. (h)(2). Pub. L. 105–244, § 493(f), substituted ‘‘the recognition’’ for ‘‘the approval’’ and ‘‘of recogni- tion’’ for ‘‘of approval’’. Subsec. (i)(1). Pub. L. 105–244, § 102(b)(6), substituted ‘‘section 1002’’ for ‘‘section 1088’’. Subsec. (i)(4). Pub. L. 105–244, § 493(g), added par. (4). Subsec. (j)(1). Pub. L. 105–244, § 493(h), inserted ‘‘after the branch is certified by the Secretary as a branch campus participating in a program under this sub- chapter,’’ after ‘‘2 years’’. Pub. L. 105–244, § 102(b)(7)(A), substituted ‘‘sections 1002(b)(1)(E) and 1002(c)(1)(C)’’ for ‘‘sections 1088(b)(5) and 1088(c)(3)’’. Subsec. (j)(2). Pub. L. 105–244, § 102(a)(6)(B), (b)(7)(B), amended par. (2) identically, substituting ‘‘section 1001(a)(2)’’ for ‘‘section 1141(a)(2)’’. 1993—Subsec. (c)(2). Pub. L. 103–208, § 2(i)(9)(A), in- serted at end ‘‘Such criteria shall take into account any differences in generally accepted accounting prin- ciples, and the financial statements required there- under, that are applicable to for profit and nonprofit institutions. The Secretary shall take into account an institution’s total financial circumstances in making a determination of its ability to meet the standards here- in required.’’ Subsec. (c)(3). Pub. L. 103–208, § 2(i)(9)(B), substituted ‘‘The Secretary shall determine’’ for ‘‘The Secretary may determine’’ in introductory provisions. Subsec. (c)(3)(C). Pub. L. 103–208, § 2(i)(9)(C), amended subpar. (C) generally. Prior to amendment, subpar. (C) read as follows: ‘‘such institution establishes to the satisfaction of the Secretary, with the support of a re- port of an independent certified public accountant pre- pared under generally accepted accounting principles, that the institution is a going concern capable of meet- ing all of its financial obligations, including (but not limited to) refunds of institutional charges and repay- ments to the Secretary for liabilities and debts in- curred in programs administered by the Secretary; or’’. Subsec. (c)(4) to (6). Pub. L. 103–208, § 2(i)(9)(D), (E), added par. (4) and redesignated former pars. (4) and (5) as (5) and (6), respectively. Subsec. (f). Pub. L. 103–208, § 2(i)(10), inserted after second sentence ‘‘The Secretary may establish prior- ities by which institutions are to receive site visits, and may coordinate such visits with site visits by States, guaranty agencies, and accrediting bodies in order to eliminate duplication, and reduce administra- tive burden.’’ Subsec. (h)(1)(B)(iii). Pub. L. 103–208, § 2(i)(11), amend- ed cl. (iii) generally. Prior to amendment, cl. (iii) read as follows: ‘‘the Secretary determines that the institu- tion is, in the judgment of the Secretary, in an admin- istrative or financial condition that may jeopardize its ability to perform its responsibilities under its pro- gram participation agreement.’’ Subsec. (i)(1). Pub. L. 103–208, § 2(i)(12), amended par. (1) generally. Prior to amendment, par. (1) read as fol- Page 743 TITLE 20—EDUCATION § 1099c–1 lows: ‘‘For the purpose of certifying the eligibility of an institution, an eligible institution of higher edu- cation that has a change in ownership resulting in a change in control shall not be considered to be the same institution (except as provided in paragraph (3)) and shall be considered a new institution for the pur- pose of establishing eligibility, except that such insti- tution shall not be required (under section 1088(b)(5) or 1088(c)(3) of this title) to be in existence for 2 years prior to seeking such certification unless such institu- tion was in existence as a branch for less than 2 years.’’ Subsec. (i)(3)(A). Pub. L. 103–208, § 2(i)(13), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: ‘‘the death of an owner of an institu- tion, when the owner’s interest is sold or transferred to either a family member or a current stockholder of the corporation; or’’. Subsec. (j)(1). Pub. L. 103–208, § 2(i)(14), amended par. (1) generally. Prior to amendment, par. (1) read as fol- lows: ‘‘For the purposes of this subchapter, a branch of an eligible institution, as defined pursuant to regula- tions of the Secretary, is a separate institution of high- er education and shall separately meet all the require- ments of this subchapter, except that such institution shall not be required (under section 1088(b)(5) or 1088(c)(3) of this title) to be in existence for 2 years prior to seeking such certification unless such institu- tion was in existence as a branch for less than 2 years.’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2009 AMENDMENT Amendment by Pub. L. 111–39 effective as if enacted on the date of enactment of Pub. L. 110–315 (Aug. 14, 2008), see section 3 of Pub. L. 111–39, set out as a note under section 1001 of this title. EFFECTIVE DATE OF 1998 AMENDMENT Amendment by sections 102(a)(6)(B), (b)(6), (7) and 493(a), (b), (d)–(h) of Pub. L. 105–244 effective Oct. 1, 1998, except as otherwise provided in Pub. L. 105–244, see sec- tion 3 of Pub. L. 105–244, set out as a note under section 1001 of this title. Pub. L. 105–244, title IV, § 493(c)(2), Oct. 7, 1998, 112 Stat. 1762, provided that: ‘‘The amendment made by paragraph (1) [amending this section] shall be effective with respect to any unpaid refunds that were first re- quired to be paid to a lender or to the Secretary on or after 90 days after the date of enactment of this Act [Oct. 7, 1998].’’ EFFECTIVE DATE OF 1993 AMENDMENT Amendment by Pub. L. 103–208 effective as if included in the Higher Education Amendments of 1992, Pub. L. 102–325, except as otherwise provided, see section 5(a) of Pub. L. 103–208, set out as a note under section 1051 of this title. EFFECTIVE DATE Subpart effective Oct. 1, 1992, see section 2 of Pub. L. 102–325, set out as an Effective Date of 1992 Amendment note under section 1001 of this title. § 1099c–1. Program review and data (a) General authority In order to strengthen the administrative ca- pability and financial responsibility provisions of this subchapter, the Secretary— (1) shall provide for the conduct of program reviews on a systematic basis designed to in- clude all institutions of higher education par- ticipating in programs authorized by this sub- chapter; (2) shall give priority for program review to institutions of higher education that are— (A) institutions with a cohort default rate for loans under part B of this subchapter in excess of 25 percent or which places such in- stitutions in the highest 25 percent of such institutions; (B) institutions with a default rate in dol- lar volume for loans under part B of this subchapter which places the institutions in the highest 25 percent of such institutions; (C) institutions with a significant fluctua- tion in Federal Stafford Loan volume, Fed- eral Direct Stafford/Ford Loan volume, or Federal Pell Grant award volume, or any combination thereof, in the year for which the determination is made, compared to the year prior to such year, that are not ac- counted for by changes in the Federal Staf- ford Loan program, the Federal Direct Staf- ford/Ford Loan program, or the Pell Grant program, or any combination thereof; (D) institutions reported to have defi- ciencies or financial aid problems by the State licensing or authorizing agency, or by the appropriate accrediting agency or asso- ciation; (E) institutions with high annual dropout rates; and (F) such other institutions that the Sec- retary determines may pose a significant risk of failure to comply with the adminis- trative capability or financial responsibility provisions of this subchapter; and (3) shall establish and operate a central data base of information on institutional accredita- tion, eligibility, and certification that in- cludes— (A) all relevant information available to the Department; (B) all relevant information made avail- able by the Secretary of Veterans Affairs; (C) all relevant information from accred- iting agencies or associations; (D) all relevant information available from a guaranty agency; and (E) all relevant information available from States under subpart 1 of this part. (b) Special administrative rules In carrying out paragraphs (1) and (2) of sub- section (a) and any other relevant provisions of this subchapter, the Secretary shall— (1) establish guidelines designed to ensure uniformity of practice in the conduct of pro- gram reviews of institutions of higher edu- cation; (2) make available to each institution par- ticipating in programs authorized under this subchapter complete copies of all review guidelines and procedures used in program re- views; (3) permit the institution to correct or cure an administrative, accounting, or record- keeping error if the error is not part of a pat- tern of error and there is no evidence of fraud or misconduct related to the error; (4) base any civil penalty assessed against an institution of higher education resulting from a program review or audit on the gravity of the violation, failure, or misrepresentation; (5) inform the appropriate State and accred- iting agency or association whenever the Sec- retary takes action against an institution of higher education under this section, section 1099c of this title, or section 1082 of this title;