Publication Date: July 31, 2014

Posted Date: July 31, 2014

Subject: Invitation to Participate in the Experimental Sites Initiative

FR Type: Notice


[Federal Register Volume 79, Number 147 (Thursday, July 31, 2014)]
[Notices]
[Pages 44429-44436]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-18075]


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DEPARTMENT OF EDUCATION


Notice Inviting Postsecondary Educational Institutions To 
Participate in Experiments Under the Experimental Sites Initiative; 
Federal Student Financial Assistance Programs Under Title IV of the 
Higher Education Act of 1965, as Amended

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Notice.

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SUMMARY: The Secretary invites postsecondary educational institutions 
(institutions) that participate in the student financial assistance 
programs authorized under title IV of the Higher Education Act of 1965, 
as amended (the HEA), to apply to participate in new institutionally-
based experiments under the Experimental Sites Initiative (ESI). Under 
the ESI, the Secretary has authority to grant waivers from certain 
title IV, HEA statutory or regulatory requirements to allow a limited 
number of institutions to participate in experiments to test 
alternative methods for administering the title IV, HEA programs. The 
alternative methods of title IV HEA administration that the Secretary 
is permitting under the ESI are designed to facilitate efforts by 
institutions to test certain innovative practices aimed at improving 
student outcomes.

DATES: Letters of application to participate in any of the proposed 
experiments described in this notice must be received by the Department 
no later than September 29, 2014 in order for an institution to receive 
priority to be considered for participation in the experiment. Letters 
received after September 29, 2014 may still, at the discretion of the 
Secretary, be considered for participation.

ADDRESSES: Letters of application must be submitted by electronic mail 
to the following email address: experimentalsites@ed.gov. For formats 
and other required information, see ``Instructions for Submitting 
Letters of Application'' under SUPPLEMENTARY INFORMATION.

FOR FURTHER INFORMATION CONTACT: Warren Farr, U.S. Department of 
Education, Federal Student Aid, 830 First Street NE., Washington, DC 
20002. Telephone: (202) 377-4380 or by email at: Warren.Farr@ed.gov.
    If you use a telecommunications device for the deaf (TDD) or a text 
telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-
800-877-8339.

SUPPLEMENTARY INFORMATION:

Instructions for Submitting Letters of Application

    Letters of application should take the form of a PDF attachment to 
an email message sent to the email address provided in the ADDRESSES 
section of this notice. The subject line of the email should read ``ESI 
2014--Request to Participate.'' The text of the email should identify 
the experiment, or experiments, the institution wishes to participate 
in by the title used in the ``The Experiments'' section under 
SUPPLEMENTARY INFORMATION (e.g., ``Experiment- Prior Learning 
Assessment''). The letter of application should be on institutional 
letterhead and be signed by at least two officials of the institution--
one of these officials should be the institution's financial aid 
administrator, and the other should be an academic official of the 
institution. The letter of application must include the institution's 
official name and Department of Education Office of Postsecondary 
Education Identification (OPEID), as well as a mailing address,

[[Page 44430]]

email address, FAX number, and telephone number of a contact person at 
the institution.

Background

    In August 2013, President Obama outlined an ambitious new agenda to 
combat rising college costs and make college more affordable for 
American families. The President has since engaged a wide range of 
stakeholders to advance the college costs agenda, through the College 
Opportunity Summit earlier this year and other efforts to identify ways 
to increase postsecondary educational opportunities and improve 
outcomes for students.
    One component of the President's plan is to remove barriers that 
stand in the way of innovation in higher education, including barriers 
that prevent the use of new technologies or adoption of alternative 
approaches to teaching and learning that could improve students' 
academic outcomes.
    In support of the President's agenda, the Secretary, under the 
Experimental Sites Initiative (ESI) authority of section 487A(b) of the 
HEA, is offering institutions the opportunity to participate in one or 
more of the following experiments that will waive certain statutory and 
regulatory requirements related to the title IV, HEA programs:
     Prior Learning Assessment--Provides that a student's title 
IV cost of attendance (COA) can include costs incurred by the student 
for assessments of prior learning and that a student's Federal Pell 
Grant enrollment status may, with limitations, take into account a 
student's efforts to prepare materials for a prior learning assessment.
     Competency-Based Education--Provides flexibility in how 
institutions provide Federal student aid to students enrolled in self-
paced competency-based education programs.
     Limited Direct Assessment--Provides flexibility for an 
institution to provide a mix of direct assessment coursework and credit 
or clock hour coursework in the same program.
     Federal Work Study (FWS) for Near-Peer Counseling--
Provides flexibility for institutions to compensate FWS students, who 
are employed as ``near-peer'' counselors, to high school students 
solely with Federal funds.

Details of each experiment are provided in the ``The Experiments'' 
section below.
    This notice follows the notice published in the Federal Register on 
December 6, 2013 (78 FR 73518), which solicited suggestions from 
institutions for new experiments under the ESI. In response, the 
Department received submissions from a diverse range of institutions 
and other interested parties. The new experiments described in this 
notice, and their design, were informed by many of the ideas that were 
submitted. Additional experiments relating to the December 2013 
solicitation may be announced in the future.
    Under the waiver authority granted to the Secretary under section 
487A(b) of the HEA, each experiment will be designed to test whether 
proposed changes to current requirements improve the administration of 
the title IV programs. Evidence gathered from the experiments may 
inform future changes in policy through statute or regulation.

Reporting and Evaluation

    The Department is interested in obtaining information in ways that 
will allow for a reliable evaluation of each experiment. Participating 
institutions may be required to collect, maintain, and provide 
information not only for students whose title IV aid is administered 
under an experiment, but also for a control or comparison group of 
otherwise similar students whose title IV aid was administered under 
existing requirements. Examples of likely reporting requirements 
include, for each experiment: Numbers of students, their enrollment 
status, the types and amounts of grant and loan assistance received by 
the students, and grade point averages and other reflections of 
academic performance.
    In addition, institutions that are selected for participation in an 
experiment will be required to submit a narrative description and 
evaluation of their implementation of the experiment. At a minimum, the 
narrative should include any unforeseen challenges and unexpected 
benefits.
    The specific evaluation and reporting requirements will vary among 
the experiments and will be finalized prior to the start of each 
experiment.

Application and Selection

    Institutions may apply to participate in one or more of the 
experiments described in this notice. From the institutions that apply, 
the Secretary will select a limited number to participate in each 
experiment. The Secretary intends to select a diverse cross-section of 
title IV eligible institutions for participation in the experiments, 
carefully considering the diversity of participating institutions by, 
among other characteristics, institutional type and control, geographic 
location, enrollment size, and title IV participation levels. Further, 
although not a selection requirement, the Secretary encourages 
institutions to include high-need students, adult students, and working 
students among those whose title IV aid will be administered under the 
experiment. The Secretary may consider an institution's effort to 
include such students when selecting institutions to participate in an 
experiment.
    The selection of institutions will be guided by the purpose of the 
ESI, which is to evaluate alternatives to current requirements, and to 
inform policymakers about the possibility of changes to those 
requirements. The ESI is not designed to provide broad regulatory 
relief or general exceptions to the statutory and regulatory 
requirements.
    Institutions selected to participate in an experiment must have a 
strong track record in the administration of the title IV HEA, 
programs. When selecting institutions, the Secretary will consider all 
information available about an institution including, but not limited 
to, evidence of programmatic compliance, cohort default rates, 
financial responsibility ratios, and, for for-profit institutions, 
``90/10'' funding levels.
    If a selected institution consists of more than one location (e.g., 
campus), the Secretary may limit experiments to a single location, 
unless the institution provides the Secretary with a rationale for 
expanding the experiment to one or more of the institution's other 
locations.
    Prior to the established deadlines or before commitments are 
finalized, the Secretary will consult with participating institutions 
on the final design of the experiments through Webinars or other 
outreach activities.
    Institutions selected for participation in an experiment will have 
their Program Participation Agreement (PPA) with the Secretary amended 
to reflect the specific statutory or regulatory provisions that the 
Secretary has waived for participants in the experiment. The 
institution must acknowledge its commitment to administer any 
experiments it agrees to participate in adequately by establishing any 
needed procedures and by coordinating with other institutional offices 
and staff in order to successfully administer the experiments. The 
amended PPA will also document the agreement between the Secretary and 
the institution about how the experiment will be conducted and will 
specify the evaluation and reporting requirements for the experiments.

[[Page 44431]]

The Experiments

Prior Learning Assessments--Use of Title IV Aid for Costs of Prior 
Learning Assessments

Background

    Section 472 of the HEA indicates that a student's ``cost of 
attendance'' (COA or title IV COA), for the purpose of calculating a 
student's financial need for title IV aid, includes components for 
tuition and fees, books and supplies, room and board, transportation, 
dependent care, and miscellaneous expenses.
    The regulations at 34 CFR 668.2 provide, in general, that a ``full-
time student'' is an enrolled student who is carrying a full-time 
academic workload, as determined by the institution. Generally, for an 
undergraduate student, an institution's minimum standard for full-time 
status must be at least 12 semester, trimester, or quarter hours for 
each term. A student's workload may include any combination of courses, 
work, research, or special studies that the institution considers 
sufficient to classify the student as full-time.
    The regulations at 34 CFR 600.2 provide that a credit hour 
approximates either an amount of instruction and out-of-class work or 
an equivalent amount of work for other academic activities, as 
established by the institution.
    Many students, particularly adults and those who have previously 
participated in the workforce or who are military veterans, possess 
skills and knowledge in a wide range of areas obtained prior to their 
enrollment in postsecondary education. For purposes of this experiment, 
these skills and knowledge are referred to as ``prior learning.'' 
Students who are able to demonstrate that such prior learning meets 
some of the academic requirements for a postsecondary degree or other 
credential may be more likely to complete their academic program in a 
shorter period of time than other students, and with reduced costs and 
reduced borrowing. Generally, students must incur the costs for any 
assessment of such prior learning (prior learning assessment or PLA). 
Often such costs are related to the assessment itself, such as test 
fees or fees for portfolio reviews. Under existing title IV rules, 
these costs cannot be included in a student's COA since they do not 
result from the educational program offered by the institution.
    Many PLAs require the student to spend a considerable amount of 
time preparing materials for the assessment. This most typically 
involves the effort to prepare a portfolio or other evidence of the 
prior learning. Under existing rules, even if, for the institution's 
own academic purposes, the institution were to establish some 
equivalency in clock or credit hours for the time the student spent 
preparing materials for the assessment, those hours would not count 
towards the student's enrollment status for purposes of calculating the 
student's COA and for determining title IV aid award amounts because 
those activities would not involve instruction by the institution.
    Allowing the inclusion of prior learning assessments costs to 
students' COA could result in some students receiving aid for those 
costs and may allow more students to apply their prior learning toward 
completion of an educational program.

Description

    This experiment will provide limited waivers of statutory and 
regulatory requirements to allow institutions to include in a student's 
COA reasonable costs, such as test fees, that are incurred by the 
student for the assessment of prior learning. Reasonable costs would 
not include any per clock or credit hour fee associated with the hours 
that the institution determines will apply toward completion of the 
student's academic program.
    The increased COA would be used to determine the student's 
eligibility for and amount of title IV aid for the payment period or 
enrollment period when the student is enrolled in a title IV eligible 
program.
    This experiment will also provide limited waivers of statutory and 
regulatory requirements to allow a limited number of credit hours to 
apply to a student's Federal Pell Grant (or Iraq-Afghanistan Service 
Grant) enrollment status determination relative to the effort required 
of the student to prepare for the prior learning assessment. The 
increase to the student's Pell Grant enrollment status would not apply 
to the student's enrollment status for purposes of other title IV aid. 
Any resulting increase in the student's Pell Grant award may be 
provided only as a direct disbursement to the student or it must be 
treated as a title IV credit balance that is provided to the student 
(see 34 CFR 668.164(e)).
    For the purposes of this experiment, preparation does not mean the 
time taken by a student to study for a test or examination or the time 
spent taking the test or examination. Rather, it means time spent by 
the student during the relevant payment period preparing any materials 
required to demonstrate the learning that will be assessed.
    If the institution determines that the effort required of a student 
to prepare materials for an assessment of prior learning is equivalent 
to a certain number of credit hours, it may add up to a maximum of 
three additional credit hours to the student's Pell Grant enrollment 
status for the payment period during which the student prepared the 
materials for the assessment. The three credit hour limit applies even 
if the institution determines that successfully meeting the assessment 
would require more time from the student than would be associated with 
three credit hours.
    Determinations regarding COA and Pell Grant enrollment status 
adjustments associated with a PLA under this experiment must reflect 
the expenses, time, and effort spent by individual students, not a 
group or class of students.
    It is expected that a successful assessment of a student's prior 
learning will result in the institution determining that the student 
has met all or part of the requirements for the program, without the 
student having to enroll in and complete additional coursework. Some 
institutions may simply award a certain number of academic credits to 
the student. While such additional hours may be applied toward 
completion of the student's program, they cannot, under both current 
requirements and under this experiment, count towards the student's 
title IV enrollment status. The benefit to the student is the reduction 
in the number of credits the student must earn to complete the program.
    For example, a student may wish to demonstrate proficiency in music 
composition by assembling a portfolio of the musical scores she has 
written for assessment by a third party PLA provider who charges the 
student $300 for that assessment. Under this experiment, the 
institution would, with proper documentation that the expense was 
incurred and is the responsibility of the student to pay, include in 
the student's title IV COA an additional $300 for the cost to the 
student of the portfolio assessment.
    The institution determines that the effort required of the student 
to prepare her portfolio of composition is equivalent to at least three 
credit hours. The student is only enrolled in nine hours of regular 
coursework for the payment period (three-quarter time Pell enrollment 
status). These three additional credit hours will increase her Pell 
Grant enrollment status to full-time, and because she has a zero EFC, 
the result is an increase of $716 that must be released directly to the 
student.

[[Page 44432]]

Finally, upon assessment of the student's composition portfolio, the 
institution determines that it will apply 18 credit hours toward 
completion of the student's academic program.
    Through this experiment the Department seeks to gain a better 
understanding of how the inclusion in students' COA of costs incurred 
for prior learning assessments (PLAs) may be related to credits awarded 
for knowledge the students already possess and to students' costs, 
borrowing, and completion. The Department is also interested in 
learning about: (1) The amounts and types of assessment costs that 
institutions include in students' COAs; (2) the process by which 
institutions determine which PLAs to accept for the purposes of 
awarding credit and the amount of credit to apply to the student's 
academic program for passing a PLA; and (3) the process institutions 
used to determine the number of credit hours that were used to adjust 
students' enrollment status.
    An institution applying to participate in this experiment may also 
apply to participate in the Competency-Based Education or Limited 
Direct Assessment experiments described in this notice.

Waivers

    Institutions selected for this experiment will be exempt from, or 
will follow waivers to, the following statutory and regulatory 
provisions:
     HEA section 472, which establishes the types of expenses 
that may be considered when determining a student's financial need.
     34 CFR 668.2, to the extent that the definition of a 
``full time student'' states that a student's workload must be 
``academic'' in nature, precluding the incorporation of time spent 
preparing to demonstrate prior learning.
     34 CFR 600.2, to the extent that the definition of 
``credit hour'' requires classroom or direct faculty instruction or 
work for the purpose of achieving learning outcomes, and to the extent 
that the definition of ``clock hours'' requires a class, lecture, 
recitation, faculty-supervised laboratory, shop training, or 
internship.
     668.10(f), if the program has been approved as a Direct 
Assessment program, to the extent that the regulation prohibits the use 
of title IV aid for learning that did not result from instruction 
provided, or overseen, by the institution, including for tests of 
learning that are not associated with educational activities overseen 
by the institution.

All other provisions and regulations of the title IV student assistance 
programs will remain in effect.

Competency-Based Education-Disbursement to Students Who Are Enrolled in 
Competency-Based Education Programs

Background

    Section 481(a)(2) of the HEA and the regulations at 34 CFR 668.3 
provide, in general, that, for purposes of the title IV, HEA programs, 
an ``academic year'' requires a minimum of 30 weeks of instructional 
time for a credit hour program and a minimum of 26 weeks of 
instructional time for a clock-hour program. An academic year for an 
undergraduate program of study must additionally include at least 24 
semester or trimester hours, 36 quarter hours, or 900 clock hours, as 
appropriate. In general, under the individual title IV program 
regulations, aid is disbursed on a payment period by payment period 
basis. Under 34 CFR 668.4, for an academic program that does not have 
academic terms, referred to in the title IV regulations as a ``nonterm 
program'', a payment period ends, and the next payment period begins, 
when the student has successfully completed both half the number of 
clock or credit hours in the program's title IV academic year and half 
the number of weeks of instructional time in that definition.
    Traditional postsecondary programs of study measure a student's 
academic progress based on (1) number of credit or clock hours 
completed; and (2) weeks of instructional time that have elapsed. In 
contrast, competency-based education (CBE) programs measure a student's 
academic progress by assessing the student's learning, typically on the 
basis of the student's demonstration of mastery of a defined set of 
competency standards.
    Because advancement in CBE programs is not tied to scheduled time 
periods, many CBE programs allow students to self-pace their 
progression through a program. CBE programs also commonly incorporate 
online and other technology-based teaching and learning tools. As a 
result, CBE programs may make postsecondary education more accessible, 
particularly for adult learners and those who are employed while in 
school, because students have a greater ability to learn on their own 
time and at a place of their choosing. This flexibility also has the 
potential to make postsecondary education more affordable by reducing 
time to degree and reliance on the costly infrastructure of traditional 
postsecondary institutions and the programs they offer.
    Under the current statutory and regulatory requirements for title 
IV aid disbursement, the student's title IV aid may be disbursed only 
after the student has completed not only a specific portion of 
coursework, but also a defined period of calendar time. These time-
based restrictions may make it more difficult for institutions to 
implement CBE programs in which students work at their own pace. Under 
existing rules, students who are capable of accelerating through their 
CBE programs (i.e. meeting the competency standards) would experience 
delays in receiving new disbursements of title IV aid to pay for 
upcoming institutional charges. Existing regulations also prevent 
students who may progress more slowly through their CBE programs from 
receiving additional disbursements of title IV aid to support their 
living expenses, even though these expenses continue to accrue over 
time. Removing or modifying some of the time-based regulatory 
restrictions on disbursement of title IV aid may allow institutions to 
more effectively implement CBE programs and make it easier for students 
to progress through these programs at their own pace.

Description

    This experiment will provide limited waivers of certain statutory 
and regulatory requirements to remove some of the time-based 
restrictions to the disbursement of title IV aid so that funds are 
available to the student to pay institutional charges as they progress 
through a program at their own pace.
    The experiment would allow for the disbursement of title IV aid for 
``direct costs'' (institutional charges permitted as costs of 
attendance under HEA section 472) as soon as the student completes a 
required number of competencies, regardless of how many weeks of 
instructional time have elapsed. Disbursements of title IV aid for 
``indirect costs'' (i.e. living expenses) would be made at regular 
intervals related to the completion of a certain number of weeks of 
instruction.
    The experiment will require the institution to develop clock or 
credit hour equivalencies for each of the program's required 
competencies. Both the methodology used by the institution to develop 
those equivalencies and the results of that methodology must have been 
approved by the institution's accrediting agency or otherwise meet that 
agency's requirements for the calculation of credit or clock hour 
equivalencies.
    Institutional Eligibility: To participate in this experiment, an 
institution must include in the experiment at least one CBE program 
that has been approved or recognized as such by its accrediting agency. 
For the purposes of the experiment, a CBE program is an

[[Page 44433]]

academic program of study for which at least one academic year is 
offered solely through competency-based education. CBE programs 
eligible for this experiment include programs that measure students' 
progress in credit or clock hours and programs, if approved by the 
Department, that measure student progression using direct assessment of 
the student's mastery of a defined set of competencies rather than 
using credit or clock hours.
    To be approved to participate in the experiment, the institution 
must ensure and document that the program's equivalency methodology, as 
discussed above, was either approved by the relevant accrediting agency 
or meets that agency's requirements for such equivalencies. If 
applicable, it is expected that the institution's delivery of academic 
content in a competency-based format would have been approved by its 
accrediting agency as a substantive change, in accordance with the 
regulations at 34 CFR 602.22. The program must also have been approved 
for title IV eligibility by the Department, if necessary.
    Academic Year: As with any title IV eligible program, the defined 
academic year for a semester-based or trimester-based CBE program under 
this experiment must be a minimum of 24 credit hours and a quarter-
based program's academic year must be a minimum of 36 credit hours. In 
all instances, an academic year in a CBE program using credit hour 
equivalencies must include at least 30 weeks of instructional time. An 
academic year in a CBE program using clock hour equivalencies must be a 
minimum of 900 clock hours and must include at least 26 weeks of 
instructional time.
    As described above, this experiment will require the institution to 
establish clock or credit hour equivalencies for each of the CBE 
program's required competencies. Those equivalencies will be used to 
determine the hour component of the CBE program's academic year 
definition and establish the hour thresholds for the institution's 
disbursement of title IV aid to cover the student's direct costs. Note 
that a credit-hour equivalency is simply a way to quantify an amount of 
learning and an institution is not required to display equivalency or 
``map back'' to a particular course or content. There is also no 
requirement that all of the competencies have the same number of credit 
hour equivalencies.
    For example, an institution and its accrediting agency determine 
that a particular CBE program consists of 40 competencies, successful 
completion of which will result in completion of the program. The 
institution and the accrediting agency also determine that each of 
those competencies is the equivalent, in terms of effort and learning 
outcomes, to three semester credit hours. In this example, and assuming 
a defined title IV academic year of 24 semester credit hours, a student 
would have completed the hour portion of the title IV academic year 
after demonstrating mastery of at least eight individual competencies 
(8 x 3 = 24).
    Disbursements for Direct and Indirect Costs: Under this experiment, 
institutions will separate the components of the student's title IV COA 
into two categories, one for ``direct costs'' (i.e., tuition and fees 
and books and supplies) and the other for ``indirect costs'' (such as 
room and board, transportation, miscellaneous expenses). Students will 
be eligible to receive disbursements of title IV aid for institutional 
charges and disbursements of title IV aid for living expenses at 
different times based on the two different measures of the student's 
progression through the CBE program.
    Subject to the student's maximum award eligibility for the academic 
year, the institution will be permitted to make a disbursement of title 
IV aid for direct costs once the student completes the appropriate 
number of competencies, without regard to how long it took the student 
to do so.
    Disbursements for indirect costs will be made based on the 
student's completion of a number of weeks of instructional time, since 
those costs are directly related to the time component of the title IV 
``academic year'' definition, and will not require completion of a set 
number amount of competencies by that time unless the student fails to 
meet satisfactory academic progress requirements as described below.
    Payment Periods: This experiment will require that title IV aid be 
disbursed to students under the ``non-term'' provisions of the 
regulations, except that institutions will be required to shorten the 
length of the CBE program's payment periods from 50 percent of the 
program's defined ``academic year'' to no more than 25 percent of the 
academic year. Because aid for direct and indirect costs will be 
decoupled, there will be two separate title IV payment periods.
    A direct cost payment period will be based on the student's 
completion of no more than 25 percent of the competencies in the 
program's title IV academic year. An indirect cost payment period will 
be based on the student's completion of no more than 25 percent of the 
number of weeks of instructional time in the program's title IV 
academic year.
    This experiment will provide for institutional flexibility in 
establishing the number of competencies and weeks of instructional time 
in the CBE program's payment periods to fit its needs, as long as each 
of those components is not more than 25 percent of the relevant 
academic year component and as long as all of the components combined 
equal at least 100 percent of the relevant academic year component. An 
institution may choose a different percentage for establishing a 
payment period for direct costs and for indirect costs.

    Example:  Consider an example in which the institution and its 
accrediting agency have established that the CBE program consists of 
40 competencies, each of which is equivalent to the amount of 
learning in three semester credit hours. Accordingly, the title IV 
academic year will consist of successful completion of at least 
eight competencies (the equivalent of 24 credit hours) over 30 weeks 
of instructional time. The institution has decided, for this CBE 
program, that it will set both the direct cost payment period and 
the indirect cost payment period to be equal to 25 percent of the 
title IV academic year.

    In this example, assume that the student's total title IV aid for 
the academic year is $16,000, with the direct costs (tuition and fees 
and books and supplies) totaling $12,000. For this student, the direct 
cost component of the COA will be $12,000 and the indirect cost 
component of the COA will be $4,000, the remainder of title IV aid 
available after consideration of direct costs. These amounts will be 
used to determine the amount of the disbursements that are made upon 
the student's completion of the relevant payment period.
    Therefore, for this example 25 percent of the direct cost component 
($3,000 in this example) could be disbursed at the beginning of the 
first direct cost payment period in the academic year and three 
subsequent $3,000 disbursements could be made following the student's 
successful completion of each direct cost payment period--at least two 
competencies (25 percent of the eight competencies in the academic year 
definition). Similarly, 25 percent of the indirect cost component 
($1,000 in this example) will be disbursed at the beginning of the 
first indirect cost payment period in the academic year and three 
subsequent $1,000 disbursements will be made following the student's 
successful completion of each of the indirect cost payment periods, 
each of which constitutes 7.5

[[Page 44434]]

weeks of instructional time (25 percent of the 30 weeks of 
instructional time in the academic year).
    Under this experiment, if a student completes 25 percent of the 
competencies in the academic year before 25 percent of the weeks of 
instruction has passed, the institution may choose, for administrative 
reasons, not to immediately disburse title IV aid for direct costs but, 
may instead wait until the required weeks of instruction have elapsed, 
in order to make disbursements for both direct and indirect costs at 
the same time. However, if an institution chooses to delay 
disbursements for direct costs, it may not restrict the student's 
ability to continue or to begin subsequent academic work.
    Similar to the title IV credit balance disbursement requirements of 
34 CFR 668.164(e), the institution must make the disbursement of title 
IV funds, if any, for a student's indirect costs no later than 14 days 
after the student has completed the prior indirect cost payment period.
    Weeks of Instruction, Educational Activities, and Substantive 
Interaction: Consistent with existing regulations, for purposes of this 
experiment, a week of instructional time is any seven-day period in 
which the institution makes available to the students enrolled in the 
CBE program, instructional materials and faculty support so that a 
student could be engaged in an educational activity. Although students 
must in general show progress in their program of study to continue to 
receive title IV aid, they will have a limited amount of discretion to 
determine the pace of their progression, subject to the limits of the 
withdrawal and satisfactory academic progress provisions discussed 
below.
    Also consistent with existing regulations, for the purpose of this 
experiment, an educational activity includes, but is not limited to, 
regularly scheduled learning sessions, faculty-guided independent 
study, consultations with a faculty mentor, development of academic 
action plans covering the competencies identified by the institution, 
or, in combination with any of the foregoing, assessments.
    For the purpose of this experiment, regular and substantive 
interaction between students and instructors will be required.
    Title IV aid may not be paid for academic credits resulting from 
successful assessments of prior learning where the learning was not 
based on instruction provided during the payment period.
    Withdrawals and the Return of Title IV Aid (R2T4): Because of the 
relatively short payment periods in this experiment (no more than 25 
percent of the academic year), the institution will not be required to 
perform a calculation when a student withdraws during a payment period. 
However, if a student ceases to be academically engaged, or fails to 
enroll in any competencies, for 45 days, the institution must consider 
the student to have withdrawn and no further title IV aid may be 
disbursed.
    An institution will still have to comply with regulations for late 
disbursements under 34 CFR 668.164(g), except insofar as post-
withdrawal disbursements will not be calculated in accordance with 34 
CFR 668.22. An institution will be required, within 45 days of 
determining that a student has withdrawn, to notify the student of any 
loan funds for which the student might be eligible and maintain a 
process for issuing those funds to the student or the student's account 
upon request. Likewise, the institution must also pay to the student 
any grant funds that the student was eligible to receive at the time of 
the withdrawal, and comply with the requirements in 34 CFR 668.21 to 
return funds for a payment period in which a student did not begin 
attendance.
    Satisfactory Academic Progress (SAP): This experiment will modify 
the statutory and regulatory requirements for monitoring a title IV aid 
recipient's SAP. Under the experiment, an institution will be required 
to evaluate a student's SAP upon the student's completion of each of 
the program's academic years, as measured in weeks of instructional 
time (i.e., at least 30 weeks for a program with credit hour 
equivalencies and at least 26 weeks for a program with clock hour 
equivalencies). Because the student must have completed the required 
number of competencies before title IV aid can be disbursed for direct 
costs, when performing the SAP evaluation at the end of the academic 
year, institutions will not be required to determine the student's SAP 
pace by dividing the number of hours the student has completed by the 
number of hours the student has attempted. Instead, the institution 
will determine whether the student has completed sufficient 
competencies to complete the program within the maximum timeframe, that 
is no more than 150 percent of the program's published length, as 
provided in the definition of ``maximum timeframe'' in the regulations 
at 34 CFR 668.34(b).
    For example, consider a student who was enrolled in a CBE program 
of 40 competencies, each of which has been determined to be the 
equivalent of three credit hours. The title IV academic year consists 
of eight competencies, which is equivalent to 24 credit hours, and 30 
weeks of instructional time. While the student may have received title 
IV aid for each of the four indirect cost payment periods (i.e. after 
7.5 weeks), if the student has not completed at least 5.33 competencies 
at the end of the 30th week of instruction in the student's first year 
of the program the institution would determine that she is not on pace 
to complete the program within 150% of the maximum timeframe and would 
terminate her title IV eligibility, subject to the possibility of an 
appeal.
    Additionally, under this experiment, if the institution accepts any 
transfer credit to meet requirements of a student's program, it may, 
but is not required to, prorate the student's maximum timeframe based 
on the amount of transfer credit that the student has received.
    Through this experiment the Department seeks to gain a better 
understanding of how the flexibility in the delivery of title IV 
student assistance might facilitate the implementation of CBE programs 
by institutions relate to students' costs, borrowing, and completion.
    The Department is also interested in learning how the flexibility 
provided in the experiment for R2T4 and SAP make it easier for 
institutions to implement CBE programs, as well as how institutions 
maintain the integrity of the title IV student aid programs given such 
flexibility. We also seek to learn how institutions ensure regular and 
substantive interaction between students and instructors. Additionally, 
we seek to learn how institutions prohibit the payment of title IV aid 
for credits resulting from successful assessments of prior learning 
that were not based on instruction provided during the payment period.
    Further, we hope to better understand the process by which 
institutions develop CBE programs, including the process of obtaining 
accrediting agency approval for such programs and determining, with 
their accrediting agencies, the clock or credit hour equivalencies for 
the defined competencies in their programs.
    Note that an institution applying to participate in this experiment 
may also apply to participate in one or both of the Prior Learning 
Assessment and the Limited Direct Assessment experiments described in 
this notice.

Waivers

    Institutions selected for this experiment will be exempt from, or 
will

[[Page 44435]]

follow waivers to, the following statutory and regulatory provisions:
     34 CFR 668.4(c), to the extent that the regulation defines 
payment periods in nonterm programs to be 50 percent of the title IV 
academic year and requires completion of both credit or clock hours and 
weeks of instructional time.
     HEA section 484B and 34 CFR 668.22 which require the 
institution to determine the amount of title IV aid a student has 
earned upon withdrawal from the institution, except that this waiver 
does not apply for the determination of a student's withdrawal date 
from a nonterm program at 34 CFR 668.22(a)(2) and the requirement for 
notification of a post-withdrawal disbursement for funds from the 
Direct Loan Program at 34 CFR 668.22(a)(6).
     HEA section 484(c) and 34 CFR 668.34(a)(3)(ii), 
(a)(5)(ii), and (b), related to the timeframe when the institution must 
determine whether a student is making satisfactory progress and to the 
method by which an institution must calculate the pace of a student's 
academic progression.
     34 CFR 674.16(b)(3), which permits an institution to 
advance Federal Perkins Loan funds within each payment period at such 
time and in such amounts as it determines best meets a student's needs. 
The modification will require the institution to make disbursements of 
Perkins Loan funds for indirect costs in accordance with the provisions 
of the experiment.
     34 CFR 676.16(a)(3), which permits an institution to 
advance Federal Supplemental Educational Opportunity Grant funds within 
each payment period at such time and in such amounts as it determines 
best meets a student's needs. The waiver will require the institution 
to make disbursements of FSEOG funds for indirect costs in accordance 
with the provisions of the experiment.
     HEA section 428G(a)(2) and 34 CFR 685.301(b)(3)(ii)(B), 
which provide that an institution may not make the second disbursement 
of a Direct Loan until the student successfully completes half of the 
number of credit or clock hours and half the number of weeks of 
instructional time in a payment period.
     34 CFR 685.301(c)(2) and (3), to the extent that the 
regulations provide that students in nonterm programs are considered to 
have completed their academic year and progressed to the next annual 
loan limit at the later of the successful completion of weeks of 
instructional time or the coursework or clock hours in the student's 
academic year.
     34 CFR 686.33(a), which permits an institution to pay 
TEACH Grant funds within each payment period at such time and in such 
amounts as it determines best meets a student's needs. The modification 
will require the institution to make disbursements of TEACH Grant funds 
for indirect costs in accordance with the provisions of the experiment, 
as explained above.
     34 CFR 690.63(e)(2), which requires Pell Grant funds (and 
Iraq-Afghanistan Service Grant funds) to be paid in nonterm programs 
only when both the credit or clock hours and weeks of instructional 
time associated with the prior payment period have been completed.
     34 CFR 690.76(a), which permits an institution to pay Pell 
Grant funds (and Iraq-Afghanistan Service Grant funds) within each 
payment period at such time and in such amounts as it determines best 
meets a student's needs. The modification will require the institution 
to make disbursements of Pell Grant funds or Iraq-Afghanistan Service 
Grant funds in accordance with the provisions of the experiment.

All other provisions and regulations of the title IV student assistance 
programs will remain in effect.

Limited Direct Assessment--Eligibility of Coursework Using Direct 
Assessment

Background

    Section 481(b)(4) of the HEA and the regulations at 34 CFR 668.10 
provide, in general, that the definition of an ``academic program'' 
eligible for title IV aid includes an instructional program that, in 
lieu of credit hours or clock hours as the measure of student learning, 
utilizes direct assessment of student learning, or recognizes the 
direct assessment of student learning by others. To be eligible for 
title IV aid, such programs must utilize direct assessment over the 
entire program, and may not offer a combination of coursework offered 
using direct assessment and coursework offered in traditional credit 
hours or clock hours. Institutions are also prohibited from offering 
title IV aid for remedial coursework using direct assessment.
    Several in the postsecondary education community believe that 
additional statutory and regulatory flexibility related to direct 
assessment requirements would provide opportunities for new approaches 
for teaching and instruction. They also contend that direct assessment 
may be more appropriate for some portions of a program than other 
portions, and restricting eligibility to only programs where all 
coursework is offered using direct assessment may limit the 
effectiveness of direct assessment.
    Further, some institutions and other entities have also stated that 
not allowing remedial coursework to be offered using direct assessment 
is restrictive and unnecessary, particularly for nontraditional 
students who may be able to master skills to prepare them for more 
advanced coursework, but have difficulty doing so in a traditional 
term-based program.

Description

    This experiment will permit an institution to provide title IV aid 
to students who are enrolled in a program that measures students' 
academic progress using a direct assessment method, even if the entire 
program does not use direct assessment. The experiment will permit an 
institution to provide in a single program both direct assessment 
courses and credit or clock hour courses. Students may enroll in both 
types of courses simultaneously or at different times within the same 
program, academic year, or payment period.
    An institution applying to participate in this experiment may also 
apply to participate in the Prior Learning Assessment experiment, which 
will allow the institution to include certain costs incurred by a 
student for assessments of prior learning in the student's title IV 
COA. Institutions applying to participate in this experiment are also 
encouraged to apply to participate in the related Competency-Based 
Education Program experiment.
    Through this experiment, the Department seeks to examine 
institutions' implementation of approaches that utilize direct 
assessment over only part of a program or involve the use of remedial 
coursework offered using direct assessment. The Department is also 
interested in understanding how those approaches may be related to 
students' costs, borrowing, and completion.

Waivers

    Institutions selected for this experiment will be exempt from the 
following statutory and regulatory provisions:
     HEA section 481(b)(4) and 34 CFR 668.10(a)(1), which 
require a program utilizing direct assessment to use direct assessment 
for the entire program.
     34 CFR 668.10(a)(3)(iii), to the extent that the 
regulation defines the activities that may be considered educational 
activities for the purposes of defining a week of instructional time in 
a direct assessment program.
     34 CFR 668.10(g)(2), which prohibits the payment of title 
IV aid for

[[Page 44436]]

remedial coursework offered by direct assessment.
    All other provisions of the title IV student assistance 
regulations, including the requirement that the institution apply for 
approval for direct assessment program eligibility under 34 CFR 
668.10(b), will remain in effect.

Federal Work Study--Near-Peer Counseling

Background

    Section 443(b)(5) of the HEA provides that, except under limited 
circumstances, the Federal share of compensation paid to students 
employed under the Federal Work-Study (FWS) Program may not exceed 75 
percent. The remaining portion must come from institutional or other 
non-Federal funds.
    This experiment provides financial encouragement to institutions to 
develop, implement, or expand FWS placements that provide ``near-peer 
counseling'' to high-school students, especially at-risk and 
underrepresented students. This experiment reflects emerging evidence 
that counseling provided by college students similar in age and 
circumstances to the high school students they counsel is effective in 
raising rates of college enrollment.
    Under this experiment, the regular ``matching'' share of FWS 
compensation will be reduced or eliminated, allowing institutions to 
use up to 100 percent of Federal funds to provide compensation to its 
FWS near-peer counselors.

Description

    This experiment will waive the statutory and regulatory 
requirements that prohibit the Federal share of compensation paid to a 
student under the FWS Program from exceeding 75 percent for near-peer 
counselors and mentors employed by the institution. For the purpose of 
this experiment, near-peer counselors or mentors are any of an 
institution's students whose FWS-funded jobs are to provide counseling 
or mentoring to high school students in matters of college readiness, 
student aid, career counseling, or financial literacy.
    Under this experiment, an institution must ensure that its near-
peer counselors or mentors are knowledgeable in the aforementioned 
subjects, are either experienced in or trained in relevant counseling 
or mentoring techniques, and that the activities, information, and 
initiatives under the near-peer counseling or mentoring program are 
targeted to the needs of high school students. Institutions must also 
ensure that their FWS near-peer counselors or mentors are not involved 
in any institutional marketing or recruitment activities, particularly 
for the institution itself.
    Through this experiment, the Department hopes to gain a better 
understanding of how FWS programs offered by institutions may change 
after the FWS matching requirement for near-peer counseling is waived, 
including potential changes in the number or characteristics of FWS-
supported students overall and of those who participate in near-peer 
counseling programs. The Department is also interested in learning 
about the level of student participation in FWS programs at 
institutions and characteristics of institutions' FWS students, 
especially those employed in community service jobs and those who 
participate in near-peer mentoring programs.

Waivers

    Institutions selected for this experiment will be exempt from the 
following statutory and regulatory provisions:
     HEA section 443(b)(5) and the regulations at 34 CFR 675.26 
(a), which generally provide that the Federal share of compensation 
paid to an FWS student may not exceed 75 percent.

All other provisions and regulations of the title IV student assistance 
programs and specifically regarding the FWS program will remain in 
effect.
    Accessible Format: Individuals with disabilities can obtain this 
document in an accessible format (e.g. braille, large print, audiotape, 
or compact disc) on request to the contact person listed under FOR 
FURTHER INFORMATION CONTACT.
    Electronic Access to This Document: The official version of this 
document is the document published in the Federal Register. Free 
Internet access to the official edition of the Federal Register and the 
Code of Federal Regulations is available via the Federal Digital System 
at: www.gpo.gov/fdsys. At this site you can view this document, as well 
as all other documents of this Department published in the Federal 
Register, in text or Adobe Portable Document Format (PDF). To use PDF, 
you must have Adobe Acrobat Reader, which is available free at the 
site.
    You may also access documents of the Department published in the 
Federal Register by using the article search feature at: 
www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department.

    Program Authority:  HEA, section 487A(b); 20 U.S.C. 1094a(b).

    Dated: July 25, 2014.
Lynn Mahaffie,
Acting Assistant Secretary for Postsecondary Education.
[FR Doc. 2014-18075 Filed 7-30-14; 8:45 am]
BILLING CODE 4000-01-P

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