Publication Date: October 28, 2011

Posted Date: October 28, 2011

Subject: Postsecondary Educational Institutions Invited To Participate in Experiments Under the Experimental Sites Initiative

FR Type: Notice


[Federal Register Volume 76, Number 208 (Thursday, October 27, 2011)]
[Notices]
[Page 66698-66707]
From the Federal Register Online via the Government Printing Office [wais.access.gpo.gov
[FR Doc No: 2011-27880]

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DEPARTMENT OF EDUCATION

Postsecondary Educational Institutions Invited To Participate in 
Experiments Under the Experimental Sites Initiative

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Notice

------------------------------------------------------

    Overview Information: Federal Student Financial Assistance Programs 
under Title IV of the Higher Education Act of 1965, as amended; notice 
inviting postsecondary educational institutions to participate in 
experiments under the Experimental Sites Initiative.
SUMMARY: The Secretary invites postsecondary educational institutions 
(institutions) that participate in the student assistance programs 
authorized under Title IV of the Higher Education Act of 1965, as 
amended (the HEA), to apply to participate in one or more new 
experiments under the Experimental Sites Initiative (ESI), as 
authorized by section 487A(b) of the HEA. Under section 487A(b) the 
Secretary has the authority to grant waivers from specific Title IV, 
HEA statutory or regulatory requirements to allow institutions to test 
alternative methods for administering the Title IV, HEA programs.

DATES: Applications to participate in any experiment must be received 
by the Department no later than December 12, 2011 in order for an 
institution to receive priority to be considered for participation in 
an experiment. Letters of application received after December 12, 2011 
may be considered for participation at a later time.

ADDRESSES: Letters of application must be submitted via 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, below.

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), call the Federal Relay Service (FRS), toll free, at 1-800-877-8339.

[[Page 66699]]


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--Request to Participate.'' The text of the email should identify 
the experiment, or experiments, the institution wishes to participate 
in by number and title used in the ``The Experiments'' paragraph under 
SUPPLEMENTARY INFORMATION, below (e.g., ``Experiment 5--Direct Loan 
Program--Unequal disbursements'').
    The letter of application should be on institutional letterhead and 
be signed by an official of the institution. The letter must include 
the institution's official name and Department of Education Office of 
Postsecondary Education Identification (OPEID), as well as a mailing 
address, email address, FAX number, and telephone number of a contact 
person at the institution.
    Background:
    This notice is the second notice regarding the Experimental Sites 
Initiative (ESI). The first, published in the Federal Register on 
October 28, 2009 (74 FR 55542), solicited suggestions from institutions 
for new experiments under the ESI. The Department received suggestions 
for new experiments from institutions representing all sectors of the 
postsecondary education community. This notice invites institutions to 
request to participate in one or more of the experiments described in 
this notice.
    Under the waiver authority granted 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. Substantiated improvements as a result of an 
experiment would provide a rationale for policymakers to consider 
changing the statutory or regulatory provision that was the focus of 
the experiment.
    The Department is interested in gathering data under circumstances 
that will allow for a reliable evaluation of the experiments. 
Participating institutions will be expected to gather and report data 
needed by the Department for this purpose. To support recommendations 
for change, evidence must be provided that was obtained from both a 
treatment group of students who participated in the experiment and a 
control or comparison group of students who received their student aid 
under existing rules. As for any evaluation design, it is important 
that the control or comparison group be as similar as possible to the 
treatment group.
    Depending upon the experiment, the control group could be a set of 
students who otherwise meet the eligibility requirements for the 
experiment but are randomly selected to have their aid administered 
under existing requirements. Comparison groups could include students 
from, for example, a different but similar educational program, a 
different but similar location or campus, an earlier award year, or a 
group that does not have the same need for the treatment (e.g., they 
are not Pell Grant eligible); but in all cases these groups should be 
made up of students as similar as possible to those in the treatment 
group.
    The Secretary intends to support experiments where the Department 
can draw causal inferences about the effects of the alternative 
approach based on a rigorous evaluation design. Examples of the kinds 
of evaluation and research designs that allow conclusions to be drawn 
about the effects of an intervention (program, policy, or practice) can 
be found at ED's What Works Clearinghouse ( http://ies.ed.gov/ncee/wwc/).
    Institutions may apply to participate in one or more of the eight 
experiments included in this notice and described below. From the 
institutions that apply, the Secretary will select only a limited 
number to participate in each experiment. The selection of 
participating institutions will be guided by the purpose of the ESI, 
which is, as is provided for under section 487A(b), to evaluate 
alternatives to current requirements, and 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. Consequently, the Secretary will 
consider the extent to which eligible institutions are willing to 
conduct the experiment in a way that maximizes the Department's ability 
to make reliable evaluations of the experiments.
    The Secretary intends to select a cross-section of Title IV 
eligible institutions, carefully considering the diversity of 
participating institutions by, among other characteristics, 
institutional type and control, geographic location, enrollment size, 
and Title IV participation levels.
    Institutions selected to participate in the experiments must have a 
strong track record in the administration of the Title IV student 
assistance 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" results.
    Specifically, any institution with a last official cohort default 
rate of 25 percent or more (the statutory default rate threshold for 
possible loss of Title IV student loan eligibility) will not be 
eligible to participate in the ESI. Nor will any for-profit institution 
where 85 percent or more of its revenues come from Title IV aid (the 
historical percentage that applied to for-profit institutions), as 
computed under the requirements for the 90/10 rule. Due to the 
proximity of these rates to the thresholds that would place the 
institution in jeopardy of losing Title IV program eligibility, the 
Secretary believes that including institutions with high cohort default 
rates or high 90/10 ratios creates a risk to program integrity.
    Finally, institutions with recent cohort default rates and, as 
appropriate, 90/10 ratios that show a trajectory toward the 25 percent 
default rate or the 85 percent Title IV revenue thresholds will also be 
ineligible to participate in the experiments.
    In the event that a selected institution consists of more than one 
location (e.g., campus), the Secretary anticipates limiting experiments 
to a single location, unless the institution proposes to implement the 
experiment differently at other locations to test multiple alternatives 
to the statutory or regulatory requirement, or if the institution 
provides the Secretary with another compelling justification.
    Through the ESI, the Department seeks to partner with institutions 
in experiments that will test the effectiveness of alternatives to 
selected statutory or regulatory requirements applicable to the Title 
IV, HEA programs. In general, effectiveness will be determined by the 
Department's analysis of empirical evidence submitted by participating 
institutions. A successful experiment would be one that results in 
improved services to students or reduces burden on students and 
institutions, or both, and supports the statutory or regulatory intent 
of the original requirement and maintains (or increases) the financial 
and programmatic integrity of the Title IV, HEA programs. Each of the 
experiments must provide documented results that can inform future 
policy decisions.
    For each experiment, we expect to measure--to the greatest extent 
possible--the effect of the alternative approach on the students whose Title IV

[[Page 66700]]

aid was administered under the experiment. Evaluations will be designed 
to measure the likely outcome in the absence of the experiment. Thus, 
participating institutions will be required to report information for 
students in the experiment and information, as available, for otherwise 
similar students whose Title IV eligibility was administered under 
existing requirements. The specific reporting requirements will vary 
among the experiments and will be finalized in consultation with the 
institutions selected to participate in each experiment.
    In addition to submitting evaluation data specified for each 
experiment, institutions that are selected for participation in an 
experiment will be required to submit a narrative description of their 
implementation of the experiment. The narrative should include any 
unforeseen challenges and unexpected benefits.
    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 or modified. Revised PPAs will also document the 
agreement between the Secretary and the institution about how each 
experiment will be conducted and will specify the evaluation and 
reporting requirements for each experiment.
    To assist institutions considering whether to submit a request to 
participate in an experiment, the Department provides, in the 
descriptions of each experiment below, its initial thoughts on the 
evaluation measures and corresponding data that will be collected from 
institutions participating in each experiment. Institutions that are 
selected to participate in an experiment will be required to submit 
data and other information specified by the Secretary as a condition of 
the institution's initial and continued participation in the 
experiment. The Secretary reserves the right to modify these initial 
evaluation measures and reporting requirements for any experiment to 
support a rigorous evaluation of the experiment.
    The Experiments:
    Experiment 1--Federal Pell Grant Program--Eligibility of students 
with bachelor's degrees who enroll in vocational or career programs.
    Experiment 2--Federal Pell Grant Program--Eligibility of students 
enrolled in certain short-term training programs.
    Experiment 3--Direct Loan Program--Single disbursement of a one-
term loan for study abroad students.
    Experiment 4--Direct Loan Program--Early disbursement for study 
abroad students and for students enrolled in foreign institutions.
    Experiment 5--Direct Loan Program--Unequal disbursements.
    Experiment 6--Direct Loan Program--Limiting unsubsidized loan 
amounts.
    Experiment 7--PLUS Loans for parents of students with intellectual 
disabilities.
    Experiment 8--Student Eligibility--Eligibility of students with 
intellectual disabilities who are also enrolled in high school.
    Details on the ESI Experiments:
    Experiment 1--Federal Pell Grant Program--Eligibility of students 
with bachelor's degrees who enroll in vocational or career programs.
    Background: In general, section 401(c)(1) of the HEA provides that 
students who have earned a bachelor's degree are not eligible for a 
Federal Pell Grant. This restriction may prevent low-income students 
who have earned a bachelor's degree from benefiting from short-term 
vocational training when they are either unemployed or underemployed, 
notwithstanding their having earned a bachelor's degree. This 
experiment would test whether a limited exception to the provision that 
only students without a bachelor's degree can receive a Pell Grant 
would help address the unemployment or underemployment status of such 
persons.
    Description: This experiment would provide a limited waiver of the 
statutory requirement that a student who has earned a bachelor's degree 
may not receive a Pell Grant. The experiment would allow at least some 
students with a bachelor's degree to receive not more than one full 
scheduled Pell Grant award, over no more than two award years, for 
enrollment in a vocational/career program of study of one year or less.
    Eligibility would be restricted to students with a bachelor's 
degree who have demonstrated to the participating institution that they 
are unemployed or underemployed and who will be entering the vocational 
program for the first time.
    The experiment will require that the program be one that provides 
training needed to meet local or regional workforce needs, as 
determined by the institution in consultation with employers or state 
or local workforce agencies.
    As a condition of receiving a Pell Grant under this experiment, 
students must agree to provide career and employment information to the 
institution for both the period prior to enrolling in the program and 
receiving Pell Grant funding and for up to two years following 
completion or withdrawal from the program. As an option, the 
institution may provide information it obtains from an alternative 
reliable source such as a state longitudinal data system.
    The Department is particularly interested in applications from 
institutions that will include in this experiment students who are 
legal immigrants to the United States, who were trained as 
professionals abroad, and who are seeking credentials allowing them to 
fill skilled positions in the United States.
    The objective of the experiment is to determine if providing Pell 
Grants to low-income students who have earned a bachelor's degree but 
who are unemployed or underemployed improves the students' employment 
status. The experiment should also minimize the use of student loan 
funds to finance vocational/career education for such students.
    Waivers: Institutions selected for this experiment will be exempt 
from the following statutory and regulatory provisions:
     HEA section 401(c)(1), which excludes students who have 
earned a bachelor's degree from receiving Pell Grant funding.
     34 CFR 668.32(c)(2)(i)(A), which excludes baccalaureate or 
first professional degree holders from receiving a Pell Grant.
     34 CFR 690.6(a), which limits eligibility for Pell Grants 
to students who have not earned their first bachelor's degree.

All other provisions of the Student Assistance General Provisions 
regulations and the Federal Pell Grant regulations will remain in 
effect, including 34 CFR 690.6(e), which provides that a student may 
not receive more than nine Pell Grant Scheduled Awards.
    Evaluation: This experiment will be evaluated by using information 
provided by the institution, and any other information available to the 
Secretary, to determine if the students who received Pell Grant funding 
under the experiment completed the program and became employed in the 
field for which the training was provided. Evaluation measures will 
include employment and salary data for the students before they entered 
the program and after completing or withdrawing from the program. The

[[Page 66701]]

Department will also analyze whether these students completed their 
vocational training with a lower student loan debt than if they had not 
received a Pell Grant.
    As noted earlier, to support a recommendation for a change to a 
legal requirement, data from both a treatment group of students who 
participated in the experiment and a control or comparison group of 
students who received their student aid under existing rules must be 
evaluated. This could require that some students who otherwise meet the 
eligibility requirements for this experiment would have their aid 
administered under existing requirements.
    The Department will collect and analyze data to evaluate completion 
rates, loan debt, and post-training employment.
    Reporting Requirements: Institutions participating in this 
experiment will be required to report information on the students 
participating in the experiment and on at least the following: (1) 
Students enrolled in the program who do not have a bachelor's degree 
and (2) students with bachelor's degrees who were enrolled in the 
program during one or more years prior to the first year of the 
experiment.
    The information that will be reported for each of the groups of 
students will likely include the number of students who began the 
program, the amount of grant and loan assistance received by the 
students, the number of students who withdrew from the program, the 
number of students who completed the program, grade point averages and 
other academic performance information for the students, the number of 
students who obtained employment in jobs related to the vocational 
training, and salary information before and after program completion or 
withdrawal.
    Experiment 2--Federal Pell Grant Program--Eligibility of students 
enrolled in certain short-term training programs.
    Background: In general, section 481(b)(A) of the HEA provides that 
only academic programs that are at least 15 weeks in duration and that 
provide 600 clock hours, 16 semester or trimester hours, or 24 quarter 
hours of academic credit are eligible programs for purposes of the 
Federal Pell Grant Program (unless the program requires at least an 
associate's degree for admission).
    Representatives from some state institutions that offer short-term 
vocational programs have suggested that if the training is directly 
related to state or local workforce needs, allowing shorter term 
vocational training programs to be Pell Grant eligible would enable 
unemployed and underemployed persons to obtain the short-term training 
required for employment by local or regional employers. While some 
institutions have developed innovative programs to embed a short-term 
program within a longer eligible degree or certificate program, such 
programs may not meet the needs of all potential students. This is 
especially true for students from low income backgrounds or those who 
have work or family responsibilities that prevent them from enrolling 
in longer term programs. In addition, it is hoped that, under this 
experiment, institutions that currently offer longer term programs may 
develop ways that shorten the student's time to completion--such as 
asynchronous learning, competency based instruction, or other 
innovative approaches. Such changes to the structure of training 
programs may allow the program to be shorter than 15 weeks and still 
maintain Pell Grant eligibility.
    Description: This experiment would provide a waiver of the 
requirement that a Pell Grant eligible program must include at least 15 
weeks of instructional time and at least 600 clock hours, 16 semester 
or trimester hours, or 24 quarter hours. It would allow Pell Grants to 
be received by at least some otherwise eligible students who are 
enrolled in a vocational program of at least eight weeks in length and 
that, at a minimum, includes at least 150 clock hours of instructional 
time, which is what some short-term vocational programs currently 
provide. The amount of the Pell Grant provided to a student under this 
experiment will be prorated for the shorter period of instructional 
time, pursuant to the Pell Grant regulations at 34 CFR 690.63(a)(3).
    The experiment will require that the short-term vocational program 
at the community college or postsecondary vocational institution must 
provide training needed to meet local or regional workforce needs, as 
determined by the institution in consultation with employers or state 
or local workforce agencies. As part of that consultation, the 
institution must ensure that the content and instructional hours of the 
program are (1) sufficient to meet hiring requirements of multiple 
likely employers, and (2) sufficient to allow the students to apply for 
any licenses or other certifications that may be required to be 
employed in the field for which the training was offered.
    As a condition of receiving Pell Grant funds under this experiment, 
students must agree to provide career and employment information to the 
institution for the period prior to enrolling in the program and for up 
to two years following completion or withdrawal from the program. As an 
option, the institution may provide information it obtains from an 
alternative reliable source such as a state longitudinal data system.
    The objective of this experiment is to determine if providing Pell 
Grant funding to support unemployed or underemployed persons enrolled 
in short-term vocational training programs offered by community 
colleges and postsecondary vocational institutions increases employment 
rates or wages of those persons.
    Waivers: Institutions selected for this experiment will be exempt 
from the following statutory and regulatory provisions:
     HEA section 481(b)(1)(A), which sets the minimum 
timeframes for a Pell Grant eligible program.
     34 CFR 668.8(d)(1)(i) and (ii), which establish the 
timeframes for eligible programs.

All other provisions of the Student Assistance General Provisions 
regulations and the Federal Pell Grant regulations will remain in 
effect.
    Evaluation: This experiment will be evaluated by using information 
provided by the institution, and any other information available to the 
Secretary, to determine whether providing Pell Grant funding for low-
income students enrolled in short-term vocational programs results in 
expanded and improved job placement for those students. The evaluation 
will examine the employment status and, if possible, the earnings of 
students participating in the program and their program completion 
rates. It will also measure employment outcomes of students who were 
enrolled in vocational programs that include at least 15 weeks of 
instructional time and at least 600 clock hours.
    As noted earlier, to support a recommendation for a change to a 
legal requirement, data from both a treatment group of students who 
participated in the experiment and a control or comparison group of 
students who received their student aid under existing rules must be 
evaluated. The Department is interested in gathering data under 
circumstances that will allow for a reliable measurement of the impact 
of the experiment. Because it is important that the outcomes for the 
treatment group be compared to a group of students as similar to them 
as possible, some students who otherwise meet the eligibility 
requirements for this experiment may need to have their aid 
administered under existing requirements.

[[Page 66702]]

    Reporting Requirements: Institutions participating in this 
experiment will be required to report information about the low-income 
students enrolled in the short-term programs who receive Pell Grants 
under this experiment and about non-Pell--eligible students enrolled in 
the same (or similar) vocational program(s), and of students, if any, 
who were enrolled in the program prior to the effective date of this 
experiment. The data institutions participating in this experiment must 
report will likely include: Enrollment counts; student employment and 
income data, including participation, if any, in government assistance 
programs; amounts of grant assistance received; program completion 
data; information on the placement of students in applicable jobs, 
including the number of different employers hiring graduates of the 
program over the two years following the students' completion of the 
program; and salary information of the students both before and after 
program completion or withdrawal.
    Experiment 3--Direct Loan Program--Single disbursement of a one--
term loan for study abroad students.
    Background: Section 428G(a) of the HEA provides that with two 
exceptions, Direct Loan Program loans must be disbursed at least twice 
during the loan period and those disbursements must be substantially 
equal. One of the exceptions allows for a single disbursement for an 
institution's study abroad students if the institution's most recent 
official Direct Loan/FFEL Program cohort default rate is less than five 
percent. This exception allows students participating in a study abroad 
program sponsored by a domestic institution to have money to help 
offset their initial financial commitments, such as transportation 
expenses, housing costs, visa fees, fees for immunizations, etc. 
Additionally, many countries require, as the United States requires, 
that students planning to attend postsecondary institutions provide 
documentation of sufficient financial resources to cover their expenses 
while in the country.
    With the nationwide increase in default rates, many institutions 
(mostly public and non-profit four-year institutions) fall just short 
of the five percent cohort default rate threshold that would allow for 
a single disbursement of a one-term Direct Loan to their study abroad 
students. With the upcoming transition to three-year cohort default 
rate calculations, it is expected that even fewer institutions will 
meet the less-than-five-percent threshold.
    Description: This experiment would provide a partial waiver to the 
requirement that Direct Loan Program loans be disbursed in at least two 
substantially equal disbursements during a loan period. It would allow 
a single disbursement of a one-term loan for some study abroad students 
attending a participating institution even if the institution's cohort 
default rate equals or exceeds five percent.
    The objective of this experiment is to determine if providing 
needed early loan funding for students studying outside of the United 
States increases participation in foreign educational experiences for 
students without increasing the risk that the students will not 
complete the loan period for which the funds were provided.
    Waivers: Institutions selected for this experiment will be exempt 
from the following statutory and regulatory provisions:
     HEA section 428G(a), which generally requires multiple 
disbursements of student loans.
     34 CFR 685.301(b)(3)(ii), which requires at least two 
disbursements of Direct Loan Program loan proceeds.

Instead, participating institutions will be permitted to make one 
disbursement of a Direct Loan Program loan for study abroad students if 
the loan period is one academic term. All other provisions of the 
Student Assistance General Provisions regulations and the Direct Loan 
Program regulations will remain in effect.
    Evaluation: The Department will evaluate this experiment by using 
information provided by the institution, and any other information 
available to the Secretary, to determine whether the experiment allowed 
more students, especially low-income students, to participate in study 
abroad programs. It will also evaluate whether students assisted by the 
experiment completed the loan period for which they received Direct 
Loan funding in a single disbursement.
    As noted earlier, to support a recommendation for a change to a 
legal requirement, data must be provided from both a treatment group of 
students who participated in the experiment and a control or comparison 
group of students who received their student aid under existing rules. 
Because it is important that outcomes for the treatment group be 
compared to a group of students as similar to the treatment group as 
possible, some students who otherwise meet the eligibility requirements 
for this experiment may need to have their aid administered under 
existing requirements.
    Reporting Requirements: Institutions participating in this 
experiment will be required to provide information on study abroad 
students who received their loan proceeds in one disbursement under 
this experiment as well as for study abroad students who received their 
loan funds for an earlier payment period when at least two 
disbursements were made. The information to be collected for these 
groups will likely include the number of students in each group, the 
amount of grant and loan assistance received, and the number of 
students enrolled at the end of the loan period.
    Experiment 4--Direct Loan Program--Early disbursement for students 
participating in approved study abroad programs and students enrolled 
in foreign institutions.
    Background: Under the FFEL Program regulations at 34 CFR 
682.207(b)(1)(v), a student who was participating in an approved study 
abroad program or who was attending an eligible foreign institution 
could, upon request of the institution and the approval of the FFEL 
Program guaranty agency, have FFEL Program loan proceeds disbursed as 
early as 30 days prior to the first day of classes of the academic term 
(i.e. payment period). This is an exception to the Title IV Student 
Assistance General Provisions regulations that generally provide that 
no Title IV student assistance funds can be disbursed to a student 
earlier than ten days prior to the first day of classes of the academic 
term.
    This FFEL Program exception was provided because of the unique 
financial needs of students who study outside of the United States. 
Such students typically need their student aid funds early to meet 
obligations for travel to the site of their upcoming studies, to get 
established in the foreign country (housing, etc.), and in some 
instances to meet the foreign country's visa requirements.
    Because prior to July 1, 2010, the only Title IV student assistance 
a student attending an eligible foreign institution could receive was 
FFEL Program funds, there was no need to provide a similar exception 
for the Direct Loan Program. However, with the enactment of the SAFRA 
within the Health Care and Education Reconciliation Act, students 
attending foreign institutions (as well as those participating in 
approved study aboard programs sponsored by U.S. host institutions), 
must get their Title IV loans through the Direct Loan Program which 
currently has no provision for early disbursement.
    Description: This experiment would permit participating domestic 
institutions to disburse Direct Loan funds for some students enrolled 
in approved study abroad programs as

[[Page 66703]]

early as 30 days prior to the first day of classes of the student's 
enrollment for the loan period. Similarly, participating foreign 
institutions would be able to disburse Direct Loan funds as early as 30 
days prior to the first day of classes of the student's enrollment for 
the loan period.
    As a condition of receiving an early disbursement of a Direct Loan 
under this experiment, students must sign an agreement with the 
institution allowing for the release of the student's academic records 
and agreeing to participate in a study to determine the impact of the 
early disbursement on their foreign study.
    The objective of this experiment is to determine if providing early 
disbursement of Direct Loan proceeds to students whose academic program 
includes studying in a foreign country increases the number of students 
who participate in such programs. It will also determine if 
participating students are academically successful in their programs 
because of the financial relief the early disbursement provides.
    Waivers: Institutions selected for this experiment will be exempt 
from the following statutory and regulatory provisions:
     HEA section 428G, which provides the earliest date that 
loan funds may be disbursed.
     34 CFR 668.164(f), which provides that disbursements of 
Direct Loan proceeds cannot occur any earlier than ten days prior to 
the first day of classes for the payment period.

All other provisions of the Student Assistance General Provisions 
regulations and the Direct Loan Program regulations will remain in 
effect.
    Evaluation: This experiment will be evaluated by using information 
provided by the institution, and any other information available to the 
Secretary, to determine if a broader range of students are able to 
participate in foreign study and be successful. Information collected 
from students will attempt to determine the effects of the early 
disbursement. Finally, this experiment will carefully monitor academic 
withdrawal rates as well as loan delinquencies and defaults for 
participating students to determine if there are any abnormalities that 
might be attributed to the early disbursement of loan proceeds.
    As noted earlier, to support a recommendation for a change to a 
legal requirement, data must be provided from both a treatment group of 
students who participated in the experiment and a control or comparison 
group of students who received their student aid under existing rules. 
Because it is important that outcomes for the treatment group be 
compared to a group of students as similar to the treatment group as 
possible, some students who otherwise meet the eligibility requirements 
for this experiment may need to have their aid administered under 
existing requirements.
    Reporting Requirements: Institutions participating in this 
experiment will be required to report information on the students 
participating in the experiment and also on other students (including 
students from prior years) who were enrolled in study abroad programs 
or at foreign institutions, as appropriate. The data to be collected 
and analyzed for each group of students will likely include the number 
of students, confirmation of the students' actual attendance at the 
foreign institution, and the students' progress toward completion of 
the foreign study program. Additionally, data will be collected from 
the students participating in the experiment regarding the impact of 
the early disbursement on their foreign study experience. And, for 
students who were not participating in the experiment, data will be 
collected on the impact on their foreign study experience of not 
receiving their loan proceeds until, at the earliest, ten days before 
the first day of classes for the academic term.
    Experiment 5--Direct Loan Program--Unequal disbursements.
    Background: Section 428G(a)(1) of the HEA provides that a student's 
Direct Loan must be disbursed in two or more substantially equal 
amounts. The dates of the disbursements usually coincide with the 
educational program's academic terms (i.e., payment periods) that make 
up the loan period. This provision generally works well since the costs 
for most educational programs are usually reasonably spread out over 
all of the payment periods that comprise the loan period. However, some 
educational programs have up-front costs associated with the first 
payment period of the loan period that are substantially higher than 
costs for later payment periods. Such up-front costs could include 
costs of required books and supplies that will be used throughout the 
loan period, payment required to meet certain insurance or medical 
requirements, and initial housing costs for students whose housing 
changes as a result of enrolling in the educational program.
    Financial aid administrators have suggested that for some students 
in certain academic programs, receiving only half of their student loan 
proceeds at the beginning of the loan period does not allow the student 
to meet required up-front educational expenses. This can affect whether 
the students (particularly low-income students) are able to enroll in 
the program and, once enrolled, be academically successful.
    Description: This experiment would waive the requirement that 
Direct Loans be disbursed in at least two substantially equal 
disbursements and would allow, under certain conditions, unequal 
disbursements of Direct Loan proceeds. Institutions participating in 
this experiment will be required to establish formal policies for 
determining the conditions under which it would allow a student to 
receive unequal disbursements of loan funds.
    Under this experiment, no student may receive a single disbursement 
of more than 75 percent of the total loan amount for the loan period, 
and the same percentage must be applied to all of the student's loans 
for the loan period (subsidized, unsubsidized, and PLUS loans). This 
provision is to ensure that there are funds available for later in the 
loan period. Any funds released in excess of the existing rules cannot 
be applied to the student's institutional tuition and fee charges, 
except for any charges directly related to the student obtaining 
required books and supplies or housing provided by the institution.
    Institutions must provide guidance to their Direct Loan borrowers 
concerning the types of expenses that may qualify them for 
consideration of unequal loan disbursements and what the acceptable 
documentation is for each type of expense.
    The objective of this experiment is to determine if providing more 
up-front loan proceeds when the educational expenses are higher at the 
beginning of the loan period increases the enrollment and program 
completion of low-income students.
    This experiment only applies to Direct Loan proceeds and does not 
allow for unequal disbursements of Pell Grant funds.
    Waivers: Institutions selected for this experiment will be exempt 
from the following statutory and regulatory provisions:
     HEA section 428G(a)(1), which requires that no Direct Loan 
disbursement be for more than one-half of the total loan for the loan 
period.
     34 CFR 685.301(b)(5), which provides that no installment 
of a Direct Loan exceed one-half of the loan for the loan period.


All other Direct Loan disbursement requirements will remain in effect.
    Evaluation: This experiment will be evaluated by using information 
provided by the institution, and any

[[Page 66704]]

other information available to the Secretary, to determine whether 
allowing unequal disbursement of Direct Loans increases student 
enrollment, increases academic performance, and leads to the students' 
completion of the loan period and academic program.
    As noted earlier, to support a recommendation for a change to a 
legal requirement, data must be provided from both a treatment group of 
students who participated in the experiment and a control or comparison 
group of students who received their student aid under existing rules. 
Because it is important that outcomes for the treatment group be 
compared to a group of students as similar to the treatment group as 
possible, some students who otherwise meet the eligibility requirements 
for this experiment may need to have their aid administered under 
existing requirements.
    Reporting Requirements: Institutions participating in this 
experiment will be required to report information on the students 
participating in the experiment and also on students enrolled in the 
same academic program who received substantially equal disbursements 
and on students who received equal disbursements for loan periods prior 
to the experiment. The measures for these groups will likely include 
the number of students enrolled at the beginning of the loan period, 
demographic information of the students, the amount of grant and loan 
assistance awarded to each student, and completion and other academic 
measures for the students. Institutions must, upon request of the 
Secretary, submit a description of their policy for determining a 
student's eligibility for unequal Direct Loan disbursements.
    Experiment 6--Direct Loan Program--Limiting unsubsidized loan 
amounts.
    Background: Section 479A(c) of the HEA provides that institutions 
may only reduce the amount of a student's Direct Loan eligibility on a 
case-by-case, documented basis. They may not reduce eligibility on any 
across-the-board programmatic or other categorical basis. Some in the 
school community believe that this prohibition results in excessive 
borrowing by some students, especially by students attending low-cost 
institutions or those who live with their parents (or other family 
members), or otherwise do not have significant housing expenses. The 
schools also suggest that providing the statutorily established loan 
amounts (especially after recent statutory increases) to all students 
provides incentives for persons to enroll in low cost institutions only 
to receive a cash disbursement of Federal grant and loan funds in 
excess of direct institutional charges.
    Institutions also argue that the requirement that they provide the 
full loan amount to all students negatively affects the institution's 
cohort default rates, thereby placing in jeopardy not only the 
availability of the Direct Loan Program but also the Pell Grant Program 
for all of the institution's students. Consequently, some low-cost 
institutions, mostly community colleges, have chosen not to participate 
in the loan programs at all, thus depriving otherwise eligible students 
of access to low-cost Federal student loan assistance.
    Some for-profit institutions argue that because of the requirement 
that no more than 90 percent of their revenues can come from Title IV 
student aid--the 90/10 rule--they must ensure that their tuition always 
exceeds their students' Title IV eligibility. Thus, they cannot reduce 
tuition and, as Title IV aid amounts increase (e.g., increases in the 
maximum annual loan amounts), they often must raise tuition.
    Description: This experiment would allow an institution to 
establish a written policy where it would, for students enrolled in a 
particular educational program or on some other categorical basis 
(e.g., students living at home or first-time freshman), reduce by at 
least $2,000 (the amount of the most recent statutory increase) the 
amount of an unsubsidized Direct Loan that the otherwise eligible 
student would receive, or eliminate the unsubsidized Direct Loan 
completely.
    The institution must continue to ensure that each eligible student 
receives the full amount of any subsidized Direct Loan the student has 
requested, up to the statutory maximums for subsidized loans.
    Although this experiment will allow reductions in Direct Loan 
amounts on other than a case-by-case basis, it would not allow 
institutions to discriminate against any borrower or applicant on the 
basis of race, national origin, religion, sex, marital status, age, or 
disability status.
    The Department anticipates that experiments in this area would 
address at least one of three issues and requests that institutions 
wishing to be considered for this experiment clearly state which of the 
three following issues they wish to test.
    (1) Over-borrowing. The one-size-fits-all nature of annual loan 
limits may give some students access to more in Federal loans than they 
need to complete their educational program. Some students may borrow 
more than is justified by the economic prospects for completers of 
their educational program (i.e., major course of study or vocational 
area of concentration). Despite recent increases in loan limits, there 
is little empirical evidence of the effect additional loan amounts have 
on student access and completion. Experiments designed to address over-
borrowing would reduce students' annual unsubsidized loan limits by at 
least $2,000, restoring those limits to no higher than their 2007-2008 
level.
    For-profit colleges interested in reducing their students' over-
borrowing are encouraged to apply to participate in this experiment 
under both this issue and under issue 3, Unintended consequences at 
for-profit colleges.
    (2) Lack of loan availability. Paradoxically, the same limits that 
may lead some students to borrow too much may prevent others from 
borrowing at all. Some institutions, particularly community colleges, 
have chosen not to participate in the Federal student loan programs, in 
part because they are concerned that high cohort default rates could 
jeopardize the Pell Grant eligibility of their students. As a result, 
some students attending those institutions must work longer hours or 
must use private student loans and credit cards to help finance their 
education. Institutions that wish to be considered for this experiment 
because they had previously chosen not to participate in the loan 
programs, would, as a condition of the experiment, become participating 
Direct Loan institutions and begin to make Direct Loans available to 
their students under the terms of this experiment.
    (3) Unintended consequences at for-profit colleges. Some for-profit 
institutions argue that due to the 90/10 rule, they must set tuition 
charges above their students' Title IV aid eligibility. As a result, 
these institutions argue, increases in annual loan limits has the 
perverse consequence of not allowing them to reduce tuition and, in 
some instances, actually requires them to raise tuition. Additionally, 
some of these institutions claim that because of the 90/10 rule, they 
admit fewer financially needy students who bring with them increased 
amounts of Title IV aid eligibility. Allowing reduced loan limits for 
some for-profit institutions under this experiment will test these 
claims and, if they are true, could result in some institutions 
lowering tuitions. For-profit institutions wishing to participate in 
this experiment for purposes of addressing tuition levels would be 
required to include along with reductions in students' annual 
unsubsidized loan eligibility of at least $2,000, reductions in tuition 
of the same

[[Page 66705]]

amount. Requests to participate under this issue should address how 
reducing loan limits may affect long term decisions on tuition or other 
fees.
    The Department is aware of the risks of reduced access to loans for 
some students. Participating institutions will be required to describe 
how they will ensure that their educational programs remain affordable 
for students in all financial circumstances and that the institution 
has maintained the economic and ethnic diversity of its students and 
graduates. In addition, participating institutions will be expected to 
describe how they will attempt to prevent increases in other forms of 
debt by students whose unsubsidized loan amounts were reduced, 
including increased use of private student loans and credit cards. 
Participants will be required to report data on these commitments, and 
experiments that are not meeting them will be terminated.
    Institutions participating in this experiment must inform their 
students and prospective students that the institution is participating 
in the experiment and that the institution has established maximum loan 
limits for unsubsidized loans that are less than the statutory 
maximums.
    Waivers: Institutions selected for this experiment will be exempt 
from the following statutory and regulatory provisions:
     HEA section 479A(c), which allows only case-by-case 
reductions in Direct Loan amounts.
     34 CFR 685.301(a)(8), which provides that reductions in a 
student's eligibility for a Direct Loan can only be made on a case-by-
case basis.

All other Direct Loan requirements will be in effect.
    Evaluation: This experiment will be evaluated by using information 
provided by the institution, and any other information available to the 
Secretary, to determine whether students who received less than the 
statutory amounts of Direct Loans were able to enroll in, succeed, and 
complete their academic programs. The Secretary will compare those 
results with results from similar students who received the higher loan 
amounts. An analysis of the effect of the experiment on the diversity 
of the students enrolled in the institution will be conducted, 
especially as it relates to the numbers of low-income students. The 
evaluation will also attempt to determine if the lower educational loan 
debt of the students in the experiment resulted in fewer delinquencies 
and defaults.
    As noted earlier, to support a recommendation for a change to a 
legal requirement, data must be provided from both a treatment group of 
students who participated in the experiment and a control or comparison 
group of students who received their student aid under existing rules. 
Because it is important that outcomes for the treatment group be 
compared to a group of students as similar to the treatment group as 
possible, some students who otherwise meet the eligibility requirements 
for this experiment may need to have their aid administered under 
existing requirements.
    The Department will also evaluate this experiment by analyzing the 
information reported by the participating institutions to determine 
compliance with the experimental requirements that students do not 
receive increased amounts of non-Federal financing and to determine 
that participating for-profit institutions were able to reduce tuition 
and fees during the term of the experiment by an amount equal to the 
amount that student loan borrowing was reduced.
    Reporting Requirements: The Secretary will require institutions 
participating in this experiment to report information on the students 
affected by the experiment and also on students enrolled in the same or 
in a similar program when the experiment was not in effect. The 
measures for these groups will likely include the number of enrolled 
students and their demographic information; tuition charges; the amount 
of grant and loan assistance awarded to each student; grades (or other 
measures of academic performance); the number of students enrolled at 
the beginning of the loan period; the number of withdrawals; the number 
of completions; and average student debt levels, including non-Federal 
debts.
    Institutions must, upon the request of the Secretary, submit a 
description of their policy and procedures for determining the amount 
of the reduced loan eligibility.
    Experiment 7--Direct Loan Program--PLUS Loans for parents of 
students with intellectual disabilities.
    Background: Pursuant to section 484(s) of the HEA, students with 
intellectual disabilities who are enrolled in an approved comprehensive 
transition and postsecondary program (transition program) are eligible 
to receive funding from the Pell, Federal Work Study (FWS), and Federal 
Supplemental Educational Opportunity Grant (FSEOG) programs, 
notwithstanding that the students are not enrolled in an academic 
program that leads to a postsecondary educational credential. This 
statutory provision specifically provides that such students may not 
receive support from the Title IV loan programs. Because of this, an 
otherwise eligible parent is unable to receive a Direct PLUS loan to 
help offset the educational costs for their intellectually disabled son 
or daughter to enroll in an approved transition program. This places 
the family in a difficult financial situation when educational costs 
exceed, sometimes significantly, the limited other Title IV aid that 
may be available. This is, of course, particularly true for the parents 
of students who are not Pell or FSEOG eligible, arguably the target 
group for parent PLUS loans. Many of these parents may be forced to 
rely on less favorable private financing to support their child's 
education.
    Description: This experiment would permit participating 
institutions to originate and disburse Direct PLUS loans to the 
otherwise eligible parents of dependent students with intellectual 
disabilities, as defined in the Department's regulations at 34 CFR 
668.231(b), who are enrolled in an approved comprehensive transition 
and postsecondary program (transition program), as defined in the 
Department's regulations at 34 CFR 668.231(a). As a condition of the 
parent receiving a Direct PLUS loan under this experiment, the student, 
or the student's parent(s) if required, must sign an agreement with the 
institution allowing for the release to the Department of the student's 
academic and other records related to the student's participation in 
the transition program. The release must also provide that the student 
(or parent) will provide information on the student's post enrollment 
living and occupational status. Additionally, the parents must agree to 
provide the institution, for release to the Secretary, general 
information concerning how the family financed the student's attendance 
in the transition program.
    The objective of this experiment is to determine if by providing 
this financing option to some parents, more students with intellectual 
disabilities will enroll in and complete an approved transition 
program. Another objective is to reduce the parents' debt burden caused 
by higher interest rates from non-Federal financing.
    Waivers: Institutions selected for this experiment will be exempt 
from the following statutory and regulatory provisions:
     The portion of HEA section 484(s) that provides that 
students with intellectual disabilities who are enrolled in an approved 
comprehensive transition and postsecondary program may only receive 
Title IV funding from

[[Page 66706]]

the Pell Grant, FSEOG, and FWS programs.
     34 CFR 668.230, which states that the only programs a 
student with intellectual disabilities who is enrolled in a 
comprehensive transition and postsecondary program is eligible for are 
the Pell Grant, FSEOG, and FWS programs.

All other Student Assistance General Provisions regulations and Direct 
Loan regulations, including all of the Direct PLUS Loan requirements of 
34 CFR Part 685, will remain in effect.
    Evaluation: This experiment will be evaluated by using information 
provided by the institution, and any other information available to the 
Secretary, to determine if making Direct PLUS loans available to the 
parents of students with intellectual disabilities who are enrolled in 
a transition program, increases the participation of those students and 
increases the likelihood of the students completing the transition 
program. The experiment will also test to see if the availability of 
PLUS loans reduces the reliance by the parents on non-Federal loans and 
other less favorable financing.
    As noted earlier, to support a recommendation for a change to a 
legal requirement, data must be provided from both a treatment group 
and a control or comparison group. Because it is important that 
outcomes for the treatment group be compared to a group as similar to 
the treatment group as possible, some students who otherwise meet the 
eligibility requirements for this experiment may need to have their aid 
administered under existing requirements.
    Reporting Requirements: Institutions participating in this 
experiment will be required to report information on the students and 
parents who benefit from the PLUS loan and on those who did not. The 
data to be collected and analyzed will likely include the number of 
students enrolled in the transition program; the types and amounts of 
Title IV aid received by the students and, if applicable, by the 
parents; and information on the students' enrollment in, and completion 
of, the transition program. Additional data will be collected from 
parents regarding the need for other educational financing.
    Experiment 8--Student Eligibility--Eligibility of students with 
intellectual disabilities who are also enrolled in high school.
    Background: Pursuant to section 484(s) of the HEA, students with 
intellectual disabilities who are enrolled in an approved comprehensive 
transition and postsecondary program (transition program) are eligible 
to receive funding from the Pell, Federal Work Study (FWS), and Federal 
Supplemental Educational Opportunity Grant (FSEOG) programs, 
notwithstanding that the students are not enrolled in an academic 
program that leads to a postsecondary educational credential. Section 
484(a)(1) of the HEA specifically prohibits any student from receiving 
Title IV assistance if the student is also enrolled in a secondary 
school (i.e., high school) and no statutory exception was provided for 
students enrolled in transition programs. Since the purpose of these 
comprehensive transition and postsecondary programs is to provide 
transition training to students who have intellectual disabilities, 
many of these students would benefit significantly from enrolling in 
the transition program at the postsecondary institution while still 
completing their high school curriculum. For many of these students 
enrolling in the postsecondary transition program while still in high 
school offers them the best chance for academic, vocational, and life 
success.
    Description: This experiment would permit some students with 
intellectual disabilities who are enrolled in an approved comprehensive 
transition and postsecondary program at a Title IV eligible institution 
while also enrolled in secondary school--dually enrolled students--to 
receive Title IV funding, notwithstanding the general prohibition of 
eligibility for such students because of their dual enrollment. 
Institutions participating in this experiment will be required to 
obtain assurances from other entities that provide education services 
or financial support to students participating in the experiment, 
including local education agencies (LEAs) and State Vocational 
Rehabilitation Agencies, that those entities will maintain their 
support for the students receiving Federal financial aid under this 
experiment or to the students' families, unless the entity is legally 
prohibited from doing so.
    The objective of this experiment is to determine if, by providing 
Title IV aid to otherwise eligible students with intellectual 
disabilities who are enrolled in an approved transition program while 
also enrolled in high school, the transition process for the students 
can be improved without placing financial burdens on their families.
    Waivers: Institutions selected for this experiment will be exempt 
from the following statutory and regulatory provisions, but only for 
students with intellectual disabilities who are enrolled in approved 
transition programs:
     The provision of HEA section 484(a)(1) that precludes 
students who are enrolled in secondary school from receiving Title IV 
aid.
     34 CFR 668.32(b), which excludes elementary or secondary 
school students from eligibility for Title IV assistance.
All other student eligibility requirements would remain in effect as 
would the specific requirements of each of the Title IV student 
assistance programs.
    Evaluation: This experiment will be evaluated by using information 
provided by the institution, and any other information available to the 
Secretary, to determine if more intellectually disabled students enroll 
in and complete a comprehensive transition and postsecondary program 
than would have without the experiment. The evaluation will assess the 
success of dually enrolled students in the transition program relative 
to their peers who were not also enrolled in high school.
    As noted earlier, to support a recommendation for a change to a 
legal requirement, data must be provided from both a treatment group of 
students who participated in the experiment and a control or comparison 
group of students who received their student aid under existing rules. 
Because it is important that outcomes for the treatment group be 
compared to a group of students as similar to the treatment group as 
possible, some students who otherwise meet the eligibility requirements 
for this experiment may need to have their aid administered under 
existing requirements.
    Reporting Requirements: Institutions participating in this 
experiment will be required to report information on the students 
participating in the experiment and also on students enrolled in the 
transition program who were not also enrolled in high school. The data 
to be collected and analyzed for each group of students will likely 
include the number of students; the types and amounts of Title IV and 
other student aid received; the students' progress toward completion of 
the high school curriculum and progress toward completion of the 
transition program curriculum; and, where appropriate, employment 
information of the students who complete the transition program.
    As a condition of the student receiving Title IV aid while enrolled 
in high school under this experiment, the student, or the student's 
parent(s), if required, must sign an agreement with the institution 
allowing for the release to the Department of the student's academic 
and other records related to

[[Page 66707]]

the student's participation in the transition program. The release must 
also provide that the student (or parent) will provide information on 
the student's post enrollment living and occupational status.
    Institutions participating in this experiment will be required to 
provide information on whether other educational service providers 
maintained the students' programmatic and financial support while the 
student was still enrolled in high school.
    Accessible Formats: 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: 
http://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:
http://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: Section 487A(b); 20 U.S.C. 1094a(b).

    Dated: October 21, 2011.
Eduardo M. Ochoa,
Assistant Secretary for Postsecondary Education.
[FR Doc. 2011-27880 Filed 10-26-11; 8:45 am]
BILLING CODE 4000-01-P
 

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