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From: Kolotos, John
Sent: Thursday. April 15, 2010 9:16 AM
To: Manheimer, Ann
Subject: RE: Application of GE

From: Manheimer, Ann

Sent: Thursday, April 15, 20108:52 AM
To: Kolotos, John
Subject: fIN: Application of GE

From: Pauline Abernatt)y [mailto:pabemathy@ticas.org]

sent: Thursday, April 15; 2010 8:47 AM
To: Manheimer, Ann
Subject: RE: Application of GE

Right. My understanding is that HEOA was intended to,exempt Uof Phoenix's liberal Arts SA only. The question is did it
only exempt their liberal arts SA or did it incorrectly exempt all Phoenix programs? And, can you also confirm that if a
nonprofit is pUrchased by a for-profit, all of the school's programs would be subject to GE because it is now for-profit,
regardless of whether it used to be regionally accredited and was offering a SA in liberal arts before it was purchased?
Thank you.

From: Manheimer, Ann [mailto:Ann.Manheimer@ed.gov]

Sent: Thursday, April is, 2010 8;41 AM
To: Pauline Abemathy
Cc: Manhelmer, Ann
Subject: RE: Application of GE

Pauline - hang on -I want to double check on an eX17eption for liberal arts programs in the HEOA 200S

From: Manheimer, Ann

Sent: Wednesday, April 14, 2010 5:00 PM
To: Pauline Abernathy
Subject: fIN: Application of GE

Here is what I have come up with - is this helpful? fnough info (I have boiled it down)?

GE applies to certificate programs at aff schools and to afl programs offered at for-profit schools.

In the case where a proprietary school buys a nonprofit, the SA programs (which were not previously subject to GEl
would now be subject to GE.

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 From: Pauline Abernathy [mailto:pabernathy@ticas.org]
Sent: MondaYI April 12 1 2010 11:00 AM
To: Manheimer, Ann
Cc: Debbie Frankie Cochrane; Deanne Loonin
Subject: Application of GE

. Ann,
Per our conversation, it would help to understand to which entities the GE standard currently applies.
The confusion appears to stem in part from the provisions added in theHEOA and in part from reported
differences among the FSA Handbook, regs and statute. I wrote up the questions and issues based on
information from Deanne and Debbie, but any inaccuracies are my own. Thank you!

The FSA Handbook, I am told, says in order to be considered an 'institution of higher education' for title
IV purposes, an institution has to offer programs no less than one year in length, along with being non~
profit. Other institutions are in a separate category, as proprietary or vocational institutions. But once
the institution is eligible, each individual program mayor may not be eligible. Gainful employment
pertains solely to program eligibility, not institutional eligibility (we believe). This would suggest that
gainful employment would apply to everything at proprietary and vocational colleges, and all sub-degree
(less than two year programs) at institutions of higher education.

The HEOA added a category that allows a proprietary institution to offer programs leading to a
baccalaureate degree in liberal arts if the school previously provided such programs and is regionally
accredited. There is no gainful employment requirement here.

Questions:

o If a proprietary school like Univ. of Phoenix meets the HEOA provision standards, are then
none of its programs subject to the GE requirement, or is just their BA in liberal arts not
subject to GE? I believe Congress intended the latter but is this how ED interprets it as
well?
o If a proprietary school buys a nonprofit that has previously offered a BA in liberal arts and
is regionally accredited, are all of the proprietary school's programs now exempt from GE?
I don't believe Congress ever intended this to apply to for-profits that purchased a
nonprofit, but is this how ED interprets it?

For the nonprofit schools, there could be an argument that a general eligibility stamp of approval would
flow to all of their programs, even non-degree programs. However, the FSA handbook reportedly states
that a school's eligibility does not necessarily extend to all of its programs. The school must ensure that a
program is eligible before awarding FSA funds.

There is, however, another distinction that may be important. The provisions in 101(b) state that a non~
profit may be an eligible institution of higher education if it provides not less than a one-year program of
training to provide students for gainful employment. This section does not say that it must be an eligible
program. The same issue"arises in the regulations at 34 C.F.R 600.4. The regs say only that these
institutions must provide an educational program, not an eligible educational program. However, the
eligible program regulations at 668.8 (c) use the term "eligible program" in referring to non-profit

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institutions of higher education, but do not specify time requirements as is the case for proprietary
institutions. .

Clearly non-profits may offer non-degree programs that by definition must prepare students for gainful
employment. This should be sufficient to conclude that the definition of gainful employment would apply
here. However, there is some ambiguity because the statute does not specifically say that the program
must be "eligible." Does this just mean that they do not have to refer to the definitions in 1088 re: clock
hours? One would think that the school cannot qualify to offer non-degree programs based .on their
eligibility qualifications offering degr,ee programs and so they must independently ensure that each
program is eligible. This would mean that ifit is a non-degree program at an institution of higher
education (meaning a non-profit), the program must be independently eligible and so must prepare
students for gainful employment. Is this how ED sees it? Margaret Reiter asked this question in an e-mail
to Fred Sellers during the neg reg. In contrast, in order to be an eligible PROPRIETARY institution of
higher education, the school must provide an ELIGIBLE program of training to prepare students for
gainful employment in a recognized occupation.

It is therefore clear that the proprietary institutions must also offer "eligible" programs. These are
defined in section 1088(b). As Margaret pointed out, this section does not explicitly refer back to section.
1002. These are mostly time-related categories.

Pauline Abernathy
Vice President
The Institute for College Access & Success
www.ticas.org and www.projectonstudentdebt.org
We moved! TICAS' main number is now 510.318.7900. My direct line is 510.318.7903.

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