§ 600.21 Eligibility notification.

(a) The Secretary notifies an institution in writing of the Secretary's determination

(1) Whether the applicant institution qualifies in whole or in part as an eligible institution under the appropriate definition in §§ 600.4 through 600.7; and

(2) Of the HEA programs for which it is eligible to apply for participation.

(b) If only a portion of the applicant qualifies as an eligible institution, the Secretary specifies in the notification of eligibility letter only the locations or programs which qualify.

(Authority: 20 U.S.C. 1085, 1088, and 1141)

Subpart C-Maintaining Eligibility

§ 600.30 Institutional changes requiring review by the Secretary.

(a) An eligible institution shall notify the Secretary at the same time that it notifies its accrediting agency or association, but not later than ten days after the change occurs, of any change in the following information provided in the institution's eligibility application:

(1) Its name.

(2) Its address.

(3) The name, number, and address of locations other than the main campus at which it offers educational services.

(4) Its ownership, if that ownership change results in a change in control of the institution.

(5) The establishment of written agreements with other institutions or organizations in accordance with § 600.9(b)(2).

(b) The Secretary notifies the institution in writing if the change affects the institution's eligibility.

(c) The institution's failure to inform the Secretary of the information described in paragraph (a) of this section within the time period stated in that paragraph may result in adverse action against it, including the loss of its eligibilty.

(Approved by the Office of Management and Budget under control number 18400098)

(Authority: 20 U.S.C. 1085, 1088, and 1141)

[53 FR 11210, Apr. 5, 1988, as amended at 53 FR 49146, Dec. 6, 1988]

§ 600.31 Change in ownership resulting in a change of control.

(a) An eligible institution, or a previously eligible institution that participated in any HEA program, that changes ownership resulting in a change of control is not considered by the Secretary to be the same institution unless

(1) The new owner agrees to be liable, or the old and new owners agree to be jointly and severally liable, for all HEA program funds which the institution received and improperly expended before the effective date of the change of control;

(2) The new owner agrees

(i) To abide by the institution's policy regarding refunds of institutional charges to students in effect before the effective date of the change of control for students who were enrolled before the effective date; and

(ii) To honor all student enrollment contracts that were signed by the institution before the effective date of the change;

(3) The institution submits individual statements for the new owners listing assets, liabilities, and net worth and either

(i) A profit and loss statement and balance sheet for the institution's latest complete fiscal year; or

(ii) An audit for the institution's latest complete fiscal year prepared by a licensed certified public accountant;

(4) The institution submits additional financial documents if requested by the Secretary because the financial information provided in paragraph (a)(3) of this section is insufficient; and

(5) The institution provides for the retention of all records required in connection with its designation as an eligible institution and its participation in any HEA program. These records must include a copy of the latest prior application requesting a determinaton of institutional eligibility for HEA programs, the Secretary's eligibility notification received as a result of that application, and the institution's participation agreement for the student aid programs.

(b) The Secretary may require that the profit and loss statement and balance sheet provided for in paragraph (a)(3)(i) of this section be audited and certified by a licensed certified public accountant.

(c) For the purposes of this part, a change in ownership of an institution that results in a change of control means any action by which a person or corporation obtains new authority to control the actions of that institution. That action may include, but is not limited to

(1) The sale of the institution;

(2) The transfer of the controlling interest of stock of the institution or its parent corporation;

(3) The merger of two or more eligible institutions;

(4) The division of one institution into two or more institutions;

(5) The transfer of the controlling interest of stock or assets of the institution to its parent corporation; or

(6) The transfer of the liabilities of an institution to its parent corporation.

(d)(1) Except as provided in paragraph (d)(2) of this section, the Secretary considers an eligible institution, or a previously eligible institution that has participated in any HEA program, that changes ownership resulting in a change of control to be a new institution for the purpose of establishing eligibility if the new owner or owners of the institution have been convicted of or have pled nolo contendere or guilty to, a crime involving the acquisition, use, or expenditure of Federal funds, or have been judicially determined to have committed fraud involving Federal funds.

(2) The Secretary may consider an eligible institution or a previously eligible institution to be the same institution for the purpose of establishing institutional eligibility under this part, if

(i) The individuals who were convicted of, or pled nolo contendere or guilty to, a crime involving the acquisition, use, or expenditure of the funds are no longer incarcerated for that crime; (ii) At least five years have elapsed from the date of the conviction, nolo contendere plea, guilty plea, or judicial determination; and

(iii) The funds that were fraudulently obtained or criminally acquired, used, or expended have been repaid to the United States, and any related financial penalty has been paid.

(e) If the Secretary considers an institution to be a new institution under this section, the institution under its new owner or owners must meet all applicable requirements for establishing eligibility, including, if applicable, the two years in existence requirement. (Approved by the Office of Management and Budget under control number 18400098)

(Authority: 20 U.S.C. 1085, 1088(b), and 1094)

[53 FR 11210, Apr. 5, 1988, as amended at 53 FR 49146, Dec. 6, 1988]

Subpart D-Loss of Eligibility

§ 600.40 Loss of eligibility.

(a) An institution loses its eligibility on the date that

(1) It fails to meet any of the eligibility requirements of this part;

(2) It permanently closes; or

(3) It ceases to provide educational programs (except during normal vacation periods).

(b) If the Secretary designates an institution as an eligible institution on the basis of inaccurate information or documentation, the Secretary's designation is void from the date it was made and the institution never qualified as an eligible institution.

(c) If an institution ceases to satisfy any of the requirements for eligibility under this part

(1) It must notify the U.S. Department of Education within 30 days; and (2) It becomes ineligible to continue to participate in any HEA program. (Authority: 20 U.S.C. 1085, 1088 and 1141) [53 FR 11210, Apr. 5, 1988. Redesignated at 55 FR 32182, Aug. 7, 1990]

§ 600.41 Termination

action proceedings.

and

emergency

(a) If the Secretary believes that an institution as a whole, or at one or more of its locations, that was previously designated by the Secretary as an eligible institution under the HEA, does not satisfy the statutory or regu

latory requirements that define that institution as an eligible institution, the Secretary may

(1) Undertake to terminate the institution's eligibility under the title IV, HEA programs as a whole or at those locations under the procedural provisions applicable to terminations contained in 34 CFR 668.81, 668.86, 668.87, 668.88, 668.89, 668.90 (a)(1), (a)(4), (c)(f), and 668.91; and

(2) Initiate an emergency action under the provisions contained in 34 CFR 668.83 with regard to the institution's participation in the title IV, HEA programs.

(b) If the Secretary believes that an educational program offered by an institution, that was previously designated by the Secretary as an eligible institution under the HEA, does not satisfy relevant statutory or regulatory requirements that define that educational program as part of an eligible institution, the Secretary may

(1) Undertake to terminate that educational program's eligibility under the title IV, HEA programs under the procedural provisions applicable to terminations described in paragraph (a)(1) of this section; and

(2) Initiate an emergency action under the provisions contained in 34 CFR 668.83 with regard to the institution's participation in the title IV, HEA programs.

(c) If the eligibility of an institution or one of its locations or educational programs is terminated under the procedures described in paragraph (a)(1) of this section because of the failure to satisfy the statutory or regulatory requirements that defined that institution or location as an eligible institution or as a part of an eligible institution, or that educational program as an eligible program, the effective date of the loss of eligibility is the date specified in § 600.40(a) with regard to the institution, location, or educational program, as applicable.

(d) If the eligibility of an institution or one or more of its locations is terminated under this section, the consequences of that termination with regard to the title IV, HEA programs are described in § 600.40(b) and 34 CFR 668.94, with the references therein to an "institution" considered to

apply to the location. The consequences of termination of the eligibility of an educational program are described in § 600.10(c)(2), § 600.40(b), and 34 CFR 668.94, with the references therein to an "institution" considered to apply to the educational program.

(e) For purposes of this section, the title IV, HEA programs are those listed at 34 CFR 668.1(c).

(f) For purposes of this section, designation of eligibility by the Secretary with regard to an educational program includes a determination by the institution pursuant to § 600.10(c)(1) that an educational program is an eligible program.

(g)(1) In any proceeding under this section to terminate the eligibility of an institution, location, or educational program on the ground that the institution, location, or educational program no longer meets applicable requirements in this part with regard to accreditation or legal authorization, the sole issue that may be considered is whether the institution lacks the requisite accreditation or legal authorization. The administrative law judge has no authority to consider challenges to the propriety of the action of the accrediting agency or governmental agency in revoking, terminating, or modifying that accreditation or legal authorization.

(2) In any proceeding under this sec tion with regard to a termination of an institution or location on the ground that by reason of a change of ownership, the institution or location no longer meets the requirements of §§ 600.5(a)(7), 600.6(a)(6), and 600.7(a)(5) that an institution be in existence for at least two years, the only issues that may be considered are whether

(i) The institution or location has undergone a change of ownership that results in a change of control within the meaning of § 600.31(c), and

(ii) If such a change has taken place, the requirements of 600.31(a)(1) (a)(5) have been satisfied.

(Authority: 20 U.S.C. 1094) [56 FR 32182, Aug. 7, 1990)

601.3 Requesting an eligibility determination.

601.4 Criteria for determination of eligibil

ity to apply for participation in the GSLP.

601.5 Duration of eligibility determination. 601.6 Determination that a school previ

ously eligible under this subpart is no longer eligible.

601.7 Exception for students who received GSLP loans to attend foreign medical schools prior to publication date of this subpart.

AUTHORITY: Secs. 432 and 435(a) of the Higher Education Act of 1965, as amended (20 U.S.C. 1082, 1085(a)), unless otherwise noted.

SOURCE: 48 FR 8063, Feb. 25, 1983, unless otherwise noted.

§ 601.1 Purpose and scope.

(a) An educational institution located outside the United States is eligible to apply for participation in the Guaranteed Student Loan Program (GSLP) if it is comparable to medical schools in the United States and has been otherwise approved by the Secretary for purposes of the GSLP. This subpart sets forth procedures and criteria by which the Secretary determines whether medical schools located outside the United States and Canada are eligible to apply for participation in the GSLP. "Participation" in the GSLP by a foreign medical school means that its students who are citizens or nationals of the United States may apply for loans from eligible lenders under that program.

(b) This subpart does not cover the procedures and criteria by which a foreign medical school determined eligible to apply for participation in the GSLP actually applies for such participation. Those procedures and criteria are set forth in the GSLP regulations, 34 CFR Part 682.

(c) With respect to medical schools located in Canada, the Secretary uses the same procedures and criteria for determining eligibility as for medical

a

For purposes of this subpart: Foreign medical school means medical school not located in a State or in Canada.

Guaranteed Student Loan Program (GSLP) means the student loan program authorized by Title IV, Part B of the Higher Education Act of 1965, as amended (20 U.S.C. 1071 to 1087-2, regulations in 34 CFR Part 682) and includes the PLUS program (Auxiliary Loan Program, regulations in 34 CFR Part 683), also authorized by Part B.

Medical school means a school which satisfies the criteria for listing as a medical school in the World Directory of Medical Schools published by the World Health Organization (WHO).

Pass rate means the number of examinations passed (with passing scores on both medicine and English sections) by persons counted as "United States citizens" for tabulation purposes by the ECFMG who were graduates of the medical school, or in attendance at the school, at the time the examinations they passed were administered, divided by the number of examinations taken by all persons counted as "United States citizens" for tabulation purposes by the ECFMG who were graduates of the medical school, or were in attendance at the school, at the time the examinations they took were administered, expressed as a percentage.

State or United States includes, in addition to the several States of the Union, the Commonwealth of Puerto Rico, the District of Columbia, Guam,

American Samoa, the Virgin Islands, the Trust Territory of the Pacific Islands, and the Northern Mariana Islands.

(Authority: 20 U.S.C. 1082, 1085, 1141)

§ 601.3 Requesting an eligibility determination.

The Secretary may determine a foreign medical school eligible to apply for participation in the GSLP at any time, upon the request of either:

(a) A person who is

(1) Enrolled, or accepted for enrollment, at that school, and

(2) Otherwise eligible to receive a GSLP loan, or

(b) The school, on behalf of eligible students in attendance.

(Authority: 20 U.S.C. 1082, 1085)

§ 601.4 Criteria for determination of eligibility to apply for participation in the GSLP.

The Secretary determines that a foreign medical school is eligible to apply for participation in the GSLP only if it meets all of the following criteria:

(a) The school is a medical school, as defined in § 601.2.

(b) The school is both recognized as a medical school and approved by those evaluating bodies (such as medical associations or educational agencies) in the country in which the school is located whose views are considered relevant by the Secretary.

(c) The school provides, and in the normal course requires its students to complete, a program of clinical and classroom medical instruction of not less than 32 months in length, which is supervised closely by members of the school's faculty and which is provided either (1) outside the United

States, in facilities adequately equipped and staffed to afford students comprehensive clinical and classroom medical instruction, or (2) in the United States, through a training program for foreign medical students which has been approved by all medical licensing boards and evaluating bodies whose views are considered relevant by the Secretary.

(d) The school has graduated classes during each of the two twelve-month periods immediately preceding the

date the Secretary receives the school's request for an eligibility determination.

(e) During the most recent twentyfour month period for which data is available prior to the date the Secretary receives a request for a determination of the school's eligibility, the school's American students have achieved a pass rate of not less than 50 per cent on the examination of the Educational Commission for Foreign Medical Graduates (ECFMG), Philadelphia, Pennsylvania; provided, however, that if the number of ECFMG examinations taken by American students or graduates of the school during the preceding twenty-four month period is less than eight, the Secretary shall not deem the school to have failed to satisfy this criterion unless, after assessing the ECFMG examination performance of the school's students and graduates over a preceding period greater than twenty-four months, the Secretary concludes that the ECFMG examination performance of the school's students and graduates has been significantly and consistently substandard for a prolonged period of time.

(Authority: 20 U.S.C. 1082, 1085)

§ 601.5 Duration of eligibility determination.

(a) A determination by the Secretary that a foreign medical school is eligible to apply for participation in the GSLP is effective for two years, subject to the qualifications set forth in § 601.6. The determination is not rescinded during the two-year period even if at any time during that period the school no longer meets the criterion set forth in § 601.4(e).

(b) At any time, the Secretary may require a school or student to update the information the school or student provided in an earlier request for an eligibility determination.

(Authority: 20 U.S.C. 1082, 1085)

§ 601.6 Determination that a school previously eligible under this subpart is no longer eligible.

(a) If at any time a school previously eligible under this subpart no longer