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stitution or of an entity that holds a substantial ownership interest in the institution.
(B) The Secretary may determine that an entity exercises substantial control over one or more institutions participating in a program under this title if the Secretary determines that the entity directly or indirectly holds a substantial ownership interest in the institution.
(3) For purposes of this subsection, an ownership interest is defined as a share of the legal or beneficial ownership or control of, or a right to share in the proceeds of the operation of, an institution or institution's parent corporation. An ownership interest may include, but is not limited to
(A) a sole proprietorship;
(B) an interest as a tenant-in-common, joint tenant, or tenant by the entireties;
(C) a partnership; or
(D) an interest in a trust.
(4) The Secretary shall not impose the requirements described in subparagraphs (A) and (B) of paragraph (1) on an institution that
(A) has not been subjected to a limitation, suspension, or termination action by the Secretary or a guaranty agency within the preceding 5 years;
(B) has not had, during its 2 most recent audits of the institutions conduct of programs under this title, an audit finding that resulted in the institution being required to repay an amount greater than 5 percent of the funds the institution received from programs under this title for any year;
(C) meets and has met, for the preceding 5 years, the financial responsibility standards under subsection (c); and
(D) has not been cited during the preceding 5 years for failure to submit audits required under this title in a timely fashion.
(5) For purposes of section 487(c)(1)(G), this section shall also apply to individuals or organizations that contract with an institution to administer any aspect of an institution's student assistance program under this title.
(6) Notwithstanding any other provision of law, any individual who
(A) the Secretary determines, in accordance with paragraph (2), exercises substantial control over an institution participating in, or seeking to participate in, a program under this title;
(B) is required to pay, on behalf of a student or borrower, a refund of unearned institutional charges to a lender, or to the Secretary; and
(C) willfully fails to pay such refund or willfully attempts in any manner to evade payment of such refund, shall, in addition to other penalties provided by law, be liable to the Secretary for the amount of the refund not paid, to the same extent with respect to such refund that such an individual would be liable as a responsible person for a penalty under section
6672(a) of Internal Revenue Code of 1986 with respect to the nonpayment of taxes. 1
(f) ACTIONS ON APPLICATIONS AND SITE VISITS.-The Secretary shall ensure that prompt action is taken by the Department on any application required under subsection (b). The personnel of the Department of Education may conduct a site visit at each institution before certifying or recertifying its eligibility for purposes of any program under this title. The Secretary shall establish priorities by which institutions are to receive site visits, and shall, to the extent practicable, coordinate such visits with site visits by States, guaranty agencies, and accrediting bodies in order to eliminate duplication, and reduce administrative burden.
(g) TIME LIMITATIONS ON, AND RENEWAL OF, ELIGIBILITY.
(1) GENERAL RULE.-After the expiration of the certification of any institution under the schedule prescribed under this section (as this section was in effect prior to the enactment of the Higher Education Act Amendments of 1998), or upon request for initial certification from an institution not previously certified, the Secretary may certify the eligibility for the purposes of any program authorized under this title of each such institution for a period not to exceed 6 years.
(2) NOTIFICATION.-The Secretary shall notify each institution of higher education not later than 6 months prior to the date of the expiration of the institution's certification.
(3) INSTITUTIONS OUTSIDE THE UNITED STATES.-The Secretary shall promulgate regulations regarding the recertification requirements applicable to an institution of higher education outside of the United States that meets the requirements of section 102(a)(1)(C) and received less than $500,000 in funds under part B for the most recent year for which data are available.
PROVISIONAL CERTIFICATION OF INSTITUTIONAL ELIGIBILITY. (1) Notwithstanding subsections (d) and (g), the Secretary may provisionally certify an institution's eligibility to participate in programs under this title
(A) for not more than one complete award year in the case of an institution of higher education seeking an initial certification; and
(B) for not more than 3 complete award years if—
(i) the institution's administrative capability and financial responsibility is being determined for the first time;
(ii) there is a complete or partial change of ownership, as defined under subsection (i), of an eligible institution; or (iii) the Secretary determines that an institution that seeks to renew its certification is, in the judgment of the Secretary, in an administrative or financial condition that may jeopardize its ability to perform its financial responsibilities under a program participation agreement.
1Section 493(c)(2) of the Higher Education Amendments of 1998 provided that the amendment adding paragraph (6) was effective with respect to any unpaid refunds that were first required to be paid to a lender or to the Secretary on or after 90 days after the date of enactment of that Act.
(2) Whenever the Secretary withdraws the recognition of any accrediting agency, an institution of higher education which meets the requirements of accreditation, eligibility, and certification on the day prior to such withdrawal, the Secretary may, notwithstanding the withdrawal, continue the eligibility of the institution of higher education to participate in the programs authorized by this title for a period not to exceed 18 months from the date of the withdrawal of recognition.
(3) If, prior to the end of a period of provisional certification under this subsection, the Secretary determines that the institution is unable to meet its responsibilities under its program participation agreement, the Secretary may terminate the institution's participation in programs under this title.
(i) TREATMENT OF CHANGES OF OWNERSHIP. (1) An eligible institution of higher education that has had a change in ownership resulting in a change of control shall not qualify to participate in programs under this title after the change in control (except as provided in paragraph (3)) unless it establishes that it meets the requirements of section 102 (other than the requirements in subsections (b)(5) and (c)(3)) and this section after such change in control.
(2) An action resulting in a change in control may include (but is not limited to)—
(A) the sale of the institution or the majority of its assets; (B) the transfer of the controlling interest of stock of the institution or its parent corporation;
(C) the merger of two or more eligible institutions;
(D) the division of one or more institutions into two or more institutions;
(E) the transfer of the controlling interest of stock of the institutions to its parent corporation; or
(F) the transfer of the liabilities of the institution to its parent corporation.
(3) An action that may be treated as not resulting in a change in control includes (but is not limited to)
(A) the sale or transfer, upon the death of an owner of an institution, of the ownership interest of the deceased in that institution to a family member or to a person holding an ownership interest in that institution; or
(B) another action determined by the Secretary to be a routine business practice.
(4)(A) The Secretary may provisionally certify an institution seeking approval of a change in ownership based on the preliminary review by the Secretary of a materially complete application that is received by the Secretary within 10 business days of the transaction for which the approval is sought.
(B) A provisional certification under this paragraph shall expire not later than the end of the month following the month in which the transaction occurred, except that if the Secretary has not issued a decision on the application for the change of ownership within that period, the Secretary may continue such provisional certification on a month-to-month basis until such decision has been issued.
(j) TREATMENT OF BRANCHES. (1) A branch of an eligible institution of higher education, as defined pursuant to regulations of the Secretary, shall be certified under this subpart before it may participate as part of such institution in a program under this title, except that such branch shall not be required to meet the requirements of sections 102(b)(1)(E) and 102(c)(1)(C) prior to seeking such certification. Such branch is required to be in existence at least 2 years after the branch is certified by the Secretary as a branch campus participating in a program under this title, prior to seeking certification as a main campus or free-standing institution.
(2) The Secretary may waive the requirement of section 101(a)(2) for a branch that (A) is not located in a State, (B) is affiliated with an eligible institution, and (C) was participating in one or more programs under this title on or before January 1, 1992.
SEC. 498A. [20 U.S.C. 1099c-1] PROGRAM REVIEW AND DATA.
(a) GENERAL AUTHORITY.-In order to strengthen the administrative capability and financial responsibility provisions of this title, the Secretary
(1) shall provide for the conduct of program reviews on a systematic basis designed to include all institutions of higher education participating in programs authorized by this title; (2) shall give priority for program review to institutions of higher education that are—
(A) institutions with a cohort default rate for loans under part B of this title in excess of 25 percent or which places such institutions in the highest 25 percent of such institutions;
(B) institutions with a default rate in dollar volume for loans under part B of this title which places the institutions in the highest 25 percent of such institutions;
(C) institutions with a significant fluctuation in Federal Stafford Loan volume, Federal Direct Stafford/Ford Loan volume, or Federal Pell Grant award volume, or any combination thereof, in the year for which the determination is made, compared to the year prior to such year, that are not accounted for by changes in the Federal Stafford Loan program, the Federal Direct Stafford/Ford Loan program, or the Pell Grant program, or any combination thereof;
(D) institutions reported to have deficiencies or financial aid problems by the State licensing or authorizing agency, or by the appropriate accrediting agency or association;
(E) institutions with high annual dropout rates; and (F) such other institutions that the Secretary determines may pose a significant risk of failure to comply with the administrative capability or financial responsibility provisions of this title; and
(3) shall establish and operate a central data base of information on institutional accreditation, eligibility, and certification that includes
(A) all relevant information available to the Department;
(B) all relevant information made available by the Secretary of Veterans Affairs;
(C) all relevant information from accrediting agencies or associations;
(D) all relevant information available from a guaranty agency; and
(E) all relevant information available from States under subpart 1.
(b) SPECIAL ADMINISTRATIVE RULES.-In carrying out paragraphs (1) and (2) of subsection (a) and any other relevant provisions of this title, the Secretary shall—
(1) establish guidelines designed to ensure uniformity of practice in the conduct of program reviews of institutions of higher education;
(2) make available to each institution participating in programs authorized under this title complete copies of all review guidelines and procedures used in program reviews;
(3) permit the institution to correct or cure an administrative, accounting, or recordkeeping error if the error is not part of a pattern of error and there is no evidence of fraud or misconduct related to the error;
(4) base any civil penalty assessed against an institution of higher education resulting from a program review or audit on the gravity of the violation, failure, or misrepresentation; and
(5) inform the appropriate State and accrediting agency or association whenever the Secretary takes action against an institution of higher education under this section, section 498, or section 432.
(c) DATA COLLECTION RULES.-The Secretary shall develop and carry out a plan for the data collection responsibilities described in paragraph (3) of subsection (a). The Secretary shall make the information obtained under such paragraph (3) readily available to all institutions of higher education, guaranty agencies, States, and other organizations participating in the programs authorized by this title.
(d) TRAINING.-The Secretary shall provide training to personnel of the Department, including criminal investigative training, designed to improve the quality of financial and compliance audits and program reviews conducted under this title.
(e) SPECIAL RULE.-The provisions of section 103(b) of the Department of Education Organization Act shall not apply to Secretarial determinations made regarding the appropriate length of instruction for programs measured in clock hours.
SEC. 498B. [20 U.S.C. 1099c-2] REVIEW OF REGULATIONS.
(a) REVIEW REQUIRED.-The Secretary shall review each regulation issued under this title that is in effect at the time of the review and applies to the operations or activities of any participant in the programs assisted under this title. The review shall include a determination of whether the regulation is duplicative, or is no longer necessary. The review may involve one or more of the follow