[Federal Register Volume 65, Number 249 (Wednesday, December 27, 2000)]
[Rules and Regulations]
[Pages 81740-81743]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-32810]
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DEPARTMENT OF DEFENSE
DEPARTMENT OF TRANSPORTATION
Coast Guard
DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 21
RIN 2900-AI67
New Criteria for Approving Courses for VA Educational Assistance
Programs
AGENCIES: Department of Defense, Department of Transportation (Coast
Guard), and Department of Veterans Affairs.
ACTION: Final rule.
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SUMMARY: This document amends the Department of Veterans Affairs (VA)
educational assistance and educational benefit regulations by adding
new criteria for VA to use in approving enrollments in courses under
the educational programs VA administers. These changes implement
provisions of the Veterans' Benefits Improvements Act of 1996 and the
Veterans' Benefits Act of 1997. This document also amends the
regulations to conform to statutory provisions and makes changes for
the purpose of clarification.
DATES: Effective Date: This final rule is effective December 27, 2000.
Applicability Date: October 9, 1996.
FOR FURTHER INFORMATION CONTACT: William G. Susling, Jr., Assistant
Director for Policy and Program Development, Education Service (225),
Veterans Benefits Administration, 202-273-7187.
SUPPLEMENTARY INFORMATION: On February 2, 2000, VA published a proposed
rule in the Federal Register (65 FR 4914) to amend the VA educational
assistance and educational benefit regulations in 38 CFR part 21,
subparts D, K, and L to conform with provisions of the Veterans'
Benefits Improvement Act of 1996 (Pub. L. 104-275) and with section
401(e) of the Veterans' Benefits Act of 1997 (Pub. L. 105-114).
Interested persons were given 60 days to submit comments. We
received three comments: One from a veterans service organization, one
from an educational institution, and one from an association of
educational institutions. The service organization indicated that it
had no comments.
The educational institution wrote that the provisions of 38 CFR
21.4251, as currently written, concerning (a) courses that were similar
in character to other courses and (b) courses offered at additional
facilities, should be added to the proposed rule.
The regulations previously provided that VA could approve the
enrollment of a veteran or eligible person in a course offered by a
school other than a job-training establishment only if the course had
been in operation for 2 years or more immediately prior to the date of
enrollment of the person. There were two exceptions to this rule which
are the subject of the comment. The first exempted courses similar in
character to instruction previously offered by the school for more than
2 years. (38 CFR 21.4251(a)(2)). The second exempted courses at
additional facilities acquired by a school in the same general locality
because of space limitations, since those were not considered to be
courses at a subsidiary branch or extension, otherwise required to be
offered for 2 years. (38 CFR 21.4251(f)(3)).
The ``similar in character'' requirement was derived from 38 U.S.C.
3689, which was specifically rescinded by Congress in the enactment of
Pub. L. 104-275. The proposed rule is based on 38 U.S.C. 3680A(e), as
added by Pub. L. 104-275, which bars approval of enrollment in courses
not leading to a standard college degree offered by propriety schools
that have operated on site for less than two years. Under the amended
statute it does not matter how long the courses themselves have been
offered at that site or whether they are similar in character to
courses formerly offered at other sites. Rather, VA need only verify
that the educational institution has been in operation at the site for
two years. Therefore, we believe that adopting the commenter's
suggestion to include the ``similar in character'' exemption of the old
rule is unnecessary.
Similarly, we find no support in law for the old rule exempting
courses at additional facilities created as a result of space
limitations, because, as amended by Pub. L. 104-275, the law now
requires that enrollment in all courses not leading to a standard
college degree offered at a branch of a proprietary educational
institution must be disapproved if the branch has been operating for
less than two years. (38 U.S.C. 3680A(e)(2)).
The association of educational institutions objected that the
definition of ``change of ownership'' in 38 CFR 21.4251(f)(2) was too
vague. Specifically, the association stated that the language
``Transactions that may cause a change of ownership include, but are
not limited to the following * * *'' made it difficult for institutions
to decide if a change of ownership has taken place. The association
suggested that we consider a change of ownership as having taken place
when the Department of Education believes this occurred.
After careful consideration, we have decided not to adopt this
suggestion. Under the previous rule, VA made the final decision whether
changes in ownership had taken place. Thus, we believe VA has
sufficient experience in making change-in-ownership decisions.
Moreover, we expect that changes in ownership not specifically included
in the definition would be extremely rare and approval would be barred
only if the facts clearly show a change in ownership did occur.
The association of educational institutions also questioned the
final-rule requirement in 38 CFR 21.4251(g) that an educational
institution use substantially the same instructional methods and offer
courses leading to the same educational objectives following a change
of ownership or following a
[[Page 81741]]
move outside its general locality. Among the requirements of 38 U.S.C.
3680A(e) is a requirement that VA cannot approve an enrollment for VA
training in a course not leading to a standard college degree offered
by a proprietary educational institution if the institution offering
the course completely moves outside its original general locality or
has changed ownership and does not retain substantially the same
courses as before the change in ownership or move, unless the
institution has operated for two years following the change in
ownership or move. The association of educational institutions
suggested that it would be better policy to permit the use of different
instructional methods and the teaching of additional courses if the
institution's accrediting body so permits.
We believe that 38 U.S.C. 3680A(e), which establishes the
applicable policy as a matter of law, may not be interpreted to permit
adoption of this suggestion. We do not believe that courses could be
``substantially the same'' if they used different instructional methods
or had different educational objectives.
Based on the rationale stated in this document and the proposed
rule, we are adopting the provisions of the proposed rule as a final
rule with one nonsubstantive change.
The Department of Defense (DOD), the Department of Transportation
(Coast Guard), and VA are jointly issuing this final rule insofar as it
relates to the Montgomery GI Bill--Selected Reserve. This program is
funded by DOD and the Coast Guard, and is administered by VA. The
remainder of this final rule is issued solely by VA.
The Secretary of Defense, Commandant of the Coast Guard, and the
Secretary of Veterans Affairs hereby certify that this final rule will
not have a significant economic impact on a substantial number of small
entities as they are defined in the Regulatory Flexibility Act, 5
U.S.C. 601-612. This final rule will not cause educational institutions
to make changes in their activities and would have minuscule monetary
effects, if any. Pursuant to 5 U.S.C. 605(b), this final rule,
therefore, is exempt from the initial and final regulatory flexibility
analyses requirements of sections 603 and 604.
The Catalog of Federal Domestic Assistance numbers for the programs
affected by this proposed rule are 64.117, 64.120, and 64.124. This
proposed rule will affect the Montgomery GI Bill--Selected Reserve
which has no Catalog of Federal Domestic Assistance number.
List of Subjects in 38 CFR Part 21
Administrative practice and procedure, Armed forces, Civil rights,
Claims, Colleges and universities, Conflict of interests, Defense
Department, Education, Employment, Grant programs-education, Grant
programs-veterans, Health care, Loan programs--education, Loan
programs--veterans, Manpower training programs, Reporting and
recordkeeping requirements, Educational institutions, Travel and
transportation expenses, Veterans, Vocational education, Vocational
rehabilitation.
Approved: October 10, 2000.
Hershel W. Gober,
Acting Secretary of Veterans Affairs.
Approved: October 20, 2000.
Col. Curtis B. Taylor,
U.S. Army, Principal Director, (Military Personnel Policy) Department
of Defense.
Approved: December 12, 2000.
F.L. Ames,
Assistant Commandant for Human Resources.
For the reasons set forth in the preamble, 38 CFR part 21 (subparts
D, K, and L) is amended as set forth below.
PART 21--VOCATIONAL REHABILITATION AND EDUCATION
Subpart D--Administration of Educational Assistance Programs
1. The authority for part 21, subpart D continues to read as
follows:
Authority: 10 U.S.C. ch. 1606; 38 U.S.C. 501(a), chs. 30, 32,
34, 35, 36, unless otherwise noted.
2. In Sec. 21.4200, paragraph (z) is added to read as follows:
Sec. 21.4200 Definitions.
* * * * *
(z) Proprietary educational institution. The term proprietary
educational institution (including a proprietary profit or proprietary
nonprofit educational institution) means an educational institution
that:
(1) Is not a public educational institution;
(2) Is in a State; and
(3) Is legally authorized to offer a program of education in the
State where the educational institution is physically located.
(Authority: 38 U.S.C. 3680A(e))
3. Section 21.4251 is revised to read as follows:
Sec. 21.4251 Minimum period of operation requirement for educational
institutions.
(a) Definitions. The following definitions apply to the terms used
in this section. The definitions in Sec. 21.4200 apply to the extent
that no definition is included in this paragraph.
(1) Control. The term control (including the term controlling)
means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a person, whether
through the ownership of voting securities, by contract, or otherwise.
(2) Person. The term person means an individual, corporation,
partnership, or other legal entity.
(Authority: 38 U.S.C. 3680A(e))
(b) Some educational institutions must be in operation for 2 years.
Except as provided in paragraph (c) of this section, when a proprietary
educational institution offers a course not leading to a standard
college degree, VA may not approve an enrollment in that course if the
proprietary educational institution--
(1) Has been operating for less than 2 years;
(2) Offers the course at a branch or extension and the branch or
extension has been operating for less than 2 years; or
(3) Offers the course following either a change in ownership or a
complete move outside its original general locality, and the
educational institution does not retain substantially the same faculty,
student body, and courses as before the change in ownership or the move
outside the general locality unless the educational institution, after
such change or move, has been in operation for at least 2 years.
(Authority: 38 U.S.C. 3680A(e) and (g))
(c) Exception to the 2-year operation requirement. Notwithstanding
the provisions of paragraph (b) of this section, VA may approve the
enrollment of a veteran, servicemember, reservist, or eligible person
in a course not leading to a standard college degree approved under
this subpart if it is offered by a proprietary educational institution
that--
(1) Offers the course under a contract with the Department of
Defense or the Department of Transportation; and
(2) Gives the course on or immediately adjacent to a military base,
Coast Guard station, National Guard facility, or facility of the
Selected Reserve.
(Authority: 38 U.S.C. 3680A(e) and (g))
(d) Operation for 2 years. VA will consider, for the purposes of
paragraph (b) of this section, that a proprietary
[[Page 81742]]
educational institution (or a branch or extension of such an
educational institution) will be deemed to have been operating for 2
years when the educational institution (or a branch or extension of
such an educational institution)--
(1) Has been operating as an educational institution for 24
continuous months pursuant to the laws of the State(s) in which it is
approved to operate and in which it is offering the training; and
(2) Has offered courses continuously for at least 24 months
inclusive of normal vacation or holiday periods, or periods when the
institution is closed temporarily due to a natural disaster that
directly affected the institution or the institution's students.
(Authority: 38 U.S.C. 3680A(e) and (g))
(e) Move outside the same general locality. A proprietary
educational institution (or a branch or extension thereof) will be
deemed to have moved to a location outside the same general locality of
the original location when the new location is beyond normal commuting
distance of the original location, i.e., 55 miles or more from the
original location.
(Authority: 38 U.S.C. 3680A(e))
(f) Change of ownership. (1) A change of ownership of a proprietary
educational institution occurs when--
(i) A person acquires operational management and/or control of the
proprietary educational institution and its educational activities; or
(ii) A person ceases to have operational management and/or control
of the proprietary educational institution and its educational
activities.
(2) Transactions that may cause a change of ownership include, but
are not limited to the following:
(i) The sale of the educational institution;
(ii) The transfer of the controlling interest of stock of the
educational institution or its parent corporation;
(iii) The merger of 2 or more educational institutions; and
(iv) The division of one educational institution into 2 or more
educational institutions.
(3) VA considers that a change in ownership of an educational
institution does not include a transfer of ownership or control of the
institution, upon the retirement or death of the owner, to:
(i) The owner's parent, sibling, spouse, child, spouse's parent or
sibling, or sibling's or child's spouse; or
(ii) An individual with an ownership interest in the institution
who has been involved in management of the institution for at least 2
years preceding the transfer.
(Authority: 38 U.S.C. 3680A(e))
(g) Substantially the same faculty, student body, and courses. VA
will determine whether a proprietary educational institution has
substantially the same faculty, student body, and courses following a
change of ownership or move outside the same general locality by
applying the provisions of this paragraph.
(1) VA will consider that the faculty remains substantially the
same in an educational institution when faculty members who teach a
majority of the courses after the move or change in ownership, were so
employed by the educational institution before the move or change in
ownership.
(2) VA will consider that the courses remain substantially the same
at an educational institution when:
(i) Faculty use the same instructional methods during the term,
quarter, or semester after the move or change in ownership as were used
before the move or change in ownership; and
(ii) The courses offered after the move or change in ownership lead
to the same educational objectives as did the courses offered before
the move or change in ownership.
(3) VA considers that the student body remains substantially the
same at an educational institution when, except for those students who
have graduated, all, or a majority of the students enrolled in the
educational institution on the last day of classes before the move or
change in ownership are also enrolled in the educational institution
after the move or change in ownership.
(Authority: 38 U.S.C. 3680A(e) and (f)(1))
4. In Sec. 21.4252, paragraph (m) is added to read as follows:
Sec. 21.4252 Courses precluded.
* * * * *
(m) Courses offered under contract. VA may not approve the
enrollment of a veteran, servicemember, reservist, or eligible person
in a course as a part of a program of education offered by any
educational institution if the educational institution or entity
providing the course under contract has not obtained a separate
approval for the course in the same manner as for any other course as
required by Secs. 21.4253, 21.4254, 21.4256, 21.4257, 21.4260, 21.4261,
21.4263, 21.4264, 21.4265, 21.4266, or 21.4267, as appropriate.
(Authority: 38 U.S.C. 3680A(f) and (g))
5. In Sec. 21.4253, paragraphs (d)(6), (d)(7), and (d)(8) are added
to read as follows:
Sec. 21.4253 Accredited courses.
* * * * *
(d) * * *
(6) The accredited courses, the curriculum of which they form a
part, and the instruction connected with those courses are consistent
in quality, content, and length with similar courses in public
educational institutions and other private educational institutions in
the State with recognized accepted standards.
(7) There is in the educational institution offering the course
adequate space, equipment, instructional material, and instructor
personnel to provide training of good quality.
(8) The educational and experience qualifications of directors, and
administrators of the educational institution offering the courses, and
instructors teaching the courses for which approval is sought, are
adequate.
(Authority: 38 U.S.C. 3675(b), 3676(c)(1), (2), (3))
* * * * *
Subpart K--All Volunteer Force Educational Assistance Program
(Montgomery GI Bill--Active Duty)
6. The authority for part 21, subpart K continues to read as
follows:
Authority: 38 U.S.C. 501(a), chs. 30, 36, unless otherwise
noted.
7. Section 21.7122 is amended by:
a. In paragraph (e)(6), removing ``school, or'' and adding, in its
place, ``school;''.
b. In paragraph (e)(7), removing ``course.'' and adding, in its
place, ``course; or''.
c. Revising paragraphs (e)(1) through (e)(5), and the authority
citation for paragraph (e).
d. In paragraph (e)(6), removing from the end of the paragraph ``,
or'' and adding, in its place, ``;''.
e. In paragraph (e)(7), removing the period at the end of the
paragraph and adding, in its place, ``; or''.
f. Adding paragraph (e)(8).
The addition and revisions read as follows:
Sec. 21.7122 Courses precluded.
* * * * *
(e) Other courses. VA shall not pay educational assistance for--
(1) An enrollment in an audited course (see Sec. 21.4252(i));
(2) An enrollment in a course for which the veteran or
servicemember received a nonpunitive grade in the absence of mitigating
circumstances (see Sec. 21.4252(j));
[[Page 81743]]
(3) New enrollments in a course where approval has been suspended
by a State approving agency;
(4) An enrollment in certain courses being pursued by
nonmatriculated students as provided in Sec. 21.4252(l);
(5) Except as provided in Sec. 21.4252(j), an enrollment in a
course from which the veteran or servicemember withdrew without
mitigating circumstances;
* * * * *
(8) An enrollment in a course offered under contract for which VA
approval is prohibited by Sec. 21.4252(m).
(Authority: 38 U.S.C. 3002(3), 3034, 3672(a), 3676, 3680(a),
3680A(a), 3680A(f), 3680A(g))
Subpart L--Educational Assistance for Members of the Selected
Reserve
8. The authority for part 21, subpart L continues to read as
follows:
Authority: 10 U.S.C. ch. 1606; 38 U.S.C. 501, unless otherwise
noted.
9. Section 21.7622 is amended by:
a. In paragraph (f)(4)(v), removing ``or''.
b. In paragraph (f)(4)(vi), removing ``course.'' and adding, in its
place, ``course; or''.
c. Adding a new paragraph (f)(4)(vii).
d. Revising the authority citation for paragraph (f).
The addition and revision read as follows:
Sec. 21.7622 Courses precluded.
* * * * *
(f) * * *
(4) * * *
(vii) An enrollment in a course offered under contract for which VA
approval is prohibited by Sec. 21.4252(m).
(Authority: 10 U.S.C. 16131(c), 16136(b); 38 U.S.C. 3672(a), 3676,
3680(a), 3680A(f), 3680A(g); Sec. 642, Public Law 101-189, 103 Stat.
1458)
[FR Doc. 00-32810 Filed 12-26-00; 8:45 am]
BILLING CODE 8320-01-P