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Proposed Rule

New Criteria for Approving Courses for VA Educational Assistance Programs

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Information about this document as published in the Federal Register.

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AGENCIES:

Department of Defense, Department of Transportation, Coast Guard, and Department of Veterans Affairs.

ACTION:

Proposed rule.

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SUMMARY:

This document proposes to amend 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. The intended effect of these proposed changes is to implement provisions of the Veterans' Benefits Improvements Act of 1996 and the Veterans' Benefits Act of 1997. This document also would amend the regulations to conform to statutory provisions and would make changes for the purpose of clarification.

DATES:

Comments must be received on or before April 3, 2000.

ADDRESSES:

Mail or hand-deliver written comments to: Director, Office of Regulations Management (02D), Department of Veterans Affairs, 810 Vermont Ave., NW, Room 1154, Washington, DC 20420. Comments should indicate that they are submitted in response to “RIN 2900-AI67.” All written comments will be available for public inspection at the above address in the Office of Regulations Management, Room 1158, between the hours of 8:00 a.m. and 4:30 p.m., Monday through Friday (except holidays).

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FOR FURTHER INFORMATION CONTACT:

William G. Susling, Jr., Education Advisor, Education Service, Veterans Benefits Administration, 202-273-7187.

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SUPPLEMENTARY INFORMATION:

This document proposes to amend the VA educational assistance and educational benefit regulations in 38 CFR part 21, subparts D, K, and L to conform with the Veterans' Benefits Improvement Act of 1996 (Pub. L. 104-275).

The provisions of the 1996 Act, with certain exceptions noted below, mandate that VA cannot approve an enrollment for VA training in a course not leading to a standard college degree offered by a proprietary profit or proprietary nonprofit educational institution if (1) the institution has been operating for less than two years, (2) the institution offers the course at a branch or extension and the branch or extension has been operating for less than two years, or (3) the institution offering the course completely moved outside its original general locality or has changed ownership and, in either event, does not retain substantially the same faculty, student body, and courses as before the change in ownership or move, unless the institution has operated for two years following the change in ownership or move. However, if the course were offered under a contract with the Department of Defense (DOD) or the Department of Transportation (Coast Guard) and were given on or immediately adjacent to a military base, Coast Guard station, National Guard facility or facility of the Selected Reserve, these restrictions do not apply. The regulations would be amended to reflect these statutory changes.

VA proposes to define “proprietary educational institution” (including a proprietary profit or proprietary nonprofit educational institution) as 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. VA believes that this definition accords with the common understanding of “proprietary educational institution.”

VA proposes to recognize that a proprietary educational institution has been “in operation” for at least two years if it has been offering courses for 24 consecutive months, inclusive of normal vacation periods or holidays or periods when the educational institution is closed due to a natural disaster. VA believes that this interpretation of the two-year operation requirement is in accordance with the common meaning of the term “in operation” as it relates to educational institutions, and, in our view, reflects the statutory intent.

VA proposes to provide that a move by a proprietary educational institution outside the same general locality is a move beyond normal commuting distance which VA regulations have long recognized as being more than 55 miles (see 38 CFR 21.4200). This seems to be an appropriate interpretation of the statutory language.

As noted above, VA cannot approve an enrollment for VA training in a course not leading to a standard college degree offered by a proprietary profit or nonprofit educational institution if the institution offering the course completely moved outside its original general locality or has changed ownership and, in either event, does not retain substantially the same faculty, student body, and courses as before the change in ownership or move, unless the institution has operated for two years following the change in ownership or move. In this regard, it is proposed to set forth provisions indicating what VA considers to constitute “change in ownership.”

A “change in ownership” would occur when a person acquires, or ceases to have, operational management and/or control of the proprietary institution and its educational activities. “Control” is proposed to be defined as the possession, direct or indirect, by a “person” or “persons”, of the power to direct or cause the direction of the management and policies of the institution whether through the ownership of voting securities, by contract or otherwise. “Person” is proposed to be defined as a legal person (corporation) or an individual or individuals. Transactions causing a change of ownership would include, but not be limited to, the following: (1) The sale of the educational institution; (2) the transfer of the controlling interest of stock of the educational institution or its parent corporation; (3) the merger of two or more educational institutions; or (4) the division of one educational institution into two or more educational institutions. A “change of ownership” would not include transfer of ownership or control of the institution, upon the retirement or death of the owner, (1) to the owner's parent, sibling, spouse, child, spouse's parent or sibling, or sibling's or child's spouse or (2) to an individual with an ownership interest in the institution who has been involved in management of the institution for at least two years preceding the transfer.

These provisions appear to reflect adequately the kinds of institutional changes that could constitute a “change in ownership.”

As regards the requirement that the educational institution “retain substantially the same faculty, student body, and courses” following change in ownership or move outside the same general locality, it is proposed that VA will consider that a proprietary educational institution has “substantially the same faculty, student body, and courses” both before and after the move or ownership change when:

  • Faculty members who teach a majority of the courses after the move or change in ownership were employed by the educational institution before the move or change in ownership.
  • Faculty use the same instructional methods after the move or change in ownership as were used before the move or change in ownership,
  • 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, and
  • Except for those who graduate, 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 immediately after the move or change in ownership.

The preceding criteria appear to assure adequately the institutional Start Printed Page 4916continuity contemplated by the statutory scheme.

It also is proposed to amend § 21.4233 by adding new paragraphs (d)(6), (d)(7), and (d)(8) to reflect statutory provisions set forth in 38 U.S.C. 3675(b)(3) regarding criteria for determining whether accredited courses should be approved for VA training.

Further, it is proposed to amend 38 CFR 21.4252 by adding new paragraph (m) to reflect amendments made by the Veterans' Benefits Act of 1997 (Pub. Law 105-114) and set forth in 38 U.S.C. 3680A(f) and (g) regarding approval of courses under contract.

Other nonsubstantive changes are made to conform the regulations to the statutory changes.

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.

Executive Order 12866

This proposed rule has been reviewed by the Office of Management and Budget under Executive Order 12866.

The Secretary of Defense, Commandant of the Coast Guard, and the Secretary of Veterans Affairs hereby certify that this proposed rule would 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 proposed rule would 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 proposed rule, therefore, is exempt from the initial and final regulatory flexibility analyses requirements of sections 603 and 604.

The Catalog of Federal Domestic Assistance number 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.

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List of Subjects in 38 CFR Part 21

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Approved: March 10, 1999.

Togo D. West, Jr.,

Secretary of Veterans Affairs.

Approved: April 29, 1999.

Curtis B. Taylor,

Colonel, U.S. Army, Principal Director (Military Personnel Policy), Department of Defense.

Approved: October 18, 1999.

F.L. Ames,

Rear Admiral, U.S. Coast Guard, Assistant Commandant for Human Resources.

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For the reasons set forth in the preamble, 38 CFR part 21 (subparts D, K, and L) is amended as set forth below.

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PART 21—VOCATIONAL REHABILITATION AND EDUCATION

Subpart D—Administration of Educational Assistance Programs

1. The authority for part 21, subpart D is revised to read as follows:

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Authority: 10 U.S.C. 2141 note, ch. 1606; 38 U.S.C. 501(a), chs. 30, 32, 34, 35, 36, unless otherwise noted. 2. In § 21.4200, paragraph (z) is added to read as follows:

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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:

Minimum period of operation requirement for educational institutions.

(a) Definitions. The following definitions apply to the terms used in this section. The definitions in § 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 includes a legal person (corporation or partnership) or an individual.

(Authority: 38 U.S.C. 3680A(e))

(b) Some educational institutions must be in operation for two 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 two years;

(2) Offers the course at a branch or extension and the branch or extension has been operating for less than two 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 following such change or move has been in operation for at least two years.

(Authority: 38 U.S.C. 3680A(e) and (g))

(c) Exception to the two-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 two years. VA will consider, for the purposes of paragraph (b) of this section, that a proprietary educational institution (or a branch or extension of such an educational institution) will be deemed to have been operating for two 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 Start Printed Page 4917

(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 two or more educational institutions;

(iv) The division of one educational institution into two 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 two 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 immediately after the move or change in ownership.

(Authority: 38 U.S.C. 3680A(e) and (f)(1))

4. In § 21.4252, paragraph (m) is added to read as follows:

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 §§ 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 § 21.4253, paragraphs (d)(6), (d)(7), and (d)(8) are added to read as follows:

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))

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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:

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Authority: 38 U.S.C. 501(a), chs. 30, 36, unless otherwise noted.

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7. Section 21.7122 is amended as follows:

a. Paragraph (e)(6) is amended by removing “school, or” and adding, in its place, “school;”;

b. Paragraph (e)(7) is amended by removing “course.” and adding, in its place, “course; or”;

c. Paragraphs (e)(1) through (e)(5), and the authority citation for paragraph (e) are revised; and

d. Paragraph (e)(8) is added, to read as follows:

Courses precluded.
* * * * *

(e) Other courses. VA shall not pay educational assistance for—

(1) An enrollment in an audited course (see § 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 § 21.4252(j));

(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 § 21.4252(l);

(5) Except as provided in § 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 § 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 is revised to read as follows:

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Start Printed Page 4918 Authority: 10 U.S.C. ch. 1606; 38 U.S.C. 501(a), 512, ch. 36, unless otherwise noted.

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9. Section 21.7622 is amended as follows:

a. Paragraph (f)(4)(v) is amended by removing “or”;

b. Paragraph (f)(4)(vi) is amended by removing “course.” and adding, in its place, “course; or”;

c. The authority citation for paragraph (f) is revised; and

d. Paragraph (f)(4)(vii) is added, to read as follows:

Courses precluded.
* * * * *

(f) * * *

(4) * * *

(vii) An enrollment in a course offered under contract for which VA approval is prohibited by § 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); § 642, Public Law 101-189, 103 Stat. 1458)

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[FR Doc. 00-2211 Filed 2-1-00; 8:45 am]

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