Section 121.31. Approved institutions in Federal Stafford Loan and Federal PLUS Loan Programs

(a) To be approved, an institution shall comply with the following:

(1) The institution shall be approved by the United States Secretary of Education as an eligible institution for participation in the Federal Stafford Loan or Federal PLUS Loan Programs.

(2) The institution shall have executed an Assurance of Compliance with 42 U.S.C.A. § 2000d-1 (1974) and filed it with the United States Secretary of Education.

(3) The institution shall have executed and filed with the Agency an agreement, on a form provided by the Agency, to report to or advise the Agency if the institution has knowledge of the name and address of Commonwealth resident students who are recipients or beneficiaries of Agency-administered aid who have been convicted in any court of record of any criminal offense which under the laws of the United States or of the Commonwealth would constitute a felony committed after October 29, 1969. Institutional knowledge shall be facts contained in the academic, disciplinary or financial student records of the institution and facts known to the dean of students, director of financial aid and president of the institution or persons occupying these positions by titles designated by the institution.

(b) The institution shall comply with 34 CFR 668.82 (relating to standard of conduct) and other laws and regulations governing the Federal Stafford Loan and PLUS Loan Programs.

(c) Mailing dates and receipt dates referenced in this section shall be evidenced by United States Postal Service receipts. If an institution refuses or fails to accept a notice mailed as set forth in this section, the Agency shall consider the notice as being received on the date that the institution refuses or fails to accept the notice as noted by the United States Postal Service.

(d) The following provisions deal with emergency action:

(1) The President and Chief Executive Officer may take emergency action as follows against an institution under which the processing of loan applications for students at the institution is withheld if the President and Chief Executive Officer:

(i) Receives information, determined by an Agency official to be reliable, that the institution is violating applicable laws, regulations, special arrangements, agreements or limitations.

(ii) Determines that immediate action is necessary to prevent misuse of funds of the programs authorized by Title IV of the Higher Education Act of 1965 (20 U.S.C.A. § § 1071—1099c-1).

(iii) Determines that the likelihood of loss outweighs the importance of awaiting completion of procedures set forth for suspension, limitation or termination in subsection (e).

(2) The Agency will begin an emergency action by notifying the institution by certified mail, with return receipt requested, of the emergency action and the basis on which the action is taken. The institution shall have an opportunity to show cause that the emergency action is unwarranted via submission of written documentation to the President and Chief Executive Officer. The effective date of the action shall be the date on which the notice is mailed to the institution.

(3) An emergency action may not exceed 30 calendar days unless a suspension, limitation or termination proceeding is begun under this section before the expiration of that period. In this case, the period may be extended until the completion of that proceeding, including any appeal to the Board of Directors.

(e) The following provisions deal with suspension, limitation or termination:

(1) The President and Chief Executive Officer may suspend the eligibility of an institution to participate in the Federal Stafford Loan and Federal PLUS Loan Programs if the institution violates any applicable laws, regulations, special arrangements or agreements. The suspension may not exceed 60-calendar days unless the institution and the President and Chief Executive Officer agree to an extension if the institution has not requested a hearing or the Agency begins a limitation or termination proceeding under this section.

(i) A designated Agency official will notify the institution by certified mail, with return receipt requested, of the Agency’s intent to suspend the institution from the Federal Stafford Loan and Federal PLUS Loan Programs, citing the consequences of that action and identifying the alleged violations on which the proposed action is based. The initially designated beginning date of suspension shall be at least 20-calendar days from the date the letter of intent is mailed.

(ii) The institution subject to the suspension notice may request in writing a hearing before a hearing examiner or submit written material for consideration by the designated Agency official. If the institution submits written material or requests a hearing at least 5-calendar days prior to the effective date of suspension, the designated suspension date shall automatically be delayed until after a final determination is made.

(iii) If the institution does not request a hearing but submits written material, the designated Agency official will review the material and notify the institution that either the proposed suspension is dismissed or the suspension is effective as of a specified date.

(iv) If the institution requests a hearing at least 5-calendar days prior to the effective date of suspension, the date of the hearing will be scheduled at least 15-calendar days after receipt of the request.

(A) A hearing examiner selected by the President and Chief Executive Officer will conduct the hearing at the Agency’s principal office, and a written record shall be made.

(B) The hearing examiner will consider the written material presented before the hearing and the evidence presented at the hearing.

(C) The hearing examiner will issue a decision to either uphold the suspension or to dismiss it and inform the President and Chief Executive Officer and institution of this decision in writing within 30-calendar days of the conclusion of the hearing.

(D) The hearing examiner’s decision is final unless appealed under subsection (g). If the decision is in favor of suspension, the Agency will send a notice to the institution which sets forth the effective date of the suspension.

(E) If the Agency begins a limitation or termination proceeding before the suspension period ends, the suspension period may be extended until the completion of the new proceeding.

(F) The President and Chief Executive Officer will inform the United States Department of Education of actions taken or decisions made by the Agency in regard to the suspension so the United States Department of Education can take appropriate action.

(v) In accordance with 1 Pa Code § § 35.111—35.116 (relating to prehearing conferences), at any time prior to or during the hearings, the Agency may schedule a conference with the parties.

(2) If the institution violates any applicable laws, regulations, special arrangements or agreements, the President and Chief Executive Officer may limit the number or percentage of borrowers who may receive loan guaranties to attend an institution; may limit, for a stated period of time, the percentage of an institution’s total receipts from tuition and fees derived from loan guaranties; may impose a requirement that an institution obtain a bond in a specified amount to assure its ability to meet its financial obligations to borrowers who receive loan guaranties; or may impose other conditions deemed to be reasonable and appropriate.

(i) A designated Agency official will notify the institution by certified mail, with return receipt requested, of the Agency’s intent to limit the institution’s participation in the Federal Stafford Loan and Federal PLUS Loan Programs, citing the consequences of that action and identifying the alleged violations on which the proposed action is based. The initially designated beginning date of limitation shall be at least 20-calendar days from the date the letter of intent is mailed.

(ii) The institution subject to the limitation notice may request in writing a hearing before a hearing examiner or submit written material for consideration by the designated Agency official. If the institution submits written material or requests a hearing at least 5-calendar days prior to the effective date of the limitation, the designated limitation date shall automatically be delayed until after a final determination is made.

(iii) If the institution does not request a hearing but submits written material, the designated Agency official will review the material and notify the institution that either the proposed limitation is dismissed or the limitation is effective as of a specified date.

(iv) If the institution requests a hearing at least 5-calendar days prior to the effective date of limitation, the date of the hearing shall be at least 15-calendar days after receipt of the request.

(A) A hearing examiner selected by the President and Chief Executive Officer will conduct the hearing at the Agency’s principal office, and a written record shall be made.

(B) The hearing examiner will consider the written material presented before the hearing and the evidence presented at the hearing.

(C) The hearing examiner will issue a decision to either uphold the limitation or to dismiss it and inform the President and Chief Executive Officer and the institution of this decision in writing within 30-calendar days of the conclusion of the hearing.

(D) The hearing examiner’s decision is final unless appealed under subsection (g). If the decision is in favor of limitation, the Agency will send a notice to the institution which sets forth the effective date of the limitation.

(E) If the Agency begins a termination proceeding before the limitation period ends, the limitation period may be extended until completion of the new proceeding.

(F) The President and Chief Executive Officer will inform the United States Department of Education of actions taken or decisions made by the Agency in regard to the limitation so the United States Department of Education can take appropriate action.

(v) In accordance with 1 Pa. Code § § 35.111—35.116, at any time prior to or during the hearings, the Agency may schedule a conference with the parties.

(3) The President and Chief Executive Officer may terminate an institution’s eligibility to participate in the Federal Stafford Loan and Federal PLUS Loan Programs, if the institution violates any applicable laws, regulations, special arrangements or agreements. Termination prohibits the future guaranty of Federal Stafford Loans and Federal PLUS Loans to borrowers attending the institution.

(i) A designated Agency official will notify the institution by certified mail, with return receipt requested, of the Agency’s intent to terminate the institution from the Federal Stafford Loan and Federal PLUS Loan Programs, citing the consequences of that action and identifying the alleged violations on which the proposed action is based. The initially designated beginning date of termination shall be at least 20-calendar days from the date the letter of intent is mailed.

(ii) The institution subject to the termination notice may request in writing a hearing before a hearing examiner or submit written material for consideration by the designated Agency official. If the institution submits written material or requests a hearing no less than 5-calendar days prior to the effective date of termination, the designated termination date shall automatically be delayed until after a final determination is made.

(iii) If the institution does not request a hearing but submits written material, the designated Agency official will review the material and notify the institution that either the proposed termination is dismissed or the termination is effective as of a specified date.

(iv) If the institution requests a hearing at least 5-calendar days prior to the effective date of termination, the date of the hearing shall be at least 15-calendar days after receipt of the request.

(A) A hearing examiner selected by the President and Chief Executive Officer will conduct the hearing at the Agency’s principal office, and a written record shall be made.

(B) The hearing examiner will consider the written material presented before the hearing and the evidence presented at the hearing.

(C) The hearing examiner will issue a decision to either uphold the termination or to dismiss it and inform the President and Chief Executive Officer and institution of this decision in writing within 30-calendar days of the conclusion of the hearing.

(D) The hearing examiner’s decision is final unless appealed under subsection (g). If the decision is in favor of termination, the Agency will send a notice to the institution which sets forth the effective date of termination.

(E) The President and Chief Executive Officer will inform the United States Department of Education of any actions taken or decisions made by the Agency in regard to the termination so the United States Department of Education can take appropriate action.

(v) In accordance with 1 Pa. Code § § 35.111—35.116, at any time prior to or during the hearings, the Agency may schedule a conference with the parties.

(f) An institution may lose its eligibility to participate in the Federal Stafford Loan and Federal PLUS Loan Programs through other than emergency action, suspension, limitation or termination. This may occur under one or more of the following conditions:

(1) Change in ownership, administration or directorship of the institution that results in a change of control, in which case the loss of eligibility continues until the institution reestablishes eligibility as determined by the United States Secretary of Education.

(2) Permanent closure of the institution or its termination of approved educational programs.

(3) Action taken by the United States Secretary of Education under applicable Federal regulations to limit, suspend or terminate the institution’s eligibility.

(g) The Agency and the institution have the right to appeal the decision of the hearing examiner to the Board of Directors of the Agency within 20-calendar days after the receipt of a copy of the decision, which shall be done by certified mail.

(1) Written notice of appeal and the material submitted in support shall be addressed to the Chairperson of the Board of Directors at the Agency’s principal address, with a copy to the other party.

(2) The appealing party has 20-calendar days from the date of the notice of appeal to submit exceptions to the hearing examiner’s decision and supporting briefs and statements.

(3) The opposing party has 20-calendar days from receipt of the appealing party’s exceptions and brief to respond.

(4) When the Chairperson of the Board receives notice of an appeal, the Chairperson will place the appeal on the meeting agenda of the Board at a time in the future that the Board has received a record of the hearing and the briefs and supporting materials and has had an opportunity to review the record. Before issuing a final order, the Board of Directors will review the record and hearing examiner’s decision and may order oral argument.

(5) Notice of a final order by the Board of Directors will be mailed promptly to the institution, the Agency and the United States Department of Education.

(6) The decision of the Board of Directors will become final upon mailing. Within 30-calendar days after the decision of the Board of Directors becomes final, the institution may file an appeal with Commonwealth Court.

(h) An institution whose eligibility to participate was limited may not apply for removal of the limitation before the expiration of 12 months from the effective date of the limitation.

(1) After the minimum limitation period, the institution may request removal of the limitation. The request shall be in writing and be supported by documented evidence that the institution has corrected the violations on which the limitation was based.

(2) Within 60-calendar days after receipt of the request, the President and Chief Executive Officer will respond to the institution by granting the request, denying the request or granting the request subject to other limitation.

(i) An institution whose eligibility to participate has been terminated may file a request of reinstatement 18 months after the effective date of the termination. To be reinstated, an institution shall:

(1) Demonstrate to the President and Chief Executive Officer’s satisfaction that it has corrected the violations on which termination was based and repaid funds which it had improperly received.

(2) Meet the requirements for participation in the Federal Stafford Loan and Federal PLUS Loan Programs.

(3) Enter into a new participation agreement with the Agency.

The provisions of this § 121.31 adopted February 27, 1969; amended June 2, 1978, effective June 3, 1978, 8 Pa.B. 1532; amended July 3, 1980, effective July 5, 1980, 10 Pa.B. 2874; amended August 7, 1981, effective August 8, 1981, 11 Pa.B. 2760; amended March 26, 1982, effective March 27, 1982, 12 Pa.B. 1043; amended January 16, 1987, effective January 17, 1987, 17 Pa.B. 249; amended October 16, 1987, effective October 17, 1987, 17 Pa.B. 4120; amended July 12, 1996, effective July 13, 1996, 26 Pa.B. 3321. Immediately preceding text appears at serial pages (161808) to (161810).

Notation

Authority

The provisions of this § 121.31 amended under section 4 of the act of August 7, 1963 (P. L. 549, No. 290) (24 P. S. § 5104); section 1 of the act of January 25, 1966 (P. L. 1546, No. 541) (24 P. S. § 5151); the act of July 18, 1974 (P. L. 483, No. 174) (24 P. S. § § 5181—5189); the act of July 1, 1988 (P. L. 1259, No. 155) (24 P. S. § § 5191—5197); and the act of June 26, 1992 (P. L. 322, No. 64) (24 P. S. § § 5198.1—5198.7).

Cross References

This section cited in 22 Pa. Code § 121.1 (relating to definitions).