How Final Rules Affect Pell & PEPs

By Rick Cox

Final rules that affect Pell Grant eligibility and the Prison Education Program (PEP) become effective July 1, 2023, and include provisions summarized below. A detailed summary follows, but postsecondary institutions should read the Federal Register on Pell eligibility to determine its impact on their college’s operations.

The Dear Colleague Letter with summarized requirements can be found here.

• Federal, state or local correctional institutions would be treated as an “additional location” even if a student receives instruction primarily through distance education or correspondence courses at that location. Correctional institutions include a federal, state or local penitentiary, prison, jail, reformatory, work farm, juvenile justice facility or other similar institution.
• Final rules update “incarcerated student” to “confined or incarcerated individual” and defines incarcerated as an individual serving a criminal sentence in a federal, state or local penitentiary, prison, jail, reformatory, work farm, juvenile justice facility or other similar correctional institution. An individual would not be considered incarcerated if subject to or serving an involuntary civil commitment, in a half-way house or home detention, or is sentenced to serve only weekends.

Final Rules for PEPs

• The final rules make several changes related to institutional eligibility:
  ۰ Adds a condition that the Secretary will not approve an enrollment cap waiver for a PEP until the oversight entity of the prison makes the “best interest determination” provided in 668.241. That determination would be at least two years after the postsecondary institution has continuously provided a PEP.
  ۰ The Secretary would not grant the waiver to a nondegree program at a nonprofit unless the institution maintains a completion rate of at least 50 percent for enrolled incarcerated students. This is a current requirement.
  ۰ Adds a requirement that all postsecondary institutions operating a PEP, regardless of program length, satisfy two conditions to obtain and maintain an enrollment cap waiver for incarcerated students: (1) comply with all requirements under final part 668 subpart P (Prison Education Programs), and (2) demonstrate they are administratively capable as defined in 668.16 and financially responsible under part 668 subpart L.
  ۰ Clarifies that the Secretary has the discretion to deny a request for an enrollment cap waiver  if the institution fails to meet the standards referenced above.
  ۰ Sets program enrollment limitations on the number of incarcerated students even after a waiver is approved. Once a postsecondary institution is granted a waiver, for the next five years, up to 50 percent of the institution’s regular enrolled students could be incarcerated students. That percentage would increase to 75 percent for the five years thereafter. Public institutions chartered for the explicit purposes of educating confined or incarcerated students would be exempt from these limits.
  ۰ Allows the Secretary to limit or terminate a postsecondary institution’s waiver if it no longer meets the requirements established in paragraph (c)(1) {see the first four sub-bullets above}.
  ۰ Revocation of an enrollment cap waiver would render an institution ineligible to participate in Title IV programs beginning at the end of the award year in which the waiver was revoked. An institution would retain eligibility if it demonstrated that it met all requirements before losing eligibility. That would include reducing enrollment of confined or incarcerated students to no more than 25 percent of its regular enrolled students and ceasing to enroll new incarcerated students upon loss of the waiver.
• Institutions must obtain approval from the Secretary to offer their eligible PEPs at the first two additional locations at correctional facilities. An institution may have multiple PEPs at one of these additional locations, but the approval process will only apply to the first program at each of the first two locations.
• Institutions would be required to update their Program Participation Agreement no later than 10 days after they establish or add an eligible PEP.
• Updates 668.8(n) to include PEPs as eligible programs for Title IV aid.
• Adds a severability provision in 668.11 (would redesignate current 668.11 as 668.12) that would make clear that if any part of the final regulations is held invalid by a court, the remainder would still be in effect.
• Regulations related to student eligibility will be revised to reflect that a confined or incarcerated individual would be eligible for a Pell Grant if enrolled in an eligible PEP.
• Requires disclosure information on whether an academic program fulfills educational requirements for licensure or certification if the program is designed to meet, or advertised as meeting, such requirements. New 668.43(a)(5)(vi) would apply if an eligible PEP was designed to meet educational requirements for a specific professional license or certification required for employment. In those cases, institutions must provide information on whether that occupation typically involves state or federal prohibitions on licensure of employment of formerly confined or incarcerated individuals. The institution would provide this information for any state for which the institution has made a determination about such state prohibitions, if it’s a state other than the one in which the correctional facility is located or the state where most students are likely to return in the case of a federal correctional facility. Please note that this regulation does not require such disclosures for the state in which the facility is located or the state where most students are likely to return because the program approval process already requires this.
• The regulations will add new subpart P to part 668 that will set forth the mechanics and requirements for PEPs. This section also confirms that a confined or incarcerated individual is eligible to receive a Pell Grant if that individual enrolls in an eligible PEP.

New Definitions

• New definitions will be added that have specific application in the PEP context:
  ۰ “Advisory committee” would be a group established by the oversight entity of a correctional facility that provides nonbinding feedback about the approval and operation of a PEP.
  ۰ “Feedback process” would be defined as the process developed by the oversight entity to gather nonbinding input from relevant stakeholders on the approval and operation of PEPs.
  ۰ “Oversight entity” is defined as the Federal Bureau of Prisons or the appropriate state department of corrections or other entity responsible for overseeing correctional facilities.
  ۰ “Relevant stakeholders” would be defined as individuals and organizations that provide input to the oversight entity as part of a feedback process on approval and operation of PEPs. This will include representatives of incarcerated students, organizations representing confined or incarcerated individuals, state higher education executive offices and accrediting agencies, and may include additional stakeholders as determined by the oversight entity.

More Guidelines for Eligibility

• Final rules limit the ability to offer PEPs to public or private nonprofit institutions of higher education or postsecondary vocational institutions.
• Requires the PEP to be offered by a postsecondary institution that has been approved by the oversight entity to operate in a correctional facility.
• The final rules require the oversight entity to make its “best interest” determination after a two-year period of initial approval.
• Requires that credits earned while enrolled in an eligible PEP transfer to at least one public, private nonprofit or vocational institution in the state where the facility is located. Or for federal facilities, credits must transfer to an institution in the state in which most of the individuals confined or incarcerated will reside upon release as determined by the postsecondary institution, with input from the oversight entity.
• Prohibits an institution from offering a PEP if it has been subject to certain adverse actions by its accrediting agency or association in the last five years. This also includes any adverse actions by the Department of Education, such as suspension, emergency action or termination of programs.
• Imposes limits on an institution’s eligibility to offer a PEP if it is subject to a current adverse action.
• Requires an eligible PEP to satisfy any applicable educational requirements for professional licensure or certification, including licensure or certification examinations needed to practice or find employment in the occupation for which the program prepares the individual, in the state in which the correctional facility is located or, for a federal facility, in the state in which most of the individuals will reside upon release. It prohibits offering programs, or allowing students to enroll in programs, for licensure or certification if the job or occupation involves prohibitions on licensure or employment of formerly confined or incarcerated individuals in the state in which the correctional facility is located or, in the case of a federal correctional facility, the state in which most individuals will reside upon release.

Grants of Accreditation & Application Requirements

• Requires a PEP to meet the requirements of the institution’s accrediting agency or state approval agency. Additionally, for any PEP to qualify as an eligible program, the accrediting agency would need to undertake the following four measures:
  ۰ Evaluate at least the first two additional locations and PEPs being offered there to ensure the institution’s ability to offer and implement the program based on the agency’s accrediting standards and include it in the institution’s grant of accreditation or pre-accreditation.
  ۰ Evaluate the institution’s first additional PEP offered using a new mode of delivery to ensure the institution’s ability to offer and implement the program based on the agency’s standards and include it in the institution’s grant of accreditation or pre-accreditation.
  ۰ Perform a site visit as soon as practicable but no later than one year after initiating the PEPs at the first two additional locations.
  ۰ Review and approve the methodology for how the institution, in collaboration with the oversight entity, made the determination that the PEP meets the same standards as substantially similar non-PEP programs at the institution.
• The new regulations spell out the application requirements for PEPs, including the required approval for the first PEP at the first two additional locations. For all other PEPs not subject to initial approval by the Secretary, postsecondary institutions would be required to submit documentation outlined in 668.238(c).
• PEPs at any location, including the first two additional locations, would be required to adhere to enrollment caps and reporting requirements.
• If an institution is provisionally certified, the institution cannot add an additional location or education program, including a PEP, without prior approval from the Secretary. These requirements apply to any institution on reimbursement or cash monitoring if it acquires the assets of another institution that provided educational programs at that location during the preceding year and participated in Title IV programs during that year, or that would be subject to a loss of eligibility if it adds that location.
• For all PEPs that don’t require the Secretary’s approval, a postsecondary institution must document that it is not subject to license revocation by the state. The institution must also document that it has an agreement with the oversight entity to obtain data on the transfer and release dates of confined or incarcerated individuals.
• An institution must submit reports as required by a notice the Secretary publishes in the Federal Register. Institutions would be required to report information about transfer and release dates of confined or incarcerated individuals through an agreement with the oversight entity.
• The Secretary can limit or terminate approval of an institution to provide an eligible PEP if the Secretary determines the institution violated terms of final subpart P or submits any materially inaccurate information to the Secretary, accrediting agency, state agency or oversight entity in support of its PEP application. If the Secretary initiates a limitation or termination action with respect to an institution’s PEP approval, the institution would be required to submit a teach-out plan and if practicable, a teach-out agreement to the institution’s accrediting agency.
• An oversight entity’s determination that a PEP is operating in the best interest of students must include an assessment of all the following:
  ۰ Whether the rate of confined or incarcerated individuals continuing their education post-release, as determined by the percentage of students who re-enroll in higher education, meets thresholds established by the oversight entity with input from relevant stakeholders.
  ۰ Whether job placement rates in the relevant field for such individuals meet any applicable standards required by the agency that accredits the institution or program or a state in which the institution is authorized. If no job placement rate standard applies to a PEP offered by the institution, the oversight entity would need to define, and the institution would need to report, a job placement rate with input from relevant stakeholders.
  ۰ Whether the earnings for such individuals, or the median earnings for graduates of the same or similar programs at the institution, as measured by the department, exceed those of a typical high school graduate in the state.
  ۰ Whether the experience, credentials and rates of turnover or departure of PEP instructors are substantially similar to other programs at the institution, accounting for the unique constraints of PEPs.
  ۰ Whether the transferability of credits for courses available to confined or incarcerated individuals and the applicability of such credits toward related degree or certificate programs are substantially similar to those at other similar programs at the institution, accounting for constraints of PEPs.
  ۰ Whether the PEP’s offering of relevant academic and career-advising services to individuals while they are confined or incarcerated, in advance of re-entry, and upon release, is substantially similar to offerings to a student who is not confined or incarcerated and who is enrolled, and may be preparing to transfer from, the same institution, accounting for constraints of PEPs.
  ۰ Whether the institution ensures that all formerly incarcerated students are able to fully transfer their credits and continue their programs at any location of the institution that offers a comparable program, including by the same mode of instruction, barring exceptional circumstances relating to the student’s conviction.
• Additional assessment items that would be optional for the oversight entity:
  ۰ Whether the rates of recidivism, which do not include any recidivism by the student within a reasonable number of years of release and which only include new felony convictions as defined by United States Sentencing Guidelines 4A1.1(a) as “each sentence of imprisonment exceeding one year and one month,” meet thresholds set by the oversight entity.
  ۰ Whether the rates of completion reported by the department, which do not include any students who were transferred across facilities and which account for the status of part-time students, meet thresholds set by the oversight entity with input from relevant stakeholders.
  ۰ Other indicators pertinent to program success as determined by the oversight entity.

Best Interest Determinations

• The oversight entity would make the best interest determination through a feedback process that considers input from relevant stakeholders and considers approval of the eligible PEP given the totality of the circumstances.
• If the oversight entity does not find a program to be operating in the best interest of students, it would allow for the program to re-apply within a reasonable timeframe.
• The oversight entity initially could approve a PEP without the required assessments under this section for two years. After two years of initial approval, the oversight entity would need to determine that the PEP is operating in the best interest of students.
• After the oversight entity’s initial best interest determination, the institution must obtain subsequent final evaluations of each eligible PEP. Evaluations would come from the responsible oversight entity not less than 120 calendar days before the expiration of each of the institution’s PPAs. However, the oversight entity could make a determination between subsequent evaluations based on its regular monitoring and evaluation of program outcomes. Each subsequent evaluation would include the entire period after the prior determination, a review of best interest factors for all students enrolled in the program and input from relevant stakeholders through the oversight entity’s feedback process. Subsequent evaluations would be submitted to the Secretary no later than 30 days after the evaluation is completed.
• Institutions would be required to obtain and maintain documentation of the methodology by which the oversight entity made each best interest determination, including the initial approval determination, for as long as the program is active or, if the program is discontinued, for three years after the date of discontinuance.
• For institutions operating eligible PEPs in a correctional facility that is not a federal or state correctional facility, a confined or incarcerated student who otherwise meets the eligibility requirements to receive a Pell Grant and is enrolled in an eligible program that does not meet the requirements under subpart P would continue to receive a Pell Grant until the earlier of July 1, 2029; the date the student reaches the maximum timeframe for program completion; or the date the student exhausts their Pell Grant eligibility. This will allow students to complete their programs if those programs don’t qualify as a PEP program under these new regulations.
• An institution would not be permitted to enroll a confined or incarcerated student on or after July 1, 2023, who was not enrolled in an eligible program before July 1, 2023 unless the institution first converts the eligible program into an eligible PEP.
• The final rules stipulate that a Pell Grant cannot exceed the cost of attendance. Institutions will be required to reduce the Pell Grant award if the amount exceeds the cost of attendance so that it does not result in a credit balance.
• If the confined or incarcerated individual is receiving other aid besides a Pell Grant, the institution will be required to reduce the other aid by the amount by which the total financial assistance exceeds the cost of attendance. If the other aid cannot be reduced, the institution will be required to reduce the Pell Grant to ensure the total financial assistance does not exceed the cost of attendance.

Rick Cox is Global’s Executive Director of Regulatory Affairs and Compliance