Department of Education Publishes Court-Mandated Changes to Misrepresentation Rule

by DLA Piper
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Earlier today, the Department of Education (Department) published a Federal Register notice (the official publication will likely be tomorrow) amending the misrepresentation rule that was published on October 29, 2010 as part of the “program integrity” rules.  As we reported previously, in Ass’n of Priv. Sector Colls. and Univs. v. Duncan, No. 11-5174 (D.C. Cir. June 5, 2012), the DC Federal Court of Appeals upheld in part and vacated in part the misrepresentation rule.  The ruling required the Department  to:

  • Revise 34 C.F.R. §§ 668.71(b) (covering “misrepresentations regarding the eligible institution”) and 668.75 (covering misrepresentations related to an institution’s  relationship with the Department) because those sections include subjects not covered by the HEA;
  • Revise 34 C.F.R. § 668.71(a) to add additional procedural protections for fully certified schools; and
  • Revise 34 C.F.R. § 668.71(c), to exclude true statements that have the tendency or likelihood to confuse from the definition of misrepresentation

The Department’s revisions to 34 C.F.R. §§ 668.71 and 75 are in redline after the jump.  There were no changes required of 34 C.F.R. §§ 668.72-74.

All changes in red.  Additions in bold and underline.  Deletions in strikethrough.

34 CFR § 668.71   Scope and special definitions.

(a) If the Secretary determines that an eligible institution has engaged in substantial misrepresentation, the Secretary may—

(1) Revoke the eligible institution’s program participation agreement, if the institution is provisionally certified

under §668.13(c);

(2) Impose limitations on the institution’s participation in the title IV, HEA programs;

(3) Deny participation applications made on behalf of the institution; or

(4) Initiate a proceeding against the eligible institution under subpart G of this part.

(b) This subpart establishes the types of activities that constitute substantial misrepresentation by an eligible institution. An eligible institution is deemed to have engaged in substantial misrepresentation when the institution itself, one of its representatives, or any ineligible institution, organization, or person with whom the eligible institution has an agreement to provide educational programs, marketing, advertising, recruiting or admissions services, makes a substantial misrepresentation regarding the eligible institution, including about the nature of its educational program, its financial charges, or the employability of its graduates. Substantial misrepresentations are prohibited in all forms, including those made in any advertising, promotional materials, or in the marketing or sale of courses or programs of instruction offered by the institution.

(c) The following definitions apply to this subpart:

Misrepresentation: Any false, erroneous or misleading statement an eligible institution, one of its representatives, or any ineligible institution, organization, or person with whom the eligible institution has an agreement to provide educational programs, or to provide marketing, advertising, recruiting or admissions services makes directly or indirectly to a student, prospective student or any member of the public, or to an accrediting agency, to a State agency, or to the Secretary. A misleading statement includes any statement that has the likelihood or tendency to deceive or confuse. A statement is any communication made in writing, visually, orally, or through other means. Misrepresentation includes the dissemination of a student endorsement or testimonial that a student gives either under duress or because the institution required the student to make such an endorsement or testimonial to participate in a program.

Prospective student: Any individual who has contacted an eligible institution for the purpose of requesting information about enrolling at the institution or who has been contacted directly by the institution or indirectly through advertising about enrolling at the institution.

Substantial misrepresentation: Any misrepresentation on which the person to whom it was made could reasonably be expected to rely, or has reasonably relied, to that person’s detriment.

34 CFR § 668.75   Relationship with the Department of Education.

An eligible institution, its representatives, or any ineligible institution, organization, or person with whom the eligible institution has an agreement may not describe the eligible institution’s participation in the title IV, HEA programs in a manner that suggests approval or endorsement by the U.S. Department of Education of the quality of its educational programs.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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