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Proposed Rule2026-04520

ACCOUNTABILITY IN HIGHER EDUCATION AND ACCESS THROUGH DEMAND-DRIVEN WORKFORCE PELL: PELL GRANT EXCLUSION RELATING TO OTHER GRANT AID; AND WORKFORCE PELL GRANTS

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Published

March 9, 2026

Issuing agencies

Education Department

Abstract

The Secretary of Education (Secretary) proposes to amend the regulations governing institutional eligibility, general provisions, and the Federal Pell Grant (Pell Grant) Program under title IV of the Higher Education Act (HEA) of 1965, as amended (the title IV, HEA programs). The proposed regulations would implement statutory changes to the title IV, HEA programs included in the One Big Beautiful Bill Act (OBBB), signed into law by President Trump on July 4, 2025. The OBBB made numerous changes to the HEA, including changes to student eligibility requirements for the Pell Grant Program and the establishment of Workforce Pell Grants for students who enroll in a new type of eligible program called an "eligible workforce program," intended to be a high-quality, performance-based, short-term program that supports America's workforce needs.

Full Text

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<title>Federal Register, Volume 91 Issue 45 (Monday, March 9, 2026)</title>
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[Federal Register Volume 91, Number 45 (Monday, March 9, 2026)]
[Proposed Rules]
[Pages 11378-11436]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-04520]

[[Page 11377]]

Vol. 91

Monday,

No. 45

March 9, 2026

Part II

Department of Education

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34 CFR Parts 600, 668, and 690

Accountability in Higher Education and Access Through Demand-Driven
Workforce Pell: Pell Grant Exclusion Relating to Other Grant Aid; and
Workforce Pell Grants; Proposed Rule

Federal Register / Vol. 91, No. 45 / Monday, March 9, 2026 / Proposed
Rules

[[Page 11378]]

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DEPARTMENT OF EDUCATION

34 CFR Parts 600, 668, and 690

[Docket ID ED-2026-OPE-0133]
RIN 1840-AD99

ACCOUNTABILITY IN HIGHER EDUCATION AND ACCESS THROUGH DEMAND-
DRIVEN WORKFORCE PELL: PELL GRANT EXCLUSION RELATING TO OTHER GRANT
AID; AND WORKFORCE PELL GRANTS

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: The Secretary of Education (Secretary) proposes to amend the
regulations governing institutional eligibility, general provisions,
and the Federal Pell Grant (Pell Grant) Program under title IV of the
Higher Education Act (HEA) of 1965, as amended (the title IV, HEA
programs). The proposed regulations would implement statutory changes
to the title IV, HEA programs included in the One Big Beautiful Bill
Act (OBBB), signed into law by President Trump on July 4, 2025. The
OBBB made numerous changes to the HEA, including changes to student
eligibility requirements for the Pell Grant Program and the
establishment of Workforce Pell Grants for students who enroll in a new
type of eligible program called an ``eligible workforce program,''
intended to be a high-quality, performance-based, short-term program
that supports America's workforce needs.

DATES: We must receive your comments on or before April 8, 2026.

ADDRESSES: Find a plain language summary of the proposed rule and
submit your comments through the Federal eRulemaking Portal at
<a href="http://regulations.gov">regulations.gov</a>. The Department will not accept comments submitted by
fax or by email or comments submitted after the comment period closes.
To ensure that the Department does not receive duplicate copies, please
submit your comment only once. Additionally, please include the Docket
ID at the top of your comments.
Information on using Regulations.gov, including instructions for
submitting comments, is available on the site under ``FAQ.'' If you
require an accommodation or cannot otherwise submit your comments via
Regulations.gov, please contact <a href="/cdn-cgi/l/email-protection#e4968183918885908d8b8a978c8188948081978fa4839785ca838b92">[email&#160;protected]</a> or by phone
at 1-866-498-2945. If you are deaf, hard of hearing, or have a speech
disability and wish to access telecommunications relay services, please
dial 7-1-1.
Privacy Note: The Department's policy is to make all comments
received from members of the public available for public viewing in
their entirety on the Federal eRulemaking Portal at
<a href="http://www.regulations.gov">www.regulations.gov</a>. Therefore, commenters should include in their
comments only information that they wish to make publicly available.
Additionally, commenters should not include in their comments any
personally identifiable information (PII) in comments about other
individuals. For example, if your comment describes an experience of
someone other than yourself, please do not identify that individual or
include any personal information that identifies that individual. The
Department reserves the right to redact a portion of a comment or the
entire comment at any time any PII about other individuals is included.

FOR FURTHER INFORMATION CONTACT: Aaron Washington, Office of
Postsecondary Education, 400 Maryland Ave., SW, Washington, DC 20202.
Telephone: (202) 202-987-0911. Email: <a href="/cdn-cgi/l/email-protection#c7a6a6b5a8a9e9b0a6b4afaea9a0b3a8a987a2a3e9a0a8b1">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

The Secretary proposes to codify two changes made to the HEA by the
OBBB through these regulations. The two changes are:
1. Pell Grant Ineligibility When Other Aid Covers Full Cost. The
OBBB does not allow students to receive Pell Grant funds during any
period for which they also receive grant or scholarship aid from non-
Federal sources--including States, eligible institutions, or private
sources--that equals or exceeds their cost of attendance (COA) for such
period.
2. Workforce Pell Grants. The OBBB allows students to receive Pell
Grants for eligible workforce programs that are 150-599 clock hours in
length or an equivalent number of credit hours and that take at least 8
weeks but less than 15 weeks of instructional time to complete (also
referred to as ``Workforce Pell Grants''). The OBBB establishes several
other eligibility requirements for such programs, including approval by
a Governor and the Secretary, and annual outcome metrics.

II. Summary of the Major Provisions of this Regulatory Action

Pell Grant Ineligibility When Other Aid Covers Full Cost

The proposed regulations would:
<bullet> Unreserve Sec. 690.5 and add language to prohibit a
student from receiving a Pell Grant if the student received grant or
scholarship assistance from non-Federal sources that equals or exceeds
the student's COA for the award year.
<bullet> Add Sec. 690.80(d) to require an eligible institution, in
such cases where a student would receive non-Federal grant or
scholarship assistance that equals or exceeds the student's COA, either
to reduce that student's non-Federal grant or scholarship assistance,
insofar as such grant or assistance is within the institution's
control, or to return all Pell Grant funds and cancel any future
disbursements of such funds.

Workforce Pell Grants

The proposed regulations would:
<bullet> Amend Sec. 600.10 to require the Secretary's approval of
each eligible workforce program in order to establish Pell Grant
eligibility.
<bullet> Amend Sec. 668.5 to limit the amount of an eligible
workforce program that can be offered by an ineligible institution or
organization through a written arrangement to 25 percent or less.
<bullet> Amend Sec. 668.8 to add eligible workforce programs as a
new type of Pell Grant eligible program.
<bullet> Amend Sec. 668.20 to prohibit an eligible institution
from taking into account any noncredit or reduced credit remedial
coursework outside of required coursework (including a course in
English as a second language) when determining enrollment intensity and
COA for a student enrolled in an eligible workforce program, as defined
under 34 CFR 690.92, that is offered in credit hours.
<bullet> Amend Sec. 668.32 to prohibit an individual that is
enrolled or accepted for enrollment in a program that leads to a
graduate credential or has attained a graduate credential from
receiving a Pell Grant to enroll in an eligible workforce program.
<bullet> Add a definition of an eligible workforce program to Sec.
690.2.
<bullet> Amend Sec. 690.6 to allow an otherwise eligible student
with a bachelor's degree to receive a Pell Grant to enroll in an
eligible workforce program.
<bullet> Amend Sec. 690.11 to prohibit a student from receiving
concurrent Pell Grant awards for two or more different eligible
programs.
<bullet> Add Sec. 690.90 to provide a high-level scope and purpose
of eligible workforce programs and clarify that eligible students in
these programs are only eligible to receive Pell Grants and not any
other title IV aid.
<bullet> Add Sec. 690.91 to define key terms, including ``cohort
period,'' ``earnings measurement period,'' ``in-demand

[[Page 11379]]

industry sector or occupation,'' ``Governor,'' ``recognized
postsecondary credential,'' ``State board,'' and ``tuition and fees.''
<bullet> Add Sec. 690.92(a) to establish that an eligible
workforce program is an undergraduate program that is at least 8 but
less than 15 weeks of instruction.
<bullet> Add Sec. 690.92(b) to establish that an eligible
workforce program is 150-599 clock hours, 4-15 semester or trimester
hours, or 6-23 quarter hours.
<bullet> Add Sec. 690.92(c) to prohibit correspondence courses,
study abroad, or direct assessment in eligible workforce programs.
<bullet> Add Sec. 690.92(d) to require program approval by the
Governor of a State.
<bullet> Add Sec. 690.92(e) to require program approval by the
Secretary.
<bullet> Add Sec. 690.92(f) to require eligible workforce programs
to pass the value-added earnings metric.
<bullet> Add Sec. 690.92(g) to prevent an eligible institution
from offering an eligible workforce program if it has been subject to
any suspension or emergency or termination action by the Secretary
during the five years preceding the date of the determination.
<bullet> Add Sec. 690.93(a) to codify statutory requirements for
Governor approval, including that the eligible workforce program
provides an education aligned with the requirements of high-skill,
high-wage, or in-demand industry sections or occupations, meets the
hiring needs of employers, leads to a recognized postsecondary
credential that is stackable and portable (or prepares students for
employment for which there is only one recognized postsecondary
credential), and ensures that a student receives academic credit for
the program for at least one certificate or degree program at one or
more eligible institutions.
<bullet> Add Sec. 690.93(b) to require Governors to establish
written policies and processes to evaluate whether a program meets the
requirements under Sec. 690.93(a), which includes requirements for
institutions to submit the necessary information for the Governor to
access a program's completion rate and job placement rates; involve a
process for an institution to appeal the Governor's determination; and
require the Governor to submit an attestation that the State board was
consulted when evaluating whether a program is an eligible workforce
program.
<bullet> Add Sec. 690.93(c) to prohibit the Governor from
approving the program until it meets all the requirements under Sec.
690.93(a).
<bullet> Add Sec. 690.93(d) to require the Governor to provide the
Secretary with a certification, including the components outlined in
regulation, that an eligible workforce program was approved by the
Governor and meets the requirements.
<bullet> Add Sec. 690.93(e) to clarify that a Governor's approval
expires with the expiration of the eligible institution's Program
Participation Agreement.
<bullet> Add Sec. 690.93(f) to establish a process in which a
Governor provides a certification of continued approval of each
eligible workforce program offered by the eligible institution prior to
the expiration of an eligible institution's Program Participation
Agreement.
<bullet> Add Sec. 690.93(g) to treat a program that serves as a
related technical instruction component of a Registered Apprenticeship
Program as meeting the requirements of providing an education aligned
with high-skill, high-wage, or in-demand industry sectors or
occupations, and meeting the hiring needs of employers.
<bullet> Add Sec. 690.93(h) to allow the Governors of two States
to enter into a bilateral agreement regarding the enrollment of
students located in one of those States into some or all the programs
located in the other State.
<bullet> Add Sec. 690.94(a) to require the Secretary to approve
each program, after the Governor has approved the program. The program
must meet the conditions under Sec. 690.92(a) and (b) for the 12
months preceding the date on which the eligible institution applied for
eligibility for the program. The program must also meet completion and
job placement rates prior to application to the Department and each
year subsequent to the eligible workforce program's approval.
<bullet> Add Sec. 690.94(b) to require an eligible institution to
submit to the Governor a list of students that completed the program in
each award year, provide the necessary information to verify the job
placement rate, and report the published tuition and fees for the
eligible workforce program through a process the Secretary determines.
<bullet> Add Sec. 690.94(c) to allow the Secretary to waive some
or all the proposed requirements under Sec. 690.94(a) and (b) related
to submission of completion rates and the Governor's certification of
job placement rates.
<bullet> Add Sec. 690.94(d) to prohibit an eligible workforce
program's tuition and fees from exceeding the value-added earnings of
the program.
<bullet> Add Sec. 690.94(e) to exclude certain categories of
students from the numerator and denominator of the completion and
placement rate calculations.
<bullet> Add Sec. 690.95(a) to codify the value-added earnings
process. An eligible workforce program's total published tuition and
fees may not exceed the value-added earnings of students who are
working, who received a Pell Grant for enrollment in the program, and
who completed the program during the cohort period.
<bullet> Add Sec. 690.95(b) to establish that an eligible
workforce program's value-added earnings are determined by calculating
the difference between the adjusted median earnings of student
completers during the earnings measurement period as defined in Sec.
690.91 and 150 percent of the U.S. Federal Poverty Guidelines
applicable to a single individual for such tax year.
<bullet> Add Sec. 690.95(c) to require the Secretary to publish
the value-added earnings that will apply to the eligible workforce
program for the upcoming award year no later than three months prior to
the beginning of the award year.
<bullet> Add Sec. 690.95(d) to require that an eligible
institution keep published tuition and fees at or below the value-added
earnings calculated for the program for all students who received a
Pell Grant and first enroll in the eligible workforce program during
the award year that begins following the annual release of the
program's value-added earnings.
<bullet> Add Sec. 690.95(e) to establish that programs that have a
calculated value-added earnings of zero or a negative value are not
eligible programs.
<bullet> Add Sec. 690.95(f) to require an eligible institution to
provide evidence, upon request, to the Secretary that its published
tuition and fees do not exceed the published value-added earnings for
that award year.
<bullet> Add Sec. 690.95(g) to establish that the Secretary will
calculate the value-added earnings for an eligible workforce program
using the student completion data the eligible institution reported.
<bullet> Add Sec. 690.95(h) to establish the number of students
needed for the Secretary to calculate the value-added earnings for the
program.
<bullet> Add Sec. 690.95(i) to establish that the Federal agency
with earnings data will provide the Department with median annual
earnings of the students whom the Federal agency has matched with
earnings data.
<bullet> Add Sec. 690.95(j) to require the Secretary to include
completers from all eligible workforce programs with the same six-digit
Classification of Instructional Programs (CIP) code when calculating
value-added earnings.
<bullet> Add Sec. 690.95(k) to clarify that, if more than 50
percent of students in the eligible workforce program are not

[[Page 11380]]

located in the State in which the eligible institution offering the
program is located, the Department will not adjust the program's median
earnings by the State and metropolitan area regional price parities of
the Bureau of Economic Analysis.
<bullet> Add Sec. 690.96(a) to establish a process for programs
that lose eligibility. A program will become ineligible at the end of
the payment period that begins following the date that the Governor
acts to withdraw approval or the Governor fails to reapprove the
program.
<bullet> Add Sec. 690.96(b) to provide that, except in limited
circumstances such as a pending appeal, a program will become
ineligible at the end of the payment period that begins after the date
that the Secretary determines that the eligible institution failed to
meet the completion rate or job placement rate requirements.
<bullet> Add Sec. 690.96(c) to provide that, if an eligible
workforce program fails to meet the value-added earnings requirements,
the program will become ineligible at the beginning of the award year
following the release of the value-added earnings, and the Secretary
will assess a liability to the eligible institution.
<bullet> Add Sec. 690.97(a) to establish a process for an eligible
workforce program to regain eligibility once it has lost it. This
process would prohibit an eligible institution from reestablishing the
eligibility of a failing program or establish eligibility for a
substantially similar program until two years following the date the
program loses eligibility or the date the eligible institution
voluntarily discontinues the failing eligible workforce program,
whichever date is earlier.
<bullet> Add Sec. 690.97(b) to establish that, if an eligible
workforce program loses eligibility due to a loss of Governor approval,
the program may reestablish eligibility after the Secretary receives
the Governor's certification that the program has been approved, and
after the Secretary determines the program has met eligibility
criteria.
<bullet> Add Sec. 690.97(c) to allow an eligible institution to
request that a program's eligibility be reinstated if the program loses
its eligibility due to the published tuition being higher than its
value-added earnings.

Cost and Benefits

As further detailed in the Regulatory Impact Analysis, the
Department estimates that the proposed regulations would have
significant impacts on students, educational institutions, employers,
taxpayers, State governments, and the Department.
Under the proposed regulations, students would benefit from
expanded access to Federal grant funds for new workforce programs that
institutions are likely to offer--or may already offer--but that were
previously ineligible for such funding. Students will also experience
higher wages due to the skills and credentials they gain by attending
eligible workforce programs, including receiving stackable credentials
that will allow them to pursue further postsecondary education and
workforce training. Employers will benefit from the proposed
regulations because the regulations will increase the number of skilled
workers in the labor market. Institutions will benefit from the new
enrollments and the resulting tuition revenues. State governments and
taxpayers will also benefit from greater tax revenues and reduced
expenditures on public assistance programs because of the higher wages
experienced by those completing eligible workforce programs.
The Department will incur new costs to finance Pell Grants for
eligible workforce programs, which are funded as part of the existing
Pell Grant Program. The Department will incur new costs to implement
the changes to the Pell Grant Program and monitor eligibility, as will
State governments, who, if they or institutions within their State
choose to participate, must certify eligible programs and monitor their
completion and job placement outcomes. While taxpayers will bear the
cost of financing Pell Grants to eligible workforce programs, they will
also benefit indirectly from the earnings gain that Pell Grant
recipients receive, such as through reduced use of public benefits
programs for low-income households.

III. Directed Questions

Written Arrangements To Provide Educational Programs (Sec. 668.5(c))

The Department seeks comments from relevant stakeholders regarding
the proposal to allow eligible institutions to enter into a written
arrangement with an ineligible institution or organization for up to 25
percent of an eligible workforce program. Currently, eligible
institutions may enter into written arrangements with ineligible
institutions and organizations to offer a portion greater than 25
percent but less than 50 percent, if such written arrangements are
reviewed and approved by the eligible institution's accrediting agency
as a substantial change. During negotiated rulemaking, the Department
explained that it was not applying such an option for eligible
workforce programs because there is not the same level of quality
assurance given the broad lack of experience in the accreditation
industry in evaluating agreements for short-term programs. Moreover,
the Department is concerned that the provision of eligible workforce
programs by ineligible institutions and organizations could rapidly
expand far beyond the intent of the statute. However, the Department
also recognizes the potential value in partnerships between eligible
institutions and certain ineligible organizations, such as employers
and unions or non-Title IV eligible Registered Apprenticeship related
training instruction providers, that could result in the enhanced
quality of eligible workforce programs. Therefore, we seek additional
information from commenters regarding whether the proposed 25 percent
standard for other eligible programs is an appropriate level, or
whether a greater percentage of instruction could be provided by
ineligible organizations under specific conditions. We request that
commenters provide examples, data, or rationales for any proposed
limits other than the Department's current proposal.

Ineligibility Due to Grant or Scholarship Assistance From Non-Federal
Grants (Sec. 690.5)

The Department seeks feedback from relevant stakeholders about
potential methods to prevent manipulation or circumvention of the new
statutory limitation on Pell Grant eligibility for a student who
receives grant or scholarship assistance from non-Federal sources that
exceed the student's cost of attendance. Note that wages earned by the
student from his or her work for their employer are not grant or
scholarship assistance.
The Department is concerned that the provision, as currently
written based on the language in statute, may be vulnerable to certain
types of circumventions that would limit the effectiveness of the
statutory requirement. For example, under the regulations as currently
proposed, a student would not qualify for Pell Grant funds if they
received non-Federal assistance that equaled or exceeded their cost of
attendance but could qualify for their full Pell Grant if that
assistance was just one dollar less than the total cost of attendance.
This provides avenues for institutions to continue to award Pell Grants
when the student's COA has been paid for by non-Federal aid, either by
limiting the grant or scholarship assistance that it provides to just
under the student's cost

[[Page 11381]]

of attendance, or by using professional judgment to slightly increase
the student's cost of attendance.
The Department was sufficiently concerned about this possibility
that it originally considered a different regulatory approach that
would have required institutions to reduce Pell Grant or non-Federal
grant or scholarship assistance if the combination of such assistance
exceeded the student's cost of attendance. The Department ultimately
chose to propose regulations that mirror the statute because we do not
believe the statutory text is sufficiently flexible to allow for this
interpretation. Additional information can be found in the
``Alternatives Considered'' section of this NPRM.
Because we remain concerned about this potential vulnerability, the
Department seeks feedback from relevant stakeholders about how to
prevent gaming of this provision, for example through additional
reporting, oversight, or enforcement mechanisms. We request that
commenters provide a clear rationale for any requirement other than the
Department's current proposal, including an explanation of why the
alternative would provide greater net benefits to taxpayers in light of
the costs it would impose on institutions or students.

Components Determined by Governors (Sec. 690.93)

The Department seeks feedback on the proposal to allow two
Governors to enter into a bilateral agreement for an eligible
institution in one State to offer an eligible workforce program to
students in another State through distance education so that students
may use Pell Grant funds to attend a program located in another State.
During negotiated rulemaking, the Department stated its concern
regarding the potential for rapid proliferation of eligible workforce
programs offered through distance education (Sec. 600.2) and the need
for appropriate safeguards. Many components of an eligible workforce
program center on high-wage, high-skill, or in-demand occupations and
sectors in a particular State, and the employability of graduates in
the State where the eligible workforce program was approved. As such,
these conditions may not apply in another State where a student is
located while enrolled in a distance education online program.
Bilateral agreements allow the Governors of two States to determine
that an eligible workforce program meets the workforce needs of both
States while also preventing the rapid proliferation of such programs
among States where the program's training is not as valuable.
However, it is not the Department's intent to limit the expansion
of high-quality eligible workforce programs through distance education.
Specifically, the Department is concerned that distance education
programs that may prepare students for the workforce in one State may
not be appropriate in other States due to regional differences in the
labor market. As such, multilateral agreements between Governors in
numerous States may be inappropriate because they may not reflect the
workforce needs in all of the States that could be parties to the
agreement. Therefore, we seek comments from the public regarding
whether the requirement for bilateral agreements is appropriate to
limit the unchecked proliferation of eligible workforce programs in
areas where they are not aligned with labor market demand, while also
providing adequate flexibility for eligible institutions to quickly
establish programs that offer valuable training to students in other
States through distance education. We request that commenters provide
examples, data, or rationale for any requirement for interstate
agreements other than the Department's current proposal.

Value-Added Earnings: Interim Value-Added Earnings Metric (Sec.
690.95(a))

Based on the cohort period outlined in statute (and further defined
in Sec. 690.91), the earliest time that the Department can calculate
official value-added earnings for workforce programs that become
eligible during the 2026-27 award year (the first year of eligibility)
will be for the 2030-31 award year. A few negotiators expressed concern
that eligible workforce programs' tuition and fees would not be held
accountable for low earnings under the value-added earnings measurement
for this four-year time period. The Department seeks feedback from the
community on whether an interim value-added earnings metric should be
computed, at the very least to make those applying for workforce
programs to be aware of the potential earnings outcomes, and whether an
eligible institution's workforce programs should be held accountable in
any way to said interim earnings metric prior to the official
calculation of the value-added earnings metric. We are also interested
in feedback regarding whether the result of an interim measure should
be made available to public, and if so, the appropriate timeframe for
publishing that information. The Department requests that the public
include information outlining the type of data that should be used when
calculating interim earnings measurements and any actions that should
be taken against an eligible institution as a result of any eligible
workforce programs that fail the interim value-added earnings metric.
In the interim, is there a reliable measure of actual median earnings
for these programs based on state or federal administrative data that
can be used for interim purposes? If so, what is this data? Please
provide all citations and sources.

Value-Added Earnings: Exclusion of Certain Students in the Completer
Cohort (Sec. 690.95(a))

The Department seeks feedback from relevant stakeholders regarding
the cohort of completers that are included in the calculation of the
value-added earnings metric. During negotiated rulemaking, the
Department and negotiators discussed the importance of excluding non-
working individuals from the cohort. However, the Department also
recognizes that there may be other scenarios in which it might be
beneficial to exclude additional types of students, such as students
who are currently enrolled in college at the time their earnings are
measured. Excluding currently enrolled students has long been the
practice for calculating other earnings metrics by the Department, such
as the 2023 Gainful Employment regulations and earnings metrics
reported in the College Scorecard.
That said, there are also strong arguments for limiting the types
of students who are excluded from accountability metrics such as the
value-added earnings metric. Exclusions have the potential to introduce
incentives for institutions to design programs in a manner that limits
the number of students who are included in the value-added earnings
calculation, or could have other unanticipated consequences.
Therefore, the Department seeks additional information from
commenters regarding whether other types of students should be excluded
from the cohort of individuals used to calculate the value-added
earnings metric. The Department requests that commenters support their
position using data (when available) and by discussing the potential
administrative burden that their proposal would create or reduce for
institutions, the Department, and relevant Federal agencies.

[[Page 11382]]

Value-Added Earnings: Process for Combining Multiple Cohorts (Sec.
690.95(h))

To compute the value-added earnings metrics for small programs, the
Department is proposing a process that combines completers from
multiple cohorts until a minimum number (50) is obtained. The primary
reason for combining completers from multiple cohorts is so that the
Federal agency with earnings data can compute a median earnings value
for eligible workforce programs without the need for privacy
suppression due to small sample sizes. The specific process the
Department proposes for combining cohorts is to aggregate completers
from the four most recent award years (the current award year, and the
three prior award years). However, the Department recognizes that there
may be alternative ways to aggregate multiple years of cohorts, for
example, including completers from more than three prior award years
when combining cohorts. Such an approach may allow the Department to
compute a value-added earnings metric for a larger number of eligible
workforce programs, making more programs subject to the value-added
earnings test and providing additional consumer protection for
students. This approach aligns with the consensus language on the
aggregation process that the negotiating committee agreed to in week
two of negotiations, under discussions regarding the accountability
provisions of the OBBB. The Department seeks feedback from relevant
stakeholders regarding the cohort aggregation process, particularly
related to the maximum number of years included in the aggregation. The
Department requests that commenters support their position using data
(when available) and by discussing the potential regulatory burden that
their proposal would create or reduce for the Department and relevant
Federal agencies. Commenters should also identify the manner in which
this can be done to prevent any potential gaming by institutions that
may allow colleges to artificially inflate earnings values.

Value-Added Earnings: Programs Serving Out-Of-State Students (Sec.
690.95(k))

The Department seeks feedback on its proposal that, if more than 50
percent of students enrolled in an eligible workforce program are not
located in the State in which the eligible institution offering the
program is located, the Department will not adjust the program's median
earnings by the State and metropolitan area regional price parities of
the Bureau of Economic Analysis when calculating the value-added
earnings measurement. In these cases, the value-added earnings would
simply use the national median earnings. During negotiated rulemaking,
the Department expressed concerns about adjusting a program's median
earnings by regional price parities if most students in the program do
not actually live in the State where the program is being offered (for
example, through distance education). However, the data that the
Department would use to make this determination is limited. We seek
feedback from the public regarding the most effective way to avoid
adjusting earnings by regional price parities that are not applicable
to the locations of most students in a workforce program. As part of
this discussion, the Department also seeks feedback on what data to use
to identify the student's location for this purpose. The Department
proposed using the student's address or State of legal residence as
reported on their Free Application for Federal Student Aid
(FAFSA[supreg]) form at the time of enrollment. However, some
negotiators discussed concerns with the accuracy of the FAFSA address
information as reported by students and proposed using the student's
address at the time the value-added earnings are measured as a better
reflection of potential geographic earning differences. If commenters
have a proposal other than what the Department has outlined in these
proposed regulations, please provide a rationale for using a different
methodology, along with any specific data and calculation requirements
necessary to institute an alternative approach, either for adjusting
the median earnings, or when and how to identify appropriate student
locations.

IV. Invitation to Comment

We invite you to submit comments regarding these proposed
regulations. For your comments to have maximum effect in developing the
final regulations, we urge you to clearly identify the specific section
or sections of the proposed regulations that each of your comments
addresses and to arrange your comments in the same order as the
proposed regulations. The Department will not accept comments submitted
after the comment period closes.
The following tips are meant to help you prepare your comments:
<bullet> Be concise but support your claims.
<bullet> Explain your views as clearly as possible and avoid using
profanity.
<bullet> Refer to specific sections and subsections of the proposed
regulations throughout your comments, particularly in any headings that
are used to organize your submission. Explain why you agree or disagree
with the proposed regulatory text and support these reasons with data-
driven evidence, including the depth and breadth of your personal or
professional experiences. We encourage commenters to include supporting
facts, research, and evidence in their comments. When doing so,
commenters are encouraged to provide citations to the published
materials referenced, including active hyperlinks. Likewise, commenters
who reference materials which have not been published are encouraged to
upload relevant data collection instruments, data sets, and detailed
findings as a part of their comment. Providing such citations and
documentation will assist us in analyzing the comments.
<bullet> Where you disagree with the proposed regulatory text,
suggest alternatives, including regulatory language, and your rationale
for the alternative suggestion.
<bullet> Submit your public comment only.
<bullet> Do not include personally identifiable information (PII)
such as Social Security numbers or loan account numbers for yourself or
for others in your submission.
<bullet> Do not include any information that directly identifies or
could identify other individuals or that permits readers to identify
other individuals.
Mass Writing Campaigns: In instances where individual submissions
appear to be duplicates or near duplicates of comments prepared as part
of a writing campaign, the Department will post one representative
sample comment along with the total comment count for that campaign to
Regulations.gov. The Department will consider these comments along with
all other comments received.
In instances where individual submissions are bundled together
(submitted as a single document or packaged together), the Department
will post all of the substantive comments included in the submissions
along with the total comment count for that document or package to
Regulations.gov. A well-supported comment is often more informative to
the agency than multiple form letters.
Public Comments: The Department invites you to submit comments on
all aspects of the proposed regulatory language specified in this NPRM,
and in the Regulatory Impact Analysis and Paperwork Reduction Act
sections.
The Department may, at its discretion, decide not to post or to
withdraw certain comments and other materials that contain promotion of
commercial services or products, and spam.

[[Page 11383]]

We may not address comments outside of the scope of these proposed
regulations in the final rule. Comments that are outside of the scope
of these proposed regulations are comments that do not discuss the
content or impact of the proposed regulations or the Department's
evidence or reasons for the proposed regulations.
Comments that are submitted after the comment period closes will
not be posted to Regulations.gov or addressed in the final rule.
We invite you to assist us in complying with the requirements of
Executive Orders 12866 and 13563 and their overall requirement of
reducing regulatory burden that might result from these proposed
regulations. Please let us know of any further ways we could reduce
potential costs or increase potential benefits while preserving the
effective and efficient administration of the Department's programs and
activities.
During and after the comment period, you may inspect public
comments about these proposed regulations by accessing Regulations.gov.
Assistance to Individuals with Disabilities in Reviewing the
Rulemaking Record: On request, we will provide appropriate
accommodation or auxiliary aid to an individual with a disability who
needs assistance to review the comments or other documents in the
public rulemaking record for these proposed regulations. If you want to
schedule an appointment for this type of accommodation or auxiliary
aid, please contact the Information Technology Accessibility Program
Help Desk at <a href="/cdn-cgi/l/email-protection#470e1306171432373728353307222369202831">[email&#160;protected]</a> to help facilitate this request.

Clarity of the Regulations

Executive Order 12866 and the Presidential memorandum ``Plain
Language in Government Writing'' require each agency to write
regulations that are easy to understand. The Secretary invites comments
on how to make the regulation easier to understand, including answers
to questions such as the following:
<bullet> Are the requirements in the proposed regulations clearly
stated?
<bullet> Do the proposed regulations contain technical terms or
other wording that interferes with their clarity?
<bullet> Does the format of the proposed regulations (grouping and
order of sections, use of headings, paragraphing) aid or reduce their
clarity?
<bullet> Would the proposed regulations be easier to understand if
we divided them into more (but shorter) sections? (A ``section'' is
preceded by the symbol ``Sec. '' and a numbered heading; for example,
Sec. 668.2 General definitions.)
<bullet> Could the description of the proposed regulations in the
SUPPLEMENTARY INFORMATION section of this preamble be more helpful in
making the proposed regulations easier to understand? If so, how?
<bullet> What else could we do to make the proposed regulation
easier to understand?
To send any comments that concern how the Department could make
these proposed regulations easier to understand, see the instructions
in the ADDRESSES section.

V. Background

The OBBB, which President Trump signed into law on July 4, 2025,
made important changes to the title IV, HEA programs, including one of
the most significant changes to the Pell Grant Program in its history,
to address America's workforce needs.
Specifically, the OBBB expanded Pell Grant eligibility to eligible
workforce programs. These programs are shorter in duration than the
undergraduate programs currently eligible for Pell Grants, and they
must meet specific accountability metrics related to graduate earnings,
as well as indicia of employer demand--requirements that are not
applicable to other eligible programs.
The OBBB also added a new criterion for Pell Grant eligibility that
does not allow students to receive Pell Grant funds if they also
receive grant or scholarship aid from non-Federal sources--including
States, institutions of higher education, and private sources--in a
total amount that equals or exceeds their cost of attendance (COA).
Eligible institutions determine the COA by establishing a budget for
tuition and fees, books, supplies, housing, food, and other costs.
This NPRM complies with Section 492 of the HEA, which requires the
Secretary to obtain public input and conduct negotiated rulemaking
before issuing proposed regulations for the title IV, HEA programs. To
meet those requirements and implement the new statutory directives
provided for in the OBBB, the Department convened the Accountability in
Higher Education and Access through Demand-driven Workforce Pell
(AHEAD) negotiated rulemaking committee, which reached consensus
agreement on the entirety of the regulatory text included in this NPRM.

VI. Authority for This Regulatory Action

The OBBB amended portions of the HEA related to the title IV, HEA
programs administered by the Department. The Secretary has been granted
broad authority by Congress to implement federal student aid programs
under title IV of the HEA, including amendments made by the OBBB. See
20 U.S.C. 1221e-3, see also 20 U.S.C. 1082, 3441, 3471, 3474. In order
to carry out functions otherwise vested in the Secretary by law or by
delegation of authority pursuant to law, and subject to limitations as
may be otherwise imposed by law, the Secretary is authorized to make,
promulgate, issue, rescind, and amend rules and regulations governing
the manner of operations of, and governing the applicable programs
administered by, the Department. See 20 U.S.C. 1221e-3. These programs
include the Federal student loan programs authorized by the HEA, as
amended by the OBBB.
Waiver of HEA Master Calendar Requirements
The Harmonious-Reading Canon provides that statutes should, when
possible, be interpreted in a way that renders them compatible, not
contradictory, but such an approach is not always possible if context
and other considerations (including the application of other canons)
make it impossible to do so, another approach to statutory
interpretation, such as the General/Specific Canon must be applied. See
Scalia & Garner, Reading Law, 155 (2012). The General/Specific Canon of
statutory construction dictates that, in cases where a general
prohibition is contradicted by a specific permission or a general
permission that is contradicted by a specific prohibition, the more
specific of the two provisions controls. See Scalia & Garner, Reading
Law, 158 (2012). Because, as discussed below, OBBB contains provisions
with effective dates that cannot possibly be implemented in regulation
in accordance with the HEA's master calendar requirements, OBBB
implicitly provides a limited waiver of the HEA's master calendar
requirement, so far as it is necessary to promulgate regulations that
give effect to those provisions. See Dorsey v. United States, 567 U.S.
260, 274 (2012) (stating that an agency's compliance with an existing
statute ``cannot justify a disregard of the will of Congress as
manifested either expressly or by necessary implication in a subsequent
enactment'' (quoting Great Northern R. Co. v. United States, 208 U. S.
452, 465 (1908).

[[Page 11384]]

Here, the OBBB was enacted on July 4, 2025. The OBBB directs the
Department to implement roughly a dozen provisions by July 1, 2026.
Many of these provisions are not self-executing and could not be
implemented absent the Department promulgating regulations to provide
details for institutions on how to comply with the OBBB. Congress gave
the Secretary discretion within the OBBB to implement the provisions
impacting the title IV, HEA programs and knew that its commands were
not self-executing when directing the Secretary to take action.
Congress expected the Secretary to act via rulemaking before July 1,
2026, to enable these provisions to actually go into effect.
The master calendar in the HEA provides that regulatory changes
initiated by the Secretary affecting the title IV, HEA programs must be
published in final form by November 1st in order for them to go into
effect by July 1st of the following year. 20 U.S.C Sec. 1089(c)(1).
Section 492 of the HEA requires the Department to undertake negotiated
rulemaking as part of any regulation under title IV of the HEA. In
order to conduct negotiated rulemaking and meet APA requirements, the
Department must have a public hearing (providing notice to the public),
solicit nominations from the public to serve on a negotiated rulemaking
committee, select non-Federal negotiators, hold negotiations, develop
an NPRM, publish an NPRM (with at least a 30-day comment period), and
then publish a final rule that responds to any substantive comments
received. The fastest possible timeframe in which the negotiated
rulemaking process for the rulemaking packages assigned to the AHEAD
Committee could have occurred is 149 days, which is irreconcilable with
the timeline allowed by the enactment of the OBBB, due to the fact that
there were 120 days between July 4, 2025, (the day the OBBB was
enacted), and November 1, 2025, (the publication date of the final rule
required by the master calendar).
It would not have been possible for the Department to undertake
every step of the negotiated rulemaking process by November 1, 2025, in
order to implement the provisions that become effective in the OBBB by
July 1, 2026, which is the statutory effective date. Congress was aware
of this temporal impossibility when they passed the OBBB, yet Congress
decided that these provisions would still go into effect on July 1,
2026. Because these provisions are not self-implementing and cannot go
into effect unless the Department promulgates a final rule, the OBBB
implicitly waives the master calendar.
With important details unanswered by the plain text of the OBBB, it
is clear that the policy scheme set forth in the HEA made by the OBBB
cannot be implemented absent regulatory action by the Department. At
the same time, even though the requirements of negotiated rulemaking
are onerous, it is possible to undergo negotiated rulemaking and
publish a final rule at least 30 days prior to the effective date of
these OBBB provisions on July 1, 2026. Therefore, the OBBB does not
waive negotiated rulemaking nor any provision in the APA. For
provisions in the OBBB that become effective July 1, 2027, and beyond,
Congress did not implicitly repeal the master calendar because it is
possible for the Department to publish a final rule that complies with
the master calendar to implement those provisions.
Severability
``It is axiomatic'' that a regulation may be invalid in part but
not in whole or as applied to one set of facts but not another. Ayotte
v. Planned Parenthood of N. New England, 546 U.S. 320, 329 (2006). If a
court finds one part of a regulation is unlawful, the ``normal rule''
is to enjoin only that part. Id. (quoting Brockett v. Spokane Arcades,
Inc., 472 U.S. 491, 504 (1985).
It is the Department's intent that if any provision of this subpart
or its application to any person, act, or practice is held invalid, the
remainder of the subpart or the application of its provisions to any
person, act, or practice shall not be affected thereby.
Statutes and regulations are severable if the separate provisions
are ``wholly independent of each other'' and can operate independently.
Brockett v. Spokane Arcades, Inc., 472 U.S. 491, 502 (1985). That is
the case here. No part herein will be affected if another part is found
to be unlawful. Nor does the Department believe courts or regulated
parties would be unable to apply the rule if one part is held invalid.
C.f. Dep't of Educ. v. Louisiana, 603 U.S. 866, 868 (2024) (per curiam)
(denying the government's request to stay a preliminary injunction
against an entire rule where only parts were found to be invalid
because ``schools would face in determining how to apply the rule for a
temporary period with some provisions in effect and some enjoined'').

VI. Public Participation

Section 492 of the HEA, 20 U.S.C. 1098a, requires the Secretary to
obtain public involvement in the development of proposed regulations
affecting programs authorized by the title IV, HEA programs. Prior to
developing this NPRM, the Department obtained advice and
recommendations from individuals and representatives of groups involved
in the title IV, HEA programs. This outreach included a 30-day public
comment period, one day of public hearings, and five days of in-person
negotiated rulemaking sessions on these proposed regulations at the
Department's headquarters in Washington, DC. Further details regarding
these efforts are provided below.
On July 25, 2025, the Department published in the Federal Register
(90 FR 35261) a notice of our intent to hold public hearings and to
establish two negotiated rulemaking committees to consider regulatory
changes to the title IV, HEA programs, with one committee addressing
topics including institutional and programmatic accountability and the
Pell Grant Program. The engagement included a 30-day written public
comment period, a virtual public hearing on August 7, 2025, and five
days of negotiated rulemaking specific to this NPRM.

Public Comments and Hearings

We received 1,864 written comments in response to the Federal
Register notice. Additionally, we held a virtual public hearing on
August 7, 2025. A total of 57 individuals testified virtually at the
hearing.
You may view the written comments submitted in response to the July
29, 2025 ``Intent to Establish Negotiated Rulemaking Committees;
Correction'' correction notice (90 FR 35652), by visiting the Federal
eRulemaking Portal at Regulations.gov, within docket ID ED-2025-OPE-
0151. Instructions for finding comments are also available on the site
under ``FAQ.''
Transcripts of the public hearings can be accessed at <a href="https://www.ed.gov/laws-and-policy/higher-education-laws-and-policy/higher-education-policy/negotiated-rulemaking-for-higher-education-2025-2026">https://www.ed.gov/laws-and-policy/higher-education-laws-and-policy/higher-education-policy/negotiated-rulemaking-for-higher-education-2025-2026</a>.

Negotiated Rulemaking

On July 25, 2025, we published the notice in the Federal Register
referenced earlier in the Public Participation section. That notice
also set forth a schedule for committee meetings and requested
nominations for individual negotiators to serve on the AHEAD Committee.
We chose members of the negotiated rulemaking committee from
individuals nominated by groups involved in the title IV, HEA programs.
We selected individuals with demonstrated expertise

[[Page 11385]]

or experience with the proposed topics. The negotiated rulemaking
committee included the following members, representing their respective
constituencies:
<bullet> Students who are currently enrolled and receiving
assistance from the title IV, HEA programs: Eric Atchison, Arkansas
State University System, and Magnus Noble (alternate), University of
Illinois Springfield.
<bullet> Students who are veterans, U.S. military service members
or groups representing them: Matthew Feehan, Veterans Education
Project, and Julie Howell (alternate), Paralyzed Veterans of America.
<bullet> Employers and groups representing the business community,
including small, medium, and large businesses: David Kafafian, Clasp,
and Dennis Cariello (alternate), Hogan Marren Babbo & Rose.
<bullet> Legal assistance organizations that represent students and
borrowers, consumer advocates, and civil rights groups that represent
students: Tamar Hoffman, Community Legal Services of Philadelphia, and
Zoe Kemmerling (alternate), Legal Aid of the District of Columbia.
<bullet> Public institutions of higher education, including
institutions eligible to receive Federal assistance under Title III and
Title V of the HEA, Tribal Colleges and Universities, and Historically
Black Colleges and Universities: Kristin Hultquist, HCM Strategists,
and Tonjua Williams (alternate), St. Petersburg College.
<bullet> Private nonprofit institutions of higher education
including institutions eligible to receive Federal assistance under
Title III and Title V of the HEA, Tribal Colleges and Universities, and
Historically Black Colleges and Universities: Aaron Lacey, Thompson
Coburn LLP, and Joanna Roush (alternate), Liberty University.
<bullet> Proprietary institutions of higher education, as defined
in 34 CFR 600.5: Jeff Arthur, ECPI University, and Ryan Claybaugh
(alternate), Paul Mitchell Advanced Education.
<bullet> State workforce agencies and workforce development boards:
Rachael Stephens Parker, Maryland Governor's Workforce Development
Board, and Andrea DeSantis (alternate), North Carolina Department of
Commerce.
<bullet> State grant agencies, and other State and non-profit
higher education financing organizations: J. Ritchie Morrow, Nebraska
Coordinating Commission for Higher Education, and Elizabeth McCloud
(alternate), Pennsylvania Higher Education Assistance Agency.
<bullet> State higher education executive officers, State
authorizing agencies, and other State regulators: Randy Stamper,
Virginia Community College System, and Heather DeLange (alternate),
Colorado Department of Higher Education.
Accrediting agencies recognized by the Secretary of Education:
Michale McComis, Accrediting Commission of Career Schools and Colleges,
and Gedalia (Gary) Litke (alternate), Association of Advanced
Rabbinical and Talmudic Schools.
<bullet> Organizations representing taxpayers and the public
interest: Preston Cooper, American Enterprise Institute, and Ethan
Pollack (alternate), Jobs for the Future.
After obtaining extensive advice and recommendations from the
public, the Secretary, as required by Section 492 of the HEA, 20 U.S.C.
1098a, prepared draft regulations and submitted them to a negotiated
rulemaking process. The committee for these proposed regulations began
negotiations on December 8, 2025, and concluded on December 12, 2025.
The committee reviewed and discussed draft regulations prepared by the
Department, as well as alternative regulatory language and suggestions
proposed by committee members. Additionally, during each negotiated
rulemaking meeting, some non-Federal negotiators shared feedback that
they had received from stakeholders in their respective constituencies.
This approach facilitated the inclusion of a wide array of ideas and
perspectives, which contributed to the development of the consensus
language.
Under the organizational protocols for negotiated rulemaking agreed
to by all members of the committee, if the committee reaches consensus
on the proposed regulations, the Department agrees to publish, without
substantive alteration, a defined group of regulations on which the
committee reached consensus--unless the Secretary reopens the process
or provides a written explanation to the participants stating why she
has decided to depart from the agreement reached during negotiations.
In this instance, consensus is considered to be the absence of dissent
by any member of the negotiated rulemaking committee (abstaining
members are not considered to be dissenting from the proposal). The
committee reached consensus on the entirety of the draft regulations on
December 12, 2025. As a result, this NPRM reflects the consensus
language with minor technical and non-substantive corrections which are
noted in subsequent sections of this NPRM.
The AHEAD Committee met subsequently during the week of January 5,
2026, to consider a separate set of draft regulations related to
implementing accountability provisions in the OBBB, but the regulatory
provisions discussed during that week are outside the scope of this
proposed rule. The Department will publish a separate NPRM on these
accountability regulations.

VII. Significant Proposed Regulations

The Department discusses substantive issues under the sections of
the proposed regulations to which they pertain. Generally, we do not
address proposed regulatory provisions that are technical or otherwise
minor in effect.

Pell Grant Ineligibility When Other Aid Covers Full Cost Ineligibility
due to Grant or Scholarship Assistance From Non-Federal Grants (Sec.
690.5(a) and (b))

[[Page 11386]]

their full, calculated Pell Grant for the award year.
Eligible institutions determine a student's COA based on the costs
associated with individual programs of study. The allowable costs
included in a student's COA are set forth in HEA Section 472 and
generally encompass all the regular costs that a student would usually
pay to attend a given program at an eligible institution: tuition and
fees, books, supplies, and housing and food.\1\ The COA can be further
specified, on an individual basis, when a student informs his or her
institution's financial aid office that they have costs that they are
responsible for (for example, unusually high medical bills) that are
not accounted for in the normal COA. In such cases, eligible
institutions can use professional judgment on a case-by-case basis to
adjust the student's COA to account for that student's unique costs.
---------------------------------------------------------------------------

\1\ Federal Student Aid Handbook--Volume 3, Chapter 2--Cost of
Attendance--<a href="https://fsapartners.ed.gov/knowledge-center/fsa-handbook/2025-2026/vol3/ch2-cost-attendance-budget">https://fsapartners.ed.gov/knowledge-center/fsa-handbook/2025-2026/vol3/ch2-cost-attendance-budget</a>.
---------------------------------------------------------------------------

Several negotiators expressed concern that the receipt of grant or
scholarship aid would have an adverse effect and prohibit students from
receiving a Pell Grant that may be necessary for their education.
However, if a student's entire COA is met with non-Federal grant or
scholarship aid, that student has no remaining allowable education
expenses for a Pell Grant to be used for. Therefore, the student would
have no need for a Pell Grant to cover education-related expenses. In
addition, this provision safeguards the interests of taxpayers by only
providing Pell Grants to students who need financial assistance,
thereby ensuring equity with other students receiving aid from the Pell
Grant Program.
During negotiated rulemaking, we received a request from a
negotiator to add ``assistance'' for clarity and transparency for
students. We do not believe providing this clarity would substantively
change the regulation and did so.
The Department proposes that the regular exclusions from ``other
financial assistance'' enumerated in Section 480(i) of the HEA would
not be treated as non-Federal grant or scholarship assistance under
this provision. For example, in Section 480(i), it states ``emergency
financial assistance provided to the student for unexpected expenses
that are a component of the student's COA, and not otherwise considered
when the determination of the student's need is made . . .'' is not
considered grant or scholarship assistance. The Department does not
have the authority to exclude other types of non-Federal grant or
scholarship assistance not specifically stated in the statute. This
clarification does not substantively change the proposed regulation or
affect the Department's enforcement of Section 480(i).
Although the Department believes its proposed regulations closely
adhere to the statute, we have concerns about the vulnerability of this
provision to abuse by institutions seeking to subvert the intent of the
law by manipulating the amount of a student's grant or scholarship
funds or by using professional judgment to slightly alter the student's
cost of attendance. Because of these concerns, we have included a
question regarding how to limit such vulnerabilities under the Directed
Questions section in this NPRM.

Recalculation of a Pell Grant award (Sec. 690.80(d))

Statute: Section 401(d)(6) of the HEA, as amended by Section 83004
of the OBBB, provides that beginning on July 1, 2026, a student shall
not be eligible for a Pell Grant during any period for which the
student receives grant aid from non-Federal sources in an amount that
equals or exceeds the student's COA for such period. Additionally,
Section 401(f) states that payments of Pell Grant funds shall be made
in accordance with regulations promulgated by the Secretary.
Current Regulations: Current regulations under Sec. 690.80
prescribe instances in which an eligible institution recalculates a
Pell Grant award. An eligible institution is required to recalculate a
Pell Grant if there is a change to the student's Student Aid Index
(formerly the Expected Family Contribution) or enrollment intensity
(formerly the enrollment status). The eligible institution may, but is
not required to, recalculate a Pell Grant due to a change in the
student's COA when the enrollment status is unaffected.
Proposed Regulations: The proposed regulation requires that if,
prior to the final disbursement of a student's Pell Grant for an award
year, the eligible institution becomes aware that the student has
received or will receive grant or scholarship assistance from non-
Federal sources that equals or exceeds the student's COA, the eligible
institution must either (1) reduce the non-Federal grant or scholarship
assistance--insofar as the institution has control over such grant or
assistance--until it does not equal or exceed the student's COA, or (2)
return all of the Pell Grant funds that the student received for that
award year pursuant to Sec. 690.79 and cancel any future disbursements
of such funds for that award year.
Reasons: The proposed regulation describes the options available to
an eligible institution when it learns that a student has received or
will receive non-Federal grant aid that equals or exceeds the student's
COA. The Department understands that there will be circumstances when
eligible institutions will not know this or become aware of it until
after the final Pell Grant disbursement; in such cases the institution
will not need to take any action. However, if an eligible institution
becomes aware of this information prior to the final disbursement of
Pell Grants for the award year, it must act in accordance with the
proposed rule. The Department would like feedback from institutions to
more thoughtfully understand if institutions have the resources,
ability, or visibility to undertake this proposal.

Workforce Pell Grants

Date, Extent, Duration, and Consequence of Eligibility (Sec.
600.10(c))

Statute: Section 481(b)(3) of the HEA, as amended by Section
83002(b) of the OBBB, states that after the Governor of a State
determines that a program meets specified requirements, the Secretary
shall determine whether the program meets additional specified
conditions necessary for the program to be considered an eligible
workforce program.
Current Regulations: An eligible institution must obtain the
Secretary's approval prior to offering title IV, HEA funds for certain
educational programs. Currently, this requirement applies to: (1) the
first direct assessment program offered by an eligible institution; (2)
the first eligible prison education program offered at the first two
additional locations where the eligible institution offers such
programs; (3) any comprehensive transition and postsecondary program or
short-term program; and (4) in cases where an eligible institution's
Program Participation Agreement (PPA) includes a condition requiring
such approval.
Proposed Regulations: We propose to require that an eligible
institution obtain the Secretary's approval to offer an eligible
workforce program, if the institution seeks to designate the program as
eligible for the Pell Grant Program.
Reasons: Section 481(b)(3) of the HEA, as amended by Section
83002(b) of the OBBB, requires that each eligible

[[Page 11387]]

workforce program that participates in the Pell Grant Program be
approved by the Secretary and requires the Secretary to determine
whether the program satisfies specific statutory requirements. Per the
authorizing statute the Secretary is required to proactively determine
that a program meets all applicable statutory and regulatory
requirements before it can be an eligible workforce program, the
Department does not have discretion to regulate in this area.
Neither the OBBB nor these proposed regulations contain language
specific to an accrediting agency. But during negotiated rulemaking, a
negotiator requested that the Department clarify the role that
accrediting agencies play in the eligible workforce program approval
process. The Department addresses this in our response below. An
eligible institution must be able to demonstrate that each program,
including eligible workforce programs,--collectively or individually--
is included within its grant of accreditation. The Department does not
require the accrediting agency to approve each eligible workforce
program but an accrediting agency recognized by the Department may
establish its own internal processes regarding the approval of eligible
workforce programs, which must follow its established review procedures
for substantive changes set forth in Sec. 602.22. If an accrediting
agency decides to approve one or more eligible workforce programs
separately or based on established policies that require eligible
institutions to make a substantive change request to add an eligible
workforce program, the accrediting agency approval may come before or
after approval by the Governor (but prior to Department approval).

Written Arrangements To Provide Educational Programs (Sec. 668.5(c))

Statute: Section 484(a) of the HEA provides that a recipient of
title IV, HEA program funds must be enrolled in an eligible academic
program leading to a degree or certificate at an eligible institution.
Current Regulations: Section 668.5 currently sets forth the
conditions under which the Secretary will consider eligible programs to
include educational programs that are offered by an eligible
institution that has a written arrangement, sometimes referred to as a
contractual agreement, with an ineligible institution or organization.
Under such an agreement, an ineligible institution or organization
provides part of the educational program offered by the eligible
institution. Generally, an ineligible institution or organization may
provide 25 percent or less of an eligible program without approval of
the arrangement by the eligible institution's accrediting agency.
Moreover, in some cases, the current regulations allow an ineligible
institution or organization to provide more than 25 percent but less
than 50 percent of an eligible program if the eligible institution
offering the program receives approval from its accrediting agency as a
substantive change, in accordance with applicable regulations under 34
CFR 602.22.
Proposed Regulations: The Department proposes that an eligible
institution may enter into a written arrangement with an ineligible
institution or organization to provide a portion of an eligible
workforce program only if the ineligible institution does not provide
more than 25 percent of the eligible workforce program. Programs under
which an ineligible institution or organization provided more than 25
percent of the eligible program would not be considered to be an
eligible workforce program.
Reasons: While the statute is silent on the issue of written
arrangements, the Department believes that institutions offering
eligible workforce programs should have some flexibility to enter into
written arrangements with ineligible institutions and organizations, as
they currently do with their other eligible programs. However, for
written arrangements where 26 to 49 percent of the program is not
provided by the eligible institution, the Department is concerned that
requiring that such written arrangements be approved by the eligible
institution's accrediting agency, as is required for other eligible
programs under current regulations, may not be as effective in
providing quality assurance for eligible workforce programs.
During negotiated rulemaking, several negotiators expressed concern
that the 25 percent limitation could stymie innovation and employer
engagement in the development and implementation of eligible workforce
programs. One negotiator noted that some eligible institutions may not
have the capabilities to offer an eligible workforce program without
assistance from ineligible institutions or organizations. The
negotiator mentioned that a written arrangement could help an eligible
institution start an eligible workforce program without the need to
purchase expensive capital equipment of its own, as necessary training
on such equipment may be available from an ineligible institution or
organization through a written arrangement. The Department responded by
stating that it had considered several options in developing the draft
regulations, ranging from the less than 50 percent upper limit that
some negotiators had proposed, to express prohibition of written
arrangements for eligible workforce programs. The 25 percent threshold
that was proposed in the draft regulations and agreed to by all
negotiators during the committee negotiations strikes a balance between
providing institutions with the same flexibility that institutions have
under existing policies for other eligible programs but offers
additional assurance that the vast majority (75 percent or greater) of
the eligible workforce program is provided by the eligible institution.
In proposing these regulations, the Department continues to seek
public input on achieving a proper balance between providing eligible
institutions with the flexibility to acquire educational resources from
outside the institution that can enhance the quality of eligible
workforce programs using written arrangements, while also ensuring that
standards of quality assurance for the title IV, HEA programs continue
be maintained for all types of eligible programs. Thus, we have
included a question regarding this proposal under the Directed
Questions section in this NPRM.

Eligible Program (Sec. 668.8(n))

Statute: Section 401(k)(1) of the HEA, added by Section 83002(a) of
the OBBB, states that beginning on July 1, 2026, and each subsequent
year, the Secretary shall award Pell Grants to eligible students to
enroll in eligible workforce programs.
Current Regulations: Sec. 668.8 defines which programs are
considered eligible programs for the purposes of the title IV, HEA
programs. Beyond the general requirements set forth in Sec. 668.8,
Sec. 668.8(n) specifically states that eligible programs include:
direct assessment programs, comprehensive transition and postsecondary
programs, and prison education programs.
Proposed Regulations: The proposed regulations state that an
eligible program includes, solely for the purposes of the Pell Grant
Program, an eligible workforce program as defined in 34 CFR 690.92.
Additionally, we propose to make a technical restructuring edit to
paragraph (n) due to the increasing number of eligible programs defined
under the paragraph. The consensus language contained romanettes in the
subparagraphs following subsection (n), however, those subparagraphs
should be Arabic numerals because they are at the paragraph level
instead of the subparagraph level. We have made that

[[Page 11388]]

technical update in the proposed amendatory language.
Reasons: This is a conforming change, made to ensure consistency
and alignment of the hierarchical structure throughout the Code of
Federal Regulations (CFR). While we propose that the majority of
eligible workforce program regulations be included under 34 CFR 690
Subpart H, to ensure that a reader knows that the definition of an
eligible program includes an eligible workforce program, we propose to
add a reference to eligible workforce programs under this section of
the CFR.

Limitations on Remedial Coursework That is Eligible for Title IV, HEA
Program Assistance (Sec. 668.20(b) and (g))

Statute: Section 401(k)(3)(B) of the HEA, added by Section 83002(a)
of the OBBB, prohibits an eligible institution from taking into account
noncredit or reduced credit remedial coursework (including a course in
English as a second language) when determining enrollment intensity and
COA for an eligible workforce program offered in credit hours.
Current Regulations: The current regulations prescribe instances
when noncredit or reduced credit remedial coursework can (Sec.
668.20(b)) and cannot (Sec. 668.20(c) and (d)) be included in a
student's enrollment intensity (formerly enrollment status) and COA.
For example, a remedial course cannot be below the educational level
needed for a student to successfully pursue their program after one
year in that course and be included in a student's enrollment intensity
(Sec. 668.20(c)(2)). Also, in order to be included, remedial courses
must be at least at the high school level, as determined by the
eligible institution, its state legal authority, or its accrediting
agency (Sec. 668.20(c)(3)(ii)).
Proposed Regulations: We propose that an eligible institution may
not take into account any noncredit or reduced credit remedial
coursework (including a course in English as a second language) when
determining enrollment intensity and COA for a student enrolled in an
eligible workforce program, as defined under 34 CFR 690.92, that is
offered in credit hours.
Reasons: Section 401(k)(3)(B) of the HEA, added by Section 83002(a)
of the OBBB, prohibits the inclusion of noncredit or reduced credit
remedial coursework to determine enrollment intensity or COA for an
eligible workforce program.
Section 401(d)(1) of the HEA states that the ``. . . period during
which a student may receive Federal Pell Grants shall be the period
required for the completion of the first undergraduate baccalaureate
course of study being pursued by that student at the institution at
which the student is in attendance, except that any period during which
the student is enrolled in a noncredit or remedial course of study, as
described in paragraph (2), shall not be counted for the purpose of
this paragraph.''.
Section 401(d)(2) of the HEA states, ``(2) Noncredit or remedial
courses; study abroad.--Nothing in this section shall exclude from
eligibility courses of study which are noncredit or remedial in nature
(including courses in English language instruction) which are
determined by the eligible institution to be necessary to help the
student be prepared for the pursuit of a first undergraduate
baccalaureate degree or certificate or, in the case of courses in
English language instruction, to be necessary to enable the student to
use already existing knowledge, training, or skills . . .''. However,
Section 401(k)(3)(B) of the HEA, added by Section 83002(a) of the OBBB,
explicitly states that Section 401(d)(2) of the HEA does not apply to
an eligible workforce program. In other words, students enrolled in
eligible workforce programs offered in credit hours can only receive
Pell Grants for courses that they receive credit for.
The Department clarified during negotiated rulemaking that the
prohibition on noncredit courses is not in reference to programs
offered using clock hours. The prohibition applies specifically to
noncredit courses in credit hour programs. In clock hour programs,
whether or not coursework confers academic credit is irrelevant for
purposes of the title IV, HEA programs. The Department interprets Sec.
401(d)(1) to apply an exception to the normal requirement that
coursework in a credit hour program carry academic credit in order for
that coursework to be considered for Title IV purposes.

Student Eligibility (Sec. 668.32(c))

Statute: Section 401(k)(2)(B) of the HEA, added by Section 83002(a)
of the OBBB, states that a student is not eligible for a Pell Grant in
an eligible workforce program if the student is enrolled, or accepted
for enrollment, in a program of study that leads to a graduate
credential, or if the student has obtained a graduate credential.
Current Regulations: The existing Pell Grant Program regulations
generally prohibit an individual with a baccalaureate degree or first
professional degree from receiving a Pell Grant (Sec.
668.32(c)(2)(i)(A)).
Proposed Regulations: The proposed regulations clarify that an
otherwise eligible student who has obtained a baccalaureate degree can
receive a Pell Grant to enroll in an eligible workforce program. The
proposed regulations state that a student who is receiving a Pell Grant
to enroll in an eligible workforce program may not be enrolled in or
accepted for enrollment in a program of study that leads to a graduate
credential, nor have attained a graduate credential.
Reasons: Section 401(k)(2) of the HEA states ``To be eligible to
receive a Pell Grant for enrollment in an eligible workforce program
the student may not ``be enrolled, or accepted for enrollment, in a
program of study that leads to a graduate credential; or . . . have
attained such a credential.'' Section 401(k)(2) does not explicitly
exclude students who possess a bachelor's degree from being eligible to
receive Pell Grant funds for enrollment in an eligible workforce
program. In doing so, Section 401(k) superseded the ordinary Pell Grant
eligibility limitations under Section 401(d)(1) that prohibit students
who have already earned a bachelor's degree from receiving Pell Grants.
20 U.S.C. 1070a (limiting eligibility to students who have not
completed their ``first undergraduate baccalaureate course of study.'')
Students must generally have a bachelor's degree in order to enroll
in graduate programs, so the ordinary rule under subsection (d)(1)
already excluded students who are enrolled in or admitted to a graduate
degree program or already have a graduate degree. It would be
unnecessary for Congress to change the ordinary rule, if all that was
intended is to prevent graduate students or graduate degree holders
from receiving a Pell Grant. As such, by necessary implication, the
statute in subsection (d)(1) is supplanted for the purposes of
eligibility in the Workforce Pell Grant Program by Section 401(k)(2).
In effect, this means that an eligible student for the purposes of this
program is: (1) a student who meets all of the other eligibility
criteria in Section 401 (such as needs analysis); (2) has not earned a
graduate degree, is not admitted to a graduate program, nor is enrolled
in a graduate program; and (3) has not exhausted their lifetime Pell
Grant eligibility of 12 semesters (or its equivalent) under Section 401
(d)(5). As such, students who already have a bachelor's degree are not
disqualified from receiving Pell Grants for eligible workforce programs
on that basis alone.
During negotiated rulemaking the Department agreed to provide more

[[Page 11389]]

context regarding what constitutes a graduate credential in the
preamble of this NPRM. A graduate credential includes, but is not
limited to, a graduate degree such as a master's degree or doctoral
degree, a first-professional degree such as a Doctor of Medicine (MD),
Doctor of Dental Surgery (DDS), or Juris Doctor (JD), a graduate
certificate (including a postgraduate certificate), or another
professional credential that is above the undergraduate level. A
graduate credential does not include an undergraduate post-
baccalaureate certificate.
Although it is not directly relevant to the interpretive task of
construing the eligibility criteria in the OBBB related to the
Workforce Pell Grant, the Department believes that allowing students
with bachelor's degrees to be eligible to receive Pell Grant funds for
enrollment in an eligible workforce program is beneficial. The proposed
regulation allows otherwise eligible students with bachelor's degrees
who require new proficiencies in order to become employed in a new
high-skill, high-wage field with the ability to achieve this cost-
effectively and in a short period of time. Additionally, because other
applicable student eligibility requirements still apply--for example,
Lifetime Eligibility Used (LEU) limits on Pell Grant eligibility--the
Department believes appropriate safeguards are in place to ensure that
Pell Grant funds are not overutilized for this purpose. Under Sec.
690.6(e), LEU is the requirement that a student may receive no more
than 6 Scheduled Awards, as determined by the Secretary, which is
calculated as a percentage not to exceed 600 percent.
A negotiator also requested the Department add an overview of
satisfactory academic progress (SAP) requirements as they relate to
eligible workforce programs. Under Sec. 668.32(f) and Sec. 668.34, a
student is required to maintain SAP in his or her course of study
according to the eligible institution's published standards of SAP. The
Department is not proposing to change current SAP regulations, nor are
any changes to those regulations required as a result of the OBBB's
amendments to the HEA. For any program less than an academic year,
including all eligible workforce programs, eligible institutions must
evaluate a student's SAP at the end of each payment period. If the
eligible institution chooses to have a warning period,\2\ it is
possible for a student to receive all of their Pell Grant disbursements
for the entire eligible workforce program. Alternatively, an eligible
institution could choose not to have a warning period but to evaluate a
student's academic progress after each payment period; in that case, if
a student fails SAP at the end of the first payment period, the student
would be ineligible to receive any subsequent Pell Grant disbursements
unless they successfully appeal under the eligible institution's SAP
appeal policy.
---------------------------------------------------------------------------

\2\ 2025-26 Federal Student Aid Handbook, ch. 1,--(``Financial
aid warning is a status a school assigns to a student who is failing
to make SAP. The school reinstates eligibility for aid for one
payment period and may do so without a student appeal. This status
may only be used by schools that check SAP at the end of each
payment period and only for students who were making SAP in the
prior payment period for which they were enrolled or who were in the
first payment period of their program.'') Available at, <a href="https://fsapartners.ed.gov/knowledge-center/fsa-handbook/2025-2026/vol1/ch1-school-determined-requirements">https://fsapartners.ed.gov/knowledge-center/fsa-handbook/2025-2026/vol1/ch1-school-determined-requirements</a>.
---------------------------------------------------------------------------

Definitions (Sec. 690.2(c))

Duration of Student Eligibility (Sec. 690.6(a) and (f))

Statute: Section 401(k)(2)(B) of the HEA, as added by Section
83002(a) of the OBBB, states that a student is not eligible for a Pell
Grant for an eligible workforce program if that student is enrolled, or
accepted for enrollment, in a program of study that leads to a graduate
credential, or if the student that has obtained a graduate credential.
Current Regulations: Section 690.6(a) generally states that a
student is only eligible to receive a Pell Grant for the period of time
required to complete his or her first undergraduate baccalaureate
course of study.
Proposed Regulations: The proposed regulation exempts enrollment in
an eligible workforce program from the prohibition of a student having
already obtained a baccalaureate degree.
Reasons: This is a conforming change to align with Sec. 668.32(c),
to ensure consistency and alignment throughout the CFR. As discussed in
detail in the Student eligibility (Sec. 668.32(c)) section of this
preamble, the Department interprets the statutory text to allow an
individual with a bachelor's degree to receive a Pell Grant to enroll
in an eligible workforce program because Section 401(k)(2)(B) of the
HEA, amended by Section 83002(a) of the OBBB, only explicitly prohibits
enrolling in or obtaining a credential in a graduate level program.
During negotiated rulemaking, a negotiator requested that the
Department inform each student enrolling in an eligible workforce
program about their LEU at specific percentages. The Department has
considered the negotiator's suggestion but declines to implement it for
two reasons. First, the Department already provides information on LEU
to all students, so a disclosure specific to eligible workforce
programs is not necessary. Comments on the FAFSA Submission Summary
inform students of their approximate Pell Grant usage at 50 percent
intervals. For example, a student between 100 percent and 150 percent
would see a comment reading ``The limit to the total amount of Federal
Pell Grants that a student may receive is the equivalent of six school
years. Based upon information reported to the National Student Loan
Data System (NSLDS[supreg]) database by the schools you have attended,
you have received Pell Grants for the equivalent of between one and one
and one-half years.'' Second, the Department is concerned that a
disclosure such as this could be perceived as a warning to students not
to enroll or continue in his or her program, rather than solely an
indication of the amount of LEU the student has remaining. The
Department prefers that students work directly with their institution's
financial aid office regarding their Federal financial aid eligibility.
However, the Department committed to providing additional guidance to
the community about ensuring that students who enroll in eligible
workforce programs receive clear and accurate information that Pell
Grants they receive for enrollment in such programs count against their
lifetime limits.

Federal Pell Grant Payments From More Than One Institution (Sec.
690.11)

Statute: Section 401(k)(4) of the HEA, as added by Section 83002(a)
of the OBBB, states an eligible student cannot

[[Page 11390]]

receive a Pell Grant for enrollment in an eligible workforce program
and for enrollment in another eligible program at the same time.
Current Regulations: Current Sec. 690.11 states that a student is
not entitled to receive Pell Grant payments concurrently from more than
one eligible institution or from the Secretary and an eligible
institution.
Proposed Regulations: The proposed regulations clarifies that a
student is not entitled to receive Pell Grant payments concurrently for
enrollment in an eligible workforce program and any other educational
program at the same or a different eligible institution, including
another eligible workforce program.
The proposed regulations also update the title of this section to
``Concurrent Federal Pell Grant payments''.
Reasons: This language implements the statutory prohibition on a
student receiving a Pell Grant for enrollment in an eligible workforce
program and for enrollment in another eligible program at the same
time.

Scope and Purpose (Sec. 690.90)

Statute: Section 401(k)(1) of the HEA, added by Section 83002(a) of
the OBBB, states that beginning on July 1, 2026, and each subsequent
year, the Secretary shall award Pell Grants to eligible students
enrolled in eligible workforce programs, in the same manner and with
the same terms and conditions as the Secretary awards Pell Grants to
eligible students enrolled in other eligible programs. Section
481(b)(3), as added by Section 83002(b) of the OBBB, defines the
requirements for an educational program offered by an eligible
institution to be considered an eligible workforce program, which
differ from the requirements to be considered an eligible program for
the purposes of participation in other title IV, HEA programs set forth
in Section 481(b) of the HEA.
Current Regulations: None.
Proposed Regulations: We propose adding a scope and purpose section
to 34 CFR 690 Subpart H that will apply to eligible institutions that
offer eligible workforce programs. In this section, we clarify that an
eligible student enrolled in an eligible workforce program is only
eligible for Federal financial assistance under the Pell Grant Program
and no other title IV, HEA programs. In other words, students who
enroll in an eligible workforce program are not eligible for Direct
Loans, a Federal Supplemental Educational Opportunity Grant, Federal
Work Study, or other forms of title IV assistance. Furthermore, this
section clarifies that, as provided in this subpart, eligible students
and eligible institutions that offer Pell Grants to students enrolled
in eligible workforce programs are subject to the same regulations and
procedures that otherwise apply to title IV, HEA program participants.
Reasons: Every subpart in 34 CFR starts with a scope and purpose
section to establish the legal boundaries, intent, and application of
the regulations in that subpart, defining what is covered and why the
regulations exist. Therefore, we have included a scope and purpose for
this new subpart.
In particular, this scope and purpose section highlights the fact
that under these proposed rules, a student enrolled in an eligible
workforce program would only be eligible for a Pell Grant and would not
qualify for any other assistance under title IV of the HEA (such as
Direct Loans, a Federal Supplemental Educational Opportunity Grant, and
Federal Work Study) on the basis of enrollment in that program. Section
481(b) of the HEA sets forth the requirements for an educational
program to be considered an eligible program for the purpose of
participation in the title IV, HEA programs, including minimum length
requirements. HEA Section 481(b)(3), added by Section 83002(b)of the
OBBB, imposes specific requirements for an educational program to be
considered an eligible workforce program which differ from those
applicable to other eligible programs.
While an educational program has to satisfy a different set of
requirements to be considered an eligible workforce program than it
must satisfy in order to be considered an eligible program for the
purpose of the other the title IV, HEA programs, it is technically
possible that an educational program could satisfy the statutory
requirements for both an eligible workforce program and eligible
program. Specifically, some educational programs of a duration of 300
and 599 clock hours could satisfy the statutory requirements to be both
an eligible workforce program and eligible program for the purposes of
the Direct Loan program authorized under part B of title IV of the HEA.
In such situations, the Department proposes to require an institution
to offer such programs as either an eligible workforce program or an
eligible program for the purposes of the Direct Loan program, but not
both.
The Department takes this position for several reasons. First, the
Department believes that allowing programs that include between 300 and
599 clock hours to qualify for both the Pell Grant and Direct Loan
programs would run counter to the intent of the statutory provisions of
Workforce Pell. Those provisions build on an existing framework for
funding job training programs under the Workforce Innovation and
Opportunity Act (WIOA), whereby participants enrolling in programs
under WIOA choose a program from a State's Eligible Training Provider
List (ETPL) and can then qualify for funding to enroll in that program
through Individual Training Accounts (ITAs). Under this framework, an
eligible workforce program that is included on a State's ETPL would, in
many cases, allow students who qualify for Pell Grants to fund their
programs fully or partially through that resource, while funding gaps
for students whose Pell Grants do not fully cover training expenses, or
students who do not qualify for Pell Grants, are addressed through ITAs
under WIOA. In cases where these two sources of funding would be
available to students enrolled in eligible workforce programs, many
students would not need Direct Loan funds to cover their cost of
attendance. Indeed, in some of those cases students would not even
qualify for Direct Loans if amounts received from these other sources
fully covered the student's cost of attendance. Second, although it is
technically possible for a short-term program that qualifies for Direct
Loans to also comply with the requirements for an eligible workforce
program, adding the Department's proposed regulations for eligible
workforce programs on top of those required for Direct Loans would
result in two entirely different frameworks for the calculation of
completion and placement rates for students in the programs depending
on each title IV, HEA program funding source. Moreover, institutions
wishing to qualify an educational program that provides between 300 and
599 clock hours for eligibility for students to receive funding under
both title IV, HEA programs would be subject to a burdensome and
complex array of completion and placement rate requirements. It would
require one set as mandated for Direct Loan eligibility that is
calculated entirely by the institution and substantiated by non-federal
auditors, and one set required for eligible workforce program
eligibility, as described in Components determined by the Secretary
(Sec. 690.94(c)), that is calculated either solely by the State
Governor or by the institution and the Governor. The Department
believes that the burden and complexity (for institutions, auditors,
and the Department) that would be associated with applying the

[[Page 11391]]

requirements for both title IV, HEA programs at the same time would not
be justified by the resulting value of permitting qualification for
both programs to institutions, students, and taxpayers.
This section also clarifies that eligible workforce programs are
subject to all other title IV eligibility requirements, consistent with
OBBB, unless the Department specifically notes in the regulations that
the program is exempt from such requirement. For example (as discussed
in Written arrangements to provide educational programs (Sec.
668.5(c)), we propose that an eligible institution offering an eligible
workforce program is prohibited from entering into a written
arrangement with an ineligible institution or organization whereby the
ineligible institution or organization would provide more that 25
percent of the eligible workforce program.

Definitions--Cohort Period (Sec. 690.91)

Statute: Section 481(b)(3)(B) of the HEA, added by Section 83002(b)
of the OBBB, states that for each award year, the total amount of the
published tuition and fees of an eligible workforce program for such
year may not exceed the ``value-added earnings'' of students who
received Federal financial aid and who completed the program 3 years
prior to the award year. An eligible workforce program's value-added
earnings are determined by calculating the difference between the
median earnings of such students (as adjusted by the State and
metropolitan area regional price parities of the Bureau of Economic
Analysis based on the location of such program) and an amount that is
equal to 150 percent of the poverty line applicable to a single
individual (as determined under Section 673(2) of the Community
Services Block Grant Act (42 U.S.C. 9902(2)) for such year).
Current Regulations: None.
Proposed Regulations: The proposed regulations define the cohort
period as the award year that ends three full award years prior to the
beginning of the award year for which value-added earnings are being
determined.
Reasons: The proposed regulations implement the statutory
requirement that the cohort for the value-added earnings calculation is
``. . .students who received Federal financial aid under this title and
who completed the program 3 years prior to the award year. . .''. For
context, the Department will request the median earnings from the
Federal agency with earnings data for individuals who completed the
eligible workforce program and received a Pell Grant during the cohort
period to complete the value-added earnings calculation (see the
discussion under Sec. 690.95 for more information).
Section 481(b)(3)(A)(iv)(IV) states that the value-added earnings
metric is calculated using the earnings of Pell Grant recipients who
``received Federal financial aid under this title and who completed the
program 3 years prior to the award year'' from eligible workforce
programs. It is not possible to calculate value-added earnings for a
program that has not yet become eligible because no students could have
received Federal financial aid to attend a program that is not yet an
eligible program. Therefore, the Department interprets the statute to
mean that the value-added earnings metric only becomes relevant once
individuals have graduated from an eligible workforce program and
enough time has passed to calculate the value-added earnings.
During negotiated rulemaking, several non-Federal negotiators
requested that the Department stress in regulation that the cohort
period only include individuals that completed the eligible workforce
program three ``full'' award years prior to the current award year.
Negotiators believed that unless the Department defined the cohort
period in this way, we could have included the earnings of individuals
that completed the program but, their earnings would not reflect the
full impact of having participated in an eligible workforce program. By
establishing a cohort period that is three full award years prior to
the current award year, we ensure that a program completer has an
amount of time between the completion of the eligible workforce program
and obtaining a job that that appropriately captures corresponding
increases in income associated with completion of the program. This
also means that the 2030-31 award year is the first time the value-
added earnings measure can be calculated for programs that begin in the
2026-27 award year due to the fact that such programs will first
receive Pell Grants during the 2026-27 award year. The Department
ultimately accepted the negotiators' reasoning and adopted the change.

Definitions--Earnings Measurement Period (Sec. 690.91)

Statute: Section 481(b)(3)(B) of the HEA, as added by Section
83002(b) of the OBBB, states that the value-added earnings for an
eligible workforce program are determined by calculating the difference
between the median earnings of such students, as adjusted by the State
and metropolitan area regional price parities of the Bureau of Economic
Analysis based on the location of such program, and 150 percent of the
poverty line applicable to a single individual as determined under
Section 673(2) of the Community Services Block Grant Act (42 U.S.C.
9902(2)) for such year.
Current Regulations: None.
Proposed Regulations: The proposed regulations define an earnings
measurement period for the value-added earnings calculation as the
first full tax year following the award year in which the student
completed the eligible workforce program.
Reasons: The proposed regulation implements the statutory
requirement that the Department obtain median earnings for eligible
workforce program completers. The Department originally proposed to
obtain from the Federal agency with earnings data ``[t]he median
earnings of such students during the most recent tax year for which
data is available at the time of the calculation, as adjusted by the
State and metropolitan area regional price parities of the Bureau of
Economic Analysis based on the location of such programs.'' \3\ The
Department did not define an earnings measurement period in the
original proposal sent to negotiators. During negotiated rulemaking,
one negotiator asserted that the Department needs to more clearly
define the specific tax year for which we would obtain median earnings
of eligible workforce program completers, which does not need to be the
same tax year for all completers. Another negotiator believed that the
tax year in question should be the first full tax year following the
award year in which the student completed the eligible workforce
program. That timeframe would allow the evaluation of earnings for one
full working year after having participated in the eligible workforce
program. The negotiator noted that if the Department uses the earnings
information from the tax year in which the individual completed the
eligible workforce program, it may not be indicative of a full year of
earnings potential of the completer. The Department ultimately agreed
with the negotiator's assertion that using earnings from the first full
tax year following the award year in which the student completed the
program is consistent with the statute.
---------------------------------------------------------------------------

\3\ Dep't of ED, AHEAD Negotiated Rulemaking Discussion Draft
and Draft Amendatory Text, (December 2025), available at--<a href="https://www.ed.gov/media/document/2025-ahead-discussion-draft-112625.pdf">https://www.ed.gov/media/document/2025-ahead-discussion-draft-112625.pdf</a>.
---------------------------------------------------------------------------

Thus, the proposed regulation defines it here for two reasons: (1)
to ensure that all students would have a year's worth of earnings and
(2) to clarify the point

[[Page 11392]]

at which the Department is able to perform the value-added earnings
calculation after receiving the proper tax information from the Federal
agency with earnings data.
In our illustrative example from the prior section (Definitions--
Cohort period), the cohort period for the 2030-31 award year includes
completers who graduated during the 2026-27 award year. The 2026-27
award year ends June 30, 2027. The first full tax year following the
award year is the 2028 tax year (January 1, 2028, through December 31,
2028), therefore, the 2028 tax year is tax year for which the
Department would request earnings information for and use as the basis
for calculating the program's value-added earnings.

Definitions--In-Demand Industry Sector or Occupation (Sec. 690.91)

Statute: Section 481(b)(3)(B) of the HEA, as added by Section
83002(b) of the OBBB, states that the term in-demand sector or
occupation has the meaning given in Section 3 of WIOA. Section 3 of
WIOA defines that term to mean (i) an industry sector that has a
substantial current or potential impact (including through jobs that
lead to economic self-sufficiency and opportunities for advancement) on
the State, regional, or local economy, as appropriate, and that
contributes to the growth or stability of other supporting businesses,
or the growth of other industry sectors; or (ii) an occupation that
currently has or is projected to have a number of positions (including
positions that lead to economic self-sufficiency and opportunities for
advancement) in an industry sector so as to have a significant impact
on the State, regional, or local economy, as appropriate.
Current Regulations: None.
Proposed Regulations: The proposed regulation defines an in-demand
industry sector or occupation identically to how that term is defined
in Section 3 of WIOA.
Reasons: The Department is required by law to use the definition of
in-demand industry sector or occupation as defined under WIOA. This
definition will be used by Governors to decide whether or not to
approve a program under Sec. 690.93. We use the term ``in-demand
industry sector or occupation'' under Sec. 690.93(a)(1), which states
that an eligible workforce program is (in part) a program that
``provides an education aligned with the requirements of high-skill,
high-wage (as identified by the State pursuant to Section 122 of the
Carl D. Perkins Career and Technical Education Act (20 U.S.C. 2342)),
or in-demand industry sectors or occupations[.]'' The Department also
proposes using the term in Sec. 690.93(b)(1)(ii) which states that a
Governor must have a written policy for determining whether a program
meets the hiring requirements of employers in an in-demand sector or
occupation and that the program prepares students for such employment.

Definitions--Governor (Sec. 690.91)

Statute: Section 481(b)(3)(B) of the HEA, as added by Section
83002(b) of the OBBB, states that Governor means the chief executive of
a State. Section 103 of the HEA defines State to mean ``in addition to
the several States of the United States, the Commonwealth of Puerto
Rico, the District of Columbia, Guam, American Samoa, the United States
Virgin Islands, the Commonwealth of the Northern Mariana Islands, and
the Freely Associated States.'' Section 103 of the HEA further defines
Freely Associated States to mean ``the Republic of the Marshall
Islands, the Federated States of Micronesia, and the Republic of
Palau.''
Current Regulations: None.
Proposed Regulations: We propose to define Governor as (1) the
chief executive of a State or outlying area as defined under Section 3
of WIOA or (2) if an eligible institution is located on Tribal lands,
the Tribal government.
Reasons: To the extent possible, the Department has sought to align
eligible workforce programs with pre-existing definitions and concepts
under WIOA; therefore, we have proposed to use the definition of
Governor under WIOA. The Governor's approval is the first step in the
full approval process for an eligible workforce program.
The chief executive of a State is the governor of one of the 50
States and mayor of the District of Columbia. The chief executive of an
outlying area is the highest public official in the U.S. Virgin
Islands, Guam, American Samoa, the Northern Mariana Islands, and the
Republic of Palau.
Traditionally, for purposes of the title IV, HEA programs, Tribes
have had autonomy to make decisions regarding the authorization of
postsecondary eligible institutions. See 34 CFR 600.9(a)(2)(ii). The
proposed language would provide Tribes the ultimate authority over
determinations of approved programs. Tribes would still need to consult
with the State board, as required under proposed Sec. 690.93(a) in
order to approve the program. The Department believes this compromise
achieves the goal of maintaining Tribal sovereignty over these
decisions while also ensuring State boards are consulted as required by
the statute.
A governor can designate a public official in the State or outlying
area, including someone at the State workforce or education department,
the State agency overseeing workforce programs to make approval
decisions on behalf of the governor. A governor must inform the
Department of the designated office through a process as determined by
the Secretary.

Definitions--Recognized Postsecondary Credential (Sec. 690.91)

Statute: Section 481(b)(3)(B) of the HEA, added by Section 83002(b)
of the OBBB, states that ``recognized postsecondary credential'' has
the meaning given in Section 3 of WIOA.
Current Regulations: None.
Proposed Regulations: We propose to define ``recognized
postsecondary credential'' as a credential consisting of an industry-
recognized certificate or certification, a certificate of completion of
a Registered Apprenticeship under 29 CFR part 29, a license recognized
by the State involved or Federal Government, or an associate or
baccalaureate degree.
Reasons: The training and instruction that an apprentice receives
through a Registered Apprenticeship program are designed to provide
them with the knowledge necessary to obtain a license. Additionally,
the Department is required by law to use the definition of a recognized
postsecondary credential as contained in WIOA; however, we amended the
definition based on the recommendation of a negotiator, adding the word
``Registered'' in front of apprenticeship. 29 CFR part 29 establishes
the procedures for an apprenticeship to be registered with the
Department of Labor's Office of Apprenticeship, and the two terms are
synonymous under the WIOA statute and regulations. Therefore, the
Department agreed with the rulemaking committee that a certificate, as
defined under 29 CFR 29.2, that a student receives from a Registered
Apprenticeship would be a recognized postsecondary credential.
A negotiator also requested that the Department clarify the portion
of the definition that states a recognized postsecondary credential can
be ``a license recognized by the State involved or Federal
Government.'' For context, the ``recognized postsecondary credential''
is a part of the Governor's approval process of the program under Sec.
690.93(a)(3). The Governor must ensure that the program either (1)
leads to a recognized postsecondary credential that is stackable and
portable across more than one employer; or (2) prepares students for
employment in an occupation for which there is only one

[[Page 11393]]

recognized postsecondary credential and provides students with such a
credential upon completion of the program.
Several elements of this definition warrant additional discussion.
Under the definition of an ``educational program'' in 34 CFR 600.2, in
order to qualify for any type of title IV, HEA program funds, a program
must lead to ``an academic, professional, or vocational degree, or
certificate, or other recognized educational credential . . .'' This
credential may not be the same as the ``recognized postsecondary
credential'' conferred upon completion of both educational requirements
and non-academic requirements such as on-the-job training, work
experience, or a licensure exam. The Department understands that
licensure for employment in an occupation generally is not granted by
the eligible institution upon completion of a program. Instead,
licensure is typically granted by a Federal, State or local government,
licensure body, or association, and the education a student receives as
part of an eligible program may meet only the educational requirements
for a license. Similarly, a Registered Apprenticeship program requires
a related instruction component that may be met by an eligible
workforce program, but the program also requires a substantial amount
of on-the-job learning with an employer, which may occur over several
years. In these cases where the education included in an eligible
workforce program meets the educational requirements for a recognized
postsecondary credential but does not meet all the requirements for
such a credential, the program nonetheless fulfills the requirement to
lead to a recognized postsecondary credential under proposed 34 CFR
690.93(a)(3)(i). This is because it is necessary to obtain the
educational component in order to obtain licensure. Additional
discussion of this concept as it pertains to Registered Apprenticeship
programs can be found under the section Components determined by
Governors (Sec. 690.93(g)).

Definitions--State Board (Sec. 690.91)

Statute: Section 481(b)(3)(B) of the HEA, as added by Section
83002(b) of the OBBB, states that State board has the meaning given in
Section 3 of WIOA.
Current Regulations: None.
Proposed Regulations: We propose to define State board to mean the
State workforce development board established under Section 101 of WIOA
and 20 CFR 679 Subpart A.
Reasons: The Department is required by Section 481(b)(3)(B) of the
HEA, added by Section 83002(b) of the OBBB, to use the definition of
State board as contained in WIOA. The Governor would be required to
consult with the State board in making his or her decision whether to
approve a workforce program. Ultimately, the Governor would need to
attest to having consulted with the State board on the certification
form developed by the Secretary.
Additionally, we propose making a technical correction due to the
incorrect cross-reference. The consensus language referenced 34 CFR 679
Subpart A, but the correct reference here is 20 CFR 679 Subpart A. We
have made that technical correction in the amendatory language.

Definitions--Tuition and Fees (Sec. 690.91)

Statute: Section 481(b)(3)(A)(iv)(IV) of the HEA, as added by
Section 83002(b) of the OBBB, states that for each award year, the
total amount of the published tuition and fees of the program for such
year is an amount that does not exceed the value-added earnings of
students who received Federal financial aid and who completed the
program 3 years prior to the award year.
Current Regulations: None.
Proposed Regulations: We propose to define tuition and fees to mean
the institutional charges for an eligible workforce program.
Reasons: As set forth above, Section 481(b)(3)(A)(iv)(IV) of the
HEA, added by Section 83002(b) of the OBBB, limits the total amount of
tuition and fees that an eligible institution may charge to students
enrolled in an eligible workforce program. Therefore, it is necessary
for the Department to define what constitutes tuition and fees. The
Department chose to define tuition and fees to mean ``the institutional
charges for an eligible workforce program'' because such charges
include those direct education related costs which must be paid to the
institution for enrollment in an educational program. Institutional
charges do not include living expenses such as food, housing, and
transportation. The concept of ``institutional charges'' has a long
regulatory history and has applications throughout the general
provisions regulations for the title IV, HEA programs and will be
understandable to financial aid staff at schools who are accustomed to
the concept.\4\ The concept of ``institutional charges'' also has the
advantage of including most fees charged by institutions, but excluding
discretionary expenses that such as tickets to concerts or athletic
events. Discretionary expenses are not fixed nor are they controlled by
the institution, so such expenses would not be considered as part of an
institution's compliance with the value-added earnings calculation. We
note that the concept of institutional charges traditionally includes
food and housing if contracted with the institution; however, for
purposes of this definition we are only referring to the published
tuition and fee portion of institutional charges associated with the
eligible workforce program. This is because the statute refers to
tuition and fees, which ordinarily means costs for the educational
services provided by the institution.
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\4\ Federal Student Aid Handbook--Volume 4, Chapter 2--<a href="https://fsapartners.ed.gov/knowledge-center/fsa-handbook/2025-2026/vol4/ch2-disbursing-title-iv-funds">https://fsapartners.ed.gov/knowledge-center/fsa-handbook/2025-2026/vol4/ch2-disbursing-title-iv-funds</a>.
---------------------------------------------------------------------------

As set forth in Sec. 690.94(d), on a yearly basis, the Secretary
must confirm that each eligible workforce program complies with the
requirement that the program's published tuition and fees do not exceed
the value-added earnings of the eligible workforce program. To enable
the Secretary to make this determination, under proposed Sec.
690.94(b)(2), the eligible institution would be required to report the
published tuition and fees for an eligible workforce program. To
collect information regarding tuition and fees charged by the eligible
institution to students for enrollment in an eligible workforce
program, the Department may be able to utilize the reporting
requirements under the current regulations at Sec. 668.408(a)(2)(vi)
or our consensus language from the Student Tuition and Transparency
System (STATS) and Accountability rulemaking at Sec.
668.406(a)(2)(iv). The Department will provide sub-regulatory guidance
to institutions on the reporting of tuition and fees. Additionally,
under proposed Sec. 690.95(f), the eligible institution must provide,
upon request, evidence satisfactory to the Secretary that its published
tuition and fees do not exceed the published value-added earnings for
that award year.

Eligible Workforce Program--Program Length Limitations (Sec. 690.92(a)
and (b)

Statute: Section 481(b)(3)(A) of the HEA, as added by Section
83002(b) of the OBBB, states that an eligible workforce program must be
at least 150 clock hours of instruction, but less than 600 clock hours
of instruction, or an equivalent number of credit hours and be offered
by an eligible institution during a minimum of 8 weeks, but less than
15 weeks.
Current Regulations: None.
Proposed Regulations: The proposed regulation establishes the
minimum and

[[Page 11394]]

maximum program length for an eligible workforce program. We propose to
require an eligible workforce program to have a duration of between 8
to 14 weeks of instruction. For a program offered in clock hours, we
propose to require an eligible workforce program to be between 150 to
599 clock hours. For a program offered in credit hours, we propose to
require an eligible workforce program to be between 4 to 15 semester or
trimester hours or between 6 to 23 quarter hours.
Reasons: The Department proposes these limitations because Section
481(b)(3)(A) of the HEA, as added by Section 83002(b) of the OBBB,
explicitly restricts the types of academic progress measurements for
eligible workforce programs to credit and clock hours and establishes
clear limits on both the length of time in which an eligible workforce
program can be offered and the number of credit or clock hours that may
be included in such program.
Rather than explicitly provide the amount of credit hours that may
be included in an eligible workforce program, the statutory language
states that a program offered in credit hours must be the equivalent of
least 150 clock hours of instruction, but less than 600 clock hours of
instruction. Section 481(b) of the HEA, when establishing minimum
requirements for credit or clock hours in eligible programs, has done
so using ratios of 37.5 clock hours to each semester hour and 25 clock
hours to each quarter hour. Therefore, to determine the minimum and
maximum number of credit hours for an eligible workforce program, we
divided 150 and 599 by 37.5 for programs that use semester and
trimester hours and by 25 for programs that use quarter hours. This
method is also consistent with established instructional measurement
equivalencies under Sec. 668.8(d)(1)(ii) and (d)(2)(ii). Therefore,
the equivalent number of credit hours for 150 to 599 clock hours is 4
to 15 semester or trimester hours or 6 to 23 quarter hours.
During negotiated rulemaking, several negotiators requested that
the Department expand the duration of an eligible workforce program
beyond 14 weeks. The Department noted that the statute is clear that
the duration of an eligible workforce program is a minimum of 8 weeks,
but less than 15 weeks. In other words, a program cannot last or exceed
15 weeks, therefore, the Department is proposing a 14-week maximum
duration. The Department lacks the statutory authority to further
extend the maximum allowable length of a program.
For all eligible programs, ``a week of instructional time'' is
defined in two ways under 34 CFR 668.3(b). The term can mean any period
of seven consecutive days in which at least one day of regularly
scheduled instruction or examinations occurs, or, after the last
scheduled day of classes for a term or payment period, at least one
scheduled day of study for examinations occurs. For a program offered
using asynchronous coursework, it can also mean any period of seven
consecutive days in which the institution makes available the
instructional materials, other resources, and instructor support
necessary for academic engagement and completion of course objectives.
This period must also be one in which the institution expects enrolled
students to perform educational activities demonstrating academic
engagement during the week. The Department proposes, for purposes of
consistency and integrity in the title IV, HEA programs, to use this
definition in the context of eligible workforce programs. The HEA, as
amended by the OBBB, does not require a program to run for a sequential
time period, therefore, it is acceptable for an eligible workforce
program to have non-sequential weeks of instructional time, as defined
in the previous paragraph. The program would be considered an eligible
workforce program as long as the weeks of instructional time used to
determine the students' Pell Grant eligibility do not exceed a total of
14 weeks. For example, non-sequential weeks of coursework that occur
over a year but only include 14 weeks of instructional time (as defined
under 34 CFR 668.3(b)) applicable to the student's Pell Grant
eligibility is acceptable.
We also understand that in rare instances some students may take
slightly longer than 14 weeks of instructional time to complete their
eligible workforce program. This could be due to illness or other
unforeseen circumstances in the student's life. An individual student
may take longer than the published duration of the eligible workforce
program; however, this cannot be the norm for most students. If most
students in the program take more than 14 weeks of instructional time
to complete the program, then the program is not less than 15 weeks of
instructional time, and the school's program length must be adjusted
accordingly. This ensures that institutions are not able to circumvent
the maximum length requirement by declaring a course to be 14 weeks or
less, when in practice it takes most students longer than that to
complete it. At the same time, this approach provides flexibility such
that institutions may provide flexible arrangements to students who
have difficult life circumstances unrelated to the course.

Eligible Workforce Program--Prohibition on Offering Correspondence
Courses, Study Abroad, and Direct Assessment Coursework (Sec.
690.92(c))

Statute: Section 481(b)(3)(A)(ii) of the HEA, as amended by Section
83002(b) of the OBBB, states that `` a program is an eligible program
for purposes of the Workforce Pell Grant program under section 401(k)
only if it is not offered as a correspondence course. . .''. Section
401(k)(3)(B) of the HEA, as added by Section 83002(a) of the OBBB,
provides that the provisions of subsection (d)(2) of the same section,
which allow for the consideration of study abroad coursework in Pell
Grant eligibility calculations, shall not be applicable to eligible
workforce programs. Section 481(b)(3)(A) of the HEA, added by Section
83002(b) of the OBBB, outlines what makes a workforce program eligible
for Pell Grant funds. Section 481(d) of the HEA provides that the term
``eligible program'' includes an instructional program that, in lieu of
credit hours or clock hours as the measure of student learning,
utilizes direct assessment of student learning or the direct assessment
of student learning by others.
Current Regulations: None.
Proposed Regulations: The proposed regulation prohibits an eligible
workforce program from offering correspondence courses, coursework as
part of a study abroad program, or credit or clock hour equivalencies
that are part of a direct assessment program.
Reasons: The Department believes that the statute explicitly
prohibits eligible workforce programs from offering correspondence
courses and study abroad coursework. Section 481(b)(3)(A)(ii) of the
HEA, as amended by Section 83002(b) of the OBBB, states that ``a
program is an eligible program for purposes of the Workforce Pell Grant
program under section 401(k) only if it is not offered as a
correspondence course. . .''. In addition, Section 401(k)(3)(B) of the
HEA, as amended by Section 83002(a) of the OBBB, states that ``the
provisions of subsection (d)(2) shall not be applicable to eligible
workforce programs.'' Section 401(d)(2) of the HEA allows study abroad
programs to receive Pell Grants, but since this provision is excluded
for eligible workforce programs, this means eligible workforce programs
are prohibited from offering study abroad. Furthermore, although direct
assessment programs are required to

[[Page 11395]]

maintain a clock or credit hour equivalence, they do not measure
academic progress in credit or clock hours, and therefore an eligible
workforce program is not permitted to offer direct assessment
coursework. As stated in 34 CFR 668.10, an eligible institution must
establish a methodology to reasonably equate each module in the direct
assessment program to either credit hours or clock hours. We do not
believe academic progress can be measured in a sufficiently uniform way
in direct assessment coursework to comply with the statute and thus
would not permit such coursework in an eligible workforce program.

Eligible Workforce Program--Requirements for Approval by the Governor
(Sec. 690.92(d))

Statute: Section 481(b)(3)(A)(iii) of the HEA, as added by Section
83002(b) of the OBBB, states that the Governor of a State determines
whether a program meets certain requirements to qualify as an eligible
workforce program.
Current Regulations: None.
Proposed Regulations: The proposed regulation requires that an
eligible workforce program be approved by the Governor of a State
through a process meeting the requirements under Sec. 690.93.
Reasons: Section 481(b)(3) of the HEA, added by Section 83002(b) of
the OBBB, explicitly states that the Governor of a State, after
consultation with the State board, shall determine whether a program
meets certain requirements to qualify as an eligible workforce program.
States have a major role in the program approval process because they
are well positioned to identify high-skill, high-wage, and in-demand
sectors or occupations needed within the State and understand the
hiring requirements of employers within these industries and
occupations. The Department interprets this text to mean that the
Governor of a State must approve each eligible workforce program. For
more information on the Governor's approval process, see Sec. 690.93
of the Significant Proposed Regulations section.

Eligible Workforce Program--Requirements for Approval by the Secretary
(Sec. 690.92(e))

Statute: Section 481(b)(3)(A)(iv) of the HEA, as added by Section
83002(b) of the OBBB, states that after the Governor of a State
determines that a program meets certain requirements, the Secretary
shall determine whether the program meets other conditions to be
considered an eligible workforce program.
Current Regulations: None.
Proposed Regulations: The proposed regulation requires that an
eligible workforce program meet the requirements established by the
Secretary as described in Sec. 690.94. The proposed regulations
outline the requirements an eligible workforce program must meet, as
follows. The program must be offered by an eligible institution and
must exist for at least 12 months before the Secretary determines
whether the program qualifies as an eligible workforce program. The
program must have a verified completion rate of at least 70 percent
each award year, within 150 percent of the normal time for completion.
The program must have a verified job placement rate of at least 70
percent each award year, measured 180 days after completion. The total
amount of the published tuition and fees of the program for such year
is an amount that does not exceed the value-added earnings of students
who received Federal financial aid under this title and who completed
the program 3 years prior to the award year. Earnings are determined by
calculating the difference between the median earnings of such
students, as adjusted by the State and metropolitan area regional price
parity of the Bureau of Economic Analysis based on the location of such
program, and 150 percent of the poverty line for a single individual
for the appropriate tax year.
Reasons: Section 481(b)(3) of the HEA, as added by Section 83002(b)
of the OBBB, explicitly states that after the Governor of a State
determines that a program meets the requirements, then the Secretary
determines if the program meets other conditions to be considered an
eligible workforce program. The Department interprets this text to mean
that the Secretary must approve each eligible workforce program. For
more information on the Secretary's approval process, see section Sec.
690.94 of the Significant Proposed Regulations section.

Eligible Workforce Program--Value-Added Earnings (Sec. 690.92(f))

Statute: Section 481(b)(3)(A)(iv)(IV) of the HEA, as added by
Section 83002(b) of the OBBB, states that for each award year, the
total amount of the published tuition and fees of an eligible workforce
program for such year is an amount that does not exceed the value-added
earnings of students who received Federal financial aid under this
title and who completed the program 3 years prior to the award year.
Current Regulations: None.
Proposed Regulations: The proposed regulation requires that an
eligible workforce program comply with the annual value-added earnings
requirements described under Sec. 690.95.
Reasons: Section 481(b)(3)(A)(iv)(IV) of the HEA, as added by
Section 83002(b) of the OBBB, states that ``. . . for each award year,
the total amount of the published tuition and fees of the program for
such year is an amount that does not exceed the value-added earnings of
students who received Federal financial aid under this title and who
completed the program 3 years prior to the award year.'' For more
information on the value-added earnings requirements, see section Sec.
690.95 of the Significant Proposed Regulations section.

Eligible Workforce Program--Limitations Due to Actions Taken by the
Secretary (Sec. 690.92(g))

Statute: Section 487 of the HEA allows the Department to establish
criteria for eligible institutions to follow as part of the eligible
institution's PPA to participate in the title IV, HEA programs.
Current Regulations: None.
Proposed Regulations: The proposed regulation prohibits eligible
institutions from offering an eligible workforce program if they have
been subject to any suspension, emergency action, or termination of
programs during the five years preceding the date of the determination.
Reasons: Eligible institutions that have faced suspension,
emergency action, or termination of programs within the past five years
are at a higher risk for compliance issues because they have had
compliance issues in the past. Allowing these eligible institutions to
offer eligible workforce programs has a higher likelihood of exposing
students to programs that may not meet quality or financial
responsibility standards. This limitation has been used in other
programs, for example, the prison education program under Sec.
668.236(a)(5)(i), to safeguard program integrity and protect students
and Federal funds.

Components Determined by Governors (Sec. 690.93(a))

Statute: Section 481(b)(3)(A)(iii) of the HEA, added by Section
83002(b) of the OBBB, states that after consultation with the
appropriate State board, the Governor must approve the program.
Current Regulations: None.
Proposed Regulations: The proposed regulation requires that prior
to the Secretary's review of compliance with

[[Page 11396]]

statutory and regulatory requirements to be an eligible workforce
program, the Governor, after consultation with the State board,
approves the program to be offered to students in that State. The
Governor would approve the program by determining that the program
meets the four statutory criteria in a sequence to be determined by the
Governor. The Governor would determine that the program provides an
education aligned with the requirements of high-skill, high-wage (as
identified by the State pursuant to section 122 of the Carl D. Perkins
Career and Technical Education Act (20 U.S.C. 2342)), or in-demand
industry sectors or occupations. The Governor would also examine the
program to determine if it meets the hiring requirements of potential
employers in the relevant sectors or occupations. The Governor would
ensure that the program either (1) leads to a recognized postsecondary
credential that is stackable and portable across more than one
employer, or (2) prepares such students for employment in an occupation
for which there is only one recognized postsecondary credential and
provides such students with such a credential upon completion of the
program. The Governor would ensure that the program prepares students
to pursue one or more certificate or degree programs at one or more
eligible institutions (which may include the eligible institution
providing the program), including by ensuring that a student, upon
completion of the program and enrollment in such a related certificate
or degree program, receives academic credit for the program that will
be accepted toward meeting such certificate or degree program
requirements.
Reasons: This section very closely mirrors the statute, with minor,
non-substantive technical edits to account for regulatory formatting.
The Department contemplated providing additional regulatory context to
the statutory framework in the HEA; however, ultimately, we decided
against doing so in Sec. 690.93(a). We believe that Governors may be
currently implementing several of the requirements enumerated in the
proposed regulations through other programs in their States authorized
under the Carl D. Perkins Career and Technical Education Act of 2006
(Perkins V) and WIOA; therefore, the Department proposes to provide
Governors the flexibility to establish policies that best serve
students in their specific States. While Governors would have
substantial flexibility, we propose under Sec. 690.93(b) that
Governors would be required to publish written policies that would be
used to evaluate if a program meets the four criteria and provide
additional context in the regulations as to what these policies must
incorporate.
We note that in cases where students enroll in an eligible
workforce program through distance education and said students are
located in a State other than a State where the Governor approved the
program, the program may be subject to a bilateral agreement. For more
information on bilateral agreements, please see Sec. 690.93(h) of the
Significant Proposed Regulations section.
Finally, during negotiated rulemaking, a negotiator asked the
Department to encourage Governors to publish lists of eligible
workforce programs on a publicly accessible website. The Department
agrees with the negotiator's suggestion, and although we are not
requiring this as part of our regulations, we strongly encourage
Governors to maintain and publish a list of eligible workforce programs
in their State. Governors may wish to use the existing processes
established to disseminate the State list of WIOA eligible training
providers to members of the public, as described in 20 CFR 680.500, or
update those processes to more effectively disseminate both eligible
workforce programs qualifying for Pell Grant funds and WIOA eligible
training providers to the public.

Components Determined by Governors (Sec. 690.93(b))

Statute: Section 481(b)(3)(A)(iii) of the HEA, added by Section
83002(b) of the OBBB, requires the Governor to approve a program.
Current Regulations: None.
Proposed Regulations: The proposed regulations require that the
Governor shall establish, after consultation with the State board, a
process for an institution to request a determination that a program
meets the requirements of Sec. 690.3(a) and that is publicly available
and includes the criteria the Governor will use to determine if a
program meets each of the requirements. This shall include the State's
methodology to determine and periodically review which occupations and
industry sectors are high-skill, high-wage (as identified by the State
pursuant to Section 122 of the Carl D. Perkins Career and Technical
Education Act (20 U.S.C. 2342)), or in-demand, including the
competencies needed in such industries and occupations, as identified
by the State pursuant to Section 102 of WIOA, and where the list of
such occupations and sectors will be made publicly available. The
Department encourages States to make the list of such occupations and
sectors publicly available in searchable and easy to navigate formats.
The aforementioned periodic review must be done not less than every two
years concurrent with development and modification of the State Plan
under Section 102(c) of WIOA. In addition, we encourage Governors to
include such lists in their State's WIOA State Plan as soon as
possible.
The Governor's process must include a written policy for
determining whether a program meets the hiring requirements of
employers in the high-skill, high-wage, or in-demand sectors and
occupations for which the program prepares students for employment. The
review must consider whether the expected competencies for which the
recognized postsecondary credential intends align with the competencies
needed in such high-skill, high-wage, or in-demand sectors and
occupations. Further, these determinations must incorporate direct
input from employers, which may be secured from the state board and
local workforce development boards, industry or sector partnerships,
sponsors of Registered Apprenticeship programs, joint labor-management
partnerships, or through other methodologies established by the State.
The process would be required to include a written policy for
determining if a credential is stackable and portable. The process must
also document connections to additional credentials, consider, if
available, real-time labor market information and other data showing
whether students have obtained additional credentials through career
pathways, and include a process for employer validation.
The proposed process must include a written policy for institutions
to establish that an eligible workforce program will ensure the award
of academic credit toward a certificate or degree program upon a
student's successful completion of the eligible workforce program and
enrollment in such certificate or degree program. Furthermore, it
requires that such credit will be accepted at one or more eligible
institutions through written agreements, including established
articulation agreements, transfer-of-credit agreements, consortium or
partnership agreements, or similar arrangements.
The process must include the information an institution must submit
to the Governor to assess an eligible workforce program on the criteria

[[Page 11397]]

established, including the job placement standards under 36 CFR
690.94(a)(2)(ii), and, if applicable, alternative completion and
placement standards under 34 CFR 690.94(a)(2)(i). Those standards shall
include the information necessary for the Governor to make the
appropriate job placement calculations using administrative data, such
as wage records.
The proposed regulations require that the Governor's process
includes the timeline for the Governor's consultation with the state
board and a determination that a program meets the requirements. There
also must be a process for an institution to appeal that determination,
and such process must include clear, transparent and timely procedures
that are applied consistently and equitably at all eligible
institutions. Finally, the process would need to include an attestation
affirming that a State board consultation occurred.
Reasons: The Department believes it is important for Governors to
have written policies on how programs would be approved and
transparency when policies change. Written policies establish a
framework for consistent and standardized program approval. Written
policies would also make the approval process clear and transparent for
eligible institutions by outlining what information is necessary for
said institutions to submit its program to the Governor for approval.
We note that these proposed requirements for written policies are
all based on the statutory requirements contained in the regulations
under Sec. 690.93(a) and are cross-referenced to the written policies
below with the requirements under Sec. 690.93(a). We encourage
Governors to post all written policies prominently to appropriate
websites and to use plain language.
Included in the first component of the proposed process is the
State's methodology for determining and periodically reviewing high-
skill, high-wage, or in-demand sectors or occupations as required by
Sec. 690.93(a)(1). During negotiated rulemaking, the Department
accepted a recommendation from several negotiators to align the
periodic review process with development and modification of the WIOA
State Plans. WIOA State Plan development or modifications include
reviews of occupations and sectors that occur every two years, which
would eliminate overlap or redundancy between WIOA and title IV
regulations. The list of occupations must be posted publicly, and as
noted above, the Department encourages the list to be posted
prominently and in plain language.
The second component that would require a written policy for how
the Governor will determine whether the program meets the hiring
requirements of employers is tied to the requirements proposed under
Sec. 690.93(a)(2). We propose for a State's policy to incorporate
consideration of the alignment between the expected competencies for
which the recognized postsecondary credential intends and the
competencies needed in the relevant sectors and occupations to ensure
students are equipped with the skills needed to obtain employment.
Additionally, the proposed regulations require direct input from
employers because employers can speak directly to their own hiring
needs. We note that this information could be obtained through many
methodologies as determined by the Governor, including from the State
board. Governors are already required by statute to consult with the
State board; therefore, we believe this would not be an overly
burdensome policy to establish. The proposed regulation provides
Governors with broad latitude to determine how these requirements
should be incorporated in their written policy.
The third component, requiring a written policy for how the
Governor will determine if a credential obtained upon completion of the
program is stackable and portable, is tied to requirements proposed
under Sec. 690.93(a)(3). The written policy must include a means to
establish if the credential has documented connections to additional
credentials. The policy must also consider, if available, data showing
whether students have obtained additional credentials through career
pathways and real-time labor market information, where available, and
include a process for employer validation. Further, as many states have
established strategies to assess credentials and identify ``credentials
of value'', these components are commonly used evidence for
establishing stackability and portability.\5\ We received several
proposals from negotiators during negotiated rulemaking to define
``stackable'' and ``portable.'' As noted throughout this preamble, we
attempted to align as much of the proposed regulations as possible with
WIOA. WIOA does not define stackable or portable. The Employment and
Training Administration at the Department of Labor released guidance in
its publication entitled: Understanding Postsecondary Credentials in
the Public Workforce System,\6\ that provides a sub-regulatory
definition of stackable and portable credentials that may be useful for
States as they develop their written policies.
---------------------------------------------------------------------------

\5\ Advance CTE, The State of Career Technical Education,
(2025), available at, <a href="https://careertech.org/wp-content/uploads/2025/09/StateofCTE_Credentials_2025_FullReport.pdf">https://careertech.org/wp-content/uploads/2025/09/StateofCTE_Credentials_2025_FullReport.pdf</a>.
\6\ Understanding Postsecondary Credentials in the Public
Workforce System--<a href="https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEN/2020/TEN_25-19.pdf">https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEN/2020/TEN_25-19.pdf</a>.
---------------------------------------------------------------------------

The fourth component that would require a written policy to ensure
that academic credit will be awarded to students, and that credit will
be accepted at one or more eligible institutions and is tied to
requirements under proposed Sec. 690.93(a)(4). We accepted a
suggestion from multiple negotiators that the arrangements should be
written and ratified through a formal arrangement between eligible
institutions. A formalized arrangement is important for consistency,
clarity, and transparency for students. Note that under HEA Sec.
481(b)(3)(A)(iii)(IV) the written policy can be within the same
eligible institution offering the eligible workforce program.
The fifth component would require Governors to have a process to
inform eligible institutions what to submit to the Governor in order
for the Governor to calculate placement and completion calculations.
This is tied to requirements under Sec. 690.94(a)(2) and (b)(1). These
provisions require specific annual placement and completion rates for
eligible workforce programs. The Department believes that it is
important for Governors to clearly publish what information is
necessary for them to calculate the completion and placement rates
because it would standardize the process and make the data expectations
clear for the stakeholders.
The sixth component, which is explained within the regulatory text
itself, requires Governors to provide a process and timeline for
consultation with the State board and a process for an appeal of a
program's denial. This policy would provide clear, transparent, and
timely procedures for eligible institutions which can be applied
consistently and equitably across all eligible institutions.
Finally, the Governor would be required to include in their
attestation that the Governor consulted with the State board. This
requirement is intended to provide a written record of the consultation
with the State board.

Components Determined by Governors (Sec. 690.93(c))

Statute: Section 481(b)(3)(A)(iii) of the HEA, added by Section
83002(b) of the

[[Page 11398]]

OBBB, states that after consultation with the appropriate State board,
the Governor must determine whether to approve the program.
Current Regulations: None.
Proposed Regulations: The proposed regulations require that the
Governor shall not approve a program until it meets all the
requirements of paragraph (a) and paragraph (b) of Sec. 690.93.
Reasons: The proposed regulations are designed to ensure that a
Governor has established written and published policies for eligible
institutions to follow prior to reviewing a program and has reviewed
each program based on those policies prior to approval.

Components Determined by Governors (Sec. 690.93(d))

Statute: Section 481(b)(3)(A)(iii) of the HEA, added by Section
83002(b) of the OBBB, states that after consultation with the
appropriate State board, the Governor must determine whether to approve
the program.
Current Regulations: None.
Proposed Regulations: The proposed regulation requires that the
Secretary documents the Governor's approval and determination that a
program meets all applicable requirements by accepting a certification
by the Governor that includes the following--
(1) The name of the program;
(2) The 6-digit Classification of Instructional Programs (CIP) Code
of the program;
(3) The Standard Occupational Classification (SOC) codes(s) for the
occupation(s) for which the program prepares individuals for
employment;
(4) A signed statement that the program was approved by the
Governor and that the program currently meets, and has met for the 12
months immediately preceding the certification, the requirements
described in Sec. 690.93(a);
(5) The date the eligible workforce program was approved;
(6) If applicable, a certification that the State determined that
the program meets the alternative completion and placement standards
under 34 CFR 690.94(a)(3)(i);
(7) An agreement that, upon request of the Secretary of Education
or Secretary of Labor, the Governor will make available to the
Secretary of Education and Secretary of Labor documentation of its
process for making the determination in paragraph (a) of Sec. 690.93;
(8) An agreement that the Governor will inform the Department of
Education and Department of Labor and the eligible institution within
15 calendar days of its final decision to withdraw approval of the
eligible workforce program;
(9) A certification that the Governor takes into consideration the
cost of the program and the anticipated wages of the industry or
occupation prior to the initial determination of the program's value-
adding earnings is made under Sec. 690.95; and
(10) Such other information as the Secretary of Education or
Secretary of Labor may require.
Reasons: The Secretary must know the name of the program in order
to fulfill the statutory and regulatory requirements, including but not
limited to being able to approve the correct program once an eligible
institution's application is received for review by the Secretary of
Education under Sec. 690.94. We must obtain the CIP code and the 6-
digit SOC code to fulfill the statutory and regulatory requirements,
including but not limited to, enforcing the two-year prohibition on a
program regaining eligibility due to loss of eligibility due to a
program's failure to meet the placement and completion rates under
Sec. 690.97(a). Additionally, such data elements facilitate important
information sharing about how to find training programs that prepare
individuals for in-demand occupations.
The Department proposes to collect a signed statement that the
program meets, and has met for the 12 months immediately preceding the
certification, all of the requirements under Sec. 690.93(a) and we
propose to collect the date the eligible workforce program was
approved. This requirement is necessary because Section
481(b)(3)(A)(iv)(I) of the HEA requires that the program be offered by
the eligible institution ``for not less than 1 year prior to the date
on which the Secretary makes a decision. . .''. Note that this proposed
regulation would not require the Governor's process to have been in
place to assess the requirements under 690.93(a) for one full year, but
merely requires the Governor to validate that, at the time of the
determination, the program had met those criteria for at least the 12
months prior.
The Department also proposes that an eligible workforce program
must submit placement and completion rates to have the program approved
by the Secretary. Under proposed Sec. 690.94(a)(2)(i), for the 2026-
27, 2027-28, and 2028-29 award years only, as determined through a
certification from the Governor, based on the Governor's analysis using
administrative data, including wage records, a program use alternative
data to assess completion and placement rates. After the 2028-29 award
year, the placement and completion rate calculations would be
different. The alternative data are intended to provide an ``on ramp''
to States and institutions that do not yet have the administrative data
to conduct the full placement and completion rate calculations. We also
discuss the rates in further detail in the Sec. 690.94(a) section of
this preamble.
The Department of Education and the Department of Labor will work
in close partnership to implement the eligible workforce program
process. Neither Department intends to dictate a state's written
policies or approval process of an eligible workforce program. However,
to ensure program integrity, both Departments must reserve the right to
request additional documentation from the Governors, if necessary,
regarding the policies and program approval. In addition, both
Departments need to know within 15 calendar days of a Governor's final
decision to withdraw approval of an eligible workforce program. We note
that the Department of Education would not need to be informed of an
ongoing investigation; we only need to be informed of the Governor's
final decision to withdraw approval of the program.
As noted in the definition of cohort period under Sec. 690.91, the
first time the Department would calculate the value-added earnings
under Sec. 690.95 is during the 2030-31 award year. During negotiated
rulemaking, a negotiator requested that the Department develop an
alternative method to calculate the value-added earnings prior to 2030-
31. The statute says that the value-added earnings is calculated based
on the earnings of individuals that completed the program three years
prior to the current year, therefore, the Department does not have the
authority to require institutions to implement the value-added earnings
prior to 2030-31.
During negotiated rulemaking, the Department accepted a proposal
from one of the negotiators to add a requirement for the Governor to
certify that he or she has taken into consideration the cost of the
program as it compares to the anticipated wages of the industry or
occupation prior to the Department's determination of the program's
value-adding earnings. The negotiator argued that such an evaluation
was necessary given the time between the establishment of a program and
the first time that the value-added earnings for the program would be
calculated, during which there would be no required evaluation of the
economic value of the program to students. The Department believes that
such an evaluation is likely to occur even without this requirement and
that it is

[[Page 11399]]

reasonable to expect a Governor to consider whether the program
provides adequate economic value to program completers while also
considering the overall economic impact of additional entrants to high-
skill, high-wage, or in-demand industry sectors or occupations. The
Department also clarified during negotiated rulemaking that it would
not expect a State to conduct additional comparisons of the program's
cost versus anticipated wages in the field after the initial evaluation
described in the regulation; such additional evaluations would be
duplicative of the value-added earnings calculation performed by the
Department.
Finally, because these are Federal funds, the Department may
request other information to ensure program efficacy and integrity.
This is a provision we have incorporated into many of our regulations.
For example, in the application process for prison education programs
under Sec. 668.239(b)(9) we state that the Secretary can request
``[s]uch other information as the Secretary deems necessary.''

Components Determined by Governors (Sec. 690.93(e) and (f))

Components Determined by Governors (Sec. 690.93(g))

Statute: Section 481(b)(3) of the HEA, as added by Section 83002(b)
of the OBBB, establishes the requirements for Governors to approve
eligible workforce programs.
Current Regulations: None.
Proposed Regulations: We propose that a program which serves as a
related technical instruction component of a Registered Apprenticeship
Program meets the requirements of paragraph (a)(1) and (a)(2) of Sec.
690.93.
Reasons: The related technical instruction component of a
Registered Apprenticeship Program provides apprentices with the
knowledge of subjects related to the occupation and is the component of
the Registered Apprenticeship program that would commonly seek to
become Pell Grant eligible after approval by the Secretary. Registered
Apprenticeship Programs go through a rigorous registration process
administered by the Department of Labor under 29 CFR part 29. Since
Registered Apprenticeships are paid jobs with an employer that operate
under approved program standards structured to prepare apprentices with
the qualifications for a specific occupation, all programs that serve
as a related technical instruction component of a Registered
Apprenticeship program meet the requirement of paragraph (a)(2) of
Sec. 690.93. Further, as Registered Apprenticeships are linked to
demonstrated hiring needs, the Department of Labor has consistently
asserted that Registered Apprenticeship programs qualify as occupations
in-demand in the local labor market under WIOA and Registered
Apprenticeships are automatically eligible for inclusion on state
eligible training provider lists under WIOA section 122.\7\
Accordingly, a Governor must consider a program that serves as a
related technical instruction component of a Registered Apprenticeship
program to provide education that aligns with the requirements high-
skill, high-wage, or in-demand industry sectors or occupations and that
the program meets the hiring requirements of potential employers. While
the proposed regulation does not extend such treatment to the
requirement at paragraph (a)(3) of Sec. 690.93, the Department notes
that a program that serves as a related technical instruction component
of a Registered Apprenticeship program does in all cases lead to a
Registered Apprenticeship Certificate of Completion, as defined in 29
CFR 29.2 Definitions, including interim credentials, which are
considered to be a recognized postsecondary credential that is
nationally portable. Further, there are many ways a Registered
Apprenticeship Certificate of Completion may be determined to meet the
state's criteria for being a recognized postsecondary credential that
is stackable, including those described in guidance from the Department
of Labor.\8\
---------------------------------------------------------------------------

\7\ Dep't of Labor, Training and Employment Guidance Letter No.
08, (May 17, 2021), available at <a href="https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2021/TEGL_8-19_Change-1.pdf">https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2021/TEGL_8-19_Change-1.pdf</a>.
\8\ Dep't of Labor, Training and Employment Notice No. 25-19,
(June 8, 2020), available at <a href="https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEN/2020/TEN_25-19.pdf">https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEN/2020/TEN_25-19.pdf</a>.
---------------------------------------------------------------------------

Components Determined by Governors (Sec. 690.93(h))

Current Regulations: None.
Proposed Regulations: The Department proposes that the Governors of
two States may enter into a bilateral agreement, that is published
publicly, regarding the enrollment of students located in one of those
States into some or all of the programs located in the other State,
under certain conditions.
First, the Governor in the State in which the student is located,
in consultation with the State board, would need to include the
occupation(s) or sector(s) on the list developed under the process set
forth in 34 CFR 690.93(b)(1)(i). Second, the Governor of the State in
which the eligible institution(s) offering such program(s) is located
would be required to determine, in consultation with the State board,
that the program meets the conditions under 34 CFR 690.93(a). Finally,
the bilateral agreement would be required to include provisions for
data-sharing among the States for purposes of completion and placement
rate calculations.
Reasons: The Department recognizes that there may be instances
where students who live in one State may wish to use Pell Grants to pay
for eligible workforce programs offered by an institution that is
located in another State (where the program is approved by the other
State). Further, during rulemaking, several negotiators asked if an
eligible workforce program could be offered through distance education
(defined under 34 CFR 600.2) to students located in a different State
than where the eligible institution is located. The Department has two
significant

[[Page 11400]]

concerns about allowing nationwide reciprocity for eligible workforce
programs offered via distance education.
First, such reciprocity is more likely to lead to rapid
proliferation of certain types of eligible workforce programs offered
through distance education that are not aligned to local workforce
needs, and because the oversight framework for these programs is only
now being developed, there is significant risk associated with allowing
rapid widespread adoption of programs. Rapid expansion of eligible
workforce programs could reduce the Department's ability to provide
oversight of institutions, and has the potential to incentivize
educational offerings at scale rather than to smaller groups of
students. Both of those risks were realized during the rapid expansion
of distance education during the 2000s.
Second, the Department is concerned that nationwide reciprocity,
without constraints, would circumvent statutory intent that eligible
workforce programs fulfill specific local, regional, and State
workforce needs. Many components of an eligible workforce program
center on high-wage, high-skill, or in-demand occupations and sectors
and employability in the State where the eligible workforce program is
approved. For example, if a Governor of a State on the east coast of
the United States approves an eligible workforce program based on the
factors in his or her State, those same factors may not apply to
students seeking to enroll in the same eligible workforce program on
the west coast of the United States.
At the same time, the Department does not seek to discourage high-
quality eligible workforce programs offered through distance education.
We propose to permit bilateral agreements between two Governors, as
opposed to multilateral agreements that allow multiple Governors to
offer eligible workforce programs to students through distance
education. The bilateral agreements would ensure that Governors are
more intentional about program offerings and students' Pell Grant
eligibility is not used for enrollment in eligible workforce programs
that will not lead to job opportunities and will have insufficient
return on investment where the student lives. The Governor of the State
where the student is located would be required to ensure that the list
developed under 690.93(b)(1)(i) includes the occupation(s) or sector(s)
that are relevant in the State where the student program is located
because students should only enroll in eligible workforce programs that
will prepare them to enter the workforce upon completion.
The bilateral framework encourages two Governors to speak directly
to one another about each other's specific State standards. This is in
contrast to a multilateral agreement that may have an independent
reciprocity or membership organization that has national standards that
may not actually meet the needs of the student where the student is
located.
Finally, there are annual completion and placement metrics that
must be met each year for the eligible workforce program to maintain
eligibility. The bilateral agreement includes provisions for data-
sharing among the States for purposes of completion and placement rate
calculations so that the Governor where the eligible institution is
located can properly evaluate and certify that the eligible workforce
program meets all appropriate outcome metrics.
There are also operational aspects that support the efficacy of
bilateral agreements. As noted in the previous paragraph, Governors
would still need to comply with the completion and job placement
metrics discussed under Sec. 690.94(a). Eligible institutions and
Governors would need to obtain, analyze, and share information with the
Department about students in different states than where the eligible
institution is located. This would require complex and thoughtful
agreements better suited to bilateral than multilateral agreements.
These regulations also would not prevent a State from entering into
more than one bilateral agreement with other States. Additionally, the
Department's proposal does not prevent an institution from seeking
approval in multiple states pursuant to the written policies and
processes of each state.
After a written bilateral agreement is ratified, the eligible
institutions offering eligible workforce programs in both States would
be able to disburse Pell Grants to eligible students not located in the
State where the eligible institution is located.
We note that this provision would not apply to an individual who is
attending an eligible workforce program in person and resides in a
different State than where the eligible workforce program is offered.
The Department has made a technical update to the consensus
language under Sec. 690.93(h)(1) and (2). We changed ``State Board''
with an upper case ``B'' to ``State board'' with a lower case ``b''.

Components Determined by the Secretary (Sec. 690.94(a))

Statute: Section 481(b)(3)(A)(iv) of the HEA, as added by Section
83002(b) of the OBBB, requires that ``. . .after the Governor of such
State makes the determination that the program meets the requirements.
. .'' under Sec. 690.93 ``. . .the Secretary determines that. . .''
the program meets additional requirements prior to approving the
program. The requirements as outlined in statute are (1) the program
must have been offered by the eligible institution for not less than 1
year, (2) the program must meet completion and job placement rates and
(3) the program's tuition and fees cannot exceed value-added earnings.
Current Regulations: None.
Proposed Regulations: The proposed regulation states that after the
Governor determines that the program meets the requirements under 34
CFR 690.93, the Secretary will use documentation from the eligible
institution to determine that the program has met the conditions under
34 CFR 690.92(a) and (b) for the 12 months preceding the date on which
the eligible institution applied for eligibility for the program.
The proposed regulation also requires the program to meet specific
placement and completion rate requirements for the 2026-27 through
2028-29 award years, as determined through a certification from the
Governor and based on the Governor's analysis using administrative
data, including wage records. The program would need to have a
completion rate of at least 70 percent, within 150 percent of the
normal time to completion, and a job placement rate of at least 70
percent, calculated as the percentage of students that are employed
during the second quarter after exiting the program.
The Department's proposal states that for each award year after the
2028-29 award year, the program would be required to have a completion
rate of at least 70 percent, within 150 percent of the normal time of
completion. Specifically, the job placement rate of at least 70 percent
is calculated as the percentage of students who are employed in the
occupation(s) for which the program prepares students (as established
under 34 CFR 690.93 (b)) or in a comparable high-skill, high-wage, or
in-demand occupation during the second quarter after successfully
completing the program. This is determined through a certification from
the Governor and based on the Governor's analysis using available
administrative data, including wage records.
Reasons: Under 34 CFR 600.10, we propose to require Department
approval of each eligible workforce program, and under this section we
describe this approval, which eligible institutions initiate by
submitting satisfactory documentation to the Secretary through

[[Page 11401]]

a process that would be outlined in sub-regulatory guidance.
While Governors would play an initial role by evaluating the
elements of workforce program under their purview, the Secretary's
determination provides a final layer of oversight to maintain
consistency and integrity across States and eligible institutions.
These requirements provide a uniform framework for evaluating eligible
workforce programs across States and eligible institutions, limiting
disparities that could undermine program integrity. By setting minimum
standards such as instructional duration, alignment with workforce
needs, and performance benchmarks, the Department improves the
likelihood that Pell Grant funds are directed to eligible workforce
programs that deliver meaningful educational and economic outcomes.
This approach reinforces accountability and fulfills the Department's
responsibility to protect both students and taxpayer resources.
Under the proposed regulations, the Secretary would determine that
the program comprises 8-14 weeks of instruction, 150-599 clock hours,
4-15 semester hours, or 6-23 quarter hours, and that the program had
met these conditions for the 12 months preceding the date on which the
eligible institution applied for eligibility of the program. As
discussed under Sec. 690.92(a) and (b), the limits on hours and
calendar duration of the program are statutory. The OBBB also requires
that ``the program has been offered by the eligible institution for not
less than 1 year prior to the date on which the Secretary makes a
determination. . .''. We note that our proposal under Sec.
690.93(d)(4) also requires that the Governor determine that the program
has met all the requirements for the Governor's approval for at least
12 months preceding the Governor's certification.
The OBBB states that ``for each award year, the program has a
verified completion rate of at least 70 percent. . .'' and ``. . .the
program has a verified job placement rate of at least 70 percent. .
.'', therefore, in regulation we propose that the program would need to
meet completion and placement outcomes to establish and maintain Pell
Grant eligibility. The rates would be submitted to the Department each
year through a process determined by the Secretary.
The Department seeks to provide flexibility for the upcoming award
years regarding the completion rate. We understand that many Governors
and eligible institutions may not collect standardized data, and we
propose an alternative to the strict standards in the initial years
following the implementation of eligible workforce programs. For the
2026-27, 2027-28, and 2028-29 award years, the Governor would use the
appropriate administrative data source and methodology for their state
to certify a 70 percent completion rate within 150 percent of normal
time to completion. For example, at least 70 percent of individuals
that enroll in an 8-week program must complete the program within 12
weeks. The proposed regulation would also require the Governor to use
administrative data to calculate the completion rate during these award
years. If the Governor does not collect completion information for
programs, then he or she must begin collecting the necessary
information to certify the completion rate.
For the 2029-30 award year and beyond, the completion rate would be
calculated under Sec. 668.8(f), where the eligible institution would
calculate the completion rate instead of the Governor. The components
of the calculation and the process for performing it are prescribed in
that section of the regulations. Similar to the proposal for the
completion rates, the Department also proposes to provide an interim
approach that aligns with an existing WIOA performance indicator for
the calculation of job placement rates during the initial
implementation period for these regulations. For the 2026-27, 2027-28,
and 2028-29 award years, the Governor would use administrative data to
certify a 70 percent job placement rate, calculated as the percentage
of students that are employed during the second quarter after exiting
the program. The Department chose this approach because all states
currently report on this indicator for their WIOA programs and should
be able to use existing administrative data sources, including wage
records, and collection methodologies to assess and certify this
requirement. The use of administrative data sources data collection
burden for the Governor as well as provides a highly credible source
for determination of participant employment. WIOA currently requires
reporting on all participants who leave a program, not just those who
finish it, and the Department proposes to align directly with the WIOA
indicator. In order to align with current WIOA reporting requirements,
the Department's proposal also does not include parameters for the
sector or occupation for which the exiting student must be employed for
this reason.
The Department proposes that exiting students must be employed at
any point during the second quarter after exiting the program in order
to align with requirements under WIOA. This is generally consistent
with the 180-day timeframe for capturing placements under the statute
and it is also consistent with the Department's intent, described
throughout this preamble, to align our regulations with requirements
under WIOA. Section 116 of WIOA requires job placement outcomes for
participants in several WIOA-funded programs to be measured during the
second quarter after exiting the program. For example, if an individual
exits the program in March, he or she would need to be employed between
July and September in order to be counted as a placement. Additionally,
the Department's proposal measures job placement in the second quarter
after exit because quarterly wage records are the primary
administrative data set that will be used to verify job placement.
For the 2029-30 award year and beyond, 70 percent of students who
complete the program (not just exit), must be employed in the
occupation or occupations for which the program prepares the student or
in a comparable high-skill, high-wage, or in-demand occupation, as
determined by Governors using administrative data. The Department
believes it is important that students benefit from the program by
obtaining employment in occupations in the workforce program's
applicable field and that this proposal is the most appropriate way to
measure the job placement rate of a program. Accordingly, the
Department believes it would not be adequate to count a program
completer who obtains employment or retains his or her current
employment in a field that is unrelated to the education provided
through the workforce program towards the program's job placement rate.
We have chosen not to define ``comparable'' occupation. During
negotiated rulemaking, a negotiator suggested providing some examples
in the preamble of comparable occupations; however since States
determine which occupations are high-skill, high-wage, or in-demand, we
believe the Governor should have considerable autonomy to determine how
to assess if an occupation is comparable to the training received. The
Department intends to work with the Department of Labor to develop sub-
regulatory guidance for Governors to support State implementation of
this requirement. We propose to only measure completers in job
placement for the 2029-30 award year and beyond to provide States time
to develop the appropriate reporting

[[Page 11402]]

mechanisms and administrative data sources, such as enhancing wage
records to include occupational information. Note that during
negotiated rulemaking the proposal was to measure completers in job
placement for the 2028-29 award year, however, a negotiator requested
an additional year to provide States additional time and the Department
agreed.
During negotiated rulemaking, a negotiator requested that the
Department publicly publish the completion and job placement rates for
transparency purposes. While the Department does not commit in
regulation or in this preamble to publicly publish the completion or
placement rates for each eligible workforce program, we will explore
the benefits and practicability of publishing rates in the future. We
seek comments on the benefit of publishing these rates and how best to
do this.

Components Determined by the Secretary (Sec. 690.94(b))

Statute: Section 481(b)(3)(A)(iv)(II), (III), and (IV) of the HEA,
as added by Section 83002(b) of the OBBB, provides that as a condition
of eligibility for an eligible workforce program, such program must
have completion and placement rates of at least 70 percent. That
section also provides that an eligible workforce program's published
tuition and fees may not ``exceed the value-added earnings of students
who received Federal financial aid under this title and who completed
the program 3 years prior to the award year . . .''.
Current Regulations: None.
Proposed Regulations: The proposed regulations require that for
each award year after the date that the eligible workforce program is
approved, the eligible institution must submit to the Governor a list
of students who completed the program during the award year and the
information necessary for the Governor to verify the job placement rate
for that year. We also propose that the eligible institution report the
published tuition and fees for the workforce program to the Secretary.
Reasons: For 2029-30 and each year thereafter, the Governor must
determine the job placement rate based on program completers;
therefore, an institution offering an eligible workforce program must
submit a list of all students that completed the eligible workforce
program each award year. Also, under paragraph (d) of this section, the
Secretary would confirm that the eligible workforce program's published
tuition and fees do not exceed the value-added earnings, and an
institution's submission of tuition and fees for eligible workforce
programs is the intended mechanism for the Secretary to make that
confirmation.

Components Determined by the Secretary (Sec. 690.94(c))

Statute: Sections 481(b)(3)(A)(iv)(II) and (III) of the HEA, as
added by Section 83002(b) of the OBBB, state that ``. . .for each award
year, the program has a verified completion rate of at least 70
percent, within 150 percent of the normal time to completion'' and ``.
. . for each award year, the program has a verified job completion rate
of at least 70 percent, measured 180 days after completion''.
Current Regulations: None.
Proposed Regulations: The proposed regulation states that the
Secretary may waive some or all of the requirements related to
submission of completion rates and the Governor's certification of job
placement rates if the Secretary determines that completion or
placement rates will be calculated under a separate process established
by the Secretary. Or, alternatively, in the case of the job placement
rate certification described in 34 CFR 690.94(a)(2)(ii)(B), the
Secretary determines that the Governor is making progress towards that
certification but needs an additional award year using the
certification described in 34 CFR 690.94(a)(2)(i)(B).
Reasons: Regarding the completion rates, the Department continually
updates and modernizes its systems. In the future, we may be able to
calculate completion rates for eligible workforce programs internally,
reducing burden and costs to eligible institutions. If the Department
or its vendors are eventually able to calculate completion rates, these
proposed regulations establish clear authority for the Department to
waive the completion rate calculations in favor of a more efficient and
streamlined process.
Regarding the job placement rate, the Department understands that
establishing new data systems is a major undertaking. For that reason,
we have proposed flexibility in these regulations for three full award
years. However, we also acknowledge that some States may need
additional time to fully establish sufficient systems. Governors may
contact the Secretary, through a process determined by the Secretary,
to request an additional year of flexibility in calculating job
placement rates under the approach described in 34 CFR
690.94(a)(2)(i)(B) after the 2028-29 award year. This is a similar one-
year extension that the Department provides to certain States under the
ability-to-benefit state process in Sec. 668.156(g).

Components Determined by the Secretary (Sec. 690.94(d))

Statute: Section 481(b)(3)(A)(iv)(IV) of the HEA, added by Section
83002(b) of the OBBB, states that ``. . . for each award year, the
total amount of the published tuition and fees of the program for such
year is an amount that does not exceed the value-added earnings of
students who received Federal financial aid under this title and who
completed the program 3 years prior to the award year.''
Current Regulations: None.
Proposed Regulations: The Department proposes that for each award
year, the Secretary will confirm that the published tuition and fees of
the eligible workforce program do not exceed its value-added earnings,
consistent with 34 CFR 690.95.
Reasons: The proposed regulation was suggested by a negotiator
during negotiated rulemaking in order to ensure that the Department
will monitor and evaluate institutional compliance with the value-added
earnings requirements using data provided by institutions. The
Department agreed to the proposal and plans to use the information
provided by institutions regarding published tuition and fees to
perform an administrative check for compliance.

Components Determined by the Secretary (Sec. 690.94(e))

[[Page 11403]]

program to lose eligibility. The Department agreed that it was
reasonable to exclude students from consideration in completion or
placement rates in such circumstances, and in collaboration with
negotiators the Department developed this list of exclusions. This list
of exclusions from the completion rate can also be applied to the
calculation when it is performed under the requirements established in
Sec. 668.8(f).
Several negotiators suggested the Department to add ``continuing
education'' as a category for exclusion in the numerator and
denominator of the completion rate. The negotiators believed that
because recognized postsecondary credentials from workforce programs
are stackable, students are encouraged to continue their education by
enrolling in a sequence of educational programs. The Department
clarified that the primary intent of a workforce program is to obtain a
job upon completion. While institutions must ensure the stackability of
the recognized postsecondary credential a program leads to when
developing or enhancing programs, in the Department's view, the primary
focus should be for graduates to obtain a job in the occupation(s) the
program prepares students for after program completion. The importance
of the job placement rate metric in the statute supports the idea that
the intended goal for students is to become employed not long after
completing the workforce program in a job related to the eligible
workforce program. Additionally, the value-added earnings metric in the
statute is designed to ensure that graduates are earning enough to
justify the program's cost. The Department also pointed out that for
students who want to enroll in further education than what workforce
programs typically provide, students have access to all other, longer
title IV eligible programs. The Department believes that the primary
focus of obtaining employment is not inconsistent with the requirements
for an eligible program to lead to a recognized postsecondary
credential that is stackable and prepare students to pursue one or more
certificate or degree programs. Instead, the overall objective is for
students to gain the specific skills needed to enter high-skill, high-
wage, or in-demand occupations or industries while also ensuring that
when a student continues their education to upskill throughout the
course of their career, they can easily build upon the education
received through the eligible workforce program.
We also made technical edits to the consensus language by (1)
changing the romanettes to Arabic numerals and (2) moving the ``or''
from (e)(2) to (e)(3).

Value-Added Earnings (Sec. 690.95(a))

Statute: Section 481(b)(3) of the HEA, added by Section
83002(b)(3)(A)(iv)(IV) of the OBBB, states that for each award year the
total amount of the published tuition and fees of an eligible workforce
program cannot exceed the value-added earnings of students who received
Federal financial aid and who completed the program three years prior
to the award year.
Current Regulations: None.
Proposed Regulations: The Department proposes that, for each award
year, an eligible workforce program's total published tuition and fees
may not exceed the value-added earnings of students who are working,
received a Pell Grant for enrollment in the program, and completed the
program during the cohort period.
Reasons: The proposed regulation aligns an eligible institution's
eligible workforce program tuition and fee requirements with the
requirements of the statute.
The Department proposes to include in the value-added earnings
students who were ``working'' in part to more accurately determine the
true earning potential of program completers and avoid any
unintentional distorting of the median earnings. In addition, we chose
the term ``working'' to align with current data retrieval procedures
within the College Scorecard process that captures non-zero income for
individuals without specific employment history.
Similarly, the Department submits a directed question as to whether
it should include or exclude in the value-added earnings students who
are enrolled at an institution of higher education at the point when
earnings are measured after completing the eligible workforce program.
The consensus language does not include an exception for these
students, but the Department is particularly interested in hearing from
the public regarding this provision. Interested commenters should
review the Supplementary Information section III (``Directed
Questions''), found earlier in this document, for a complete
description of the information sought by the Department regarding the
changes outlined in Sec. 690.95(a).
Because the statute indicates that the value-added earnings are
only to be computed for students who receive Federal financial aid, we
further clarified that these earnings only apply to students who
receive a Pell Grant given that Pell Grants are the only type of title
IV aid students enrolled in eligible workforce programs can receive.
Moreover, the value-added earnings requirement is an outcome-based
approach to determine the efficacy of providing Pell Grants to students
enrolled in workforce programs.
Finally, to implement the statutory requirement of evaluating
students who completed the program three years prior to the award year,
we developed a formal cohort period and grouped completers accordingly.
We define the cohort period as the award year that ends three full
award years prior to the beginning of the award year for which value-
added earnings are determined.

Value-Added Earnings (Sec. 690.95(b))

Statute: Section 481(b)(3) of the HEA, as added by Section
83002(b)(3)(A)(iv)(IV) of the OBBB, states that a value-added earnings
measurement will be computed for workforce programs by calculating the
difference between the median earnings of applicable students as
adjusted by the State and metropolitan area regional price parities
based on the location of the program and 150 percent of the poverty
line associated with a single individual.
Current Regulations: None.
Proposed Regulations: The Department's proposed regulatory language
indicates that the Department of Education will determine an eligible
workforce program's value-added earnings by calculating the difference
between the median earnings of applicable students during the earnings
measurement period as adjusted by the State and metropolitan area
regional price parities based on the location of the program and 150
percent of the poverty line associated with a single individual for the
appropriate tax year.
Reasons: The Department's regulatory language closely mirrors the
statutory text with a few clarifying statements. To obtain a better
picture of earning potential for all applicable students over a
consistent period and to provide parity among students from different
award years as appropriate, the Department developed an earnings
measurement period definition within the value-added earnings
calculation. The earnings measurement period is the first full tax year
following the award year in which the student completed the eligible
workforce program. For example, the earnings measurement period for a
student that completes a workforce program in the 2026-27 award year is
the 2028 tax year. Many negotiators supported this approach to ensure
that students completing workforce programs were given an

[[Page 11404]]

opportunity to demonstrate their earning potential over a full tax
year, avoiding the possibility of calculating median earnings based on
partial income from only a portion of a tax year.
In addition, to be consistent with the earnings measurement period,
the Department specified that the 150 percent poverty line figure would
be computed from the same tax year associated with the earnings
measurement period associated with the cohort period. For background
information on the Federal poverty guidelines, we guide readers to
review the most recent Federal Register Notice published by the
Department of Health and Human Services.\9\ The notice states--``The
poverty guidelines are not defined for Puerto Rico or other outlying
jurisdictions. In cases in which a Federal program using the poverty
guidelines serves any of those jurisdictions, the Federal office that
administers the program is general

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Indexed from Federal Register on March 9, 2026.

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