N.Y. Comp. Codes R. & Regs. tit. 8 § 3.58

Current through Register Vol. 46, No. 50, December 11, 2024

Section 3.58 - Proprietary college degree-conferring authority

(a) Definitions. As used in this section:

(1) Change of ownership or control means merger or consolidation with any corporation; sale, lease, exchange or other disposition of all or substantially all of the assets of the institution; and the transfer of a controlling interest (at least 51 percent) of the stock of a corporation.

(2) Deputy commissioner means the deputy commissioner for the Office of Higher Education.

(3) Proprietary college means an institution that is operated on a for-profit basis, offers postsecondary educational programs, and has been granted by the Board of Regents authority to confer degrees.

(4) Prospective owner means an individual or individuals seeking ownership or control of a proprietary college and requesting the consent of the Board of Regents for the transfer of degree-conferring authority of the institution upon the change of ownership or control.

(b) General requirements.

(1) A for-profit institution may be granted degree-conferring authority by the Board of Regents in accordance with the procedures of this section. Such an institution that has no degree-conferring authority must first obtain provisional authority to confer degrees for a period of up to five years, in accordance with the requirements of subdivision (c) of this section. At least 12 months prior to the end of the provisional authority period, such institution must apply to the department for permanent authority to confer degrees, in accordance with the requirements of subdivision (d) of this section. The Board of Regents shall determine whether to grant such permanent authority, or extend the provisional authority to confer degrees for an additional period of up to five years, or deny continuing degree-conferring authority past the term of the previously granted provisional authority.

(2) During the period of provisional authority, the institution shall take steps to meet the requirements for permanent authority to confer degrees, as prescribed in subdivision (d) of this section. At the department's request, the institution shall provide the department with information and reports concerning its progress in meeting the requirements for permanent authority to confer degrees.

(3) Applicants seeking provisional or permanent authorization under this section shall maintain satisfactory demonstration of the following:

(i) need for each degree program that the institution seeks to offer in New York based upon demand by students and/or employers and/or need of society for such programs, in accordance with section 137 of chapter 82 of the laws of 1995;

(ii) institutional capacity to operate as an institution in compliance with the Education Law, the program registration standards set forth in Part 52 of this Title and other federal and state statutes, regulations, and policies related to the operation of an institution;

(iii) financial resources to ensure satisfactory conduct of proposed degree programs, achievement of its institutional mission, and proposed educational goals;

(iv) performance outcomes that demonstrate that the institution and/or programs it operates are effective, where applicable; and

(v) that the individuals having ownership or control of the institution have a record free from evidence suggesting fraudulent and/or deceptive practices, including but not limited to misleading or misrepresentation in advertising.

(c) Provisional authorization to confer degrees.

(1) Initial Review. A written application based on the criteria set forth in subdivision (b) of this section, and including the fees set forth in (i) of this section, shall be submitted to the Department in a timeframe and manner prescribed by the Commissioner. Properly submitted applications shall be reviewed by the Department to determine whether the application demonstrates sufficient initial evidence of meeting the requirements set forth in subdivision (b) of this section.

(i) For those written applications that demonstrate sufficient initial evidence of meeting the requirements set forth in subdivision (b) of this section the Department shall notify the applicant in writing, and the applicant shall be subject to the secondary review procedures set forth in subdivision (c)(2).

(ii) For written applications that do not demonstrate sufficient initial evidence of meeting the requirements set in subdivision (b) of this section, the application will be closed without further action. The Department shall provide the applicant with the reasons for its decision in writing. The applicant may appeal the Department's decision to the Commissioner, within 10 days of the date of the Department's decision, and may submit additional information in support of its position in a timeframe determined by the Commissioner. Applicants whose applications have been closed may submit a new written application under the terms of subdivision (c)(1) no sooner than one year after the final determination to close the application.

(2) Secondary Review. For applications that meet the provisions of subdivision (c)(1)(i):

(i) The Department shall review any available information concerning the applicant, including but not limited to information related to availability of financial resources, academic quality and performance, and consumer protections.

(ii) The Department may cause the applicant to undergo an in-person capacity interview and a site review, and may require the applicant to provide additional reports and/or information based on the findings from such review.

(iii) The Department shall conduct a canvass of existing degree-granting institutions in accordance with section 137 of chapter 82 of the laws of 1995.

(3) Determination. For applicants that have completed the procedures set forth in subdivision (c)(2), the Deputy Commissioner shall consider the information obtained during the Department's review of the application during the initial and secondary review, including in-person interviews and any site reviews, and make a determination as to whether to recommend to the Commissioner and Board of Regents that provisional authorization be granted.

(i) If the Deputy Commissioner determines the applicant meets the requirements set forth in subdivision (b) of this section, and that the findings from the review do not raise a substantial question about the likelihood of success, effectiveness, or consumer protections, she/he shall make a recommendation to the Commissioner and Board of Regents to grant provisional authorization. At a regularly scheduled public meeting, the Board of Regents shall consider the Deputy Commissioner's recommendation and make the determination on whether to grant the applicant provisional authorization.

(ii) If the Deputy Commissioner determines the applicant does not meet the requirements set forth in subdivision (b) of this section, or that findings from the review raise a substantial question about the likelihood of success, effectiveness, or consumer protections, she/he will not make a recommendation to the Board of Regents and the application shall be closed without further action. The Deputy Commissioner shall provide the applicant with the reasons for the decision in writing. The applicant may appeal the Deputy Commissioner's decision to the Commissioner, within 10 days of the date of the Deputy Commissioner's decision, and may submit additional information in support of its position in a timeframe determined by the Commissioner. If an application is closed, a new written application may be submitted under the terms of subdivision (c)(1) no sooner than one year after the final determination to close the application.

(4) Progress toward permanent authorization. A provisionally authorized institution shall maintain a satisfactory demonstration of the requirements identified in subdivision (b) of this section.

(i) At the Department's request, the institution shall provide the Department with information and reports concerning its performance and demonstration of progress toward meeting the requirements for permanent authorization.

(ii) At least 12 months prior to the end of the provisional authorization period, the institution must apply to the Department for permanent authorization, in accordance with the requirements of subdivision (d) of this section. An institution that fails to apply for permanent authorization by the end of its provisional period shall not be eligible for permanent authorization and its provisional authorization shall expire at the end of its provisional period.

(d) Permanent authorization to confer degrees.

(1) An institution with provisional authorization shall submit to the Department, in a form and timeframe prescribed by the Commissioner, a written application for permanent authorization that provides satisfactory evidence of maintaining the requirements set forth in subdivision (b) of this section throughout its provisional period.

(2) The Department may cause the institution to undergo a site review and provide additional reports in support of its application for permanent authorization.

(3) The Deputy Commissioner shall review the information submitted by the institution and information obtained during the Department's site reviews, and other information obtained during the Department's review of the institution during its provisional period. The Deputy Commissioner shall consider whether the institution provides sufficient evidence that it met the requirements set forth in subdivision (b) of this section during the period of provisional authorization. On the basis of these considerations, the Deputy Commissioner shall make a recommendation to the Commissioner and Board of Regents to either grant permanent authorization, or extend provisional authorization, or deny permanent authorization.

(4) At a regularly scheduled public meeting, the Board of Regents shall consider the findings and recommendations of the Deputy Commissioner and take one of the following actions:

(i) grant permanent authorization;

(ii) extend provisional authority for an additional period for the purposes of additional review in consideration of permanent authorization;

(iii) deny permanent authorization and extend the provisional authorization period with limited authority for the purposes of teach-out and closure; or

(iv) deny permanent authorization and direct immediate closure.

(e) Transfer of degree-conferring authority.

(1) In accordance with Education Law, section 224(1)(b), no proprietary college holding degree-conferring authority granted by the Board of Regents shall convey, assign or transfer such degree-conferring authority through a change of ownership or control of the institution, without the consent of the Board of Regents to transfer such degree-conferring authority prior to the change of ownership or control of the institution, except that consent to a temporary transfer of degree-conferring authority may be obtained after a change of ownership or control of the institution already has been made where the Board of Regents determine there is an adequate showing of good cause as prescribed in paragraph (7) of this subdivision. The determination concerning whether to consent to the transfer of degree-conferring authority shall be made in accordance with the requirements and procedures of this subdivision.

(2) The department shall determine if a proposed transaction is a change of ownership or control of a proprietary college, as defined in subdivision (a) of this section.

(3) The department may expedite in terms of time the department's review for the transfer of degree-conferring authority in instances where the change of ownership or control of the institution is between family members, upon an adequate showing of good cause by the institution. For purposes of this paragraph, good cause shall include but not be limited to, evidence satisfactory to the department that the change of ownership or control will not materially affect the management of the institution, provided that an expedited review is in the best interests of students at the institution.

(4) The Board of Regents may limit or condition the degree-conferring authority of the proprietary college under the prospective owner based upon a review of the prospective owner's capacity to meet the standards prescribed in paragraph (6) of this subdivision.

(5)

(i) Where the Board of Regents did not consent to the transfer of degree-conferring authority prior to the change of ownership or control of a proprietary college, and where there is no temporary transfer of degree-conferring authority based upon good cause, as prescribed in paragraph (7) of this subdivision, the institution shall cease all instruction creditable towards a degree until such time as the Board of Regents shall have consented to the transfer of degree-conferring authority, except as provided in subparagraph (ii) of this paragraph. The new owner shall meet the responsibilities prescribed in subdivision (h) of this section applicable when there is a cessation of degree-conferring authority. The new owner shall apply under the procedures of paragraph (6) of this subdivision to request the consent of the Board of Regents for the transfer of degree-conferring authority.

(ii) Cessation of instruction as prescribed in subparagraph (i) of this paragraph shall be held in abeyance during the time period that the department and the Board of Regents are reviewing an institution's properly submitted application for a temporary transfer of degree-conferring authority in accordance with the requirements of paragraph (7) of this subdivision. During this period of review, the Board of Regents shall confer degrees upon students of the institution who, in the judgment of the Regents, have duly earned such degrees.

(6) Procedures for determining whether to consent to the transfer of degree-conferring authority.

(i) At least 180 days prior to the proposed date for consummation of the change of ownership or control of a proprietary college, the proprietary college holding degree-conferring authority shall inform the department in writing of the proposed change of ownership or control, and shall inform the prospective owner in writing that the Board of Regents must approve the transfer of degree-conferring authority of the proprietary college prior to the change of ownership or control of the institution, that such degree-conferring authority is not transferred when a proprietary college is purchased or other change of ownership or control takes place, and that the prospective owner must apply to the department for consent to the transfer of degree-conferring authority at least 150 days prior to the proposed date for the change of ownership or control of the proprietary college.

(ii) At least 150 days prior to the proposed date for the change of ownership or control of a proprietary college, the prospective owner shall apply to the department for the transfer of degree-conferring authority. The prospective owner shall submit to the department the following documentation which substantiates the prospective owner's capacity to operate the college:

(a) evidence confirming the prospective owner's capacity to operate the institution in compliance with the Education Law, program registration standards set forth in Part 52 of this Title, other rules of the Board of Regents and regulations of the Commissioner of Education, other State statutes and regulations, and Federal statutes and regulations, relevant to the operation of degree-granting institutions;

(b) evidence confirming that the prospective owner has sufficient financial resources to ensure satisfactory conduct of degree programs and achievement of the institution's stated educational goals;

(c) evidence of the prospective owner's experience operating an educational institution or other business or enterprise in an effective manner which demonstrates the prospective owner's capacity to operate a degree-granting institution;

(d) evidence that postsecondary education institutions that the prospective owner operates in New York State or elsewhere, if any, are in compliance with Federal and State statutes and regulations and accreditation requirements relevant to the operation of such institutions; and

(e) evidence that the prospective owner has not engaged in fraudulent or deceptive practices.

(iii) The department may make site visits to the proprietary college for which transfer of degree-conferring authority is being requested and institutions operated by the prospective owner, and require the prospective owner to provide additional reports and documentation in support of its application.

(iv) The deputy commissioner shall review the information submitted by the prospective owner and information obtained during the department's site visits, and other information obtained by the department during the department's review for transfer of degree-conferring authority, and make a recommendation on the matter within 60 days of receipt of a complete application, as determined by the department. This recommendation shall include the factual basis for the recommendation and shall be sent to the prospective owner and the proprietary college.

(v) Within 15 days of receipt of the deputy commissioner's recommendation, the prospective owner may request the deputy commissioner to reconsider that recommendation, and may submit with the application for reconsideration additional written information in support of its position. If the prospective owner does not request reconsideration during this time frame, the deputy commissioner's recommendation shall be the final recommendation on the transfer of degree-conferring authority, transmitted to the Board of Regents.

(vi) If the prospective owner timely requests reconsideration, the deputy commissioner shall consider the additional written information submitted by the prospective owner and make a final recommendation on the transfer of degree-conferring authority within 30 days of receipt of the request for reconsideration. Such final recommendation shall include the factual basis for the recommendation and shall be sent to the prospective owner and the proprietary college, and transmitted to the Board of Regents.

(vii) Regents decision. At a regularly scheduled public meeting, the Board of Regents shall consider the findings and recommendations of the deputy commissioner and make the final determination on the transfer of degree-conferring authority.

(7) Temporary transfer of degree-conferring authority.

(i) The Board of Regents may consent to a temporary transfer of degree-conferring authority after the change of ownership or control of the institution already has been made, upon an adequate showing of good cause by the institution. For purposes of this paragraph, good cause shall include but not be limited to, evidence satisfactory to the Board of Regents that conditions outside of the new owner's control caused the transfer of ownership or control of the institution prior to the institution obtaining the consent of the Board of Regents for the transfer of degree-conferring authority, provided that it is in the best interests of students at the institution to permit the institution to continue to offer degree programs.

(ii) The department shall review the institution's application for a temporary transfer of degree-conferring authority and may request other information from the institution during its review. The department shall make a recommendation to the Board of Regents concerning whether to grant consent to the temporary transfer of degree-conferring authority based upon good cause.

(iii) When the department determines that it is in the best interests of students of the institution, the department may require the institution to have a teach-out agreement with other institution(s) that is acceptable to the department, before making a positive recommendation to the Board of Regents that it grant consent to the temporary transfer of degree-conferring authority. The teach-out agreement shall be a written agreement between the institution requesting consent to the temporary transfer of degree-conferring authority and one or more degree-granting institutions. The agreement shall provide for the continuity of educational services to students enrolled in registered programs at the institution in the event that the Board of Regents does not consent to the transfer of degree-conferring authority after a review pursuant to paragraph (6) of this subdivision. To be acceptable to the department, the teach-out agreement shall ensure that the teach-out institution(s):

(a) has the necessary experience, resources, and support services to provide educational programs that are of acceptable quality and reasonably similar in content, structure, and scheduling to that provided by the institution requesting consent to the transfer of degree-conferring authority; and

(b) can provide students access to the programs and services without requiring them to move or travel substantial distances.

(iv) The Board of Regents consent to such temporary transfer may limit or condition the degree-conferring authority of the institution. Such temporary transfer shall be for an initial period not to exceed 180 days, but may be extended for such additional periods as determined by the Board of Regents.

(v) Before consent to a temporary transfer of degree-conferring authority may be granted, the new owner must also apply under the regular procedures of paragraph (6) of this subdivision for the review required for the transfer of degree-conferring authority.

(f) Revocation of or limitation on degree-conferring authority.

(1) The Board of Regents may revoke in whole or part or limit the degree-conferring authority of a proprietary college for sufficient cause. As a prerequisite for the revocation in whole or part of degree-conferring authority in accordance with the requirements of this subdivision, all registered programs at the institution leading to the degree(s) covered by the revocation must first be denied re-registration by the department pursuant to the requirements and procedures prescribed in Part 52 of this Title. Such prerequisite shall not apply when the proceeding under this subdivision does not concern revocation of an institution's authority to confer a degree or degrees and only concerns limitations on degree-conferring authority, such as enrollment caps.

(2) Procedures for determining whether to revoke or limit degree-conferring authority.

(i) The department may review the capacity of a proprietary college to continue to have degree-conferring authority and may cause the institution to undergo site visits and require the institution to provide reports and written information in support of the continuation of degree-conferring authority. The department's review shall determine whether the institution violated substantive requirements of Part 52 of this Title that demonstrate that the institution does not have the ability to offer quality programs leading to the degree(s) covered by the revocation or that demonstrate that the institution must have limitations on degree-conferring authority to ensure the quality of the degree programs offered by the institution.

(ii) The deputy commissioner shall review the record relating to the denial of re-registration of programs leading to the degree(s) covered by the revocation, information submitted by the institution and information obtained during the department's site visits, and other information obtained during the department's review of the institution for continuing degree-conferring authority. Based upon such review, the deputy commissioner may recommend that the Board of Regents revoke in whole or in part or otherwise limit the authority of a proprietary college to confer degrees upon sufficient cause, meaning the institution violated substantive requirements of Part 52 of this Title that demonstrate that the institution does not have the ability to offer quality programs leading to the degree(s) covered by the revocation or that demonstrate that the institution must have limitations on degree-conferring authority to ensure the quality of the degree programs. This recommendation shall include the factual basis for the recommendation and shall be sent to the institution.

(iii) Within 30 days of receipt of the deputy commissioner's recommendation to revoke or limit degree-conferring authority, the institution may request the deputy commissioner to reconsider that recommendation, and may submit with the application for reconsideration additional written information in support of its position. If the institution does not request reconsideration during this time frame, the deputy commissioner's recommendation shall be the final recommendation on whether the degree-conferring authority shall be revoked in whole or part or limited, and such recommendation shall be transmitted to the Board of Regents.

(iv) If the institution timely requests reconsideration, the deputy commissioner shall consider the additional written information submitted by the institution and make a final recommendation to the Board of Regents on whether to revoke in whole or part or limit degree-conferring authority of the institution. Such final recommendation shall include the factual basis for the recommendation and shall be sent to the institution and transmitted to the Board of Regents.

(v) Within 30 days of receiving the final recommendation of the deputy commissioner, the proprietary college may submit to the Board of Regents a written response to the deputy commissioner's final recommendation, which may include supporting affidavits, exhibits, and documentary evidence and may present legal argument. In such written response, the proprietary college may at its discretion request an opportunity for oral argument.

(vi) The matter shall be reviewed by a panel of the Board of Regents consisting of at least three Regents designated by the Chancellor of the Board of Regents. This panel shall hear oral argument, if requested by the proprietary college in its written response as prescribed in subparagraph (v) of this paragraph. At this oral argument, representatives of the proprietary college and the deputy commissioner may speak and present additional documentary evidence and written submissions. After its consideration of the deputy commissioner's recommendation, the written response of the proprietary college, if any, and oral argument and documentary evidence and written submissions taken at oral argument, if any, the designated Regents panel shall make a recommendation to the full Board of Regents as to whether the degree-conferring authority shall be revoked in whole or part or limited. Such recommendation shall include the factual basis for the recommendation.

(vii) Regents decision. At a regularly scheduled public meeting, the Board of Regents shall consider the findings and recommendations of the designated Regents panel and make the final determination on whether the degree-conferring authority of the institution shall be revoked in whole or part or limited.

(g) Surrender of degree-conferring authority.

(1) A proprietary college may make application to surrender in whole or in part its degree-conferring authority. Such application shall be in writing and submitted to the department. The institution shall describe in such application how it will meet the institutional responsibilities prescribed in subdivision (h) of this section applicable when there is a cessation of degree-conferring authority at a proprietary college.

(2) At a regularly scheduled public meeting, the Board of Regents shall determine whether to accept the proprietary college's request to surrender in whole or part its degree-conferring authority.

(h) Institutional responsibilities upon cessation of degree-conferring authority. A proprietary college whose degree-conferring authority has expired or has been surrendered, denied, or revoked shall:

(1) cease recruitment for enrollment of new students in each program registered pursuant to Part 52 of this Title creditable towards the degree or degrees covered by the expiration, surrender, denial, or revocation of degree-conferring authority;

(2) cease operation of each program registered pursuant to Part 52 of this Title creditable towards the degree or degrees that are covered by the expiration, surrender, denial, or revocation of degree-conferring authority by the effective date of such expiration, surrender, denial or revocation; and

(3) cooperate with the department to ensure that students already enrolled in programs creditable towards the degree or degrees covered by the expiration, surrender, denial or revocation of degree-conferring authority are able to find avenues for completion of their studies with a minimum of disruption.

(i) Fees. In addition to the fees set forth in section 3.23 of this Title, applicants who apply for provisional or permanent authority under this section, shall be subject to the following fees:

(1) Application for provisional authorization. A nonrefundable and nontransferable fee of $7,000 shall be submitted with an application for provisional authorization under this section, plus $2,500 for each additional degree program if more than one such program is requested. Failure to submit this fee with the application will constitute an incomplete application and submitted materials will not be reviewed.

(2) In-person capacity interview. A nonrefundable and nontransferable fee of $1,500 shall be submitted upon notice from the Department pursuant to subdivision (c)(1)(i) of this section that such an interview is needed. Failure to submit this fee within 90 days of the Department's notification will result in the application being closed without further action.

(3) Site-review. A nonrefundable and nontransferable fee of $5,000 shall be submitted upon notification from the Department that a site-review is needed pursuant to subdivisions (c)(2)(ii) or (d)(2) of this section. Failure to submit this fee within 90 days of the Department's notification will result in the application being closed without further action.

(4) Annual administrative fee. An institution granted provisional authorization shall be subject to an annual non-refundable fee of $5,000 commencing in the first annual period that the institution obtains provisional authorization, and for each annual period through the term of its provisional authorization. The fee for each annual period shall be due no later than 60 days prior to the start of each annual period for such institution, as determined by the Department.

N.Y. Comp. Codes R. & Regs. Tit. 8 § 3.58

Amended New York State Register March 28, 2018/Volume XL, Issue 13, eff. 3/28/2018