 
      CHAPTER 28--HIGHER EDUCATION RESOURCES AND STUDENT ASSISTANCE
 
                    SUBCHAPTER IV--STUDENT ASSISTANCE
 
                        Part G--Program Integrity
 
           subpart 3--eligibility and certification procedures
 
Sec. 1099c. Eligibility and certification procedures


(a) General requirement

    For purposes of qualifying institutions of higher education for 
participation in programs under this subchapter and part C of subchapter 
I of chapter 34 of title 42, the Secretary shall determine the legal 
authority to operate within a State, the accreditation status, and the 
administrative capability and financial responsibility of an institution 
of higher education in accordance with the requirements of this section.

(b) Single application form

    The Secretary shall prepare and prescribe a single application form 
which--
        (1) requires sufficient information and documentation to 
    determine that the requirements of eligibility, accreditation, 
    financial responsibility, and administrative capability of the 
    institution of higher education are met;
        (2) requires a specific description of the relationship between 
    a main campus of an institution of higher education and all of its 
    branches, including a description of the student aid processing that 
    is performed by the main campus and that which is performed at its 
    branches;
        (3) requires--
            (A) a description of the third party servicers of an 
        institution of higher education; and
            (B) the institution to maintain a copy of any contract with 
        a financial aid service provider or loan servicer, and provide a 
        copy of any such contract to the Secretary upon request;

        (4) requires such other information as the Secretary determines 
    will ensure compliance with the requirements of this subchapter and 
    part C of subchapter I of chapter 34 of title 42 with respect to 
    eligibility, accreditation, administrative capability and financial 
    responsibility; and
        (5) provides, at the option of the institution, for 
    participation in one or more of the programs under part B or C of 
    this subchapter.

(c) Financial responsibility standards

    (1) The Secretary shall determine whether an institution has the 
financial responsibility required by this subchapter and part C of 
subchapter I of chapter 34 of title 42 on the basis of whether the 
institution is able--
        (A) to provide the services described in its official 
    publications and statements;
        (B) to provide the administrative resources necessary to comply 
    with the requirements of this subchapter and part C of subchapter I 
    of chapter 34 of title 42; and
        (C) to meet all of its financial obligations, including (but not 
    limited to) refunds of institutional charges and repayments to the 
    Secretary for liabilities and debts incurred in programs 
    administered by the Secretary.

    (2) Notwithstanding paragraph (1), if an institution fails to meet 
criteria prescribed by the Secretary regarding ratios that demonstrate 
financial responsibility, then the institution shall provide the 
Secretary with satisfactory evidence of its financial responsibility in 
accordance with paragraph (3). Such criteria shall take into account any 
differences in generally accepted accounting principles, and the 
financial statements required thereunder, that are applicable to for 
profit, public, and nonprofit institutions. The Secretary shall take 
into account an institution's total financial circumstances in making a 
determination of its ability to meet the standards herein required.
    (3) The Secretary shall determine an institution to be financially 
responsible, notwithstanding the institution's failure to meet the 
criteria under paragraphs (1) and (2), if--
        (A) such institution submits to the Secretary third-party 
    financial guarantees that the Secretary determines are reasonable, 
    such as performance bonds or letters of credit payable to the 
    Secretary, which third-party financial guarantees shall equal not 
    less than one-half of the annual potential liabilities of such 
    institution to the Secretary for funds under this subchapter and 
    part C of subchapter I of chapter 34 of title 42, including loan 
    obligations discharged pursuant to section 1087 of this title, and 
    to students for refunds of institutional charges, including funds 
    under this subchapter and part C of subchapter I of chapter 34 of 
    title 42;
        (B) such institution has its liabilities backed by the full 
    faith and credit of a State, or its equivalent;
        (C) such institution establishes to the satisfaction of the 
    Secretary, with the support of a financial statement audited by an 
    independent certified public accountant in accordance with generally 
    accepted auditing standards, that the institution has sufficient 
    resources to ensure against the precipitous closure of the 
    institution, including the ability to meet all of its financial 
    obligations (including refunds of institutional charges and 
    repayments to the Secretary for liabilities and debts incurred in 
    programs administered by the Secretary); or
        (D) such institution has met standards of financial 
    responsibility, prescribed by the Secretary by regulation, that 
    indicate a level of financial strength not less than those required 
    in paragraph (2).

    (4) If an institution of higher education that provides a 2-year or 
4-year program of instruction for which the institution awards an 
associate or baccalaureate degree fails to meet the criteria imposed by 
the Secretary pursuant to paragraph (2), the Secretary shall waive that 
particular requirement for that institution if the institution 
demonstrates to the satisfaction of the Secretary that--
        (A) there is no reasonable doubt as to its continued solvency 
    and ability to deliver quality educational services;
        (B) it is current in its payment of all current liabilities, 
    including student refunds, repayments to the Secretary, payroll, and 
    payment of trade creditors and withholding taxes; and
        (C) it has substantial equity in school-occupied facilities, the 
    acquisition of which was the direct cause of its failure to meet the 
    criteria.

    (5) The determination as to whether an institution has met the 
standards of financial responsibility provided for in paragraphs (2) and 
(3)(C) shall be based on an audited and certified financial statement of 
the institution. Such audit shall be conducted by a qualified 
independent organization or person in accordance with standards 
established by the American Institute of Certified Public Accountants. 
Such statement shall be submitted to the Secretary at the time such 
institution is considered for certification or recertification under 
this section. If the institution is permitted to be certified 
(provisionally or otherwise) and such audit does not establish 
compliance with paragraph (2), the Secretary may require that additional 
audits be submitted.
    (6)(A) The Secretary shall establish requirements for the 
maintenance by an institution of higher education of sufficient cash 
reserves to ensure repayment of any required refunds.
    (B) The Secretary shall provide for a process under which the 
Secretary shall exempt an institution of higher education from the 
requirements described in subparagraph (A) if the Secretary determines 
that the institution--
        (i) is located in a State that has a tuition recovery fund that 
    ensures that the institution meets the requirements of subparagraph 
    (A);
        (ii) contributes to the fund; and
        (iii) otherwise has legal authority to operate within the State.

(d) Administrative capacity standard

    The Secretary is authorized--
        (1) to establish procedures and requirements relating to the 
    administrative capacities of institutions of higher education, 
    including--
            (A) consideration of past performance of institutions or 
        persons in control of such institutions with respect to student 
        aid programs; and
            (B) maintenance of records;

        (2) to establish such other reasonable procedures as the 
    Secretary determines will contribute to ensuring that the 
    institution of higher education will comply with administrative 
    capability required by this subchapter and part C of subchapter I of 
    chapter 34 of title 42.

(e) Financial guarantees from owners

    (1) Notwithstanding any other provision of law, the Secretary may, 
to the extent necessary to protect the financial interest of the United 
States, require--
        (A) financial guarantees from an institution participating, or 
    seeking to participate, in a program under this subchapter and part 
    C of subchapter I of chapter 34 of title 42, or from one or more 
    individuals who the Secretary determines, in accordance with 
    paragraph (2), exercise substantial control over such institution, 
    or both, in an amount determined by the Secretary to be sufficient 
    to satisfy the institution's potential liability to the Federal 
    Government, student assistance recipients, and other program 
    participants for funds under this subchapter and part C of 
    subchapter I of chapter 34 of title 42; and
        (B) the assumption of personal liability, by one or more 
    individuals who exercise substantial control over such institution, 
    as determined by the Secretary in accordance with paragraph (2), for 
    financial losses to the Federal Government, student assistance 
    recipients, and other program participants for funds under this 
    subchapter and part C of subchapter I of chapter 34 of title 42, and 
    civil and criminal monetary penalties authorized under this 
    subchapter and part C of subchapter I of chapter 34 of title 42.

    (2)(A) The Secretary may determine that an individual exercises 
substantial control over one or more institutions participating in a 
program under this subchapter and part C of subchapter I of chapter 34 
of title 42 if the Secretary determines that--
        (i) the individual directly or indirectly controls a substantial 
    ownership interest in the institution;
        (ii) the individual, either alone or together with other 
    individuals, represents, under a voting trust, power of attorney, 
    proxy, or similar agreement, one or more persons who have, 
    individually or in combination with the other persons represented or 
    the individual representing them, a substantial ownership interest 
    in the institution; or
        (iii) the individual is a member of the board of directors, the 
    chief executive officer, or other executive officer of the 
    institution or of an entity that holds a substantial ownership 
    interest in the institution.

    (B) The Secretary may determine that an entity exercises substantial 
control over one or more institutions participating in a program under 
this subchapter and part C of subchapter I of chapter 34 of title 42 if 
the Secretary determines that the entity directly or indirectly holds a 
substantial ownership interest in the institution.
    (3) For purposes of this subsection, an ownership interest is 
defined as a share of the legal or beneficial ownership or control of, 
or a right to share in the proceeds of the operation of, an institution 
or institution's parent corporation. An ownership interest may include, 
but is not limited to--
        (A) a sole proprietorship;
        (B) an interest as a tenant-in-common, joint tenant, or tenant 
    by the entireties;
        (C) a partnership; or
        (D) an interest in a trust.

    (4) The Secretary shall not impose the requirements described in 
subparagraphs (A) and (B) of paragraph (1) on an institution that--
        (A) has not been subjected to a limitation, suspension, or 
    termination action by the Secretary or a guaranty agency within the 
    preceding 5 years;
        (B) has not had, during its 2 most recent audits of the 
    institutions conduct of programs under this subchapter and part C of 
    subchapter I of chapter 34 of title 42, an audit finding that 
    resulted in the institution being required to repay an amount 
    greater than 5 percent of the funds the institution received from 
    programs under this subchapter and part C of subchapter I of chapter 
    34 of title 42 for any year;
        (C) meets and has met, for the preceding 5 years, the financial 
    responsibility standards under subsection (c) of this section; and
        (D) has not been cited during the preceding 5 years for failure 
    to submit audits required under this subchapter and part C of 
    subchapter I of chapter 34 of title 42 in a timely fashion.

    (5) For purposes of section 1094(c)(1)(G) of this title, this 
section shall also apply to individuals or organizations that contract 
with an institution to administer any aspect of an institution's student 
assistance program under this subchapter and part C of subchapter I of 
chapter 34 of title 42.
    (6) Notwithstanding any other provision of law, any individual who--
        (A) the Secretary determines, in accordance with paragraph (2), 
    exercises substantial control over an institution participating in, 
    or seeking to participate in, a program under this subchapter and 
    part C of subchapter I of chapter 34 of title 42;
        (B) is required to pay, on behalf of a student or borrower, a 
    refund of unearned institutional charges to a lender, or to the 
    Secretary; and
        (C) willfully fails to pay such refund or willfully attempts in 
    any manner to evade payment of such refund,

shall, in addition to other penalties provided by law, be liable to the 
Secretary for the amount of the refund not paid, to the same extent with 
respect to such refund that such an individual would be liable as a 
responsible person for a penalty under section 6672(a) of title 26 with 
respect to the nonpayment of taxes.

(f) Actions on applications and site visits

    The Secretary shall ensure that prompt action is taken by the 
Department on any application required under subsection (b) of this 
section. The personnel of the Department of Education may conduct a site 
visit at each institution before certifying or recertifying its 
eligibility for purposes of any program under this subchapter and part C 
of subchapter I of chapter 34 of title 42. The Secretary shall establish 
priorities by which institutions are to receive site visits, and shall, 
to the extent practicable, coordinate such visits with site visits by 
States, guaranty agencies, and accrediting bodies in order to eliminate 
duplication, and reduce administrative burden.

(g) Time limitations on, and renewal of, eligibility

                          (1) General rule

        After the expiration of the certification of any institution 
    under the schedule prescribed under this section (as this section 
    was in effect prior to October 7, 1998), or upon request for initial 
    certification from an institution not previously certified, the 
    Secretary may certify the eligibility for the purposes of any 
    program authorized under this subchapter and part C of subchapter I 
    of chapter 34 of title 42 of each such institution for a period not 
    to exceed 6 years.

                          (2) Notification

        The Secretary shall notify each institution of higher education 
    not later than 6 months prior to the date of the expiration of the 
    institution's certification.

             (3) Institutions outside the United States

        The Secretary shall promulgate regulations regarding the 
    recertification requirements applicable to an institution of higher 
    education outside of the United States that meets the requirements 
    of section 1002(a)(1)(C) of this title and received less than 
    $500,000 in funds under part B of this subchapter for the most 
    recent year for which data are available.

(h) Provisional certification of institutional eligibility

    (1) Notwithstanding subsections (d) and (g) of this section, the 
Secretary may provisionally certify an institution's eligibility to 
participate in programs under this subchapter and part C of subchapter I 
of chapter 34 of title 42--
        (A) for not more than one complete award year in the case of an 
    institution of higher education seeking an initial certification; 
    and
        (B) for not more than 3 complete award years if--
            (i) the institution's administrative capability and 
        financial responsibility is being determined for the first time;
            (ii) there is a complete or partial change of ownership, as 
        defined under subsection (i) of this section, of an eligible 
        institution; or
            (iii) the Secretary determines that an institution that 
        seeks to renew its certification is, in the judgment of the 
        Secretary, in an administrative or financial condition that may 
        jeopardize its ability to perform its financial responsibilities 
        under a program participation agreement.

    (2) Whenever the Secretary withdraws the recognition of any 
accrediting agency, an institution of higher education which meets the 
requirements of accreditation, eligibility, and certification on the day 
prior to such withdrawal, the Secretary may, notwithstanding the 
withdrawal, continue the eligibility of the institution of higher 
education to participate in the programs authorized by this subchapter 
and part C of subchapter I of chapter 34 of title 42 for a period not to 
exceed 18 months from the date of the withdrawal of recognition.
    (3) If, prior to the end of a period of provisional certification 
under this subsection, the Secretary determines that the institution is 
unable to meet its responsibilities under its program participation 
agreement, the Secretary may terminate the institution's participation 
in programs under this subchapter and part C of subchapter I of chapter 
34 of title 42.

(i) Treatment of changes of ownership

    (1) An eligible institution of higher education that has had a 
change in ownership resulting in a change of control shall not qualify 
to participate in programs under this subchapter and part C of 
subchapter I of chapter 34 of title 42 after the change in control 
(except as provided in paragraph (3)) unless it establishes that it 
meets the requirements of section 1002 of this title (other than the 
requirements in subsections (b)(5) and (c)(3) \1\) and this section 
after such change in control.
---------------------------------------------------------------------------
    \1\ See References in Text note below.
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    (2) An action resulting in a change in control may include (but is 
not limited to)--
        (A) the sale of the institution or the majority of its assets;
        (B) the transfer of the controlling interest of stock of the 
    institution or its parent corporation;
        (C) the merger of two or more eligible institutions;
        (D) the division of one or more institutions into two or more 
    institutions;
        (E) the transfer of the controlling interest of stock of the 
    institutions to its parent corporation; or
        (F) the transfer of the liabilities of the institution to its 
    parent corporation.

    (3) An action that may be treated as not resulting in a change in 
control includes (but is not limited to)--
        (A) the sale or transfer, upon the death of an owner of an 
    institution, of the ownership interest of the deceased in that 
    institution to a family member or to a person holding an ownership 
    interest in that institution; or
        (B) another action determined by the Secretary to be a routine 
    business practice.

    (4)(A) The Secretary may provisionally certify an institution 
seeking approval of a change in ownership based on the preliminary 
review by the Secretary of a materially complete application that is 
received by the Secretary within 10 business days of the transaction for 
which the approval is sought.
    (B) A provisional certification under this paragraph shall expire 
not later than the end of the month following the month in which the 
transaction occurred, except that if the Secretary has not issued a 
decision on the application for the change of ownership within that 
period, the Secretary may continue such provisional certification on a 
month-to-month basis until such decision has been issued.

(j) Treatment of branches

    (1) A branch of an eligible institution of higher education, as 
defined pursuant to regulations of the Secretary, shall be certified 
under this subpart before it may participate as part of such institution 
in a program under this subchapter and part C of subchapter I of chapter 
34 of title 42, except that such branch shall not be required to meet 
the requirements of sections 1002(b)(1)(E) and 1002(c)(1)(C) of this 
title prior to seeking such certification. Such branch is required to be 
in existence at least 2 years after the branch is certified by the 
Secretary as a branch campus participating in a program under this 
subchapter and part C of subchapter I of chapter 34 of title 42, prior 
to seeking certification as a main campus or free-standing institution.
    (2) The Secretary may waive the requirement of section 1001(a)(2) of 
this title for a branch that (A) is not located in a State, (B) is 
affiliated with an eligible institution, and (C) was participating in 
one or more programs under this subchapter and part C of subchapter I of 
chapter 34 of title 42 on or before January 1, 1992.

(Pub. L. 89-329, title IV, Sec. 498, as added Pub. L. 102-325, title IV, 
Sec. 499, July 23, 1992, 106 Stat. 647; amended Pub. L. 103-208, 
Sec. 2(i)(9)-(14), Dec. 20, 1993, 107 Stat. 2479, 2480; Pub. L. 105-244, 
title I, Sec. 102(a)(6)(B), (b)(6), (7), title IV, Sec. 493(a)-(c)(1), 
(d)-(h), Oct. 7, 1998, 112 Stat. 1618, 1622, 1761-1763.)

                       References in Text

    Subsections (b)(5) and (c)(3), referred to in subsec. (i)(1), 
originally meant subsections (b)(5) and (c)(3) of section 1088 of this 
title, see 1998 Amendment note below for subsec. (i)(1). Pub. L. 105-
244, title I, Sec. 101(c), Oct. 7, 1998, 112 Stat. 1617, amended section 
1088 by striking out subsecs. (b) and (c) and redesignating subsecs. (e) 
and (f) as (b) and (c), respectively. Section 1002 of this title does 
not contain a subsec. (b)(5) or (c)(3), but provisions similar to those 
appearing in former subsecs. (b)(5) and (c)(3) of section 1088 are 
contained in subsecs. (b)(1)(E) and (c)(1)(C) of section 1002.


                               Amendments

    1998--Subsec. (b)(1). Pub. L. 105-244, Sec. 493(a)(1), substituted 
``financial responsibility, and administrative capability'' for ``and 
capability''.
    Subsec. (b)(3). Pub. L. 105-244, Sec. 493(a)(2), amended par. (3) 
generally. Prior to amendment, par. (3) read as follows: ``requires a 
description of third party servicers of an institution of higher 
education, together with a copy of any contract with the institution of 
higher education and a financial aid service provider or loan servicer; 
and''.
    Subsec. (b)(5). Pub. L. 105-244, Sec. 493(a)(3), (4), added par. 
(5).
    Subsec. (c)(2). Pub. L. 105-244, Sec. 493(b)(1)(B), inserted ``, 
public,'' after ``for profit'' in second sentence.
    Pub. L. 105-244, Sec. 493(b)(1)(A), which directed amendment of 
first sentence by substituting ``regarding ratios that demonstrate 
financial responsibility,'' for ``with respect to operating losses, net 
worth, asset-to-liabilities ratios, or operating fund deficits'', was 
executed by making the substitution for text which read ``asset-to-
liabilities ratios'' rather than ``asset to liabilities ratios'', to 
reflect the probable intent of Congress.
    Subsec. (c)(3)(A). Pub. L. 105-244, Sec. 493(b)(2), inserted ``that 
the Secretary determines are reasonable'' after ``Secretary third-party 
financial guarantees''.
    Subsec. (c)(4). Pub. L. 105-244, Sec. 493(b)(3)(A), substituted 
``criteria'' for ``ratio of current assets to current liabilities'' in 
introductory provisions.
    Subsec. (c)(4)(C). Pub. L. 105-244, Sec. 493(b)(3)(B), substituted 
``criteria'' for ``current operating ratio requirement''.
    Subsec. (e)(6). Pub. L. 105-244, Sec. 493(c)(1), added par. (6).
    Subsec. (f). Pub. L. 105-244, Sec. 493(d), substituted ``and site 
visits'' for ``; site visits and fees'' in heading, ``may'' for 
``shall'' in second sentence, and ``shall establish'' for ``may 
establish'' and ``shall, to the extent practicable, coordinate'' for 
``may coordinate'' in third sentence, and struck out at end ``The 
Secretary may charge reasonable fees to cover the expenses of 
certification and site visits and, to the extent permitted by 
appropriations Acts, may retain such fees to cover such expenses.''
    Subsec. (g). Pub. L. 105-244, Sec. 493(e), amended heading and text 
of subsec. (g) generally. Prior to amendment, text read as follows:
    ``(1) The eligibility for the purposes of any program authorized 
under this subchapter and part C of subchapter I of chapter 34 of title 
42 of any institution that is participating in any such program on July 
23, 1992, shall expire in accordance with the schedule prescribed by the 
Secretary in accordance with paragraph (2), but not later than 5 years 
after July 23, 1992.
    ``(2) The Secretary shall establish a schedule for the expiration of 
the eligibility for purposes of any such program of all institutions of 
higher education within the 5-year period specified in paragraph (1). 
Such schedule shall place a priority for the expiration of the 
certification of institutions on those that meet the following criteria:
        ``(A) institutions subject to review by a State postsecondary 
    review entity pursuant to subpart 1 of this part; or
        ``(B) other categories of institutions which the Secretary deems 
    necessary.
    ``(3) After the expiration of the certification of any institution 
under the schedule prescribed under this subsection, or upon request for 
initial certification from an institution not previously certified, the 
Secretary may certify the eligibility for the purposes of any program 
authorized under this subchapter and part C of subchapter I of chapter 
34 of title 42 of each such institution for a period not to exceed 4 
years.''
    Subsec. (h)(2). Pub. L. 105-244, Sec. 493(f), substituted ``the 
recognition'' for ``the approval'' and ``of recognition'' for ``of 
approval''.
    Subsec. (i)(1). Pub. L. 105-244, Sec. 102(b)(6), substituted 
``section 1002'' for ``section 1088''.
    Subsec. (i)(4). Pub. L. 105-244, Sec. 493(g), added par. (4).
    Subsec. (j)(1). Pub. L. 105-244, Sec. 493(h), inserted ``after the 
branch is certified by the Secretary as a branch campus participating in 
a program under this subchapter and part C of subchapter I of chapter 34 
of title 42,'' after ``2 years''.
    Pub. L. 105-244, Sec. 102(b)(7)(A), substituted ``sections 
1002(b)(1)(E) and 1002(c)(1)(C)'' for ``sections 1088(b)(5) and 
1088(c)(3)''.
    Subsec. (j)(2). Pub. L. 105-244, Sec. 102(a)(6)(B), (b)(7)(B), 
amended par. (2) identically, substituting ``section 1001(a)(2)'' for 
``section 1141(a)(2)''.
    1993--Subsec. (c)(2). Pub. L. 103-208, Sec. 2(i)(9)(A), inserted at 
end ``Such criteria shall take into account any differences in generally 
accepted accounting principles, and the financial statements required 
thereunder, that are applicable to for profit and nonprofit 
institutions. The Secretary shall take into account an institution's 
total financial circumstances in making a determination of its ability 
to meet the standards herein required.''
    Subsec. (c)(3). Pub. L. 103-208, Sec. 2(i)(9)(B), substituted ``The 
Secretary shall determine'' for ``The Secretary may determine'' in 
introductory provisions.
    Subsec. (c)(3)(C). Pub. L. 103-208, Sec. 2(i)(9)(C), amended subpar. 
(C) generally. Prior to amendment, subpar. (C) read as follows: ``such 
institution establishes to the satisfaction of the Secretary, with the 
support of a report of an independent certified public accountant 
prepared under generally accepted accounting principles, that the 
institution is a going concern capable of meeting all of its financial 
obligations, including (but not limited to) refunds of institutional 
charges and repayments to the Secretary for liabilities and debts 
incurred in programs administered by the Secretary; or''.
    Subsec. (c)(4) to (6). Pub. L. 103-208, Sec. 2(i)(9)(D), (E), added 
par. (4) and redesignated former pars. (4) and (5) as (5) and (6), 
respectively.
    Subsec. (f). Pub. L. 103-208, Sec. 2(i)(10), inserted after second 
sentence ``The Secretary may establish priorities by which institutions 
are to receive site visits, and may coordinate such visits with site 
visits by States, guaranty agencies, and accrediting bodies in order to 
eliminate duplication, and reduce administrative burden.''
    Subsec. (h)(1)(B)(iii). Pub. L. 103-208, Sec. 2(i)(11), amended cl. 
(iii) generally. Prior to amendment, cl. (iii) read as follows: ``the 
Secretary determines that the institution is, in the judgment of the 
Secretary, in an administrative or financial condition that may 
jeopardize its ability to perform its responsibilities under its program 
participation agreement.''
    Subsec. (i)(1). Pub. L. 103-208, Sec. 2(i)(12), amended par. (1) 
generally. Prior to amendment, par. (1) read as follows: ``For the 
purpose of certifying the eligibility of an institution, an eligible 
institution of higher education that has a change in ownership resulting 
in a change in control shall not be considered to be the same 
institution (except as provided in paragraph (3)) and shall be 
considered a new institution for the purpose of establishing 
eligibility, except that such institution shall not be required (under 
section 1088(b)(5) or 1088(c)(3) of this title) to be in existence for 2 
years prior to seeking such certification unless such institution was in 
existence as a branch for less than 2 years.''
    Subsec. (i)(3)(A). Pub. L. 103-208, Sec. 2(i)(13), amended subpar. 
(A) generally. Prior to amendment, subpar. (A) read as follows: ``the 
death of an owner of an institution, when the owner's interest is sold 
or transferred to either a family member or a current stockholder of the 
corporation; or''.
    Subsec. (j)(1). Pub. L. 103-208, Sec. 2(i)(14), amended par. (1) 
generally. Prior to amendment, par. (1) read as follows: ``For the 
purposes of this subchapter and part C of subchapter I of chapter 34 of 
title 42, a branch of an eligible institution, as defined pursuant to 
regulations of the Secretary, is a separate institution of higher 
education and shall separately meet all the requirements of this 
subchapter and part C of subchapter I of chapter 34 of title 42, except 
that such institution shall not be required (under section 1088(b)(5) or 
1088(c)(3) of this title) to be in existence for 2 years prior to 
seeking such certification unless such institution was in existence as a 
branch for less than 2 years.''


                    Effective Date of 1998 Amendment

    Amendment by sections 102(a)(6)(B), (b)(6), (7) and 493(a), (b), 
(d)-(h) of Pub. L. 105-244 effective Oct. 1, 1998, except as otherwise 
provided in Pub. L. 105-244, see section 3 of Pub. L. 105-244, set out 
as a note under section 1001 of this title.
    Pub. L. 105-244, title IV, Sec. 493(c)(2), Oct. 7, 1998, 112 Stat. 
1762, provided that: ``The amendment made by paragraph (1) [amending 
this section] shall be effective with respect to any unpaid refunds that 
were first required to be paid to a lender or to the Secretary on or 
after 90 days after the date of enactment of this Act [Oct. 7, 1998].''


                    Effective Date of 1993 Amendment

    Amendment by Pub. L. 103-208 effective as if included in the Higher 
Education Amendments of 1992, Pub. L. 102-325, except as otherwise 
provided, see section 5(a) of Pub. L. 103-208, set out as a note under 
section 1051 of this title.


                             Effective Date

    Subpart effective Oct. 1, 1992, see section 2 of Pub. L. 102-325, 
set out as an Effective Date of 1992 Amendment note under section 1001 
of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 1087dd, 1094, 1099c-1, 5938 
of this title.
