C.F.R. » Title 34 » CHAPTER VI—OFFICE OF POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION › PART 668—STUDENT ASSISTANCE GENERAL PROVISIONS › Subpart G—Fine, Limitation, Suspension and Termination Proceedings

34 C.F.R. § 668.86

Limitation or termination proceedings

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(a) Scope and consequences. (1) The Secretary may limit or terminate an institution's participation in a Title IV, HEA program or the eligibility of a third-party servicer to contract with any institution to administer any aspect of the institution's participation in any Title IV, HEA program, if the institution or servicer—

(i) Violates any statutory provision of or applicable to Title IV of the HEA, any regulatory provision prescribed under that statutory authority, or any applicable special arrangement, agreement, or limitation entered into under the authority of statutes applicable to Title IV of the HEA; or

(ii) Substantially misrepresents the nature of—

(A) In the case of an institution, its educational program, its financial charges, or the employability of its graduates; or

(B) In the case of a third-party servicer, as applicable, the educational program, financial charges, or employability of the graduates of any institution that contracts with the servicer.

(2) If the Secretary begins a limitation or termination proceeding against a third-party servicer, the Secretary also may begin a fine, limitation, suspension, or termination proceeding against any institution under whose contract a third-party servicer commits the violation.

(3) The consequences of the limitation or termination of the institution's participation or the servicer's eligibility are described in §§ 668.94 and 668.95, respectively.

(b) Procedures. (1) A designated department official begins a limitation or termination proceeding by sending an institution or third-party servicer a notice by certified mail, return receipt requested. In the case of a limitation or termination proceeding against a third-party servicer, the official also sends the notice to each institution that contracts with the servicer. The designated department official may also transmit the notice by other, more expeditious means if practical. This notice—

(i) Informs the institution or servicer of the intent of the Secretary to limit or terminate the institution's participation or servicer's eligibility, as applicable, cites the consequences of that action, and identifies the alleged violations that constitute the basis for the action, and, in the case of a limitation proceeding, states the limits to be imposed;

(ii) Specifies the proposed effective date of the limitation or termination, which is at least 20 days after the date of mailing of the notice of intent;

(iii) Informs the institution or servicer that the limitation or termination will not be effective on the date specified in the notice if the designated department official receives from the institution or servicer, as applicable, by that date a request for a hearing or written material indicating why the limitation or termination should not take place; and

(iv) In the case of a limitation or termination proceeding against a third-party servicer, informs each institution that contracts with the servicer of the consequences of the action to the institution.

(2) If the institution or servicer does not request a hearing but submits written material, the designated department official, after considering that material, notifies the institution or, in the case of a third-party servicer, the servicer and each institution that contracts with the servicer that—

(i) The proposed action is dismissed;

(ii) Limitations are effective as of a specified date; or

(iii) The termination is effective as of a specified date.

(3) If the institution or servicer requests a hearing by the time specified in paragraph (b)(1)(iii) of this section, the designated department official transmits the request for hearing and response to the Office of Hearings and Appeals, which sets the date and place. The date is at least 15 days after the designated department official receives the request. The limitation or termination does not take place until after the requested hearing is held.

(4) A hearing official conducts a hearing in accordance with § 668.89.

(c) Expedited proceeding. With the approval of the hearing official and the consent of the designated department official and the institution or servicer, as applicable, any time schedule specified in this section may be shortened.

(Authority: 20 U.S.C. 1094) [59 FR 22447, Apr. 29, 1994, as amended at 60 FR 61774, Dec. 1, 1995; 65 FR 65637, Nov. 1, 2000; 82 FR 6257, Jan. 19, 2017]
Notes of Decisions
Cited in 15 cases (2 in the last 5 years), 1988–2024 · leading case: San Juan City Coll. v. United States, 391 F.3d 1357 (Fed. Cir. 2004).
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San Juan City Coll. v. United States, 391 F.3d 1357 (Fed. Cir. 2004). · cites it 4× “The court found it unnecessary to determine whether the Department had breached the Agreement, however, because it concluded that “as a matter of law, violation of the agreement, insofar as it involves a failure to offer a hearing under 34 C.F.R. § 668.86 , creates a right only…”
Ass'n of Private Sector Colleges & Universities v. Duncan, 681 F.3d 427 (D.C. Cir. 2012). · cites it 2× “See 34 C.F.R. § 668.86 (a) (2011). Under this interpretation, section 668.”
San Juan City Coll., Inc. v. United States, 58 Fed. Cl. 26 (Fed. Cl. 2003). · cites it 2× “We will assume that the failure to provide a hearing constituted a violation of 34 C.F.R. § 668.86 , and hence constituted a breach of the agency’s agreement to adhere to the law.”
San Juan City Coll., Inc. v. United States, 74 Fed. Cl. 448 (Fed. Cl. 2006). · cites it 4× “Instead, the most plaintiffs could claim was that the Department of Education had failed to adhere to its administrative regulations under 34 C.F.R. § 668.86 (1994), thus allowing SJCC to seek an administrative appeal or equitable relief.”
Roberts v. Bd. of Trs. of Cmty. Coll. Dist. No. 508, 2019 IL 123594 (Ill. 2019). “41 (2010); 34 C.F.R. § 668.86 (2000). ¶ 29 Plaintiff first contends defendant put the HEA funding of Malcolm X students at risk by violating section 1094(a)(21) of the HEA ( 20 U.”
Roberts v. Bd. of Trs. of Cmty. Coll. Dist. No. 508, 2019 IL 123594 (Ill. 2019). “41 (2010); 34 C.F.R. § 668.86 (2000). -8- ¶ 29 Plaintiff first contends defendant put the HEA funding of Malcolm X students at risk by violating section 1094(a)(21) of the HEA ( 20 U.”
Career Educ., Inc., D/B/A Atds-Texas v. Dep't of Educ., 6 F.3d 817 (D.C. Cir. 1993). “The Department’s regulations state that the notice of termination, the only agency action on Career when it filed the amended complaint, merely begins the termination proceedings, see 34 C.F.R. § 668.86 (b)(1), and becomes final only after the requested hearing and an…”
Career Coll. Ass'n v. Duncan, 796 F. Supp. 2d 108 (D.D.C. 2011). “See 34 C.F.R. § 668.86 ; see also 20 U.S.C. § 1094 (c)(1)(F) (requiring notice and opportunity for hearing prior to the limitation, suspension, or termination of a school’s participation in any program).”
Bowling Green Jr. Coll. v. U. S. Dep't of Educ., 687 F. Supp. 293 (W.D. Ky. 1988). “Two weeks earlier, however, the Department sent written notice of its intent to initiate termination proceedings in accordance with 34 C.F.R. § 668.86 , based on the February review.”
Elizabeth Grady Sch. of Esthetics & Massage Therapy v. Cardona (D. Mass. 2023). · cites it 4× “5 at 14], and that it was therefore entitled to the procedures set forth in 34 C.F.R. § 668.86 , [id]; see also [ECF No.”
L'ggrke v. Benkula, 966 F.2d 1346 (10th Cir. 1992). “85 (a)(1); or to terminate or limit the eligibility of an institution to participate in Title IV programs, 34 C.F.R. § 668.86 (a). See also 20 U.S.C.”
San Antonio Hous. Auth. v. United States (Fed. Cl. 2019). · cites it 2× “San Juan City College alleged that the breach occurred in 1995, when the government failed to provide it with a hearing before ceasing student aid funding, which was required pursuant to 34 C.F.R. § 668.86 (1995), a regulation that was incorporated into the program participation…”
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— 34 C.F.R. § 668.86(b) — 1 case
Elizabeth Grady Sch. of Esthetics & Massage Therapy v. Cardona (D. Mass. 2023). “5 at 14], and that it was therefore entitled to the procedures set forth in 34 C.F.R. § 668.86 , [id]; see also [ECF No.”
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