What is “Safe Harbor”

*All of the references below are copied and pasted from federal documents.

“The “safe harbor” regulations describe various payment and business practices that, although they potentially implicate the Federal anti-kickback statute, are not treated as offenses under the statute.”

*All of these programs contain “safe harbor” regulations that are being revised due to abuses in spending.

“The Federal Family Education Loan (FFEL) Program, the William D. Ford Federal Direct Loan Program, the Teacher Education Assistance for College and Higher Education (TEACH) Grant Program, the Federal Pell Grant Program, and the Academic Competitiveness Grant (AGC) and National Science and Mathematics Access to Retain Talent Grant (National Smart Grant) Programs.”

“The safe harbor in § 668.14(b)(22)(ii)(E), as promulgated on November 1, 2002 (67 FR 67048), permits compensation based upon students successfully completing their educational programs or one academic year of their educational programs, whichever is shorter.”

“The Department (of Education) also is aware of schools that have devised and operated grading policies that all but ensure that students who enroll will graduate, regardless of their academic performance.”

“It is the Department’s experience that institutions use this safe harbor to provide recruiters with compensation that is “indirectly” based upon securing enrollments in violation of the HEA.”

“This is particularly the case with short-term, accelerated programs, where the Department was advised in comments received during and following the November 2009 Negotiated Rulemaking Meeting that there is the potential for increased efforts by institutions to rely upon this safe harbor to provide incentives to recruiters.”

“The shorter the program, the more likely the student will complete the program, thus rewarding enrollment and completion notwithstanding the student’s academic performance or the quality of the program.”

“We are also concerned that, if this safe harbor is not removed, recruiters will steer students to the shortest possible programs regardless of whether the programs are appropriate for the students, or to an even smaller number of program options where the recruiter believes completion is most likely to be obtained.”

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