Maintained for Historical Purposes

This resource is being maintained for historical purposes only and is not currently applicable.

The Secretary proposes to amend the regulations governing the student financial assistance programs authorized under title IV of the Higher Education Act of 1965, as amended (title IV, HEA programs). These programs include the campus-based programs (Fede

FR part
III
Attachments:
PublicationDate: 9/19/96
FRPart: III
RegPartsAffected:
PageNumbers: 49389-49396
Summary: The Secretary proposes to amend the regulations governing the student financial assistance programs authorized under title IV of the Higher Education Act of 1965, as amended (title IV, HEA programs). These programs include the campus-based programs (Federal Perkins Loan, Federal Work-Study (FWS), and Federal Supplemental Educational Opportunity Grant (FSEOG) programs) and the Federal Pell Grant Program. These proposed amendments, which eliminate duplicate provisions for the student financial assistance programs and consolidate common provisions for the campus-based programs, are part of a planned series of regulatory reform and relief proposals for the title IV, HEA programs. The Secretary is proposing these changes in response to the President's Regulatory Reform Initiative.
CommentDueDate: 10/21/96

  
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[


[Federal Register: September 19, 1996 (Volume 61, Number 183)]
[Proposed Rules]
[Page 49389-49396]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19se96-28]


[[Page 49389]]


_______________________________________________________________________

Part III





Department of Education





_______________________________________________________________________



34 CFR Part 668, et al.



Student Assistance General Provisions; Proposed Rule


[[Page 49390]]



DEPARTMENT OF EDUCATION

34 CFR Parts 668, 673, 674, 675, 676, and 690

RIN 1840-AC34


Student Assistance General Provisions; General Provisions for the
Federal Perkins Loan Program, Federal Work-Study Program, and Federal
Supplemental Educational Opportunity Grant Program; Federal Perkins
Loan Program; Federal Work-Study Programs; Federal Supplemental
Educational Opportunity Grant Program; and Federal Pell Grant Program

AGENCY: Department of Education.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Secretary proposes to amend the regulations governing the
student financial assistance programs authorized under title IV of the
Higher Education Act of 1965, as amended (title IV, HEA programs).
These programs include the campus-based programs (Federal Perkins Loan,
Federal Work-Study (FWS), and Federal Supplemental Educational
Opportunity Grant (FSEOG) programs) and the Federal Pell Grant Program.
These proposed amendments, which eliminate duplicate provisions for the
student financial assistance programs and consolidate common provisions
for the campus-based programs, are part of a planned series of
regulatory reform and relief proposals for the title IV, HEA programs.
The Secretary is proposing these changes in response to the President's
Regulatory Reform Initiative.

DATES: Comments must be received on or before October 21, 1996.

ADDRESSES: All comments concerning these proposed regulations should be
addressed to Nancy Adams, U.S. Department of Education, P.O. Box 23272,
Washington, D.C. 20026-3272. Comments may also be sent through the
Internet to ``reg--relief@ed.gov''.
To ensure that public comments have maximum effect in developing
the final regulations, the Department urges that each comment clearly
identify the specific section or sections of the regulations that the
comment addresses and that comments be in the same order as the
proposed regulations.

FOR FURTHER INFORMATION CONTACT:
1. For the Federal Perkins Loan Program: Gail H. McLarnon, U.S.
Department of Education, 600 Independence Avenue, S.W., Regional Office
Building 3, Room 3053, Washington, D.C. 20202-5447. Telephone: (202)
708-8242.
2. For the FWS and FSEOG programs: Richard P. Coppage, U.S.
Department of Education, 600 Independence Avenue, S.W., Regional Office
Building 3, Room 3053, Washington, D.C. 20202-5447. Telephone: (202)
708-4690.
3. For the Federal Pell Grant Program: Daniel J. Sullivan, U.S.
Department of Education, 600 Independence Avenue, S.W., Regional Office
Building 3, Room 3053, Washington, D.C. 20202-5447. Telephone: (202)
708-4607.
Individuals who use a telecommunications device for the deaf (TDD)
may call the Federal Information Relay Service (FIRS) at 1-800-877-8339
between 8 a.m. and 8 p.m., Eastern time, Monday through Friday.

SUPPLEMENTARY INFORMATION: On March 4, 1995, the President directed
every Federal agency to review its rules and procedures to reduce
regulatory and paperwork burden and directed Federal agencies to
eliminate or revise those regulations that are outdated or otherwise in
need of reform. Responding to the President's Regulatory Reform
Initiative, the Secretary announced plans to eliminate or revise 93
percent of the Department's regulations. To launch the Department's
reinvention effort, the Secretary published a notice in the May 23,
1995 Federal Register (60 FR 27223-27226), eliminating more than 30
percent of the Department's regulations, primarily in areas not related
to student financial assistance.
The Secretary is conducting a page-by-page review of all student
financial assistance regulations to identify those that should be
eliminated or improved. The Secretary is considering amending these
regulations by moving the provisions that are common to all three of
the campus-based programs to a new part 673 of the Department's
regulations. The Secretary is proposing these changes to eliminate
duplication in the regulations and to make the regulations easier to
understand and use in administering the campus-based programs. The
public is invited to comment on this proposal. The Secretary is also
considering developing proposals for statutory amendments to eliminate
unnecessary administrative burden.
As part of his response to the President's Regulatory Reinvention
Initiative, the Secretary published the first part of a planned series
of regulatory reform and relief measures that apply to the title IV,
HEA programs on December 1, 1995. These amendments are part of that
series.
A description of the major proposed changes follows. The proposed
changes that apply to more than one program are described first
followed by descriptions of provisions that apply only to a specific
program.

Summary of Proposed Changes

Campus-Based Programs

A new part 673 of Title 34 of the Code of Federal Regulations is
being created to consolidate sections with common provisions contained
in the Federal Perkins Loan--part 674, the FWS--part 675, and the
FSEOG--part 676, program regulations.

Sections 674.3, 675.3, and 676.3 Application

Sections 674.3, 675.3, and 676.3 of the Federal Perkins Loan, FWS,
and FSEOG program regulations, respectively, provide the procedures for
an institution to apply for campus-based program funds. The application
procedures are the same for all three programs. Therefore, the
Secretary is proposing to delete these sections currently found in
parts 674, 675, and 676 and consolidate the application procedures into
the new part 673 under Sec. 673.3.

Sections 674.4, 675.4, and 676.4 Allocation and Reallocation

The procedures for allocating and reallocating campus-based funds
are contained in the HEA for the Federal Perkins Loan Program in
section 462, the FWS Program in section 442, and the FSEOG Program in
section 413D. The current regulations for allocating and reallocating
these program funds are common in several areas. Therefore, the
Secretary is proposing to delete these sections currently found in
parts 674, 675, and 676 and consolidate the allocation and reallocation
provisions into the new part 673 under Sec. 673.4.

Sections 674.14, 675.14, and 676.14 Overaward

A financial aid administrator may not award or disburse aid from a
campus-based program if that aid, when combined with all other
resources, would exceed the student's need. Before awarding aid from
campus-based programs, the aid administrator must take into account the
aid that the student will receive from other student financial
assistance programs and other resources that the aid administrator
knows about or can reasonably anticipate at the time aid is awarded to
the student. If the student receives additional resources at any time
during the award period that were not considered in determining the
student's eligibility for aid, and these resources combined with the
expected financial

[[Page 49391]]

aid will exceed the student's need, the amount in excess of the
student's need is considered an overaward.
Currently Secs. 674.14, 675.14, and 676.14 of the campus-based
program regulations provide procedures that institutions must follow in
the event that an overaward situation occurs. The majority of the
overaward provisions are the same for all three programs. The Secretary
believes that the provisions are duplicates as presented in the three
program parts. Therefore, the Secretary is proposing to delete these
sections from parts 674, 675, and 676 and consolidate them into the new
part 673 under Sec. 673.5.

Sections 674.15, 675.15, 676.15 Coordination With BIA Grants

Sections 674.15, 675.15, and 676.15 of the Federal Perkins Loan,
FWS, and FSEOG program regulations provide institutions with the
procedures to follow when awarding title IV student financial aid to a
student who is also eligible for a Bureau of Indian Affairs (BIA)
education grant. Identical procedures are duplicated in all three
program regulations. The Secretary proposes to delete these identical
sections from parts 674, 675, and 676 and consolidate the provisions
into the new part 673 under Sec. 673.6.

Sections 674.18, 675.18, and 676.18 Use of Funds

Section 674.18(b), 675.18(b), and 676.18(b) of the Federal Perkins
Loan, FWS, and FSEOG program regulations provide the formula for
calculating an institution's administrative cost allowance and the
permissible use of the allowance. Institutions participating in these
programs are entitled to an allowance to help offset administrative
costs incurred in the administration of the campus-based programs and
the Federal Pell Grant program. These costs include salaries,
furniture, travel, supplies, and equipment and also include the expense
incurred for carrying out the student consumer information services
requirements of Subpart D of the Student Assistance General Provisions
regulations, 34 CFR part 668.
The formula for calculating this allowance is identical and
duplicated in all three program regulations. The allowable use of the
allowance is almost the same in all three program regulations.
Therefore, the Secretary is proposing to remove these duplicate
formulas and the allowable use provisions from parts 674, 675, and 676
and present them in the new part 673 under Sec. 673.7 with a new
heading of Administrative cost allowance.

Federal Pell Grant Program

There are no major proposed changes to the Federal Pell Grant
Program. However, the Secretary plans to make some minor technical
changes as described in the following paragraphs.

Section 690.2 General Definitions

The Secretary is proposing to clarify the definition of ``Annual
award'' in Sec. 690.2(c) to inform institutions of what a Federal Pell
Grant payment would be under the appropriate Disbursement Schedule for
a student attending half-time, three-quarter-time, and less-than-half-
time during that academic year. The Secretary also is proposing to
remove the definition for ``Comparable State income tax return.'' This
definition predated Sec. 668.57(a)(1) of Subpart E (Verification of
Student Aid Application Information) of the Student Assistance General
Provisions regulations, which requires the use of the income tax
return.
Subpart B--Application Procedures for Determining Expected Family
Contribution (EFC)

Section 690.14 Request for Recalculation of Expected Family
Contribution Because of Clerical or Arithmetic Error

The Secretary is proposing to amend Sec. 690.14 by revising the
heading of the section to include ``or if the information submitted was
incorrect'' and by clarifying paragraph (b)(1) to include the phrase
``or inaccurate information was submitted when the application was
signed.'' These changes would add an additional reason for
recalculating a student's EFC that was inadvertently left out of
earlier regulations.
Subpart F--Determination of Federal Pell Grant Awards

Section 690.61 Submission Process and Deadline for a Student Aid
Report or Institutional Student Information Record

The Secretary is proposing to amend Sec. 690.61(b)(2) by deleting
the June 30 deadline date for a student to submit a valid Student Aid
Report (SAR) or the institution to obtain a valid Institutional Student
Information Record (ISIR) and adding ``By the deadline date established
by the Secretary through publication of a notice in the Federal
Register.'' Due to faster electronic data processing, a student now has
an extended period of time to submit the required documents.
Subpart G--Administration of Grant Payments

Section 690.75 Determination of Eligibility for Payment

The Secretary is proposing to amend Sec. 690.75(e) by deleting
``the family contribution amount of $3,000'' and adding ``family
contribution amount at least equal to the maximum authorized award
amount for the award year.''

Section 690.78 Method of Disbursement--by Check or Credit to a
Student's Account

The Secretary is proposing to amend Sec. 690.78 (c)(2), (c)(3), and
(c)(4) to revise from 15 days to 20 days the timeframes governing
disbursements. If a student does not pick up the check on time, the
institution would still be required to pay the student if he or she
requests payment within 20 days after the last date of enrollment in
the award year. Also, the Secretary proposes to change from 15 days to
20 days the time period after which the institution may credit only
certain items to a student's account and after which the student
forfeits the right to receive payment. This additional five days would
give the student a longer time to claim Federal Pell Grant Program
funds to which he or she is entitled and would help standardize the
numerous timeframes in the title IV program regulations.

Section 690.81 Fiscal Control and Fund Accounting Procedures

The Secretary is proposing to delete Sec. 690.81(c) because the
provisions contained in this paragraph duplicate provisions in 34 CFR
668.161(b) of the Student Assistance General Provisions regulations,
which cover all of the title IV programs.

Goals 2000: Educate America Act

The Goals 2000: Educate America Act (Goals 2000) focuses the
Nation's education reform efforts on the eight National Education Goals
and provides a framework for meeting them. Goals 2000 promotes new
partnerships to strengthen schools and expands the Department's
capacities for helping communities to exchange ideas and obtain
information needed to achieve the goals.
These proposed regulations would address the National Education
Goal that calls for increasing the rate at which students graduate from
high school and pursue high quality postsecondary education and for
supporting life-long learning.

[[Page 49392]]

Executive Order 12866

Clarity of the Regulations

Executive Order 12866 requires each agency to write regulations
that are easy to understand.
The Secretary invites comments on how to make these proposed
regulations easier to understand, including answers to questions such
as the following: (1) Are the requirements in the proposed regulations
clearly stated? (2) Do the proposed regulations contain technical terms
or other wording that interferes with their clarity? (3) Does the
format of the proposed regulations (grouping and order of sections, use
of headings, paragraphing, etc.) aid or reduce their clarity? Would the
proposed regulations be easier to understand if they were divided into
more (but shorter) sections? (A ``section'' is preceded by the symbol
``Sec. '' and a numbered heading; for example, Sec. 674.18 Use of
funds.) (4) Is the description of the proposed regulations in the
``Supplementary Information'' section of this preamble helpful in
understanding the proposed regulations? How could this description be
more helpful in making the proposed regulations easier to understand?
(5) What else could the Department do to make the proposed regulations
easier to understand?
A copy of any comments that concern how the Department could make
these proposed regulations easier to understand should be sent to
Stanley M. Cohen, Regulations Quality Officer, U.S. Department of
Education, 600 Independence Avenue, S.W., (Room 5100, FB-10B),
Washington, D.C. 20202-2241.

Regulatory Flexibility Act Certification

The Secretary certifies that these proposed regulations would not
have a significant economic impact on a substantial number of small
entities. The small entities that would be affected by these proposed
regulations are small institutions of postsecondary education. The
proposed changes in these regulations would not substantially increase
institutions' workload or costs associated with administering the title
IV, HEA programs and, therefore, would not have a significant economic
impact on a substantial number of small entities.

Paperwork Reduction Act of 1995

These proposed regulations have been examined under the Paperwork
Reduction Act of 1995 and have been found to contain no new information
collection requirements.

Intergovernmental Review

The Federal Supplemental Educational Opportunity Grant Program is
subject to the requirements of Executive Order 12372 and the
regulations in 34 CFR part 79. The objective of the Executive order is
to foster an intergovernmental partnership and a strengthened
federalism by relying on processes developed by State and local
governments for coordination and review of proposed Federal financial
assistance.
In accordance with the order, this document is intended to provide
early notification of the Department's specific plans and actions for
this program.
The Federal Perkins Loan, FWS, and Federal Pell Grant programs are
not subject to the requirements of Executive Order 12372 and the
regulations in 34 CFR part 79.

Invitation to Comment

Interested persons are invited to submit comments and
recommendations regarding these proposed regulations.
All comments submitted in response to these proposed regulations
will be available for public inspection, during and after the comment
period, in Room 3045, ROB-3, 7th and D Streets, S.W., Washington, D.C.,
between the hours of 8:30 a.m. and 4:00 p.m., Monday through Friday of
each week except Federal holidays.

Assessment of Educational Impact

The Secretary particularly requests comments on whether the
proposed regulations in this document would require transmission of
information that is being gathered by or is available from any other
agency or authority of the United States.

List of Subjects

34 CFR part 668

Administrative practice and procedure, Colleges and universities,
Consumer protection, Loan programs--education, Grant programs--
education, Student aid.

34 CFR part 673

Loan programs--education, Grant programs--education, Student aid.

34 CFR part 674

Loan programs--education, Student aid.

34 CFR part 675

Loan programs--education, Student aid.

34 CFR part 676

Grant programs--education, Student aid.

34 CFR part 690

Grant programs--education, Student aid.

Dated: September 16, 1996.
Richard W. Riley,
Secretary of Education.

(Catalog of Federal Domestic Assistance Numbers: 84.007 Federal
Supplemental Educational Opportunity Grant Program; 84.033 Federal
Work-Study Program; 84.038 Federal Perkins Loan Program; and 84.063
Federal Pell Grant Program)

The Secretary proposes to amend chapter VI of Title 34 of the Code
of Federal Regulations as follows:
1. A new part 673 is added to read as follows:

PART 673--GENERAL PROVISIONS FOR THE FEDERAL PERKINS LOAN PROGRAM,
FEDERAL WORK-STUDY PROGRAM, AND FEDERAL SUPPLEMENTAL EDUCATIONAL
OPPORTUNITY GRANT PROGRAM

Subpart A--Purpose and Scope

Sec.
673.1 Purpose.
673.2 Applicability of regulations.
Subpart B--General Provisions for the Federal Perkins Loan, FWS, and
FSEOG programs
673.3 Application.
673.4 Allocation and reallocation.
673.5 Overaward.
673.6 Coordination with BIA grants.
673.7 Administrative cost allowance.

Authority: 20 U.S.C. 421-429, 1070b-1070b-3, 1087aa-1087ii; 42
U.S.C. 2751-2756b, unless otherwise noted.

Subpart A--Purpose and Scope


Sec. 673.1 Purpose.

This part governs the following three programs authorized by title
IV of the Higher Education Act of 1965, as amended (HEA) that
participating institutions administer:
(a) The Federal Perkins Loan Program, which encourages the making
of loans by institutions to needy undergraduate and graduate students
to help pay for the students' cost of education.
(b) The Federal Work-Study (FWS) Program, which encourages the
part-time employment of undergraduate and graduate students who need
the income to help pay for the students' costs of education and which
encourages FWS recipients to participate in community service
activities.
(c) The Federal Supplemental Educational Opportunity Grant (FSEOG)
Program, which encourages the providing of grants to exceptionally
needy undergraduate students to help pay for the students' cost of
education.


[[Page 49393]]


(Authority: 20 U.S.C. 421-429, 1070b-1070b-3, 1087aa-1087ii; 42
U.S.C. 2751-2756b)


Sec. 673.2 Applicability of regulations.

The participating institution is responsible for administering
these programs in accordance with the regulations in this part and the
applicable program regulations in 34 CFR part 674, 675, or 676.

(Authority: 20 U.S.C. 421-429, 1070b-1070b-3, 1087aa-1087ii; 42
U.S.C. 2751-2756b)

Subpart B--General Provisions for the Federal Perkins Loan, FWS,
and FSEOG Programs


Sec. 673.3 Application.

(a) To participate in the Federal Perkins Loan, FWS, or FSEOG
programs, an institution shall file an application before the deadline
date established annually by the Secretary through publication of a
notice in the Federal Register.
(b) The application for the Federal Perkins Loan, FWS, and FSEOG
programs must be on a form approved by the Secretary and must contain
the information needed by the Secretary to determine the institution's
allocation or reallocation of funds under sections 462, 442, and 413D
of the HEA, respectively.

(Authority: 20 U.S.C. 1070b-3, 1087bb; 42 U.S.C. 2752)


Sec. 673.4 Allocation and reallocation.

(a) Allocation and reallocation of Federal Perkins Loan funds. (1)
The Secretary allocates Federal capital contributions to institutions
participating in the Federal Perkins Loan Program in accordance with
section 462 of the HEA.
(2) The Secretary reallocates Federal capital contributions to
institutions participating in the Federal Perkins Loan Program by--
(i) Reallocating 80 percent of the total funds available in
accordance with section 462(j) of the HEA; and
(ii) Reallocating 20 percent of the total funds available in a
manner that best carries out the purposes of the Federal Perkins Loan
Program.
(b) Allocation and reallocation of FWS funds. The Secretary
allocates and reallocates funds to institutions participating in the
FWS Program in accordance with section 442 of the HEA.
(c) Allocation and reallocation of FSEOG funds. (1) The Secretary
allocates funds to institutions participating in the FSEOG Program in
accordance with section 413D of the HEA.
(2) The Secretary reallocates funds to institutions participating
in the FSEOG Program in a manner that best carries out the purposes of
the FSEOG Program.
(d) General allocation and reallocation--(1) Categories. As used in
section 462 (Federal Perkins Loan Program), section 442 (FWS Program),
and section 413D (FSEOG Program) of the HEA, ``Eligible institutions
offering comparable programs of instruction'' means institutions that
are being compared with the applicant institution and that fall within
one of the following six categories:
(i) Cosmetology.
(ii) Business.
(iii) Trade/Technical.
(iv) Art Schools.
(v) Other Proprietary Institutions.
(vi) Non-Proprietary Institutions.
(2) Payments to institutions. The Secretary allocates funds for a
specific period of time. The Secretary pays an institution its
allocation in periodic installments as determined by the Secretary.
(3) Unexpended funds. (i) If an institution returns more than 10
percent of its Federal Perkins Loan, FWS, or FSEOG allocation for an
award year, the Secretary reduces the institution's allocation for that
program for the second succeeding award year by the dollar amount
returned.
(ii) The Secretary may waive the provision of paragraph (d)(3)(i)
of this section for a specific institution if the Secretary finds that
enforcement would be contrary to the interests of the program.
(iii) The Secretary considers enforcement of paragraph (d)(3)(i) of
this section to be contrary to the interest of the program only if the
institution returns more than 10 percent of its allocation due to
circumstances beyond the institution's control that are not expected to
recur.
(e) Anticipated collections of Federal Perkins Loan funds.
(1) For the purposes of calculating an institution's share of any
excess allocation of Federal Perkins Loan funds, an institution's
anticipated collections are equal to the amount that was collected
during the second year preceding the beginning of the award period
multiplied by 1.21.
(2) The Secretary may waive the provision of paragraph (e)(1) of
this section for any institution that has a cohort default rate that
does not exceed 7.5 percent.
(f) Authority to expend FWS funds after the award year. Except as
specifically provided in 34 CFR 675.18 (b), (c), and (f), an
institution may not use funds allocated or reallocated for an award
year--
(1) To meet FWS wage obligations incurred with regard to an award
of FWS employment made for any other award year; or
(2) To satisfy any other obligation incurred after the end of the
designated award year.
(g) Authority to expend FSEOG funds after the award year. Except as
specifically provided in 34 CFR 676.16(e), an institution shall not use
funds allocated or reallocated for an award year--
(1) To make FSEOG disbursements to students in any subsequent award
year; or
(2) To satisfy any other obligation incurred after the end of the
designated award year.

(Authority: 20 U.S.C. 1070b-3, 1087bb; 42 U.S.C. 2752)


Sec. 673.5 Overaward.

(a) Overaward prohibited. (1) Federal Perkins Loan and FSEOG
Programs. An institution may only award or disburse a Federal Perkins
loan or an FSEOG to a student if that loan or the FSEOG, combined with
the other resources the student receives, does not exceed the student's
financial need.
(2) FWS Program. An institution may only award FWS employment to a
student if the award, combined with the other resources the student
receives, does not exceed the student's financial need.
(b) Awarding and disbursement. (1) When awarding and disbursing a
Federal Perkins loan or an FSEOG or awarding FWS employment to a
student, the institution shall take into account those resources it--
(i) Can reasonably anticipate at the time it awards Federal Perkins
Loan funds, an FSEOG, or FWS funds to the student;
(ii) Makes available to its students; or
(iii) Otherwise knows about.
(2) If a student receives resources at any time during the award
period that were not considered in calculating the Federal Perkins Loan
amount or the FWS or FSEOG award, and the total resources including the
loan, the FSEOG, or the prospective FWS wages exceed the student's
need, the overaward is the amount that exceeds need.
(c) Resources. (1) Except as provided in paragraph (c)(2) of this
section, the Secretary considers that ``resources'' include, but are
not limited to, any--
(i) Funds a student is entitled to receive from a Federal Grant;
(ii) William D. Ford Federal Direct Loans;

[[Page 49394]]

(iii) Federal Family Education Loans;
(iv) Long-term loans, including Federal Perkins loans made by the
institution;
(v) Grants, including FSEOGs, State grants, and ROTC subsistence
allowances;
(vi) Scholarships, including athletic scholarships and ROTC
scholarships;
(vii) Waiver of tuition and fees;
(viii) Fellowships or assistantships;
(ix) Veterans benefits;
(x) Net earnings from need-based employment; and
(xi) Insurance programs for the student's education.
(2) The Secretary does not consider as a resource--
(i) Any portion of the resources described in paragraph (c)(1) of
this section that are included in the student's expected family
contribution (EFC); and
(ii) Earnings from non-need-based employment.
(3) The institution may treat a Federal Direct PLUS Loan, a Federal
PLUS Loan, a Federal Direct Unsubsidized Stafford/Ford Loan, a Federal
Unsubsidized Stafford Loan, or a State-sponsored or private loan as a
substitute for a student's EFC. However, if the sum of the loan amounts
received exceeds the student's EFC, the excess is a resource.
(d) Treatment of resources in excess of need--General. An
institution shall take the following steps if it learns that a student
has received additional resources not included in the calculation of
Federal Perkins Loan, FWS, or FSEOG eligibility that would result in
the student's total resources exceeding his or her financial need by
more than $300:
(1) The institution shall decide whether the student has increased
financial need that was unanticipated when it awarded financial aid to
the student. If the student demonstrates increased financial need and
the total resources do not exceed this increased need by more than
$300, no further action is necessary.
(2) If the student's total resources still exceed his or her need
by more than $300, as recalculated pursuant to paragraph (d)(1) of this
section, the institution shall cancel any undisbursed loan or grant
(other than a Pell Grant).
(3) Federal Perkins loan and FSEOG overpayment. If the student's
total resources still exceed his or her need by more than $300, after
the institution takes the steps required in paragraphs (d) (1) and (2)
of this section, the institution shall consider the amount by which the
resources exceed the student's financial need by more than $300 as an
overpayment.
(e) Termination of FWS employment. (1) An institution may fund a
student's FWS employment with FWS funds only until the amount of the
FWS award has been earned or until the student's financial need, as
recalculated under paragraph (d)(1) of this section, is met.
(2) Notwithstanding the provisions of paragraph (e)(1) of this
section, an institution may provide additional FWS funding to a student
whose need has been met until that student's cumulative earnings from
all need-based employment occurring subsequent to the time his or her
financial need has been met exceed $300.
(f) Liability for and recovery of Federal Perkins loans and FSEOG
overpayments. (1) A student is liable for any Federal Perkins loan or
FSEOG overpayment made to him or her.
(2) The institution is also liable for a Federal Perkins loan or
FSEOG overpayment if the overpayment occurred because the institution
failed to follow the procedures in this part, 34 CFR part 668, 34 CFR
part 674 and 34 CFR part 676. The institution shall restore an amount
equal to the overpayment and any administrative cost allowance claimed
on that amount to its loan fund for a Federal Perkins loan overpayment
or to its FSEOG account for an FSEOG overpayment if it cannot collect
the overpayment from the student.
(3) If an institution makes a Federal Perkins loan or FSEOG
overpayment for which it is not liable, it shall help the Secretary
recover the overpayment by promptly attempting to recover the
overpayment by sending a written notice to the student requesting
repayment of the overawarded funds. The notice must state that failure
to make that repayment or to make arrangements, satisfactory to the
holder of the overpayment debt, to pay the overpayment renders the
student ineligible for further title IV aid until final resolution of
the overpayment.
(4) If a student objects to the institution's Federal Perkins loan
or FSEOG overpayment determination on the grounds that it is erroneous,
the institution shall consider any information provided by the student
and determine whether the objection is warranted.
(5) Referral of FSEOG overpayments. (i) If the student fails to
repay an FSEOG overpayment or make arrangements, satisfactory to the
holder of the overpayment debt, to pay the FSEOG overpayment after
taking the action required by paragraphs (f)(3) and, if applicable,
(f)(4) of this section, and the Federal share of the FSEOG overpayment
is $25.00 or more, the institution shall notify the Secretary
identifying the Federal share of the FSEOG overpayment, the student's
name, most recent address, telephone number, and any other relevant
information. After notifying the Secretary under this section, the
institution need make no further recovery efforts of FSEOG
overpayments.
(ii) If an institution fails in its attempt to collect the
overpayment and the Federal share of the FSEOG overpayment is less than
$25.00, the institution need make no further recovery efforts of the
FSEOG overpayment.

(Approved by the Office of Management and Budget under control
number 1840-0535)

(Authority: 20 U.S.C. 1070b-1, 1087dd, and 1087hh; 42 U.S.C. 2753)


Sec. 673.6 Coordination with BIA grants.

(a) Coordination of BIA grants with Federal Perkins Loans, FWS
awards, or FSEOGs. To determine the amount of a Federal Perkins Loan,
FWS compensation, or an FSEOG for a student who is also eligible for a
Bureau of Indian Affairs (BIA) education grant, an institution shall
prepare a package of student aid--
(1) From resources other than the BIA education grant the student
has received or is expected to receive; and
(2) That is consistent in type and amount with packages prepared
for students in similar circumstances who are not eligible for a BIA
education grant.
(b) (1) The BIA education grant, whether received by the student
before or after the preparation of the student aid package, supplements
the student aid package specified in paragraph (a) of this section.
(2) No adjustment may be made to the student aid package as long as
the total of the package and the BIA education grant is less than the
institution's determination of that student's financial need.
(c) (1) If the BIA education grant, when combined with other aid in
the package, exceeds the student's need, the excess must be deducted
from the other assistance (except for Federal Pell Grants), not from
the BIA education grant.
(2) The institution shall deduct the excess in the following
sequence: loans, work-study awards, and grants other than Federal Pell
Grants. However, the institution may change the sequence if requested
to do so by a student and the institution believes the change benefits
the student.
(d) To determine the financial need of a student who is also
eligible for a BIA

[[Page 49395]]

education grant, a financial aid administrator is encouraged to consult
with area officials in charge of BIA postsecondary financial aid.

(Authority: 20 U.S.C. 1070b-1, 1087dd; 42 U.S.C. 2753)


Sec. 673.7 Administrative cost allowance.

(a) An institution participating in the Federal Perkins Loan, FWS,
or FSEOG programs is entitled to an administrative cost allowance for
an award year if it advances funds under the Federal Perkins Loan
Program, provides FWS employment, or awards grants under the FSEOG
Program to students in that year.
(b) An institution may charge the administrative cost allowance
calculated in accordance with paragraph (c) of this section for an
award year against--
(1) The Federal Perkins Loan Fund, if the institution advances
funds under the Federal Perkins Loan Program to students in that award
year;
(2) The FWS allocation, if the institution provides FWS employment
to students in that award year; or
(3) The FSEOG allocation, if the institution awards grants to
students under the FSEOG program in that award year.
(c) For any award year, the amount of the allowance equals--
(1) Five percent of the first $2,750,000 of the institution's total
expenditures to students in that award year under the FWS, FSEOG and
the Federal Perkins Loan programs; plus
(2) Four percent of its expenditures to students that are greater
than $2,750,000 but less than $5,500,000; plus
(3) Three percent of its expenditures to students that are
$5,500,000 or more.
(d) The institution shall not include, when calculating the
allowance in paragraph (c) of this section, the amount of loans made
under the Federal Perkins Loan Program that it assigns during the award
year to the Secretary under section 463(a)(6) of the HEA.
(e) An institution shall use its allowance to offset its cost of
administering the Federal Pell Grant, FWS, FSEOG, and Federal Perkins
Loan programs. Administrative costs also include the expenses incurred
for carrying out the student consumer information services requirements
of Subpart D of the Student Assistance General Provisions regulations,
34 CFR part 668.
(f) An institution may use up to 10 percent of the allowance, as
calculated under paragraph (c) of this section, that is attributable to
the institution's expenditures under the FWS program to pay the
administrative costs of conducting its program of community service.
These costs may include the costs of--
(1) Developing mechanisms to assure the academic quality of a
student's experience;
(2) Assuring student access to educational resources, expertise,
and supervision necessary to achieve community service objectives; and
(3) Collaborating with public and private nonprofit agencies and
programs assisted under the National and Community Service Act of 1990
in the planning, development, and administration of these programs.
(g) If an institution charges any administrative cost allowance
against its Federal Perkins Loan Fund, it must charge these costs
during the same award year in which the expenditures for these costs
were made.

(Authority: 20 U.S.C. 1087cc, 20 U.S.C. 1096, 42 U.S.C. 2753, and 20
U.S.C. 1070b-2)

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

2. The authority citation for part 668 continues to read as
follows:

Authority: 20 U.S.C. 1085, 1088, 1091, 1092, 1094, 1099c, and
1141, unless otherwise noted.


Sec. 668.1 [Amended]

3. Section 668.1, paragraph (c)(4) is amended by adding ``673 and''
before ``676'' and adding an ``s'' to the word ``part''; paragraph
(c)(10) is amended by adding ``673 and'' before ``675'' and adding an
``s'' to the word ``part''; and paragraph (c)(12) is amended by adding
``673 and'' before ``674'' and adding an ``s'' to the word ``part''.


Sec. 668.2 [Amended]

4. Section 668.2, in paragraph (b) amend the definition of
``Campus-based programs'' in paragraph (1) by adding ``673 and'' before
``674'' and adding an ``s'' to the word ``part''; in paragraph (2) add
``673 and'' before ``675'' and add an ``s'' to the word ``part''; and
in paragraph (3) add ``673 and'' before ``676'' and add an ``s'' to the
word ``part''.


Sec. 668.22 [Amended]

5. Section 668.22, paragraph (g)(3)(i) is amended by removing
``674, 675, 676,''.

PART 674--FEDERAL PERKINS LOAN PROGRAM

6. The authority citation for part 674 continues to read as
follows:

Authority: 20 U.S.C. 1087aa-1087hh and 20 U.S.C. 421-429, unless
otherwise noted.


Sec. 674.3 [Removed]

7. Section 674.3 is removed and reserved.


Sec. 674.4 [Removed]

8. Section 674.4 is removed and reserved.


Sec. 674.8 [Amended]

9. Section 674.8 is amended by removing in paragraph (b)(2),
``Sec. 674.18(b)'' and adding in its place ``34 CFR 673.7''.


Sec. 674.14 [Removed]

10. Section 674.14 is removed and reserved.


Sec. 674.15 [Removed]

11. Section 674.15 is removed and reserved.


Sec. 674.18 [Amended]

12. Section 674.18 is amended by removing paragraph (b) and by
redesignating paragraph (c) as paragraph (b).

PART 675--FEDERAL WORK-STUDY PROGRAM

13. The authority citation for part 675 is revised to read as
follows:

Authority: 42 U.S.C. 2751-2756b, unless otherwise noted.


Sec. 675.3 [Removed]

14. Section 675.3 is removed and reserved.


Sec. 675.4 [Removed]

15. Section 675.4 is removed and reserved.


Sec. 675.14 [Removed]

16. Section 675.14 is removed and reserved.


Sec. 675.15 [Removed]

17. Section 675.15 is removed and reserved.


Sec. 675.18 [Amended]

18. Section 675.18 is amended by removing paragraph (b) and by
redesignating paragraphs (c), (d), (e), (f), (g), and (h) as paragraphs
(b), (c), (d), (e), (f), and (g), respectively.


Sec. 675.49 [Amended]

19. Section 675.49 is amended by adding the words ``34 CFR part 673
and'' before the words ``this part 675''.

PART 676--FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANT
PROGRAM

20. The authority citation for part 676 continues to read as
follows:

Authority: 20 U.S.C. 1070b-1070b-3, unless otherwise noted.

[[Page 49396]]

Sec. 676.3 [Removed]

21. Section 676.3 is removed and reserved.


Sec. 676.4 [Removed]

22. Section 676.4 is removed and reserved.


Sec. 676.14 [Removed]

23. Section 676.14 is removed and reserved.


Sec. 676.15 [Removed]

24. Section 676.15 is removed and reserved.


Sec. 676.16 [Amended]

25. Section 676.16 is amended by removing in paragraph (e)(1) and
(e)(2) ``(f)'' and adding in its place ``(e)''.


Sec. 676.18 [Amended]

26. Section 676.18 is amended by removing paragraph (b) and by
redesignating paragraph (c) as paragraph (b).

PART 690--FEDERAL PELL GRANT PROGRAM

27. The authority citation for part 690 continues to read as
follows:

Authority: 20 U.S.C. 1070a, unless otherwise noted.

28. Section 690.2, paragraph (c) is amended by removing the
definition of ``Comparable State income tax return'' and by revising
the definition of ``Annual award'' to read as follows:


Sec. 690.2 General definitions.

* * * * *
(c) * * *
Annual award: The Federal Pell Grant award amount a full-time
student would receive under the Payment Schedule for a full academic
year in an award year, and the amount a three-quarter-time, half-time,
and less-than-half-time student would receive under the appropriate
Disbursement Schedule for being enrolled in that enrollment status for
a full academic year in an award year.
* * * * *
29. Section 690.10(b) is revised to read as follows:


Sec. 690.10 Administrative cost allowance to participating schools.

* * * * *
(b) All funds an institution receives under this section must be
used solely to pay the institution's cost of administering the Federal
Pell Grant, Federal Perkins Loan, Federal Work-Study, and Federal
Supplemental Educational Opportunity Grant programs.
* * * * *


Sec. 690.12 [Amended]

30. Section 690.12(b)(1) is amended by removing ``a copy of''.
31. Section 690.13 is revised to read as follows:


Sec. 690.13 Notification of expected family contribution.

The Secretary sends a student's application information and EFC as
calculated by the central processor to the student on an SAR and allows
each institution designated by the student to obtain an ISIR for that
student.

(Approved by the Office of Management and Budget under control
number 1840-0681)

(Authority: 20 U.S.C. 1070a)

32. Section 690.14 is amended by removing paragraphs (b)(1)and
(b)(2); by redesignating paragraph (b)(3) introductory text as
paragraph (c) introductory text; by redesignating paragraph (b)(3)(i)
as paragraph (c)(1); by redesignating paragraph (b)(3)(ii) as paragraph
(c)(2); by redesignating paragraph (b)(4) as paragraph (d); and by
revising the heading and paragraphs (a) and (b) to read as follows:


Sec. 690.14 Applicant's request to recalculate expected family
contribution because of a clerical or arithmetic error or the
submission of inaccurate information.

(a) An applicant may request the Secretary to recalculate his or
her expected family contribution if--
(1) He or she believes a clerical or arithmetic error has occurred;
or
(2) The information he or she submitted was inaccurate when the
application was signed.
(b) The applicant shall request the Secretary to make the
recalculation described in paragraph (a) of this section by--
(1) Having his or her institution transmit that request to the
Secretary under EDE; or
(2) Sending to the Secretary an approved form, certified by the
student, and one of the student's parents if the student is a dependent
student.
* * * * *
33. Section 690.61 is amended by revising paragraphs (a)(1)(ii) and
paragraph (b)(2) to read as follows:


Sec. 690.61 Disbursement conditions and deadlines.

(a) * * *
(1) * * *
(ii) The institution obtains a valid ISIR for the student.
* * * * *
(b) * * *
(2) By the deadline date established by the Secretary through
publication of a notice in the Federal Register.
* * * * *


Sec. 690.75 [Amended]

34. Section 690.75 (a)(2) is amended by adding ``in an eligible
program'' after ``enrolled''; and paragraph (e) is amended by removing
the phrase ``an expected family contribution of at least $3,000'' and
adding in its place ``an expected family contribution amount at least
equal to the maximum authorized award amount for the award year''.


Sec. 690.78 [Amended]

35. Section 690.78 (c)(2) is amended by removing ``15'' and adding
in its place ``20''; paragraph (c)(3) is amended by removing ``15'' and
adding in its place ``20''; and paragraph (c)(4) is amended by removing
``15'' and adding in its place ``20''.


Sec. 690.81 [Amended]

36. Section 690.81 is amended by removing paragraph (c).

[FR Doc. 96-24010 Filed 9-18-96; 8:45 am]
BILLING CODE 4000-01-P




]

Last Modified: 06/24/1998