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
V
Attachments:
PublicationDate: 9/21/95
FRPart: V
RegPartsAffected:
PageNumbers: 49113-49127
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), the Federal Family Education Loan (FFEL) programs, the William D. Ford Federal Direct Loan programs, the Federal Pell Grant Program, and the State Student Incentive Grant program. These proposed amendments, which eliminate unnecessary regulations and improve the existing regulations, 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.
The Federal student financial assistance programs support the National Education Goals by enhancing opportunities for postsecondary education. The National Education Goals call for increasing the rate at which students graduate from high school and pursue high quality postsecondary education and for supporting life-long learning.
CommentDueDate: 10/27/95

  
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[


[Federal Register: September 21, 1995 (Volume 60, Number 183)]
[Proposed Rules ]
[Page 49113-49127]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21se95-42]



[[Page 49113]]

_______________________________________________________________________

Part V





Department of Education





_______________________________________________________________________



34 CFR Parts 668, 674, et al.



Higher Education Act of 1965; Student Financial Assistance Programs;
Federal Regulatory Assistance Review; Proposed Rule


[[Page 49114]]


DEPARTMENT OF EDUCATION

34 CFR Parts 668, 674, 675, 676, 682, 685, and 690

RIN: 1840 AC20


Student Assistance General Provisions, Federal Perkins Loan
Program, Federal Work-Study Programs, Federal Supplemental Educational
Opportunity Grant Program, Federal Family Education Loan Program,
William D. Ford Federal Direct Loan Programs, 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), the Federal Family Education Loan
(FFEL) programs, the William D. Ford Federal Direct Loan programs, the
Federal Pell Grant Program, and the State Student Incentive Grant
program. These proposed amendments, which eliminate unnecessary
regulations and improve the existing regulations, 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.
The Federal student financial assistance programs support the
National Education Goals by enhancing opportunities for postsecondary
education. The National Education Goals call for increasing the rate at
which students graduate from high school and pursue high quality
postsecondary education and for supporting life-long learning.

DATES: Comments on the proposed regulations must be received on or
before October 27, 1995.

ADDRESSES: All comments concerning these proposed regulations should be
addressed to: Harold McCullough, U.S. Department of Education, P.O. Box
23272, Washington, DC 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.
Comments that concern information collection requirements must be
sent to the Office of Management and Budget at the address listed in
the Paperwork Reduction Act section of this preamble. A copy of those
comments may also be sent to the Department representative named above.

FOR FURTHER INFORMATION CONTACT:
1. For the Student Assistance General Provisions: Claude Denton,
Student Eligibility and Verification Section, General Provisions Branch
on (202) 708-7888;
2. For the Federal Perkins Loan Program: Sylvia R. Ross, Campus-
Based Loan Programs Section, Loans Branch on (202) 708-8242;
3. For the FWS and FSEOG programs: Kathy S. Gause, Campus-Based
Programs Section, Grants Branch on (202) 708-4690;
4. For the FFEL Programs: Ralph Madden, GSL Programs Section, Loans
Branch on (202) 708-8242;
5. For the William D. Ford Federal Direct Loan Programs: Doug
Laine, Direct Loan Policy Group on (202) 708-9406; and
6. For the Federal Pell Grant Program: Mike Oliver, Pell and State
Grant Section, Grants Branch on (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 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 is proposing these amendments to the
regulations that apply to the title IV, HEA programs. The Secretary
plans to propose additional reform and relief regulatory amendments for
the title IV, HEA programs in the upcoming months.
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.
The Federal student financial assistance programs support the
National Education Goals by enhancing opportunities for postsecondary
education.

Summary of Proposed Changes

Student Assistance General Provisions

The Student Assistance General Provisions regulations, 34 CFR part
668, implement requirements that are common to the title IV, HEA
programs.

Subpart A--General

Section 668.7 Eligible Student

The Secretary proposes to remove and reserve the section formerly
designated as Sec. 668.7, ``Eligible student.'' The ``eligible
student'' provisions currently provided in Sec. 668.7 would now
comprise a revised subpart C of 34 CFR part 668.
The Secretary believes that this relocation will improve regulatory
organization, provide greater clarity, and improve understanding of
those provisions.

Subpart B--Standards for Participation in Title IV, HEA Programs

Section 668.19 Financial Aid Transcript

Under the current regulations, if an institution determines that a
student previously attended another institution, the institution must
obtain a financial aid transcript from that other institution. The
financial aid transcript provides some of the information that enables
an institution to determine whether an enrolling student is eligible to
receive title IV, HEA program funds. Thus, the financial aid transcript
may indicate that a student is in default on a title IV, HEA program
loan, or owes a repayment on a title IV, HEA program grant or loan. It
may also help the institution to determine the amount that an eligible
student is entitled to receive in the current award year by indicating

[[Page 49115]]
a student's Scheduled Federal Pell Grant award or the amount of FFEL or
William D. Ford Federal Direct loan funds that the student received in
the current award year.
The Secretary proposes an alternative to obtaining a financial aid
transcript. The Department has been developing the National Student
Loan Data System (NSLDS), which will contain basically the same
information that is included on a financial aid transcript. When the
system becomes fully operational, institutions will be able to obtain
financial aid history information about an applicant for title IV, HEA
program assistance from the NSLDS instead of from other institutions
previously attended by the applicant. Therefore, the Secretary is
proposing in Sec. 668.19 that when the NSLDS can be used to satisfy
this purpose, an institution will have the option of obtaining
information about an enrolling student who has previously attended
another institution from the NSLDS instead of requesting a financial
aid transcript from the other institution.
At the present time, the Secretary anticipates that institutions
will be able to obtain financial aid transcript information from the
NSLDS starting with the 1996-97 award year. However, the Secretary is
proposing in Sec. 668.19 to notify institutions through a Federal
Register notice when they may begin to use this option.
After experience demonstrates that the NSLDS is a valid alternative
to requesting a financial aid transcript from another institution, the
Secretary anticipates that institutions will use the NSLDS exclusively
to obtain information and the Secretary will eliminate the financial
aid transcript requirement.
The Secretary expects that use of NSLDS will relieve institutions
of the burden of requesting and compiling information from financial
aid transcripts. Because financial aid history information will be
available electronically, obtaining information from the NSLDS will
also reduce delays in awarding and disbursing title IV, HEA program
assistance to students.
While the Secretary is confident that NSLDS data will provide
accurate and reliable information, there will be instances where an
institution encounters inconsistencies between NSLDS data and other
sources of information. If that happens, the institution is expected to
resolve those conflicts in accordance with Sec. 668.16(f). Resolution
of inconsistencies can be achieved through use of the financial aid
transcript or other methods the institution determines to be
appropriate.

Subpart C--Student Eligibility

Because of increased statutory requirements affecting a student's
eligibility to receive title IV, HEA program funds, the Secretary
believes that the inclusion of all those requirements in one section of
the regulations has become too cumbersome. Therefore, the Secretary has
revised and reorganized those requirements into subpart C of 34 CFR
part 668. The Secretary requests comments on this proposed
reorganization.

Section 668.33 Student Identification

The Office of Inspector General recently recommended enhancement of
the data match with the Social Security Administration (SSA), under
which SSA would confirm claims of U.S. citizenship by applicants for
title IV, HEA program funds on their Free Application for Federal
Student Aid (FAFSA). Currently, the Department and SSA have a data
match under which SSA confirms the accuracy of social security numbers
provided by title IV, HEA program applicants.
The Secretary and SSA have agreed to this expanded data match
starting with the 1996-97 award year application cycle. Section 668.33
has provisions to conform these regulations to this internal
interagency process.
Operationally, the citizenship aspect of the SSA data match would
be similar to other data matches. If a student's claim of U.S. citizen
status is confirmed by SSA, the central processor will generate a
confirming message on an applicable ``output document,'' such as an
ISIR or SAR. No further action will be required by either the student
or institution, absent conflicting information. If the student's claim
is not confirmed, the student would be advised of the lack of
confirmation and would be given the opportunity to provide documentary
evidence to the institution, such as a birth certificate,
naturalization certificate, or passport, to support his or her
assertion of citizenship.
The Secretary proposes, in this section, to allow students to
satisfy the requirement of filing a Statement of Educational Purpose
with the institution, by completing the FAFSA, which will include this
statement starting with the 1996-97 award year. Currently, institutions
must collect a Statement of Educational Purpose individually from each
student applying for title IV, HEA program assistance. The Secretary;s
proposal does not affect current FFEL requirements with regard to this
statement on loan applications.
The Secretary proposes to eliminate the model Statement of
Educational Purpose in the current regulations. A model statement would
be duplicative because the statement will appear on the FAFSA starting
with the 1996-97 award year.
The Secretary also proposes to eliminate the Statement of
Registration Status because the statement is duplicative. A male
student's selective service registration status is now confirmed
through a data match with the Selective Service System. This data match
eliminates the need for the collection of a separate statement.

Section 668.34 Student Debts Under the HEA and to the U.S.

The Secretary is proposing in these regulations to amend and
reorganize, for clarity and conformity, the provisions under which a
student who owes a debt under the HEA or to the United States may
nevertheless be eligible to receive title IV, HEA program assistance.
Also, the Secretary proposes to conform the regulations to existing
statutory requirements pertaining to bankruptcy.
Specifically, these regulations would allow a student who owes a
debt under the HEA or to the United States to be eligible to receive
title IV, HEA program funds even though the student (1) is in default
on a title IV, HEA program loan, (2) inadvertently received a title IV,
HEA program loan in an amount that exceeded that program's annual or
aggregate loan limits, (3) owes a repayment on a title IV, HEA program
grant or loan, or (4) has property subject to a judgment lien for a
debt owed to the United States.
Under the proposed regulations, a student who is in default on a
title IV, HEA program loan would be eligible to receive additional
title IV, HEA program funds if the student repays the loan in full, or
makes six consecutive monthly payments on the defaulted loan and makes
arrangements, satisfactory to the holder of the loan, to repay that
loan.
A student who is not in default but inadvertently obtained loan
funds under a title IV, HEA loan program in an amount that exceeded the
annual or aggregate loan limits under that program would be eligible to
receive additional title IV, HEA program funds if the student repays in
full the excess loan amount or makes arrangements satisfactory to the
holder of the loan, to repay that excess loan amount.
A student who receives a grant or loan overpayment under a title
IV, HEA program would be eligible for additional title IV, HEA program
funds if the student pays the overpayment in full, or

[[Page 49116]]
makes arrangements satisfactory to the institution to pay the
overpayment.
A student who has property subject to a judgment lien for a debt
owed to the United States would be eligible for title IV, HEA program
funds if the student pays the debt in full, or makes arrangements
satisfactory to the United States to pay the debt.
In addition, the proposed regulations clarify that the exception
under bankruptcy law is applicable to a student who is otherwise in
default on a title IV, HEA program loan, or owes an overpayment on a
title IV, HEA program grant or loan.
These proposed changes provide clarification and, to the extent
allowed by the HEA, consistency in the treatment by institutions of
applicants for title IV, HEA program assistance who may owe a debt on
previously awarded title IV aid or when the applicant has had a lien
placed on another debt owed to the United States. Additionally, they
provide, in the case of a grant or loan overpayment, flexibility to the
holder of the debt by allowing for the establishment of satisfactory
arrangements to repay so that the applicant who demonstrates good faith
in resolving his or her obligation may regain eligibility for title IV,
HEA program assistance.

Subpart I--Immigration-Status Confirmation

Section 668.133 Conditions Under Which an Institution Shall Require
Documentation and Request Secondary Confirmation

The Secretary proposes to remove the requirement that an
institution request secondary confirmation from the Immigration and
Naturalization Service for a student if (1) the student presents
documents verifying his or her immigration status that are identical to
documents presented to that institution in a previous year, and (2)
that institution determined the student to be an eligible noncitizen
using secondary confirmation of those same documents in a previous
award year. This waiver of secondary confirmation requirements would
not apply if the institution has conflicting information or reason to
doubt the student's claim to be an eligible noncitizen.

Subpart K--Cash Management

Section 668.164 Maintaining Funds

The Secretary proposes to amend Sec. 668.164(a)(2) to limit the
requirement that all institutions file a UCC-1 statement for any bank
account in which title IV, HEA program funds are maintained.
Specifically, the Secretary proposes to eliminate the UCC-1 filing
requirement for institutions that (1) disclose clearly in the name of
the account that Federal funds are maintained in that account, or (2)
are backed by the full faith and credit of a State. The filing of a
UCC-1 would only be required for bank accounts of institutions that do
not satisfy either of these conditions.
In establishing this requirement, the Secretary sought to use the
UCC-1 filing process as the means by which an institution publicly
discloses which of its accounts contain Federal funds. A public
disclosure reduces the possibility that an unscrupulous institution
could misrepresent Federal funds as its own funds.
Upon further review, the Secretary believes that the disclosure
purposes of the UCC-1 filing requirement are adequately accomplished
where an institution includes the phrase ``Federal funds'' in the name
of its accounts. Moreover, the Secretary believes that the UCC-1 filing
requirement is not appropriate for public institutions because these
institutions generally do not seek to obtain credit in the same manner
as private institutions.

Section 668.165 Disbursing Funds

The Secretary is proposing to modify section 668.165(b)(1) to
provide an institution as much flexibility as possible with respect to
how it notifies a student or parent borrower that William D. Ford
Federal Direct Loan or FFEL program funds have been credited to a
student's account. Under the current regulations, the institution must
provide such notification in writing. Under the proposed rules, the
institution would be able to provide this notification electronically
or through the use of telecommunication devices. If an institution
provides the notification through these devices, the institution must
have a means of documenting that the student or parent received this
information. For example, if the institution provides this information
through electronic mail, the institution must ensure that it receives a
``return receipt'' message from the addressee.
The Secretary proposes to amend Sec. 668.165(b) (1) and (3) to
provide that under certain circumstances, and with a student's
permission, an institution may credit the student's account with title
IV, HEA program funds to pay for minor institutional charges from a
prior year. Currently, Sec. 668.165(b)(1) prohibits this practice. This
prohibition reflects long-standing Department policy and is based on
the tenet that title IV, HEA program funds are intended to be used to
pay for educational expenses a student incurs in the period for which
those funds are provided. The Cash Management regulations published on
December 1, 1994 merely codified this policy.
After the publication of these regulations, institutions have
brought to the Secretary's attention circumstances under which a
limited exception to this rule may be appropriate. These circumstances
occur where a student incurs a minor institutional charge late in a
semester after the institution has released to the student all of his
or her title IV, HEA program funds. This charge is often not paid by
the student by the end of the semester and is consequently carried over
to the next semester. Where that next semester falls within the award
year, the charges may be paid using the student's title IV, HEA program
funds. The institutions note, however, that a problem arises where the
next semester falls in a subsequent award year because many
institutions have a policy that prevents a student from continuing at
the institution until all prior year charges are paid. In this case,
the student's current title IV, HEA program funds may not be used to
pay the prior year charges even if the amount of these funds exceeds
all current allowable costs and the student's remaining funds are
sufficient to pay the prior year charges. While the institutions
acknowledge that a student's failure to pay institutional charges when
those charges are due is a problem that may arise regardless of whether
a student receives title IV, HEA program funds, they maintain that the
current regulatory prohibition on the payment of prior year charges
imposes an unnecessary administrative burden and otherwise interferes
with an institution's ability to resolve this problem with the student.
After further review, the Department announced on July 11, 1995
that in the case described above where a balance of title IV, HEA
program funds remains after the student's current allowable costs are
paid, an institution may use the student's current title IV, HEA
program funds to pay for minor prior year charges provided that the
institution obtains appropriate authorization from a student to do so.
These proposed regulations merely restate this announced policy.
The Secretary believes that, as a practical matter, the payment of
minor prior year charges does not violate the intended use of title IV,
HEA program funds because the primary purpose of these funds is to
assist a student in beginning and continuing to pursue his or her
postsecondary education. However, the Secretary is concerned

[[Page 49117]]
that the payment of prior year charges may impair a student from
continuing his or her education at an institution if the amount of
those charges reduces adversely the amount of title IV, HEA program
funds that the student would otherwise rely on in meeting his or her
living expenses and other educational costs. The Secretary believes
strongly that this would not only violate the intended use of title IV,
HEA program funds but that it would be a disservice to the student and
waste of Federal funds. Therefore, although the Secretary does not
specify the dollar amount of prior year charges that may be paid, the
Secretary would expect institutions to use the latitude provided under
this proposal in a reasonable manner.

Campus-Based Programs

Sections 674.2, 675.2 and 676.2 Definitions

Section 674.2(b) and Sec. 675.2(b) of the Federal Perkins Loan and
FWS program regulations, respectively, define the terms ``full-time or
professional student'' and ``full-time undergraduate student'' and
Sec. 676.2(b) of the FSEOG program regulations defines the term ``full-
time undergraduate student.'' However, Sec. 668.2 of the Student
Assistance General Provisions regulations contains a definition of the
term ``full-time student'' that duplicates those definitions.
Therefore, the Secretary is proposing to eliminate these duplicative
definitions in Sec. 674.2(b), Sec. 675.2(b) and Sec. 676.2(b) and
instead incorporate the definition of the term ``full-time student''
set forth in Sec. 668.2 for all three of the campus-based programs.

Sections 674.17, 675.17, and 676.17 Federal Interest in Allocated
Funds

Section 674.17(a), Sec. 675.17 and Sec. 676.17 of the Federal
Perkins Loan, FWS, and FSEOG program regulations provide that program
funds are held in trust for the Secretary and intended student
beneficiaries and cannot be used or hypothecated for any other purpose.
These very provisions are included in Sec. 668.161(b) of the Student
Assistance General Provisions regulations so are not needed in these
program regulations.
In the past, the Secretary kept these provisions in program
regulations even though they were in the Student Assistance General
Provisions regulations as a reminder of their importance. However, the
Secretary now believes that the continued presence of redundant
regulatory provisions in each Title IV, HEA program regulation is no
longer needed.

Sections 674.19, 675.19, and 676.19 Fiscal Procedures and Records

The Secretary proposes to amend Secs. 674.19(e)(4)(v),
675.19(c)(3), and 676.19(c)(3) of the Federal Perkins Loan, FWS, and
FSEOG program regulations, respectively, to allow institutions the
additional flexibility of using optical disk technology in complying
with recordkeeping requirements. The Secretary believes that the use of
new technologies such as optical disk is an important tool in reducing
paper retention at an institution, particularly if an institution keeps
its records in computer format. The Secretary further believes that
broadening methods of record retention through the use of optical disk
will enhance administrative efficiency and increase flexibility by
providing institutions with a new recordkeeping option that saves time
and space.

Federal Perkins Loan Program

Section 674.2 Definitions

The current definition of ``making of a loan'' under Sec. 674.2 of
the Federal Perkins Loan program regulations includes the burdensome
requirement of collecting a student's signature each time loan funds
are advanced. In order to make this definition consistent with the
changes in signature requirements being proposed in Sec. 674.16, the
Secretary is proposing to amend this definition by removing the
reference to a borrower signing for each advance of funds. The
Secretary proposes to redefine ``making of a loan'' simply as when the
borrower signs the promissory note and the loan funds are disbursed.

Section 674.16 Making and Disbursing Loans

In keeping with the Secretary's desire to alleviate administrative
burden on institutions and to protect students, the Secretary is
proposing to eliminate the requirement that a student must sign for
each loan advance under the Federal Perkins Loan Program. The financial
aid community has commented repeatedly that this is a time-consuming,
costly, and impractical requirement that often results in long lines of
students waiting to sign loan documents.
Under the Secretary's proposal, an institution simply must obtain
the borrower's signature on a promissory note for each award year
before it disburses any loan funds under that promissory note for that
award year. Thus, when he or she signs a promissory note for an award
year, the student will know the loan amount for that award year.
Moreover, the student will know when and how those funds will be
disbursed because the institution is required to provide that
information to the student under Sec. 668.165 of the Student Assistance
General Provisions regulations.

Section 674.31 Promissory Note

The Secretary proposes to amend Sec. 674.31(a) of the Federal
Perkins Loan Program regulations to indicate that the Secretary will
provide sample promissory notes to institutions. Institutions may add
additional items to the sample notes as long as the new items do not
alter the substance of these sample notes.

Section 674.33 Repayment

The Secretary is proposing to amend Sec. 674.33(a)(2) of the
Federal Perkins Loan Program regulations by allowing institutions to
combine the last scheduled Federal Perkins Loan payment with the next-
to-last payment if the last payment is $25 or less. As currently
written, in order to combine payments, the last payment must be $15 or
less. The Secretary believes that allowing institutions to combine a
last payment of a higher dollar amount will reduce collection costs by
eliminating the generation of bills for small dollar amounts and also
significantly improve an institution's success in collecting small loan
balances.

Section 674.47 Costs Chargeable to the Fund

The Secretary recently issued a ``Dear Colleague'' Letter regarding
the limitations on write-offs in the Federal Perkins Loan Program (CB-
95-17). However, the Secretary believes that confusion still exists as
to what the term ``write-off'' means as it relates to Sec. 674.47(g).
In an attempt to clarify the Secretary's position and to alleviate
burden on institutions, the Secretary is proposing to revise
Sec. 674.47(g) by replacing the term ``write-off'' with the term
``cessation of collection activity.''
As the proposed change indicates, an institution may cease
collection activity on a defaulted account with a balance of less than
$25. However, the institution must continue to include the loan as in
default for purposes of calculating its cohort default rate.
Cessation of collection activity by an institution does not relieve
the borrower of his or her obligation to repay that loan, and interest
continues to accrue on the amount on which collection activities cease.
Moreover, the borrower is still considered in default on that loan and
therefore remains ineligible for further title IV, HEA program
assistance and retains an adverse credit rating.

[[Page 49118]]

It is the Secretary's long-standing policy to require institutions
to collect every amount due on an account from the borrower. However,
the Secretary recognizes that institutions and collection agencies
experience cost-inefficiencies in their attempts to collect small-
balance, defaulted loan accounts.
The Secretary recognizes that very small balances frequently occur,
for example, when a few days of additional interest accrues on the
final balance, and that billing borrowers for this small remaining
balance is not cost-effective for institutions as servicing fees often
exceed the remaining balance. Accordingly, the Secretary is proposing
to further amend Sec. 674.47 by adding new paragraph (h) to allow
institutions to cease collection activities and write off loan accounts
with a balance of less than $1, including outstanding principal,
accrued interest, collection costs, and late charges.
The write-off of balances of less than $1 creates a paid-in-full
status on the loan and, therefore, relieves the borrower of all
obligations, does not have an adverse effect on the borrower's credit
rating, does not affect the borrower's eligibility for further title
IV, HEA program assistance, nor will the loan be included in the
calculation of an institution's cohort default rate.

Federal Work-Study Programs

Appendix B--Model Off-Campus Agreement

When an institution enters into a written agreement--a
contract--with any off-campus agency or company that employs FWS
students, the institution must make sure the organization is a
reliable organization with professional direction and staff, and
that the work to be performed is adequately supervised and
consistent with the purpose of the FWS Program. Appendix B of the
current FWS regulations provides a model off-campus agreement.
Institutions can use this model as a guide in developing their
agreements.
In an effort to streamline regulations, the Secretary is
proposing to eliminate this sample agreement as an appendix to the
FWS regulations. The Secretary will include a model off-campus
agreement in the Federal Student Financial Aid Handbook.

Federal Family Education Loan Program, William D. Ford Federal Direct
Loan Programs

Sections 682.201 and 685.200 Eligible Borrowers

The Secretary proposes to expand the pool of borrowers under the
Federal PLUS and Federal Direct PLUS programs to include the spouse of
a student's parent if that parent remarried. The Secretary is proposing
this expansion to provide greater flexibility to the student's family
to enable them to pay for the student's educational costs. The proposed
extension includes the spouse of the parent if that spouse's income and
assets would be taken into account in determining the student's
expected family contribution.

Section 682.600 Agreement Between an Eligible School and the Secretary
for Participation in the FFEL Programs and Sec. 682.602 Schedule
Requirements for Courses of Study by Correspondence

The Secretary believes that the provisions of Sec. 682.600(a)
through Sec. 682.600(c) duplicate provisions in 34 CFR part 600 or 668
and are therefore unnecessary. Accordingly, the Secretary has proposed
to eliminate those provisions in 34 CFR part 682. The provisions
included in Sec. 682.600(d) that deal with foreign schools are needed
and the Secretary has proposed to include those provisions in a new
section, Sec. 682.611.
Students enrolled in correspondence programs are not eligible to
receive FFEL Program loans unless they are enrolled in a program that
leads to an associate, bachelor, or graduate degree. Therefore, the
Secretary believes that the provisions contained in Sec. 682.602 are no
longer needed and has proposed to eliminate those provisions.

Federal Pell Grant Program

Subpart A--Scope, Purpose and General Definitions

Section 690.7 Institutional Participation

The Secretary proposes to revise Sec. 690.7 by deleting current
paragraph (a)(1) because the provisions contained in that paragraph
duplicate provisions in 34 CFR part 600 or 668.

Subpart G--Administration of Grants Payments

Section 690.71 Scope, Sec. 690.72 Institutional Participation,
Sec. 690.73 Termination of Institutional Participation Agreement, and
Sec. 690.74 Provision of Funds to Institutions

The Secretary proposes to eliminate the last sentences in
Secs. 690.71, 690.72, 690.73, and 690.74 because they duplicate
provisions contained in 34 CFR part 668.

Section 690.83 Submission of Reports

The Secretary proposes to revise Sec. 690.83 by consolidating in
one paragraph the procedures that allow institutions to receive payment
or credit for Federal Pell Grants they previously disbursed if that
situation is disclosed by an initial audit or program review.

Executive Order 12866

1. Assessment of Costs and Benefits

These proposed regulations have been reviewed in accordance with
Executive Order 12866. Under the terms of the order the Secretary has
assessed the potential costs and benefits of this regulatory action.
The potential costs associated with the proposed regulations are
those resulting from statutory requirements and those determined by the
Secretary to be necessary for administering these programs effectively
and efficiently. Burdens specifically associated with information
collection requirements, if any, are identified and explained elsewhere
in this preamble under the heading Paperwork Reduction Act of 1995.
In assessing the potential costs and benefits--both quantitative
and qualitative--of these proposed regulations, the Secretary has
determined that the benefits of the proposed regulations justify the
costs.
The Secretary has also determined that this regulatory action does
not unduly interfere with State, local, and tribal governments in the
exercise of their governmental functions.
To assist the Department in complying with the specific
requirements of Executive Order 12866, the Secretary invites comment on
whether there may be further opportunities to reduce any potential
costs or increase potential benefits resulting from these regulations
without impeding the effective and efficient administration of the
program.

2. 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 regulations contain technical terms or other
wording that interferes with their clarity? (3) Does the format of the
regulations (grouping and order of sections, use of headings,
paragraphing, etc.) aid or reduce their clarity? Would the 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. 674.4 Allocation and reallocation.)
(4) Is the description of the regulations in the ``Supplementary
Information'' section of this preamble helpful in understanding the
regulations? How could this

[[Page 49119]]
description be more helpful in making the regulations easier to
understand? (5) What else could the Department do to make the
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, 400 Maryland Avenue, S.W., (Room 5125, FOB-6), 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 affected by these proposed regulations are
small institutions of postsecondary education. The changes in these
regulations will not substantially increase institutions--workload or
costs associated with administering the title IV, HEA programs and,
therefore, will not have a significant economic impact on a substantial
number of small entities.

Paperwork Reduction Act of 1995

Sections 668.19, 668.32, 668.33, 668.34, 668.36, 668.133, 668.164,
668.165, 674.16, 674.19, 674.31, 674.47, 675.19, 676.19, and 690.83
contain information collection requirements. As required by the
Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), the Department of
Education has submitted a copy of these sections to the Office of
Management and Budget (OMB) for its review.
Collection of information: Student Assistance General Provisions--
Section 668.19--Financial aid transcript--Institutions are required
to obtain financial aid transcript information for purposes of
determining student eligibility under these regulations. The
information to be collected includes: assurances to meet certain
statutory requirements and specific information regarding a student's
financial aid history. Institutions need and use the information to
release title IV, HEA program funds.
All information is to be collected on a case by case basis for
those students that previously attended an institution and received
title IV, HEA program funds. Annual recordkeeping and reporting burden
contained in the collection of information proposed in these
regulations are estimated to average .17 hours for 17,600 respondents,
including the time for reviewing instructions, searching existing data
sources, gathering and maintaining the data needed, and completing and
reviewing the collection of information. The total annual recordkeeping
and reporting burden equals 2992 hours.
Section 668.32--Statement of Educational Purpose--The Department
currently has this section approved under OMB control number for the
FAFSA (1840-0110). There are no new information collection requirements
as a result of these regulations.
Section 668.33--Statement of Registration Status--The Department
currently has this section approved under OMB control number for the
FAFSA (1840-0110). There are no new information collection requirements
as a result of these regulations.
Section 668.34--Model Statement of Educational Purpose and
Registration Status--The Department currently has this section approved
under OMB control number for the FAFSA (1840-0110). There are no new
information collection requirements as a result of these regulations.
Section 668.36--Selective Service notification, administrative
review, and liability--The Department currently has this section
approved under OMB control number for the FAFSA (1840-0110). There are
no new information collection requirements as a result of redesignating
and renaming this section from Sec. 668.35.
Section 668.133--Conditions under which an institution shall
require documentation and request secondary confirmation--Institutions
must require documentation and secondary confirmation with INS for
purposes of determining student eligibility for noncitizen applicants
under these regulations. The information to be collected includes:
specific information regarding a student's residency status and
documentary evidence. Institutions need and use the information to
determine a student's eligibility for title IV, HEA program funds.
All information is to be collected on a case by case basis. Annual
recordkeeping and reporting burden contained in the collection of
information proposed in these regulations are estimated to average .25
hours for 8,000 respondents, including the time for reviewing
instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information. The total annual recordkeeping and reporting
burden equals 2000 hours.
Section 668.164--Maintaining funds--Institutions are required to
deposit title IV, HEA program funds into a bank account, (1) with the
words ``Federal funds'' in the title of the account, or (2) be backed
by the full faith and credit of a state, or (3) file a UCC-1 form with
the appropriate county and/or State office(s) and maintain a copy of
that filing in its records to disclose that Federal funds are
maintained in that bank account under these regulations.
All information is to be collected on a one time basis if changing
the title of a bank account, or annually if filing a UCC-1 form. Annual
recordkeeping and reporting burden contained in the collection of
information proposed in these regulations are estimated to average 1.23
hours for 3,634 respondents, including the time for reviewing
instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information. The total annual recordkeeping and reporting
burden equals 4470 hours.
Section 668.165--Disbursing funds--There are no new information
collection requirements as a result of these regulations.
Collection of information: Federal Perkins Loan, FWS, and FSEOG
programs--
Section 674.16--Making and disbursing loans and section 674.31--
Promissory note--There are no new information collection requirements
as a result of these regulations.
Section 674.19, 675.19, and 676.19--Fiscal procedures and records--
The Department currently has these sections approved under OMB control
number for the FISAP (1840-0073). There are no new information
collection requirements as a result of these regulations.
Section 674.47--Costs chargeable to the fund--There are no new
information collection requirements as a result of these regulations.
Collection of information: Federal Pell Grant Program--
Section 690.83--Submission of reports--Institutions must follow
certain procedures for receiving funds for payment submissions after
established deadline dates.
All information is to be collected annually. There are no new
collection requirements as a result of these regulations. The current
annual recordkeeping and reporting burden contained in section 690.83
is estimated to average 41 hours for 400 respondents, including the
time for reviewing instructions, researching existing data sources,
gathering and maintaining the data needed, and completing and reviewing
the collection of information.

[[Page 49120]]
The total annual recordkeeping and reporting burdne equals 16,400
hours.
Organizations and individuals desiring to submit comments on the
information collection requirements should direct them to the Office of
Information and Regulatory Affairs, OMB, Room 10235, New Executive
Office Building, Washington, D.C. 20503; Attention: Desk Officer for
U.S. Department of Education.
The Department considers comments by the public on these proposed
collections of information in--
<bullet> Evaluating whether the proposed collections of information
are necessary for the proper performance of the functions of the
Department, including whether the information will have a practical
use;
<bullet> Evaluating the accuracy of the Department's estimate of
the burden of the proposed collections of information, including the
validity of the methodology and assumptions used;
<bullet> Enhancing the quality, usefullness, and clarity of the
information to be collected; and
<bullet> Minimizing the burden of collection of information on
those who are to respond, including through the use of appropriate
automated, electronic, mechanical, or other technological collection
techniques or other forms of information technology; e.g., permitting
electronic submission of responses.
OMB is required to make a decision concerning the collections of
information contained in these proposed regulations between 30 and 60
days after publication of this document in the Federal Register.
Therefore, a comment to OMB is best assured of having its full effect
if OMB receives it within 30 days of publication. This does not affect
the deadline for the public to comment to the Department on the
proposed regulations.

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 3053, ROB-3, 7th and D Streets, S.W., Washington, D.C.,
between the hours of 8:30 a.m. and 4 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, Reporting and recordkeeping requirements.

34 CFR Part 674

Loan programs--education, Student aid, Reporting and recordkeeping
requirements.

34 CFR Part 675

Loan programs--education, Student aid, Reporting and recordkeeping
requirements.

34 CFR Part 676

Loan programs--education, Student aid, Reporting and recordkeeping
requirements.

(Catalog of Federal Domestic Assistance Numbers: 84.007 Federal
Supplemental Educational Opportunity Grant Program; 84.032
Consolidation Program; 84.032 Federal Stafford Loan Program; 84.032
Federal PLUS Program; 84.032 Federal Supplemental Loans for Students
Program; 84.033 Federal Work-Study Program; 84.038 Federal Perkins
Loan Program; 84.063 Federal Pell Grant Program; 84.069 Federal
State Student Incentive Grant Program; 84.268 William D. Ford
Federal Direct Loan Programs; and 84.272 National Early Intervention
Scholarship and Partnership Program.)
Dated: September 13, 1995.
Richard W. Riley,
Secretary of Education.

The Secretary proposes to amend parts 668, 674, 675, 676, 682, 685,
and 690 of title 34 of the Code of Federal Regulations as follows:

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

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

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


Sec. 668.2 [Amended]

2. Section 668.2, paragraph (b) is amended by revising the first
paragraph of the definition of ``Payment period'' to read as follows:
``With respect to the Federal Pell Grant Program, a payment period as
defined in 34 CFR 690.3;''


Sec. 668.7 [Amended]

3. Section 668.7 is removed and reserved.
4. Section 668.19 is revised to read as follows:


Sec. 668.19 Financial aid transcript.

(a)(1) An institution shall determine whether a student who is
applying for assistance under any title IV, HEA program has previously
attended another eligible institution.
(2) Before a student who previously attended another eligible
institution may receive any title IV, HEA program funds--
(i) The institution must request each institution the student
previously attended to provide a financial aid transcript to the
institution the student is, or will be, attending; or
(ii) The institution may use information obtained from the
National Student Loan Data System, that would otherwise be provided on
a financial aid transcript, once the Secretary notifies institutions
through a notice in the Federal Register that the National Student Loan
Data System is available for this purpose.
(3) Except as provided in paragraph (a)(5) of this section, if an
institution requests a financial aid transcript from each of the
institutions a student previously attended, until the institution
receives a financial aid transcript from each of those institutions,
the requesting institution--
(i) May withhold payment of Federal Pell Grant and campus-based
funds to the student;
(ii) May disburse Federal Pell Grant or campus-based funds to the
student for one payment period only;
(iii) May decline to certify the student's Federal Stafford Loan
application or the parent's Federal PLUS application under the FFEL
Program;
(iv) May decline to originate the student's Federal Direct
Stafford Loan application or the parent's Federal Direct PLUS
application under the William D. Ford Federal Direct Loan Programs;
(v) May not release Federal Stafford Loan proceeds to a student or
Federal PLUS proceeds to a parent or student under the FFEL Program;
and
(vi) May not release Federal Direct Stafford Loan proceeds to a
student or Federal Direct PLUS proceeds to a parent or student under
the William D. Ford Federal Direct Loan Programs.
(4)(i) An institution may not hold Federal Stafford, or Federal
PLUS loan proceeds under paragraph (a)(3) of this section for more than
45 days. If an institution does not receive all required financial aid
transcripts for a student within 45 days of the receipt of those
proceeds, the institution shall return the loan proceeds to the
appropriate lender.
(ii) An institution that certifies a Federal Stafford or Federal
PLUS loan

[[Page 49121]]
application before receiving all required financial aid transcripts
shall return to the lender the appropriate amount of any Federal
Stafford or Federal PLUS loan proceeds for the student if it receives a
financial aid transcript indicating that the student is not eligible
for all, or a part, of the loan proceeds.
(5) An institution may disburse title IV, HEA program funds to a
student without receiving a financial aid transcript from an eligible
institution the student previously attended if the institution the
student previously attended--
(i) Has closed, and information concerning the student's receipt of
title IV, HEA program assistance for attendance at that institution is
not available;
(ii) Is not located in a State; or
(iii) Provides the disbursing institution with the written
certification described in paragraph (b)(2)(ii) of this section.
(b) Upon request, each institution located in a State shall
promptly provide to the institution that requested a financial aid
transcript--
(1) All information in its possession concerning whether the
student in question attended institutions other than itself and the
requesting institution; and
(2)(i) A financial aid transcript for that student, if the student
received or benefited from any title IV, HEA program assistance while
attending the institution; or
(ii) A written certification that--
(A) The student did not receive or benefit from any title IV, HEA
program assistance while attending the institution; or
(B) The transcript would cover only years for which the
institution no longer has records and is no longer required to keep
records under the applicable title IV, HEA program recordkeeping
requirements.
(c) An institution must disclose on a financial aid transcript for
a student--
(1) The student's name and social security number;
(2) To the extent that the institution is aware, whether the
student is in default on any title IV, HEA loan;
(3) Whether the student owes an overpayment on any grant made
under the Federal Pell Grant or FSEOG programs and, to the extent that
the institution is aware, the SSIG Program, for attendance at the
institution;
(4) For the award year for which a financial aid transcript is
requested--
(i) The student's scheduled Federal Pell Grant award;
(ii) The amount of Federal Pell Grant funds disbursed to the
student;
(iii) The amount of loans made under the National Defense Student
Loan, Direct Loan, and Federal Perkins Loan programs; and
(iv) The amount of loans made under the FFEL and William D. Ford
Federal Direct Loan programs; and
(5) The aggregate amount of loans under the title IV, HEA loan
programs for attendance at the institution.
(d)(1) A financial aid transcript must be signed by an official
authorized by the institution to disclose information in connection
with title IV, HEA programs.
(2) An institution must base the information it includes on
financial aid transcripts on records it maintains under the title IV,
HEA programs' recordkeeping requirements.
5. The heading for Sec. 668.21 is revised to read as follows:


668.21 Treatment of Federal Perkins Loan, FSEOG, and Federal Pell
Grant program funds if the recipient withdraws, drops out, or is
expelled before his or her first day of class.


Sec. 668.22 [Amended]

6. Section 668.22 is amended by removing paragraph (h)(1)(i) and
redesignating paragraphs (h)(1)(ii) through (xiii) as paragraphs
(h)(1)(i) through (xii), respectively.
7.-8. Subpart C is revised to read as follows:

Subpart C--Student Eligibility

Sec.
668.31 Scope.
668.32 Student enrollment.
668.33 Student identification.
668.34 Student debts under the HEA and to the U.S.
668.35 Program-specific requirements.
668.36 Selective Service notification, administrative review, and
liability.

Subpart C--Student Eligibility


Sec. 668.31 Scope.

This subpart establishes rules by which a student establishes
eligibility for assistance under the title IV, HEA programs. In order
to qualify as an eligible student, a student must meet all applicable
requirements in this subpart.

(Authority: 20 U.S.C. 1091)


Sec. 668.32 Student enrollment.

A student is eligible to receive assistance under the title IV,
HEA programs if the student--
(a)(1) Is a regular student enrolled or accepted for enrollment in
an eligible program at an eligible institution;
(2) For purposes of the FFEL or William D. Ford Federal Direct Loan
programs, is enrolled for no longer than one twelve-month period as at
least a half-time student in a course of study necessary for enrollment
in an eligible program; or
(3) For purposes of the Federal Perkins Loan, FWS, FFEL, or
William D. Ford Federal Direct Loan programs, is enrolled or accepted
for enrollment as at least a half-time student at an eligible
institution in a program necessary for a professional credential or
certification from a State that is required for employment as a teacher
in an elementary school or secondary school in that State;
(b) Is not enrolled in either an elementary or secondary school;
(c)(1) Has a high school diploma or its recognized equivalent;
(2) Has obtained within 12 months before the date the student
initially receives title IV, HEA program funds, a passing score
specified by the Secretary on an approved, independently administered
test, in accordance with subpart J of this part; or
(3) Is enrolled in an eligible institution that participates in a
State process approved by the Secretary under subpart J of this part;
(d) Maintains satisfactory progress in his or her course of study
according to the institution's published standards of satisfactory
progress that satisfy the provisions of Sec. 668.16(e). To make a
determination that a student is maintaining satisfactory progress, an
institution shall--
(1) At a minimum, review the student's academic progress at the end
of each academic year;
(2) If the student is enrolled in a program of study of more than
two academic years, at the end of the student's second year of
attendance, determine that the student--
(i) Has at least a cumulative grade point average of ``C'' or its
equivalent, or has academic standing consistent with the institution's
graduation requirements; or
(ii) Failed to have at least a cumulative grade point average of
``C'' or its equivalent, or academic standing consistent with its
graduation requirements because of--
(A) The death of a relative of the student;
(B) An injury or illness of the student; or
(C) Other special circumstances; or
(3) Is not making satisfactory progress at the end of the second
academic year, but at the end of a subsequent grading period comes into
compliance with the institution's requirements for graduation. The
institution may consider the student as making satisfactory progress
beginning with the next grading period;

[[Page 49122]]

(e) Is enrolled in an educational program leading to an associate,
bachelor's, or graduate degree, if enrolled in telecommunications or
correspondence courses; and
(f) If engaged in a study-abroad program, (which need not be
required as part of the student's degree program)--
(1) Maintains enrollment in an eligible institution during his or
her study-abroad program; and
(2) Enrolls in a study-abroad program that has been approved for
academic credit by the eligible institution at which the student is
enrolled.

(Authority: 20 U.S.C. 1091)


Sec. 668.33 Student identification.

A student is eligible to receive assistance under the title IV,
HEA programs if the student--
(a) Citizenship status. (1) Has confirmed status as a U.S. citizen
or national as a result of a data match with the Social Security
Administration;
(2) In the absence of confirmation as provided in paragraph (a)(1)
of this section, and within a deadline to be set by the institution of
no less than 30 days from the date the institution is notified of the
results of the data match, has provided documented evidence that he or
she is a U.S. citizen or national;
(3) Provides evidence from the U.S. Immigration and Naturalization
Service that he or she--
(i) Is a permanent resident of the United States; or
(ii) Is in the United States for other than a temporary purpose
with the intention of becoming a citizen or permanent resident; or
(4) For purposes of the FWS, FSEOG, and Federal Pell Grant
programs--
(i) Is a citizen of the Federated States of Micronesia, the
Republic of the Marshall Islands, or the Republic of Palau, and attends
an eligible institution of higher education in a State or a public or
nonprofit private institution of higher education in the Federated
States of Micronesia, the Republic of the Marshall Islands, or the
Republic of Palau; or
(ii) Meets the requirements of paragraph (a)(1), (a)(2), or (a)(3)
of this section and attends an eligible public or nonprofit private
institution of higher education in the Federated States of Micronesia,
the Republic of the Marshall Islands, or the Republic of Palau;
(b) Selective Service. (1) Has confirmed registration with
Selective Service as a result of a data match with the Selective
Service System; or
(2) In the absence of confirmation as provided in paragraph (b)(1)
of this section and within a deadline to be set by the institution of
no less than 30 days from the date the institution is notified of the
results of the data match, has provided evidence of compliance with, or
exemption from, Selective Service registration requirements. An
institution may establish that a student is exempt from Selective
Service registration requirements if the institution determines, based
on clear and unambiguous evidence, that--
(i) The student is not, or was not required to be, registered with
Selective Service; or
(ii) The student--
(A) Was required to be registered with the Selective Service prior
to age 26;
(B) Is now at least 26 years old;
(C) Failed to register with the Selective Service prior to age 26;
and
(D)(1) Demonstrates to the institution that he did not knowingly
and willfully fail to register with the Selective Service. The
Secretary considers that a student satisfies this requirement by
obtaining and presenting to the institution an advisory opinion from
the Selective Service System that does not dispute the student's claim
that he did not knowingly and willfully fail to register, and the
institution does not have uncontroverted evidence that the student
knowingly and willfully failed to register; or
(2) Served as a member of one of the U.S. Armed Forces on active
duty and received a DD Form 214, ``Certificate of Release or Discharge
from Active Duty'' showing military service with other than the Reserve
Forces and National Guard;
(iii) The student is enrolled in an officer procurement program the
curriculum of which has been approved by the Secretary of Defense at
the following institutions:
(A) The Citadel, Charleston, South Carolina;
(B) North Georgia College, Dahlonega, Georgia;
(C) Norwich University, Northfield, Vermont; or
(D) Virginia Military Institute, Lexington, Virginia;
(iv) The student is a commissioned officer of the Public Health
Service or a member of the Reserve of the Public Health Service who is
on active duty as provided in section 6(a)(2) of the Military Selective
Service Act; or
(v) The student was unable to present himself for registration for
reasons beyond his control, such as being hospitalized,
institutionalized, or incarcerated;
(c) Incarcerated students. For purposes of the Federal Perkins
Loan, FFEL, and William D. Ford Federal Direct Loan programs, is not an
incarcerated student at the time funds are delivered or disbursed;
(d) Social security number. Except for the residents of the
Republic of the Marshall Islands, the Federated States of Micronesia,
or the Republic of Palau, has a correct social security number that has
been verified by an eligible institution, which shall enforce the
following conditions:
(1) An institution may not deny, reduce, delay or terminate a
student's eligibility for assistance under the title IV, HEA programs
because social security number verification is pending.
(2) If the institution receives an output document indicating that
the Secretary has determined that the student's social security number
is correct, the institution may not require the student to produce
other evidence to confirm that the student's social security number is
correct, unless the institution--
(i) Has documentation that conflicts with the social security
number status reported on the output document; or
(ii) Has reason to believe the output document is incorrect.
(3) If the institution receives an output document indicating that
the Secretary has determined that the social security number provided
by the student is incorrect, or that the Secretary was unable to
confirm that the social security number provided by the student is
correct, the institution--
(i) Shall provide the student an opportunity, within a deadline of
at least 30 days from the date the institution is notified of the
results of the data match, to provide clear and convincing evidence to
verify that the student has a correct social security number;
(ii) May disburse any combination of title IV, HEA program funds,
employ the student under the FWS Program, certify a Federal Stafford,
Federal PLUS, or originate a William D. Ford Federal Direct Loan
application for the student upon making, based on the evidence provided
for in paragraph (d)(3)(i) of this section, a determination that the
social security number provided by the otherwise eligible student to
the institution is correct; and
(iii) Shall ensure that the student reports his or her correct
social security number to the Secretary if the correct social security
number differs from the social security number previously reported by
the student to the Secretary.
(4) If a student fails to submit the documentation by the deadline
established in accordance with paragraph (d)(3)(i) of this section, the
institution need not disburse to the student, or certify the student as
eligible

[[Page 49123]]
for, any title IV, HEA program funds for that period of enrollment or
award year; employ the student under the FWS Program; certify a Federal
Stafford, or Federal PLUS; or originate a William D. Ford Federal
Direct Loan for the student for that period of enrollment.
(5) If the Secretary determines that the social security number
provided to an institution by a student is incorrect, and the
institution has not made a determination under paragraph (d)(3) of this
section, and a loan has been guaranteed for the student under FFEL
Program, the institution shall notify and instruct the lender and
guaranty agency making and guaranteeing the loan, respectively, to
cease further disbursements of the loan, until the Secretary or the
institution determines that the social security number provided by the
student is correct, but the guaranty may not be voided or otherwise
nullified with respect to disbursements made before the date that the
lender and the guaranty agency receive the notice.
(6) Nothing in this section permits the Secretary to take any
compliance, disallowance, penalty or other regulatory action against--
(i) Any institution of higher education with respect to any error
in a social security number, unless the error was the result of fraud
on the part of the institution; or
(ii) Any student with respect to any error in a social security
number, unless the error was a result of fraud on the part of the
student; and
(e) Statement of Educational Purpose. Has filed a Statement of
Educational Purpose with the institution, or under the FFEL Program,
with the lender, in accordance with instructions of the Secretary.

(Authority: 20 U.S.C. 1091)


Sec. 668.34 Student debts under the HEA and to the U.S.

(a) Except as provided under paragraphs (b) through (g) of this
section, a student is ineligible to receive title IV, HEA program funds
if the student--
(1) Is in default on a loan made under a title IV, HEA loan
program;
(2) Has inadvertently obtained loan funds under a title IV, HEA
loan program in an amount that exceeded the annual or aggregate loan
limits under that program;
(3) Received a grant or loan overpayment under a title IV, HEA
grant program; or
(4) Has property subject to a judgment lien for a debt owed to the
United States.
(b) A student who is in default on a loan made under a title IV,
HEA loan program may nevertheless be eligible to receive title IV, HEA
program funds if the student--
(1) Repays the loan in full; or
(2)(i) Makes at least six consecutive monthly payments on the
defaulted loan; and
(ii) Makes arrangements, satisfactory to the holder of the loan, to
repay the loan balance.
(c) A student who is not in default on a loan made under a title
IV, HEA loan program but has inadvertently obtained loan funds under a
title IV, HEA loan program in an amount that exceeded the annual or
aggregate loan limits under that program may nevertheless be eligible
to receive title IV, HEA program funds if the student--
(1) Repays in full the excess loan amount; or
(2) Makes arrangements, satisfactory to the holder of the loan, to
repay that excess loan amount.
(d)(1) A student who receives a grant or loan overpayment under a
title IV, HEA program may nevertheless be eligible to receive title IV,
HEA program funds if the student--
(i) Pays the overpayment in full; or
(ii) Makes arrangements, satisfactory to the institution, to pay
the overpayment.
(2) If a student's grant or loan payments exceed the amount he or
she is eligible to receive, he or she has received a grant or loan
overpayment.
(e) A student who has property subject to a judgment lien for a
debt owed to the United States may nevertheless be eligible to receive
title IV, HEA programs funds if the student--
(1) Pays the debt in full; or
(2) Makes arrangements, satisfactory to the United States, to pay
the debt.
(f)(1) The Secretary considers that a student does not receive a
Federal Pell Grant overpayment during an award year if the institution
can eliminate that overpayment by adjusting subsequent Federal Pell
Grant payments in the same award year.
(2) The Secretary considers that a student does not receive a
Federal Perkins Loan, FSEOG or SSIG overpayment during an award year if
the institution can eliminate that overpayment by adjusting subsequent
title IV, HEA program (other than Federal Pell Grant) disbursements in
the same award year.
(g) A student who otherwise is in default on a loan made under a
title IV, HEA loan program or who otherwise owes an overpayment on a
title IV, HEA program grant or loan is not considered to be in default
or owe an overpayment if the student--
(1) Obtains a judicial determination that the debt has been
discharged or is dischargeable in bankruptcy; or
(2) Demonstrates to the holder of the debt that--
(i) When the student filed the petition for bankruptcy relief, the
loan, or demand for the payment of the grant overpayment, had been
outstanding for the period required under 11 U.S.C. 523(a)(8)(A),
exclusive of applicable suspensions of the repayment period for either
debt of the kind defined in 34 CFR 682.402(m); and
(ii) The debt is otherwise qualifies for discharge under applicable
bankruptcy law.

(Authority: 20 U.S.C. 1091 and 11 U.S.C. 523 and 525)


Sec. 668.35 Program-specific requirements.

A student is eligible to receive assistance under the campus-
based, FFEL, William D. Ford Federal Direct Loan, and Federal Pell
Grant programs if the student has financial need, if applicable, and
otherwise meets the student eligibility requirements of--
(a) For purposes of the Federal Perkins Loan Program, 34 CFR 674.9;
(b) For purposes of the FWS Program, 34 CFR 675.9;
(c) For purposes of the FSEOG Program, 34 CFR 676.9;
(d) For purposes of the FFEL Program, 34 CFR 682.201;
(e) For purposes of the William D. Ford Federal Direct Loan
Programs, 34 CFR 685.200;
(f) For purposes of the Federal Pell Grant Program, 34 CFR 690.75;
or
(g) For purposes of the SSIG Program, 34 CFR 692.40.

(Authority: 20 U.S.C. 1091)


Sec. 668.36 Selective Service notification, administrative review, and
liability.

(a) General. Before denying aid to any student under any title IV,
HEA program who is required by law to register with the Selective
Service, but fails to do so, the institution shall inform that student
in writing that he or she will be denied title IV, HEA program
assistance.
(b) Selective Service notification. (1) A student notified under
paragraph (a) of this section who has not registered, although required
to do so, may establish his eligibility for title IV, HEA program
assistance for the award year in which he was notified under paragraph
(a) of this section by registering with Selective Service before the
end of that award year.
(2) A student notified under paragraph (a) of this section who is
not required to register with the Selective Service may establish his
or her eligibility for title IV, HEA program

[[Page 49124]]
assistance for the award year in which he was notified under paragraph
(a) of this section by providing evidence of exemption within 30 days
of the receipt of the notice or the end of the same award year,
whichever is later.
(c) Administrative review. (1) A student who is required to
register with Selective Service, claims that he is registered with
Selective Service, and has been denied title IV, HEA program assistance
because he has not proven to the satisfaction of the institution that
he has complied with that requirement, may seek a hearing from the
Secretary by filing a request in writing with the Secretary. The
student must submit with that request--
(i) A statement that he is in compliance with registration
requirements;
(ii) A concise statement of the reasons why he has not been able
to prove that he is in compliance with those requirements; and
(iii) Copies of all material that he has already supplied to the
institution to verify his compliance.
(2) The Secretary provides an opportunity for a hearing to a
student who--
(i) Asserts that he is in compliance with registration
requirements; and
(ii) Files a written request for a hearing in accordance with
paragraph (c)(1) of this section within the award year for which he was
denied title IV, HEA program assistance or within 30 days following the
end of the payment period, whichever is later.
(3) An official designated by the Secretary shall conduct any
hearing held under paragraph (c)(2) of this section. The sole purpose
of this hearing is the determination of compliance with registration
requirements. At this hearing, the student retains the burden of
proving compliance, by credible evidence, with the requirements of the
Military Selective Service Act. The designated official may not
consider challenges based on constitutional or other grounds to the
requirements that a student state and verify, if required, compliance
with registration requirements, or to those registration requirements
themselves.
(4) Any determination of compliance made under this section is
final unless reopened by the Secretary and revised on the basis of
additional evidence.
(5) Any determination of compliance made under this section is
binding only for purposes of determining eligibility for title IV, HEA
program assistance.
(d) Liability. An institution is liable for any title IV aid
provided to a student who was required to register, but who was not
registered, if--
(1) The institution made its determination that the student was
not required to register on the basis of ambiguous information
regarding his status under registration law; or
(2)(i) The institution had conflicting information about whether
the student was required to register; and
(ii) Its determination that the student was not required to
register was not reasonable in the light of all available information.

(Authority: 50 U.S.C. App. 462)

9. Section 668.133 is amended by revising paragraph (b) to read as
follows:


Sec. 668.133 Conditions under which an institution shall require
documentation and request secondary confirmation.

* * * * *
(b) Exclusions from secondary confirmation. (1) An institution may
not require the student to produce the documentation requested under
Sec. 668.33(a)(3) and may not request that INS perform secondary
confirmation, if--
(i) The student demonstrates eligibility under the provisions of
Sec. 668.33(a)(4); and
(ii) The institution does not have conflicting documentation or
reason to believe that the student's claim of eligible noncitizen
status is incorrect.
(2) An institution receiving documentation required under
Sec. 668.33(a)(3) from a student need not request that INS perform
secondary confirmation for that student, if--
(i) The documents submitted by the student are identical to
documents received by the institution in a previous award year and for
which secondary confirmation was performed;
(ii) Based on the results of secondary confirmation, the
institution determined the student to be an eligible noncitizen for a
previous award year; and
(iii) The institution does not have conflicting documentation or
reason to believe that the student's claim of eligible noncitizen
status for the current award year is incorrect.
* * * * *
10. Section 668.164 is amended by revising paragraph (a) to read as
follows:


Sec. 668.164 Maintaining funds.

(a) General. (1) The requirements in this section apply only to
title IV, HEA program funds an institution receives under the campus-
based, William D. Ford Federal Direct Loan, Federal Pell Grant, and
SSIG programs. An institution that receives FFEL program funds through
electronic funds transfer or by master check must maintain those funds
as provided under 34 CFR 682.207(b).
(2)(i) Except as provided in paragraph (e) of this section, an
institution is not required to maintain a separate account for title
IV, HEA program funds. For funds an institution receives under the
campus-based, William D. Ford Federal Direct Student Loan, Federal Pell
Grant, and SSIG programs, an institution must maintain a bank account
that meets the requirements under paragraphs (b) or (c) of this
section. In establishing the bank account, an institution must--
(ii) Ensure that the name of the account discloses clearly that
Federal funds are maintained in that account; or
(iii)(A) Notify the bank of the accounts that contain Federal funds
and retain a record of that notice in its recordkeeping system; and
(B) Except for an institution that is backed by the full faith and
credit of a State, file with the appropriate State or municipal
government entity a UCC-1 statement disclosing that the account
contains Federal funds and maintain a copy of that statement in its
records.
* * * * *
11. Section 668.165 is amended by revising paragraph (b)(1); by
removing the word ``and'' at the end of paragraph (b)(3)(iv)(A); by
removing the period at the end of paragraph (b)(3)(iv)(B) and adding in
its place ``; and''; and by adding new paragraph (b)(3)(iv)(C) to read
as follows:


Sec. 668.165 Disbursing funds.

* * * * *
(b) Crediting a student's account--(1) General. In crediting the
student's account with title IV, HEA program funds, the institution may
apply those funds only to allowable charges described under paragraph
(b)(3) of this section. An institution must notify expeditiously a
student or parent borrower, in writing, electronically, or by other
means that the institution has credited the student's account with FFEL
or William D. Ford Federal Direct Loan program funds.
* * * * *
(3) * * *
(iv) * * *
(C) Provided that a student has or will have a title IV, HEA credit
balance as determined under paragraph (b)(2) of this section, minor
institutional charges assessed the student in a prior award year or
period of enrollment. For purposes of this paragraph, minor
institutional charges are limited to an amount that does not, or will
not, monetarily impair the student from paying for his or her room,
board, transportation, or other education-related expenses.
* * * * *

[[Page 49125]]



Sec. 668.1 [Amended]

12. In Sec. 668.1, paragraph (c)(11), remove ``FDSL'' and add in
its place ``William D. Ford Federal Direct Loan Programs''.


Sec. 668.2 [Amended]

13. In Sec. 668.2, paragraph (b) in the definitions of ``Federal
Direct PLUS loan'' and ``Federal Direct Stafford loan'' remove
``Federal Direct Student Program'' and add in its place ``William D.
Ford Federal Direct Loan Programs''; in the definition of ``Federal
Direct Student loan'' remove ``Federal Direct Student loan'' and add in
its place ``William D. Ford Federal Direct loan''; and in the
definition of ``Federal Direct Student Loan (FDSL) program'' remove
``Federal Direct Student Loan (FDSL) program'' and add in its place
``William D. Ford Federal Direct Loan Programs''; and remove the
definition of ``Income Contingent Loan (ICL) program''.


Sec. 668.13 [Amended]

14. In Sec. 668.13, paragraph (a)(4)(i) remove ``Federal Pell Grant
Program, the campus-based programs, the FDSL program, or the Federal
Stafford Loan, Federal SLS, or Federal PLUS Program'' and add in its
place ``campus-based programs, the Federal Stafford Loan, Federal PLUS
programs, the William D. Ford Federal Direct Loan Programs, or the
Federal Pell Grant Program''.


Sec. 668.21 [Amended]

15. In Sec. 668.21, in the heading and in paragraph (a)(1),
respectively, remove ``Pell Grant, SEOG, ICL, and Perkins Loan'' and
add in its place ``Federal Perkins Loan, FSEOG, and Federal Pell
Grant''.


Sec. 668.22 [Amended]

16. In Sec. 668.22, paragraphs (c)(2)(ii) and (g)(2)(ii)(B) remove
``Federal Direct Student Loan Program'' and add in its place ``William
D. Ford Federal Direct Loan Programs''.


Sec. 668.23 [Amended]

17. In Sec. 668.23, paragraphs (a) introductory language and
(c)(1)(i) remove ``FDSL'' and add in its place ``William D. Ford
Federal Direct Loan''.


Sec. 668.26 [Amended]

18. In Sec. 668.26, paragraph (b)(4) remove ``FDSL'' and add in its
place ``William D. Ford Federal Direct Loan''; in paragraph (b)(6)
remove ``National Defense/Direct Student Loan and ICL.'' and add in its
place ``National Defense Student Loan and Direct Loan programs''; in
paragraph (d)(1) remove ``or PAS Program''; in paragraph (d)(3) remove
``FDSL'' and ``Federal Direct Student loan'', respectively, and add in
its place ``William D. Ford Federal Direct Loan'', respectively; in
paragraph (d)(3)(i) remove ``FDSL'' and add in its place ``William D.
Ford Federal Direct Loan''; and in paragraph (e)(1) remove ``and PAS
programs'' and add in its place ``Program''.


Sec. 668.43 [Amended]

19. In Sec. 668.43, paragraph (c)(6) remove ``Federal Direct
Student Loan'' and add in its place ``William D. Ford Federal Direct
Loan''.


Sec. 668.51 [Amended]

20. In Sec. 668.51, paragraph (a) remove ``FDSL'' and add in its
place ``William D. Ford Federal Direct Loan''.


Sec. 668.52 [Amended]

21. In Sec. 668.52, in the definition of ``Student aid
application'' remove ``Federal Direct Loan'' and add in its place
``William D. Ford Federal Direct Loan''.


Sec. 668.54 [Amended]

22. In Sec. 668.54, paragraph (a)(2)(i) remove ``Federal Pell
Grant, Federal Direct Student Loan, campus-based, and Federal Stafford
Loan'' and add in its place ``campus-based, Federal Stafford Loan,
William D. Ford Federal Direct Loan, and Federal Pell Grant''.


Sec. 668.55 [Amended]

23. In Sec. 668.55, paragraph (c) remove ``Federal Pell Grant,
campus-based, Federal Stafford Loan, or FDSL'' and add in its place
``campus-based, Federal Stafford Loan, William D. Ford Federal Direct
Loan, or Federal Pell Grant''; in paragraphs (c)(1) and (c)(2) remove
``Federal Pell Grant, campus-based, or FDSL'', respectively, and add in
its place ``campus-based, William D. Ford Federal Direct Loan, or
Federal Pell Grant'', respectively.


Sec. 668.58 [Amended]

24. In Sec. 668.58, paragraph (a)(1)(i) remove ``Federal Pell
Grant, campus-based, or need-based ICL'' and add in its place ``campus-
based, or Federal Pell Grant''; in paragraph (a)(2)(i) remove ``Federal
Pell Grant and campus-based'' and add in its place ``campus-based and
Federal Pell Grant''; and in paragraph (a)(2)(iii)(A) add ``origination
of the applicant's'' before ``William''; and add ``originate the''
before ``William''.


Sec. 668.59 [Amended]

25. In Sec. 668.59, paragraph (d)(1) add ``s'' to ``Program''.


Sec. 668.60 [Amended]

26. In Sec. 668.60, paragraph (b) remove ``FDSL'' and add in its
place ``William D. Ford Federal Direct Loan''; in paragraphs
(b)(1)(i)(A) and (b)(1)(iii), respectively, remove ``FDSL, or FSEOG''
and add in its place ``FSEOG, or William D. Ford Federal Direct Loan'',
respectively; and in paragraph (d) remove ``FDSL, or Federal Stafford
Loan'' and add in its place ``Federal Stafford Loan, or William D. Ford
Federal Direct Loan''.


Sec. 668.61 [Amended]

27. In Sec. 668.61, paragraph (a)(2)(ii)(B) remove ``Federal Pell
Grant, Federal Perkins Loan, FDSL, or FSEOG'' and add in its place
``Federal Perkins Loan, FSEOG, William D. Ford Federal Direct Loan, or
Federal Pell Grant''.


Sec. 668.161 [Amended]

28. In Sec. 668.161, paragraph (a)(4) remove ``Federal Pell Grant,
PAS, FSEOG, Federal Perkins Loan, FWS, Direct Loan, and FFEL'' and add
in its place ``Federal Perkins Loan, FWS, FSEOG, FFEL, William D. Ford
Federal Direct Loan, and Federal Pell Grant''.


Sec. 668.162 [Amended]

29. In Sec. 668.162 in the definition of ``Disburse'' in paragraph
(1)(i) add ``William D. Ford Federal'' before ``Direct''; in paragraph
(1)(ii) remove ``Direct Loan or FFEL'' and add in its place ``FFEL or
William D. Ford Federal Direct Loan''; and in the definition of
``Period of enrollment'' add ``William D. Ford Federal'' before
``Direct''.


Sec. 668.165 [Amended]

30. In Sec. 668.165, paragraph (c)(2)(ii) remove ``Direct Loan and
FFEL'' and add in its place ``FFEL and William D. Ford Federal Direct
Loan''; and in paragraph (c)(3) add ``William D. Ford Federal'' before
``Direct''.


Sec. 668.166 [Amended]

31. In Sec. 668.166, paragraph (b)(3) add ``William D. Ford
Federal'' before ``Direct''.
* * * * *

PART 674--FEDERAL PERKINS LOAN PROGRAM

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

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

33. Section 674.2 paragraph (a) is amended by adding, in
alphabetical order, ``Full-time student''.
34. Section 674.2 paragraph (b) is amended by removing the
definitions of ``Full-time graduate or professional student'' and
``Full-time undergraduate student''; and by revising the definition of
``Making of a loan'' to read as follows:

[[Page 49126]]



Sec. 674.2 Definitions.

* * * * *
(b) * * *
Making of a loan: When the borrower signs the promissory note and
the loan funds are disbursed.
* * * * *
35. Section 674.16 is amended by revising paragraph (d) to read as
follows:


Sec. 674.16 Making and disbursing loans.

* * * * *
(d)(1) The institution shall disburse funds to a student or the
student's account in accordance with 34 CFR 668.165.
(2) The institution shall obtain the borrower's signature on a
promissory note for each award year before it disburses any loan funds
to the borrower under that note for that award year.
* * * * *


Sec. 674.17 [AMENDED]

36. Section 674.17 is amended by removing paragraph (a) and by
redesignating paragraphs (b)(1), (b)(1)(i), (b)(1)(ii), (b)(1)(iii),
(b)(2), (b)(3), (b)(4), (b)(4)(i), (b)(4)(ii), and (5) as paragraphs
(a), (a)(1), (a)(2), (a)(3), (b), (c), (d), (d)(1), (d)(2), and (e),
respectively.
37. Section 674.19 is amended by revising paragraph (e)(4)(v) to
read as follows:


Sec. 674.19 Fiscal procedures and records.

* * * * *
(e) * * *
(4) * * *
(v) An institution may keep the records required in this section on
microforms, optical disk, other machine readable format, or it may keep
its records in computer format. If an institution keeps its records in
computer format it shall maintain, in either hard copy, microforms,
optical disk, or other machine readable format, the source documents
supporting the computer input.
* * * * *
38. Section 674.31 is amended by redesignating paragraph (a)(2) as
paragraph (a)(3); and by adding a new paragraph (a)(2) to read as
follows:


Sec. 674.31 Promissory note.

* * * * *
(a) * * *
(2) The Secretary provides sample promissory notes to participating
institutions. The institution may not change the substance of these
sample notes.
* * * * *


Sec. 674.33 [Amended]

39. Section 674.33, paragraph (a)(2) is amended by removing ``$15''
and adding in its place ``$25''.
40. Section 674.47 is amended by revising paragraph (g) and by
adding a new paragraph (h) to read as follows:


Sec. 674.47 Costs chargeable to the fund.

* * * * *
(g) Cessation of collection activity of defaulted accounts. (1) An
institution may cease collection activity of a defaulted account with a
balance of less than $25, including outstanding principal, accrued
interest, collection costs, and late charges.
(2) An institution that ceases collection activity under paragraph
(g)(1) of this section may no longer include the amount of the account
as an asset of the Fund.
(h) Write-offs of accounts of less than $1. Notwithstanding any
other provision in this subpart, an institution may write off an
account with a balance of less than $1, including outstanding
principal, accrued interest, collection costs, and late charges.
* * * * *

PART 675--FEDERAL WORK-STUDY PROGRAMS

41. The authority citation for part 675 continues to read as
follows:

Authority: 42 U.S.C. 2571-2756b, unless otherwise noted.


Sec. 675.2 [Amended]

42. Section 675.2, paragraph (a) is amended by adding in
alphabetical order, ``Full-time student''.
43. Section 675.2, paragraph (b) is amended by removing the
definitions of ``Full-time graduate or professional student'' and
``Full-time undergraduate student''.


Sec. 675.17 [Removed]

44. Section 675.17 is removed and reserved.
45. Section 675.19 is amended by revising paragraph (c)(3) to read
as follows:


Sec. 675.19 Fiscal procedures and records.

* * * * *
(c) * * *
(3) An institution may keep the records required in this section on
microforms, optical disk, other machine readable format, or it may keep
its records in computer format. If an institution keeps its records in
computer format it shall maintain, in either hard copy, microforms,
optical disk, or other machine readable format, the source documents
supporting the computer input.
* * * * *

Appendix B to Part 675--[Removed]

46. Appendix B to part 675--Model Off-Campus Agreement is removed.

PART 676--FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANT
PROGRAM

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

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


Sec. 676.2 [Amended]

48. Section 676.2, paragraph (a) is amended by adding in
alphabetical order, ``Full-time student''.
49. Section 676.2, paragraph (b) is amended by removing the
definition of ``Full-time undergraduate student''.


Sec. 676.17 [Removed]

50. Section 676.17 is removed and reserved.
51. Section 676.19 is amended by revising paragraph (c)(3) to read
as follows:


Sec. 676.19 Fiscal procedures and records.

* * * * *
(c) * * *
(3) An institution may keep the records required in this section on
microforms, optical disk, other machine readable format, or it may keep
its records in computer format. If an institution keeps its records in
computer format it shall maintain, in either hard copy, microforms,
optical disk, or other machine readable format, the source documents
supporting the computer input.
* * * * *

PART 682--FEDERAL FAMILY EDUCATION LOAN (FFEL) PROGRAM

52. The authority citation for part 682 continues to read as
follows:

Authority: 20 U.S.C. 1071 to 1087-2, unless otherwise noted.

53. Section 682.201, paragraph (b) is amended by redesignating
paragraphs (b)(1) through (b)(8) as paragraphs (b)(1)(i) through
(b)(1)(viii), respectively; by redesignating the introductory sentence
as paragraph (b)(1); and by adding a new paragraph (b)(2) to read as
follows:


Sec. 682.201 Eligible borrowers.

* * * * *
(b) * * *
(2) For purposes of paragraph (b)(1) of this section, a ``parent''
includes the

[[Page 49127]]
individuals described in the definition of the term ``parent'' in 34
CFR 668.2 and the spouse of a parent who remarried, if that spouse's
income and assets are taken into account when calculating a dependent
student's expected family contribution.


Sec. 682.600 [Removed]

54. Section 682.600 is removed and reserved.


Sec. 682.602 [Removed]

55. Section 682.602 is removed and reserved.
56. A new Sec. 682.611 is added to read as follows:


Sec. 682.611 Foreign schools.

A foreign school shall comply with the regulations in this part
except to the extent that the Secretary states in these regulations or
in other official publications or documents that those schools do not
have to comply.

(Authority: 20 U.S.C. 1077, 1078, 1078-1, 1078-2, 1078-3, 1082,
1088, and 1094)

PART 685--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAMS

57. The authority citation for part 685 continues to read as
follows:

Authority: 20 U.S.C. 1078a et seq., unless otherwise noted.

58. Section 685.200, paragraph (b) is amended by redesignating
paragraphs (b)(1) through (b)(7) as paragraphs (b)(1)(i) through
(b)(1)(vii), respectively; by redesignating the introductory sentence
as paragraph (b)(1); and by adding a new paragraph (b)(2) to read as
follows:


Sec. 685.200 Borrower eligibility.

* * * * *
(b) * * *
(2) For purposes of paragraph (b)(1) of this section, a ``parent''
includes the individuals described in the definition of the term
``parent'' in 34 CFR 668.2 and the spouse of a parent who remarried, if
that spouse's income and assets are taken into account when calculating
a dependent student's expected family contribution.
* * * * *

PART 690--FEDERAL PELL GRANT PROGRAM

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

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


Sec. 690.7 [Amended]

60. Section 690.7, paragraph (a)(1) is removed and paragraph (a)(2)
is redesignated as paragraph (a).


Sec. 690.71 [Amended]

61. Section 690.71 is amended by removing the second sentence.


Secs. 690.72, 690.73, 690.74 [Removed]

62. Sections 690.72, 690.73, and 690.74 are removed and reserved.


Sec. 690.83 [Amended]

63. Section 690.83 is amended by removing paragraph (c); by
redesignating paragraphs (d) and (e) as paragraphs (c) and (d),
respectively; by removing in redesignated paragraph (c), ``paragraphs
(a), (b) or (c) of this section'' and adding, in its place,
``paragraphs (a) or (b) of this section''; and by removing in
redesignated paragraph (d)(1), ``Notwithstanding paragraphs (a), (b),
(c)(1) or (2), or (d) of this section'' and adding, in its place,
``Notwithstanding paragraphs (a), (b), or (c) of this section''; by
removing in redesignated paragraph (d)(1) ``(e)'' and adding, in its
place, ``(d)''; by adding in redesignated paragraph (d)(2) ``or program
review,'' after ``34 CFR 668.23(c),'', and ``or program review'' after
``audit'' in the last sentence.

[FR Doc. 95-23150 Filed 9-20-95; 8:45 am]
BILLING CODE 4000-01-P



]

Last Modified: 08/17/1998