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Proposed Rulemaking Pell/Campus Based Programs. Comments must be received no later than September 15, 1999.

Attachments:
PublicationDate: 8/3/99
FRPart:
RegPartsAffected: Citation : (R)668.1
PageNumbers: 42205-42219
Summary: Proposed Rulemaking Pell/Campus Based Programs. Comments must be received no later than September 15, 1999.
CommentDueDate: 9/15/99

  
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[


[Federal Register: August 3, 1999 (Volume 64, Number 148)]
[Proposed Rules]
[Page 42205-42219]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03au99-26]


[[Page 42205]]

_______________________________________________________________________

Part III





Department of Education





_______________________________________________________________________



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



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


[[Page 42206]]



DEPARTMENT OF EDUCATION

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

RIN 1845-AA01


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

AGENCY: Department of Education.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: The proposed regulations would amend the regulations governing
the Student Assistance General Provisions, the Campus-Based programs
(Federal Perkins Loan, Federal Work-Study (FWS), and Federal
Supplemental Educational Opportunity Grant (FSEOG) programs), and the
Federal Pell Grant Program. These proposed amendments are a result of
recently enacted changes to the Higher Education Act of 1965, as
amended (HEA), made by the Higher Education Amendments of 1998 (1998
Amendments).

DATES: We must receive your comments on or before September 15, 1999.

ADDRESSES: Address all comments about these proposed regulations to:
Ms. Kathy Gause, U.S. Department of Education, P.O. Box 23272,
Washington, D.C. 20026-3272. If you prefer to send your comments
through the Internet use the following address: CBPellNPRM@ed.gov
If you want to comment on the information collection requirements
you must send your comments to the Office of Management and Budget at
the address listed in the Paperwork Reduction Act section of this
preamble. You may also send a copy of these comments to the Department
representative named in this section.

FOR FURTHER INFORMATION CONTACT:
1. For the Federal Perkins Loan, FWS, and FSEOG programs: Ms. Kathy
Gause, U.S. Department of Education, 400 Maryland Avenue, S.W.,
Regional Office Building 3, Room 3045, Washington, DC 20202-5447.
Telephone: (202) 708-8242.
2. For the Student Assistance General Provisions and the Federal
Pell Grant Program: Ms. Monica Woods, U.S. Department of Education, 400
Maryland Avenue, S.W., Regional Office Building 3, Room 3045,
Washington, DC 20202-5447. Telephone: (202) 708-8242.
If you use a telecommunications device for the deaf (TDD), you may
call the Federal Information Relay Service (FIRS) at 1-800-877-8339.
Individuals with disabilities may obtain this document in an
alternate format (e.g., Braille, large print, audiotape, or computer
diskette) on request to the contact persons listed in the preceding
paragraphs.

SUPPLEMENTARY INFORMATION:

Invitation to Comment

We invite you to submit comments regarding these proposed
regulations. To ensure that your comments have maximum effect in
developing the final regulations, we urge you to identify clearly the
specific section or sections of the proposed regulations that each of
your comments addresses and to arrange your comments in the same order
as the proposed regulations.
We invite you to assist us in complying with the specific
requirements of Executive Order 12866 and its overall requirement of
reducing regulatory burden that might result from these proposed
regulations. Please let us know of any further opportunities we should
take to reduce potential costs or increase potential benefits while
preserving the effective and efficient administration of the programs.
During and after the comment period, you may inspect all public
comments about these proposed regulations in Room 3053, ROB-3, 7th & D
Streets, SW, Washington, DC, between the hours of 8:30 a.m. and 4 p.m.,
Eastern time, Monday through Friday of each week except Federal
holidays.

Assistance to Individuals With Disabilities in Reviewing the
Rulemaking Record

On request, we will supply an appropriate aid, such as a reader or
print magnifier, to an individual with a disability who needs
assistance to review the comments or other documents in the public
rulemaking record for these proposed regulations. If you want to
schedule an appointment for this type of aid you may call (202) 205-
8113 or (202) 260-9895. If you use a TDD, you may call the Federal
Information Relay Service at 1-800-877-8339.

Negotiated Rulemaking Process

Section 492 of the HEA requires that, before publishing any
proposed regulations to implement programs under Title IV of the Act,
the Secretary obtain public involvement in the development of the
proposed regulations. After obtaining advice and recommendations, the
Secretary must conduct a negotiated rulemaking process to develop the
proposed regulations. All published proposed regulations must conform
to agreements resulting from the negotiated rulemaking process unless
the Secretary reopens the negotiated rulemaking process or provides a
written explanation to the participants in that process why the
Secretary has decided to depart from the agreements.
To obtain public involvement in the development of the proposed
regulations, we published a notice in the Federal Register (63 FR
59922, November 6, 1998) requesting advice and recommendations from
interested parties concerning what regulations were necessary to
implement Title IV of the HEA. We also invited advice and
recommendations concerning which regulated issues should be subjected
to a negotiated rulemaking process. We further requested advice and
recommendations concerning ways to prioritize the numerous issues in
Title IV, in order to meet statutory deadlines. Additionally, we
requested advice and recommendations concerning how to conduct the
negotiated rulemaking process, given the time available and the number
of regulations that needed to be developed.
In addition to soliciting written comments, we held three public
hearings and several informal meetings to give interested parties an
opportunity to share advice and recommendations with the Department.
The hearings were held in Washington, DC, Chicago, and Los Angeles, and
we posted transcripts of those hearings to the Department's Information
for Financial Aid Professionals' website (http://ifap.ed.gov).
We then published a second notice in the Federal Register (63 FR
71206, December 23, 1998) to announce the Department's intention to
establish four negotiated rulemaking committees to draft proposed
regulations implementing Title IV of the HEA. The notice announced the
organizations or groups believed to represent the interests that should
participate in the negotiated rulemaking process and announced that the
Department would select participants for the process from nominees of
those organizations or groups. We requested nominations for additional
participants from anyone who believed that the organizations or groups
listed did not adequately represent the list of interests outlined in
section 492. Once the four committees were established they met to
develop proposed regulations over the course of several months,
beginning in January.
The proposed regulations contained in this notice of proposed
rulemaking (NPRM) reflect the final consensus of Committee III, which
was made up of the following members:


[[Page 42207]]


Accrediting Commission of Career Schools and Colleges of Technology
American Association of Collegiate Registrars and Admissions Officers
American Association of Community Colleges
American Association of Cosmetology Schools
American Association of State Colleges and Universities
American Council on Education
Association of American Universities
Career College Association
Coalition of Higher Education Assistance Organizations
Education Finance Council
Legal Services Counsel (a coalition)
National Association of College and University Business Officers
National Association of Equal Opportunity in Higher Education
National Association of Graduate/Professional Students
National Association of Independent Colleges and Universities
National Association of State Student Grant and Aid Programs/National
Council of Higher Education Loan Programs (a coalition)
National Association of State Universities and Land-Grant Colleges
National Association of Student Financial Aid Administrators
National Direct Student Loan Coalition
The College Board
The College Fund/United Negro College Fund
United States Department of Education
United States Student Association
US Public Interest Research Group

As stated in the Committee protocols, consensus means that there
must be no dissent by any member in order for the committee to be
considered to have reached agreement. Consensus was reached on all of
the proposed regulations in this document.

Affected Programs

The student financial assistance programs under Title IV of the
Higher Education Act of 1965, as amended (HEA), affected by these
proposed regulations are the Federal Perkins Loan, FWS, FSEOG, and the
Federal Pell Grant programs. These proposed regulations also affect the
Student Assistance General Provisions regulations.
The term ``campus-based programs'' refers to the Federal Perkins
Loan, FWS, and FSEOG programs. A description of the major proposed
changes to these program regulations follows. The proposed changes that
pertain to more than one program are described first, followed by
descriptions of provisions that pertain to only a specific program. We
will begin with a discussion of the proposed changes to the Student
Assistance General Provisions regulations followed by the ``campus-
based programs'' discussion, and end with proposed changes to the
Federal Pell Grant Program.

Summary of Proposed Regulatory Changes

Student Assistance General Provisions

Section 668.8 Eligible Program and Section 668.32 Student Eligibility--
General

Section 401(c) of the HEA was amended by the 1998 Amendments to
allow students enrolled in a postbaccalaureate teacher certificate or
licensing program to receive a Federal Pell Grant. For purposes of the
Federal Pell Grant Program, the current Student Assistance General
Provisions regulations require an educational program to be an
undergraduate program in order to qualify as an eligible program. The
current regulations also require that a student not have a
baccalaureate degree or first professional degree in order to receive a
Federal Pell Grant. These proposed regulations would amend the eligible
program provision in Sec. 668.8 and the student eligibility provision
in Sec. 668.32 of the Student Assistance General Provisions to conform
with the amended HEA.

Section 668.161 Scope and Purpose.

Amended section 445(c) of the HEA allows an institution, upon the
written request of a student, to make payments of FWS funds directly to
the student's account at a financial institution or account at the
institution for tuition and fees, contracted room and board, and other
institutionally provided educational related goods and services.
Currently Secs. 668.164 and 668.165 of the Subpart K--Cash Management
regulations establish the rules and procedures under which a
participating institution disburses Title IV, HEA program funds.
However, Subpart K does not specifically address the crediting of FWS
earnings to a student's account at the institution. Section 675.16 of
the FWS regulations would be amended to establish the disbursement
procedures for paying a student his or her wages. Therefore, these
proposed regulations would amend Sec. 668.161 to indicate that an
institution must follow Sec. 675.16 for paying a student under the FWS
Program instead of Secs. 668.164 and 668.165.

Federal Perkins Loan, Federal Work-Study, and Federal Supplemental
Educational Opportunity Grant Programs

Section 673.5 Overaward

These proposed regulations would modify the overaward provisions in
Sec. 673.5 of the regulations for the campus-based programs. Section
428(a)(2)(C) of the HEA was amended to change the definition of
estimated financial assistance to exclude veterans education benefits
under Title 38, Chapter 30 (Montgomery GI Bill) and national service
education awards or post-service benefits under Title I of the National
and Community Service Act of 1990 (AmeriCorps) in determining a
student's eligibility for subsidized loans. This applies to a
subsidized Federal Stafford Loan (subsidized Stafford Loan) under the
Federal Family Education Loan (FFEL) Program and a Federal Direct
Stafford/Ford Loan (Direct Subsidized Loan) under the William D. Ford
Federal Direct Loan (Direct Loan) Program.
Under current campus-based regulations, if a student has both a
subsidized loan and campus-based aid the most stringent requirement
regarding resources becomes operative since the student's eligibility
for campus-based funds is reduced by the amount of subsidized loans and
any Montgomery GI Bill benefits and AmeriCorps funds, or both, paid for
the cost of attendance. Thus, students receiving subsidized loans
because of the new exclusion of these benefits may have their
eligibility for campus-based aid reduced. The Committee concluded that,
under the new statute, a student should not lose campus-based
eligibility because of the interaction of the various Title IV
programs. Therefore, in order to allow students to have the full
advantage of this statutory exclusion of benefits without losing
campus-based eligibility, these proposed regulations would change the
definition of ``resources'' for the campus-based programs in cases
where a student receives both a subsidized loan and Montgomery GI Bill
veterans education benefits and/or an AmeriCorps education award. These
regulations are proposing that when packaging a student's financial aid
under the campus-based programs, an institution may exclude as a
resource any portion of a subsidized Stafford Loan or a Direct
Subsidized Loan that is equal to or less than the amount of the
student's Montgomery GI Bill veterans education benefits and AmeriCorps
education awards or post-service benefits paid for the cost of
attendance.

Sections 674.10, 675.10, and 676.10 Selection of Students

Current regulations require institutions to offer to less-than-
full-time and independent students at least five percent of its FWS
allotment, five percent of its FSEOG allotment, or five percent of the
dollar amount of the

[[Page 42208]]

loans made under the Federal Perkins Loan Program if the need of all
these students exceeds five percent of the total need of all students
at an institution. These proposed regulations would amend Secs. 674.10,
675.10, and 676.10 in accordance with amended sections 413C(d),
443(b)(3), and 464(b)(2) of the HEA, to provide that if an
institution's FWS, FSEOG, or Federal Perkins Loan (respectively)
allocation is directly or indirectly based in part on the financial
need of less-than-full-time or independent students, then the
institution must offer to those students a reasonable portion of the
FWS allocation, FSEOG allocation, or dollar amount of Federal Perkins
Loans made.
The language in the sections of the HEA referred to above require
institutions to ``make available'' campus-based funds to less-than-
full-time and independent students. The Committee realized that in some
circumstances it may be difficult for an institution actually to
disburse funds to these students because institutions have no control
over whether students will accept aid. Therefore, to accommodate these
circumstances and prevent a burden on institutions, the Committee
agreed that the words ``make available'' should be interpreted to mean
that the institution must ``offer'' the funds to less-than-full-time
and independent students.
These proposed regulations contain no definition of the statutory
words ``reasonable portion''. Institutions are expected to have
reasonable packaging policies for awarding campus-based funds. A policy
of exclusion for less-than-full-time and independent students would not
be acceptable for purposes of this requirement.

Federal Work-Study Programs

Section 675.2 Definitions

In an effort to increase participation of FWS students in community
service activities, the definition of ``community services,'' in
section 441(c) of the HEA has been amended. The definition of
``community services'' now includes child care services provided on
campus that are ``open and accessible to the community'' and services
to students with disabilities who ``are enrolled at the institution.''
These proposed regulations would amend Sec. 675.2 of the FWS
regulations to reflect these statutory changes.
Child care services. The statutory changes do not alter the
Secretary's current policy on the inclusion of child care services
provided on campus as ``community service''.
This policy is described in Part 3 of The 1999-2000 Student
Financial Aid Handbook and in ``Dear Colleague'' letters CB-94-4, dated
March 1994, and CB-97-12, dated July 1997. On-campus jobs can meet the
definition of community service jobs if the services provided are open
and accessible to the community. A university or college in and of
itself is not considered the community for this purpose.
A service (i.e., child care) is considered open to the community if
the service is publicized to the community and the general public uses
the service. These regulations are not proposing to set a numerical
count or percentage requirement for institutions to demonstrate public
use of the service. However, if the service is provided only to
students, faculty, staff, and their families, an FWS job does not meet
the definition of ``community service'' under the FWS Program.
Services for students with disabilities. The 1998 Amendments also
amended the definition of ``community services'' to include the
provision of support services for students with disabilities who are
enrolled at the institution. Current regulations provide that on-campus
jobs providing support services for students with disabilities could
meet the definition of ``community services'' only if those services
were provided to the community as well. Under section 441(c)(3) of the
amended HEA, services to students with disabilities are to be
considered as community service activities, even if the services are
provided exclusively to students with disabilities who are enrolled at
the institution. This is the only statutory exception to the
requirement that community services must be open and accessible to the
community.

Section 675.8 Program Participation Agreement

These proposed regulations would amend the provisions governing the
program participation agreement between the Secretary and the
institution in Sec. 675.8 in accordance with the statutory change in
section 443(b)(6) of the HEA. The statutory change eliminates the
requirement that institutions employing FWS students must make
``equivalent employment'' offered or arranged by the institution
reasonably available to all students at the institution who desire to
work.

Section 675.16 Payments Directly to the Student's Account

These proposed regulations would amend Sec. 675.16, in accordance
with amended section 445(c) of the HEA, to allow an institution, upon
the written request of a student, to make payments of FWS funds
directly to the student's account at a financial institution or the
student's account at the educational institution for tuition and fees,
contracted room and board, and other institutionally-provided
educationally-related goods and services.
Currently, the FWS regulations prohibit an institution from
directly transferring the Federal share of FWS earnings to a student's
account at the institution. Since the FWS Program regulations allow for
payment to the student by check or similar instrument, the Department
in the past eased the administrative burden for institutions by
allowing for the electronic transfer of FWS compensation to the
student's bank account. This procedure was acceptable if the student
signed an authorization for the electronic transfer and the institution
maintained that authorization on file. The institution could not
require a student to use this method as a condition for receiving FWS
funds.
The 1998 Amendments broaden the institution's authority concerning
students who want their FWS earnings credited to their accounts at the
institution to cover institutional charges. Institutions already had
this authority for all other Title IV, HEA program funds under
Secs. 668.164 and 668.165 of the Subpart K--Cash Management
regulations.
Under Sec. 668.165 of the current regulations an institution is
required to provide specific award information to a student before it
starts disbursing Title IV, HEA funds for any award year. However,
under the proposed regulations Sec. 668.165 will not apply to the FWS
Program. Therefore, to have this requirement continue to apply to the
FWS Program, these regulations are proposing that this student
notification requirement be added to the FWS regulations in
Sec. 675.16. These regulations also propose that an institution, before
making an initial disbursement of FWS compensation for an ``award
period'' to a student, must notify the student of the amount of FWS
compensation he or she is authorized to earn, and how and when the
compensation will be paid.
An ``award period'' is the period of time covered by the FWS award
made to a specific student. For example, if an institution makes an FWS
award to a student for only the summer, the ``award period'' is that
period of time. In this example, the period of time crosses over two
award years and the portion of compensation earned up to June 30 is
reported for one award year and the compensation earned after that

[[Page 42209]]

date is reported for the next award year. It is not the intention of
the proposed regulations to require that an institution inform the
student about the summer award again even though a new award year has
started. Because of this factor, the proposed FWS regulations for the
student notification refer to an ``award period'' and not an award
year.
FWS Program student rights and responsibilities. The FWS Program's
purpose is to provide part-time employment to needy undergraduate and
graduate students. The important distinction to be made between FWS
Program funds and other Title IV program funds is that under the FWS
Program, the students hold jobs and their compensation is earned and
governed by the same applicable Federal, State, or local laws as any
other type of earnings from employment. These proposed regulations
would allow institutions to credit FWS earnings to a student's account
at the institution or to initiate an EFT to a bank account designated
by the student under the following conditions:
<bullet> The institution must obtain a written authorization from
the student;
<bullet> The authorization to transfer funds to a student's account
at the institution must be separate from the authorization to have
funds transferred to his or her bank account;
<bullet> For purposes of the authorization to transfer FWS funds to
a student's bank account, the bank forms required to initiate a direct
EFT deposit can be considered the authorization;
<bullet> The authorization cannot be included as part of a list or
in combination with other types of authorizations signed by the
student;
<bullet> The student may not be required or coerced to provide the
authorization;
<bullet> The student must be allowed to cancel or modify the
authorization at any time;
<bullet> The institution must clearly explain how it will use the
authorization; and
<bullet> If an institution credits a student's account and the
total amount of FWS funds credited exceeds the amount of tuition and
fees, contracted room and board, and charges for other institutionally-
provided educationally-related goods and services, the student must be
paid the balance as soon as possible by the institution. However, a
credit balance must be paid no later than 14 days after the balance
occurred on the student's account.
Holding excess FWS funds on behalf of students. These proposed
regulations would also allow an institution to hold, on behalf of a
student, FWS funds that would otherwise be paid directly to the student
after a balance occurred on the student's account unless specifically
prohibited by the Secretary under the terms of a reimbursement payment
method.
To hold FWS funds for a student, an institution must:
<bullet> Obtain a written authorization from the student for this
specific purpose;
<bullet> Identify the amount of FWS funds held in excess for each
student in a designated subsidiary ledger account;
<bullet> Maintain cash in its bank account that is always at a
minimum equal to the FWS funds being held for students; and
<bullet> Pay any remaining balance by the end of the institution's
final FWS payroll period for an award period.

Section 675.18 Use of Funds

These regulations propose several amendments to Sec. 675.18.
Carry back funds for summer employment. First, to provide
consistency with the new authority in the FSEOG Program to carry back
FSEOG funds, these regulations are proposing to change the date of May
15 in Sec. 675.18(f) to May 1. Currently, an institution is authorized
to make payments of FWS funds from the succeeding award year's
allocation to students for services performed on or after May 15 of the
previous award year but prior to the beginning of the succeeding award
year (that is, for summer employment). The HEA now provides this same
additional ``carry-back'' authority for the FSEOG Program. After
discussion of various possible dates, the Committee agreed that May 1
is a more realistic date. This is the only proposed change for the FWS
carry-forward/carry-back provision.
Community service percentage requirement: Second, in accordance
with amended section 443(b)(2) of the HEA, these regulations are
proposing to amend Sec. 675.18(g) to provide that institutions are
required to use at least seven percent of the total funds granted to
the institution to compensate students employed in community service
activities for the 2000-2001 and subsequent award years. Currently,
institutions are required to use at least five percent of those funds
to compensate those students.
New reading tutoring and family literacy project requirement.
Third, in accordance with amended section 443(b)(2) of the HEA, these
regulations also propose to amend Sec. 675.18(g) to require that,
beginning with the 2000-2001 award year, an institution must ensure
that one or more of its FWS students is employed (1) in a reading
tutoring project as a reading tutor for children who are preschool age
or are in elementary school, or (2) in a family literacy project
performing family literacy activities. As discussed in the preceding
paragraph, the HEA previously required that an institution use a
specified percentage of its annual FWS allocation to employ students in
community service jobs. Although the types of community service jobs
were not specified, employing students to tutor children in reading or
to work in a family literacy program was recommended to institutions
because of the national critical needs in these areas. Encouragement is
provided to institutions to employ students in these areas in
Sec. 675.26 of the FWS regulations through waivers of the FWS
institutional-share requirement.
Family literacy projects. As defined in ``Dear Colleague'' letter
CB-98-6, dated May 1998, a family literacy project integrates four
components. It provides:
<bullet> Literacy or pre-literacy education to children;
<bullet> Literacy training for parents or other caregivers of
children in the program;
<bullet> A means of equipping parents or other caregivers with the
skills needed to partner with their children in learning; and
<bullet> Literacy activities between parents or other caregivers
and their children.
This definition is consistent with the Even Start and Head Start
definitions of family literacy programs. The four parts make up a
comprehensive family literacy project. The interaction between parent
(or caregiver) and child is very important. The family literacy concept
recognizes the family as an institution for education and learning and
the role of parents as their children's first teachers. The family
literacy concept also is based on the premise that an investment in the
education of adults in a family is, simultaneously, an investment in
improving the chances for academic success for the children in that
family. For more information about family literacy projects, you can
review ``Dear Colleague'' letter CB-98-6 on the Information for
Financial Aid Professionals (IFAP) web site at: http://IFAP.ed.gov
Waiver--Employment of students as reading tutors or in a family
literacy project: Section 443(b)(2) of the HEA provides for a waiver of
the community service requirement if the Secretary determines that
enforcing the requirement would cause hardship for students at the
institution. Institutions seeking a waiver of the community service
requirement are required to follow the Department's procedure. This
procedure requires institutions to submit a written waiver request and
any supporting information or documents by

[[Page 42210]]

a date established by the Secretary and published in the Federal
Register each year.
The 1998 Amendments revised section 443(b)(2) of the HEA to grant
the Secretary the same waiver authority with respect to the new
statutory requirement that institutions must ensure that one or more of
its FWS students is employed in a reading tutoring project as a reading
tutor for children or in a family literacy project performing family
literacy activities. Therefore, these proposed regulations would
provide for a waiver if the Secretary determines that enforcing this
requirement would create a hardship for students at the institution.
The Department would use a waiver procedure that requires institutions
seeking a waiver of this new requirement to apply for this waiver in
the same manner as for the community service requirement waiver. The
institution would be required to submit a written waiver request and
any supporting information or documents by the date established by the
Secretary and published in the Federal Register each year.
The Secretary has approved some waivers to institutions of the
community service requirement. In the waiver requests that received
approval, the institutions stated that their FWS allocation was very
small. It was noted that five percent (increase to seven percent
beginning with the 2000-2001 award year) of the FWS allocation only
provided enough funds for a student to work for a short period;
therefore, the schools were unable to find short-term placement for
community service. This was considered a hardship to the student. The
fact that it may be difficult for the institution to comply with this
provision is not in and of itself a basis for granting a waiver.
Reading tutoring requirement--Priority for schools. Fourth, if an
institution employs FWS students as reading tutors in elementary
schools, section 443(d)(2) of the HEA requires the institution, to the
extent practicable, to give priority to employing students in schools
that are participating in a reading reform project. The 1998 Amendments
require that the reading reform project be one that is designed to
train teachers how to teach reading on the basis of scientifically-
based research on reading and funded under the Elementary and Secondary
Education Act of 1965, as amended (ESEA). Under the new tutoring and
literacy activities, the amended HEA also requires that the FWS
students tutoring reading in a school participating in a reading reform
project described above receive training from the employing school in
the instructional practices used by the school. The Secretary
recommends that institutions contact their local educational agency to
find out if any elementary schools in their area participate in a
reading reform project funded under the ESEA.
This new provision supports the President's ``America Reads
Challenge'' which is designed to ensure that all children read
independently and well by the end of the third grade, and also targets
at-risk children.
Reading reform projects. The Reading Excellence Act amended Title
II of the ESEA by adding a component to improve students' reading
ability. The Reading Excellence Act recognizes a reading reform project
to be a project that supports the improvement of reading instruction.
The projects are funded by the Department of Education through
competitive grants to State educational agencies. The Secretary
believes that most educational policy makers and practitioners have
come to agree that school reform can result in increased student
achievement only to the extent that the following four principles are
implemented: (1) Set high academic standards that all students are
expected to achieve; (2) Measure student progress; (3) Ensure that
there is a well-qualified teacher in every classroom; and (4) Hold
schools accountable for results.
Payment for time spent in training and travel. Fifth, in accordance
with amended section 443(b)(2)(A) of the HEA, these proposed
regulations would amend Sec. 675.18 to provide that an institution may
pay FWS students for a reasonable amount of time spent for training for
any FWS employment, and for travel that is directly related to
employment in community service activities (including tutoring in
reading and family literacy activities).
Since every job consists of some type of training, whether formal
or informal, it has been the Department's policy to allow FWS students
to be paid wages during a training period conducted for a reasonable
length of time. This policy has applied whether the student was
employed in community service activities or not. Therefore, this
provision of the proposed regulations is not a change to previous
Department policy. The Secretary recognizes that jobs such as math or
reading tutors may require more training than other FWS positions. A
training period of an academic term would not be considered reasonable
because the goal of the FWS Program is to optimize the number of hours
an FWS student spends working. The Secretary would consider a
reasonable training period to be one that occurs before the student
begins the duties of tutoring and that does not exceed approximately 20
hours. Students may also be compensated for a reasonable amount of time
to perform on-going activities (i.e., preparation and evaluation time)
necessary to accomplish their tutoring jobs.
The new provision in section 443(b)(2)(A) for compensating FWS
students for time spent traveling to and from their community service
job does change current policy. Beginning with the 1999-2000 award
year, institutions will be allowed to pay students for a reasonable
amount of time spent for travel that is directly related to employment
in community service activities. The Department's policy would require
that the time spent for travel be reported on the student's FWS time
record as the hours worked are currently reported. The Secretary
recommends that institutions use a time record that shows a separation
for the time spent in travel from hours worked.

Section 675.20 Eligible Employers and General Conditions and
Limitation on Employment

In accordance with amended section 443(b)(1) of the HEA, the
proposed regulations amend Sec. 675.20 to clarify that FWS employment
may include internships, practicums, or assistantships (e.g., research
or teaching assistantships). The 1998 Amendments do not alter the
Secretary's current policy on an FWS student receiving academic credit
from the work performed in an FWS job. This policy as discussed below
is described in Part 3 of The 1999-2000 Student Financial Aid Handbook.

It has been the Department's longstanding policy that a student
could receive academic credit from the work performed under the FWS
Program. However, certain restrictions apply to this type of
employment. An internship, practicum, or assistantship does not qualify
for FWS employment unless the employer would normally pay the student
for the same work even if that student were not FWS eligible. If the
employer normally pays or has paid such persons, the internship,
practicum, or assistantship qualifies as an FWS job. An example of an
internship that normally does not qualify as an FWS job is student
teaching because student teachers are not usually compensated for that
activity. Also, current Department policy is that a student who
receives academic credit for an FWS job cannot be paid any less than he
or she would be paid if no academic credit were received.

[[Page 42211]]

The 1998 Amendments allow a student to earn FWS funds while earning
academic credit in the jobs listed in the prior paragraph because these
types of jobs are considered to be outside the normal realm of
classroom experience. The list of jobs in these proposed regulations is
not meant to be exhaustive. However, Department policy does not allow a
student to be paid for receiving instruction in a classroom,
laboratory, or other academic setting. Institutions must continue to
ensure that students are not being paid for attending class.
Department policy allows an FWS student to be assigned to assist an
instructor at any private nonprofit or public institution if the
student is doing work the institution would normally support under its
own employment program. For example, having a student serve as a
research assistant to a professor is appropriate, so long as the work
is in line with the professor's official duties and is considered work
for the institution itself. However, at a proprietary institution a
student may not assist an instructor because instructional activities
are not considered student services under Sec. 675.2(b) of the current
regulations.

Section 675.23 Employment Provided by a Private For-Profit
Organization

Current regulations provide that if a student is employed by a
private for-profit organization the work that the student performs must
be academically relevant to the student's educational program. In
accordance with amended section 443(c)(4) of the HEA, these proposed
regulations would amend Sec. 675.23(b) to provide that jobs in a
private for-profit organization must be academically relevant only to
the maximum extent possible. This change would allow some students to
pursue other employment opportunities that provide other valuable
experiences outside their field of study.

Section 675.26 FWS Federal Share Limitations

Current regulations provide that the Federal share of FWS
compensation paid to a student employed other than by a for-profit
organization may not exceed 75 percent. In accordance with amended
section 443(b)(5) of the HEA, these regulations propose to amend
Sec. 675.26 to provide that the Federal share of an FWS student's
compensation may exceed 75 percent, but may not exceed 90 percent, if
the student is employed at a nonprofit or a public organization that
cannot afford to pay the regular non-Federal share. Institutions that
choose to use this provision would have to meet several requirements as
prescribed in amended section 443(b)(5) of the HEA:
<bullet> No placement at the institution itself would be eligible
for the 90 percent match, nor at any agency owned, operated or
controlled by the institution. It is the Secretary's view and the
Committee agreed that a statement in the institution's file, signed by
both the organization and the institution, stating that they have no
relationship would satisfy this requirement.
<bullet> The organization would have to be selected by the
institution on an individual case-by-case basis. It is the Secretary's
view and the Committee agreed that an institution would satisfy this
requirement by selecting the nonprofit or public organization that
meets the requirements of this provision through its normal process of
selecting potential employers.
<bullet> The nonprofit or public organization must be otherwise
unable to afford the costs of this employment. In the Secretary's view
and the Committee agreed, a signed letter in the institution's file
from an official of the organization stating that the organization
cannot afford to pay the regular non-Federal share would be sufficient
evidence of the organization's inability to pay.
<bullet> This 90 percent funding level would be limited to no more
than 10 percent of the students paid under the FWS program. For
purposes of this calculation, the 1998 Amendments provide that the
institution must use the total number of students paid under the FWS
Program during the current award year.
It is important to note that this proposed 10 percent limit on the
number of students paid at the 90 percent funding level does not
include students whose FWS wages have been exempted from the full
institutional match due to current regulations in Sec. 675.26(d) that
establish waiver criteria. These proposed regulations would continue to
authorize a Federal share of 100 percent of the FWS funds awarded to
students by an institution for an award year if the following
provisions in the current regulations apply:
<bullet> The institution requests the increased Federal share on
the Fiscal Operations Report and Application to Participate for that
year and is designated as an eligible institution under the
Strengthening Institutions Program (34 CFR part 607), the Strengthening
Historically Black Colleges and Universities Program (34 CFR part 608),
or the Strengthening Historically Black Graduate Institutions Program
(34 CFR part 609);
<bullet> The student is employed as a reading tutor for preschool
age children or children who are in elementary school;
<bullet> The student is employed in a family literacy program that
provides services to families with preschool age children or children
who are in elementary school; or
<bullet> The student is employed as a mathematics tutor for
children who are in elementary school through the ninth grade.

Work-Colleges Program (Subpart C)

Section 675.45 Allowable Costs, Federal, Share, and Institutional
Share

The Work-Colleges Program was created by the Higher Education
Amendments of 1992 to encourage comprehensive work-learning programs
and recognize the special nature of institutions that choose to make
work-learning a central part of their educational programs. These
proposed regulations would amend Sec. 675.45(a) of the current
regulations in accordance with amended section 448 of the HEA to
provide Work-Colleges with more flexibility in the use of their funds.
These proposed regulations would allow participants in the Work-
Colleges Program to coordinate and carry out joint projects and
activities to promote work service learning.
These proposed regulations would also allow Work-Colleges to use
funds available to them to conduct a comprehensive longitudinal study
of academic progress and academic and career outcomes, relative to
student self-sufficiency in financing their higher education, repayment
of student loans, continued community service, kind and quality of
service performed and career choice and community service selected
after graduation. The Secretary and the Committee expect that the
results of this study will provide valuable information about the work-
learning experience.

Federal Supplemental Educational Opportunity Grant Program

Section 676.18 Use of Funds

In accordance with amended section 413E of the HEA, these proposed
regulations would amend Sec. 676.18 to add a new authority for an
institution to carry up to ten percent of its current award year FSEOG
allocation forward to spend in the next award year and to carry back up
to ten percent of its current award year allocation to spend in the
prior award year. Current regulations provide institutions with this
flexibility under the FWS Program, but not under the FSEOG Program.

[[Page 42212]]

In accordance with amended section 413E, the proposed amendments
would also permit institutions to carry back any portion of its current
award year FSEOG allocation to make awards to students for payment
periods that begin on or after May 1 of the prior award year but end
prior to the start of the current award year (summer enrollment through
June 30). This carry-back authority would be in addition to the
authority to carry back ten percent of the succeeding year's allocation
for use at any time during the preceding award year.

Authority to Carry Forward and Carry Back FSEOG Funds During the 1998-
99 Award Year

Under proposed Sec. 676.18, institutions would be allowed to use
the new authority provided by amended section 413E beginning with the
1998-99 award year. The Secretary has decided and the Committee agreed
that the new carry-forward/carry-back authority for the FSEOG Program
may be implemented using the same general concepts used for the FWS
Program. Under the proposed regulations, the official allocation letter
for a specific award period would be the institution's authority to
exercise this option. Any of the funds carried forward or back must be
reported on the institution's Fiscal Operations and Application to
Participate (FISAP). For example, if an institution carried forward 10
percent of its 1998-99 FSEOG allocation to spend in award year 1999-
2000, the institution would be required to report this amount on the
FISAP to be submitted by October 1, 1999. Before an institution may
spend its current year's allocation, it must spend any funds carried
forward from the previous year.

Note: Due to the timing of the effective date of the law, an
institution is not able to carry back 1998-1999 FSEOG funds to spend
in the 1997-98 award year or carry forward 1997-1998 FSEOG funds to
spend in the 1998-1999 award year.

These proposed changes will give institutions the flexibility to
provide additional FSEOG funds to students at a time when traditionally
there were no FSEOG funds available, and also help prevent the need for
an institution to return unused FSEOG funds for a particular award
year.

Federal Pell Grant Program

Section 690.6 Duration of Student Eligibility--Undergraduate Course of
Study and Eligible Postbaccalaureate Program

The current regulations restrict Federal Pell Grant eligibility to
students who have not earned a baccalaureate degree. The 1998
Amendments revised section 401(c) of the HEA to extend Federal Pell
Grant eligibility to students enrolled in a postbaccalaureate teacher
certificate or licensing program even if they have earned a bachelor's
degree.
In order to teach in most States, students must complete teacher
preparation courses. Some institutions incorporate these courses into a
baccalaureate program, while others offer these courses upon completion
of a baccalaureate program. To complete the teacher preparation courses
after earning a baccalaureate degree requires a fifth year of
undergraduate study. This fifth year of undergraduate study is
comparable to a fourth year of undergraduate study for a baccalaureate
program that incorporates teacher preparation. The 1998 Amendments
modified the HEA to allow certain students with a baccalaureate degree
to receive a Federal Pell Grant while completing a teacher preparation
program. As a result of this statutory change, these proposed
regulations would amend the duration of the student eligibility
provision of the Federal Pell Grant Program regulations. In addition,
these proposed regulations would make corresponding changes to the
eligible program provision in Sec. 668.8(h) and the student eligibility
provision in Sec. 668.32(c) of the Student Assistance General
Provisions regulations.
Conditions for Determining Eligibility
The 1998 Amendments provide that on a case-by-case basis, students
enrolled in a postbaccalaureate teacher certificate or licensing
program may be eligible to receive a Federal Pell Grant. To address
this case-by-case determination, the Secretary and the Committee agreed
to establish a set of conditions to be applied to each student enrolled
in a postbaccalaureate teacher certificate or licensing program. Under
the proposed regulations, if a student meets these conditions, and is
otherwise eligible, he or she may receive a Federal Pell Grant. These
conditions are discussed below and proposed in Sec. 690.6(c).
To be eligible for a Federal Pell Grant, the 1998 Amendments
require that an otherwise eligible student must be:
<bullet> Enrolled in a postbaccalaureate program that consists of
courses required by a State to receive a professional certification or
licensing credential necessary for employment as a teacher in an
elementary or secondary school in that State;
<bullet> Enrolled in a postbaccalaureate program that does not lead
to a graduate degree;
<bullet> Enrolled at a postsecondary institution that does not
offer a baccalaureate degree in education; and
<bullet> Enrolled as at least a half-time student.
The 1998 Amendments do not address whether students seeking to
renew their current teacher certification or licensure, or obtain a
teacher certification or licensure in another subject matter, are
eligible to receive a Federal Pell Grant. The Committee reached
consensus regarding the scope of eligibility for a Federal Pell Grant
under this provision; namely, to provide Federal Pell Grant funds to
students seeking to obtain certification or licensure to begin teaching
within a State. Thus, the proposed regulations limit Federal Pell Grant
eligibility to only those students pursuing an initial teacher
certification or licensing credential within a State.
The proposed regulations would also allow students enrolled in a
postbaccalaureate teacher certificate or licensing program to be
eligible to receive a Federal Pell Grant for the period of time
necessary to complete the program.
Treatment of Students Enrolled in the Postbaccalaureate Program as
Undergraduate Students Enrolled in an Undergraduate Program.
The 1998 Amendments do not address whether students enrolled in a
postbaccalaureate teacher certificate or licensing program are enrolled
in an undergraduate or graduate program. Historically, the Federal Pell
Grant Program has been preserved as a source of financial assistance
for undergraduate students enrolled in an undergraduate program. As
previously discussed, the postbaccalaureate teacher certificate or
licensing program is comparable to a baccalaureate program that
incorporates teacher preparation into the fourth year of undergraduate
study. For this reason, the Secretary and the Committee agreed that
institutions must treat students who receive a Federal Pell Grant under
this provision as undergraduate students enrolled in an undergraduate
program.
Under these proposed regulations a student would be treated as an
undergraduate student enrolled in an undergraduate program. Therefore,
the student is not automatically independent for purposes of
calculating the expected family contribution. Whether the student is
dependent or independent, the student must maintain the same dependency
status for all Title IV, student financial aid programs. Furthermore,
the student is only eligible for fifth year undergraduate Perkins,
FFEL, and Direct loan amounts.

[[Page 42213]]

Requirement to be a Regular Student in Order to Receive a Federal Pell
Grant
The 1998 Amendments do not change the requirement that a Federal
Pell Grant recipient must be a regular student. A regular student is a
person who is enrolled in an eligible program for the purpose of
obtaining a degree, certificate, or other recognized educational
credential offered by the institution. Therefore, the institution must
provide a student enrolled in a postbaccalaureate teacher certificate
or licensing program with a certificate or other recognized educational
credential. This is true even if the State provides the student with a
certificate upon completion of the postbaccalaureate program. For the
purpose of this provision only, it is the view of the Secretary and the
Committee agreed that an acceptable recognized educational credential
may be an official transcript that documents the student's enrollment
in or completion of a postbaccalaureate teacher certificate or
licensing program.
Simultaneous Enrollment in Both the Postbaccalaureate Teacher
Certificate or Licensing Program and a Graduate or Professional Degree
Program
Neither the 1998 Amendments nor the proposed regulations in
Sec. 690.6 address simultaneous enrollment in both the
postbaccalaureate program (as described here) and a graduate or
professional degree program.
The Secretary and the Committee agreed to allow Pell Grant
eligibility to a student who is enrolled in a postbaccalaureate program
and a separate graduate or professional degree program. However, to be
consistent with the proposed changes in Sec. 690.6, the proposed
regulations would require an institution to consider the following when
determining a student's eligibility for a Federal Pell Grant:
<bullet> A student who is enrolled in a postbaccalaureate teacher
certificate or licensing program and receives a Federal Pell Grant is
treated as an undergraduate student enrolled in an undergraduate
program. Thus, the student must be treated as an undergraduate student
for the other Title IV programs; e.g., a student who receives a Federal
Pell Grant is only eligible for fifth year undergraduate loan amounts;
<bullet> A student is not eligible for a Federal Pell Grant if he
or she is solely enrolled in a graduate or professional degree program,
even if the program's courses are the same as those required for the
postbaccalaureate teacher certificate or licensing program;
<bullet> A student is not eligible for a Federal Pell Grant if his
or her enrollment status, based on the hours required for the
postbaccalaureate teacher certificate or licensing program, is less
than half-time; and
<bullet> Only those courses required for the postbaccalaureate
teacher certificate or licensing program can be considered when
determining the student's enrollment status.

Section 690.7 Institutional Participation

The 1998 Amendments provide that an institution is ineligible to
participate in the Federal Pell Grant Program upon losing its
eligibility to participate in the FFEL or Direct Loan programs because
of its default rate. This provision is effective after the Secretary's
final publication of the cohort default rates for fiscal year 1996.
(These rates were published on October 26, 1998). This new provision,
in section 401(j) of the HEA, applies to institutions participating in
the FFEL or Direct Loan program on or after October 7, 1998. As a
result of this statutory change, these regulations propose to amend
Sec. 690.7 to provide for this loss of eligibility to participate in
the Federal Pell Grant Program. Specific information on the loss of
eligibility is provided in proposed Sec. 668.17(b)(4) in a recently
published NPRM.

Goals 2000: Educate America Act

The Goals 2000: Educate America Act (Goals 2000) focuses the
Nation's education reform efforts on the eight National Education Goals
and provides a framework for meeting them. Goals 2000 promotes new
partnerships to strengthen schools and expands the Department's
capacities for helping communities to exchange ideas and obtain
information needed to achieve the goals.
These proposed regulations would address the National Education
Goals that (1) all children will start school ready to learn and that
student achievement will be enhanced; (2) call for increasing the rate
at which students graduate from high school and pursue high quality
postsecondary education and for supporting life-long learning; (3)
every adult American will be literate and will possess the knowledge
and skills necessary to compete in a global economy and exercise the
rights and responsibilities of citizenship; and (4) the Nation's
teaching force will have access to programs for the continued
improvement of their professional skills and the opportunity to acquire
the knowledge and skills needed to instruct and prepare all American
students for the next century. The proposed regulations in
Sec. 675.18(g) would further the objectives of these Goals by requiring
FWS student participation in reading tutoring and in family literacy
projects where the family is recognized as an institution for education
and learning and the parent is recognized as their children's first
teachers. The objectives of the Goals would also be addressed by the
proposal to extend eligibility for Federal Pell Grants to those
students who are pursuing a teacher certification or licensing
credential through a State approved non-degree postbaccalaureate
program.

Executive Order 12866:

1. Potential Costs and Benefits

Under Executive Order 12866, we have 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 we have
determined as necessary for administering these programs effectively
and efficiently.
In assessing the potential costs and benefits of this regulatory
action--both quantitative and qualitative--we have determined that the
benefits would justify the costs.
We have also determined that this regulatory action would not
unduly interfere with State, local, and tribal governments in the
exercise of their governmental functions.
We note that, as these proposed regulations were subject to
negotiated rulemaking, the costs and benefits of the various
requirements were discussed thoroughly by negotiators. The consensus
reached on a particular requirement generally reflected agreement on
the best possible approach to that requirement in terms of cost and
benefit.
To assist the Department in complying with the specific
requirements of Executive Order 12866, the Secretary invites comments
on whether there may be further opportunities to reduce any potential
costs or to increase any potential benefits resulting from these
proposed regulations without impeding the effective and efficient
administration of the Title IV, HEA programs.

2. Clarity of the Regulations

Executive Order 12866 and the President's Memorandum of June 1,
1998 on ``Plain Language in Government Writing'' require each agency to
write regulations that are easy to understand.
We invite comments on how to make these proposed regulations easier
to understand, including answers to questions such as the following:

[[Page 42214]]

<bullet> Are the requirements in the proposed regulations clearly
stated?
<bullet> Do the proposed regulations contain technical terms or
other wording that interferes with their clarity?
<bullet> Does the format of the proposed regulations (grouping and
order of sections, use of headings, paragraphing, etc.) aid or reduce
their clarity?
<bullet> Would the proposed regulations be easier to understand if
we divided them into more (but shorter) sections? (A ``section'' is
preceded by the symbol ``Sec. '' and a numbered heading; for example,
Sec. 668.8 Eligible Program.)
<bullet> Could the description of the proposed regulations in the
SUPPLEMENTARY INFORMATION section of this preamble be more helpful in
making the proposed regulations easier to understand? If so, how?
<bullet> What else could we do to make the proposed regulations
easier to understand?
Send any comments that concern how the Department could make these
proposed regulations easier to understand to the person listed in the
ADDRESSES section of the preamble.

Regulatory Flexibility Act Certification

We certify that these proposed regulations would not have a
significant economic impact on a substantial number of small entities.
Entities affected by these regulations are institutions of higher
education that participate in the Title IV, HEA programs. The
institutions are defined as small entities, according to the U.S. Small
Business Administration, if they are: for-profit or nonprofit entities
with total revenue of $5,000,000 or less; or entities controlled by
governmental entities with populations of 50,000 or less. These
proposed regulations would not impose a significant economic impact on
a substantial number of small entities. The regulations would benefit
both small and large institutions by providing additional flexibility
in the administration of the Federal Pell Grant and Campus-Based
programs without requiring significant changes to current institutional
system operations. These proposed regulations would ease administrative
burden and augment student benefits by: expanding Federal Pell Grant
eligibility to allow students enrolled in a postbaccalaureate teacher
certification or licensing program to receive a Federal Pell Grant;
allowing an institution, upon request of a student, to make payments of
FWS funds directly to the student's account at the institution;
revising the definition of ``resources'' in the Campus-Based programs
to maximize student benefits and augment institutional flexibility in
aid packaging; and implementing new carry-forward and carry-back
authorities for the FSEOG Program.
We invite comments from small institutions as to whether the
proposed changes would have a significant economic impact on them.

Paperwork Reduction Act of 1995

Proposed Secs. 673.5, 675.10, 675.16, and 675.20 contain
information collection requirements. Under 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: General Provisions for the
Federal Perkins Loan, FWS, and FSEOG Programs--Section 673.5--
Overaward--The Department currently has this section approved under OMB
control number 1845-0535. We propose to change the definition of the
term ``resources'' for a student who receives campus-based aid, a
subsidized Stafford Loan or a Direct Subsidized Loan, and Montgomery GI
Bill veterans educational benefits and/or an AmeriCorps education award
paid for the cost of attendance. The institution would be able to
exclude as a resource any portion of the subsidized loans that is equal
to or less that the amount of the veterans education or AmeriCorps
benefits received. This provision does not change the information
collection contained in this section.
Section 675.10--Selection of students for FWS employment--We
propose under Sec. 675.10(c) that if an institution's allocation of FWS
funds is based in part on the financial need of students attending the
institution as less-than-full-time or independent students, the
institution must offer a reasonable portion of the allocation for FWS
to those students. The requirement for offering 5 percent of the FWS
allocation would be eliminated. This requirement does not change the
information collection contained in this section regarding the
maintaining of an institution's procedures for selecting students for
FWS employment.
Section 675.16--Payments to students--We are proposing under
Sec. 675.16(a)(2) that before an institution pays FWS compensation to a
student, the institution will be required to send the student a notice
informing the student of the amount of funds he or she is eligible to
earn, and how and when the FWS funds will be paid. To provide the
student with this notice is standard institutional practice. The
institutions that participate in the Title IV, HEA programs normally
send this notice out to all students that have applied to their school
for Title IV, HEA funds. Students generally receive one notice listing
all Title IV, HEA program funds they can expect to receive. FWS funds
are earned compensation. Therefore, we have concluded that the
requirement for the notice should be reiterated in Sec. 675.16. There
are 3,282 institutions of higher education currently participating in
the FWS Program, with 747,913 total FWS recipients. We understand that
the majority of these 747,913 FWS recipients receive some other type of
Title IV, HEA program funds and that institutions are already providing
FWS students this information along with information on other types of
aid the student can expect to receive in one notice.
Subpart K of the Student Assistance General Provisions regulations
(34 CFR Part 668) under the OMB control number 1845-0697 governs the
cash management regulations as authorized by section 487 of the HEA.
Amendments to this section were part of a Division-wide package--Cash
Management/Easy Access for Students and Institutions (EASI)--intended
to clarify and consolidate current policies and requirements, and make
necessary changes in the regulatory framework for us to improve
significantly the delivery of Title IV, HEA program funds to students
and institutions. Burden hours for Sec. 668.165(a)(1) were calculated
and cleared under 1845-0697 to determine the cost to institutions for
notifying students once an award year of: the amounts of Title IV, HEA
program funds a student can expect to receive; how and when those funds
will be paid; and, whether any Title IV, HEA program loans are
subsidized or unsubsidized. There are 6,576 institutions sending this
notice to 6,223,450 Title IV aid recipients with an average of 946.4
responses per institution. With each institution taking approximately
five minutes to retrieve and mail the information the total average
hour burden for each institution is calculated as 78.9 hours.
Therefore, annual recordkeeping and reporting burden contained in this
collection total 518,846.4 (6,576 respondents x 78.9 hours) hours.
Any further calculation of burden hours for Sec. 675.16 for providing a
student a notice of the amount of FWS program funds he or she can
expect to receive would duplicate hours already calculated for this
procedure in Sec. 668.165(a)(1) and cleared under OMB 1845-0697.
Section 675.16 also includes a proposal that upon the written
request of a student, an institution may make payments of FWS funds
directly to the

[[Page 42215]]

student's account at the institution for tuition and fees, room and
board, and other institutional provided goods and services. This
practice is prohibited by current regulations, so it is difficult to
estimate an accurate number of respondents that would be submitting
this request. Some institutions have informed the Department that they
will not implement this procedure, but will continue to pay FWS
students by check or electronic fund transfer to the student's bank
account. Other institutions have expressed to the Department that the
use of this procedure will be minimal at their institutions.
There are 3,282 institutions currently participating in the FWS
Program. A total of 747,913 students receive FWS funds at these
institutions. We estimate that 74,791 (10 percent of) respondents may
sign a written request to have their FWS earnings credited to their
account at an institution and that request will average 1 minute per
response. Total annual burden hours for the respondents are estimated
to be 1,247 hours. The annual recordkeeping burden hours for 3,282
institutions to obtain signatures and maintain a record of the request
in their recordkeeping system are estimated to be 12,472 hours. Annual
recordkeeping and reporting burden contained in this collection of
information as proposed in these regulations are estimated to be 13,719
hours. The total annual recordkeeping and reporting burden hours for
Sec. 675.16 equals 13,963 hours.
Section 675.20--Eligible employers and general conditions and
limitation on employment--We propose under Sec. 675.20(d) to clarify
that employment under the FWS Program may include internships,
practicums, and research, teaching, or other assistantships as
determined by the Secretary. This proposed change does not affect the
information collection requirement in this section for a written
agreement between the institution and the employer that is initiated as
part of an institution's normal business practices.
If you want to comment on the information collection requirements
please send your comments to the Office of Information and Regulatory
Affairs, OMB, room 10235, New Executive Office Building, Washington, DC
20503; Attention: Desk Officer for U.S. Department of Education. You
may also send a copy of these comments to the Department representative
named in the ADDRESSES section of this preamble.
We consider your comments on these proposed collections of
information in--
<bullet> Deciding whether the proposed collections are necessary
for the proper performance of our functions, including whether the
information will have practical use;
<bullet> Evaluating the accuracy of our estimate of the burden of
the proposed collections, including the validity of our methodology and
assumptions;
<bullet> Enhancing the quality, usefulness, and clarity of the
information we collect; and
<bullet> Minimizing the burden on those who must respond. This
includes exploring 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, to ensure that OMB gives your comments full consideration,
it is important that OMB receives the comments within 30 days of
publication. This does not affect the deadline for your comments to us
on the proposed regulations.

Intergovernmental Review

The Federal Supplemental Educational Opportunity Grant program is
subject to Executive Order 12372 and the regulations in 34 CFR part 79.
One of the objectives of the Executive order is to foster an
intergovernmental partnership and a strengthened federalism. The
Executive order relies on processes developed by State and local
governments for coordination and review of proposed Federal financial
assistance.
This document provides early notification of our specific plans and
actions for this program.
The Federal Work-Study and Federal Pell Grant programs are not
subject to the requirements of Executive Order 12372 and the
regulations in 34 CFR part 79.

Assessment of Educational Impact

The Secretary particularly requests comments on whether the
proposed regulations would require transmission of information that any
other agency or authority of the United States gathers or makes
available.

Electronic Access to This Document

You may view this document, as published in the Federal Register,
in text or Adobe Portable Document Format (PDF) on the Internet at the
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Regulations is available on GPO Access at: http://
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Catalog of Federal Domestic Assistance Numbers: 84.033 Federal Work-
Study Program; 84.007 Federal Supplemental Educational Opportunity
Grant Program; and 84.063 Federal Pell Grant Program)

List of Subjects

34 CFR Parts 668, 673, 674 and 675

Colleges and universities, Employment, Grant programs--education,
Reporting and recordkeeping requirements, Student aid.

34 CFR Part 676

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

34 CFR Part 690

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

Dated: July 27, 1999.
Richard W. Riley,
Secretary of Education.
For the reasons stated in the preamble, the Secretary proposes to
amend title 34 of the Code of Federal Regulations by amending Parts
668, 673, 674, 675, 676, and 690 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, 1099c, and
1141, unless otherwise noted.

2. Section 668.8 is amended by revising paragraph (h) to read as
follows:


Sec. 668.8 Eligible program.

* * * * *
(h) Eligibility for Federal Pell Grant and FSEOG programs. In
addition to satisfying other relevant provisions of this section--

[[Page 42216]]

(1) An educational program qualifies as an eligible program for
purposes of the Federal Pell Grant Program only if the educational
program is an undergraduate program or a postbaccalaureate teacher
certificate or licensing program as described in 34 CFR 690.6(c); and
(2) An educational program qualifies as an eligible program for
purposes of the FSEOG Program only if the educational program is an
undergraduate program.
* * * * *
3. Section 668.32 is amended by revising paragraph (c) to read as
follows:


Sec. 668.32 Student eligibility--general.

* * * * *
(c)(1) For purposes of the FSEOG Program, does not have a
baccalaureate or first professional degree;
(2) For purposes of the Federal Pell Grant Program--
(i) Does not have a baccalaureate or first professional degree; or
(ii) Is enrolled in a postbaccalaureate teacher certificate or
licensing program as described in 34 CFR 690.6(c); and
(iii) Is not incarcerated in a Federal or State penal institution;
and
(3) For purposes of the Federal Perkins Loan, FFEL, and Direct Loan
programs, is not incarcerated;
* * * * *
4. Section 668.161 is amended by revising paragraph (a)(4) to read
as follows:


Sec. 668.161 Scope and purpose.

(a) * * *
(4) FWS Program. An institution must follow the disbursement
procedures in 34 CFR 675.16 for paying a student his or her wages under
the FWS Program instead of the disbursement procedures in 34 CFR
668.164 and 668.165.
* * * * *

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

5. The authority citation for part 673 continues to read as
follows:

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

6. Section 673.5 is amended by revising paragraph (c)(1)
introductory text and paragraph (c)(1)(ix); by redesignating paragraphs
(c)(1)(x) and (c)(1)(xi) as paragraphs (c)(1)(xi) and (c)(1)(xii),
respectively; and by adding new paragraphs (c)(1)(x) and (c)(4) to read
as follows:


Sec. 673.5 Overaward.

* * * * *
(c) Resources. (1) Except as provided in paragraphs (c)(2), (c)(3),
and (c)(4) of this section, the Secretary considers that ``resources''
include, but are not limited to, any--
* * * * *
(ix) Veterans educational benefits paid under Chapters 30, 31, 32,
and 35 of title 38 of the United States Code;
(x) National service education awards or post-service benefits paid
for the cost of attendance under title I of the National and Community
Service Act of 1990 (AmeriCorps);
* * * * *
(4) The institution may exclude as a resource any portion of a
Federal Direct Stafford/Ford Loan and subsidized Federal Stafford Loan
that is equal to or less than the amount of a student's veterans
education benefits paid under Chapter 30 of title 38 of the United
States Code (Montgomery GI Bill) and national service education awards
or post service benefits paid for the cost of attendance under title I
of the National and Community Service Act of 1990 (AmeriCorps).
* * * * *

PART 674--FEDERAL PERKINS LOAN PROGRAM

7. 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.

8. Section 674.10 is amended by revising paragraph (b) to read as
follows:


Sec. 674.10 Selection of students for loans.

* * * * *
(b) If an institution's allocation of Federal Capital Contribution
is directly or indirectly based in part on the financial need
demonstrated by students attending the institution as less-than-full-
time or independent students, a reasonable portion of the dollar amount
of loans made under this part must be offered to those students.
* * * * *

PART 675--FEDERAL WORK-STUDY PROGRAMS

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

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

10. In Sec. 675.2 paragraph (b) is amended by revising paragraphs
(1) and (3) of the definition of ``community services'' to read as
follows:


Sec. 675.2 Definitions.

* * * * *
(b) * * *
(1) Such fields as health care, child care (including child care
services provided on campus that are open and accessible to the
community), literacy training, education (including tutorial services),
welfare, social services, transportation, housing and neighborhood
improvement, public safety, crime prevention and control, recreation,
rural development, and community improvement;
* * * * *
(3) Support services to students with disabilities, including
students with disabilities who are enrolled at the institution; and
* * * * *


Sec. 675.8 [Amended]

11. Section 675.8 is amended by removing paragraph (d), and
redesignating paragraphs (e), (f), and (g) as paragraphs (d), (e), and
(f), respectively.
12. Section 675.10 is amended by revising paragraph (c) to read as
follows:


Sec. 675.10 Selection of students for FWS employment.

* * * * *
(c) Part-time and independent students. If an institution's
allocation of FWS funds is directly or indirectly based in part on the
financial need demonstrated by students attending the institution as
less-than-full-time or independent students, a reasonable portion of
the allocation must be offered to those students.
13. Section 675.16 is amended to read as follows by:
A. Redesignating paragraphs (a)(2), (a)(3), and (a)(4), as
paragraphs (a)(9), (a)(10), and (a)(11), respectively;
B. Revising paragraph (a)(1) and adding new paragraphs (a)(2)
through (a)(8);
C. In newly redesignated paragraph (a)(10) by removing ``wages
are'' and adding, in its place, ``compensation is'';
D. In newly redesignated paragraph (a)(11) by removing ``wages''
and adding, in its place, ``compensation'';
E. Revising paragraph (b)(1); and
F. In paragraphs (b)(2), (b)(3), and (c), removing ``shall'' and
adding, in its place, ``must''.


Sec. 675.16 Payments to students.

(a)(1) An institution must pay a student FWS compensation at least
once a month.
(2) Before an institution makes an initial disbursement of FWS
compensation to a student for an award period, the institution must
notify the student of the amount of funds the student is authorized to
earn, and how

[[Page 42217]]

and when the FWS compensation will be paid.
(3) An institution must pay FWS compensation to a student by--
(i) Check or similar instrument that the student can cash on his or
her own endorsement;
(ii) Initiating an electronic funds transfer (EFT) to a bank
account designated by the student after obtaining the authorization
described in paragraph (a)(4)(i) of this section;
(iii) Crediting the student's account at the institution after
obtaining the authorization described in paragraph (a)(4)(i) of this
section. The institution may only credit the student's account at the
institution to satisfy current award year charges for--
(A) Tuition and fees;
(B) Board, if the student contracts with the institution for board;
(C) Room, if the student contracts with the institution for room;
and
(D) Other institutionally provided educationally related goods and
services; or
(iv) Crediting the student's account at the institution to satisfy
minor prior award year authorized charges if these charges are less
than $100 or if the payment of these charges does not, and will not,
prevent the student from paying his or her current educational costs
after obtaining the authorization described in paragraph (a)(4)(i) of
this section.
(4)(i) Except for the noncash contributions allowed under
paragraphs (b)(2) and (b)(3) of this section, an institution must
obtain a separate written authorization from the student if the student
is paid FWS compensation by--
(A) Crediting the student's account at the institution; or
(B) Initiating an EFT to a bank account designated by the student.
(ii) If an institution obtains a written authorization from the
student, the institution may hold excess FWS funds under paragraph
(a)(8) of this section.
(iii) The institution must obtain and use the written authorization
in accordance with the requirements of paragraphs (a)(5) and (a)(6) of
this section.
(5) In obtaining the student's written authorization described in
paragraph (a)(4) of this section, an institution--
(i) May not require or coerce the student to provide that
authorization;
(ii) Must allow the student to cancel or modify that authorization
at any time; and
(iii) Must clearly explain how it will carry out that activity.
(6)(i) If a student modifies the written authorization described in
paragraph (a)(4) of this section, the modification takes effect on the
date the institution receives the modification notice.
(ii) If a student cancels the written authorization described in
paragraph (a)(4)(i)(A) of this section, the institution may use the FWS
compensation to pay only those authorized charges incurred by the
student before the institution received the notice.
(7) If an institution pays a student FWS compensation by crediting
the student's account, and the result is a credit balance, the
institution must pay the credit balance directly to the student as soon
as possible but no later than 14 days after the balance occurred on the
account.
(8) Except if prohibited by the Secretary under the reimbursement
payment method, an institution may hold, on behalf of the student, FWS
funds that would otherwise be paid directly to the student under
paragraph (a)(7) of this section, if the institution obtains the
authorization described in paragraph (a)(4)(ii) of this section. If an
institution holds excess FWS funds, the institution must--
(i) Identify the amount of FWS funds the institution holds for each
student in a subsidiary ledger account designated for that purpose;
(ii) Maintain, at all times, cash in its bank account in an amount
at least equal to the amount of FWS funds the institution holds for the
student; and
(iii) Pay any remaining balance by the end of the institution's
final FWS payroll period for an award period.
* * * * *
(b)(1) Except for the noncash contributions allowed under
paragraphs (b)(2) or (b)(3) of this section, an institution must pay
the student its share of his or her FWS compensation at the same time
it pays the Federal share.
* * * * *
14. Section 675.18 is amended as follows by:
A. Revising paragraph (a)(2);
B. In paragraph (f), removing, ``May 15'' and adding, in its place,
``May 1'';
C. Revising paragraphs (g)(1) and (g)(2); and adding new paragraphs
(g)(3) and (h).


Sec. 675.18 Use of funds.

(a) * * *
(2) Paying administrative expenses as provided for in 34 CFR 673.7;
* * * * *
(g) Community service. (1) For the 2000-2001 award year and
subsequent award years, an institution must use at least seven percent
of the sum of its initial and supplemental FWS allocations for an award
year to compensate students employed in community service activities.
In meeting this community service requirement, an institution must
include at least one--
(i) Reading tutoring project that employs one or more FWS students
as reading tutors for children who are preschool age or are in
elementary school; or
(ii) Family literacy project that employs one or more FWS students
in family literacy activities.
(2) The Secretary may waive the requirements in paragraph (g)(1) of
this section if the Secretary determines that an institution has
demonstrated that enforcing the requirements in paragraph (g)(1) of
this section would cause a hardship for students at the institution.
(3) To the extent practicable, in providing reading tutors for
children under paragraph (g)(1)(i), an institution must--
(i) Give priority to the employment of students to tutor in reading
in schools that are participating in a reading reform project that--
(A) Is designed to train teachers how to teach reading on the basis
of scientifically-based research on reading; and
(B) Is funded under the Elementary and Secondary Education Act of
1965; and
(ii) Ensure that any student who is employed in a school
participating in a reading reform project described in paragraph
(g)(3)(i) of this section receives training from the employing school
in the instructional practices used by the school.
(h)(1) Payment for time spent in training and travel. For any award
year, an institution may pay students for a reasonable amount of time
spent for training that is directly related to FWS employment.
(2) Beginning with the 1999-2000 award year, an institution may pay
students for a reasonable amount of time spent for travel that is
directly related to employment in community service activities
(including tutoring in reading and family literacy activities).
15. Section 675.20 is amended by adding a new paragraph (d) to read
as follows:


Sec. 675.20 Eligible employers and general conditions and limitation
on employment.

* * * * *
(d) Academic credit and work-study. (1) A student may be employed
under the FWS program and also receive academic credit for the work
performed. Such jobs include, but are not limited to, work performed
when the student is--

[[Page 42218]]

(i) Enrolled in an internship;
(ii) Enrolled in a practicum; or
(iii) Employed in a research, teaching, or other assistantship.
(2) A student employed in an FWS job and receiving academic credit
for that job may not be--
(i) Paid less than he or she would be if no academic credit were
received;
(ii) Paid for receiving instruction in a classroom, laboratory, or
other academic setting; and
(iii) Paid unless the employer would normally pay the person for
the same position.
16. Section 675.23 is amended by revising paragraph (b)(1) to read
as follows:


Sec. 675.23 Employment provided by a private for-profit organization.

* * * * *
(b) * * *
(1) The work that the student performs must be academically
relevant to the student's educational program, to the maximum extent
practicable; and
* * * * *
17. Section 675.26 is amended by revising paragraph (a)(1), by
redesignating paragraphs (a)(2) and (a)(3) as paragraphs (a)(3) and
(a)(4), by adding a new paragraph (a)(2), and by revising paragraph
(d)(2)(iii) to read as follows:


Sec. 675.26 FWS Federal share limitations.

(a)(1) The Federal share of FWS compensation paid to a student
employed other than by a private for-profit organization, as described
in Sec. 675.23, may not exceed 75 percent unless the Secretary approves
a higher share under paragraph (a)(2) or (d) of this section.
(2) The Federal share of the compensation paid to a student may
exceed 75 percent, but may not exceed 90 percent, if--
(i) The student is employed at a private nonprofit organization or
a Federal, State, or local public agency that--
(A) Is not a part of, and is not owned, operated, or controlled by,
or under common ownership, operation, or control with, the institution;
(B) Is selected by the institution on an individual case-by-case
basis;
(C) Would otherwise be unable to afford the costs of this
employment; and
(ii) The number of students compensated under paragraph (a)(2)(i)
of this section is not more than 10 percent of the total number of
students paid under the FWS Program at the institution.
* * * * *
(d) * * *
(2) * * *
(iii) The student is employed in a family literacy project that
provides services to families with preschool age children or children
who are in elementary school; or
* * * * *

Subpart C--Work-Colleges Program

18. Section 675.45 is amended by adding new paragraphs (a)(5) and
(a)(6) to read as follows:


Sec. 675.45 Allowable costs, Federal share, and institutional share.

(a) * * *
(5) Coordinate and carry out joint projects and activities to
promote work service learning.
(6) Carry out a comprehensive, longitudinal study of student
academic progress and academic and career outcomes, relative to student
self-sufficiency in financing their higher education, repayment of
student loans, continued community service, kind and quality of service
performed, and career choice and community service selected after
graduation.
* * * * *

PART 676--SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANT PROGRAM

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

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

20. Section 676.10 is amended by revising paragraph (b) to read as
follows:


Sec. 676.10 Selection of students for FSEOG awards.

* * * * *
(b) Part-time and independent students. If an institution's
allocation of FSEOG funds is directly or indirectly based in part on
the financial need demonstrated by students attending the institution
as less-than-full-time or independent students, a reasonable portion of
the allocation must be offered to those students.
21. Section 676.18 is amended by revising paragraph (a)(2), and
adding new paragraphs (c), (d), (e) and (f) to read as follows:


Sec. 676.18 Use of funds.

(a) * * *
(2) Paying administrative expenses as provided for in 34 CFR 673.7.
* * * * *
(c) Carry forward funds. (1) An institution may carry forward and
expend in the next award year up to 10 percent of the sum of its
initial and supplemental FSEOG allocations for the current award year.
(2) Before an institution may spend its current year FSEOG
allocation, it must spend any funds carried forward from the previous
year.
(d) Carry back funds. An institution may carry back and expend in
the previous award year up to 10 percent of the sum of its initial and
supplemental FSEOG allocations for the current award year. The
institution's official allocation letter represents the Secretary's
approval to carry back funds.
(e) Use of funds carried forward and carried back. An institution
may use the funds carried forward or carried back under paragraphs (c)
and (d) of this section, respectively, for activities described in
paragraph (a) of this section.
(f) Carry back funds for summer FSEOG awards. An institution may
carry back and expend in the previous award year any portion of its
initial and supplemental FSEOG allocations for the current award year
to make awards to eligible students for payment periods that begin on
or after May 1 of the previous award year but end prior to the
beginning of the current award year.

PART 690--FEDERAL PELL GRANT PROGRAM

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

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

23. Section 690.6 is amended by revising the heading and paragraph
(a), and adding new paragraphs (c) and (d) to read as follows:


Sec. 690.6 Duration of student eligibility--undergraduate course of
study and eligible postbaccalaureate program.

(a) Except as provided in paragraphs (c) and (d) of this section, a
student is eligible to receive a Federal Pell Grant for the period of
time required to complete his or her first undergraduate baccalaureate
course of study.
* * * * *
(c) An otherwise eligible student who has a baccalaureate degree
and is enrolled in a postbaccalaureate program is eligible to receive a
Federal Pell Grant for the period of time necessary to complete the
program if--
(1) The postbaccalaureate program consists of courses that are
required by a State for the student to receive a professional
certification or licensing credential that is required for employment
as a teacher in an elementary or secondary school in that State;

[[Page 42219]]

(2) The postbaccalaureate program does not lead to a graduate
degree;
(3) The institution offering the postbaccalaureate program does not
also offer a baccalaureate degree in education;
(4) The student is enrolled as at least a half-time student; and
(5) The student is pursuing an initial teacher certification or
licensing credential within a State.
(d) An institution must treat a student who receives a Federal Pell
Grant under paragraph (c) of this section as an undergraduate student
enrolled in an undergraduate program for title IV purposes.
24. In Sec. 690.7 paragraph (c) is redesignated as paragraph (d),
and a new paragraph (c) is added to read as follows:


Sec. 690.7 Institutional participation.

* * * * *
(c)(1) If an institution loses its eligibility to participate in
the FFEL or Direct Loan program under the provisions of 34 CFR 668.17,
it also loses its eligibility to participate in the Federal Pell Grant
Program for the same period of time.
(2) That loss of eligibility must be in accordance with the
provisions of 34 CFR 668.17(b).
* * * * *
[FR Doc. 99-19724 Filed 8-2-99; 8:45 am]
BILLING CODE 4000-01-U




]

Last Modified: 08/03/1999