Subject: Publication of Title IV NPRM

FR part

Publication Date: August 21, 2009

Posted Date: August 21, 2009

Subject: Publication of Title IV NPRM

FR Part: II

FR Type: Notice of Proposed Rulemaking (NPRM)

FR Part: September 21, 2009

[Federal Register: August 21, 2009 (Volume 74, Number 161)]
[Proposed Rules]
[Page 42379-42463]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21au09-15]

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Part II

Department of Education

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34 CFR Parts 600, 668, 675, et al.

General and Non-Loan Programmatic Issues; Proposed Rule

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DEPARTMENT OF EDUCATION

[Docket ID ED-2009-OPE-0005]

34 CFR Parts 600, 668, 675, 686, 690, and 692

RIN 1840-AC99

General and Non-Loan Programmatic Issues

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Secretary proposes to implement various general and non-
loan provisions that were added to the Higher Education Act of 1965, as
amended (HEA), by the Higher Education Opportunity Act of 2008 (HEOA)
by amending the regulations for Institutional Eligibility Under the
Higher Education Act of 1965, the Student Assistance General
Provisions, the Federal Work-Study (FWS) Programs, the Teacher
Education Assistance for College and Higher Education (TEACH) Grant
Program, the Federal Pell Grant Program, and the Leveraging Educational
Assistance Partnership Program (LEAP).

DATES: We must receive your comments on or before September 21, 2009.

ADDRESSES: Submit your comments through the Federal eRulemaking Portal
or via postal mail, commercial delivery, or hand delivery. We will not
accept comments by fax or by e-mail. Please submit your comments only
one time, in order to ensure that we do not receive duplicate copies.
In addition, please include the Docket ID at the top of your comments.
Federal eRulemaking Portal: Go to http://www.regulations.gov to submit your comments electronically. Information
on using Regulations.gov, including instructions for accessing agency
documents, submitting comments, and viewing the docket, is available on
the site under ``How To Use This Site.''
Postal Mail, Commercial Delivery, or Hand Delivery. If you
mail or deliver your comments about these proposed regulations, address
them to Jessica Finkel, U.S. Department of Education, 1990 K Street,
NW., room 8031, Washington, DC 20006-8502.

Privacy Note: The Department's policy for comments received from
members of the public (including those comments submitted by mail,
commercial delivery, or hand delivery) is to make these submissions
available for public viewing in their entirety on the Federal
eRulemaking Portal at http://www.regulations.gov. Therefore,
commenters should be careful to include in their comments only
information that they wish to make publicly available on the
Internet.

FOR FURTHER INFORMATION CONTACT: For general information or information
related to the non-Title IV revenue requirement (90/10), John Kolotos.
Telephone: (202) 502-7762 or via the Internet at: John.Kolotos@ed.gov.
For information related to all Federal Pell Grant Program issues
and the LEAP/GAP Program, Fred Sellers and Jacquelyn Butler. Telephone:
(202) 502-7502 and (202) 502-7890, respectively, or via the Internet
at: Fred.Sellers@ ed.gov or Jacquelyn.Butler@ed.gov.
For information related to the provisions for readmission for
servicemembers, teach-outs, peer-to-peer file sharing, baccalaureate in
liberal arts, and institutional plans for improving the academic
program, Wendy Macias. Telephone: (202) 502-7526 or via the Internet
at: Wendy.Macias@ed.gov.
For information related to all Federal Work-Study Program issues,
Nikki Harris and Harold McCullough. Telephone: (202) 219-7050 and (202)
377-4030, respectively, or via the Internet at Nikki.Harris@ed.gov or
Harold.McCullough@ed.gov.
For information related to the provisions for fire safety
standards, missing students procedures, hate crime reporting, emergency
response and evacuation, and students with intellectual disabilities,
Jessica Finkel. Telephone: (202) 502-7647 or via the Internet at:
Jessica.Finkel@ed.gov.
For information related to the provisions for extenuating
circumstances under the TEACH Grant Program, Jacquelyn Butler.
Telephone: (202) 502-7890, or via the Internet at:
Jacquelyn.Butler@ed.gov.
For information related to the consumer information requirements,
Brian Kerrigan. Telephone: (202) 219-7058, or via the Internet at:
Brian.Kerrigan@ed.gov.
If you use a telecommunications device for the deaf, call the
Federal Relay Service (FRS), toll free, at 1-800-877-8339.
Individuals with disabilities can obtain this document in an
accessible format (e.g., Braille, large print, audiotape, or computer
diskette) on request to one of the contact persons listed under FOR
FURTHER INFORMATION CONTACT.

SUPPLEMENTARY INFORMATION:

Invitation to Comment

As outlined in the section of this notice entitled Negotiated
Rulemaking, significant public participation, through six public
hearings and three negotiated rulemaking sessions, has occurred in
developing this notice of proposed rulemaking (NPRM). In accordance
with the requirements of the Administrative Procedure Act, the
Department invites you to submit comments regarding these proposed
regulations on or before September 21, 2009. 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.
Note that enactment as final regulations of any and all provisions of
these proposed regulations is subject to the availability of sufficient
administrative savings and any provision may be removed from the final
rules if sufficient savings do not materialize.
We invite you to assist us in complying with the specific
requirements of Executive Order 12866, including its overall
requirements to assess both the costs and the benefits of the proposed
regulations and feasible alternatives, and to make a reasoned
determination that the benefits of these proposed regulations justify
their costs. 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.
As noted elsewhere in the NPRM, two of the Department's negotiated
rulemaking committees were to a minor extent involved in the proposed
revisions to 34 CFR 668.184(a)(1) (Determining cohort default rates for
institutions that have undergone a change in status) in part 668,
subpart M of the Student Assistance General Provisions. Team V-General
and Non-Loan Programmatic Issues (Team V), was the negotiating
committee responsible for the regulations regarding the treatment of
cohort default rates for institutions that conduct teach-outs of closed
institutions. Team II-Loans-School-based Issues (Team II), negotiated
all other changes to cohort default rates.
We have included the proposed change to 34 CFR 668.184(a)(1) in
this NPRM as well as in the notice of proposed rulemaking that we are
publishing as a result of the negotiations of Team II. The proposed
change is simply a cross-reference in 34 CFR 668.184(a)(1) to 34 CFR
600.32(d) which provides that under certain circumstances the cohort
default rate of a closed institution does not transfer in any way to
the institution that conducts

[[Page 42381]]

a teach-out at the site of the closed institution. We ask that when
submitting any comments on the proposed changes to Sec. Sec. 600.32(d)
or 668.184(a)(1), you submit the comments in the docket for this NPRM
(Docket ID ED-2009-OPE-0005).
During and after the comment period, you may inspect all public
comments about these proposed regulations by accessing Regulations.gov.
You may also inspect the comments, in person, in room 8031, 1990 K
Street, NW., 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, please contact one of the
persons listed under FOR FURTHER INFORMATION CONTACT.

Negotiated Rulemaking

Section 492 of the HEA requires the Secretary, before publishing
any proposed regulations for programs authorized by Title IV of the
HEA, to obtain public involvement in the development of the proposed
regulations. After obtaining advice and recommendations from the
public, including individuals and representatives of groups involved in
the Federal student financial assistance programs, the Secretary must
subject the proposed regulations to a negotiated rulemaking process.
All proposed regulations that the Department publishes on which the
negotiators reached consensus must conform to final agreements
resulting from that process unless the Secretary reopens the process or
provides a written explanation to the participants stating why the
Secretary has decided to depart from the agreements. Further
information on the negotiated rulemaking process can be found at:
http://www.ed.gov/policy/highered/leg/hea08/index.html.
On December 31, 2009, the Department published a notice in the
Federal Register (73 FR 80314) announcing our intent to establish five
negotiated rulemaking committees to prepare proposed regulations. One
committee would focus on issues related to lender and general loan
issues (Team I--Loans--Lender General Loan Issues). A second committee
would focus on school-based loan issues (Team II--Loans--School-based
Loan Issues). A third committee would focus on accreditation (Team
III--Accreditation). A fourth committee would focus on discretionary
grants (Team IV--Discretionary Grants). A fifth committee would focus
on general and non-loan programmatic issues (Team V--General and Non-
Loan Programmatic Issues). The notice requested nominations of
individuals for membership on the committees who could represent the
interests of key stakeholder constituencies on each committee.
Team V--General and Non-Loan Programmatic Issues (Team V) met to
develop proposed regulations during the months of March 2009, April
2009, and May 2009. Team V agreed to establish five subcommittees to
facilitate the discussion of the issues and expedite the development of
the proposed regulations. The subcommittees included some of non-
Federal negotiators and their alternates, outside experts regarding the
particular issues addressed by a subcommittee, ED staff, and other
interested parties. The subcommittees were:
(1) Campus Safety, responsible for issues relating to Fire Safety
Standards, Missing Student Procedures, Hate Crime Reporting, and
Emergency Response and Evacuation Procedures.
(2) Peer-to-Peer File Sharing, responsible for issues relating to
illegal downloading of copyrighted materials.
(3) Intellectual Disabilities, responsible for issues relating to
establishing title IV eligible educational programs for students with
intellectual disabilities.
(4) LEAP/GAP, responsible for issues relating to LEAP and GAP
programs.
(5) 90/10, responsible for issues relating to the requirement that
a proprietary institution must derive at least 10 percent of its
revenue from sources other than funds from the title IV, HEA programs.
In this NPRM we propose regulations for a variety of provisions,
stemming from the work of the subcommittees and main committee,
relating to the Federal grant and work-study programs, campus safety,
educational programs for students with intellectual disabilities,
copyright infringement, teach-outs, readmission of servicemembers, and
non-Title IV revenue.
The Department developed a list of proposed regulatory provisions
based on the provisions contained in the HEOA and from advice and
recommendations submitted by individuals and organizations as testimony
to the Department in a series of six public hearings held on:
September 19, 2008, at Texas Christian University in Fort
Worth, Texas;
September 29, 2008, at the University of Rhode Island, in
Providence, Rhode Island;
October 2, 2008, at Pepperdine University, in Malibu,
California;
October 6, 2008, at Johnson C. Smith University, in
Charlotte, North Carolina;
October 8, 2008, at the U.S. Department of Education in
Washington, DC; and
October 15, 2008, at Cuyahoga Community College, in
Cleveland, Ohio.
In addition, the Department accepted written comments on possible
regulatory provisions submitted directly to the Department by
interested parties and organizations. A summary of all comments
received orally and in writing is posted as background material in the
docket for this NPRM. Transcripts of the regional meetings can be
accessed at http://www.ed.gov/policy/highered/leg/hea08/index.html.
Staff within the Department also identified issues for discussion
and negotiation.
At its first meeting, Team V reached agreement on its protocols.
These protocols provided that for each community of interest identified
as having interests that were significantly affected by the subject
matter of the negotiations, the non-Federal negotiators would represent
the organizations listed after their names in the protocols in the
negotiated rulemaking process.
Team V included the following members:
Clais Daniels-Edwards, University of California Student
Association, and Serena Unrein (alternate), Arizona Students
Association, representing students.
David Baime, American Association of Community Colleges,
and Dr. Karla Leach (alternate), Western Wyoming Community College,
representing two-year public institutions.
John Curtice, State University of New York, and Karen
Fooks (alternate), University of Florida, representing four-year public
institutions.
Scott Fleming, Georgetown University, and Suzanne Day
(alternate), Harvard University, representing private, non-profit
institutions.
Elaine Neely, Kaplan Higher Education Corp., and Mark
Pelesh (alternate), Corinthian Colleges, Inc., representing private,
for-profit institutions.
Ray Testa, Empire Education Group, and Dr. Richard
Dumaresq

[[Page 42382]]

(alternate), Pennsylvania Association of Private School Administrators,
representing cosmetology schools.
David Tipton, Berea College, and Ian Robertson
(alternate), Warren Wilson College, representing work colleges.
Dr. Ray Keck, Texas A&M International University, and Karl
Brockenbrough (alternate), Bowie State University, representing
minority-serving institutions.
David Gelinas, Davidson College, and David Smedley
(alternate), George Washington University, representing financial aid
administrators.
Sandy Tallman, Ross Education LLC, and Diane Fleming
(alternate), Central Michigan University, representing financial aid
administrators.
Karen McCarthy, NASFAA, and Joan Berkes (alternate),
NASFAA, representing financial aid administrators.
Maureen Laffey, Delaware Higher Education Commission, and
Dr. Alan Edwards (alternate), State Council of Higher Education for
Virginia, representing State student grant agencies.
Dr. Nick Bruno, University of Louisiana System, and John
Higgins (alternate), Purdue University, representing business officers
and bursars.
Dr. John Cavanaugh, Pennsylvania State Systems of Higher
Education, representing State higher education executive officers.
S. Daniel Carter, Security on Campus, Inc., and Jonathan
Kassa (alternate), Security on Campus, Inc., representing campus safety
advocates.
Brendan McCluskey, UMDJ Office of Emergency Management,
and Dr. John Petrie (alternate), George Washington University,
representing campus safety administrators.
Ed Comeau, Campus Firewatch, and Phil Hagen (alternate)
Georgetown University, representing fire safety advocates and
administrators.
Paul D. Martin, Center for Campus Fire Safety,
representing fire safety advocates.
Michael Lieberman, Anti-Defamation League, and Cristina
Finch (alternate), Human Rights Campaign, representing human rights
advocates.
Delores Stafford, George Washington University, and Lisa
Phillips (alternate), IACLEA, representing law enforcement.
Stephanie Smith Lee, NDSS, and Madeleine C. Will
(alternate), representing individuals with intellectual disabilities.
Gregory Jackson, The University of Chicago, and Matthew
Arthur (alternate), representing institutions on peer-to-peer file
sharing.
David Green, NBC Universal, and Jennifer Jacobsen
(alternate), Sony Music Entertainment, representing digital content
owners on peer-to-peer file sharing.
Brian Kerrigan, U.S. Department of Education, representing
the Federal Government.
These protocols also provided that, unless agreed to otherwise,
consensus on all of the amendments in the proposed regulations had to
be achieved for consensus to be reached on the entire NPRM. Consensus
means that there must be no dissent by any member.
During the meetings, Team V reviewed and discussed drafts of
proposed regulations. At the final meeting in May 2009, Team V did not
reach consensus on the proposed regulations in this document.

Summary of Proposed Changes

These proposed regulations would implement general and non-Loan
provisions of the HEA, as amended by the HEOA, including:
Establishing requirements under which students may receive
up to two Federal Pell Grant Scheduled Awards during a single award
year (see section 401(b)(5)(A) of the HEA);
Providing the maximum Federal Pell Grant eligibility to a
student whose parent was in the armed forces and died in Iraq or
Afghanistan if the student was under 24 years old or enrolled in an
institution of higher education at the time the parent died (see
section 401(F)(4) of the HEA);
Establishing extenuating circumstances under which a TEACH
Grant recipient may be excused from fulfilling all or part of his or
her service obligation (see section 420N(d)(2) of the HEA);
Expanding the use of FWS funds to permit institutions to
compensate students employed in projects that teach civics in school,
raise awareness of government functions or resources, or increase civic
participation (see section 443 of the HEA);
Allowing institutions located in major disaster areas to
make FWS payments to disaster-affected students (see section 445(d) of
the HEA).
Revising definitions and terms relating to work colleges
(see section 448 of the HEA).
Establishing new requirements for determining how
proprietary institutions calculate the amount and percent of revenue
derived from sources other than title IV, HEA program funds (see
section 487(d) of the HEA).
Expanding the information that institutions must make
available to prospective and enrolled students to include information
on: The employment and placement of students, the retention rates of
first-time, full-time undergraduate students, and completion and
graduation rate data that is disaggregated by gender, race, and grant
or loan assistance (see section 485(a) of the HEA).
Establishing requirements for institutions that maintain
on-campus housing facilities to publish annually a fire safety report,
maintain a fire log, and report fire statistics to the Department (see
section 485(i) of the HEA).
Requiring institutions that provide on-campus housing
facilities to develop and make available a missing student notification
policy and allow students who reside on campus to confidentially
register contact information (see section 485(j) of the HEA).
Expanding the list of crimes that institutions must
include in the hate crimes statistics reported to the Department (see
section 485(f) of the HEA).
Requiring institutions to include in the annual security
report a statement of emergency response and evacuation procedures (see
section 485(f) of the HEA).
Expanding the eligibility for Federal Pell Grant, FWS, and
FSEOG Program funds to students with intellectual disabilities (see
sections 484(s) and 760 of the HEA).
Establishing requirements under which an institution must
readmit servicemembers to the same academic status they had when they
last attended the institution (see section 484C of the HEA).
Providing that an institution that conducts a teach-out at
a site of a closed institution may, under certain conditions, establish
that site as an additional location (see sections 487(f) and 498 of the
HEA).
Amending the definition of ``proprietary institution of
higher education'' to include institutions that provide a program
leading to a baccalaureate degree in liberal arts, if the institution
provided that program since January 1, 2009, and has been accredited by
a regional accrediting agency since October 1, 2007, or earlier (see
section 102(b)(1)(A) of the HEA).
Providing that an institution must certify that it has
plans to effectively combat unauthorized distribution of copyrighted
material and will offer alternatives to illegal downloading or peer-to-
peer distribution of intellectual

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property (see sections 485(a)(1) and 487(a) of the HEA).
Expanding the information that an institution must make
available to prospective and enrolled students to include a description
of any plans the institution has to improve its academic program (see
section 485(a) of the HEA).
Providing that the non-Federal share of student grants or
work-study jobs under the LEAP Program must be State funds and that the
non-Federal share no longer has to come from a direct appropriation of
State funds (see section 415C(b)(10) of the HEA).
Requiring the State program to notify students that grants
are LEAP Grants that are funded by the Federal Government, the State,
and for LEAP Grants to students under the new Grants for Access and
Persistence (GAP) Program, other contributing partners (see section
415C(b) of the HEA).
Establishing the activities, awards, allotments to States,
matching funds requirements, consumer information requirements,
application requirements, and other requirements needed to begin and
continue participating in the GAP Program (see sections 415B and 415E
of the HEA).

Significant Proposed Regulations

We group major issues according to subject, with appropriate
sections of the proposed regulations referenced in parentheses. We
discuss other substantive issues under the sections of the proposed
regulations to which they pertain. Generally, we do not address
proposed regulatory provisions that are technical or otherwise minor in
effect.

Part 600 Institutional Eligibility Under the Higher Education Act of
1965, as Amended

Definition of Baccalaureate Liberal Arts Programs Offered by
Proprietary Institutions (Sec. 600.5)

Statute: Effective July 1, 2010, the HEOA amends the definition of
proprietary institution of higher education in section 102(b)(1)(A) of
the HEA to include an institution that provides a program leading to a
baccalaureate degree in liberal arts that the institution has provided
since January 1, 2009, so long as the institution has been accredited
by a recognized regional accreditation agency or organization since
October 1, 2007, or earlier. As the language in section 102(b)(1)(A)(i)
of the HEA is not new, this change does not affect the eligibility of
current programs or alter the method used by the Department in
determining that a program of training prepares students for gainful
employment in a recognized occupation.
Current Regulations: Section 600.5(a)(5) defines a proprietary
institution of higher education as one that provides an eligible
program of training, defined in Sec. 668.8, to prepare students for
gainful employment in a recognized occupation.
Proposed Regulations: The proposed change to Sec. 600.5(a)(5)
would add to the definition of proprietary institution of higher
education, an institution that provides a program leading to a
baccalaureate degree in liberal arts that the institution has provided
since January 1, 2009, so long as the institution has been accredited
by a recognized regional accreditation agency or organization since
October 1, 2007, or earlier. In addition, a new paragraph (e) would be
added to Sec. 600.5 to include a definition of a program leading to a
baccalaureate degree in liberal arts. The definition would require that
the institution's recognized regional accreditation agency or
organization determine that the program is a general instructional
program in the liberal arts subjects, the humanities disciplines, or
the general curriculum, falling within one or more generally accepted
instructional categories comprising such programs, but including only
instruction in regular programs, and excluding independently designed
programs, individualized programs, and unstructured studies. The
generally accepted instructional categories would be:
A program that is a structured combination of the arts,
biological and physical sciences, social sciences, and humanities,
emphasizing breadth of study;
An undifferentiated program that includes instruction in
the general arts or general science;
A program that focuses on combined studies and research in
the humanities subjects as distinguished from the social and physical
sciences, emphasizing languages, literatures, art, music, philosophy
and religion; and
Any single instructional program in liberal arts and
sciences, general studies and humanities not listed above.
Reasons: The regulations are amended to reflect the changes made by
the HEOA. The regulations would require that an institution's
accrediting agency determine that a program is a liberal arts program
as defined in this section in order to ensure that a program meets a
generally accepted standard for liberal arts programs. The proposed
definition of a program leading to a baccalaureate degree in liberal
arts is from the U.S. Department of Education's National Center for
Education Statistics' (NCES) Classification of Instructional Programs
(CIP), the Federal government statistical standard on instructional
program classifications. Specifically, the instructional categories are
from the description of CIP 24, Liberal Arts and Sciences, General
Studies, and Humanities, which would ensure that a program meets a
generally accepted standard for liberal arts programs. The definition
excludes independently-designed programs, individualized programs, and
unstructured studies as the Department believes that, to meet the
statutory requirement that an institution offer a program, it must be
an organized program of study that is essentially the same for all
students, except that it could include some elective courses.

Institutional Requirements for Teach-Outs and Eligibility and
Certification Procedures (Sec. Sec. 600.2, 600.32, 668.14)

Statute: The HEOA added paragraph (f) to section 487 of the HEA to
provide that, whenever the Department initiates an action to limit,
suspend, or terminate (LS&T) an institution's participation in any
Title IV program or initiates an emergency action against an
institution, the institution must prepare a teach-out plan for
submission to its accrediting agency. The teach-out plan must be
prepared in accordance with section 496(c)(6) of the HEA (mistakenly
cited as section 496(c)(4) in the HEA) and any applicable title IV, HEA
program regulations or accrediting agency standards. A teach-out plan
is defined as a written plan that provides for equitable treatment of
students if an institution ceases to operate before all students have
completed their program of study, and may include, if required by the
institution's accrediting agency, a teach-out agreement.
The HEOA also added section 498(k) of the HEA to provide that a
location of a closed institution is eligible as an additional location
of another institution for the purpose of conducting a teach-out if the
teach-out is approved by the institution's accrediting agency. The
institution that conducts the teach-out under this provision is
permitted to establish a permanent additional location at the closed
institution without having to satisfy the requirements for additional
locations in sections 102(b)(1)(E) and 102(c)(1))(C) of the HEA--i.e.,
that a proprietary institution or a postsecondary vocational
institution must have been in existence for two years to be eligible--
and without assuming the liabilities of the closed institution.

[[Page 42384]]

One of the four new accrediting agency operating procedures added
by the HEOA as section 496(c)(3) of the HEA requires accrediting
agencies to approve teach-out plans submitted by institutions they
accredit if the Department notifies the agency of an action against an
institution in accordance with section 487(f) of the HEA, if the
institution's accreditation is withdrawn, terminated or suspended, or
if the institution intends to cease operations. This provision was
negotiated by Team III--Accreditation and will be reflected in the NPRM
developed to implement accreditation issues (Docket ID ED-2009-OPE-).
Because of the overlap in these three provisions, the development of
proposed regulatory language was coordinated between the two
negotiating committees.
Current Regulations: Section 600.32 provides that an additional
location is eligible to participate in the title IV, HEA programs if it
meets the requirements for institutional eligibility in (1) Sec. 600.4
(eligibility requirements for an institution of higher education),
Sec. 600.5 (eligibility requirements for a proprietary institution),
or Sec. 600.6 (eligibility requirements for a postsecondary vocational
institution); (2) Sec. 600.8 (treatment of a branch campus), and (3)
Sec. 600.10 (date, extent, duration, and consequences of eligibility).
However, to qualify as an eligible additional location, a location is
not required to have been in existence for two years unless (1) the
location was a facility of another institution that has closed or
ceased to provide educational programs for a reason other than a normal
vacation period or a natural disaster that directly affects the
institution or the institution's students; (2) the applicant
institution acquired, either directly from the institution that closed
or ceased to provide educational programs, or through an intermediary,
the assets at the location; and (3) the institution from which the
applicant institution acquired the assets of the location owes a
liability for a violation of an HEA program requirement and is not
making payments in accordance with an agreement to repay that
liability. An additional location that must meet the two-year rule for
these reasons, nevertheless, is exempt from the two-year rule if it
agrees (1) to be liable for all improperly expended or unspent title IV
program funds received by the institution that has closed or ceased to
provide educational programs; (2) to be liable for all unpaid refunds
owed to students who received title IV program funds; and (3) to abide
by the policy of the institution that has closed or ceased to provide
educational programs regarding refunds of institutional charges to
students in effect before the date of the acquisition of the assets of
the additional location for the students who were enrolled before that
date.
Proposed Regulations: Section 600.2 would define a teach-out plan
as a written plan developed by an institution that provides for the
equitable treatment of students if an institution, or an institutional
location that provides 100 percent of at least one program, ceases to
operate before all students have completed their program of study, and
may include, if required by the institution's accrediting agency, a
teach-out agreement between institutions.
Section 668.14 would be amended to include in the program
participation agreement the requirement in section 487(f) of the HEA.
In addition to requiring an institution to submit a teach-out plan to
its accrediting agency whenever the Department initiates an LS&T, or an
emergency action against the institution, as required by statute,
proposed Sec. 668.14(b)(31) would require an institution to submit a
teach-out plan when (1) the institution's accrediting agency acts to
withdraw, terminate, or suspend the accreditation or preaccreditation
of the institution; (2) the institution's State licensing or
authorizing agency revokes the institution's license or legal
authorization to provide an educational program; (3) the institution
intends to close a location that provides 100 percent of at least one
program; or (4) the institution otherwise intends to cease operations.
Proposed Sec. 600.32(d) would implement section 498(k) of the HEA
to provide that an institution that conducts a teach-out for a closed
institution whenever the Department initiates an LS&T, or an emergency
action against the institution, may apply to have that site approved as
an additional location, if the teach-out plan was approved by the
closed institution's accrediting agency. If the Department approves the
institution to add the additional location, the ``two-year rule'' would
not apply to the additional location. In addition, the institution
would not assume the liabilities of the closed institution, and the
institution would not assume the cohort default rate of the closed
institution, provided the institutions are not related parties and
there is no commonality of ownership or management between the
institutions, as described in proposed 34 CFR 668.188(b) and 34 CFR
668.207(b) (these sections address the determination of cohort default
rates for institutions that have undergone a change in status). An
institution that accepts responsibility for conducting a teach-out of
students under such an arrangement would still have to comply with
Sec. 600.32(c)(3), which requires the additional location to abide by
the policy of the institution that has closed or ceased to provide
educational programs regarding refunds of institutional charges to
students in effect before the date of the acquisition of the assets of
the additional location for the students who were enrolled before that
date. As a condition for approval of the additional location, the
Department may require that payments from the institution conducting
the teach-out to the owners of the closed institution, or related
parties, be used to pay any liabilities owed by the closed institution.
Reasons: The regulations are amended to reflect the changes made by
the HEOA.
In proposed Sec. 668.14(b)(31), the circumstances under which an
institution would be required to submit a teach-out plan to its
accrediting agency would be expanded beyond the circumstances listed in
the statute to specifically address other situations where the
Department believes the potential closure will put significant numbers
of students at risk of being unable to complete their program,
including the closure of a location that provides 100 percent of at
least one program. This list of circumstances would conform with
proposed changes in Sec. Sec. 602.3 and 602.24 of the Team III--
Accreditation NPRM (Docket ID ED-2009-OPE-) for implementing section
496(c)(3) of the HEA, which directs accrediting agencies to require
institutions to submit a teach-out plan for approval upon the
occurrence of certain events. As a result, the definition of a teach-
out plan would apply to an institutional location that provides 100
percent of at least one program, and would be the same definition used
in 34 CFR part 602 for the Secretary's Recognition of Accrediting
Agencies.
Proposed Sec. 600.32(d) would be consistent with statutory intent
to encourage an institution to conduct a teach-out of a closed
institution and our view that the cohort default rate of a closed
institution could be a potential impediment that could dissuade another
institution from conducting the teach-out if its default rate would be
adversely affected by the closed institution's default rate. However,
the proposed regulations would ensure that this provision is not used
by an owner to circumvent an undesirable cohort

[[Page 42385]]

default rate or liabilities for one institution by having it become an
additional location of another institution under the same, or related,
ownership. Preserving the Department's right to require that payments
from the institution conducting the teach-out to the owners of the
closed institution, or related parties, be used to pay any liabilities
owed by the closed institution, provides the benefit to the institution
that conducts the teach-out of not assuming any liabilities owed by the
closed school, while ensuring that any funds paid to the owners of the
closed school are applied against any title IV program liabilities owed
by that institution.
No changes are proposed to the applicability of Sec. 600.32(c)--
that the institution opening the additional location must continue to
apply the refund policy for the students from the institution that has
closed or ceased to provide educational programs. This obligation to
protect the students by keeping the same refund policy in place
continues because it is different from the pre-existing liabilities
that the institution is not required to assume under this provision.
Some non-Federal negotiators felt that, in keeping with proposed 34
CFR 668.14(b)(31), proposed Sec. 600.32(d) should be expanded to allow
the exemptions from the two-year rule, the assumption of liabilities,
and the assumption of the cohort default rate, to apply when an
institution conducts a teach-out at an institution that closes for
reasons other than those listed in section 498(k) of the HEA--i.e., the
initiation of a limitation, suspension, or termination of the
institution, or an emergency action against the institution by the
Department. The Department would limit the availability of this
procedure (allowing an institution to conduct a teach-out of a closed
institution without the imposition of customary restrictions to
discourage institutions not subject to an LS&T, or emergency action
from arranging a closure and sale of the institution) without
liabilities in situations where a buyer would otherwise purchase the
institution and assume the institution's liabilities under existing
change of ownership rules.

Part 668 Student Assistance General Provisions

Readmission Requirements for Servicemembers (Sec. 668.18)

Statute: The HEOA added new section 484C to the HEA to address
institutional readmission requirements for servicemembers. Section 484C
of the HEA provides that an institution of higher education may not
deny readmission to a servicemember of the uniformed services for
reasons relating to that service. In addition, a student who is
readmitted to an institution under this section must be readmitted with
the same academic status as the student had when he or she last
attended the institution. An affected servicemember is any individual
who is a member of, applies to be a member of, or performs, has
performed, applies to perform, or has the obligation to perform,
service in the uniformed services. This requirement applies to service
in the uniformed services, whether voluntary or involuntary, on active
duty in the Armed Forces, including service as a member of the National
Guard or Reserve, for a period of more than 30 days under a call or
order to active duty of more than 30 days.
Any student whose absence from an institution of higher education
is necessitated by reason of service in the uniformed services is
entitled to readmission if:
The student (or an appropriate officer of the Armed Forces
or official of the Department of Defense) gives advance written or
verbal notice of such service to the appropriate official at the
institution;
The cumulative length of the absence and of all previous
absences from that institution of higher education by reason of service
in the uniformed services does not exceed five years; and
Except as otherwise provided in this section, the student
submits a notification of intent to reenroll in the institution.
However, no advance notice by the student is required if the giving
of such notice is precluded by military necessity, such as a mission,
operation, exercise, or requirement that is classified; or a pending or
ongoing mission, operation, exercise, or requirement that may be
compromised or otherwise adversely affected by public knowledge. In
addition, any student (or an appropriate officer of the Armed Forces or
official of the Department of Defense) who did not give advance notice
of service to the appropriate official at the institution may meet the
notice requirement by submitting, at the time the student seeks
readmission, an attestation to the student's institution that the
student performed service in the uniformed services that necessitated
the student's absence from the institution.
When determining the cumulative length of the student's absence for
service, the period of service does not include any service:
That is required, beyond five years, to complete an
initial period of obligated service;
During which the student was unable to obtain orders
releasing the student from a period of service in the uniformed
services before the expiration of the five-year period and the
inability to obtain those orders was through no fault of the student;
or
That is performed by a member of the Armed Forces
(including the National Guard and Reserves) who is--
[ctrcir] Ordered to or retained on active duty under section 688,
12301(a), 12301(g), 12302, 12304, or 12305 of Title 10, U.S.C., or
under section 331, 332, 359, 360, 367, or 712 of Title 14, U.S.C.;
[ctrcir] Ordered to or retained on active duty (other than for
training) under any provision of law because of a war or national
emergency declared by the President or the Congress;
[ctrcir] Ordered to active duty (other than for training) in
support of an operational mission for which personnel have been ordered
to active duty under section 12304 of Title 10, U.S.C.;
[ctrcir] Odered to active duty in support of a critical mission or
requirement of the Armed Forces (including the National Guard or
Reserve); or
[ctrcir] Called into Federal service as a member of the National
Guard under chapter 15 of Title 10, U.S.C., or section 12406 of Title
10, U.S.C.
An affected servicemember must, upon the completion of a period of
service in the uniformed services, notify the institution of his or her
intent to return to the institution not later than three years after
the completion of the period of service. However, a student who is
hospitalized for or convalescing from an illness or injury incurred in
or aggravated during the performance of service in the uniformed
services must notify the institution of his or her intent to return to
the institution not later than two years after the end of the period
that is necessary for recovery from such illness or injury. A student
who fails to apply for readmission within the required period does not
automatically forfeit eligibility for readmission to the institution,
but is subject to the institution's established leave of absence policy
and general practices.
A student who submits an application for readmission to an
institution must provide to the institution documentation to establish
that:
The student has not exceeded the specified service
limitations; and
The student's eligibility for readmission has not been
terminated.

[[Page 42386]]

An institution may not delay or attempt to avoid a readmission of a
student under this section by demanding documentation that does not
exist, or is not readily available, at the time of readmission.
A student's eligibility for readmission to an institution under
this section by reason of such student's service in the uniformed
services terminates upon the occurrence of any of the following events:
A separation of such person from the Armed Forces
(including the National Guard and reserves) with a dishonorable or bad
conduct discharge;
A dismissal of such person permitted under section 1161(a)
of Title 10, U.S.C.; or
A dropping of such person from the rolls pursuant to
section 1161(b) of Title 10, U.S.C.
Current Regulations: None.
Proposed Regulations:

General

Section 668.18(a) would include the general requirements of the
statute that an institution may not deny readmission to a
servicemember, but must readmit the servicemember with the same
academic status as the student had when the student was last admitted
to the institution. The proposed regulations would clarify that the
requirements of this section also apply to a student who was admitted
to an institution, but did not begin attendance because of service in
the uniformed services. The proposed regulations would specify that the
institution must promptly readmit a student, and would define
``promptly readmit'' as readmitting a student into the next class or
classes in the student's program unless the student requests a later
date of admission, or unusual circumstances require the institution to
admit the student at a later date.
Section 668.18(a)(2)(iii) would specify that to readmit a person
with the ``same academic status'' means that the institution admits the
student:
To the same program to which he or she was last admitted
by the institution or, if that program is no longer offered, the
program that is most similar, unless the student requests or agrees to
admission to a different program;
At the same enrollment status that the student last held
at the institution, unless the student requests or agrees to admission
at a different enrollment status;
With the same number of credit hours or clock hours
completed previously by the student, unless the student is readmitted
to a different program to which the completed credit hours or clock
hours are not transferable;
With the same academic standing (e.g., with the same
satisfactory academic progress status) the student previously had;
If the student is readmitted to the same program, for the
first academic year in which the student returns, by assessing the same
institutional charges that the student was or would have been assessed
for the academic year during which the student left the institution;
If the student is admitted to a different program, and for
subsequent academic years for a student admitted to the same program,
by assessing no more than the institutional charges that other students
in the program are assessed for that academic year; and
Waiving charges for equipment required in lieu of
equipment the student paid for when the student was previously
enrolled.
In the case of a student who is not prepared to resume the program
at the point where he or she left off or will not be able to complete
the program, Sec. 668.18(a)(2)(iv) would require the institution to
make reasonable efforts to help the student become prepared or to
enable the student to complete the program including, but not limited
to, providing refresher courses at no extra cost and allowing the
student to retake a pretest at no extra cost. The institution would not
be required to readmit the student if, after reasonable efforts by the
institution, the student is still not prepared to resume the program at
the point where he or she left off, or is still unable to complete the
program. In addition, an institution would not be required to readmit a
student if there are no reasonable efforts the institution can take to
prepare the student to resume the program, or to enable the student to
complete the program.
The proposed regulations would define ``reasonable efforts'' as
actions that do not place an undue hardship on the institution. An
``undue hardship'' would be defined as requiring significant difficulty
or expense to the institution. An institution would carry the burden to
prove by a preponderance of the evidence that the student is not
prepared to resume the program with the same academic status at the
point where the student left off, or that the student will not be able
to complete the program.
Section 668.18(a)(3) would make clear that the requirements of this
section apply to an institution even if that institution has undergone
a change of ownership since the student ceased attendance.
Finally, Sec. 668.18(a)(4) would make clear that the provisions of
this section supersede any State law or other requirement that reduce,
limit, or eliminate any right or benefit provided by this section.

Service in the Uniformed Services

Section 668.18(b) would delineate what service in the uniformed
services means for purposes of this section. This section would expand
upon the statutory language to clarify that service in the uniformed
services includes active duty for training and full-time National Guard
duty under Federal authority (i.e., not National Guard service under
authority of State law). In addition, the regulations would specify
that qualifying service must be for more than 30 consecutive days under
a call or order to active duty of more than 30 consecutive days.

Readmission Procedures

Section 668.18(c) would list the statutory conditions under which
an institution must readmit a servicemember. In addition, Sec.
668.18(c)(2)(i) would require an institution to designate one or more
offices for the purpose of receiving advance notice from students of
their absence from the institution necessitated by service in the
uniformed services, and notice from students of an intent to return to
the institution. Section 668.18(c)(1)(i) would make clear that advance
notice must be provided by the student as far in advance as is
reasonable under the circumstances. However under Sec.
668.18(c)(2)(ii) and (iii), such notice would not need to follow any
particular format, nor would a student have to indicate as part of the
notice whether the student intends to return to the institution. Also,
the regulations would make clear that an institution may not set a
brightline deadline for submission of any such notice, but must judge
the timeliness of submission by the facts of a particular case. As such
notice may be provided by an appropriate officer of the Armed Forces,
Sec. 668.18(c)(2)(iv) would clarify who an ``appropriate officer'' is.
The regulations would also provide that a student's notice of intent to
return may be provided orally or in writing and would not need to
follow any particular format. Section 668.18(c)(1)(ii) would make clear
that the cumulative length of all previous absences by an affected
student from the institution would include only the time the student
spends actually performing service in the uniformed services. A period
of absence from the institution before or after performing service in
the

[[Page 42387]]

uniformed services would not count against the five year limit. For
example, after the individual completes a period of service in the
uniformed services, he or she is provided a certain amount of time to
return to the institution. The period between completing the uniformed
service and returning to the institution would not count against the
five-year limit.

Exceptions to Advance Notice

Section 668.18(d) would restate the statutory language for
exceptions to advance notice.

Cumulative Length of Absence

Section 668.18(e) would restate the statutory types of service that
are not included in the cumulative length of the student's absence,
including a brief description of the types of services referenced in
titles 10 and 14 of the United States Code.

Notification of Intent to Reenroll

Section 668.18(f) would restate the statutory provision providing
that a student who fails to apply for readmission within the required
periods does not automatically forfeit eligibility for readmission to
the institution, but is subject to the institution's established leave
of absence policy and general practices.

Documentation

Section 668.18(g) would list the documentation required by the
statute that a student must submit with an application for readmission.
The regulations would list several specific types of documentation that
satisfy the statutory documentation requirements, making clear that the
types of documentation available or necessary will vary from case to
case.

Termination of Readmission Eligibility

Section 668.18(h) would list the circumstances listed in the
statute under which a student's eligibility for readmission to an
institution would be terminated, including a brief description of the
types of circumstances referenced in title 10 of the United States
Code.
Reasons: The regulations are amended to reflect the changes made by
the HEOA. The statutory provisions for readmission of servicemembers to
institutions of higher education were based on the provisions of the
Uniformed Services Employment and Reemployment Rights Act (USERRA) (38
U.S.C. 4301-4334), which established the process for servicemembers to
return to employment after serving on active duty. Therefore, in
developing these proposed regulations, the Department sought to be as
consistent as possible with the regulations implementing the USERRA.
The Department believes that the purpose of these provisions, as with
the USERRA, is to minimize the disruption to the lives of persons
performing service in the uniformed services, allowing a student to
return to an institution without penalty for having left because of
service in the uniformed services.

General

Because the statute refers to ``readmission'' of servicemembers,
the Department believes that the statute was intended to apply not just
to a student who began attendance at an institution and left because of
service in the uniformed services, but also to a student who was
admitted to an institution, but did not begin attendance because of
service in the uniformed services.
In line with the goal of minimizing the disruption to the lives of
persons performing service in the uniformed services and to prevent an
institution from unduly delaying an individual's readmission, the
proposed regulations would require an institution to promptly readmit a
student, and would define ``promptly readmit'' as readmitting a student
into the next class or classes in the student's program unless the
student requests a later date of admission, or unusual circumstances
require the institution to admit the student at a later date. If, for
example, an institution must make efforts to help the student become
prepared to resume the program, and such efforts would not be completed
in time for the student to begin the next class, a later date of
admission would be justified.
The proposed requirements in Sec. 668.18(a)(2)(iii) for
readmitting a person with the ``same academic status'' are consistent
with USERRA regulations (20 CFR 1002.191 and 1002.192), which require
an employer to employ a returning servicemember in the same position he
or she left, so as to not penalize the individual for having left to
serve in the uniformed services. The Department has chosen to focus
only on the readmission of a servicemember by requiring that, if the
student is readmitted to the same program, for the first academic year
in which the student returns, the institution would have to assess the
same institutional charges that the student had or would have been
assessed for the academic year during which the student left the
institution. However, this protection would not apply to subsequent
years, when the institution could assess the institutional charges that
other students in the program are assessed for that academic year.
To address concerns voiced by non-Federal negotiators that the
regulations would not allow an institution to readmit a student with a
different academic status, even if the student wanted the change, the
regulations would make clear that the institution may admit the student
with a different academic status if the student requests or agrees to
the change.
Consistent with USERRA regulations (20 CFR 1002.198) which require
an employer to make reasonable efforts, if necessary, to help an
employee become qualified for the reemployment position, Sec.
668.18(a)(2)(iv) would require the institution to make reasonable
efforts, if necessary, to help a returning student become prepared or
to enable the student to complete the program including, but not
limited to, providing refresher courses at no extra cost and allowing
the student to retake a pretest at no extra cost. The Department
believes requiring an institution to make such an effort is in line
with the goal of allowing a student to return to an institution without
penalty for having left because of service in the uniformed services.
To ensure that such an effort does not unduly burden the institution
financially or administratively, the proposed regulations would use the
USERRA regulations definitions of ``reasonable efforts''--actions that
do not place an undue hardship on the institution and ``undue
hardship''--requiring significant difficulty or expense to the
institution.
In addition, as USERRA regulations (20 CFR 1002.139) provide an
employer with a degree of flexibility in meeting its reemployment
obligations by not requiring an employer to reemploy an individual
under very limited circumstances, so would Sec. 668.18(a)(2)(iv)(B)
provide institutions with some flexibility to not readmit a student if,
(1) after reasonable efforts by the institution, the student is still
not prepared to resume the program at the point where he or she left
off, or is still unable to complete the program; or (2) if there are no
reasonable efforts the institution can take to prepare the student to
resume the program, or to enable the student to complete the program.
Consistent with USERRA regulations (20 CFR 1002.139), an institution
would carry the burden to prove by a preponderance of the evidence that
the student is not prepared to resume the program with the same
academic status at the point where the student left off, or that the
student will not be able to complete the program.

[[Page 42388]]

Consistent with the Department's practice of treating an
institution that has undergone a change of ownership as the same
institution, Sec. 668.18(a)(3) provides that the requirements of this
section would apply to an institution even if that institution has
undergone a change of ownership since the student ceased attendance.
As with USERRA regulations (20 CFR 1002.7(b)), Sec. 668.18(a)(4)
would make clear that the provisions of this section supersede any
State law or other requirement that reduces, limits, or eliminates any
right or benefit provided by this section. This provision would make it
possible, for example, to readmit a servicemember into a class for a
semester even if that class was at the maximum enrollment level set by
the institution's State. The preemption only applies when it is the
admission of the returning servicemember that would be prevented by the
State law or other requirement. The institution is expected to take
other steps to come into compliance with the State law or other
requirements for future periods of enrollment. As with USERRA
regulations, these regulations would not supersede, nullify or diminish
any Federal or State law (including any local law or ordinance),
contract, agreement, policy, plan, practice, or other matter that
establishes an individual's right or benefit that is more beneficial
than, or is in addition to, a right or benefit provided under the HEA.

Service in the Uniformed Services

Section 668.18(b) clarifies that service in the uniformed services
includes active duty for training, because it is a form of active duty
in the Armed Forces. Consistent with USERRA regulations (20 CFR
1002.57), service in the uniformed services would include full-time
National Guard duty under Federal authority, but not National Guard
service under authority of State law, which is not considered to be
service in the uniformed services for purposes of these provisions. As
explained in 20 CFR 1002.57 of the USERRA regulations:

The National Guard has a dual status. It is a Reserve component
of the Army, or, in the case of the Air National Guard, of the Air
Force. Simultaneously, it is a State military force subject to call-
up by the State Governor for duty not subject to Federal control,
such as emergency duty in cases of floods or riots. National Guard
members may perform service under either Federal or State authority,
but only Federal National Guard service is covered by USERRA.

In addition, the regulations would specify that qualifying service
must be for more than 30 consecutive days under a call or order to
active duty of more than 30 consecutive days. This would exclude
shorter periods of Reserve and National Guard service from being added
together to trigger this provision.

Readmission Procedures

Section 668.18(c) would list the statutory conditions under which
an institution must readmit a servicemember. An institution would be
required to designate one or more offices for the purpose of receiving
advance notice from students of their absence from the institution
necessitated by service in the uniformed services, and notice from
students of an intent to return to the institution to ease
administrative burden for institutions and to assist students in
directing their notice to the appropriate individuals.
Also, consistent with USERRA regulations (20 CFR 1002.85), to ease
administrative burden for institutions, a student would have to provide
notice that he or she is leaving as far in advance as is reasonable
under the circumstances. However, also consistent with USERRA
regulations (20 CFR 1002.85 and 1002.88), to ensure that a student's
advance notice is not subject to unreasonable requirements by an
institution: (1) Such notice would not need to follow any particular
format; (2) an institution would have to judge the timeliness of
submission by the facts of a particular case; and (3) a student would
not have to indicate as part of the notice whether the student intends
to return to the institution. For the same reason, the regulations
would also provide that a student's notice of intent to return may be
provided orally or in writing and would not need to follow any
particular format (consistent with USERRA regulations section
1002.118).
Consistent with USERRA regulations (20 CFR 1002.100), Sec.
668.18(c)(1)(ii) would make clear that the cumulative length of all
previous absences by an affected student from the institution would
include only the time the student spends actually performing service in
the uniformed services. This means that the time a servicemember spent
away from the institution either before, after, or in-between periods
of service in the uniformed services does not count toward the maximum
amount of time the servicemember may spend in active service before
losing the protections in this provision.

Documentation

The list of specific types of documentation was included to assist
students and institutions in identifying documents that satisfy the
statutory documentation requirements.

Non-Title IV Revenue Requirement (90/10)

Institutional Eligibility and Sanctions (Sec. Sec. 668.14(b)(16),
668.28(c), and 668.13(c))

Statute: The HEOA moved the requirement that a proprietary
institution derive at least 10 percent of its revenue from sources
other than title IV, HEA program funds from the institutional
eligibility provisions in section 102(b) of the HEA to the general
provisions in section 487(d) of the HEA. As a result, a proprietary
institution that does not satisfy the 90/10 revenue requirement for a
fiscal year, no longer loses its eligibility to participate in the
title IV, HEA programs. Instead, as provided in section 487(d)(2) of
the HEA, the institution's participation becomes provisional for two
fiscal years. If the institution does not satisfy the 90/10 revenue
requirement for two consecutive fiscal years, it loses its eligibility
to participate in the title IV, HEA programs for at least two fiscal
years.
During the two fiscal years the institution is provisionally
certified because it failed to satisfy the 90/10 revenue requirement
for a fiscal year, the institution's provisional certification
terminates on the expiration date of its program participation
agreement or the date it loses its eligibility to participate because
it failed to satisfy the requirement for two consecutive fiscal years.
To regain eligibility, the institution must demonstrate that it
complied with all eligibility and certification requirements under
section 498 of the HEA for a minimum of two fiscal years after the
fiscal year it became ineligible.
Current Regulations: The regulations in 34 CFR 600.5(a)(8), (e),
(f), and (g), identify the requirements for, and consequences of
failing, the 90/10 revenue provision.
Proposed Regulations: In general, the proposed regulations would
remove all of the 90/10 revenue provisions from 34 CFR 600.5 and
relocate those provisions, as amended by the HEOA, to subpart B of part
668. Accordingly, proposed Sec. 668.14(b)(16) would amend the program
participation agreement to specify that a proprietary institution must
derive at least 10 percent of its revenue for each fiscal year from
sources other than title IV, HEA program funds. If an institution does
not satisfy the 90/10 requirement, the proposed regulations in Sec.
668.28(c) would incorporate the statutory consequences and require the
institution to notify the Secretary no later than 45 days after the end
of its

[[Page 42389]]

fiscal year that it failed the 90/10 requirement. Also, and in keeping
with the provisional certification requirement in the statute, Sec.
668.13(c) would be amended by adding proposed paragraph (1)(ii) to
provide that a proprietary institution's certification automatically
becomes provisional if it fails the 90/10 requirement for any fiscal
year.
Reasons: The proposed regulations reflect the statutory
requirements. The provision under which an institution would notify the
Department that it failed the 90/10 requirement no later than 45 after
its fiscal year, parallels, but would shorten, the current 90-day
timeframe in 34 CFR 600.5(f). An institution at risk of failing the 90/
10 requirement is expected to monitor its revenue sources and amounts
carefully throughout the year, and is expected to know if it failed
shortly after the end of its fiscal year. Consequently, we believe that
45 days provides ample time for the institution to confirm on-going
assessments of its compliance with this requirement.

Calculating the Revenue Percentage (Sec. 668.28(a))

Statute: Section 487(d) of the HEA prescribes the requirements that
proprietary institutions must follow in calculating their 90/10 revenue
percentage. Under these requirements, an institution must--
(1) Use the cash basis of accounting, except for certain loans made
by the institution;
(2) Consider as revenue only those funds generated by the
institution from:
Tuition, fees, and other institutional charges for
students enrolled in eligible programs.
Activities conducted by the institution that are necessary
for the education and training of the institution's students, if those
activities are conducted on campus or at a facility under the control
of the institution, are performed under the supervision of a member of
the institution's faculty, and are required to be performed by all
students in a specific educational program at the institution.
Funds paid by a student, or on behalf of a student by a
party other than the institution, for an education or training program
that is not eligible for title IV, HEA program funds, if the program is
approved or licensed by the appropriate State agency, is accredited by
an accrediting agency recognized by the Department, or provides an
industry-recognized credential or certification;
(3) Presume that any title IV, HEA program funds are disbursed or
delivered to or on behalf of a student will be used to pay the
student's tuition, fees, or other institutional charges, regardless of
whether the institution credits those funds to the student's account or
pays those funds directly to the student, except to the extent that the
student's tuition, fees, or other institutional charges are satisfied
by:
Grant funds provided by non-Federal public agencies or
private sources independent of the institution;
Funds provided under a contractual arrangement with a
Federal, State, or local government agency for the purpose of providing
job training to low-income individuals who are in need of that
training;
Funds used by a student from savings plans for educational
expenses established by or on behalf of the student and which qualify
for special tax treatment under the Internal Revenue Code of 1986; or
Institutional scholarships.
(4) Include institutional aid as revenue to the school only as
follows:
For loans made by the institution on or after July 1, 2008
and prior to July 1, 2012, the net present value (NPV) of those loans
made by the institution during the applicable institutional fiscal year
accounted for on an accrual basis and estimated in accordance with
generally accepted accounting principles and related standards and
guidance, if the loans are bona fide as evidenced by enforceable
promissory notes; are issued at intervals related to the institution's
enrollment periods; and are subject to regular loan repayments and
collections.
For loans made by the institution on or after July 1,
2012, only the amount of loan repayments received during the applicable
institutional fiscal year, excluding repayments on loans made and
accounted for which the NPV was used.
For scholarships provided by the institution, only those
scholarships provided by the institution in the form of monetary aid or
tuition discounts based upon the academic achievements or financial
need of students, disbursed during each fiscal year from an established
restricted account, and only to the extent that funds in that account
represent designated funds from an outside source or from income earned
on those funds.
(5) For each student who receives a loan on or after July 1, 2008,
and prior to July 1, 2011, that is authorized under section 428H of the
HEA or that is a Federal Direct Unsubsidized Stafford Loan, treat as
revenue received by the institution from sources other than funds
received under this title, the amount by which the disbursement of the
loan received by the institution exceeds the limit on such loan in
effect on the day before the date of enactment of the Ensuring
Continued Access to Student Loans Act (ECASLA) of 2008; and
(6) Exclude from revenues--
The amount of funds the institution received under part C
(Federal Work Study), unless the institution used those funds to pay a
student's institutional charges.
The amount of funds the institution received under subpart
4 of part A (LEAP, SLEAP, or GAP).
The amount of funds provided by the institution as
matching funds for a title IV, HEA program.
The amount of title IV, HEA program funds provided by the
institution that are required to be refunded or returned.
The amount charged for books, supplies, and equipment,
unless the institution includes that amount as tuition, fees, or other
institutional charges.
Current regulations: The regulations in 34 CFR 600.5 address many,
but not all, of the statutory requirements for calculating the 90/10
revenue percentage. However, as discussed previously, the regulations
in this section would be removed.
Section 668.23(d)(4) requires a proprietary institution to report
its 90/10 ratio in a footnote to its audited financial statements.
Proposed regulations: Proposed Sec. 668.28(a) incorporates the
statutory requirements.
We propose to implement the statutory provision relating to
counting revenue from non-title IV eligible programs by providing that
these programs may prepare students to take an examination for an
industry-recognized credential or certificate issued by an independent
third-party, provide training needed for students to maintain State
licensing requirements, or provide additional training for
practitioners.
An institution would continue to report the revenue percentages in
a footnote to its audited financial statements, but the revisions in
proposed Sec. 668.23(d)(4) would require the institution to identify
in that footnote the non-Federal and Federal revenues by category.
With regard to institutional loans for which an NPV would be
calculated, the proposed regulations establish that institutional loans
would have to be credited in-full to the student's account, be
evidenced by standalone repayment agreements between students and the
institution, and be separate from

[[Page 42390]]

enrollment contracts signed by students. Loans made to students by
third parties but subsequently acquired by the institution would not
meet this definition of institutional loans, and could not be included
in either of the NPV calculations. Moreover, all payments from the
institution to acquire the loans would be counted against any non-
Federal revenues from the loan proceeds the institution received.
For the purpose of counting revenue from loan funds in excess of
the loan limits in effect prior to ECASLA, we propose that institutions
count the excess amount on a payment-period basis.
Finally, in proposed appendix C to subpart B of part 668 we
illustrate how an institution calculates its 90/10 revenue percentage.
Reasons: To a large extent, the proposed regulations adopt the
statutory provisions which, also to a large extent, reflect current
regulations and practice. However, we are incorporating suggestions
from some of the non-Federal negotiators in implementing three of the
new provisions for non-Federal sources of revenue that may be included
in the 90/10 calculation. First, we would identify the types of non-
title IV eligible programs from which an institution could count, as
revenue, the funds paid for students taking those programs. We believe
this eliminates much of the ambiguity regarding whether the revenue
from a non-title IV eligible program offered by an institution could be
counted for 90/10 purposes. Second, for purposes of the 90/10
calculation, we are identifying the elements that will distinguish an
institutional loan from other types of student account receivables.
Third, the regulations would allocate the excess loan funds that are
treated as non-Federal revenue to each payment period to simplify the
90/10 calculation. This will minimize some complexities that may result
if the excess funds were only counted after all of the pre-ECASLA loan
funds were provided to a student, particularly if the disbursements for
a loan are received by an institution in two different fiscal years.
An institution would continue to report its 90/10 ratio in a
footnote included with the institution's annual audited financial
statements. Given the additional revenues that may be counted as non-
Federal funds in this calculation, and that Federal funds may be
treated as non-Federal funds (i.e., loan amounts in excess of the pre-
ECASLA limits), we believe it is necessary for the institution to
report in that footnote the amounts of the revenues, by category,
derived from Federal and non-Federal funds that are included in its 90/
10 calculation. The certified public accountant that prepares the
institution's audited financial statements will be required to review
that information and test the institution's calculation. On a case by
case basis, Department staff will continue to review the accountant's
work papers when more information is needed to determine if the
calculation is correct.
Some of the non-Federal negotiators suggested that the regulations
permit tuition discounts given to students be counted for 90/10
purposes, since tuition discounts are mentioned in the HEA, along with
monetary aid provided to students, as types of scholarships provided by
a proprietary institution. The HEA also requires that these
scholarships be disbursed to a student's account from an established
restricted account at the institution holding funds from an outside
source, or income earned on those funds. The proposed regulations
implement the statutory provision that institutions may pay
scholarships with tuition discounts that are credited from such
restricted accounts.
Net Present Value (NPV) (Sec. 668.28(c))
Statute: For loans an institution makes to students on or after
July 1, 2008 and prior to July 1, 2012, section 497(d)(1)(D)(i) of the
HEA requires an institution to count as revenue the NPV of the loans it
makes during a fiscal year.
Current regulations: There are no current regulations regarding
NPV, however 34 CFR 600.5(d)(3)(i) allows an institution to count as
revenue the amount of loan repayments it receives on institutional
loans during its fiscal year.
Proposed regulations: In proposed Sec. 668.28(b), the Department
defines the NPV as the sum of the discounted cash flows R\t\/(1+i)\t\.
The variable ``i'' is the discount rate, which would, for 90/10
purposes, be the most recent annual inflation rate. The variable ``t''
is the time or period of the cash flow, in years, starting from the
time the loan entered repayment. The variable ``R\t\'' is the net cash
flow at time or period t.
If the institution's loans made during the fiscal year have
substantially the same repayment period, the proposed regulations
provide that an institution may use that repayment period for those
loans to set the range of values of variable ``t'' in the NPV formula.
However, if an institution's loans have different repayment periods,
the institution would group the loans by repayment period and use the
repayment period for each group to set the range of values for variable
``t''. For each group of loans, as applicable, the institution would
multiply the total annual payments due on the loans by the
institution's collection rate (the total amount of payments collected
divided by the total amount of payments due). The resulting amount is
the cash flow used for variable ``R'' in each period ``t'' for each
group of loans for which an NPV is calculated. Proposed appendix C to
subpart B of part 668 illustrates this NPV calculation.
As a simpler alternative to performing the NPV calculation, the
proposed regulations allow an institution the option to use 50 percent
of the total amount of loans it made during the fiscal year as the NPV.
However, if the institution chooses to use this alternative, it may not
sell any of the associated loans until they have been in repayment for
at least two years.
Reasons: The Department would implement the statutory requirement
to establish the net present value of an institution's loans by
adopting the formula--NPV = sum of the discounted cash flows R\t\/
(1+i)\t\. However, this formula is generally intended for, and used
primarily, in making investment decisions. Nevertheless, the discount
rate ``i'' is the rate of return that could be earned on an investment
in the financial markets with similar risk, or more generally, the rate
of return sought or expected by the investor. Translating this for 90/
10 purposes, the formula determines the NPV of institutional loans by
taking into consideration the discounted value caused by inflation.
The proposed regulations define the expected cash flows represented
by variable ``R'' to be the annual payments due on the loans (i.e., the
scheduled payments) multiplied by the institution's loan collection
rate (the total amount of payments collected on loans for a fiscal year
divided by the total amount of payments due on those loans for that
year). In this way, the expected cash flows are adjusted to take into
account loans that are not collected or loan payments that are not
collected timely. The institution's loan collection rate should be
based on the institution's own loan collection history, and may be a
prior annual rate or historical rate covering several years. We seek
public comment on other ways that an institution may establish a loan
collections rate. In any case, the institution would need to document
that rate and the institution's auditor would examine that information
as a part of the institution's annual financial statement audit.

[[Page 42391]]

With regard to the alternative provision that allows an institution
to use 50 percent of the total amount of loans it made during the
fiscal year as the NPV, we propose this option as an administrative
convenience for institutions that either prefer a simpler method to
establish the NPV or who do not need the additional non-Federal
revenues that might be counted if the formula were used. This option
provides a conservative, simple calculation for the NPV that is
intended to be a fair compromise in exchange for choosing not to
perform the NPV calculations. However, if the institution chooses this
option, it may not sell the loans associated with the 50 percent
calculation until those loans have been in repayment for two years. As
provided in section 487(d)(1)(D)(i)(III) of the HEA, institutional
loans are subject to regular loan repayment and collections. The
regular NPV formula would use the institution's own collection rate,
but the alternative formula would not. To make sure that alternative
formula institutional loans are legitimate, the institution may not
sell them until they have been in repayment for two years. This will
permit the Department, or another oversight entity, to determine
whether these loans were subject to regular loan repayment and
collection as required by the statute. Moreover, we wish to avoid an
outcome where an institution would sell the loans in the short term for
less than the 50 percent amount it claimed for 90/10 purposes.

Institutional Plans for Improving the Academic Program (Sec.
668.43(a))

Statute: As part of the required information on its academic
program that an institution must make available to prospective and
enrolled students under section 485(a) of the HEA, the HEOA adds the
requirement that an institution make available any plans the
institution has for improving that academic program.
Current Regulations: Section 668.43(a)(5) requires an institution
to make readily available to enrolled and prospective students
information on the academic program of the institution, including (1)
the current degree programs and other educational and training
programs; (2) the instructional, laboratory, and other physical
facilities that relate to the academic program; and (3) the
institution's faculty and other instructional personnel.
Proposed Regulations: Section 668.43(a)(5) would be amended to add
to the information on the academic program of the institution that an
institution must make readily available to enrolled and prospective
students any plans by the institution for improving the academic
program of the institution. An institution would be allowed to
determine what a ``plan'' is, including when a plan becomes a plan.
Reasons: The regulations are amended to reflect the changes made by
the HEOA.

Peer-to-Peer File Sharing and Copyrighted Material (Sec. Sec.
668.14(b) and 668.43(a))

Statute: The HEOA added a new requirement to section 487 of the HEA
(Program Participation Agreement) under which an institution must
certify that it has developed plans to effectively combat the
unauthorized distribution of copyrighted material (including through
the use of a variety of technology-based deterrents) and will, to the
extent practicable, offer alternatives to illegal downloading or peer-
to-peer distribution of intellectual property, as determined by the
institution in consultation with the chief technology officer or other
designated officer of the institution.
In addition, as part of the required information an institution
must make available to prospective and enrolled students, the HEOA
added new subparagraph (P) to section 485(a)(1) of the HEA to require a
description of institutional policies and sanctions related to the
unauthorized distribution of copyrighted material. This description
includes (1) an annual disclosure that explicitly informs students that
unauthorized distribution of copyrighted material, including peer-to-
peer file sharing, may subject the students to civil and criminal
liabilities; (2) a summary of the penalties for violation of Federal
copyright laws; and (3) the institution's policies with respect to
unauthorized peer-to-peer file sharing, including disciplinary actions
that are taken against students who engage in unauthorized distribution
of copyrighted materials using the institution's information technology
system.
Current Regulations: Section 668.41(c) requires an institution to
provide to enrolled students an annual notice containing a list and
brief description of the consumer information it must disclose and the
procedures for obtaining this consumer information. The term notice is
defined in Sec. 668.41(a) as a means of notification of the
availability of information an institution is required to disclose on a
one-to-one basis through a direct individual notice to each enrolled
student. This notice must be made through an appropriate mailing or
publication, including direct mailing through the U.S. Postal Service,
campus mail or electronic mail. Posting on Internet or Intranet Web
sites does not constitute notice. If the institution discloses the
consumer information listed in Sec. 668.41(c) by posting the
information on a Web site, it must include in the notice the exact
electronic address at which the information is posted, and a statement
that the institution will provide a paper copy of the information on
request.
Section 668.41(a) defines a prospective student as an individual
who has contacted an eligible institution requesting information
concerning admission to that institution.
Proposed Regulations:
Program Participation Agreement (PPA)
Section 668.14(b)(30)(i) would implement section 487(a)(29)(A) of
the HEA to require an institution, as a condition of participation in a
title IV, HEA program, to agree that it has developed and implemented
written plans to effectively combat the unauthorized distribution of
copyrighted material by users of the institution's network without
unduly interfering with the educational and research use of the
network.
An institution would have to include in its plan:
The use of one or more technology-based deterrents;
Mechanisms for educating and informing its community about
appropriate versus inappropriate use of copyrighted material. The
written plan would include the information contained in proposed Sec.
668.43(a)(10). These mechanisms could include any additional
information and approaches determined by the institution to contribute
to the effectiveness of the plan, such as including pertinent
information in student handbooks, honor codes, and codes of conduct in
addition to e-mail and/or paper disclosures.
Procedures for handling unauthorized distribution of
copyrighted material, including disciplinary procedures; and
Procedures for periodically reviewing the effectiveness of
the plans to combat the unauthorized distribution of copyrighted
materials by users of the institution's network using relevant
assessment criteria. It would be left to each institution to determine
what relevant assessment criteria are.
The regulations would make clear that no particular technology
measures are favored or required for inclusion in an institution's
plans, and each institution retains the authority to determine what its
particular plans for compliance will

[[Page 42392]]

be, including those that prohibit content monitoring.
Proposed Sec. 668.14(b)(30)(ii) would implement section
487(a)(29)(B) of the HEA by requiring that an institution, in
consultation with the chief technology officer or other designated
officer of the institution, to the extent practicable, offer legal
alternatives to illegal downloading or otherwise acquiring copyrighted
material, as determined by the institution. The proposed regulations
would also require that institutions (1) be required to periodically
review the legal alternatives for downloading or otherwise acquiring
copyrighted material and (2) make the results of the review available
to their students through a Web site or other means.
Consumer Information
Proposed Sec. 668.43(a)(10) would implement section 485(a)(1)(P)
of the HEA. Information regarding institutional policies and sanctions
related to the unauthorized distribution of copyrighted material would
be included in the list of institutional information provided upon
request to prospective and enrolled students. This information would be
required to (1) explicitly inform its students that unauthorized
distribution of copyrighted material, including peer-to-peer file
sharing, may subject a student to civil and criminal liabilities; (2)
include a summary of the penalties for violation of Federal copyright
laws; and (3) describe the institution's policies with respect to
unauthorized peer-to-peer file sharing, including disciplinary actions
that are taken against students who engage in illegal downloading or
unauthorized distribution of copyrighted materials using the
institution's information technology system. The Department will work
with representatives of copyright holders and institutions to develop a
summary of the civil and criminal penalties for violation of Federal
copyright laws to include as part of the Federal Student Aid Handbook
that an institution may use to meet this requirement.
As current Sec. 668.41(c) requires an institution to provide to
enrolled students an annual notice containing a list and brief
description of the consumer information it must disclose and the
procedures for obtaining this consumer information, an institution
would be required to add to this list the fact that it must make
readily available information regarding institutional policies and
sanctions related to the unauthorized distribution of copyrighted
material. Consistent with the current definition of notice in Sec.
668.41(a), an institution would be required to provide this annual
notice on a one-to-one basis through a direct individual notice to each
enrolled student. This notice must be made through an appropriate
mailing or publication, including direct mailing through the U.S.
Postal Service, campus mail or electronic mail. Posting on Internet or
Intranet Web sites does not constitute notice. If the institution
discloses the consumer information by posting the information on a Web
site, it must include in the notice the exact electronic address at
which the information is posted, and a statement that the institution
will provide a paper copy of the information on request.
The current definition of prospective student in Sec. 668.41(a)
would be used--i.e., an individual who has contacted an eligible
institution requesting information concerning admission to that
institution.
Reasons: The regulations are amended to reflect the changes made by
the HEOA.
These proposed regulations reflect the work of a subcommittee of
representatives of institutions, digital content owners, and Department
staff that was formed by the larger committee to address copyright
issues. The members of the subcommittee were able to successfully
reconcile vastly disparate viewpoints on several contentious parts of
the statute to develop proposed regulatory language that was then
presented to, and tentatively agreed upon by, the full committee. The
Department has chosen to preserve the compromises made by all sides on
this issue by including the proposed regulatory language on which
tentative agreement was reached. The Department believes that the
proposed regulations provide enough specificity to emphasize that
institutions must take seriously their role in combating unauthorized
distribution of copyrighted materials by users of their network, while
providing enough flexibility to institutions in how they combat any
unauthorized distribution to acknowledge the differences among
institutions and their networks, as well as variances in the scope of
the problem of unauthorized distribution of copyrighted material.
Program Participation Agreement
The Department believes the intent of the statute was to require
institutions to actively combat the unauthorized distribution of
copyrighted material. Accordingly, Sec. 668.14(b)(30)(i) would require
an institution to agree as part of its program participation agreement
that it not only has developed a plan to do so, but has also
implemented that plan. In recognition that there must be a balance
between network security and the functioning of a network for its
intended use, Sec. 668.14(b)(30)(i) would also make clear that an
institution is not required to take measures to effectively combat the
unauthorized distribution of copyrighted material that would unduly
interfere with the educational and research use of the network. The
Department believes that all institutions can achieve this balance,
given the flexibility provided by the proposed regulations allowing
individual institutions to determine how to best effectively combat
such unauthorized distribution. Institutions should not view this
provision as a justification for not effectively combating the
unauthorized distribution of copyrighted material. Although there was
some discussion of requiring an institution to effectively combat the
unauthorized distribution of copyrighted material by only student users
of the institution's network, the regulatory language on which
tentative agreement was reached would apply the requirement more
broadly to ``users.'' This approach ensures that institutions will be
more likely to deter and prevent downloads of copyrighted material by
employees and members of the public that may use computers at a school
library, for example, and also allow them to identify illegal downloads
being made by students who are not accessing the computer systems using
their student accounts. The Department believes that this approach
meets the intent of the statute that institutions secure their networks
from misuse by individuals who are given access to the networks.
In recognition of the diversity among institutions and how
technology is continuously evolving, Sec. 668.14(b)(30)(i)(A) would
leave it up to an institution's discretion to determine how many and
what type of technology-based deterrents it uses as a part of its
plan--although every institution must employ at least one. The
Statement of Managers in the Conference Report for the HEOA discusses
this issue on pages 547-549 (H. R. Conf. Rep. No. 110-803, at 547-549
(2008)), and provides context and clarification to this requirement as
follows:

Experience shows that a technology-based deterrent can be an
effective element of an overall solution to combat copyright
infringement, when used in combination with other internal and
external solutions to educate users and enforce institutional
policies.

[[Page 42393]]

Effective technology-based deterrents are currently available to
institutions of higher education through a number of vendors. These
approaches may provide an institution with the ability to choose
which one best meets its needs, depending on that institution's own
unique characteristics, such as cost and scale. These include
bandwidth shaping, traffic monitoring to identify the largest
bandwidth users, a vigorous program of accepting and responding to
Digital Millennium Copyright Act (DMCA) notices, and a variety of
commercial products designed to reduce or block illegal file
sharing.
Rapid advances in information technology mean that new products
and techniques are continually emerging. Technologies that are
promising today may be obsolete a year from now and new products
that are not even on the drawing board may, at some point in the not
too distant future, prove highly effective. The Conferees intend
that this Section be interpreted to be technology neutral and not
imply that any particular technology measures are favored or
required for inclusion in an institution's plans. The Conferees
intend for each institution to retain the authority to determine
what its particular plans for compliance with this Section will be,
including those that prohibit content monitoring. The Conferees
recognize that there is a broad range of possibilities that exist
for institutions to consider in developing plans for purposes of
complying with this Section.

The Department believes that some institutions may be able to
effectively combat the unauthorized distribution of copyrighted
material using only one of the four types of technology-based
deterrents (bandwidth shaping, traffic monitoring, accepting and
responding to DMCA notices, or a commercial product designed to reduce
or block illegal file sharing) while others may need to employ a
combination of such deterrents.
The additional proposed components of an effective plan in Sec.
668.14(b)(30)(i)(B) and (C) reflect general agreement by the committee
that a plan to effectively combat the unauthorized distribution of
copyrighted material by users of the institution's network should
include an educational component and a description of the institution's
procedures for handling the unauthorized distribution of copyrighted
material to provide a deterrent by ensuring that users are made aware
that the unauthorized distribution of copyrighted material is illegal,
what actions constitute illegal distribution of copyrighted material,
and the potential penalties for the unauthorized distribution of
copyrighted materials.
The final component of the plan, in proposed Sec.
668.14(b)(30)(i)(D), would require an institution to periodically
review its plan to evaluate whether it is working. One of the most
controversial aspects of the proposed regulations was the evaluation of
whether a plan was effectively combating the unauthorized distribution
of copyrighted material. There was extensive discussion over how a plan
should be reviewed to determine its effectiveness, and how much
discretion institutions should be given in this area. Ultimately,
tentative agreement was reached on a provision requiring an institution
to periodically review its plan using relevant assessment criteria,
permitting an institution discretion to determine the most appropriate
criteria. As the specifics of a plan will be determined by an
institution, the Department believes that the institution is in the
best position to determine the appropriate criteria to assess its plan.
In some cases, appropriate assessment criteria might be process-based,
so long as the institution's information system information does not
contradict such a determination. Such process-based criteria might look
at whether the institution is following best practices, as laid out in
guidance worked out between copyright owners and institutions or as
developed by similarly situated institutions that have devised
effective methods to combat the unauthorized distribution of
copyrighted material. In other cases, assessment criteria might be
outcome-based. The criteria might look at whether there are reliable
indications that a particular institution's plans are effective in
combating the unauthorized distribution of copyrighted material. Among
such indications may be ``before and after'' comparisons of bandwidth
used for peer-to-peer applications, low recidivism rates, and
reductions (either in absolute or in relative numbers) in the number of
legitimate electronic infringement notices received from rights
holders. The institution is expected to use the assessment criteria it
determines are relevant to evaluate how effective its plans are in
combating the unauthorized distribution of copyrighted materials by
users of the institution's networks.
In addition to reflecting the statute requiring that institutions,
to the extent practicable, offer legal alternatives to illegal
downloading or otherwise acquiring copyrighted material, proposed Sec.
668.14(b)(30)(ii) reflects general agreement that institutions should
periodically review the legal alternatives, and make available the
results of the review to its students through a Web site or other
means, as such legal alternatives are likely to change over time. Based
on the discussions of the subcommittee, the Department anticipates that
individual institutions, national associations, and commercial entities
will develop and maintain up-to-date lists that may be referenced for
compliance with this provision.

Consumer Information

For consistency, Sec. 668.43(a)(10) would implement the consumer
information portion of the statute within the existing framework and
using the definitions found in current regulations. The committee
discussed whether the statutorily required annual disclosure should be
a one-to-one notice provided directly to each student by the
institution. However, as the statute requires that most institutional
information in this section of the HEA instead be made readily
available to prospective and enrolled students, the information
regarding institutional policies and sanctions related to the
unauthorized distribution of copyrighted material would be handled in
the same manner (i.e., included in the list of institutional
information that an institution must make available pursuant to Sec.
668.43). The Department believes that the required disclosure of
institutional policies and sanctions related to the unauthorized
distribution of copyrighted materials can be met without imposing the
burden of a one-to-one notification on institutions.
There was some discussion by the committee of extending the
statutory provision to require an institution to disclose the required
information to employees of the institution in addition to students. As
the statute does not require disclosure of this information to
employees, this would not be mandated in the regulations. The
Department believes that employees of an institution are more likely to
be aware that unauthorized distribution of copyrighted material is
illegal and does not believe that the benefit of such disclosure would
justify the potential added burden to the institution. However, we
encourage institutions to make such information available to employees
and the general public if they believe it will be beneficial.

Consumer Information (Sec. Sec. 668.41 and 668.45)

Statute: Section 485(a) of the HEA lists the types of information
that institutions are required to make available to prospective and
enrolled students. Section 488 of the HEOA expands the list of consumer
information requirements in section 485(a)(1) of the HEA, and from that

[[Page 42394]]

expanded list, Team V discussed a number of the requirements, including
the following:
The placement and types of employment obtained by
graduates of the institution's degree or certificate programs;
The types of graduate and professional education in which
graduates of the institution's four-year degree programs enrolled; and
The retention rates of the certificate or degree seeking,
first-time, full-time, undergraduate students entering the institution.
Note that the information required by section 485(a)(1) of the HEA
addressing ``institutional policies and sanctions that relate to
copyright infringements'' and ``the fire safety report'' (that is
prepared by the institution pursuant to section 485(i) of the HEA) is
discussed elsewhere in this preamble.
Section 488 of the HEOA also amends the calculation procedures for
completion and graduation rates in section 485(a)(4) of the HEA that
address situations in which students leave school to serve in the Armed
Forces, on official church missions, or with a recognized foreign aid
service of the Federal Government. Section 488 of the HEOA also adds
section 485(a)(7) to the HEA, which directs an institution to
disaggregate its completion and graduation rate information by gender,
by each major racial and ethnic subgroup, and by recipients of several
types of Federal title IV aid--if the number of students in each such
subgroup or with each such status is sufficient to yield statistically
reliable information and reporting this information will not reveal
personally identifiable information about an individual student.
Current Regulations: Section 668.41 lists the types of information
that an institution must make available to enrolled and prospective
students (and in some cases, employees, prospective employees,
prospective student-athletes, the public, and others). This information
includes:
Financial assistance available to students;
The institution's completion and graduation rate;
An annual security report (including institutional
security policies and crime statistics that are described in Sec.
668.46);
The completion and graduation rates for student-athletes;
Athletic program participation rates and financial support
data; and
Institutional information (including the cost to attend
the institution, its academic programs and faculty, etc.).
Section 668.45 specifies how an institution must prepare the annual
completion or graduation rate for its certificate- or degree-seeking,
full-time, undergraduate students. It also addresses how an institution
must prepare a transfer-out rate if the institution's mission includes
providing substantial preparation for students to enroll in another
institution. An institution must make its completion or graduation
rate, and if applicable, its transfer-out rate available by July 1
following the 12-month period ending August 31 during which 150 percent
of the normal time for completion or graduation has elapsed for the
students on which the institution bases its calculations.
Proposed Regulations: In proposed Sec. 668.41(d), we would add
retention rate information, placement rate information, and information
on the types of graduate and professional education in which graduates
of the institution's four-year degree programs enroll, to the types of
information that an institution must provide to its enrolled and
prospective students. When reporting its retention rate, proposed Sec.
668.41(d) would require an institution to disclose the institution's
retention rate as reported to the Integrated Postsecondary Education
Data System (IPEDS). We have adopted IPEDS' definition of ``retention
rate'' in proposed Sec. 668.41(a) for this purpose. For its placement
information, the institution may use various sources of information
(such as State data systems, surveys, or other relevant sources).
However, if it calculates an actual placement rate, it must disclose
that rate. For the types of graduate and professional education in
which graduates of the institution's four-year degree programs enroll,
the institution also may use various sources of information (such as
State data systems, surveys, or other relevant sources). For both
placement information and the types of graduate and professional
education in which graduates of the institution's four-year degree
programs enroll, the institution would have to identify the source of
the information it discloses, as well as the time frames and
methodology associated with that information.
In addressing the requirement for an institution to make certain
information available to students or prospective students (and
sometimes the public), we have removed the words ``on request'' in
proposed Sec. 668.41(d) and (g)(1)(i). Similar words have been deleted
from proposed Sec. 668.43(a) and (b).
Under proposed Sec. 668.45, an institution's completion and
graduation rate information must be disaggregated by gender, by each
major racial and ethnic subgroup, and by whether or not the
institution's students received certain types of Federal student aid.
The disaggregation by receipt of aid is categorized by whether students
were--
Recipients of a Federal Pell Grant;
Recipients of a Federal Family Education Loan or a Federal
Direct Loan (other than an Unsubsidized Stafford Loan); and
Recipients of neither a Federal Pell Grant nor a Federal
Family Education Loan or a Federal Direct Loan (other than an
Unsubsidized Stafford loan).
The institution would report its completion and graduation rate
information in a disaggregated manner only if the number of students in
each category is sufficient to yield statistically reliable
information, and doing so would not reveal personally identifiable
information about an individual student. Otherwise, the institution
would note that it enrolled too few students in the affected category
to disclose the information with confidence and confidentiality.
In calculating its completion and graduation rate, an institution
normally counts students as completing or graduating if they have
completed or graduated by the end of the 12-month period ending August
31 during which 150 percent of the normal time for completion or
graduation from the program has elapsed. However, as proposed, if 20
percent or more of the certificate- or degree-seeking, full-time,
undergraduate students at the institution left school to serve in the
Armed Forces, to serve on official church missions, or to serve with a
foreign aid service of the Federal Government (such as the Peace
Corps), then the institution may recalculate the completion or
graduation rate of those students by adding to the 150 percent time
frame they normally have to complete or graduate, the time period the
students were not enrolled due to their service in one of these
specified categories.
Reasons: The proposed changes in Sec. Sec. 668.41 and 668.45 would
implement statutory changes to section 485 of the HEA made by section
488 of the HEOA. As specified in Sec. 668.41(d), institutions are
allowed to use various sources to compile information on placements and
on the types of graduate and professional education in which graduates
of the institution's four-year degree programs enroll. A number of the
non-Federal negotiators noted that this latitude to compile information
from various sources should not be compromised or otherwise qualified
by

[[Page 42395]]

requiring institutions to disclose methodologies used in compiling the
data. However, because the information can come from any number of
sources and may not be comparable to similar-looking information at
another institution, the Department believes it is important that the
institution disclose the source of the information, as well as the time
frames and methodology associated with it, when the institution
discloses that information to its enrolled and prospective students.
This will allow the student and prospective student recipients of the
information to make more informed decisions regarding their educational
choices.
Since the statute is silent about requiring an institution to
calculate an actual placement rate, or to disseminate that rate if it
calculates one, a number of non-Federal negotiators argued that the
regulations should remain silent in that regard. However, the
Department believes that disclosing placement rate information would be
beneficial to students and prospective students. If the institution
makes available placement rates that it has, students and especially
prospective students will be able to make more informed decisions about
enrollment in various programs at the institution. Therefore, when a
placement rate is voluntarily calculated by the institution, proposed
Sec. 668.41(d) would require the institution to disclose that rate
along with other placement information.
The words ``on request'' (or ``upon request'') were removed from
Sec. Sec. 668.41(d), 668.41(g)(1)(i), and 668.43(a) and (b) because
the Department believes that they do not reflect how institutions
currently operate in terms of making various types of information
available to their students, prospective students, and sometimes the
public. While it is true that an individual may not receive information
unless he or she asks about it, institutions, in essence, are
considered to ``make their information available'' by having it on a
Web site or in printed material without regard to whether any one
individual requests it or not. When an individual inquires about the
information in question, the institution would direct him or her to the
appropriate source.
The requirement in proposed Sec. 668.45 for an institution to
disaggregate its completion and graduation rate information by gender,
by each major racial and ethnic subgroup, and by receipt or nonreceipt
of certain types of Federal student aid is from section 485 of the HEA.
All of the negotiators agreed that the Department should use the IPEDS
racial and ethnic categories for this purpose, but several of them
raised the issue of how institutions should disaggregate the
information by receipt or nonreceipt of student aid. For example,
should a student be considered to have received aid if the student
received it at any time during his enrollment, or only during the
student's first year, or for some other period of time? The Department
and the non-Federal negotiators ultimately agreed that the question of
receipt of aid for this determination should be based on whether the
student received the aid during the time period when the student
entered the institution that is associated with the cohort of students
the student is a part of for purposes of the institution's calculation
of completion or graduation, retention, and transfer out rates. For
institutions with a predominate number of programs based on semesters,
trimesters, or quarters, this would be the fall term of the year the
student's cohort of certificate- or degree-seeking, first-time, full-
time undergraduate students first entered the institution. For other
institutions, this would be the period between September 1 of one year
and August 31 of the following year when the student's cohort of
certificate- or degree-seeking, first-time, full-time undergraduate
students first entered the institution.
It is possible that an institution could have a significant number
of its students interrupt their education to serve in the Armed Forces,
on church missions, or with a foreign aid service of the Federal
Government (e.g., the Peace Corps). Were that to occur, the normal
calculation of the institution's completion or graduation rate would
result in a misleadingly smaller rate. Thus, consistent with section
485 of the HEA, when 20 percent or more of the certificate- or degree-
seeking, full-time, undergraduate students at the institution leave
school to serve in one of the ways listed in Sec. 668.45(d)(1)(i)
through (iii), the institution may recalculate its completion or
graduation rate to take that fact into consideration. That is, when the
institution calculates its completion or graduation rate, it may add
the time period the students were not enrolled due to their service
time to the 150 percent time frame that students normally have to
complete or graduate.

Campus Safety Provisions

Hate Crime Reporting (Sec. 668.46(c)(3))

Statute: Section 488(e)(1)(c) of the HEOA amended section 485(f) of
the HEA to expand the list of hate crimes that institutions must report
to the Department to include larceny-theft, simple assault,
intimidation, and destruction, damage, or vandalism of property.
Current Regulations: Section 668.46(c)(3) of the Department's
regulations currently requires institutions to report as hate crimes
the occurrence of criminal homicide, sex offenses, robbery, aggravated
assault, burglary, motor vehicle theft, arson, and any other crime
involving bodily injury reported to local police agencies or a campus
security authority if there is manifest evidence that the victim was
intentionally selected on the basis of certain characteristics.
Proposed Regulations: We propose to revise Sec. 668.46(c)(3) to
add the crimes of ``larceny-theft,'' ``simple assault,''
``intimidation,'' and ``destruction/damage/vandalism of property'' to
the crimes that must be reported in hate crime statistics.
Additionally, we would update the definitions of the terms ``Weapons:
carrying, possessing, etc.,'' ``Drug abuse violations,'' and ``Liquor
law violations'' in appendix A to subpart D of 34 CFR part 668, which
are excerpted from the Federal Bureau of Investigation's Uniform Crime
Reporting Program, to reflect changes made by the FBI.
Reasons: The proposed regulations would implement the statutory
changes made by the HEOA by using the FBI's Hate Crime Data Collection
Guidelines in the Uniform Crime Reporting Handbook (available at http:/
/www.fbi.gov/ucr/hatecrime.pdf) to define the hate crimes to be
reported.

Definition of Test (Sec. 668.46(a))

Statute: Section 488(e)(1)(D) of the HEOA amended section 485(f) of
the HEA to require institutions to include a statement of policy
regarding their emergency response and evacuation procedures in the
annual security report. As part of this policy statement an institution
must describe how it will test its emergency response and evacuation
procedures on an annual basis. Current Regulations: Section 668.46(a)
contains definitions that apply to the requirements for institutional
security policies and the reporting of crime statistics.
Proposed Regulation: Under proposed Sec. 668.46(a), we would
define test for purposes of the emergency response and evacuation
procedures as ``regularly scheduled drills, exercises, and appropriate
follow-through activities, designed for assessment and evaluation of
emergency plans and capabilities.''
Reasons: This definition would clarify the meaning of test for the
purposes of complying with the statutory requirement that an
institution test its emergency response and evacuation

[[Page 42396]]

procedures. Following a recommendation from some of the non-Federal
negotiators, the definition of the term was drawn from the Emergency
Management Accreditation Program (EMAP) Standard, which was designed to
serve as a set of standards defining a quality emergency management
program and was collaboratively developed by numerous organizations
involved in emergency management and response.

Annual Security Report--Emergency Response and Evacuation Procedures
(Sec. 668.46(b))

Statute: Section 485(f) of the HEA outlines the elements that must
be included in an institution's annual security report. Section
488(e)(1)(D) of the HEOA added to section 485(f) of the HEA a
requirement that an institution must include a statement of policy
regarding emergency response and evacuation procedures in its annual
security report. This statement must describe how the institution will
immediately notify the campus community upon the confirmation of a
significant emergency or dangerous situation involving an immediate
threat to the health or safety of students or staff occurring on the
campus, unless the notification will compromise efforts to contain the
emergency.
Current Regulations: Section 668.46(b) delineates the elements that
must be included in an institution's annual security report.
Proposed Regulations: Proposed Sec. 668.46(b)(13) would require
institutions to include a statement of policy regarding their emergency
response and evacuation procedures in the annual security report.
Institutions must satisfy this requirement beginning with the annual
security report distributed by October 1, 2010.
Reasons: These new provisions implement the new statutory
requirement. We would require this statement of policy for the October
1, 2010 report because it is the first report due after these
regulations would go into effect. As institutions are expected to make
a good faith effort to comply with the statute in the absence of
regulations, institutions should be gathering this information in
preparation for the 2010 report.

Timely Warning and Emergency Notification (Sec. 668.46(e))

Statute: Section 485(f)(3) of the HEA requires institutions to make
timely warnings to the campus community on crimes considered to be a
threat to students and employees that are reported to campus security
or local police agencies. Section 488(e)(1)(D) of the HEOA added
section 485(f)(1)(J) to the HEA to require institutions to have a
policy for emergency notification of the campus community upon the
confirmation of a significant emergency or dangerous situation
involving an immediate threat to the health or safety of students or
staff occurring on the campus, unless the notification will compromise
efforts to contain the emergency.
Current Regulations: Section 668.46(e) describes the situations in
which an institution must send a timely warning to the campus community
to report on crimes that are considered by the institution to represent
a threat to students and employees.
Proposed Regulations: Proposed Sec. 668.46(e)(3) would clarify the
difference between the existing timely warning requirement and the new
requirement for an emergency notification policy. While a timely
warning must be issued in response to crimes specified in Sec.
668.46(c)(1) and (3), an emergency notification is required in the case
of an immediate threat to the health or safety of students or employees
occurring on campus, as described in proposed Sec. 668.46(g). The
proposed language would clarify that an institution that follows its
emergency notification procedures is not required to issue a timely
warning based on the same circumstances; however, the institution must
provide adequate follow-up information to the community as needed.
Reasons: Many of the non-Federal negotiators requested that the
regulations clearly explain the difference between a timely warning
circumstance and an emergency notification circumstance. The emergency
notification requirement applies to a wider range of threats, such as
crimes, gas leaks, highly contagious viruses, or hurricanes. Many non-
Federal negotiators also asked that the Department make it clear that
institutions may satisfy a timely warning requirement with an emergency
notification in appropriate circumstances to avoid inundating students
and employees with messages that may become ineffective. On the other
hand, some non-Federal negotiators also expressed concern that
providing insufficient information could jeopardize the safety of the
campus community, for instance, in a situation in which the emergency
or investigation is still developing.
To address these concerns, we are proposing to require an
institution that uses its emergency notification system to provide
follow-up information to the community as needed. The phrase ``as
needed'' was used to address the wide variety of threats that might
occur.

Annual Security Report--Emergency Response and Evacuation Procedures
(Sec. 668.46(g))

Statute: Section 485(f)(1)(J) of the HEA, added by the HEOA,
requires institutions to include a statement of policy regarding
emergency response and evacuation procedures in the annual security
report. This policy statement must describe how the institution will
immediately notify the campus community upon the confirmation of a
significant emergency or dangerous situation involving an immediate
threat to the health or safety of students or staff occurring on the
campus, unless the notification will compromise efforts to contain the
emergency.
Current Regulations: None.
Proposed Regulations: Proposed Sec. 668.46(g) would set out the
following elements that an institution must include in its statement of
policy describing its emergency response and evacuation procedures in
its annual security report:
Procedures to immediately notify the campus community upon
the confirmation of a significant emergency or dangerous situation
involving an immediate threat to the health or safety of students or
employees occurring on the campus.
A description of the process that the institution will use
to (1) confirm that there is a significant emergency or dangerous
situation, (2) determine the appropriate segment or segments of the
campus community to receive a notification, (3) determine the content
of the notification, and (4) initiate the notification system.
A statement that the institution will, without delay, and
taking into account the safety of the community, determine the content
of the notification and initiate the notification system, unless
issuing the notification will, in the professional judgment of
responsible authorities, compromise efforts to assist a victim or to
contain, respond to, or otherwise mitigate the emergency.
A list of the titles of the persons or organizations
responsible for carrying out the actions in proposed Sec.
668.46(g)(2).
Procedures for disseminating emergency information to the
larger community.
Procedures for testing its emergency response and
evacuation procedures on at least an annual basis. Such tests could be
announced or unannounced, would be publicized in conjunction with at
least one test per calendar year,

[[Page 42397]]

and would be documented, including a description of the exercise, the
date, time, and whether it was announced or announced.
Reasons: The proposed regulations are intended to ensure that
institutions have sufficiently prepared for an emergency situation on
campus, that they are testing these procedures to identify and improve
weaknesses, and that they have considered how they will inform the
campus community and other individuals, such as parents. While the non-
Federal negotiators generally agreed with these goals, some of them
expressed concern that institutions need to have flexibility to
appropriately respond to situations while maintaining a level of
accountability in the system.
To allow appropriate flexibility in the system, the Department has
not specified that institutions use a particular mode of communication,
but notes that institutions may and should have multiple methods of
communication with the campus community. For example, in the case of a
gas leak, an institution may determine that the most effective mode of
communication is a fire alarm, whereas in other situations it might be
best to use a text message system. The Department encourages
institutions to consider overlapping means of communication in case one
method fails or malfunctions. Additionally, institutions have the
flexibility to alert only the appropriate segment or segments of the
population that they determine to be at risk; for instance, only
notifying individuals in the building where there is a gas leak. This
provision is intended to guard against the possibility that too many
emergency notifications would lead some members of the campus community
to begin to ignore the notices, thus dampening its response to a
potentially dangerous situation. Institutions also have the flexibility
to list the organizations that may be best equipped to respond to
different situations, for instance, the health department may best
respond to an outbreak of a virus. Further, institutions would have a
great deal of flexibility in designing tests of the emergency
notification system, as a test, as defined in the proposed changes to
Sec. 668.46(a), could be done in many ways, such as by a tabletop
exercise or a test conducted on a campus-wide scale.
Parents and students affected by the shootings at the Virginia
Polytechnic Institute and State University in 2007 attended part of the
negotiations and discussed their experiences and opinions regarding how
the Department should regulate in this area. They emphasized the need
for institutions to keep parents and families informed in the case of
an emergency. Some non-Federal negotiators suggested that institutions
be encouraged to use Web sites, radio, and television stations to keep
the larger community apprised of emergency situations. Additionally, in
the case of an institution that uses a texting system to relay
emergency notification information, several non-Federal negotiators
suggested allowing parents to sign up to receive texts along with
students and employees.
Some non-Federal negotiators were concerned that an institution
could misinterpret these proposed regulations to mean that, as part of
its procedures, it should disclose all of the details of how it would
respond to any of a variety of situations. The negotiators noted that
this approach could potentially hamper law enforcement efforts to
address or investigate an emergency. In response, we note that the
proposed regulations would not require institutions to publish in great
detail how they would respond to specific emergencies. Finally, many
non-Federal negotiators raised concerns that institutions consider the
needs of students with disabilities in developing emergency response
and evacuation policies and procedures. The Department expects an
institution to consider the diverse needs of all members of the campus
community in developing or revising an emergency plan.

Definition of On-Campus Student Housing Facility (Sec. 668.41(a))

Statute: Section 488(g) of the HEOA added section 485(j) to the HEA
to require an institution that maintains an on-campus student housing
facility to establish, for students who reside in on-campus student
housing, a missing student notification policy that allows students to
confidentially register a contact person, and procedures to notify that
contact person if the student is missing for more than 24 hours.
Current Regulations: Section 668.41(a) contains definitions that
apply to 34 CFR part 668, subpart D.
Proposed Regulations: The proposed regulations would add a
definition of the term on-campus student housing facility to Sec.
668.41(a) to mean a dormitory or other residential facility for
students that is located on an institution's campus, as defined in
Sec. 668.46(a).
Reasons: The proposed definition would be added to clarify what is
meant by on-campus student housing facility and to link the meaning of
``on-campus'' to the existing regulatory definition of campus in Sec.
668.46(a), which is used for crime reporting under Sec. 668.46(c). For
the purposes of the fire safety reporting requirements under proposed
Sec. 668.49 and the missing student notification policies and
procedures requirements under proposed Sec. 668.46, a student housing
facility that is on property owned by an institution, even if the
building is owned and maintained by a student organization or other
party, would be considered an on-campus student housing facility. If
neither the property nor the building is owned by the institution, then
the student housing facility would not be covered by this definition.
While on-campus student housing facility is used in the statute in
reference to the new fire safety and missing student notification
provisions, the definition of on-campus student housing facility would
also apply to the existing crime reporting requirements in Sec.
668.46. The Department believes this approach will minimize confusion
and create less administrative burden for institutions.

Annual Security Report--Missing Student Notification Policy (Sec.
668.46(b) and (h))

Statute: Section 485(f) of the HEA, as amended by the section
488(g) of the HEOA, requires institutions that maintain an on-campus
student housing facility to establish, for students who reside in an
on-campus student housing facility, both a missing student notification
policy that allows students to confidentially register a contact
person, and procedures for notifying a missing student's contact
person.
Current Regulations: Section 668.46(b) delineates the elements that
must be included in an institution's annual security report.
Proposed Regulations: The proposed changes in Sec. 668.46(b)(14)
would require an institution to include its missing student
notification policy and procedures in its annual security report. This
would be required beginning with the annual security report distributed
by October 1, 2010.
Reasons: Some non-Federal negotiators felt that an institution
should have the flexibility to decide how and when to distribute its
missing student policies and procedures. The Department considered this
suggestion but agrees with other negotiators who argued that having the
information in the annual security report would enable students and
parents to more easily compare policies across institutions. We propose
to require that these policies and procedures be included in the
institution's annual security report, but note that institutions may
also distribute

[[Page 42398]]

these policies and procedures at other appropriate times, such as
during a new student orientation. This policy statement must be
included in the report that must be distributed by October 1, 2010
because it is the first report due after these regulations go into
effect. Institutions must make a good faith effort to comply with the
statute in the absence of regulations; therefore, institutions should
be gathering this information in preparation for the 2010 report.

Missing Student Notification Policy (Sec. 668.46(h))

Statute: Section 485 of the HEA, as amended by section 488 of the
HEOA, requires an institution that maintains an on-campus student
housing facility to establish, for students who reside in on-campus
student housing, a missing student notification policy that includes
notifying students that they can confidentially register an individual
to be contacted if the student is determined to be missing. The statute
requires an institution to advise students who are under 18 years old
and not emancipated that a custodial parent or guardian must be
notified if the student is determined to be missing. Further, all
students residing in an on-campus student housing facility must be
advised that, regardless of whether they register a contact person, the
local law enforcement agency will be notified in the event that the
student is determined to be missing.
Current Regulations: None.
Proposed Regulations: Proposed Sec. 668.46(h)(1) implements the
new statutory requirements, specifying that an institution's statement
of policy regarding missing student notification for students residing
in on-campus student housing facilities must include:
A list of the titles of the persons or organizations to
which students, employees, or other individuals should report that a
student has been missing for 24 hours;
A requirement that any official missing student report be
immediately referred to the institution's police or campus security
department or to the local law enforcement agency with jurisdiction in
the area;
The option for each student to identify a contact person
to be notified if the student is determined missing by the
institutional police or campus security department, or the local law
enforcement agency; and
A disclosure that contact information will be registered
and maintained confidentially.
Proposed Sec. 668.46(h)(1) would further require an institution to
advise students who are under 18 and not emancipated that if the
student is missing it will notify a custodial parent or guardian in
addition to any contact person designated by the student. All students
must also be advised that, regardless of whether they name a contact
person, the institution must notify the local law enforcement agency
that the student is missing, unless the local law enforcement was the
entity that determined that the student is missing.
Reasons: These new provisions would implement the statutory
requirements. Like the existing crime reporting regulations and the
proposed fire reporting regulations, these proposed regulations require
institutions to include a list of the titles of the persons or
organizations to which a student should be reported missing.
These regulations provide that only authorized campus officials,
and law enforcement officers in furtherance of a missing person
investigation, may have access to the confidential contact information
and that it may not be disclosed to others. This limit was proposed in
order to protect the privacy rights and safety of the student.

Missing Student Notification Procedures (Sec. 668.46(h))

Statute: Section 485 of the HEA, as amended by section 488(g) of
the HEOA, requires an institution that maintains an on-campus student
housing facility to establish procedures that the institution will
follow if a student who resides in on-campus student housing is
determined to be missing. The statute specifies time frames during
which certain actions must occur. When a student is reported missing,
the institution has 24 hours to inform the local law enforcement agency
with jurisdiction in the area where the student has been reported
missing. After the law enforcement agency determines that the student
is missing, the institution has 24 hours to notify the student's
contact person, if applicable.
Current Regulations: None.
Proposed Regulations: Proposed Sec. 668.46(h)(2) reflects the
statutory requirements.
Reasons: The proposed regulations reflect the new statutory
requirements. These regulations do not preclude the institution from
contacting the student's contact person or the parent immediately upon
determination that the student has been missing for 24 hours.

Annual Fire Safety Report (Sec. 668.41(e))

Statute: Section 488(g) of the HEOA amended section 485 of the HEA
to require institutions that maintain on-campus student housing
facilities to publish a fire safety report each year and provide a copy
of the report to the Secretary.
Current Regulations: None.
Proposed Regulations: Proposed Sec. 668.41(e) would provide that
institutions that maintain an on-campus student housing facility must
distribute an annual fire safety report, as described in proposed Sec.
668.49(b). In addition, we propose to revise Sec. 668.41(e) to create
publication requirements for the annual fire safety report that are
similar to the long-standing regulations for the annual security
report.
The proposed regulations would allow an institution to publish the
annual security report and the annual fire safety report together, as
long as the title of the document clearly states that it contains both
the annual security report and the annual fire safety report. If an
institution chooses to publish the reports separately, it would have to
include information in each of the two reports about how to directly
access the other report.
Reasons: We are proposing to require the same distribution method
for both the annual fire safety report and the annual security report
to reduce administrative burden and to make it easier for students and
parents to access the information. The Department believes that
providing one source for this information best ensures that students
and parents will find and review the material. Under the proposed
regulations, institutions would have the flexibility to choose whether
to combine the two reports; however, if the reports are combined, the
title of the combined document must make it clear that both the annual
fire safety report and the annual security report are included to give
both reports equal emphasis and to clarify that the fire safety
provisions are separate from the crime provisions. An institution that
chooses to publish the reports separately must provide information in
each report about how to directly access the other report to aid
students and parents in locating and comparing information across
institutions.

Annual Fire Safety Report--Definitions of Terms (Sec. 668.49(a))

Statute: Section 485(i)(1) of the HEA, as amended by section 488(g)
of the HEOA, specifies that the annual fire safety report must contain
statistics concerning the number of fires in the institution's on-
campus housing facilities; the cause of each fire; the number of
injuries and deaths related to each fire; and the value of property
damage caused by each fire.

[[Page 42399]]

Additionally, the annual fire safety report must include a description
of each on-campus student housing facility fire safety system and the
number of regular mandatory supervised fire drills.
Current Regulations: None.
Proposed Regulations: We are proposing to add new Sec. 668.49(a)
to define the following terms relevant to the fire safety reporting
requirements:
Cause of fire: The factor or factors that give rise to a
fire. The causal factor may be, but is not limited to, the result of an
intentional or unintentional action, mechanical failure, or act of
nature.
Fire: Any instance of open flame or other burning in a
place not intended to contain the burning or in an uncontrolled manner.
Fire drill: A supervised practice of a mandatory
evacuation of a building for a fire.
Fire-related injury: Any instance in which a person is
injured as a result of a fire, including an injury sustained from a
natural or accidental cause, while involved in fire control, attempting
rescue, or escaping from the dangers of a fire. The term ``person'' may
include students, faculty, staff, visitors, firefighters, or any other
individuals.
Fire-related death: Any instance in which a person (1) is
killed as a result of a fire, including death resulting from a natural
or accidental cause while involved in fire control, attempting rescue,
or escaping from the dangers of a fire; or (2) dies within one year of
injuries sustained as a result of a fire.
Fire-safety system: Any mechanism or system related to the
detection of a fire, the warning resulting from a fire, or the control
of a fire. This may include sprinkler systems or other fire
extinguishing systems; fire detection devices; stand-alone smoke
alarms; devices that alert one to the presence of a fire, such as
horns, bells, or strobe lights; smoke-control and reduction mechanisms;
and fire doors and walls that reduce the spread of a fire.
Value of property damage: The estimated value of the loss
of the structure and contents, in terms of the cost of replacement in
like kind and quantity. This estimate should include contents damaged
by fire, and related damages caused by smoke, water, and overhaul;
however, it does not include indirect loss, such as business
interruption.
Reasons: We have added these definitions to enable comparability
across institutions of the statistics that institutions are required to
report under section 485(i)(1) of the HEA. The definitions for cause of
fire, fire-related injury, fire-related death, and value of property
damage were drawn largely from the National Fire Incident Reporting
System (NFIRS), a standard national reporting system used by U.S. fire
departments to report fires and other incidents. The non-Federal
negotiators recommended, and we agreed, that we should use the NFIRS
definitions to remain consistent with definitions already used in the
field. The definition of fire drill was developed to capture the HEA
requirement that institutions report regular, mandatory, supervised
fire drills. Further, the definition of fire safety system was
developed through collaboration with experts in the fire safety field,
who advised that the definition should include the variety of systems
and mechanisms used to detect and alert someone to the presence of a
fire, reduce the spread of fire, and control and reduce the amount of
smoke from a fire.
The committee discussed the definition of fire at length.
Generally, the negotiators agreed that the critical elements of a
reportable fire are that it occurs in a place not intended to contain
the fire or involves any burning that is not under control. For
instance, under these proposed regulations, a fire in a trash can would
count as a fire for reporting purposes, even if the fire was still
under control, because a trash can is not intended to contain a fire. A
lit candle, by contrast, while possibly against the institution's
policies for candles in dorms, would not generally be considered a
reportable fire, as it is in a place intended to contain the fire and
is under control. However, if the flame from a lit candle were to
spread and become uncontrolled, it would be considered a reportable
fire. The definition of fire is also intended to capture situations in
which there is burning (not necessarily an open flame) that might
easily become a fire, such as a smoldering couch. Burning or other
flames can easily become a fire, at great risk to students and other
individuals.

Annual Fire Safety Report--Statistics (Sec. 668.49(b) and (c))

Statute: Section 485(i)(1), as amended by section 488(g) of the
HEOA, requires an institution to include in its annual fire safety
report statistics on the number of fires and the cause of each fire;
the number of injuries related to a fire that resulted in treatment at
a medical facility; the number of deaths related to a fire; and the
value of property damage caused by a fire. Section 485(i)(2) of the HEA
requires that an institution report these statistics to the Secretary.
Current Regulations: None.
Proposed Regulations: Proposed Sec. 668.49(b)(1) would require an
institution to report the statistics that it submits to the Department
in its annual fire safety report. The institution would have to provide
data for the three most recent calendar years for which data are
available. Proposed Sec. 668.49(c) would delineate the statutorily
required statistics.
Reasons: The proposed regulations would implement the statutory
requirements. The majority of the committee supported the position that
institutions should report statistics for the three most recent
calendar years to remain consistent with current reporting requirements
for crime statistics under Sec. 668.46(c). Moreover, the three year
time frame will better enable consumers to compare statistics across
institutions while helping to identify trends in the data. This
reporting requirement would be phased in beginning with the collection
of statistics for calendar year 2009 in the October 1, 2010 Annual Fire
Safety Report. Data would be collected for three subsequent calendar
years until three years are represented. The first report to contain
the full three years of data would be the report due on October 1,
2012.

Annual Fire Safety Report--Description of Policies (Sec. 668.49(b))

Statute: Section Sec. 485(i)(1) of the HEA, as amended by section
488(g) of the HEOA, requires that, in its annual fire safety report, an
institution must include a description of each on-campus student
housing facility fire safety system, including fire sprinkler systems;
the number of regular mandatory supervised fire drills; the
institution's policies on portable electrical appliances, smoking, and
open flames; procedures for evacuation; fire safety education and
training program policies; and plans for future improvements in fire
safety, if applicable.
Current Regulations: None.
Proposed Regulations: Proposed Sec. 668.49(b) would outline the
elements that an institution must disclose in its annual fire safety
report, including:
The fire statistics required by paragraph 485(i)(1)(A) of
the HEA;
A description of each on-campus student housing facility
fire safety system;
The number of fire drills held during the previous
calendar year;
Policies or rules on portable electrical appliances,
smoking, and open flames in student housing facilities;

[[Page 42400]]

Procedures for evacuation of student housing facilities in
the case of a fire;
Policies on fire safety education and training programs
provided to students, faculty, and staff, including a description of
the procedures that students and employees should follow in the case of
a fire;
For purposes of including a fire in the statistics in the
annual fire safety report, a list of the titles of each person or
organization to which students and employees should report that a fire
has occurred; and
Plans for future improvements in fire safety, if
determined necessary by the institution.
Reasons: These proposed regulations would implement the statutory
requirements for the annual fire safety report, and specify that an
institution must include: (1) A description of the procedures that
students and employees should follow in the case of a fire, and (2)
procedures for reporting fires that do not require a call to the fire
department, for instance, those that are discovered after the fact and
are no longer a threat to safety. In response to concerns expressed by
some negotiators that all fires, even those that have already been put
out, should be included in reported statistics, the proposed
regulations would require institutions to provide a list of the titles
of each person or organization to which such fires should be reported.

Fire Log (Sec. 668.49(d))

Statute: Section 485(i)(3) of the HEA, as amended by section 488(g)
of the HEOA, requires an institution that maintains an on-campus
student housing facility to maintain a log of all fires that occur in
on-campus student housing facilities, including the nature, date, time,
and general location of each fire. An institution must make annual
reports to the campus community on such fires.
Current Regulations: None.
Proposed Regulations: Proposed Sec. 668.49(d) would specify that
an institution that maintains an on-campus student housing facility
must maintain a written and easily understood fire log that records, by
the date that the fire was reported, any fire that occurred in an on-
campus student housing facility. The log would have to include the
nature, date, time, and general location of each fire. Further, the
proposed regulations would specify that additions or changes to the log
must be made within two business days of the receipt of the
information, and require that the log be available for public
inspection for the most recent 60-day period. Any portion of the log
older than 60 days must be made available within two business days of a
request for inspection. Finally, the proposed regulations would also
implement the statutory requirement that an institution make an annual
report to the campus community on the fires recorded in the fire log;
however, the proposed regulations specify that this requirement may be
satisfied by the annual fire safety report described in proposed Sec.
668.49(b).
Reasons: The proposed regulations would implement the statutory
requirement that an institution record all reportable fires in a fire
log. Many of the negotiators recommended that institutions have
flexibility in maintaining this log. Therefore, we have not specified a
format for the log, and we would allow institutions to determine
whether to combine the annual report to the campus community on the
fires in the fire log with the annual fire safety report. Many
negotiators also recommended, and we agreed, that the fire log follow
the requirements for the crime log. As a result, we have specified
requirements for how information in the fire log should be updated, in
accordance with the long-standing requirements for the crime log
described in Sec. 668.46(f).

Financial Assistance for Students With Intellectual Disabilities

Intellectual Disabilities

Institutional Eligibility and Eligible Program (Sec. Sec. 600.2,
600.4, 600.5, 600.6, and 668.8)

Statute: Section 485(a)(8) of the HEOA added section 484(s) to the
HEA to provide that a student with intellectual disabilities who
enrolls in a comprehensive transition and postsecondary program is
eligible to receive title IV, HEA program funds under the Federal Pell
Grant, FSEOG, and FWS programs. Under the newly added provision, the
student does not have to be a high school graduate (or have obtained a
GED, or have passed an ability-to-benefit test) and does not have to be
enrolled in a program that leads to a degree or certificate.
Current Regulations: Section 600.2 defines an educational program
as a legally authorized postsecondary program of organized instruction
or study that, in part, leads to an academic, professional, or
vocational degree, or certificate, or other recognized educational
credential.
Under the definitions of an institution of higher education (Sec.
600.4(a)(2)), proprietary institution of higher education (Sec.
600.5(a)(3)), and postsecondary vocational institution (Sec.
600.6(a)(2)), the institution is required to admit as regular students,
as defined in Sec. 600.2, only those persons who have a high school
diploma or its equivalent. In addition, in Sec. Sec. 600.4(a)(4),
600.5(a)(5), 600.6(a)(4), and the definition of an eligible program
under Sec. 668.8(c)(1) and (d)(1)(iii), the institution must provide
an educational program for which it awards a degree, certificate, or
other recognized credential or that prepares students for gainful
employment in a recognized occupation.
Proposed Regulations: Proposed Sec. Sec. 600.2 (paragraph (1)(i)
of the definition of educational program), 600.4(a)(4), 600.5(a)(5),
and 600.6(a)(4) would provide that an institution may provide a
comprehensive transition and postsecondary program for students with
intellectual disabilities. In addition, proposed Sec. 668.8(n) would
define a comprehensive transition and postsecondary program as an
eligible program if it is approved by the Secretary.
Reasons: The proposed regulations would implement the statutory
requirements by making it clear that an institution does not jeopardize
its participation in the title IV, HEA programs by admitting students
with intellectual disabilities who do not have a high school diploma or
its equivalent, or admitting students with intellectual disabilities
into non-degree or non-certificate programs. In addition, the proposed
regulations would specify that a comprehensive transition and
postsecondary program approved by the Secretary qualifies as an
eligible program.

Scope and Purpose (Sec. 668.230)

Statute: Section 485(a) of the HEOA added section 484(s) to the HEA
authorizing the Secretary to develop regulations allowing students with
intellectual disabilities to be eligible for funds under the Federal
Pell Grant, FSEOG, and FWS programs. New section 484(s)(3) of the HEA
authorizes the Secretary to waive any statutory provision applicable to
these programs, except needs analysis provisions, or waive any
institutional eligibility provisions, to ensure that students with
intellectual disabilities who enroll in comprehensive transition and
postsecondary programs remain eligible for this assistance.
Current Regulations: None.
Proposed Regulations: The proposed regulations would specify that
students with intellectual disabilities who enroll in comprehensive
transition and postsecondary programs are eligible for

[[Page 42401]]

assistance under the Federal Pell Grant, FSEOG, and FWS programs, and
would restate the Secretary's waiver authority by providing that,
except for provisions related to needs analysis, the Secretary may
waive any title IV, HEA program requirement related to these programs
or institutional eligibility.
Reasons: The proposed regulations would implement the statutory
provisions, and clarify that the Secretary's waiver authority may be
used to ensure that students with intellectual disabilities remain
eligible for Federal Pell Grant, FSEOG, and FWS program funds.

Definition of a Comprehensive Transition and Postsecondary Program
(Sec. 668.231)

Statute: Section 709 of the HEOA added section 760 to the HEA to
define a comprehensive transition and postsecondary program as a
degree, certificate, or non-degree program that--
Is offered by an institution of higher education;
Is designed to support students with intellectual
disabilities who are seeking to continue academic, career and
technical, and independent living instruction at an institution to
prepare for gainful employment;
Includes an advising and curriculum structure; and
Requires students with intellectual disabilities to
participate on not less than a half-time basis, as determined by the
institution, with that participation focusing on academic components
and occurring through one or more of the following activities:
Regular enrollment in credit-bearing courses with students
without disabilities.
Auditing or participating in courses with students without
disabilities for which the student does not receive regular academic
credit.
Enrollment in non-credit-bearing, nondegree courses with
students without disabilities.
Participation in internships or work-based training in
settings with students without disabilities.
Current Regulations: None.
Proposed Regulations: Proposed Sec. 668.231 would define a
comprehensive transition and postsecondary program by incorporating the
statutory provisions, but would add a provision that the program would
have to be delivered to students physically attending the institution.
The proposed regulations would also clarify that the program must
provide opportunities for students with intellectual disabilities to
participate in coursework and other activities with students without
disabilities.
Reasons: Proposed Sec. 668.231 would incorporate the statutory
requirements from section 760 of the HEA except for the proposed
addition and clarification described in the preceding Proposed
Regulations section. Some of the non-Federal negotiators initially
opposed the proposed requirement that a comprehensive transition and
postsecondary program must be delivered to students physically
attending the institution. The negotiators argued that students should
have the option of taking distance courses because they might be unable
to commute to a campus or because some courses might only be offered
online. Other negotiators and experts in the field argued that Congress
intended for students with intellectual disabilities to be integrated
into campus life as much as possible and did not want to allow distance
education to be the sole or main delivery method. The Department does
not wish to regulate to preclude all distance courses for students with
intellectual disabilities and may permit a limited number of courses to
be delivered via distance, as long as the institution explains why it
believes the course is applicable to, and benefits, students with
intellectual disabilities. Similarly, we wish to clarify that a
comprehensive transition and postsecondary program may include an
internship for students or other activities that are located off-
campus--the physically-attending requirement does not exclude these
activities.
With regard to students participating in one or more of the
identified activities with students without disabilities, an
institution has the flexibility to determine the activity or
combination of activities that is best aligned with student needs and
interests, as long as students with intellectual disabilities
participate in these activities for at least half the time that they
are enrolled in the program.
Some non-Federal negotiators suggested that comprehensive
transition and postsecondary programs might offer multiple ways for
students with intellectual disabilities to participate in campus life
beyond those that are delineated in the statute. In response, we
propose that a program provide students with opportunities to
participate in coursework and other activities with students without
disabilities, such as student government, clubs, social events, and
sports.

Definition of a Student With an Intellectual Disability (Sec. 668.231)

Statute: Section 709 of the HEOA added section 760 of the HEA to
define student with an intellectual disability as a student:
With mental retardation or a cognitive impairment
characterized by significant limitation in intellectual and cognitive
functioning and adaptive behavior as expressed in conceptual, social,
and practical adaptive skills; and
Who is currently, or was formerly, eligible for a free
appropriate public education (FAPE) (i.e., special education and
related services) under the Individuals with Disabilities Education Act
(IDEA).
Current Regulations: None.
Proposed Regulations: Proposed Sec. 668.231 would define student
with an intellectual disability as set forth in the statute, but
clarify that a student who was determined eligible for services under
the IDEA but was home-schooled or attended private school would also
meet this part of this definition.
Reasons: Proposed Sec. 668.231 would incorporate the statutory
requirements from section 760 of the HEA except for the proposed
clarification regarding students who are home-schooled or attended
private school.
While some non-Federal negotiators felt that the statute could be
read to include students with intellectual disabilities who are home-
schooled or attended a private school but were not determined eligible
for special education and related services under the IDEA, the
Department does not believe that the HEA provides this flexibility.
Under Sec. Sec. 612(a)(3), 612(a)(10)(A)(ii)(I) and 613(a)(1) of the
Individuals with Disabilities Education Act (IDEA) (20 U.S.C. 1221e-3,
1406, 1411-1419; 23 CFR part 304), State educational agencies (SEAs)
and local educational agencies (LEAs) are required to locate, identify
and evaluate all students with disabilities within the jurisdiction of
the State and LEA. In addition, under Sec. 614(a)(1)(B) of the IDEA,
LEAs and SEAs must assess students for eligibility for special
education and related services under the IDEA if requested by the
parent. These are ongoing responsibilities that extend to all children
residing in the State, or in the jurisdiction of the LEA, including
children attending private schools. To qualify for title IV aid
pursuant to Sec. 484(s) of the HEA, a student should obtain an IDEA
eligibility determination while the student is still age-eligible for
IDEA services from, (1) for students attending private elementary and
secondary schools, including home

[[Page 42402]]

schools if home schools are considered private schools under State law,
the LEA in which the private school is located, or (2) for students not
attending private elementary and secondary schools, the LEA that is
responsible for making available a FAPE to the student (generally, the
LEA in which the student resides).

Program Eligibility (Sec. 668.232)

Statute: Section 485(a)(8) of the HEOA adds section 484(s) to the
HEA to establish the eligibility of students with intellectual
disabilities who enroll in comprehensive transition and postsecondary
programs to receive aid under the Federal Pell Grant, FSEOG, and FWS
programs.
Current Regulations: None.
Proposed Regulations: Consistent with current procedures under
which an institution adds an additional program, an institution that
wishes to offer a comprehensive transition and postsecondary program
would have to apply and receive approval from the Secretary under
proposed Sec. 668.232. The proposed regulations outline the elements
that an institution must include in its application, including:
A detailed description of the comprehensive transition and
postsecondary program, addressing all of the components of the program
as defined in proposed Sec. 668.231;
The policy for determining whether a student enrolled in
the program is making satisfactory academic progress;
A statement of the number of weeks of instructional time
and the number of semester or quarter credit hours or clock hours in
the program, including the equivalent credit or clock hours associated
with noncredit or reduced credit courses or activities;
A description of the educational credential offered or
identified outcome or outcomes established by the institution for all
students enrolled in the program;
A copy of the letter or notice sent to the institution's
accrediting agency informing the agency of its comprehensive transition
and postsecondary program; and
Any other information the Secretary may require.
Reasons: Proposed Sec. 668.232 would incorporate the statutory
provisions from section 484(s) of the HEA. The Department would use the
requested information to determine whether to approve the institution's
program for funding under the Federal Pell Grant, FSEOG, and FWS
programs.
The requirement that an institution provide a copy of the notice
sent to its accrediting agency is intended only to ensure that the
accrediting agency is informed that the institution offers or will
offer a comprehensive transition and postsecondary program. The
accrediting agency would then decide whether to take any actions.
One of the non-Federal negotiators felt that an institution should
not have to set up a separate advising and curriculum structure for
students with intellectual disabilities. The Department will consider,
on a case-by-case basis, allowing an institution to use an existing
structure based on the institution's explanation of how that structure
is applicable to, and benefits, students with intellectual
disabilities.
Other negotiators asked whether the Department would approve a
comprehensive transition and postsecondary program developed to serve
the needs of a single student, as this is already the practice in the
field. The Department will consider, on a case-by-case basis, whether
to approve a comprehensive transition and postsecondary program
developed to serve the needs of a single student. However, an
institution would have to submit a separate application for each
comprehensive transition and postsecondary program for which it seeks
approval, even if the program is developed for only one student, as
each would be considered a separate program.

Student Eligibility (Sec. Sec. 668.32 and 668.233)

Statute: Section 484(s) of the HEA specifies that a student with an
intellectual disability must:
Be enrolled or accepted for enrollment in a comprehensive
transition and postsecondary program for students with intellectual
disabilities at an institution of higher education;
Be maintaining satisfactory progress in the program as
determined by the institution, in accordance with standards established
by the institution; and
Meet the student eligibility requirements in sections
484(a)(3), (4), (5), and (6) of the HEA, under which a student must not
be in default on any Federal student loans, must have filed a FAFSA,
must be a United States citizen or national, and, if the student was
convicted of fraud in obtaining funds under this title, must have
repaid those funds.
Current Regulations: Section 668.32 describes the requirements for
student eligibility for title IV, HEA program assistance. In part,
under this section a student must:
Be enrolled for the purpose of obtaining a degree or
certificate;
Have a high school diploma, a recognized equivalent of a
high school diploma, or have passed an ability to benefit test; and
Be making satisfactory progress according to the
institution's published standards for satisfactory progress that
satisfy the provisions of Sec. 668.16(e) and, if applicable, those
under Sec. 668.34.
Proposed Regulations: Proposed Sec. Sec. 668.32(n) and 668.233
would provide that a student with intellectual disabilities enrolled in
a comprehensive transition and postsecondary program may be eligible
for title IV, HEA program assistance under the Federal Pell Grant,
FSEOG, and FWS programs if--
The student is making satisfactory academic progress in
accordance with the institution's published standards for students
enrolled in the comprehensive transition and postsecondary program; and
The institution obtains a record from a local or State
educational agency that the student is or was eligible for special
education and related services under IDEA. If the student's record does
not indicate that the student has an intellectual disability, as
discussed in paragraph (1) of the definition of a student with an
intellectual disability in proposed Sec. 668.231, the institution
would have to also obtain documentation from another source that
identifies the intellectual disability.
Reasons: The proposed regulations would implement the statutory
requirements by clarifying that a student with an intellectual
disability is exempt from the requirements that he or she have a high
school diploma or its equivalent, and is making satisfactory academic
progress under Sec. 668.16(e) and Sec. 668.34, if applicable. Also,
because a student with an intellectual disability does not have to be
enrolled in a degree or certificate program, the student would be
eligible for a second Pell Grant in the same award year if the student
otherwise qualifies for that grant under proposed Sec. 690.67.
With respect to documentation establishing an intellectual
disability, there was some concern among the negotiators that
institutions would require updated evaluations that could be costly or
cost prohibitive. Proposed Sec. 668.233 would allow institutions to
accept the most recent documentation, even if it is more than a few
years old. Also, if available in the student's record and to better
understand a student's abilities and limitations, we encourage
institutions to consider using a student's summary of academic
achievements and functional performance, as described in 34 CFR
300.305(e)(3), which includes

[[Page 42403]]

recommendations on how to assist the student in meeting the student's
postsecondary goals.

Institutional Information (Sec. 668.43)

Statute: Section 485(a)(I) of the HEA specifies that institutions
must disseminate information about special facilities and services
available to students with disabilities.
Current Regulations: Section 668.43 requires an institution to
provide a description of any special facilities and services available
to disabled students.
Proposed Regulations: Proposed Sec. 668.43(a)(7) would change the
phrase ``any special facilities and services'' to ``the services and
facilities,'' and replace the phrase ``disabled students'' with
``students with disabilities.'' The proposed changes would also clarify
that a description of services and facilities for students with
disabilities must also contain the services and facilities available
for students with intellectual disabilities.
Reasons: The proposed changes reflect changes in terminology in the
special education and disability fields. Further, we wanted to clarify
that a description of the services and facilities available to students
with intellectual disabilities must be included in the description of
the services and facilities available to all students with
disabilities.

Part 675 Federal Work-Study Programs

Definition of Community Services (Sec. 675.2)

Adding the Field of Emergency Preparedness and Response

Statute: Section 441 of the HEOA amended the definition of
community services in section 441(c)(1) of the HEA to include the field
of emergency preparedness and response.
Current Regulations: Section 675.2(b) provides the definitions of
terms for the FWS Program, including the term community services. The
definition of community services includes a list of possible services
in fields such as literacy training and education tutoring that may be
considered community services under the FWS Program. The definition
does not provide a complete list of acceptable services, but highlights
certain services that may improve the quality of life for outside
community residents, particularly low-income individuals, or solve
particular problems related to their needs.
Proposed Regulations: We propose to revise the definition of the
term community services in Sec. 675.2(b) to include the field of
emergency preparedness and response to reflect the statutory
definition.
Reasons: This proposed regulatory change is needed to conform the
regulatory definition of community services with section 441(c)(1) of
the HEA.

Conforming FWS Payment Requirements to the Cash Management Regulations
(Sec. 675.16)

Handling Minor Prior-Year Charges
Statute: Under Part E--Need Analysis of the HEA (particularly
sections 471 through 473), a student's need for most Title IV, HEA
program funds for a period of enrollment during an award year is
determined by subtracting the expected family contribution (EFC) and
other estimated financial assistance for that same enrollment period
during the award year from the student's cost of attendance for the
same period. The cost of attendance is based on current award year
educational expenses. The EFC is the amount that can reasonably be
contributed toward meeting the student's educational expenses for the
period of enrollment during the award year for which a need
determination is made. The Title IV, HEA funds are awarded to defray
the educational costs for the award year.
Current Regulations: Under Sec. 675.16(a)(3)(iv), an institution
may use a student's current year FWS compensation to pay for minor
prior-award year charges if the charges are less than $100, or the
charges are $100 or more and the payment of those charges does not
prevent the student from paying his or her current educational costs.
In either case, the institution must first obtain the student's written
authorization. The cash management requirements in Sec. 668.164(d) for
the other title IV, HEA programs allow an institution to use a
student's current year title IV, HEA program funds to pay for minor
prior-year charges if the charges are not more than $200.
Proposed Regulations: Under the provisions in proposed Sec.
675.16(b)(1)(ii) and (b)(2), the FWS regulations are amended in three
ways regarding the use of current award year FWS funds to pay prior
award year charges. First, the amount of prior award year charges that
could be paid with current award year FWS funds would increase to not
more than $200. Second, the FWS provision that allows an institution to
pay for prior award year charges of $100 or more would be removed.
Finally, we clarify that the $200 limit applies to all title IV, HEA
program funds that an institution uses to pay prior-year charges. For
example, if an institution uses FWS funds in combination with other
title IV, HEA program funds to credit a student's account to satisfy
prior award year charges, the total amount of the funds used must be
$200 or less. We note that an institution is still required to obtain
the student's written authorization to credit FWS to the student's
account.
Reasons: The proposed changes are needed to conform the FWS payment
regulations to the cash management requirements in Sec. 668.164(d)
regarding the prior award year limit. When the Department amended the
regulations for minor prior award year charges under Sec. 668.164(d)
in November 1, 2007, for the other title IV, HEA programs, we failed to
make the conforming change for the FWS Program in Sec. 675.16.

Electronic Disbursements

Statute: The HEA does not address the issue of electronic
disbursement of FWS or other Title IV, HEA program funds.
Current Regulations: The current FWS regulations in Sec. 675.16(a)
provide that an institution may pay a student by check or similar
instrument that the student can cash on his or her own endorsement, by
initiating an electronic funds transfer (EFT) to the student's bank
account, or by crediting the student's account at the institution. If
an institution wishes to make an EFT or credit the student's account at
the institution, it must obtain the student's written authorization.
The current FWS regulations do not allow an institution to require a
student to have a bank account in order to be paid FWS compensation.
Also, the current FWS regulations do not address payments made via a
stored-value card.
Proposed Regulations: The proposed FWS regulations in Sec.
675.16(a)(1) would adopt the regulations in Sec. 668.164(c) for the
direct payment of FWS compensation. The provisions for issuing a check
and expanding the use of EFTs to bank accounts that underlie stored-
value cards and other transaction devices that already exist for the
other title IV, HEA programs would also apply to the FWS Program. The
proposed regulations would remove the FWS requirement that an
institution obtain a student's written authorization to make an EFT
payment and add a provision allowing an institution to issue a stored-
value card or similar device. The proposed regulations continue the
current requirement that an institution must obtain a student's written
authorization to credit FWS compensation to a student's account at the
institution for any purpose because

[[Page 42404]]

the funds are earnings and holding those funds without the student's
permission would be a garnishment of wages. Finally, the proposed FWS
regulations would allow an institution to establish a policy requiring
students to provide bank account information or open an account at a
bank of the student's choosing, as long as this policy does not delay
the disbursement of FWS earnings to the student. Thus, if the student
does not comply with the policy, the institution must still disburse
the funds to the student in a timely manner in another way. Further, an
institution is not allowed to refuse to hire a student who does not
comply with the policy to provide bank account information or open a
bank account, nor to fire him or her for that same reason. This policy
is based on section 445(c) of the HEA, which states that an institution
may, upon the request of a student, make a direct deposit to the
student's account.
Reasons: The proposed regulations eliminate inconsistencies and
otherwise harmonize the requirements in the FWS and cash management
regulations. Providing consistency among the title IV, HEA programs for
making direct payments to students would make the FWS Program easier
for institutions to administer and make the process easier for students
to understand.

Eliminating Separate Student Authorizations

Statute: The HEA does not address the issue of student written
authorizations for crediting FWS funds directly to the student's
account at the institution or holding FWS credit balances on behalf of
a student.
Current Regulations: Under Sec. 675.16(a), an institution must
obtain written authorization from the student to credit the student's
account at the institution with FWS funds and to hold a title IV credit
balance. The authorization to credit FWS funds to a student's account
at the institution must be separate from any other authorization. The
FWS written authorization may not be included as part of a list or in
combination with other types of authorizations signed by the student,
including authorizations for all the other title IV, HEA programs as
provided in Sec. 668.165. This requirement for a separate student
authorization to credit FWS funds to a student's account also applies
to the written authorization required to hold an FWS credit balance for
the student.
Proposed Regulations: Under the provisions in proposed Sec.
675.16(d), the FWS written authorization required to credit a student's
account at the institution or the written authorization required to
hold a credit balance for the student will no longer be required to be
separated from other authorizations.
Reasons: The proposed FWS change would allow the administrative
collection of the student authorizations required under the FWS Program
for crediting student accounts and holding credit balances at the
institution to be combined with the student authorizations required in
Sec. 668.165 for the other title IV, HEA programs. This combination of
student authorizations will make the collection process easier for both
the student and the institution.

Terms for the Work Colleges Program (Subpart C of Part 675)

Statute: The amendments made by the HEOA to section 448 of the HEA
replace the term work-learning each place it appears in the statute for
the Work Colleges Program with the term work-learning-service. In
addition, the name of the comprehensive student work-learning program
that a work college must have, was changed to the comprehensive student
work-learning-service program.
Current Regulations: Throughout subpart C of part 674, the current
Work Colleges Program regulations refer to the term work-learning or
the term comprehensive work-learning programs and the term
comprehensive student work-learning program is defined in Sec.
675.41(b).
Proposed Regulations: Under the proposed changes to the regulations
in subpart C of part 674, the term work-learning is replaced with the
term work-learning-service each place that it appears. Further, the
name of the defined term comprehensive student work-learning program in
Sec. 675.41(b) would be changed to comprehensive student work-
learning-service program.
Reasons: This change is needed to conform the wording in the Work
Colleges Program regulations to the wording used in the HEA. The
addition of the word service is important because it recognizes the
value of service as an intrinsic element and educational outcome of
work that is provided as part of the overall education program at a
Work College that benefits the college, the community, and the student.
The word service that was added as part of the term work-learning-
service in the HEA and now in the proposed regulations, refers to
uncompensated volunteer service or compensated service for work
performed for the good of the college community or the external
community beyond the campus. It includes work performed in the public
interest at a Federal, State, or local public agency, or at a private
nonprofit organization.

Additional Standards for the Definition of the Term Work College

Statute: The amendments made by the HEOA to section 448 of the HEA
amended the definition of work college. The term work college was
amended by adding additional standards that a public or private
nonprofit institution must meet to be eligible for this program. The
institution must be a four-year, degree-granting institution and must
require at least one-half of all of its full-time students to
participate in a comprehensive student work-learning-service program.
The institution must continue to have all of its resident students
participate in a comprehensive student work-learning-service program.
In addition, the institution must require the students to participate
in a comprehensive student work-learning-service program for at least
five hours each week or at least 80 hours during each period of
enrollment, except for summer school, an approved study abroad program,
or an externship program. A period of enrollment means a semester,
quarter, trimester, or a similar period.
Current Regulations: Section 675.41(a) defines the term work
college.
Proposed Regulations: Under proposed Sec. 675.41(a), the
definition of work college would now include the requirement that an
institution must be a four-year, degree-granting institution. The
proposed definition would also provide that the institution must have
at least one-half of all of its full-time students participate in the
required comprehensive work-learning-service program. In addition, all
of the students in that program must participate for a minimum of five
hours each week or a minimum of 80 hours during each period of
enrollment, except for summer school, an approved study abroad program,
or an externship program.
Reasons: The proposed additional requirements are needed to conform
the definition of a work college to the statutory definition.

Expanding FWS Community Service Jobs (Sec. Sec. 675.18(g) and
675.26(d)) Promoting Civic Education and Participation Activities

Statute: The amendments made by the HEOA to section 443 of the HEA
permit institutions to meet the FWS seven percent community service
expenditure requirement by using FWS funds to pay students employed in
projects that teach civics in schools, raise awareness of government
functions or resources, or increase civic participation.

[[Page 42405]]

If an institution decides to place FWS students in a community
service project performing civic education and participation
activities, it must to the extent practicable:
Give priority to the employment of FWS students in
projects that educate or train the public about evacuation, emergency
response, and injury prevention strategies relating to natural
disasters, acts of terrorism, and other emergency situations; and
Ensure that the FWS students performing these projects
receive the appropriate training to carry out the required educational
services.
The FWS students employed in community service projects performing
these civic education and participation activities may be paid for the
time spent in training and travel. Further, the FWS students employed
in community service projects performing civic education and
participation activities may be paid FWS compensation with a Federal
share that exceeds the regular 75 percent limit.
Current Regulations: The current FWS regulations do not address and
promote civic education and participation activities as a community
service project.
Proposed Regulations: Section 675.18(g) would be amended to
implement section 443 of the HEA that promotes the use of FWS funds to
employ FWS students in community service projects performing civic
education and participation activities. The proposed regulations would
provide that when a school decides to have FWS students perform these
activities, to the extent practicable, it must give priority to the
employment of students participating in projects that educate or train
the public about evacuation, emergency response, and injury prevention
strategies relating to natural disasters, acts of terrorism, and other
emergency situations. The institution, to the extent practicable, would
also have to ensure that the students receive the appropriate training
to carry out the educational services required.
Section 675.26(d) would be amended to implement the requirement in
section 443 of the HEA to allow the Federal share of the compensation
paid to FWS students performing the civic education and participation
activities in community service projects to exceed the regular 75
percent limit. These FWS students may be paid with a Federal share of
up to 100 percent.
Reasons: The proposed changes to the FWS regulations are needed to
add this new use of FWS funds and to promote the employment of FWS
students in community service projects performing civic education and
participation activities. Allowing institutions to pay FWS students
with a Federal share of up to 100 percent encourages institutions to
place students in community service projects performing civic education
and participation activities.
We note that the conference language in the HEOA urges FWS
participating institutions to improve the availability and quality of
community service job information to students and to improve their
outreach to community service agencies. The addition of this new use of
FWS funds to have students perform civic education and participation
activities in community service projects provides an opportunity for an
institution to make the above requested improvements and to meet the
seven percent community service expenditure requirement.

Flexible Use of FWS Funds (Sec. 675.18(i))

Paying Students Under Certain Conditions in the Event of a Major
Disaster

Statute: The amendments made by the HEOA added a new subsection (d)
to section 445 of the HEA. This new provision allows an eligible
institution located in any area affected by a major disaster to make
FWS payments to disaster-affected students under certain limited
conditions. The FWS payments may only be made for the period of time,
not to exceed one academic year, in which the disaster-affected
students were prevented from fulfilling their FWS work obligations due
to the major disaster.
Payments may be made to the disaster-affected students in an amount
equal to or less than the amount of FWS wages the students would have
been paid had the students been able to complete the work obligation
necessary to receive the FWS funds. Payments may not be made to any
student who was not eligible for FWS or was not completing the work
obligation necessary to receive the FWS funds prior to the occurrence
of the major disaster. Any payments made to disaster-affected students
must meet the applicable FWS matching requirements, unless the
Secretary has waived the matching requirements.
Section 445(d) of the HEA defines the term ``disaster-affected
student'' as a student enrolled at the institution who has received the
FWS award and earned FWS wages prior to the occurrence of the major
disaster, was prevented from working for all or part of the academic
year due to the major disaster, and was unable to be reassigned to
another FWS job after the major disaster. The amended HEA also provides
that the term ``major disaster'' has the meaning as defined in section
102(2) of the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (42 U.S.C. 5122(2)).
Current Regulations: The current FWS regulations do not provide for
the flexibility to pay FWS funds to disaster-affected students unable
to work due to a major disaster. Under the current regulations, there
is no exception to the FWS Program requirement that an FWS student may
never be paid FWS funds until the student has performed the work and
earned those funds.
Proposed Regulations: Section 675.18 would be amended by adding a
new paragraph (i) that allows an institution located in any area
affected by a major disaster to make FWS payments to disaster-affected
students. However, this one special exception to the basic requirement
that an FWS student may not be paid FWS funds until the student has
performed the FWS work has very specific conditions that must be met.
To apply this limited flexible use of FWS funds to pay disaster-
affected students an institution must be located in an area affected by
a major disaster. A major disaster must be declared by the President.
The counties or parishes covered by the declaration are provided by the
Federal Emergency Management Agency (FEMA).
The FWS payments may only be made for the period of time in which
the disaster-affected students were prevented from completing their FWS
work obligations due to the major disaster. The period of time cannot
exceed one academic year for this purpose. The FWS payments made to
disaster-affected students cannot exceed the amount of FWS wages the
students would have been paid had these students been able to complete
the FWS work obligation necessary to receive the FWS funds. The
institution in paying the FWS funds to the disaster-affected students
must make the appropriate match for the FWS Federal funds, unless the
Secretary has waived the matching requirements.
The disaster-affected students must have been eligible for FWS and
awarded FWS prior to the occurrence of the major disaster. The
disaster-affected students must have earned FWS funds and be completing
the FWS work obligation prior to the occurrence of the major disaster.
The disaster-affected students could not have been separated from their
FWS employment prior to the occurrence of the major disaster. The major
disaster must prevent the FWS students from working for a portion or

[[Page 42406]]

all of the academic year. In addition, the disaster-affected students
must be unable to be reassigned to other FWS jobs by the institution
after the occurrence of the major disaster.
Reasons: The proposed changes to the FWS regulations are needed to
add this new flexibility to pay disaster-affected students who are
unable to work because of a major disaster. The change would allow the
eligible FWS students unable to work due to a major disaster to still
receive the FWS funds that they need to help pay for educational costs.

Part 686 Teacher Education Assistance for College and Higher Education
(TEACH) Grant Program

TEACH Grant Program

Periods of Suspension (Sec. 686.41)

Statute: None.
Current Regulations: Section 686.41(a) provides that a TEACH Grant
recipient may be granted a suspension of the eight-year period required
for completing his or her teaching service obligation, in a low-income
school as a highly-qualified teacher in a high-need field, based on a
call or order to active military duty. The suspension ends upon the
completion of that military service.
Proposed Regulations: A TEACH Grant recipient who is called or
ordered to active military duty (or his or her representative) may
request a suspension of the eight-year period in increments not to
exceed three years. Under proposed Sec. 686.41(a)(2), a request for a
suspension of the eight-year period may be granted in one-year
increments. Proposed Sec. 686.41(a)(2)(ii) would allow a suspension of
the eight-year period for no more than three years. Once the recipient
has exceeded the three-year suspension period, the recipient (or his or
her representative) may request a discharge of all or a portion of his
or her teaching service obligation.
Reasons: The proposed regulations would no longer provide an
indefinite delay of the eight-year, service obligation period to a
TEACH Grant recipient who is called or ordered to active duty. Instead
a TEACH Grant recipient that exceeds the three-year suspension period
could qualify for a discharge of all or part of his or her teaching
service obligation as provided in proposed Sec. 686.42. The proposed
discharge provides a greater benefit than a suspension of the service
obligation to a TEACH Grant recipient who is called or ordered to
active military duty for extended periods.

Discharge of Agreement To Serve (Sec. 686.42)

Statute: Section 420N(d)(2) of the HEA, as amended by the HEOA,
requires the Secretary to establish categories of extenuating
circumstances under which a TEACH Grant recipient who is unable to
fulfill all or a portion of his or her teaching service obligation may
be excused from fulfilling that portion of the teaching service
obligation.
Current Regulations: None.
Proposed Regulations: As provided in proposed Sec. 686.42(c)(2),
the recipient may qualify for a proportional discharge of his or her
service obligation based on the number of years the recipient has been
called or ordered to active military duty. The recipient would qualify
for a one-year discharge if the call or order to active military duty
is for more than three years. Similarly, the recipient would qualify
for a two-year, three-year, or total discharge if the call or order to
active military duty is for more than four, five, or six years,
respectively.
To obtain the discharge, the recipient (or his or her
representative) would be required under Sec. 686.42(c)(3) to provide
the Secretary:
A written statement from his or her commanding or
personnel officer certifying that the recipient is on active duty in
the Armed Forces, the date on which that service began, and the date
the service is expected to end; and
A copy of his or her official military orders and military
identification.
The term Armed Forces would be defined in Sec. 686.42(c)(4) to
mean the Army, Navy, Air Force, Marine Corps, and Coast Guard.
Finally, under proposed Sec. 686.42(c)(5), the Department would
notify a TEACH Grant recipient or his or her representative of the
decision reached on his or her request for a partial or full discharge
of the teaching service obligation. The grant recipient would be
responsible for fulfilling any teaching service obligation that is not
discharged.
Reasons: The proposed regulations in Sec. 686.41 implement the
statutory requirement in section 420N(d)(2)of the HEA by providing for
a discharge of a teaching service obligation based on a call or order
to active military duty.
Under current Sec. 686.42(a) and (b), a TEACH Grant recipient may
have his or her teaching service obligation discharged upon the
recipient's death or if he or she becomes totally and permanently
disabled. The Department believes it would be appropriate to also
provide a discharge of a TEACH Grant recipient's teaching service
obligation in cases when the grant recipient cannot comply with his or
her agreement to teach because of a call or order to active military
duty for an extended period of time. TEACH Grant recipients who are
called to active military duty for an extended period of time may
return from their military service with teaching credentials that are
no longer valid, may require retraining to meet the standards
established by the State before they can be placed in a teaching
position, or may otherwise encounter difficulties in obtaining a
teaching position that could be used to fulfill their teaching service
obligation.
Several non-Federal negotiators believed that additional
extenuating circumstances should also be considered. Some of them
suggested that we expand the categories of extenuating circumstances to
include economic hardship. Noting that teachers were being laid off in
a number of areas, they argued that TEACH Grant recipients might not be
able to find full-time employment in their high-need fields due to the
current economic conditions, which they felt might continue for some
time. While we are sympathetic to these concerns, the Department
believes that, because a TEACH Grant recipient has eight years to
complete a four-year teaching service obligation, he or she should
still be able to fulfill that obligation notwithstanding the fact that
he or she may encounter a temporary hardship in locating a suitable
position.

Part 690 Federal Pell Grant Program

Two Federal Pell Grants in an Award Year (Sec. Sec. 690.63(h), 690.64,
and 690.67)

Statute: Section 401(b)(5) of the HEA, as amended by the HEOA,
provides that a student may receive up to two consecutive Federal Pell
Grant Scheduled Awards during a single award year if the student is
enrolled at least half-time for more than one academic year, more than
two semesters, or the equivalent time during a single award year. The
student must also be enrolled in a certificate, associate degree, or
baccalaureate degree program. Section 484(s)(3) of the HEA provides the
authority to waive this provision for students with intellectual
disabilities who enroll in a comprehensive transition and postsecondary
program.

Student Eligibility for a Second Scheduled Award (Sec. 690.67(a))

Current Regulations: The current regulations provide that the
Secretary announces in the Federal Register whether an institution may
award up to

[[Page 42407]]

a second Federal Pell Grant Scheduled Award to a student in a
particular award year. An institution may award up to a second
Scheduled Award if a student is enrolled as a full-time student in an
eligible program that leads to an associate or baccalaureate degree and
the student has completed the credit hours and weeks of instructional
time in an academic year leading to his or her associate or
baccalaureate degree program. If an institution awards a student a
second Scheduled Federal Pell Grant award, the institution must make
that award to all students who qualify.
Proposed Regulations: The proposed regulations would amend Sec.
690.67 to provide that a student would be eligible for a second
Scheduled Award if the student has earned in an award year at least the
credit or clock hours of the first academic year of the student's
eligible program, and is enrolled as at least a half-time student in a
program leading to a bachelor's or associate degree or other recognized
educational credential (such as a postsecondary certificate or
diploma), except as provided in proposed 34 CFR part 668, subpart O for
students with intellectual disabilities.
Reasons: We are proposing these requirements to encourage a student
to accelerate the completion of his or her program of study within a
shorter time period than the regularly scheduled completion time, i.e.,
the published length of the program. Providing up to two Federal Pell
Grants to students for attendance in all payment periods in an award
year supports this acceleration. We believe that, by encouraging the
student to complete the credit or clock hours in the academic year
expeditiously, the benefit of most students' second Scheduled Awards
would be maximized.
We initially proposed that a student would be required to complete
the credit or clock hours of the first academic year before receiving a
second Scheduled Award or to complete the credit or clock hours of the
first academic year in the payment period for which he or she is
receiving a payment from the second Scheduled Award in the award year.
We further proposed to amend Sec. 690.80 to provide that if the
projected enrollment status of a student enrolled in a term-based
program changed at any time during a payment period in which the
student is receiving a payment from a second Scheduled Award in an
award year, the institution would be required to recalculate the
student's payment for the payment period. This recalculation
requirement would ensure that a student who is not accelerating does
not receive the benefit of a payment from a second Scheduled Award.
We did not propose any similar recalculation requirement for clock-
hour and nonterm-credit-hour programs. A recalculation requirement
would not be relevant to these programs. A student enrolled in one of
these programs must successfully complete the credit or clock hours of
a payment period to progress to the next payment period. Thus, a
student is required to earn the credit or clock hours of the first
academic year to advance to a payment from a second Scheduled Award.
Some of the non-Federal negotiators objected to the recalculation
requirements for term-based programs. These non-Federal negotiators
were concerned that the requirements would be administratively
burdensome. They also objected to the difference in treatment compared
to the requirements for recalculations for payments from a student's
first Scheduled Award in the award year. In addition, some of these
non-Federal negotiators believed that the satisfactory academic
progress standards in 34 CFR 668.16(e), as well as the new limitation
under section 401(c)(5) of the amended HEA that a student's lifetime
eligibility is limited to nine Scheduled Awards, provided sufficient
minimum standards for ensuring a student's advancement in his or her
eligible program. We are not convinced that the satisfactory progress
standards at most institutions are robust enough for this purpose or
that the lifetime limitation on eligibility is short enough to provide
a sufficient basis for encouraging students to complete their eligible
programs in less than the regularly scheduled completion time.
As a result of the non-Federal negotiators objections to the
requirements for recalculations for changes in enrollment status, we
proposed an alternative approach. Instead of recalculation, we proposed
that a student in a term-based program must earn the credit or clock
hours in an academic year before the student would be eligible for any
payment from a second Scheduled Award. This proposal would be similar
to the current treatment of students in clock-hour and nonterm-credit-
hour programs.
Some of the non-Federal negotiators objected to the proposed
alternative approach. They did not believe it was appropriate to
require a student in a term-based program to earn the credit or clock
hours of the first academic year for the student to be eligible for a
second Scheduled Award. In addition, the non-Federal negotiators
disagreed with our understanding that acceleration means that a student
would complete his or her eligible program in less than the regularly
scheduled period for completion. The non-Federal negotiators believed
that acceleration meant that a student was earning additional credit or
clock hours beyond the first academic year in the award year without
respect to whether the additional hours were sufficient for the student
to advance significantly toward the completion of his or her eligible
program. Some of these non-Federal negotiators believed that the
statute intended acceleration to apply only on a student-by-student
basis. For example, a student would be accelerating by completing his
or her eligible program in a shorter period of time than the student
would otherwise have completed the program without reference to any
objective standard. We do not agree. We do not believe the statute
limits the implementation of these requirements in this manner, nor do
we believe that adopting the non-Federal negotiators' position would
provide the necessary encouragement for a student to accelerate the
completion of his or her educational program.
As an alternative to our proposal, the non-Federal negotiators
again advanced their belief that the satisfactory progress standards
and the nine-Scheduled-Award limit were sufficient. However, they did
not provide any further information on how these requirements would
serve to advance a student's acceleration in his or her eligible
program.
Consensus was not reached and the Department decided to move
forward with the proposal to require a student to earn the credit or
clock hours in the (first) academic year before the student would be
eligible for any payment from a second Scheduled Award in the award
year.

Transfer Students (Sec. 690.67(b))

Current Regulations: None.
Proposed Regulations: The proposed regulations would provide that
an institution must determine the credit or clock hours that a transfer
student has earned at a prior institution during the award year based
on the Federal Pell Grant disbursements that the student received at
the prior institution during the award year in relation to the
student's Scheduled Award at that prior institution. The credit or
clock hours that the student would be considered to have earned would
be in the same proportion to credit or clock hours in the current
institution's academic year as the disbursements that the student has
received at the prior institution in the award year are in proportion
to the

[[Page 42408]]

student's Scheduled Award at the prior institution.
If the student's first Scheduled Award has been disbursed at
institutions previously attended, the student would be considered to
have completed the credit or clock hours of the first academic year in
the award year. If less than the first Scheduled Award has been
disbursed at prior institutions, the student's credit or clock hours
earned would be determined by multiplying the payments of the student's
Scheduled Award disbursed at a prior institution during the award year
by the number of credit or clock hours in the current institution's
academic year and dividing the product of the multiplication by the
amount of the Scheduled Award at the prior institution. If the student
previously attended more than one institution in the award year, the
institution would add the results of the calculation for each prior
institution. For example, a transfer student received $2,000 of his or
her first Scheduled Award of $4,000 while enrolled at a prior
institution. The student's current institution defines its academic
year, in part, as 24 semester hours. To determine the number of credit
hours the student is considered to have earned in the award year at the
prior institution, the current institution performs the following
calculation:
[GRAPHIC] [TIFF OMITTED] TP21AU09.000

In this case the student would be considered to have earned 12
semester hours of the first academic year in the award year.
Reasons: We are proposing these changes because we believe that
they limit the administrative burden for institutions in implementing
the requirements for determining the eligibility of transfer students.
During negotiated rulemaking, the non-Federal negotiators noted
that our initial proposal did not address the eligibility status of
transfer students. As a result, we proposed that, unless the
institution had information to the contrary such as a transcript from
the other institution, an institution could determine the credit or
clock hours that a transfer student earned at another institution
during the award year based on the Federal Pell Grant disbursements
that the student received at the other institution during the award
year in relation to the student's Scheduled Award at that institution.
Many of the non-Federal negotiators were concerned about the
difficulties for institutions administering the Federal Pell Grant
Program. Specifically, the non-Federal negotiators were concerned that
transcripts that might be in the registrar's office might not always be
readily available to the financial aid office in a form or process
conducive to implementing these provisions.
Based on the non-Federal negotiators' concerns, we have revised our
proposal to provide that an institution would rely solely on assuming
the credit or clock hours earned in an award year based on the Federal
Pell Grant disbursements received from the student's Scheduled Award at
another institution.

Special Circumstances (Sec. 690.67(c))

Current Regulations: None.
Proposed Regulations: The proposed regulations would provide that a
financial aid administrator may waive the requirement that a student
complete the credit or clock hours in the student's first academic year
in the award year if the administrator determines that the student was
unable to complete the clock or credit hours in the student's first
academic year in the award year due to circumstances beyond the
student's control. The financial aid administrator would be required to
make and document the determination on an individual basis. The
proposed regulations also provide examples of circumstances that may be
considered beyond the student's control, such as withdrawing from
classes due to illness, and those that would not be considered beyond
the student's control, such as failing to register for a necessary
class to avoid a particular instructor.
Reasons: During negotiated rulemaking, the non-Federal negotiators
noted that our initial proposal did not provide any authority for a
financial aid administrator to consider whether there were special
circumstances affecting a student's ability to complete the credits or
clock hours to be eligible for a payment from a second Scheduled Award.
We agree.

Nonapplicable Credit or Clock Hours (Sec. 690.67(d))

Current Regulations: None.
Proposed Regulations: We are proposing that, in determining a
student's eligibility for a second Scheduled Award in an award year, an
institution may not use credit or clock hours that the student received
based on Advanced Placement (AP) programs, International Baccalaureate
(IB) programs, testing out, life experience, or similar competency
measures.
Reasons: A student's eligibility for a second Scheduled Award is
based, in part, on the student's progress in earning the credits or
clock hours of the first academic year in the award year. This
provision ensures that only those credits or clock hours earned in the
award year are considered in determining the student's eligibility.

Payment Period in Two Award Years (Sec. 690.64)

Current Regulations: Under current Sec. 690.64, if a payment
period is scheduled to occur in two award years, an institution must
consider this ``crossover'' payment period to occur entirely in one
award year. In general, an institution may assign a crossover payment
to either award year. The assignment, for example, may be on a student-
by-student basis, or the institution may establish a policy of
assigning the crossover payment period of all students to the same
award year. If more than six months of a crossover payment period are
scheduled to occur within one award year, the institution must assign
the payment period to that award year.
Proposed Regulations: Under proposed Sec. 690.64, if a student is
enrolled in a crossover payment period as a half-time or less-than-
half-time student, the current requirements generally would apply.
If a student is enrolled as a three-quarter-time or full-time
student, an institution must consider the payment period to be in the
award year in which the student would receive the greater payment for
the payment period based on the information available at the time that
the student's Federal Pell Grant is initially calculated. If the
institution subsequently receives information that the student would
receive a greater payment for the payment period by reassigning the
payment to the other award year, the institution would be required to
reassign the payment to the award year providing the greater payment.
A student may request that the institution place the payment period
in the award year that can be expected to

[[Page 42409]]

result in the student receiving a greater amount of Federal Pell Grants
over the two award years in which the payment period is scheduled to
occur. If the student makes that request, the institution must assign
the payment period to that award year.
Reasons: To the extent practicable, we believe that a crossover
payment period should be assigned in a way that maximizes a student's
eligibility over the two award years in which the payment period is
scheduled to occur.
Initially, we proposed that a crossover payment period should be
assigned to the award year in which the student receives the greater
payment for the payment period based on the information available to
the institution at the time of disbursement. If, subsequent to that
date, the institution determines that the student would receive a
greater payment for the payment period by reassigning the payment to
the other award year, the institution may reassign the payment period
to the other award year.
The non-Federal negotiators objected to the mandatory assignment of
a crossover payment period to the award year with the higher payment.
They objected because, based on the student's enrollment status in a
term-based program, there may be a decrease in the overall amount the
student would receive for the two award years of the crossover payment
period. For example, a student is enrolled in a traditional semester-
based program with an academic year that is defined, in part, as 24
semester hours. The student attends half-time, 6 semester hours, for a
summer term that must be assigned to the second award year due to the
higher payment and enrolls for 12 semester hours in the fall semester.
The student would not have earned the semester hours of the first
academic year at the end of the fall semester. When the student enrolls
full-time in the spring semester, the student is not yet eligible for a
payment from the second Scheduled Award. Thus, the student would
receive only the remaining one-fourth of his or her first Scheduled
Award, instead of a full payment of one-half of a Scheduled Award.
However, if the student's summer crossover payment period were assigned
to the first award year of the crossover payment period, the student
would be eligible for a full payment of one-half of a Scheduled Award
for that following spring semester. The difference for the spring
semester between a payment of one-fourth of a Scheduled Award under the
first approach, and one-half of a Scheduled Award under the second
approach, would usually more than make up for the generally smaller
amount that the student would receive for the summer term if it were
assigned to the first award year.
In addition, the non-Federal negotiators believed that determining
the higher payment for the crossover payment period at the time of
disbursement created significant administrative difficulties, since the
higher disbursement amount might be determined not only by a change in
the Scheduled Award for the award year, but also by a change in a
student's expected family contribution (EFC). As an alternative, they
suggested that the determination of the higher amount be set based
solely on the higher Payment or Disbursement Schedule. They believed
that this approach would not require a financial aid administrator to
track changes in a student's EFC.
As a result of the non-Federal negotiators' concerns regarding the
assignment of crossover payment periods for term-based programs, we
provided an alternative proposal that is the basis for these proposed
regulations. In the case of a half-time student or less-than-half-time
student, we do not believe the difference in the payments from each
award year for a crossover payment period will usually be a significant
amount. In these situations, we do not believe it would be necessary to
mandate assignment based on the higher payment. In addition, in those
circumstances where the assignment by the institution may not be to the
student's advantage, the student may request a determination by the
institution of the assignment that would provide the student the
greater amount of Federal Pell Grants over the two award years. The
institution must comply with the student's request and must reassign
the crossover payment period if the reassignment would be expected to
provide the student the greater amount of Federal Pell Grants over the
two award years.
With regard to a student enrolled at least three-quarter-time, we
believe that, generally, a student would significantly benefit from a
crossover payment period being assigned to the award year in which the
student would receive the greater payment for the payment period. If a
student is enrolled at least three-quarter-time in a crossover payment
period that is assigned to the second award year, the student would
generally be able to complete the credit hours of an academic year in
the next semester or next two quarters by taking slightly more than the
minimum course load required for a full-time student and would be able
to qualify for a full payment from the second Scheduled Award in the
subsequent spring term. As in the case of a student enrolled half-time
or less, the student may request that the institution assign the
crossover payment period to the award year that would be expected to
provide the student the greater amount of Federal Pell Grants over the
two award years, and the institution must comply with the student's
request.
Some of the non-Federal negotiators were concerned that the time
for a determination of the award year to which a crossover payment
period must be assigned may prevent institutions from closing out the
earlier of the two award years in which the crossover payment period is
scheduled to occur. They suggested that the proposed regulations
include a provision for a deadline for such determinations. We agree
that an institution must be able to close out the earlier award year in
a timely manner, but we do not believe a specific reference is
necessary in these proposed regulations. Sections 690.12, 690.61(b),
and 690.83 and 34 CFR part 668.60 already provide the necessary
authorities to establish deadlines for closing out application
processing and Federal Pell Grant financial reporting for an award
year. If a student's higher payment for a crossover payment period is
from the earlier award year, the application and financial reporting
deadlines would still be applicable. If the determination occurred
subsequent to those deadlines, no further action would be required of
the institution. If a student's higher payment for a crossover payment
period is from the later award year, the applicable deadlines would be
those for the later award year.
The Department specifically invites public comment on the proposal
to require institutions to initially place the crossover payment period
in the award year that results in the payment of the higher amount to a
student enrolled at least three-quarter-time (and to allow the student
to request that the payment period be placed in the other award year if
that placement would be expected to result in the student receiving a
greater amount of Federal Pell Grant aid over the two award years in
which the payment period is scheduled to occur). Further, the
Department is interested in data from past practices and experiences of
institutions in the placement of crossover payment periods and in
whether, and to what degree, this proposal will burden or otherwise
adversely affect institutions' administration of the Federal Pell Grant
Program.

[[Page 42410]]

Payment From Two Scheduled Awards (Sec. 690.63(h))

Current Regulations: None.
Proposed Regulations: Under Sec. 690.63(h) of the proposed
regulations, if a student is eligible for the remaining portion of a
first Scheduled Award in an award year and for a payment from the
second Scheduled Award, the student's payment would be calculated using
the annual award for his or her enrollment status for the payment
period. The student's payment would be the remaining amount of the
first Scheduled Award being completed plus an amount from the second
Scheduled Award in the award year up to the total amount of the payment
for the payment period.
Reasons: In certain circumstances, a student may, within the same
payment period, be completing his or her eligibility for the remaining
balance of the first Scheduled Award in the award year while also
having eligibility to receive a payment from the second Scheduled
Award. We have identified two circumstances in which a student may be
paid from two Scheduled Awards in a payment period. One circumstance
would be if the institution determined, under proposed Sec. 690.67(c),
that a student was unable to earn the credits in the first academic
year due to special circumstances beyond the control of the student.
The other circumstance would be that a student completed the hours of
the first academic year but had not received all of his or her first
Scheduled Award. This provision would provide guidance to institutions
in calculating a student's payment for the payment period in these
circumstances and would ensure that eligible students receive their
awards.

Maximum Federal Pell Grant for Children of Soldiers (Sec. 690.75(e))

Statute: Section 401(f)(4) of the HEA provides that a student whose
parent or guardian died as a result of performing military service in
Iraq or Afghanistan after September 11, 2001, is deemed to have a zero
expected family contribution (EFC) for purposes of the Federal Pell
Grant Program. The HEA further directs the Secretary of Veterans
Affairs and the Secretary of Defense to provide necessary information
to the Secretary of Education to carry out this provision.
Current Regulations: None.
Proposed Regulations: Under proposed Sec. 690.75(e), a student
whose parent or guardian was a member of the Armed Forces of the United
States and died as a result of performing military service in Iraq or
Afghanistan after September 11, 2001, would automatically receive a
zero EFC for purposes of the Federal Pell Grant Program if he or she
was under 24 years old or enrolled in an institution of higher
education at the time of the parent's or guardian's death.
Reasons: These proposed regulations would implement the statutory
provisions. Some of the negotiators objected to our initial proposal
that a student must have an EFC in the numerical range that would make
a student eligible for a Federal Pell Grant to qualify for a maximum
Federal Pell Grant. The negotiators believed that the Secretary would
be adding an additional student eligibility requirement that the
statute did not provide. Based on the non-Federal negotiators
objections and our belief that any student should receive a zero EFC if
the student's parent or guardian died as a result of performing
military service in Iraq or Afghanistan after September 11, 2001, we
removed the proposal that a student must have an initial Federal Pell
Grant EFC that makes him or her eligible in order to qualify for a zero
EFC under this provision.
The non-Federal negotiators also objected to the Secretary's
position that an eligible student would be considered to have a zero
EFC rather than the maximum Federal Pell Grant Scheduled Award. We do
not agree. The statute explicitly states that an eligible student is
deemed to have an EFC of zero.
We are not proposing any regulations in relation to the Secretary
of Veterans Affairs and the Secretary of Defense providing the
necessary information to the Secretary of Education to carry out this
provision, nor will this provision require any additional questions on
the Free Application for Federal Student Aid (FAFSA). Once a student
completes the FAFSA, the Secretary of Education will perform a data
match with the Department of Defense and the Department of Veterans
Affairs to confirm that the student had a parent or guardian who died
as a result of performing military service in Iraq or Afghanistan after
September 11, 2001.
A tentative consensus was reached on these proposed regulations
during the negotiations.

Part 692 Leveraging Educational Assistance Partnership Program

LEAP Program--Non-Federal Share (Sec. 692.10)

Statute: Section 415C(b)(10) of the HEA, as amended by the HEOA,
provides that the non-Federal share of the amount of student grants or
work-study jobs under the LEAP Program must be from State funds for the
program and no longer requires that the non-Federal share must be from
a direct appropriation of State funds.
Current Regulations: Section 692.10(b) references ``State-
appropriated funds'' in the provisions concerning how the Secretary
determines the number of students deemed eligible for purposes of
calculating State allotments under Sec. 692.10(a).
Proposed Regulations: Proposed Sec. 692.10(b) would remove
references to State funds being appropriated funds and would make
technical corrections in Sec. 692.10(a) to reflect that multiple
programs are funded under part 692.
Reasons: This proposal is necessary to implement section
415C(b)(10) of the HEA, as amended by the HEOA.
Several members of the LEAP/GAP subcommittee raised concerns
regarding whether we should define the term ``State funds'' to clarify
this change to the nature of the program's matching funds. We did not
agree that a definition was necessary. During the subcommittee
discussions, we noted that the term ``State funds'' only refers to cash
funds, and this cash may be from State-appropriated funds or may be
from dedicated State revenues such as revenues from a State lottery or
tuition revenues at a State's public institutions of higher education
used to provide grant aid. The term ``State funds'' would not include
in-kind support to a student such as a tuition waiver at a public
institution of higher education. ``In-kind'' support is not cash. If a
State were to choose to use tuition revenues at public institutions, or
some other sources of State cash, to meet its non-Federal share, use of
this cash may affect information that the State must provide in its
application to participate in the LEAP and GAP programs in addition to
being included in the amount of funds reported for the non-Federal
share.
In addition, discussions of the LEAP/GAP subcommittee noted that,
in accordance with 34 CFR 80.24 of the Education Department General
Administrative Regulations (EDGAR), other Federal funds generally may
not be used to meet a State's non-Federal share nor may a State use the
same non-Federal funds to meet the non-Federal share of more than one
Federal program. For example, tuition revenues at a public institution
used to meet the non-Federal share of the LEAP Program may not be used
by the institution to meet the matching requirement of the FSEOG
Program.

[[Page 42411]]

Notification to Students of LEAP Grant Funding Sources (Sec.
692.21(k))

Statute: Section 415C(b)(11) of the HEA requires that a State
notify eligible students that grants under the LEAP Program are (1)
LEAP Grants and (2) are funded by the Federal Government, the State,
and, where applicable, other contributing partners.
Current Regulations: None.
Proposed Regulations: Proposed Sec. 692.21(k) would require that
the State program notify eligible students that grants under the LEAP
Grant Program are (1) LEAP Grants and (2) are funded by the Federal
Government, the State, and, where applicable, other contributing
partners.
Reasons: The proposed regulations generally reflect the statutory
language. Some LEAP/GAP subcommittee members questioned whether the
regulations should reflect the extent to which States had flexibility
in implementing this provision. While we noted in the discussions with
the subcommittee that our intent is to provide maximum flexibility to
the States in implementing this provision, we believe the statutory
language as used in the proposed regulations inherently sets certain
minimum standards.
As was discussed by the subcommittee members, the State would need
to ensure that students who receive a LEAP Grant are aware of the
source of those funds. A State would need to establish a policy that
would define the term ``eligible student,'' the State would use the
policy to identify the students that the State would notify in
accordance with the proposed regulations. A State may consider an
``eligible student'' to be all students submitting an application, thus
including potentially eligible students; we believe that this approach
would minimize the State's administrative burden. A State may consider
an ``eligible student'' to be students awarded LEAP Grants, or, at a
minimum, recipients of LEAP Grants. Also, under the proposed
regulations, notifications must be to individual students rather than
general notifications; a State may use electronic media; and a State
may rely on institutions as the agent of the State to provide the
notifications.
Some subcommittee members were concerned with whether it would be
appropriate to revise the notification to say that the LEAP Grant ``may
be funded'' by Federal, State, or, for purposes of the GAP Program,
other contributing partners. We do not believe such an alteration is
appropriate or necessary. The language in the required notice would
accurately describe, for example, a grant that consisted solely of
State funds or solely of Federal funds. In some cases, a State may not
determine actual LEAP recipients at the time State grants are made, for
example, if a State selects students considered to have received a LEAP
Grant after the award year has ended. In this circumstance, the State
would be expected to provide notices at least to all State grant
recipients.
In general, these same considerations apply to notifications for
LEAP Grants made under the GAP Program in accordance with proposed
Sec. 692.100(a)(8).

Grants for Access and Persistence Program (Subpart C of Part 692
Consisting of Sec. Sec. 692.90 Through 692.130)

Statute: Section 415E of the HEA, as amended by the HEOA,
authorizes the Grants for Access and Persistence (GAP) Program to
assist States in establishing partnerships to provide eligible students
with LEAP Grants under GAP to attend institutions of higher education.
The GAP Program replaces the SLEAP Program previously authorized by
section 415E of the HEA.
Current Regulations: None.
Proposed Regulations: Under proposed part 692, subpart C,
Sec. Sec. 692.90 through 692.130, we are proposing the regulations
necessary to implement the GAP Program. The proposed regulations
would--
Describe the definitions and other regulations that would
apply to the GAP Program (See Sec. 692.92);
Provide the requirements for participation in the GAP
Program by students, States, degree-granting institutions of higher
education, early information and intervention, mentoring, or outreach
programs (early intervention programs), and philanthropic organizations
or private corporations (See Sec. 692.93);
Describe the requirements a State must satisfy, as the
administrator of a partnership with institutions of higher education,
early intervention programs, and philanthropic organizations or private
corporations, to receive GAP Program funds (See Sec. 692.94);
Describe the requirements that a State must meet to
receive an allotment under this program, including submitting an
application on behalf of a partnership and serving as the primary
administrative unit of the partnership (See Sec. 692.100);
Describe the responsibilities of the members of a State
partnership in a State that receives a GAP allotment; (See Sec.
692.101)
Describe how the Secretary would allot funds to the States
(See Sec. 692.110);
Provide that the State must use at least 98 percent of the
Federal funds received under the GAP Program to fund LEAP Grants under
GAP and may use up to two percent of the Federal funds received for
administrative expenses such as the establishment of a partnership,
early notification to potentially eligible students and their families
of their potential eligibility for student assistance including LEAP
Grants under GAP, and issuing to students preliminary award
notifications (See Sec. 692.112);
Describe the requirements for funds matching the Federal
allotment under the GAP Program (See Sec. 692.113);
Describe the requirements for student eligibility under
the GAP Program including that the student meets the relevant
eligibility requirements in 34 CFR 668.32; has graduated from secondary
school or, for a home-schooled student, has completed a secondary
education; has financial need for a grant; and meets any additional
requirements that the State may require for receipt of a LEAP Grant
under GAP (See Sec. 692.120);
Provide that a State may impose reasonable time limits for
a student to complete his or her degree (See Sec. 692.120(c)(2)); and
Describe how a participating institution may request a
waiver of statutory or regulatory requirements that would inhibit the
ability of the institution to successfully and efficiently participate
in the activities of the partnership (See Sec. 692.130).
Reasons: These proposed regulations are necessary to implement the
provisions of section 415E of the HEA, as amended by the HEOA.

Early Intervention Programs (Sec. Sec. 692.94(a)(2)(ii), and
692.101(c))

Statute: Section 415E(c)(3) provides that a State agency apply for
a GAP allotment with, among others, early intervention programs located
in the State. Section 415E(c)(4)(C) requires that an early intervention
program in a partnership must provide direct services, support, and
information (direct services) to participating students.
Current Regulations: None.
Proposed Regulations: Proposed Sec. 692.94(a)(2)(ii) provides that
a State applying for a GAP allotment must establish a partnership that
includes new or existing early intervention programs. Under proposed
Sec. 692.101(c), an early intervention program

[[Page 42412]]

administered by a State or private organization is eligible to
establish a partnership under the GAP Program, if the program provides
direct services, support, and information to participating students.
Reasons: These proposed regulations are necessary to implement
section 415E(c)(3) of the HEA and to clarify what is considered an
eligible early intervention program.
Members of the LEAP/GAP subcommittee were concerned that the
proposed regulations did not define the direct services that would be
expected. We did not believe such an expansion of the regulations is
necessary but agreed to provide further clarification. Under these
proposed regulations, early intervention services would include, but
would not be limited to, direct services such as after-school and
summer-school tutoring, test preparation, assistance in obtaining
summer jobs, career mentoring, a summer-bridge component, i.e., a
precollege campus experience, and academic, personal and career
counseling. These services may be provided through electronic media if
the electronic media would be appropriate to the direct service
provided and would interactively and directly engage individual
students. Disseminating literature, or providing informational Web
sites, would not qualify as direct services.
Members of the LEAP/GAP subcommittee also questioned the minimum
number of early intervention programs that must be in a State
partnership. Under these proposed regulations, a State partnership
would be required to have more than one program that offers an early
intervention component. Section 415E(c)(3) of the HEA, which the
regulations mirror, refers to early information and intervention,
mentoring, or outreach programs, suggesting that more than one of these
types of programs must be included in the GAP Partnership. We believe
the proposed regulations are consistent with the statute. A State or
private organization that has a single early intervention program that
includes several components or programs within its structure would
satisfy the requirement of having more than one early intervention
program.

Persistence to Degree Completion (Sec. 692.100(a)(6))

Statute: Section 415E(c)(1)(B)(vi) of the HEA provides that a
State's application for a GAP allotment must include a description of
the steps the State would take to ensure that students who receive LEAP
Grants under GAP would persist to degree completion.
Current Regulations: None.
Proposed Regulations: Under proposed Sec. 692.100(a)(6), a State
must include in its application the steps it plans to take to ensure,
to the extent practicable, that students who receive a LEAP Grant under
GAP would persist to degree completion.
Reasons: Proposed Sec. 692.100(a)(6) is necessary to implement
section 415E(c)(1)(B)(vi) of the HEA.
Some members of the LEAP/GAP subcommittee believed that the
proposed regulations should directly address eligible students
attending nonparticipating institutions of higher education. We do not
agree. For a State that provides a LEAP Grant under GAP to an eligible
student attending a nonparticipating institution of higher education,
we would expect the State to obtain a signed assurance from the
nonparticipating institution. The nonparticipating institution would
assure the State that it would follow the State's plan established in
the State's GAP application.

Notification to Students of LEAP Grant Funding Sources (Sec.
692.100(a)(8))

Statute: Section 415E(c)(1)(B)(viii) of the HEA requires that a
State notify eligible students that grants are (1) LEAP Grants and (2)
are funded by the Federal Government; the State; and, where applicable,
other contributing partners.
Current Regulations: None.
Proposed Regulations: Under proposed Sec. 692.100(a)(8) a State
GAP Program is required to notify eligible students that the grants
they receive under GAP are LEAP Grants and that the grants are funded
by the Federal Government; the State; and where applicable, other
contributing partners.
Reasons: Section 415E(c)(1)(B)(viii) of the HEA for the GAP
Program, which these proposed regulations implement, is basically the
same as section 415C(b)(11) of the HEA for the LEAP Program. The
reasons for these proposed regulations are the same as those reasons
described for the LEAP Program proposed regulations as discussed under
proposed Sec. 692.21(k).
For a LEAP Grant under GAP, a State may include this notification
in the award notification required under proposed Sec. 692.111(e). The
notifications would apply to LEAP Grants under GAP that are funded by
in-kind contributions as well as those funded by the Federal allotment
or cash contributions to the non-Federal share.

Recruiting Eligible Students (Sec. 692.101(b)(2))

Statute: Section 415E(c)(4)(B)(i)(I) of the HEA provides that an
institution of higher education in a GAP partnership must recruit and
admit participating qualified students and provide additional grant aid
as agreed to with the State agency.
Current Regulations: None.
Proposed Regulations: Under proposed Sec. 692.101(b)(2), a degree-
granting institution of higher education that is in a partnership under
the GAP Program must recruit, admit, and provide institutional grant
aid to participating eligible students as agreed to with the State
agency.
Reasons: The proposed regulations generally reflect the language in
section 415E(c)(4)(B)(i)(I) of the HEA. Some LEAP/GAP subcommittee
members were concerned that the regulations may adversely affect the
admissions standards of participating institutions. We believe that
under these proposed regulations institutions and States would have
broad discretion regarding what may be included in an agreement, e.g.,
there is no requirement that an institution must waive its admissions
standards.

GAP and SLEAP Allotments (Sec. Sec. 692.70 and 692.110)

Statute: Section 415E(b) of the HEA, as amended by the HEOA,
provides that the Secretary makes an allotment under the GAP Program to
each State that submits an application to meet the costs of the Federal
share of the State's GAP Program. The statute requires that, in making
a continuation award for a State, the Secretary would make an allotment
to the State that is not less than the allotment made to the State in
the previous fiscal year and further provides that the Secretary give
priority to a State that applies for an allotment in partnerships with
degree-granting institutions whose combined full-time enrollment
represents a majority of all students attending institutions of higher
education in the State.
Section 415E(g) of the HEA, as amended by the HEOA, provides that
the LEAP Program provisions that are not inconsistent with GAP
requirements apply to GAP.
For the programs authorized under part A, subpart 4 of title IV of
the HEA, including the GAP Program, section 415B of the HEA provides
that allotments are based on the ratio that the number of eligible
students in a State bears to the number of eligible students in all the
States except that no State may receive less than the State

[[Page 42413]]

received for fiscal year 1979 (1979-1980 award year). Section 415B of
the HEA further provides that any allotted funds not required by a
State may be realloted to other States in proportion to the original
allotments to these other States.
Section 415A(b) of the HEA, as amended by the HEOA, provides that
the amount of the annual appropriation for the LEAP and GAP programs
that is in excess of $30,000,000 must be made available to carry out
the GAP Program.
Section 415E(j) of the HEA, as amended by the HEOA, provides that
for the two-year period that begins on August 14, 2008, the date of
enactment of the HEOA, a State may continue to make grants under the
SLEAP Program, i.e., through the 2010-2011 award year.
Current Regulations: There are no current regulations for the GAP
Program. Section 692.70 provides that funds are allotted to States
applying under the SLEAP Program in accordance with Sec. 692.10.
Proposed Regulations: Proposed Sec. 692.110(a)(1) would apply to
the GAP Program the allotment formula authorized under section 415B of
the HEA and used to allot a State's Federal LEAP funds under Sec.
692.10(a) for a fiscal year.
Proposed Sec. 692.110(a)(2) would provide priority to qualifying
States by increasing the number of eligible students in a State to 125
percent in determining the ratio for allotting funds for a fiscal year.
This provision would apply to a State that meets the requirements under
proposed Sec. 692.113(b) for reduced State matching because the State
is applying for an allotment in partnership with degree-granting
institutions whose combined full-time enrollment represents a majority
of all students attending institutions of higher education in the
State.
In some years, sufficient funds may be available to allot to each
State that participated in the prior fiscal year a continuation award
that is the same amount of Federal GAP funds as were allotted in the
prior fiscal year, but are not sufficient both to allot at least the
same amount of Federal GAP funds allotted in the prior year to these
States and also to allot funds to additional States in accordance with
the ratio used to allot the States' Federal LEAP funds under Sec.
692.10(a). For these circumstances we are proposing Sec.
692.110(a)(3)(i) that would provide to each State that participated in
the prior fiscal year a continuation award in the amount the State
received in the prior fiscal year. From the remaining Federal GAP
funds, new applicants would be allotted an amount based on the ratio
used to allot the State's Federal LEAP funds under Sec. 692.10(a).
Insufficient funds may be available to allot a continuation award
that is at least the amount of Federal GAP funds that were allotted to
each State in the prior fiscal year. In this circumstance, proposed
Sec. 692.110(a)(3)(ii) would provide that each State would receive an
allotment that bears the same ratio to the amount of Federal GAP funds
available as the amount of Federal GAP funds allotted to each State in
the prior fiscal year bears to the amount of Federal GAP funds allotted
to all States in the prior fiscal year.
Proposed Sec. 692.110(b) provides that we would reallot funds
available for reallotment in a fiscal year in accordance with the
provisions of proposed Sec. 692.110(a) that were used to calculate
initial allotments for the fiscal year.
Proposed Sec. 692.110(c) provides that any funds made available
for GAP but not expended in a fiscal year may be allotted or reallotted
under the LEAP Program.
Proposed Sec. 692.70 would clarify that, for fiscal year 2010
(2010-2011 award year), we would allot funds to States applying under
the SLEAP Program in accordance with Sec. 692.10 prior to calculating
allotments to States applying for GAP funds under proposed subpart C of
part 692.
Reasons: Except to carry out provisions specific to GAP, we are
proposing to apply the allotment formulas applicable to the LEAP
Program. This proposal is in accordance with section 415E(g) of the
HEA, as amended by the HEOA, that provides that the LEAP Program
provisions that are not inconsistent with GAP requirements apply to
GAP.
Two specific provisions of GAP would modify the allotment formulas
used for the LEAP Program. One provision gives priority to States that
apply for an allotment in partnerships with degree-granting
institutions whose combined full-time enrollment represents a majority
of all students attending institutions of higher education in the
State. The other provision provides that a State's GAP allotment may
not be less than the allotment made to the State in the previous year.
We propose to implement the funding priority in proposed Sec.
692.110(a)(2) by providing that the State's enrollment of eligible
students would be 125 percent of its eligible students in applying the
allotment formula to all States. We believe that the proposed 125
percent fulfills the statutory provision while providing that all
eligible States have an opportunity to qualify for funding under the
allotment formula.
For continuing awards, there may be a year in which there are
sufficient funds available to allot to each State that participated in
the prior fiscal year the same amount of Federal GAP funds that were
allotted in the prior fiscal year, but insufficient funds are available
both to allot the same amount of Federal GAP funds to these continuing
States as in the prior year and to allot additional funds to additional
States in accordance with the ratio used to allot the States' Federal
LEAP funds. For these circumstances, we believe it is in accordance
with the statute to provide continuing States with the same allotment
as received in the prior fiscal year as proposed in Sec.
692.110(a)(3)(i). Additional applicants would receive an allotment
based on applying to the remaining available funds the allotment
formula used to allot the States' Federal LEAP funds.
Another circumstance affecting continuing awards would be a year
for which there are insufficient funds available to allot a
continuation award that is at least the amount of Federal GAP funds
allotted to each State in the prior year. Proposed Sec.
692.110(a)(3)(ii) would provide that we ratably reduce the allotment of
each State in proportion to its prior year funding. Under this proposal
we would allot to each State an amount that would bear the same ratio
to the amount of Federal GAP funds available as the amount of Federal
GAP funds allotted to each State in the prior fiscal year bears to the
amount of Federal GAP funds allotted to all States in the prior fiscal
year. This proposal would ensure that, to the extent practicable, a
State with an allotment in the prior fiscal year would receive, at
least proportionately, the same allotment as in the prior year.
Proposed Sec. 692.110(b) provides that we would reallot available
funds in a fiscal year in accordance with the provisions of proposed
Sec. 692.110(a) that were used to calculate initial allotments for the
fiscal year, and under proposed Sec. 692.110(c) any funds made
available to GAP but not expended would be allotted or reallotted under
the LEAP Program. We believe that applying the provisions for
realloting funds as authorized under section 415B of the HEA is not
inconsistent with the provisions of GAP and, therefore, must be applied
to GAP allotments in accordance with section 415E(g) of the HEA. In
addition we believe that it would be consistent with the provisions of
section 415A(b) of the HEA to allot or reallot funds under the LEAP

[[Page 42414]]

Program that were previously made available to GAP but not expended.
We are proposing to amend Sec. 692.70 of the SLEAP Program to
implement the provisions of section 415E(j) of the HEA for fiscal year
2010 (2010-2011 award year). As a practical matter, no State was able
to participate in the GAP Program in fiscal year 2009 (2009-2010 award
year), and these procedures are necessary only for fiscal year 2010.
In proposed appendix A to subpart C of part 692, we are providing a
case study that would illustrate the proposed requirements for
allotting funds under the GAP Program, including the provisions
implementing the funding priority, continuation awards, and SLEAP
Program funding during the transition period of fiscal year 2010 (the
2010-2011 award year) when a State may continue to participate in the
SLEAP Program in lieu of GAP Program participation. Apart from State
enrollments for fiscal year 1979 used in the allotment formula, nothing
in the case study should be considered to reflect any State's actual
circumstances or the expected results for any State.

Non-Federal Matching Funds (Sec. 692.113(a)(2))

Statute: Section 415E(b)(2) of the HEA provides that the non-
Federal matching funds for a State's GAP Program may be cash or a
noncash, in-kind contribution that has monetary value and helps a
student meet the cost of attendance at an institution of higher
education.
Current Regulations: None.
Proposed Regulations: Under proposed Sec. 692.113(a)(2), a State
may include cash or in-kind contributions as non-Federal matching funds
of a State partnership under the GAP Program. An in-kind contribution
must be fairly evaluated; have monetary value, such as a tuition
waiver; and be considered estimated financial assistance under 34 CFR
673.5(c).
Reasons: These proposed regulations would implement the provisions
of section 415E(b)(2) of the HEA.
Members of the LEAP/GAP subcommittee noted the need to clarify the
qualifying matching funds, including the in-kind contributions that may
qualify as matching funds to make LEAP Grants under GAP to eligible
students.
Cash that qualifies as matching funds may include, but is not
limited to, State-appropriated funds or other State funds such as funds
from a State lottery or tuition revenue at public institutions of
higher education. Matching cash may also be grants to students provided
by private institutions or philanthropic organizations or private
corporations.
An in-kind contribution is a noncash contribution that has monetary
value, such as a tuition waiver, the provision of room and board,
transportation passes, or other provisions that help a student meet the
cost of attending an institution of higher education. The proposed
regulations would further clarify that an in-kind contribution must be
considered to be estimated financial assistance under 34 CFR 673.5(c).
As in the case of matching cash, matching in-kind contributions may be
provided by the State, institutions of higher education, or
philanthropic organizations or private corporations.
Regardless of whether the funds are cash or are an in-kind
contribution, funds would qualify as matching funds only if awarded in
accordance with the GAP Program requirements, and the matching funds
would be considered title IV, HEA program assistance. For example, if a
student receiving a tuition waiver did not graduate from secondary
school, as required under Sec. 692.120(a)(2) to qualify as an eligible
student for a LEAP Grant under GAP, the amount of the tuition waiver
could not qualify as matching funds for the non-Federal share of a
State's GAP Program nor would it qualify as title IV, HEA program
assistance. If another student receiving a tuition waiver graduated
from secondary school and was otherwise eligible for a LEAP Grant under
GAP, the amount of this other student's tuition waiver would qualify as
matching funds for the non-Federal share of a State's GAP Program and
as title IV, HEA program assistance.
Nothing in these proposed regulations would require a State to
provide LEAP Grants under GAP to meet all costs of attendance. As with
LEAP Grants under subpart A of this part, a State may, for example,
restrict a LEAP Grant under GAP to meeting a student's tuition and
fees. The restriction could apply to funds from both the Federal
allotment and both cash and in-kind contributions toward the non-
Federal share.
In accordance with 34 CFR 80.24 of EDGAR, generally other Federal
funds may not be used to meet a State's non-Federal share nor may a
State use the same non-Federal funds to meet the non-Federal share of
more than one Federal program. For instance, non-Federal funds used to
match the Gaining Early Awareness and Readiness for Undergraduate (GEAR
UP) Program may not be used as matching funds for the GAP Program
because those non-Federal funds were already used to match another
Federal program. However, those non-Federal funds would be included in
the State's base-year and maintenance of effort requirements under
proposed Sec. 692.100(f) and (g).

Enrollment and the Amount of State Match (Sec. 692.113(b))

Statute: Section 415E(b)(2) of the HEA provides that the amount of
the non-Federal matching funds for a State's GAP Program is based on
the full-time equivalent enrollment of the institutions of higher
education participating in the State's partnership.
Current Regulations: None.
Proposed Regulations: Under proposed Sec. 692.113(b), the non-
Federal match of the Federal allotment must be forty-three percent of
the expenditures under this subpart if a State applies for a GAP
allotment in partnership with degree-granting institutions of higher
education in the State whose combined full-time enrollment represents
less than a majority of all students attending institutions of higher
education in the State, or thirty-three and thirty-four one-hundredths
percent of the expenditures under this subpart if a State applies for a
GAP allotment in partnership with degree-granting institutions of
higher education in the State whose combined full-time enrollment
represents a majority of all students attending institutions of higher
education in the State.
Reasons: These proposed regulations would implement the provisions
of section 415E(b)(2) of the HEA. Members of the LEAP/GAP subcommittee
believed that the number of students used in determining these
percentages should include both in-State and out-of-State students. We
agree.

Base-year Requirement (Sec. 692.100(f))

Statute: Section 415E(i) of the HEA provides that in determining a
State's share of the costs of the State's GAP Program, the State may
consider only those expenditures from non-Federal sources that exceed
the State's total expenditures for need-based grants, scholarships, and
work-study assistance for fiscal year 1999.
Current Regulations: None.
Proposed Regulations: Under proposed Sec. 692.100(f), the State
must provide an assurance that the non-Federal funds used as matching
dollars under the State's GAP Program is in excess of what the State
spent in fiscal year 1999 on need-based grants, scholarships, and work-
study assistance.
Reasons: Section 415E(i) of the HEA and proposed Sec. 692.100(f)
are identical to the base-year provisions for the previously authorized
SLEAP Program. Proposed Sec. 692.100(f) would consider the same fiscal
year 1999 expenditures

[[Page 42415]]

from the same need-based grant, scholarship, and work-study programs a
State operated in fiscal year 1999. Thus, the amount of a State's
expenditures in fiscal year 1999 as determined for the SLEAP Program
would be the same amount applicable for the State under these proposed
regulations for the GAP Program.

Maintenance-of-Effort Requirement (Sec. 692.100(g))

Statute: Section 415E(h) of the HEA provides that the aggregate
amount expended by a State per student, or the aggregate expenditures
by the State, for funds derived from non-Federal sources, for the
authorized activities under section 415E(d) of the HEA for the
preceding fiscal year were not less than the amount expended per
student or the aggregate expenditure by the State for these authorized
activities for the second preceding fiscal year. The authorized
activities under section 415E(d) of the HEA include making LEAP Grants
under GAP and certain administrative expenses.
Current Regulations: None.
Proposed Regulations: Under proposed Sec. 692.100(g), the State
must provide an assurance that it meets the GAP maintenance-of-effort
(MOE) requirement. Under the GAP MOE requirement, for the fiscal year
prior to the fiscal year for which the State is requesting Federal
funds, the amount the State expended from non-Federal sources per
student, or the aggregate amount the State expended, for all the
authorized activities in Sec. 692.111, i.e., making LEAP Grants under
GAP and certain administrative expenses for the GAP Program, will be no
less than the amount the State expended from non-Federal sources per
student, or in the aggregate, for those activities for the second
fiscal year prior to the fiscal year for which the State is requesting
Federal funds.
Reasons: Section 415E(h) of the HEA and proposed Sec. 692.100(g)
are essentially the same as the MOE provisions for the previously
authorized SLEAP Program except that the GAP MOE provision is concerned
only with expenditures for GAP program activities. Because States can
only participate in the GAP Program starting in the 2010-2011 award
year, the total State expenditures for authorized GAP activities for
the 2008-2009 and 2009-2010 award years would be zero. A State's MOE
would not be relevant to qualifying for a GAP allotment until fiscal
year 2012 (the 2012-2013 award year).
Note that although the statute and regulations refer to funding in
terms of a fiscal year, States receive LEAP, SLEAP, and GAP funds
operationally on an award year (July 1 through June 30) basis.
Therefore, a State's MOE and matching requirements are also measured on
an award year basis.

Student Eligibility--Secondary School Graduate (Sec. 692.120(a)(2))

Statute: Section 415E(d)(2)(B)(i)(V)(bb) of the HEA provides that a
student must graduate from secondary school to be eligible for a LEAP
Grant under GAP.
Current Regulations: None.
Proposed Regulations: Under proposed Sec. 692.120(a)(2), to be
eligible for a LEAP Grant under GAP, a student must graduate from
secondary school or, for a home-schooled student, must complete a
secondary education.
Reasons: Proposed Sec. 692.120(a)(2) is necessary to implement
section 415E(d)(2)(B)(i)(V)(bb) of the HEA. We believe that a home-
schooled student who completes a secondary education would satisfy the
statutory requirement that a student graduate from secondary school.
However, a student who passed an approved ability-to-benefit test or
obtained a General Educational Development (GED) certificate would not
satisfy the statutory provision and would not qualify as an eligible
student for a LEAP Grant under GAP.

Student Eligibility--State's Maximum LEAP Program Award (Sec.
692.120(a)(3)(ii)(B))

Statute: Section 415E(d)(3)(A)(ii) of the HEA provides that a
student is eligible for a LEAP Grant under GAP if the student qualifies
for the State's maximum undergraduate LEAP Grant under the LEAP Program
as authorized under section 415(C)(b) of the HEA.
Current Regulations: None.
Proposed Regulations: Proposed Sec. 692.120(a)(3)(ii)(B) would
provide that, in an award year in which a student is receiving an
additional LEAP Grant under GAP, a student's eligibility may be based,
in part, on qualifying for a State's maximum undergraduate award for
LEAP Grants under the LEAP Program in accordance with subpart A of part
692.
Reasons: Proposed Sec. 692.120(a)(3)(ii)(B) is necessary to
implement section 415E(d)(3)(A)(ii) of the HEA. Members of the LEAP/GAP
subcommittee were concerned that a State's LEAP Program may not have a
single maximum award amount. They were also concerned that a student
may qualify for a maximum award but not receive the maximum amount. We
agree that a student may qualify for the State's maximum LEAP Grant
under the LEAP Program in a State that may have more than one maximum
award amount without qualifying for the highest of the maximum awards,
e.g., a State may have different maximum awards for attendance at
public and private institutions. In these cases, a student's maximum
award is based on the maximum award amount established for the
applicable category or program under which the student qualifies. We
agree that a student would meet this requirement if the student
qualifies for the State's maximum undergraduate award but does not
actually receive the full amount of the maximum award.

Executive Order 12866

Regulatory Impact Analysis

Under Executive Order 12866, the Secretary must determine whether
the regulatory action is ``significant'' and therefore subject to the
requirements of the Executive Order and subject to review by the OMB.
Section 3(f) of Executive Order 12866 defines a ``significant
regulatory action'' as an action likely to result in a rule that may
(1) have an annual effect on the economy of $100 million or more, or
adversely affect a sector of the economy, productivity, competition,
jobs, the environment, public health or safety, or State, local or
tribal governments or communities in a material way (also referred to
as an ``economically significant'' rule); (2) create serious
inconsistency or otherwise interfere with an action taken or planned by
another agency; (3) materially alter the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raise novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive order.
Pursuant to the terms of the Executive order, it has been
determined this proposed regulatory action will have an annual effect
on the economy of more than $100 million. Therefore, this action is
``economically significant'' and subject to OMB review under section
3(f)(1) of Executive Order 12866. Virtually all of the economic impact
associated with these proposed regulations flows from proposed Sec.
690.67 (implementing the statutory provision in section 401(a)of the
HEOA) allowing the award of two Pell Grants in one year for students
who wish to accelerate their program of study. Outside of this
provision, the cost of which is driven almost entirely by explicit
statutory requirements, these proposed regulations would not be
considered ``economically significant.''

[[Page 42416]]

The Secretary has assessed the potential costs and benefits of this
regulatory action and has determined that the benefits justify the
costs.

Need for Federal Regulatory Action

These proposed regulations are needed to implement provisions of
the HEA, as amended by the HEOA, related to changes to the Federal
grant and work-study programs, campus safety, educational programs for
students with intellectual disabilities, copyright infringement, teach-
outs, readmission of servicemembers, and non-Title IV revenue.
In general, these regulations simply restate specific HEOA
requirements, in many cases using language drawn directly from the
statute, or make technical changes to conform with statutory
requirements or other regulations. In the following areas, the
Secretary has exercised limited discretion in implementing the HEOA
provisions in these proposed regulations:
Definition of baccalaureate liberal arts programs offered by
proprietary institutions: The Secretary determined that, to meet the
statutory requirement that an institution offer a program, a liberal
arts program must be an organized program of study that is essentially
the same for all students, except that it could include some elective
courses.
Readmission requirements for servicemembers: The Secretary
determined that the statute applies both to a student who began
attendance at an institution and left because of service in the
uniformed services and to a student admitted to an institution who did
not begin attendance because of service in the uniformed services. The
Secretary defined ``promptly readmit'' as readmitting a student into
the next class or classes in the student's program unless the student
requests a later date of admission, or unusual circumstances require
the institution to admit the student at a later date.
Non-title IV revenue requirement (90/10)--institutional eligibility
and sanctions: The Secretary determined that an institution has 45 days
after the end of its fiscal year to notify the Department if it failed
the 90/10 requirement.
Non-title IV revenue requirement (90/10)--calculating revenue
percentage: The Secretary identified types of non-title IV eligible
programs from which an institution could count, as revenue, funds paid
for students taking those programs; identified elements to distinguish
an institutional loan from other student account receivables; and set
criteria to allocate excess loan funds treated as non-Federal revenue
to each payment period.
Net present value: As discussed more fully in the net present value
discussion in this preamble, the Secretary established a formula for
institutions to use in calculating the net present value of
institutional loans made during a fiscal year for the purpose of
counting those loans as non-Federal revenue. As an alternative, the
proposed regulations would also allow an institution to use 50 percent
of the total amount of loans it made during the fiscal year as the NPV,
provided that none of these loans are sold until they have been in
repayment for at least two years.
Institutional plans for improving the academic program: While
requiring institutions to provide prospective and enrolled students
information about plans for improving the institution's academic
program, the Secretary determined that institutions themselves are in
the best position to determine what defines a plan, including when a
plan becomes a plan subject to dissemination under this provision.
Peer-to-peer file sharing/copyrighted material: The Secretary
determined that in implementing statutory requirements intended to
reduce the unauthorized distribution of copyrighted material,
institutions must incorporate at least one technological deterrent;
must inform users that the unauthorized distribution of copyrighted
material is illegal, what actions constitute illegal distribution of
copyrighted material, and the potential penalties for doing so; and
must use relevant assessment criteria to evaluate how effective its
plans are in combating the unauthorized distribution of copyrighted
materials by users of the institution's networks.
Consumer Information: The Secretary determined that institutions
must identify the source of the information disclosed, as well as the
time frames and methodology associated with that information; that
institutions must disclose the retention rate as reported to the
Integrated Postsecondary Education Data System (IPEDS); that, with
limited exceptions, institutions must disaggregate completion and
graduation rate data by gender, by major racial and ethnic subgroup,
and by whether or not the institution's students received certain types
of Federal student aid; and that, in cases where 20 percent or more of
the certificate- or degree-seeking, full-time, undergraduate students
at an institution left school to serve in the Armed Forces, to serve on
official church missions, or to serve with a foreign aid service of the
Federal Government (such as the Peace Corps), the institution may
recalculate the completion or graduation rate of those students by
adding the time period of service to the 150 percent time frame they
normally have to complete or graduate.
Campus Safety Provisions--Hate Crime Reporting: The Secretary
determined that the current FBI's Hate Crime Data Collection Guidelines
in the Uniform Crime Reporting Handbook should be used to define the
hate crimes to be reported.
Campus Safety Provisions--Definition of Test: The Secretary defines
test for purposes of emergency response and evacuation procedures as
regularly scheduled drills, exercises, and appropriate follow-through
activities, designed for assessment and evaluation of emergency plans
and capabilities.
Campus Safety Provisions--Annual Security Report/Emergency Response
and Evacuation Procedures: The Secretary determined that institutions
must include a statement of policy regarding their emergency response
and evacuation procedures in the annual security report beginning with
the annual security report distributed by October 1, 2010. The
Secretary established these emergency response procedures to ensure
institutions are prepared for an emergency situation on campus. These
procedures include testing procedures to identify and improve
weaknesses and procedures to providing emergency information to the
campus and larger community, such as parents.
Campus Safety Provisions--Timely Warning and Emergency
Notification: The Secretary determined that a timely warning must be
issued in response to crimes specified in the regulations and that an
emergency notification is required in the case of an immediate threat
to the health or safety of students or employees occurring on campus,
covering a broader scope of situations than those covered by the timely
warning requirement.
Campus Safety Provisions--Annual Security Report/Emergency Response
and Evacuation Procedures/Definition of On-Campus Student Housing
Facility: The Secretary defines the term on-campus student housing
facility to mean a dormitory or other residential facility for students
that is located on an institution's campus, as defined in Sec.
668.46(a).
Campus Safety Provisions--Annual Security Report/Missing Student
Notification Policy: The Secretary determined that the annual security
report must include information about missing student policies and
procedures.

[[Page 42417]]

Campus Safety Provisions--Missing Student Notification Policy: The
Secretary determined that institutional missing student notification
policies must include a list of the titles of the persons or
organizations to which a student should be reported missing, must allow
students to register in a confidential manner a contact person to be
notified within 24 hours if they are reported missing, must inform
students that their parent or guardian will be notified if they are
under eighteen and not an emancipated minor, and must inform students
that law enforcement will be notified within 24 hours if the student
has been determined to be missing for 24 hours.
Campus Safety Provisions--Annual Fire Safety Report: The Secretary
included definitions for cause of fire, fire, fire drill, fire-related
injury, fire-related death, fire-safety system, and value of property
damage to enable comparability across institutions of the statistics
that institutions are required to report. Additionally, institutions
must submit statistics to the Department in their annual fire safety
report and must provide data for the three most recent calendar years
for which data are available, with reporting requirements phased in
beginning with the collection of calendar year 2009 statistics for
inclusion in the October 1, 2010 Annual Fire Safety Report.
Financial Assistance for Students with Intellectual Disabilities:
The Secretary determined that a comprehensive transition and
postsecondary program for students with intellectual disabilities must
be delivered to students who physically attend the institution and that
such a program must provide opportunities for students with
intellectual disabilities to participate in coursework and other
activities with students without disabilities.
Work-Study: The Secretary determined that written authorizations
from students will no longer be required before an institution can
credit a student's account or hold a credit balance for the student.
TEACH Grant Program Periods of Suspension and Discharge of
Agreement to Serve: The Secretary determined that a TEACH Grant
recipient's teaching service obligation should be discharged in cases
when the recipient cannot comply with his or her agreement to teach
because of a call or order to active military duty for an extended
period of time.
Two Federal Pell Grants in an Award Year: The Secretary determined
that a student would be eligible for a second Scheduled Award if the
student has earned in an award year at least the credit or clock hours
of the first academic year of the student's eligible program, and is
enrolled as at least a half-time student in a program leading to a
bachelor's or associate degree or other recognized educational
credential, except as provided for students with intellectual
disabilities. The Secretary determined that a financial aid
administrator may, on an individual basis, waive the requirement that a
student complete the credit or clock hours in the student's first
academic year in the award year due to special circumstances beyond the
student's control. The Secretary determined that in calculating a
transfer student's eligibility to receive a second Scheduled Award, an
institution determines the credit or clock hours the student has earned
at a prior institution during the award year based on the Federal Pell
Grant disbursements that the student received at the prior institution
during the award year in relation to the student's Scheduled Award at
that prior institution.
The Secretary determined that if a student is enrolled as a three-
quarter-time or full-time student, an institution must consider a
crossover payment period, i.e., a payment period that occurs in two
award years, to be in the award year in which the student would receive
the greater payment for the payment period based on the information
available at the time that the student's Federal Pell Grant is
initially calculated. If the institution subsequently receives
information that the student would receive a greater payment for the
payment period by reassigning the payment to the other award year, the
institution would be required to reassign the crossover payment to the
award year providing the greater payment.
A student may request that the institution place the payment period
in the award year that can be expected to result in the student
receiving a greater amount of Federal Pell Grants over the two award
years in which the payment period is scheduled to occur. If the student
makes that request, the institution must assign the payment period to
that award year.
Maximum Federal Pell Grant for Children of Soldiers: The Secretary
determined that a student whose parent or guardian died as a result of
performing military service in Iraq or Afghanistan after September 11,
2001 is deemed to have a zero expected family contribution (EFC) for
the Federal Pell Grant Program.

Regulatory Alternatives Considered

This section addresses the alternatives that the Secretary
considered in implementing the discretionary portions of the HEOA
provisions. Except where noted, alternatives considered did not have a
measurable effect on Federal costs. These alternatives are discussed in
more detail in the Reasons sections of this preamble related to the
specific regulatory provisions.
Campus-Safety Provisions: In general, the Secretary adopted
alternatives that maximized the availability of information provided to
students and parents while avoiding unnecessary burden on institutions.
Specific examples of this process are discussed in the Reasons sections
accompanying individual regulatory provisions.
Two Federal Pell Grants in an Award Year: The Department proposed
that a student would be eligible to receive payment from a second
Scheduled Award if the student was also completing the hours of the
first academic year in that payment period. In conjunction with this
provision, the Department proposed to require recalculation of a
student's payment for any payment period in which the student is
receiving a second Scheduled Award if the projected enrollment status
of a student enrolled in a term-based program changed. This
recalculation requirement would ensure that a student who is not
accelerating does not receive the benefit of a payment from a second
Scheduled Award. Non-Federal negotiators objected to the recalculation
requirements, citing concern that they would be administratively
burdensome and create a different treatment compared to recalculations
for first Scheduled Awards. As discussed extensively above in the
Reasons section related to this provision, the Department rejected a
number of alternatives proposed by non-Federal negotiators, because
they failed to encourage a student to accelerate the completion of his
or her program of study within a shorter time period than the regularly
scheduled completion time, i.e., the published length of the program.
Consensus was not reached on this issue.
Maximum Federal Pell Grant for Children of Soldiers: During the
negotiation of these proposed regulations, the Department proposed that
a student must have an EFC in the numerical range that would make a
student eligible for a Federal Pell Grant to qualify for a zero EFC
under this provision. Non-Federal negotiators objected that this added
an additional student eligibility requirement not

[[Page 42418]]

provided for in the statute. Based on this objection and the
Department's belief that any student with a parent or guardian who died
in Iraq or Afghanistan after September 11, 2001 should receive a zero
EFC, the Department agreed with the non-Federal negotiators' proposed
language although the Department's alternative would have cost
approximately $450,000 less over five years than the proposed
regulations that drew consensus.
Non-Federal negotiators also suggested that recipients should
receive a Maximum Pell Award instead of a zero EFC. The Department
declined on the basis that it conflicted with the explicit language of
the statute.
TEACH Grant Program Periods of Suspension and Discharge of
Agreement to Serve: Several non-Federal negotiators suggested that the
Department should expand the categories of extenuating circumstances
under which a TEACH Grant recipient who is unable to fulfill all or a
portion of his or her teaching service obligation may be excused from
fulfilling that portion of the teaching service obligation to include
economic hardship, noting that teachers were being laid off in a number
of areas and TEACH Grant recipients might not be able to find full-time
employment in their high-need fields due to the current economic
conditions. The Department rejected this alternative, believing that
the eight-year timeframe to complete the four-year service requirement
is sufficient to overcome temporary hardship in locating a suitable
position.

Benefits

Benefits provided in these proposed regulations include greater
transparency for prospective and enrolled students at institutions
participating in the Federal Student Financial Assistance programs;
increased eligibility for certain recipients of Federal Student
Financial Assistance program funds; established requirements under
which servicemembers are readmitted to participating institutions;
established extenuating circumstances under which a TEACH Grant
recipient may be excused from fulfilling all or part of his or her
service obligation; expanded use of FWS funds to permit institutions to
compensate students employed in projects that teach civics in school,
raise awareness of government functions or resources, or increase civic
participation; allowing institutions located in major disaster areas to
make FWS payments to disaster-affected students; new requirements for
determining how proprietary institutions calculate the amount and
percent of revenue derived from sources other than title IV, HEA
program funds; providing that an institution that conducts a teach-out
at a site of a closed institution may, under certain conditions,
establish that site as an additional location; amending the definition
of ``proprietary institution of higher education'' to include
institutions that provide a program leading to a baccalaureate degree
in liberal arts, if the institution provided that program since January
1, 2009, and has been accredited by a regional accrediting agency since
October 1, 2007, or earlier; providing that the non-Federal share of
LEAP Grants no longer has to come from a direct appropriation of State
funds; increased information to LEAP Grant recipients and recipients of
the new GAP program; and the establishment of the activities, awards,
allotments to States, matching funds requirements, consumer information
requirements, application requirements, and other requirements needed
to begin and continue participating in the GAP Program. In most cases,
the Department lacks data to accurately assess the impact of these
benefits. The Department is interested in receiving comments or data
that would support a more rigorous analysis of the impact of these
provisions.
These benefits all flow directly from statutory changes included in
the HEOA; they are not materially affected by discretionary choices
exercised by the Department in developing these regulations. As
discussed in greater detail under Net Budget Impacts, these proposed
provisions result in net costs to the government of $1,644 million over
2010-2014.

Costs

Many of the statutory provisions implemented though this NPRM will
require regulated entities to develop new disclosures and other
materials, as well as accompanying dissemination processes. Other
proposed regulations generally would require discrete changes in
specific parameters associated with existing guidance--such as changes
to FWS cash management practices and TEACH Grant service suspension and
discharge benefits.
Entities wishing to continue to participate in the student aid
programs have already absorbed most of the administrative costs related
to implementing these proposed regulations. Marginal costs over this
baseline are primarily related to one-time system changes that, while
possibly significant in some cases, are an unavoidable cost of
continued program participation. In assessing the potential impact of
these proposed regulations, the Department recognizes that certain
provisions--such as the requirement for additional disclosures--are
likely to increase workload for some program participants. This
additional workload is discussed in more detail under the Paperwork
Reduction Act of 1995 section of this preamble. Additional workload
would normally be expected to result in estimated costs associated with
either the hiring of additional employees or opportunity costs related
to the reassignment of existing staff from other activities. Given the
limited data available, the Department is particularly interested in
comments and supporting information related to possible burden stemming
from the proposed regulations. Estimates included in this notice will
be reevaluated based on any information received during the public
comment period.
Federal Pell Grant Program:
Statutory changes implemented by these proposed regulations are
estimated to increase grant awards under the Federal Pell Grant Program
by $297 million over award year 2009-2010 and a total of $1,643 million
over five years. This will increase Federal costs by the same amount.
Statutory changes implemented by these proposed regulations to
grant children of deceased soldiers a zero EFC are estimated to
increase grant awards under the Federal Pell Grant Program by
approximately $280,000 over award year 2009-2010 and a total of
$500,000 over five years. This will increase Federal costs by the same
amount.
Because institutions of higher education affected by these
regulations already participate in the Federal Pell Grant Program,
these schools have already established systems and procedures to meet
program eligibility requirements. Accordingly, entities wishing to
continue to participate in the program have already absorbed most of
the administrative costs related to implementing these regulations.
Marginal costs over this baseline are primarily related to one-time
system changes that, while possibly significant in some cases, are an
unavoidable cost of continued program participation.

Net Budget Impacts

HEOA provisions implemented by these proposed regulations are
estimated to have a net budget impact of $297.4 million in 2010 and
$1.6 billion over FY 2011-2013. Absent evidence on the impact of these
regulations on student behavior, budget cost estimates were based on
behavior as reflected in various Department data

[[Page 42419]]

sets and longitudinal surveys listed under Assumptions, Limitations,
and Data Sources in this preamble. The budgetary impact of the proposed
regulations is almost entirely driven by statutory changes involving
the provision of two Pell Grants in one year.

Assumptions, Limitations, and Data Sources

Because these proposed regulations would largely restate statutory
requirements that would be self-implementing in the absence of
regulatory action, impact estimates provided in the preceding section
reflect a pre-statutory baseline in which the HEOA changes implemented
in these proposed regulations do not exist. Costs have been quantified
for five years. In general, these estimates should be considered
preliminary; they will be reevaluated in light of any comments or
information received by the Department prior to the publication of the
final regulations. The final regulations will incorporate this
information in a revised analysis.
In developing these estimates, a wide range of data sources were
used, including data from the National Student Loan Data System;
operational and financial data from Department of Education systems;
and data from a range of surveys conducted by the National Center for
Education Statistics such as the 2004 National Postsecondary Student
Aid Survey, the 1994 National Education Longitudinal Study, and the
1996 Beginning Postsecondary Student Survey. For the regulations
related to the Federal Pell Grant Program, the sample file used for the
Pell Grant estimation model is created from a representative portion of
FAFSA applicants merged to Pell recipient data from the most current
completed academic year (currently AY 2007-08). The sample data is
``aged'' using OMB economic assumptions and applicant growth
assumptions to project future awards. Data from other sources, such as
the Census Bureau, were also used. Data on administrative burden at
participating schools and third-party servicers are extremely limited;
accordingly, as noted above, the Department is particularly interested
in comments in this area.
Elsewhere in this SUPPLEMENTARY INFORMATION section we identify and
explain burdens specifically associated with information collection
requirements. See the heading Paperwork Reduction Act of 1995.

Accounting Statement

As required by OMB Circular A-4 (available at http://
www.Whitehouse.gov/omb/Circulars/a004/a-4.pdf), in Table 1, we have
prepared an accounting statement showing the classification of the
expenditures associated with the provisions of these proposed
regulations. This table provides our best estimate of the changes in
Federal student aid payments as a result of these proposed regulations.
Expenditures are classified as transfers from the Federal government to
student loan borrowers (for expanded loan discharges, teacher loan
forgiveness payments).

Table 1--Accounting Statement: Classification of Estimated Expenditures
(in millions)
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............ $297.4 million in 2010.
From Whom To Whom? Federal Government To
Student Loan Borrowers.
------------------------------------------------------------------------

Clarity of the Regulations

Executive Order 12866 and the Presidential memorandum ``Plain
Language in Government Writing'' requires each agency to write
regulations that are easy to understand.
The Secretary invites comments on how to make these proposed
regulations easier to understand, including answers to questions such
as the following:
Are the requirements in the proposed regulations clearly
stated?
Do the proposed regulations contain technical terms or
other wording that interferes with their clarity?
Does the format of the proposed regulations (grouping and
order of sections, use of headings, paragraphing, etc.) aid or reduce
their clarity?
Would the proposed regulations be easier to understand if
we divided them into more (but shorter) sections? (A ``section'' is
preceded by the symbol ``Sec. '' and a numbered heading; for example,
Sec. 682.209 Repayment of a loan.)
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?
What else could we do to make the proposed regulations
easier to understand?
To send any comments that concern how the Department could make
these proposed regulations easier to understand, see the instructions
in the ADDRESSES section of this preamble.

Regulatory Flexibility Act Certification

The Secretary certifies that these proposed regulations would not
have a significant economic impact on a substantial number of small
entities. These proposed regulations would affect institutions of
higher education that participate in Title IV, HEA programs and
individual students and parents. The U.S. Small Business Administration
Size Standards define institutions and lenders as ``small entities'' if
they are for-profit or nonprofit institutions with total annual revenue
below $5,000,000 or if they are institutions controlled by governmental
entities with populations below 50,000. A significant percentage of the
institutions participating in the Federal student loan programs meet
the definition of ``small entities.'' For these institutions, the new
requirements imposed under the proposed regulations are not expected to
impose significant new costs. The impact of the proposed regulations on
individuals is not subject to the Regulatory Flexibility Act.
The Secretary invites comments from small institutions and lenders
as to whether they believe the proposed changes would have a
significant economic impact on them and, if so, requests evidence to
support that belief.

Paperwork Reduction Act of 1995

Proposed Sec. Sec. 668.14, 668.18, 668.23, 668.28, 668.41, 668.43,
668.45, 668.46, 668.49, 668.232, 668.233, 686.41, 686.42, 690.63,
690.64, 690.67, 690.75, 692.21, and 692.100, 692.101, 692.111 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.

Section 600.5(a)(5)--Definition of Baccalaureate Liberal Arts Programs
Offered by Proprietary Institutions

The proposed change to Sec. 600.5(a)(5) would add to the
definition of proprietary institution of higher education, an
institution that provides a program leading to a baccalaureate degree
in liberal arts that the institution has provided since January 1,
2009, so long as the institution has been accredited by a recognized
regional accreditation agency or organization since October 1, 2007, or
earlier. This proposed change in the definition of a proprietary
institution does not impact burden.
While the current regulations point to OMB 1840-0098, we estimate
that there is no change in burden associated with this section of the
regulations as

[[Page 42420]]

reported under the redesignated OMB Control Number 1845-0012.

Section 668.14(b)(31)--Institutional Requirements for Teach-Outs/
Eligibility and Certification Procedures

The proposed regulations in Sec. 668.14(b)(31) are amended to
require an institution to submit a teach-out plan to its accrediting
agency whenever (1) the Department or their accrediting agency
initiates an LS&T, or an emergency action against the institution, as
required by statute; (2) the institution's State licensing or
authorizing agency revokes the institution's license or legal
authorization to provide an educational program; (3) the institution
intends to close a location that provides 100 percent of at least one
program; or (4) the institution otherwise intends to cease operations.
While the current regulations in Sec. 668.14 point to OMB 1840-
0537, we estimate that the proposed changes in Sec. 668.14 will
increase burden by 160 hours for institutions under the redesignated
OMB Control Number 1845-0022.

Section 668.18--Readmission Requirements for Servicemembers

The proposed Sec. 668.18 of the regulations include the general
requirements that an institution may not deny readmission to a
servicemember, but must readmit the servicemember with the same
academic status as when the student was last admitted to the
institution. The proposed regulations clarify that the requirements
also apply to a student who was admitted to an institution, but did not
begin attendance because of service in the uniformed services. The
proposed regulations specify that the institution must promptly readmit
a student, and would define ``promptly readmit'' as readmitting a
student into the next class or classes in the student's program unless
the student requests a later date of admission, or unusual
circumstances require the institution to admit the student at a later
date. The proposed regulations require the institution to make
reasonable efforts to help the student become prepared or to enable the
student to complete the program including, but not limited to,
providing refresher courses at no extra cost and allowing the student
to retake a pretest at no extra cost. The institution would not be
required to readmit the student if, after reasonable efforts by the
institution, the student is still not prepared to resume the program at
the point where he or she left off, or is still unable to complete the
program.
The proposed regulation requires an institution to designate one or
more offices for the purpose of receiving advance notice from students
of their absence from the institution necessitated by service in the
uniformed services, and notice from students of intent to return to the
institution. However, such notice would not need to follow any
particular format, nor would a student have to indicate if the student
intends to return to the institution. Also, any such notice may be
provided by an appropriate officer of the Armed Forces. The notice of
intent to return may be provided orally or in writing and would not
need to follow any particular format. A period of absence from the
institution before or after performing service in the uniformed
services would not count against the period of uniformed service which
is limited to the five years.
The proposed regulations list the documentation that support the
institution's determination for readmission that a student must submit
with an application for readmission. The proposed regulations make
clear that the types of documentation available or necessary will vary
from case to case.
The proposed regulations list the circumstances that a student's
eligibility for readmission to an institution would be terminated.
We estimate that the proposed changes will increase burden for
students by 384 hours and for institutions by 1,129 hours for a total
increase in burden of 1,513 hours in OMB Control Number 1845-NEW1.

Non-Title IV Revenue Requirement (90/10)

Section 668.28(a)--Calculating the Revenue Percentage

The proposed regulations in Sec. 668.28(a) implement the statutory
provisions relating to counting revenue from non-title IV eligible
programs.
Regarding institutional loans for which a net present value (NPV)
would be calculated, the proposed regulations establish that
institutional loans would have to be credited in-full to the students'
accounts, be evidenced by standalone repayment agreements between
students and the institution, and be separate from enrollment contracts
signed by students.
To count revenue from loan funds in excess of the loan limits in
effect prior to ECASLA in the allowable revenue category, the proposed
regulations allow institutions to count the excess amount on a payment-
period basis.
We estimate that the proposed regulations will increase burden for
institutions; however, these proposed regulations only define non-title
IV revenue. The burden increase is found in Sec. 668.28(b) and (c)
under OMB 1845-NEW2.

Section 668.28(b)--Net Present Value

The proposed regulation 668.28(b) defines the NPV as the sum of the
discounted cash flows. Proposed Appendix C illustrates how an
institution calculates its 90/10 revenue percentage.
The proposed regulations allow a simpler alternative to performing
the NPV calculation, by allowing an institution to use 50 percent of
the total amount of loans it made during the fiscal year as the NPV.
However, as a condition of using the 50 percent alternative
calculation, if the institution chooses to use this alternative, it may
not sell any of the associated loans until they have been in repayment
for at least two years.
We estimate that the proposed regulations will increase burden for
institutions by 3,087 hours in the new OMB Control Number 1845-NEW2.

Section 668.28(c)--Non-title IV Revenue (90/10)

The proposed regulations in Sec. 668.28(c) would remove all of the
90/10 provisions from 34 CFR 600.5 and relocate the amended provisions
to subpart B of part 668. The proposed regulations amend the program
participation agreement to specify that a proprietary institution must
derive at least 10 percent of its revenue from sources other than title
IV, HEA program funds. If an institution does not satisfy the 90/10
requirement, the proposed regulations require the institution to notify
the Department no later than 45 days after the end of its fiscal year
that it failed the 90/10 requirement. In keeping with provisional
certification requirements the current regulations are amended by
adding proposed language to provide that a proprietary institution's
certification automatically becomes provisional if it fails the 90/10
requirement for any fiscal year.
We estimate that the proposed regulations in Sec. 668.28(c) will
increase burden for institutions by 1 hour in the new OMB Control
Number 1845-NEW2.

Section 668.23(d)(4)--Audited Financial Statements

The proposed regulations in Sec. 668.23(d)(4) require that a
proprietary institution must disclose in a footnote to its financial
statement audit the percentage of its revenues derived from the title
IV, HEA program funds that the

[[Page 42421]]

institution received during the fiscal year covered by that audit. The
institution must also report in the footnote the non-Federal and
Federal revenue by source that was included in the 90/10 calculation.
While the current regulations point to OMB Control Number 1840-
0697, we estimate that the proposed regulations in Sec. 668.23(d)(4)
will increase burden for institutions by 165 hours for the redesignated
OMB Control Number 1845-0038.

Section 668.43(a)(5)(iv)--Institutional Plans for Improving the
Academic Program

The proposed regulation in Sec. 668.43(a) amends the information
about the academic program that the institution must make readily
available to enrolled and prospective students about any plans by the
institution for improving any academic program at the institution. An
institution would be allowed to determine what a ``plan'' is, including
when a plan becomes a plan.
We estimate that the proposed regulations will increase burden for
institutions by 968 hours in OMB Control Number 1845-0022.

Sections 668.14(b) and 668.43(a)--Peer-to-Peer File Sharing/Copyrighted
Material

Section 668.14(b)(30)--Program Participation Agreement (PPA)

The proposed regulations require an institution, as a condition of
participation in a title IV, HEA program, to agree that it has
developed and implemented plans to effectively combat the unauthorized
distribution of copyrighted material by users of the institution's
network without unduly interfering with the educational and research
use of the network.
An institution's plan must include:
The use of one or more technology-based deterrents;
Mechanisms for educating and informing its community about
appropriate versus inappropriate use of copyrighted material;
Procedures for handling unauthorized distribution of copyrighted
material, including disciplinary procedures; and
Procedures for periodically reviewing the effectiveness of the
plans.
The proposed regulations make clear that no particular technology
measures are favored or required for inclusion in an institution's
plans, and each institution retains the authority to determine what its
particular plans for compliance will be, including those that prohibit
content monitoring.
The proposed regulation requires an institution, in consultation
with the chief technology officer or other designated officer of the
institution, to the extent practicable, offer legal alternatives to
illegal downloading or otherwise acquiring copyrighted material, as
determined by the institution. The proposed regulations would also
require that institutions (1) periodically review the legal
alternatives for downloading or otherwise acquiring copyrighted
material and (2) make the results of the review available to their
students through a Web site and/or other means.
While the current regulations in Sec. 668.14 point to OMB 1840-
0537, we estimate that the proposed changes in Sec. 668.14(b)(30) will
increase burden by 91,120 hours for institutions under the redesignated
OMB Control Number 1845-0022.

Section 668.43(a)(10)--Consumer Information

The proposed regulations requires information regarding
institutional policies and sanctions related to the unauthorized
distribution of copyrighted material be included in the list of
institutional information provided upon request to prospective and
enrolled students. This information must (1) explicitly inform enrolled
and prospective students that unauthorized distribution of copyrighted
material, including peer-to-peer file sharing, may subject a student to
civil and criminal liabilities; (2) include a summary of the penalties
for violation of Federal copyright laws; and (3) delineate the
institution's policies with respect to unauthorized peer-to-peer file
sharing, including disciplinary actions that are taken against students
who engage in illegal downloading or unauthorized distribution of
copyrighted materials using the institution's information technology
system.
We estimate that the proposed regulations in Sec. 668.43(a)(10)
will increase burden for institutions by 1,424 hours in OMB Control
Number 1845-0022.

Section 668.41--Reporting and Disclosure of Information

The proposed regulations in Sec. 668.41 add retention rate
information, placement rate information, and information on the types
of graduate and professional education in which graduates of the
institution's four-year degree programs enroll, to the types of
information that an institution must provide to its enrolled and
prospective students. When reporting its retention rate, an institution
must disclose the institution's retention rate as defined by and
reported to the Integrated Postsecondary Education Data System (IPEDS).
The institution may use various sources of retention rate information
and information on types of graduate and professional education in
which graduates of the institution's four-year degree programs enroll
(such as State data systems, surveys, or other relevant sources). If an
actual placement rate is calculated by the institution, it must be
disclosed. The institution would have to identify the source of the
information it discloses, as well as the time frames and methodology
associated with that information.
While the current regulations point to both OMB 1845-0004 and OMB
1845-0010, OMB 1845-0010 has been recently discontinued, therefore, we
estimate that the proposed regulations will increase burden for
institutions 8,541 hours in OMB Control Number 1845-0004.

Section 668.45--Information on Completion or Graduation Rates

Under the proposed regulations in Sec. 668.45, an institution's
completion and graduation rate information must be disaggregated by
gender, by each major racial and ethnic subgroup, and by whether or not
the institution's students received certain types of Federal student
aid. The disaggregation by receipt of aid is categorized by:
Recipients of a Federal Pell Grant;
Recipients of a Federal Family Education Loan or a Federal Direct
Loan (other than an Unsubsidized Stafford Loan); and
Recipients of neither a Federal Pell Grant nor a Federal Family
Education Loan or a Federal Direct Loan (other than an Unsubsidized
Stafford loan).
The institution would report its completion and graduation rate
information in a disaggregated fashion only if the number of students
in each category is sufficient to yield statistically reliable
information, and doing so would not reveal personally identifiable
information about an individual student.
We estimate that the proposed regulations will increase burden for
institutions 7,488 hours in OMB Control Number 1845-0004.

Campus Safety Provisions

Section 668.46(c)(3)--Hate Crime Reporting

The proposed regulations add the crimes of ``larceny-theft,''
``simple assault,'' ``intimidation,'' and ``destruction/damage/
vandalism of property'' to the crimes that must be reported in hate
crime statistics. Additionally, the proposed regulations

[[Page 42422]]

update the definitions of the terms ``Weapons: carrying, possessing,
etc.,'' ``Drug abuse violations,'' and ``Liquor law violations'' which
are excerpted from the Federal Bureau of Investigation's Uniform Crime
Reporting Program, to reflect changes made by the FBI to these
definitions in 2004.
We estimate that the proposed regulations will increase burden for
institutions by 5,695 hours in OMB Control Number 1845-0022.

Reporting Emergency Response and Evacuation Procedures

Section 668.46(e)--Timely Warning and Emergency Notification

The proposed regulations clarify the difference between the
existing timely warning requirement and the new requirement for an
emergency notification policy. While a timely warning must be issued in
response to specific crimes, an emergency notification is required in
the case of an immediate threat to the health or safety of students or
employees occurring on campus. The proposed language would clarify that
an institution that follows its emergency notification procedures is
not required to issue a timely warning based on the same circumstances;
however, the institution must provide adequate follow-up information to
the community as needed.
We estimate that the proposed regulations will increase burden for
institutions by 1,424 hours in OMB Control Number 1845-0022.

Section 668.46(g)--Emergency Response and Evacuation Procedures

The proposed regulations outline the elements that an institution
must include in its statement of policy describing its emergency
response and evacuating procedures in its annual security report to
include the following:
Procedures to immediately notify the campus community upon the
confirmation of a significant emergency or dangerous situation
involving an immediate threat occurring on the campus.
A description of the process that (1) confirms that there is a
significant emergency or dangerous situation, (2) determines the
appropriate segment or segments of the campus community to receive a
notification, (3) determines the content of the notification, and (4)
initiates the notification system.
A statement that the institution will, without delay, and taking
into account the safety of the community, determine the content of the
notification and initiate the notification system, unless issuing the
notification will, in the professional judgment of responsible
authorities, compromise efforts to assist a victim or to contain,
respond to, or otherwise mitigate the emergency.
A list of the titles of the persons or organizations responsible
for carrying out the actions proposed.
Procedures for disseminating emergency information to the larger
community.
Procedures for testing its emergency response and evacuation
procedures on at least an annual basis with at least one test per
calendar year, and be documented, including a description of the
exercise, the date, time, and if it was announced or unannounced.
We estimate that the proposed regulations will increase burden for
institutions by 11,390 hours in OMB Control Number 1845-0022.

Missing Student Procedure

Section 668.41(a)--Definition of On-Campus Student Housing Facility

The proposed regulations in Sec. 668.41(a) would add a definition
of the term on-campus student housing facility to mean a dormitory or
other residential facility for students that is located on an
institution's campus.
The proposed definition would be added to clarify what is meant by
on-campus student housing facility and to link the meaning of ``on-
campus'' to the existing regulatory definition of campus in Sec.
668.46(a), which is used for crime reporting under Sec. 668.46(c). The
proposed change is to a definition and does not impact burden.
While the current regulations point to both OMB 1845-0004 and OMB
1845-0010, OMB 1845-0010 has recently been discontinued. We estimate
that there is no change in burden associated with this section of the
regulations as reported under OMB Control Number 1845-0004.

Section 668.46(b)--Annual Security Report

The proposed regulations in Sec. 668.46(b) require an institution
to include its missing student notification policy and procedures in
its annual security report. This would be required beginning with the
annual security report distributed by October 1, 2010.
We estimate that the proposed regulations will increase burden for
institutions by 456 hours for an increase in burden in OMB Control
Number 1845-0022.

Section 668.46(h)--Missing Student Notification Policy

The proposed regulation in Sec. 668.46(h) implements the new
statutory requirements, specifying that a statement of policy regarding
missing student notification for students residing in on-campus student
housing facilities must include:
A list of the titles of the persons or organizations to which
students, employees, or other individuals should report that a student
has been missing for 24 hours;
A requirement that any official missing student report be
immediately referred to the institution's police or campus security
department or, if not applicable, to the local law enforcement agency
with jurisdiction in the area;
The option for each student to identify a contact person to be
notified if the student is determined missing by the institutional
police or campus security department, or the local law enforcement
agency; and
A disclosure that contact information will be registered and
maintained confidentially.
The proposed regulation further requires an institution to advise
students who are under 18 and not emancipated that if the student is
missing it will notify a custodial parent or guardian in addition to
any contact person designated by the student. All students must also be
advised that, regardless of whether they name a contact person, the
institution must notify the local law enforcement agency that the
student is missing, unless the local law enforcement was the entity
that determined that the student is missing.
The proposed regulations reflect the new statutory requirements.
These regulations do not preclude the institution from contacting the
student's contact person or the parent immediately upon determination
that the student has been missing for 24 hours.
We estimate that the proposed regulations will increase burden for
institutions by 2,423 hours for an increase in burden in OMB Control
Number 1845-0022.

Fire Safety Standards

Section 668.41(e)--Annual Fire Safety Report

The proposed regulations provide that institutions that maintain an
on-campus student housing facility must distribute an annual fire
safety report and to create publication requirements for the annual
fire safety report that are similar to the long-standing rules for the
annual security report.
The proposed regulations allow an institution to publish the annual
security report and the annual fire safety

[[Page 42423]]

report together, as long as the title of the document clearly states
that it contains both the annual security report and the annual fire
safety report. If an institution chooses to publish the reports
separately, it would have to include information in each of the two
reports about how to directly access the other report.
While the current regulations point to both OMB 1845-0004 and OMB
1845-0010, OMB 1845-0010 has recently been discontinued. The burden
associated with the data collection and reporting for the annual fire
safety report is reflected in Sec. 668.49 as reported under OMB
Control Number 1845-NEW3.

Section 668.49--Annual Fire Safety Report

The proposed regulations define the following terms relevant to the
fire safety reporting requirements: Cause of fire; Fire; Fire drill;
Fire-related injury; Fire-related death; Fire-safety system; and Value
of property damage.
The proposed regulation requires an institution to report to the
public, the statistics that it submits to the Department in its annual
fire safety report. The institution would have to provide data for the
three most recent calendar years for which data are available. The
first full report to contain the full three years of data would be the
report due on October 1, 2012.
The proposed regulations outline the elements that an institution
must disclose in its annual fire safety report, including: Fire
statistics; A description of each on-campus student housing facility
fire safety system; The number of regular, mandatory, supervised fire
drills held during the previous calendar year; Policies or rules on
portable electrical appliances, smoking, and open flames in student
housing facilities; Procedures for student housing evacuation in the
case of a fire; Policies on fire safety education and training programs
provided to students, faculty, and staff; A list of the titles of each
person or organization to which students and employees should report
that a fire has occurred; and Plans for future improvements in fire
safety.
The proposed regulations specify that an institution that maintains
an on-campus student housing facility must maintain a written and
easily understood fire log that records, by the date that the fire was
reported (as opposed to by the date that the fire occurred), any fire
that occurred in an on-campus student housing facility. The log would
have to include the nature, date, time, and general location of each
fire, and require that the log be available for public. These proposed
regulations also implement the statutory requirement that an
institution make an annual report to the campus community on the fires
recorded in the fire log; however, this requirement may be satisfied by
the annual fire safety report described in proposed Sec. 668.49(b).
We estimate that the proposed regulations will increase burden for
institutions by 7,283 hours in OMB Control Number 1845-NEW3.

Financial Assistance for Students With Intellectual Disabilities

Section 600.5--Proprietary Institution of Higher Education

The proposed regulation in Sec. 600.5(a)(5)(i)(B)(2)(ii) defines a
proprietary institution of higher education as one that may have a
comprehensive transition and postsecondary program as an eligible
program when it is approved by the Secretary. The proposed change in
the definition of an eligible program does not impact burden.
While the current regulations in Sec. 600.5 point to OMB 1840-
0098, this information collection has been discontinued and
redesignated to 1845-0012. We estimate that there is no change in
burden associated with this proposed change in the regulations.

Section 668.8--Eligible Program

The proposed regulation in Sec. 668.8(n) defines a comprehensive
transition and postsecondary program as an eligible program when it is
approved by the Secretary. The proposed change in the definition of an
eligible program does not impact burden.
While the current regulations in Sec. 668.8 point to OMB 1845-
0537, this collection package has been discontinued; we estimate that
there is no change in burden associated with this proposed change in
the regulations.

Section 668.232--Program Eligibility

The proposed regulations require an institution that wishes to
provide a comprehensive transition and postsecondary program to apply
and receive approval from the Secretary. The proposed regulations
outline the elements that an institution must include in its
application, including: A detailed description of the comprehensive
transition and postsecondary program; The policy for determining
whether a student enrolled in the program is making satisfactory
academic progress; A statement of the number of weeks of instructional
time and the number of semester or quarter credit hours or clock hours
in the program; A description of the educational credential offered or
identified outcome or outcomes established by the institution for all
students enrolled in the program; A copy of the letter or notice sent
to the institution's accrediting agency informing the agency of its
comprehensive transition and postsecondary program; and Any other
information the Department may require. We estimate that the proposed
regulations will increase burden for institutions by 66 hours in OMB
Control Number 1845-NEW4.

Section 668.233--Student Eligibility

The proposed regulations in Sec. 668.233 provide that a student
with intellectual disabilities enrolled in a comprehensive transition
and postsecondary program may be eligible for title IV, HEA program
assistance under the Federal Pell grant, FSEOG, and FWS programs if:
The student is making satisfactory academic program in accordance with
the institution's published standards for students enrolled in the
comprehensive transition and postsecondary program; and The institution
obtains a record from a local educational agency that the student is or
was eligible for FAPE under IDEA. If the FAPE record does not indicate
that the student has an intellectual disability, the institution would
have to obtain documentation from another source that identifies the
intellectual disability.
We estimate that the proposed regulations will increase burden for
institutions by 768 hours in OMB Control Number 1845-NEW4.

Section 668.43(a)(7)--Institutional Information

The proposed regulation changes the phrase ``any special facilities
and services'' to ``the services and facilities,'' and replaces the
phrase ``disabled students'' with ``students with disabilities.'' The
proposed changes would also clarify that a description of services and
facilities for students with disabilities must also contain the
services and facilities available for students with intellectual
disabilities.
We estimate that the proposed regulations will increase burden for
institutions by 44 hours in OMB Control Number 1845-0022.

Federal Work Study Programs

Section 675.16--Conforming FWS Payment Requirements to the Cash
Management Regulations

The proposed regulations in Sec. 675.16(b)(1)(ii) and (b)(2),
amend the FWS regulations in three ways regarding

[[Page 42424]]

the use of current award year FWS funds to pay prior award year
charges. First, the amount of prior award year charges that could be
paid with current award year FWS funds would increase to not more than
$200. Second, the FWS provision that allows an institution to pay for
prior award year charges of $100 or more would be removed. Finally, we
clarify that the $200 limit applies to all title IV, HEA program funds
that an institution uses to pay prior-year charges. These changes to
conform the FWS payment requirements to the current cash management
regulations do not impact burden.
We estimate that there is no change in burden associated with this
section of the regulations under OMB Control Number 1845-0019.

TEACH Grant Program

Section 686.41--Period of Suspension

The proposed regulations in Sec. 686.41 provide that a TEACH Grant
recipient who is called or ordered to active military duty (or his or
her representative) may request a suspension of the eight-year period
in increments not to exceed three years. Once the recipient has
exceeded the 3-year suspension period, the recipient (or his or her
representative) may request a discharge of all or a portion of his or
her teaching service obligation.
We estimate that the proposed regulations will increase burden for
institutions in OMB Control Number 1845-0083. The Department will
submit an 83-C incorporating the changes after the final regulations
have published.

Section 686.42--Discharge of Agreement To Serve

The proposed regulations in Sec. 686.42 provide that the recipient
may qualify for a proportional discharge of his or her service
obligation based on the number of years the recipient has been called
or ordered to active military duty.
To obtain the discharge, the recipient (or his or her
representative) would be required to provide the Department:
A written statement from his or her commanding or personnel officer
certifying that the recipient is on active duty status in the Armed
Forces, the date on which that service began, and the date the service
is expected to end; and a copy of his or her official military orders
and military identification.
The Department would notify a TEACH Grant recipient of the decision
reached on his or her request for a partial or full discharge of the
teaching service obligation. The grant recipient would be responsible
for fulfilling any teaching service obligation that is not discharged.
We estimate that the proposed regulations will increase burden for
institutions in OMB Control Number 1845-0083. The Department will
submit an 83-C incorporating the changes after the final regulations
have published.

Federal Pell Grant Program

Two Federal Pell Grants in an Award Year

Section 690.67(a)--Student Eligibility for a Second Scheduled Award

The proposed regulations would amend Sec. 690.67 to provide that a
student would be eligible for a second Scheduled Award if the student
has earned in an award year at least the credit or clock hours of the
first academic year of the student's eligible program, and is enrolled
as at least a half-time student in a program leading to a bachelor's or
associate degree or other recognized educational credential (such as a
postsecondary certificate or diploma), except as provided for students
with intellectual disabilities. To the extent that the institution will
be reporting these second scheduled award Pell disbursements via the
Common Origination and Delivery (COD) system, there will be some
additional burden for institutions.
We estimate that the proposed regulations will increase burden for
institutions by 47,432 hours in OMB Control Number 1845-NEW5.

Section 690.67(b)--Transfer Students

The proposed regulations in Sec. 690.67(b) would provide that an
institution determine the credit or clock hours that a transfer student
has earned at a prior institution during the award year based on the
Federal Pell Grant disbursements that the student received at the prior
institution during the award year in relation to the student's
Scheduled Award at that prior institution. The credit or clock hours
that the student would be considered to have earned would be in the
same proportion to credit or clock hours in the current institution's
academic year as the disbursements that the student has received at the
prior institution in the award year are in proportion to the student's
Scheduled Award at the prior institution.
To the extent that the institution will be reviewing the transfer
records of these students and subsequently reporting second scheduled
award Pell disbursements via the Common Origination and Delivery (COD)
system, there will be some additional burden for institutions.
We estimate that the proposed regulations will increase burden for
institutions by 14,400 hours in OMB Control Number 1845-NEW5.

Section 690.67(c)--Special Circumstances

The proposed regulations in Sec. 690.67(c) would provide that a
financial aid administrator may waive the requirement that a student
complete the credit or clock hours in the student's first academic year
in the award year due to circumstances beyond the student's control.
The financial aid administrator would be required to make and document
the determination on an individual basis.
To the extent that the institution will be documenting these
special circumstances and subsequently awarding second Pell grants, the
institutions will be reporting the second Pell disbursements via the
Common Origination and Delivery (COD) system, there will be some
additional burden for institutions.
We estimate that the proposed regulations will increase burden for
institutions by 3,429 hours in OMB Control Number 1845-NEW5.

Section 690.67(d)--Nonapplicable credit or clock hours

The proposed regulation in Sec. 690.67(d) states that, in
determining a student's eligibility for a second Scheduled Award in an
award year, an institution may not use credit or clock hours that the
student received based on Advanced Placement (AP) programs,
International Baccalaureate (IB) programs, testing out, life
experience, or similar competency measures.
To the extent that the institution will be making determinations
about the applicability of AP, IB, or other non- applicable courses,
institution will subsequently award second Pell grants and thereafter
report Pell disbursements via the Common Origination and Delivery (COD)
system, thus there will be some additional reporting burden for
institutions.
We estimate that the proposed regulations will increase burden for
institutions by 2,032 hours in OMB Control Number 1845-NEW5.

Section 690.64--Payment Period in Two Award Years

In this proposed regulation in Sec. 690.64, if a student is
enrolled in a crossover payment period as a half-time or less-than-
half-time student, the current requirements generally would apply.
If a student is enrolled as a three-quarter-time or full-time
student, an institution must consider the payment period to be in the
award year in which

[[Page 42425]]

the student would receive the greater payment for the payment period
based on the information available at the time that the student's
Federal Pell Grant is initially calculated. If the institution
subsequently receives information that the student would receive a
greater payment for the payment period by reassigning the payment to
the other award year, the institution would be required to reassign the
payment to the award year providing the greater payment.
A student may request that the institution place the payment period
in the award year that can be expected to result in the student
receiving a greater amount of Federal Pell Grants over the two award
years in which the payment period is scheduled to occur. If the student
makes that request, the institution must assign the payment period to
that award year.
To the extent that the institution will be reviewing enrollment
status in each of the two award years and making determinations about
which award year must be used and subsequently reporting these second
scheduled award Pell disbursements via the Common Origination and
Delivery (COD) system, there will be some additional burden for
institutions.
We estimate that the proposed regulations will increase burden for
institutions by 33,881 hours in OMB Control Number 1845-NEW5.

Section 690.63(h)--Payment From Two Scheduled Awards

Under the proposed regulations in Sec. 690.63(h), if a student is
eligible for the remaining portion of a first Scheduled Award in an
award year and for a payment from the second Scheduled Award, the
student's payment would be calculated using the annual award for his or
her enrollment status for the payment period. The student's payment
would be the remaining amount of the first Scheduled Award being
completed plus an amount from the second Scheduled Award in the award
year up to the total amount of the payment for the payment period.
We estimate that the proposed regulations will increase burden for
institutions by 8,471 hours in OMB Control Number 1845-NEW5.

Section 690.75(e)--Maximum Pell Grant for Children of Soldiers

Under the proposed regulation in Sec. 690.75(e), a student whose
parent or guardian was a member of the Armed Forces of the United
States and died as a result of performing military service in Iraq or
Afghanistan after September 11, 2001, would automatically receive a
zero EFC for purposes of the Federal Pell Grant Program if he or she
was under 24 years old or enrolled in an institution of higher
education at the time of the parent's or guardian's death.
We estimate that the proposed regulations will increase burden for
institutions by 48 hours in OMB Control Number 1845-NEW6.

Part 692 Leveraging Educational Assistance Partnership Program

Section 692.21(k)--Notification to Students of LEAP Grant Funding
Sources

The proposed regulations require that the State program notify
eligible students that grants under the LEAP Grant Program are (1) LEAP
Grants and (2) are funded by the Federal Government, the State, and,
where applicable, other contributing partners.
The implementation of the proposed regulations for the changes to
LEAP and the introduction of the GAP program will increase burden to
States. We estimate that the burden in these proposed regulations will
be associated with the application and performance report forms under
development. These forms will be developed after the final regulations
are published to insure that the forms comport with the finalized
requirements. The new forms will be submitted to OMB for approval under
OMB Control Number 1845-NEW7.

Section 692.100--Requirements a State Must Meet To Receive GAP Funds

The proposed regulations in Sec. 692.100 describe the requirements
that a State must meet to receive an allotment under this program
including submitting an application on behalf of a partnership and
serving as the primary administrative unit of the partnership. Under
proposed Sec. 692.100(a)(6), a State must include in its application
the steps it plans to take to ensure, to the extent practicable, that
students who receive a LEAP Grant under GAP would persist to degree
completion.
Under proposed Sec. 692.100(a)(8) a State GAP Program is required
to notify eligible students that the grants they receive under GAP are
LEAP Grants and that the grants are funded by the Federal Government,
the State and where applicable, other contributing partners.
The implementation of the proposed regulations for the changes to
LEAP and the introduction of the GAP program will increase burden to
States. We estimate that the burden in these proposed regulations will
be associated with the application and performance report forms under
development. These forms will be developed after the final regulations
are published to insure that the forms comport with the finalized
requirements. The new forms will be submitted to OMB for approval under
OMB Control Number 1845-NEW7.

Section 692.101--Requirements That Must Be Met by a State Partnership

The proposed regulations in Sec. 692.101(b)(2) provide that a
degree-granting institution of higher education that is in a
partnership under the GAP Program must recruit, admit, and provide
institutional grant aid to participating eligible students as agreed to
with the State agency.
The implementation of the proposed regulations for the changes to
LEAP and the introduction of the GAP program will increase burden to
States. We estimate that the burden in these proposed regulations will
be associated with the application and performance report forms under
development. These forms will be developed after the final regulations
are published to insure that the forms comport with the finalized
requirements. The new forms will be submitted to OMB for approval under
OMB Control Number 1845-NEW7.

Section 692.111--Purposes for Which a State May Use Its GAP Grant

The proposed regulations in Sec. 692.111 provide that each State
receiving an allotment shall annually notify potentially eligible
students in grades 7 through 12 in the State, and their families, of
their potential eligibility for student financial assistance, including
a LEAP Grant under GAP, to attend a LEAP-participating institution of
higher education.
The notice shall include information about early information and
intervention, mentoring, or outreach programs available to the student.
The notice shall provide a nonbinding estimate of the total amount of
financial aid that an eligible student with a similar income level may
expect to receive, including an estimate of the amount of a LEAP Grant
under GAP and an estimate of the amount of grants, loans, and all other
available types of aid from the major Federal and State financial aid
programs. The proposed notice will also include any additional
requirements that the State may require for receipt of a LEAP Grant
under GAP.
The implementation of the proposed regulations for the changes to
LEAP and the introduction of the GAP program will increase burden to
States. We estimate that the burden in these proposed regulations will
be associated with the application and performance report forms under
development. These forms will be developed after the final

[[Page 42426]]

regulations are published to insure that the forms comport with the
finalized requirements. The new forms will be submitted to OMB for
approval under OMB Control Number 1845-NEW7.
Consistent with the discussion above, the following chart describes
the sections of the proposed regulations involving information
collections, the information being collected, and the collections that
the Department will submit to the Office of Management and Budget for
approval and public comment under the Paperwork and Reduction Act.

**NOTE: CHART HAS BEEN OMITTED -- SEE PDF FILE

 If you want to comment on the proposed information collection 
requirements, please send your comments to the Office of Information 
and Regulatory Affairs, OMB, Attention: Desk Officer for U.S. 
Department of Education. Send these comments by e-mail to OIRA_
DOCKET@omb.eop.gov or by fax to (202) 395-6974. You may also send a 
copy of these comments to the Department contact named in the ADDRESSES 
section of this preamble.
    We consider your comments on these proposed collections of 
information in--
      Deciding whether the proposed collections are necessary 
for the proper performance of our functions, including whether the 
information will have practical use;
      Evaluating the accuracy of our estimate of the burden of 
the proposed collections, including the validity of our methodology and 
assumptions;
      Enhancing the quality, usefulness, and clarity of the 
information we collect; and
      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

    These programs are not subject to Executive Order 12372 and the 
regulations in 34 CFR part 79.

Assessment of Educational Impact

    In accordance with section 411 of the General Education Provisions 
Act, 20 U.S.C. 1221e-4, the Secretary particularly requests comments on 
whether these 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 well as all other Department of 
Education documents published in the Federal Register, in text or Adobe 
Portable Document Format (PDF) on the Internet at the following site: 
http://www.ed.gov/news/fedregister.

[[Page 42428]]

    To use PDF you must have Adobe Acrobat Reader, which is available 
free at this site. If you have questions about using PDF, call the U.S. 
Government Printing Office (GPO), toll free, at 1-888-293-6498; or in 
the Washington, DC, area at (202) 512-1530.

    Note: The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
official edition of the Federal Register and the Code of Federal 
Regulations is available on GPO Access at: http://www.gpoaccess.gov/
nara/index.html.


(Catalog of Federal Domestic Assistance Numbers: 84.063 Federal Pell 
Grant Program; 84.033 Federal Work-Study Program; 84.379 TEACH Grant 
Program; 84.069 LEAP)

List of Subjects

34 CFR Part 600

    Colleges and universities, Foreign relations, Grant programs-
education, Loan programs-education, Reporting and recordkeeping 
requirements, Student aid, Vocational education.

34 CFR Part 668

    Administrative practice and procedure, Aliens, Colleges and 
universities, Consumer protection, Grant programs-education, Loan 
programs-education, Reporting and recordkeeping requirements, Selective 
Service System, Student aid, Vocational education.

34 CFR Part 675

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

34 CFR Part 686

    Administrative practice and procedure, Colleges and universities, 
Education, Elementary and secondary education, Grant programs-
education, Reporting and recordkeeping requirements, Student aid.

34 CFR Part 690

    Colleges and universities, Education of disadvantaged, Grant 
programs-education, Reporting and recordkeeping requirements, Student 
aid.

34 CFR Part 692

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

    Dated: July 30, 2009.
Arne Duncan,
Secretary of Education.

    For the reasons discussed in the preamble, the Secretary proposes 
to amend parts 600, 668, 675, 686, 690, and 692 of title 34 of the Code 
of Federal Regulations as follows:

PART 600--INSTITUTIONAL ELIGIBILITY UNDER THE HIGHER EDUCATION ACT 
OF 1965, AS AMENDED

    1. The authority citation for part 600 continues to read as 
follows:

    Authority:  20 U.S.C. 1001, 1002, 1003, 1088, 1091, 1094, 1099b, 
and 1099c, unless otherwise noted.

    2. Section 600.2 is amended by:
    A. Revising paragraph (1)(i) of the definition of educational 
program.
    B. Adding, in alphabetical order, a definition for teach-out plan.
    C. Revising the authority citation at the end of the section.
    The revisions and addition read as follows:


Sec.  600.2  Definitions.

* * * * *
    Educational program: (1) * * *
    (i) Leads to an academic, professional, or vocational degree, or 
certificate, or other recognized educational credential, or is a 
comprehensive transition and postsecondary program, as described in 34 
CFR part 668, subpart O; and
* * * * *
    Teach-out plan: A written plan developed by an institution that 
provides for the equitable treatment of students if an institution, or 
an institutional location that provides 100 percent of at least one 
program, ceases to operate before all students have completed their 
program of study, and may include, if required by the institution's 
accrediting agency, a teach-out agreement between institutions.
* * * * *

(Authority: 20 U.S.C. 1071 et seq., 1078-2, 1088, 1091, 1094, 1099b, 
1099c, 1141; 26 U.S.C. 501(c))


    3. Section 600.4 is amended by:
    A. Revising paragraph (a)(4).
    B. Revising the authority citation at the end of the section.
    The revisions read as follows:


Sec.  600.4  Institution of higher education.

    (a) * * *
    (4)(i) Provides an educational program--
    (A) For which it awards an associate, baccalaureate, graduate, or 
professional degree;
    (B) That is at least a two-academic-year program acceptable for 
full credit toward a baccalaureate degree; or
    (C) That is at least a one-academic-year training program that 
leads to a certificate, degree, or other recognized educational 
credential and prepares students for gainful employment in a recognized 
occupation; and
    (ii) May provide a comprehensive transition and postsecondary 
program, as described in 34 CFR part 668, subpart O; and
* * * * *

(Authority: 20 U.S.C. 1091, 1094, 1099b, 1141(a))


    4. Section 600.5 is amended by:
    A. Revising paragraph (a)(5).
    B. In paragraph (a)(6), adding the word ``and'' after the 
punctuation ``;''.
    C. In paragraph (a)(7), removing the word ``; and'' and adding, in 
its place, the punctuation ``.''.
    D. Removing paragraph (a)(8).
    E. Removing paragraphs (d) through (g).
    F. Redesignating paragraph (h) as paragraph (d).
    G. Adding a new paragraph (e).
    H. Revising the OMB control number and authority citation at the 
end of the section.
    The revisions and addition read as follows:


Sec.  600.5  Proprietary institution of higher education.

    (a) * * *
    (5)(i)(A) Provides an eligible program of training, as defined in 
34 CFR 668.8, to prepare students for gainful employment in a 
recognized occupation; or
    (B)(1) Provides a program leading to a baccalaureate degree in 
liberal arts, as defined in paragraph (e) of this section, and has 
provided that program since January 1, 2009; and
    (2) Is accredited by a recognized regional accrediting agency or 
association, and has continuously held such accreditation since October 
1, 2007, or earlier; and
    (ii) May provide a comprehensive transition and postsecondary 
program for students with intellectual disabilities, as provided in 34 
CFR part 668, subpart O;
* * * * *
    (e) For purposes of this section, a ``program leading to a 
baccalaureate degree in liberal arts'' is a program that the 
institution's recognized regional accreditation agency or organization 
determines, is a general instructional program in the liberal arts 
subjects, the humanities disciplines, or the general curriculum, 
falling within one or more of the following generally-accepted 
instructional categories comprising such programs, but including only 
instruction in regular programs, and excluding independently-designed 
programs, individualized programs, and unstructured studies:

[[Page 42429]]

    (1) A program that is a structured combination of the arts, 
biological and physical sciences, social sciences, and humanities, 
emphasizing breadth of study.
    (2) An undifferentiated program that includes instruction in the 
general arts or general science.
    (3) A program that focuses on combined studies and research in the 
humanities subjects as distinguished from the social and physical 
sciences, emphasizing languages, literatures, art, music, philosophy, 
and religion.
    (4) Any single instructional program in liberal arts and sciences, 
general studies, and humanities not listed in paragraph (e)(1) through 
(e)(3) of this section.

(Approved by the Office of Management and Budget under control 
number 1845-0012)

(Authority: 20 U.S.C. 1088, 1091)


    5. Section 600.6 is amended by:
    A. Revising paragraph (a)(4).
    B. Revising the authority citation at the end of the section.
    The revisions read as follows:


Sec.  600.6  Postsecondary vocational institution.

    (a) * * *
    (4)(i) Provides an eligible program of training, as defined in 34 
CFR 668.8, to prepare students for gainful employment in a recognized 
occupation; and
    (ii) May provide a comprehensive transition and postsecondary 
program for students with intellectual disabilities, as provided in 34 
CFR part 668, subpart O;
* * * * *

(Authority: 20 U.S.C. 1088, 1091, 1094(c)(3))


    6. Section 600.32 is amended by:
    A. In paragraph (a), removing the words ``(b) and (c)'' and adding, 
in their place, the words ``(b), (c), and (d)''.
    B. Redesignating paragraph (d) as paragraph (e).
    C. Adding a new paragraph (d).
    D. Revising the authority citation at the end of the section.
    The addition and revision read as follows:


Sec.  600.32  Eligibility of additional locations.

* * * * *
    (d)(1) An institution that conducts a teach-out at a site of a 
closed institution may apply to have that site approved as an 
additional location if--
    (i) The closed institution ceased operations as result of an action 
taken by the Secretary to limit, suspend, or terminate the 
institution's participation under Sec.  600.41 or subpart G of this 
part, or as a result of an emergency action taken by the Secretary 
under 34 CFR 668.83; and
    (ii) The teach-out plan required under 34 CFR 668.14(b)(31) is 
approved by the closed institution's accrediting agency.
    (2)(i) An institution that conducts a teach-out and is approved to 
add an additional location described in paragraph (d)(1) of this 
section--
    (A) Does not have to meet the two-year requirement of Sec.  
600.5(a)(7) or Sec.  600.6(a)(6) for the additional location described 
in paragraph (d)(1) of this section;
    (B) Is not responsible for any liabilities of the closed 
institution as provided under paragraphs (c)(1) and (c)(2) of this 
section if the institutions are not related parties and there is no 
commonality of ownership or management between the institutions, as 
described in 34 CFR 668.188(b) and 34 CFR 668.207(b); and
    (C) Will not have the default rate of the closed institution 
included in the calculation of its default rate, as would otherwise be 
required under 34 CFR 668.184 and 34 CFR 668.203, if the institutions 
are not related parties and there is no commonality of ownership or 
management between the institutions, as described in 34 CFR 668.188(b) 
and 34 CFR 668.207(b).
    (ii) As a condition for approving an additional location under 
paragraph (d)(1) of this section, the Secretary may require that 
payments from the institution conducting the teach-out to the owners or 
related parties of the closed institution, are used to satisfy any 
liabilities owed by the closed institution.
* * * * *

(Authority: 20 U.S.C. 1088, 1099c, 1141)

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

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

    Authority:  20 U.S.C. 1001, 1002, 1003, 1070g, 1085, 1088, 1091, 
1092, 1094, 1099c, and 1099c-1, unless otherwise noted.

    8. Section 668.8 is amended by:
    A. Revising paragraph (n).
    B. Removing the OMB control number at the end of the section.
    The revision reads as follows:


Sec.  668.8  Eligible program.

* * * * *
    (n) For title IV, HEA program purposes, eligible program includes a 
direct assessment program approved by the Secretary under Sec.  668.10 
and a comprehensive transition and postsecondary program approved by 
the Secretary under Sec.  668.232.
* * * * *
    9. Section 668.13(c) is revised to read as follows:


Sec.  668.13  Certification procedures.

* * * * *
    (c) Provisional certification. (1)(i) The Secretary may 
provisionally certify an institution if--
    (A) The institution seeks initial participation in a Title IV, HEA 
program;
    (B) The institution is an eligible institution that has undergone a 
change in ownership that results in a change in control according to 
the provisions of 34 CFR part 600;
    (C) The institution is a participating institution--
    (1) That is applying for a certification that the institution meets 
the standards of this subpart;
    (2) That the Secretary determines has jeopardized its ability to 
perform its financial responsibilities by not meeting the factors of 
financial responsibility under Sec.  668.15 or the standards of 
administrative capability under Sec.  668.16; and
    (3) Whose participation has been limited or suspended under subpart 
G of this part, or voluntarily enters into provisional certification;
    (D) The institution seeks a renewal of participation in a title IV, 
HEA program after the expiration of a prior period of participation in 
that program; or
    (E) The institution is a participating institution that was 
accredited or preaccredited by a nationally recognized accrediting 
agency on the day before the Secretary withdrew the Secretary's 
recognition of that agency according to the provisions contained in 34 
CFR part 603.
    (ii) A proprietary institution's certification automatically 
becomes provisional if it does not derive at least 10 percent of its 
revenue for any fiscal year from sources other than title IV, HEA 
program funds, as required under Sec.  668.14(b)(16).
* * * * *
    10. Section 668.14 is amended by:
    A. Adding paragraph (b)(16).
    B. In paragraph (b)(25)(ii), removing the word ``and'' that appears 
after the punctuation ``;''.
    C. Adding paragraph (b)(30).
    D. Adding paragraph (b)(31).
    E. Revising the OMB control number at the end of the section.
    The additions and revision read as follows:


Sec.  668.14  Program participation agreement.

* * * * *
    (b) * * *
    (16) For a proprietary institution, the institution will derive at 
least 10

[[Page 42430]]

percent of its revenues for each fiscal year from sources other than 
title IV, HEA program funds, as provided in Sec.  668.28(a) and (b), or 
be subject to sanctions described in Sec.  668.28(c);
* * * * *
    (30) The institution--
    (i) Has developed and implemented written plans to effectively 
combat the unauthorized distribution of copyrighted material by users 
of the institution's network, without unduly interfering with 
educational and research use of the network, that include--
    (A) The use of one or more technology-based deterrents;
    (B) Mechanisms for educating and informing its community about 
appropriate versus inappropriate use of copyrighted material, including 
that described in Sec.  668.43(a)(10);
    (C) Procedures for handling unauthorized distribution of 
copyrighted material, including disciplinary procedures; and
    (D) Procedures for periodically reviewing the effectiveness of the 
plans to combat the unauthorized distribution of copyrighted materials 
by users of the institution's network using relevant assessment 
criteria. No particular technology measures are favored or required for 
inclusion in an institution's plans, and each institution retains the 
authority to determine what its particular plans for compliance with 
paragraph (b)(30) of this section will be, including those that 
prohibit content monitoring; and
    (ii) Will, in consultation with the chief technology officer or 
other designated officer of the institution--
    (A) Periodically review the legal alternatives for downloading or 
otherwise acquiring copyrighted material;
    (B) Make available the results of the review in paragraph 
(b)(30)(ii)(A) of this section to its students through a Web site or 
other means; and
    (C) To the extent practicable, offer legal alternatives for 
downloading or otherwise acquiring copyrighted material, as determined 
by the institution; and
    (31) The institution will submit a teach-out plan to its 
accrediting agency in compliance with 34 CFR 602.24(c), and the 
standards of the institution's accrediting agency upon the occurrence 
of any of the following events:
    (i) The Secretary initiates the limitation, suspension, or 
termination of the participation of an institution in any title IV, HEA 
program under 34 CFR 600.41 or subpart G of this part or initiates an 
emergency action under Sec.  668.83.
    (ii) The institution's accrediting agency acts to withdraw, 
terminate, or suspend the accreditation or preaccreditation of the 
institution.
    (iii) The institution's State licensing or authorizing agency 
revokes the institution's license or legal authorization to provide an 
educational program.
    (iv) The institution intends to close a location that provides 100 
percent of at least one program.
    (v) The institution otherwise intends to cease operations.
* * * * *
(Approved by the Office of Management and Budget under control 
number 1845-0022)
* * * * *
    11. Section 668.18 is added to subpart B of part 668 to read as 
follows:


Sec.  668.18  Readmission requirements for servicemembers.

    (a) General. (1) An institution may not deny readmission to a 
person who is a member of, applies to be a member of, performs, has 
performed, applies to perform, or has an obligation to perform, service 
in the uniformed services on the basis of that membership, application 
for membership, performance of service, application for service, or 
obligation to perform service.
    (2)(i) An institution must promptly readmit to the institution a 
person described in paragraph (a)(1) of this section with the same 
academic status as the student had when the student last attended the 
institution or was last admitted to the institution, but did not begin 
attendance because of that membership, application for membership, 
performance of service, application for service, or obligation to 
perform service.
    (ii) ``Promptly readmit'' means that the institution must readmit 
the student into the next class or classes in the student's program 
beginning after the student provides notice of his or her intent to 
reenroll, unless the student requests a later date of readmission or 
unusual circumstances require the institution to admit the student at a 
later date.
    (iii) To readmit a person with the ``same academic status'' means 
that the institution admits the student--
    (A) To the same program to which he or she was last admitted by the 
institution or, if that exact program is no longer offered, the program 
that is most similar to that program, unless the student requests or 
agrees to admission to a different program;
    (B) At the same enrollment status that the student last held at the 
institution, unless the student requests or agrees to admission at a 
different enrollment status;
    (C) With the same number of credit hours or clock hours completed 
previously by the student, unless the student is readmitted to a 
different program to which the completed credit hours or clock hours 
are not transferable;
    (D) With the same academic standing (e.g., with the same 
satisfactory academic progress status) the student previously had;
    (E)(1) If the student is readmitted to the same program, for the 
first academic year in which the student returns, assessing the same 
institutional charges that the student was or would have been assessed 
for the academic year during which the student left the institution; or
    (2) If the student is admitted to a different program, and for 
subsequent academic years for a student admitted to the same program, 
assessing no more than the institutional charges that other students in 
the program are assessed for that academic year; and
    (F) Waiving charges for equipment required in lieu of equipment the 
student paid for when the student was previously enrolled.
    (iv)(A) If the institution determines that the student is not 
prepared to resume the program with the same academic status at the 
point where the student left off, or will not be able to complete the 
program, the institution must make reasonable efforts to help the 
student become prepared or to enable the student to complete the 
program including, but not limited to, providing refresher courses at 
no extra cost and allowing the student to retake a pretest at no extra 
cost.
    (B) The institution is not required to readmit the student on his 
or her return if--
    (1) After reasonable efforts by the institution, the institution 
determines that the student is not prepared to resume the program at 
the point where he or she left off;
    (2) After reasonable efforts by the institution, the institution 
determines that the student is unable to complete the program; or
    (3) The institution determines that there are no reasonable efforts 
the institution can take to prepare the student to resume the program 
at the point where he or she left off or to enable the student to 
complete the program;
    (C)(1) ``Reasonable efforts'' means actions that do not place an 
undue hardship on the institution.
    (2) ``Undue hardship'' means an action requiring significant 
difficulty or expense.

[[Page 42431]]

    (D) The institution carries the burden to prove by a preponderance 
of the evidence that the student is not prepared to resume the program 
with the same academic status at the point where the student left off, 
or that the student will not be able to complete the program.
    (3) This section applies to an institution that has continued in 
operation since the student ceased attending or was last admitted to 
the institution but did not begin attendance, notwithstanding any 
changes of ownership of the institution since the student ceased 
attendance.
    (4) The requirements of this section supersede any State law 
(including any local law or ordinance), contract, agreement, policy, 
plan, practice, or other matter that reduces, limits, or eliminates in 
any manner any right or benefit provided by this section.
    (b) Service in the uniformed services. For purposes of this 
section, service in the uniformed services means service, whether 
voluntary or involuntary, in the Armed Forces, including service by a 
member of the National Guard or Reserve, on active duty, active duty 
for training, or full-time National Guard duty under Federal authority, 
for a period of more than 30 consecutive days under a call or order to 
active duty of more than 30 consecutive days.
    (c) Readmission procedures. (1) Any student whose absence from an 
institution is necessitated by reason of service in the uniformed 
services shall be entitled to readmission to the institution if--
    (i) Except as provided in paragraph (d) of this section, the 
student (or an appropriate officer of the Armed Forces or official of 
the Department of Defense) gives advance oral or written notice of such 
service to an office designated by the institution, and provides such 
notice as far in advance as is reasonable under the circumstances;
    (ii) The cumulative length of the absence and of all previous 
absences from that institution by reason of service in the uniformed 
services, including only the time the student spends actually 
performing service in the uniformed services, does not exceed five 
years; and
    (iii) Except as provided in paragraph (f) of this section, the 
student gives oral or written notice of his or her intent to return to 
an office designated by the institution--
    (A) For a student who completes a period of service in the 
uniformed services, not later than three years after the completion of 
the period of service; or
    (B) For a student who is hospitalized for or convalescing from an 
illness or injury incurred in or aggravated during the performance of 
service in the uniformed services, two years after the end of the 
period that is necessary for recovery from such illness or injury.
    (2)(i) An institution must designate one or more offices at the 
institution that a student may contact to provide notification of 
service required by paragraph (c)(1)(i) of this section and 
notification of intent to return required by paragraph (c)(1)(iii) of 
this section.
    (ii) An institution may not require that the notice provided by the 
student under paragraph (c)(1)(i) or (c)(1)(iii) of this section follow 
any particular format.
    (iii) The notice provided by the student under paragraph (c)(1)(i) 
of this section--
    (A) May not be subject to any rule for timeliness; timeliness must 
be determined by the facts in any particular case; and
    (B) Does not need to indicate whether the student intends to return 
to the institution.
    (iv) For purposes of paragraph (c)(1)(i) of this section, an 
``appropriate officer'' is a commissioned, warrant, or noncommissioned 
officer authorized to give such notice by the military service 
concerned.
    (d) Exceptions to advance notice. (1) No notice is required under 
paragraph (c)(1)(i) of this section if the giving of such notice is 
precluded by military necessity, such as--
    (i) A mission, operation, exercise, or requirement that is 
classified; or
    (ii) A pending or ongoing mission, operation, exercise, or 
requirement that may be compromised or otherwise adversely affected by 
public knowledge.
    (2) Any student (or an appropriate officer of the Armed Forces or 
official of the Department of Defense) who did not give advance written 
or oral notice of service to the appropriate official at the 
institution in accordance with paragraph (c)(1) of this section may 
meet the notice requirement by submitting, at the time the student 
seeks readmission, an attestation to the institution that the student 
performed service in the uniformed services that necessitated the 
student's absence from the institution.
    (e) Cumulative length of absence. For purposes of paragraph 
(c)(1)(ii) of this section, a student's cumulative length of absence 
from an institution does not include any service--
    (1) That is required, beyond five years, to complete an initial 
period of obligated service;
    (2) During which the student was unable to obtain orders releasing 
the student from a period of service in the uniformed services before 
the expiration of the five-year period and such inability was through 
no fault of the student; or
    (3) Performed by a member of the Armed Forces (including the 
National Guard and Reserves) who is--
    (i) Ordered to or retained on active duty under--
    (A) 10 U.S.C. 688 (involuntary active duty by a military retiree);
    (B) 10 U.S.C. 12301(a) (involuntary active duty in wartime);
    (C) 10 U.S.C. 12301(g) (retention on active duty while in captive 
status);
    (D) 10 U.S.C. 12302 (involuntary active duty during a national 
emergency for up to 24 months);
    (E) 10 U.S.C. 12304 (involuntary active duty for an operational 
mission for up to 270 days);
    (F) 10 U.S.C. 12305 (involuntary retention on active duty of a 
critical person during time of crisis or other specific conditions);
    (G) 14 U.S.C. 331 (involuntary active duty by retired Coast Guard 
officer);
    (H) 14 U.S.C. 332 (voluntary active duty by retired Coast Guard 
officer);
    (I) 14 U.S.C. 359 (involuntary active duty by retired Coast Guard 
enlisted member);
    (J) 14 U.S.C. 360 (voluntary active duty by retired Coast Guard 
enlisted member);
    (K) 14 U.S.C. 367 (involuntary retention of Coast Guard enlisted 
member on active duty); or
    (L) 14 U.S.C. 712 (involuntary active duty by Coast Guard Reserve 
member for natural or man-made disasters);
    (ii) Ordered to or retained on active duty (other than for 
training) under any provision of law because of a war or national 
emergency declared by the President or the Congress, as determined by 
the Secretary concerned;
    (iii) Ordered to active duty (other than for training) in support, 
as determined by the Secretary concerned, of an operational mission for 
which personnel have been ordered to active duty under section 12304 of 
title 10, United States Code;
    (iv) Ordered to active duty in support, as determined by the 
Secretary concerned, of a critical mission or requirement of the Armed 
Forces (including the National Guard or Reserve); or
    (v) Called into Federal service as a member of the National Guard 
under chapter 15 of title 10, United States Code, or section 12406 of 
title 10, United States Code (i.e., called to respond to an invasion, 
danger of

[[Page 42432]]

invasion, rebellion, danger of rebellion, insurrection, or the 
inability of the President with regular forces to execute the laws of 
the United States).
    (f) Notification of intent to reenroll. A student who fails to 
apply for readmission within the periods described in paragraph 
(c)(1)(iii) of this section does not automatically forfeit eligibility 
for readmission to the institution, but is subject to the institution's 
established leave of absence policy and general practices.
    (g) Documentation. (1) A student who submits an application for 
readmission to an institution under paragraph (c)(1)(iii) of this 
section shall provide to the institution documentation to establish 
that--
    (i) The student has not exceeded the service limitation in 
paragraph (c)(1)(ii) of this section; and
    (ii) The student's eligibility for readmission has not been 
terminated due to an exception in paragraph (h) of this section.
    (2)(i) Documents that satisfy the requirements of paragraph (g)(1) 
of this section include, but are not limited to, the following:
    (A) DD (Department of Defense) 214 Certificate of Release or 
Discharge from Active Duty.
    (B) Copy of duty orders prepared by the facility where the orders 
were fulfilled carrying an endorsement indicating completion of the 
described service.
    (C) Letter from the commanding officer of a Personnel Support 
Activity or someone of comparable authority.
    (D) Certificate of completion from military training school.
    (E) Discharge certificate showing character of service.
    (F) Copy of extracts from payroll documents showing periods of 
service.
    (G) Letter from National Disaster Medical System (NDMS) Team Leader 
or Administrative Officer verifying dates and times of NDMS training or 
Federal activation.
    (ii) The types of documents that are necessary to establish 
eligibility for readmission will vary from case to case. Not all of 
these documents are available or necessary in every instance to 
establish readmission eligibility.
    (3) An institution may not delay or attempt to avoid a readmission 
of a student under this section by demanding documentation that does 
not exist, or is not readily available, at the time of readmission.
    (h) Termination of readmission eligibility. A student's eligibility 
for readmission to an institution under this section by reason of such 
student's service in the uniformed services terminates upon the 
occurrence of any of the following events:
    (1) A separation of such person from the Armed Forces (including 
the National Guard and Reserves) with a dishonorable or bad conduct 
discharge.
    (2) A dismissal of a commissioned officer permitted under section 
1161(a) of title 10, United States Code by sentence of a general court-
martial; in commutation of a sentence of a general court-martial; or, 
in time of war, by order of the President.
    (3) A dropping of a commissioned officer from the rolls pursuant to 
section 1161(b) of title 10, United States Code due to absence without 
authority for at least three months; separation by reason of a sentence 
to confinement adjudged by a court-martial; or, a sentence to 
confinement in a Federal or State penitentiary or correctional 
institution.

(Approved by the Office of Management and Budget under control 
number 1845-NEW1)

Authority:

    20 U.S.C. 1088 et seq.)

    12. In 668.23, revise paragraph (d)(4) to read as follows:


Sec.  668.23  Compliance audits and audited financial statements.

* * * * *
    (d) * * *
    (4) Disclosure of title IV, HEA program revenue. A proprietary 
institution must disclose in a footnote to its financial statement 
audit the percentage of its revenues derived from the title IV, HEA 
program funds that the institution received during the fiscal year 
covered by that audit. The revenue percentage must be calculated in 
accordance with Sec.  668.28. The institution must also report in the 
footnote the non-Federal and Federal revenue by source that was 
included in the 90/10 calculation.
* * * * *
    13. Section 668.28 is added to subpart B of part 668 to read as 
follows:


Sec.  668.28  Non-title IV revenue (90/10).

    (a) General. (1) Calculating the revenue percentage. A proprietary 
institution determines whether it satisfies the requirement in Sec.  
668.14(b)(16) that at least 10 percent of its revenue is derived from 
sources other than title IV, HEA program funds by using the formula in 
appendix C of this subpart to calculate its revenue percentage for its 
latest complete fiscal year.
    (2) Cash basis accounting. Except for institutional loans made to 
students under paragraph (a)(5)(i) of this section, the institution 
must use the cash basis of accounting in calculating its revenue 
percentage.
    (3) Revenue generated from programs and activities. The institution 
must consider as revenue only those funds it generates from--
    (i) Tuition, fees, and other institutional charges for students 
enrolled in eligible programs as defined in Sec.  668.8;
    (ii) Activities conducted by the institution that are necessary for 
the education and training of its students provided those activities 
are--
    (A) Conducted on campus or at a facility under the institution's 
control;
    (B) Performed under the supervision of a member of the 
institution's faculty; and
    (C) Required to be performed by all students in a specific 
educational program at the institution; and
    (iii) Funds paid by a student, or on behalf of a student by a party 
other than the institution, for an education or training program that 
is not eligible under Sec.  668.8 if the program--
    (A) Is approved or licensed by the appropriate State agency;
    (B) Is accredited by an accrediting agency recognized by the 
Secretary under 34 CFR part 602;
    (C) Provides an industry-recognized credential or certification, or 
prepares students to take an examination for an industry-recognized 
credential or certification issued by an independent third party;
    (D) Provides training needed for students to maintain State 
licensing requirements; or
    (E) Provides training needed for students to meet additional 
licensing requirements for specialized training for practitioners that 
already meet the general licensing requirements in that field.
    (4) Application of funds. The institution must presume that any 
title IV, HEA program funds it disburses, or delivers, to or on behalf 
of a student will be used to pay the student's tuition, fees, or 
institutional charges, regardless of whether the institution credits 
the funds to the student's account or pays the funds directly to the 
student, except to the extent that the student's tuition, fees, or 
other charges are satisfied by--
    (i) Grant funds provided by non-Federal public agencies or private 
sources independent of the institution;
    (ii) Funds provided under a contractual arrangement with a Federal, 
State, or local government agency for the purpose of providing job 
training to low-income individuals who need that training;
    (iii) Funds used by a student from a savings plan for educational 
expenses established by or on behalf of the student if the saving plan 
qualifies for

[[Page 42433]]

special tax treatment under the Internal Revenue Code of 1986; or
    (iv) Institutional scholarships as provided under paragraph 
(a)(5)(iv) of this section.
    (5) Revenue generated from institutional aid. The institution must 
include the following institutional aid as revenue:
    (i) For loans made to students, including funds advanced to 
students under installment sales contracts, on or after July 1, 2008 
and prior to July 1, 2012, include as revenue the net present value of 
the loans made to students during the fiscal year, as calculated under 
paragraph (b) of this section, if the loans--
    (A) Are bona fide as evidenced by standalone repayment agreements 
between the students and the institution that are enforceable 
promissory notes;
    (B) Are issued at intervals related to the institution's enrollment 
periods;
    (C) Are subject to regular loan repayments and collections by the 
institution; and
    (D) Are separate from the enrollment contracts signed by the 
students.
    (ii) For loans made to students before July 1, 2008, include as 
revenue only the amount of payments made on those loans that the 
institution received during the fiscal year.
    (iii) For loans made to students on or after July 1, 2012, include 
as revenue only the amount of payments made on those loans that the 
institution received during the fiscal year.
    (iv) For scholarships provided by the institution in the form of 
monetary aid or tuition discount and based on the academic achievement 
or financial need of its students, include as revenue the amount 
disbursed to students during the fiscal year. The scholarships must be 
disbursed from an established restricted account and only to the extent 
that the funds in that account represent designated funds from an 
outside source or income earned on those funds.
    (6) Revenue generated from loan funds in excess of loan limits 
prior to the Ensuring Continued Access to Student Loans Act of 2008 
(ECASLA). For each student who receives an unsubsidized loan under the 
FFEL or Direct Loan programs on or after July 1, 2008 and prior to July 
1, 2011, the amount of the loan disbursement for a payment period that 
exceeds the disbursement for which the student would have been eligible 
for that payment period under the loan limit in effect on the day prior 
to enactment of the ECASLA is included as revenue from a source other 
than title IV, HEA program funds but only to the extent that the excess 
amount pays for tuition, fees, or institutional charges remaining on 
the student's account after title IV, HEA program funds are applied.
    (7) Funds excluded from revenues. For the fiscal year, the 
institution does not include--
    (i) The amount of Federal Work Study (FWS) wages paid directly to 
the student. However, if the institution credits the student's account 
with FWS funds, those funds are included as revenue;
    (ii) The amount of funds received by the institution from a State 
under the LEAP, SLEAP, or GAP programs;
    (iii) The amount of institutional funds used to match title IV, HEA 
program funds;
    (iv) The amount of title IV, HEA program funds refunded or returned 
under Sec.  668.22, including funds refunded or returned under 
paragraph (a)(6) of this section; or
    (v) The amount the student is charged for books, supplies, and 
equipment unless the institution includes that amount as tuition, fees, 
or other institutional charges.
    (b) Net present value (NPV). (1) As illustrated in appendix C of 
this subpart, an institution calculates the NPV of the loans it made 
under paragraph (a)(5)(i) of this section by--
    (i) Using the formula, NPV = sum of the discounted cash flows R\t\/
(1+i)\t\, where--
    (A) The variable ``i'' is the discount rate. For purposes of this 
section, an institution must use the most recent annual inflation rate 
as the discount rate;
    (B) The variable ``t'' is time or period of the cash flow, in 
years, from the time the loan entered repayment; and
    (C) The variable ``R\t\'' is the net cash flow at time or period t; 
and
    (ii) Applying the NPV formula to the loans made during the fiscal 
year by--
    (A) If the loans have substantially the same repayment period, 
using that repayment period for the range of values of variable ``t''; 
or
    (B) Grouping the loans by repayment period and using the repayment 
period for each group for the range of values of variable ``t''; and
    (C) For each group of loans, as applicable, multiplying the total 
annual payments due on the loans by the institution's loan collection 
rate (e.g., the total amount of payments collected divided by the total 
amount of payments due). The resulting amount is used for variable 
``R'' in each period ``t'', for each group of loans that a NPV is 
calculated.
    (2) Instead of performing the calculations in paragraph (b)(1) of 
this section, using 50 percent of the total amount of loans that the 
institution made during the fiscal year as the NPV. However, if the 
institution chooses to use this 50 percent calculation, the institution 
may not sell any of these loans until they have been in repayment for 
at least two years.
    (c) Sanctions. If an institution does not derive at least 10 
percent of its revenue from sources other than title IV, HEA program 
funds--
    (1) For two consecutive fiscal years, it loses its eligibility to 
participate in the title IV, HEA programs for at least two fiscal 
years. To regain eligibility, the institution must demonstrate that it 
complied with the State licensure and accreditation requirements under 
34 CFR 600.5(a)(4) and (a)(6), and the financial responsibility 
requirements under subpart L of this part, for a minimum of two fiscal 
years after the fiscal year it became ineligible; or
    (2) For any fiscal year, it becomes provisionally certified under 
Sec.  668.13(c)(1)(ii) for the two fiscal years after the fiscal year 
it failed to satisfy the revenue requirement. However, the 
institution's provisional certification terminates on--
    (i) The expiration date of the institution's program participation 
agreement that was in effect on the date the Secretary determined the 
institution failed this requirement; or
    (ii) The date the institution loses its eligibility to participate 
under paragraph (c)(1) of this section; and
    (3) It must notify the Secretary no later than 45 days after the 
end of its fiscal year that it failed to meet this requirement.

(Approved by Office of Management and Budget under control number 
1845-NEW2)

(Authority: 20 U.S.C. 1085, 1088, 1091, 1092, 1094, 1099a-3, 1099c, 
1141)


    14. Appendix C is added to subpart B of part 668 to read as 
follows:
BILLING CODE 4000-01-P

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BILLING CODE 4000-01-C
    15. Section 668.32 is amended by:
    A. Revising the introductory text.
    B. In paragraph (a)(1)(iii), adding the word ``and'' after the 
punctuation ``;''.
    C. In paragraph (a)(2), removing the punctuation ``;'' and adding, 
in its place, the punctuation ``.''.
    D. In paragraph (b), removing the punctuation ``;'' and adding, in 
its place, the punctuation ``.''.
    E. In paragraph (c)(4)(ii), removing the punctuation ``;'' and 
adding, in its place, the punctuation ``.''.
    F. In paragraph (d), removing the punctuation ``;'' and adding, in 
its place, the punctuation ``.''.
    G. In paragraph (e)(4)(ii), removing the punctuation ``;'' and 
adding, in its place, the punctuation ``.''.
    H. In paragraph (f), removing the punctuation ``;'' and adding, in 
its place, the punctuation ``.''.
    I. In paragraph (g)(4), removing the punctuation ``;'' at the end 
of the paragraph and adding, in its place, the punctuation ``.''.
    J. In paragraph (h), removing the punctuation ``;'' and adding, in 
its place, the punctuation ``.''.
    K. In paragraph (i), removing the punctuation ``;'' and adding, in 
its place, the punctuation ``.''.
    L. In paragraph (j), removing the punctuation ``;'' and adding, in 
its place, the punctuation ``.''.
    M. In paragraph (k)(9), removing the word ``; and'' and adding, in 
its place, the punctuation ``.''.
    N. In paragraph (l), removing the word ``; and'' and adding, in its 
place, the punctuation ``.''.
    O. Adding paragraph (n).
    The revision and addition read as follows:


Sec.  668.32  Student eligibility--general.

    A student is eligible to receive title IV, HEA program assistance 
if the student either meets all of the requirements in paragraphs (a) 
through (m) of this section or meets the requirement in paragraph (n) 
of this section as follows:
* * * * *
    (n) Is enrolled in a comprehensive transition and postsecondary 
program under subpart O of this part and meets the student eligibility 
criteria in that subpart.
* * * * *
    16. Section 668.41 is amended by:
    A. In paragraph (a), adding, in alphabetical order, definitions of 
on-campus student housing facility and retention rate.
    B. Revising paragraph (d).
    C. Revising paragraph (e).
    D. In paragraph (g)(1)(i), removing the words ``on request''.
    E. In the OMB control number parenthetical at the end of the 
section, removing the words, ``and 1845-0010''.
    The additions and revisions read as follows:


Sec.  668.41  Reporting and disclosure of information.

    (a) * * *
    On-campus student housing facility: A dormitory or other 
residential facility for students that is located on an

[[Page 42438]]

institution's campus, as defined in Sec.  668.46(a).
* * * * *
    Retention rate means a measure of the rate at which students 
persist in their educational program at an institution expressed as a 
percentage. For four-year institutions, this is the percentage of 
first-time bachelors (or equivalent) degree-seeking undergraduates from 
the previous fall who are again enrolled in the current fall. For all 
other institutions, this is the percentage of first-time degree- or 
certificate-seeking students from the previous fall who either re-
enrolled or successfully completed their program by the current fall.
* * * * *
    (d) General disclosures for enrolled or prospective students. An 
institution must make available to any enrolled student or prospective 
student through appropriate publications, mailings or electronic media, 
information concerning--
    (1) Financial assistance available to students enrolled in the 
institution (pursuant to Sec.  668.42).
    (2) The institution (pursuant to Sec.  668.43).
    (3) The institution's retention rate as reported to the Integrated 
Postsecondary Education Data System (IPEDS). In the case of a request 
from a prospective student, the information must be made available 
prior to the student's enrolling or entering into any financial 
obligation with the institution.
    (4) The institution's completion or graduation rate and, if 
applicable, its transfer-out rate (pursuant to Sec.  668.45). In the 
case of a request from a prospective student, the information must be 
made available prior to the student's enrolling or entering into any 
financial obligation with the institution.
    (5) The placement of, and types of employment obtained by, 
graduates of the institution's degree or certificate programs.
    (i) The information provided in compliance with this paragraph may 
be gathered from--
    (A) The institution's placement rate for any program, if it 
calculates such a rate;
    (B) State data systems;
    (C) Alumni or student satisfaction surveys; or
    (D) Other relevant sources.
    (ii) The institution must identify the source of the information 
provided in compliance with this paragraph, as well as any time frames 
and methodology associated with it.
    (iii) The institution must disclose any placement rates it 
calculates.
    (6) The types of graduate and professional education in which 
graduates of the institution's four-year degree programs enroll.
    (i) The information provided in compliance with this paragraph may 
be gathered from--
    (A) State data systems;
    (B) Alumni or student satisfaction surveys; or
    (C) Other relevant sources.
    (ii) The institution must identify the source of the information 
provided in compliance with this paragraph, as well as any time frames 
and methodology associated with it.
    (e) Annual security report and annual fire safety report--(1) 
Enrolled students and current employees--annual security report and 
annual fire safety report. By October 1 of each year, an institution 
must distribute to all enrolled students and current employees its 
annual security report described in Sec.  668.46(b), and, if the 
institution maintains an on-campus student housing facility, its annual 
fire safety report described in Sec.  668.49(b), through appropriate 
publications and mailings, including--
    (i) Direct mailing to each individual through the U.S. Postal 
Service, campus mail, or electronic mail;
    (ii) A publication or publications provided directly to each 
individual; or
    (iii) Posting on an Internet Web site or an Intranet Web site, 
subject to paragraph (e)(2) and (3) of this section.
    (2) Enrolled students--annual security report and annual fire 
safety report. If an institution chooses to distribute either its 
annual security report or annual fire safety report to enrolled 
students by posting the disclosure or disclosures on an Internet Web 
site or an Intranet Web site, the institution must comply with the 
requirements of paragraph (c)(2) of this section.
    (3) Current employees--annual security report and annual fire 
safety report. If an institution chooses to distribute either its 
annual security report or annual fire safety report to current 
employees by posting the disclosure or disclosures on an Internet Web 
site or an Intranet Web site, the institution must, by October 1 of 
each year, distribute to all current employees a notice that includes a 
statement of the report's availability, the exact electronic address at 
which the report is posted, a brief description of the report's 
contents, and a statement that the institution will provide a paper 
copy of the report upon request.
    (4) Prospective students and prospective employees--annual security 
report and annual fire safety report. For each of the reports, the 
institution must provide a notice to prospective students and 
prospective employees that includes a statement of the report's 
availability, a description of its contents, and an opportunity to 
request a copy. An institution must provide its annual security report 
and annual fire safety report, upon request, to a prospective student 
or prospective employee. If the institution chooses to provide either 
its annual security report or annual fire safety report to prospective 
students and prospective employees by posting the disclosure on an 
Internet Web site, the notice described in this paragraph must include 
the exact electronic address at which the report is posted, a brief 
description of the report, and a statement that the institution will 
provide a paper copy of the report upon request.
    (5) Submission to the Secretary--annual security report and annual 
fire safety report. Each year, by the date and in a form specified by 
the Secretary, an institution must submit the statistics required by 
Sec. Sec.  668.46(c) and 668.49(c) to the Secretary.
    (6) Publication of the annual fire safety report. An institution 
may publish its annual fire safety report concurrently with its annual 
security report only if the title of the report clearly states that the 
report contains both the annual security report and the annual fire 
safety report. If an institution chooses to publish the annual fire 
safety report separately from the annual security report, it must 
include information in each of the two reports about how to directly 
access the other report.
* * * * *
    17. Section 668.43 is amended by:
    A. In the introductory text of paragraph (a), removing the words 
``upon request''.
    B. In paragraph (a)(5)(ii), removing the word ``and'' that appears 
after the punctuation ``;''.
    C. In paragraph (a)(5)(iii), adding the word ``and'' after the 
punctuation ``;''.
    D. Adding paragraph (a)(5)(iv).
    E. Revising paragraph (a)(7).
    F. In paragraph (a)(8), removing the word ``and'' that appears 
after the punctuation ``;''.
    G. In paragraph (a)(9), removing the punctuation ``.'' And adding, 
in its place, the word ``; and''.
    H. Adding paragraph (a)(10).
    I. In paragraph (b), removing the words ``, upon request,''.
    The additions and revision read as follows:


Sec.  668.43  Institutional information.

    (a) * * *

[[Page 42439]]

    (5) * * *
    (iv) Any plans by the institution for improving the academic 
program of the institution;
* * * * *
    (7) A description of the services and facilities available to 
students with disabilities, including students with intellectual 
disabilities as defined in subpart O of this part;
* * * * *
    (10) Institutional policies and sanctions related to copyright 
infringement, including--
    (i) A statement that explicitly informs its students that 
unauthorized distribution of copyrighted material, including 
unauthorized peer-to-peer file sharing, may subject the students to 
civil and criminal liabilities;
    (ii) A summary of the penalties for violation of Federal copyright 
laws; and
    (iii) A description of the institution's policies with respect to 
unauthorized peer-to-peer file sharing, including disciplinary actions 
that are taken against students who engage in illegal downloading or 
unauthorized distribution of copyrighted materials using the 
institution's information technology system.
* * * * *
    18. Section 668.45 is revised to read as follows:


Sec.  668.45  Information on completion or graduation rates.

    (a)(1) An institution annually must prepare the completion or 
graduation rate of its certificate- or degree-seeking, first-time, 
full-time undergraduate students, as provided in paragraph (b) of this 
section.
    (2) An institution that determines that its mission includes 
providing substantial preparation for students to enroll in another 
eligible institution must prepare the transfer-out rate of its 
certificate- or degree-seeking, first-time, full-time undergraduate 
students, as provided in paragraph (c) of this section.
    (3)(i) An institution that offers a predominant number of its 
programs based on semesters, trimesters, or quarters must base its 
completion or graduation rate, retention rate, and, if applicable, 
transfer-out rate calculations, on the cohort of certificate- or 
degree-seeking, first-time, full-time undergraduate students who enter 
the institution during the fall term of each year.
    (ii) An institution not covered by the provisions of paragraph 
(a)(3)(i) of this section must base its completion or graduation rate, 
retention rate, and, if applicable, transfer-out rate calculations, on 
the cohort of certificate- or degree-seeking, first-time, full-time 
undergraduate students who enter the institution between September 1 of 
one year and August 31 of the following year.
    (4)(i) An institution covered by the provisions of paragraph 
(a)(3)(i) of this section must count as an entering student a first-
time undergraduate student who is enrolled as of October 15, the end of 
the institution's drop-add period, or another official reporting date 
as defined in Sec.  668.41(a).
    (ii) An institution covered by paragraph (a)(3)(ii) of this section 
must count as an entering student a first-time undergraduate student 
who is enrolled for at least--
    (A) 15 days, in a program of up to, and including, one year in 
length; or
    (B) 30 days, in a program of greater than one year in length.
    (5) An institution must make available its completion or graduation 
rate and, if applicable, transfer-out rate, no later than the July 1 
immediately following the 12-month period ending August 31 during which 
150 percent of the normal time for completion or graduation has elapsed 
for all of the students in the group on which the institution bases its 
completion or graduation rate and, if applicable, transfer-out rate 
calculations.
    (6)(i) Completion or graduation rate information must be 
disaggregated by gender, by each major racial and ethnic subgroup (as 
defined in IPEDS), by recipients of a Federal Pell Grant, by recipients 
of a Federal Family Education Loan or a Federal Direct Loan (other than 
an Unsubsidized Stafford Loan made under the Federal Family Education 
Loan Program or a Federal Direct Unsubsidized Stafford Loan) who did 
not receive a Federal Pell Grant, and by recipients of neither a 
Federal Pell Grant nor a Federal Family Education Loan or a Federal 
Direct Loan (other than an Unsubsidized Stafford Loan made under the 
Federal Family Education Loan Program or a Federal Direct Unsubsidized 
Loan) if the number of students in such group or with such status is 
sufficient to yield statistically reliable information and reporting 
will not reveal personally identifiable information about an individual 
student. If such number is not sufficient for such purpose, i.e., is 
too small to be meaningful, then the institution shall note that the 
institution enrolled too few of such students to so disclose or report 
with confidence and confidentiality.
    (ii) With respect to the requirement in paragraph (a)(6)(i) of this 
section to disaggregate the completion or graduation rate information 
by the receipt or nonreceipt of Federal student aid, students shall be 
considered to have received the aid in question only if they received 
such aid in the period specified in paragraph (a)(3) of this section.
    (iii) The requirement in paragraph (a)(6)(i) of this section shall 
not apply to two-year, degree-granting institutions of higher education 
until academic year 2011-2012.
    (b) In calculating the completion or graduation rate under 
paragraph (a)(1) of this section, an institution must count as 
completed or graduated--
    (1) Students who have completed or graduated by the end of the 12-
month period ending August 31 during which 150 percent of the normal 
time for completion or graduation from their program has lapsed; and
    (2) Students who have completed a program described in Sec.  
668.8(b)(1)(ii), or an equivalent program, by the end of the 12-month 
period ending August 31 during which 150 percent of normal time for 
completion from that program has lapsed.
    (c) In calculating the transfer-out rate under paragraph (a)(2) of 
this section, an institution must count as transfers-out students who 
by the end of the 12-month period ending August 31 during which 150 
percent of the normal time for completion or graduation from the 
program in which they were enrolled has lapsed, have not completed or 
graduated but have subsequently enrolled in any program of an eligible 
institution for which its program provided substantial preparation.
    (d) For the purpose of calculating a completion or graduation rate 
and a transfer-out rate, an institution may--
    (1) Exclude students who--
    (i) Have left school to serve in the Armed Forces;
    (ii) Have left school to serve on official church missions;
    (iii) Have left school to serve with a foreign aid service of the 
Federal Government, such as the Peace Corps;
    (iv) Are totally and permanently disabled; or
    (v) Are deceased.
    (2) In cases where the students described in paragraphs (d)(1)(i) 
through (iii) of this section represent 20 percent or more of the 
certificate- or degree-seeking, full-time, undergraduate students at 
the institution, recalculate the completion or graduation rates of 
those students by adding to the 150 percent time-frame they normally 
have to complete or graduate, as described in paragraph (b) of this 
section, the time period the students were not enrolled due to their 
service in the Armed

[[Page 42440]]

Forces, on official church missions, or with a recognized foreign aid 
service of the Federal Government.
    (e)(1) The Secretary grants a waiver of the requirements of this 
section dealing with completion and graduation rate data to any 
institution that is a member of an athletic association or conference 
that has voluntarily published completion or graduation rate data, or 
has agreed to publish data, that the Secretary determines are 
substantially comparable to the data required by this section.
    (2) An institution that receives a waiver of the requirements of 
this section must still comply with the requirements of Sec.  
668.41(d)(3) and (f).
    (3) An institution, or athletic association or conference applying 
on behalf of an institution, that seeks a waiver under paragraph (e)(1) 
of this section must submit a written application to the Secretary that 
explains why it believes the data the athletic association or 
conference publishes are accurate and substantially comparable to the 
information required by this section.
    (f) In addition to calculating the completion or graduation rate 
required by paragraph (a)(1) of this section, an institution may, but 
is not required to--
    (1) Calculate a completion or graduation rate for students who 
transfer into the institution;
    (2) Calculate a completion or graduation rate for students 
described in paragraphs (d)(1)(i) through (iv) of this section; and
    (3) Calculate a transfer-out rate as specified in paragraph (c) of 
this section, if the institution determines that its mission does not 
include providing substantial preparation for its students to enroll in 
another eligible institution.

(Approved by the Office of Management and Budget under control 
number 1845-0004)

(Authority: 20 U.S.C. 1092)


    19. Section 668.46 is amended by:
    A. In paragraph (a), adding, in alphabetical order, a definition of 
test.
    B. In paragraph (b), adding paragraphs (13) and (14).
    C. Revising paragraph (c)(3).
    D. In paragraph (e), revising the paragraph heading and adding 
paragraph (e)(3).
    E. Adding paragraph (g).
    F. Adding paragraph (h).
    The additions and revisions read as follows:


Sec.  668.46  Institutional security policies and crime statistics.

    (a) * * *
    Test: Regularly scheduled drills, exercises, and appropriate 
follow-through activities, designed for assessment and evaluation of 
emergency plans and capabilities.
* * * * *
    (b) * * *
    (13) Beginning with the annual security report distributed by 
October 1, 2010, a statement of policy regarding emergency response and 
evacuation procedures, as described in paragraph (g) of this section.
    (14) Beginning with the annual security report distributed by 
October 1, 2010, a statement of policy regarding missing student 
notification procedures, as described in paragraph (h) of this section.
    (c) * * *
    (3) Reported crimes if a hate crime. An institution must report, by 
category of prejudice, the following crimes reported to local police 
agencies or to a campus security authority that manifest evidence that 
the victim was intentionally selected because of the victim's actual or 
perceived race, gender, religion, sexual orientation, ethnicity, or 
disability:
    (i) Any crime it reports pursuant to paragraph (c)(1)(i) through 
(vii) of this section.
    (ii) The crimes of larceny-theft, simple assault, intimidation, and 
destruction/damage/vandalism of property.
    (iii) Any other crime involving bodily injury.
* * * * *
    (e) Timely warning and emergency notification. * * *
    (3) If there is an immediate threat to the health or safety of 
students or employees occurring on campus, as described in paragraph 
(g)(1) of this section, an institution must follow its emergency 
notification procedures. An institution that follows its emergency 
notification procedures is not required to issue a timely warning based 
on the same circumstances; however, the institution must provide 
adequate follow-up information to the community as needed.
* * * * *
    (g) Emergency response and evacuation procedures. An institution 
must include a statement of policy regarding its emergency response and 
evacuation procedures in the annual security report. This statement 
must include--
    (1) The procedures the institution will use to immediately notify 
the campus community upon the confirmation of a significant emergency 
or dangerous situation involving an immediate threat to the health or 
safety of students or employees occurring on the campus;
    (2) A description of the process the institution will use to--
    (i) Confirm that there is a significant emergency or dangerous 
situation as described in paragraph (g)(1) of this section;
    (ii) Determine the appropriate segment or segments of the campus 
community to receive a notification;
    (iii) Determine the content of the notification; and
    (iv) Initiate the notification system;
    (3) A statement that the institution will, without delay, and 
taking into account the safety of the community, determine the content 
of the notification and initiate the notification system, unless 
issuing a notification will, in the professional judgment of 
responsible authorities, compromise efforts to assist a victim or to 
contain, respond to, or otherwise mitigate the emergency;
    (4) A list of the titles of the person or persons or organization 
or organizations responsible for carrying out the actions described in 
paragraph (g)(2) of this section;
    (5) The institution's procedures for disseminating emergency 
information to the larger community; and
    (6) The institution's procedures to test the emergency response and 
evacuation procedures on at least an annual basis, including--
    (i) Tests that may be announced or unannounced;
    (ii) Publicizing its emergency response and evacuation procedures 
in conjunction with at least one test per calendar year; and
    (iii) Documenting, for each test, a description of the exercise, 
the date, time, and whether it was announced or unannounced.
    (h) Missing student notification policies and procedures. (1) An 
institution that provides any on-campus student housing facility must 
include a statement of policy regarding missing student notification 
procedures for students who reside in on-campus student housing 
facilities in its annual security report. This statement must--
    (i) Indicate a list of titles of the persons or organizations to 
which students, employees, or other individuals should report that a 
student has been missing for 24 hours;
    (ii) Require that any missing student report must be referred 
immediately to the institution's police or campus security department, 
or, in the absence of an institutional police or campus security 
department, to the local law enforcement agency that has jurisdiction 
in the area;
    (iii) Contain an option for each student living in an on-campus 
student housing facility to identify a contact person or persons whom 
the institution shall notify if the student is determined

[[Page 42441]]

missing by the institutional police or campus security department, or 
the local law enforcement agency;
    (iv) Advise students that their contact information will be 
registered confidentially, that this information will be accessible 
only to authorized campus officials, and that it may not be disclosed, 
except to law enforcement personnel in furtherance of a missing person 
investigation;
    (v) Advise students that if they are under 18 years of age and not 
emancipated, the institution must notify a custodial parent or guardian 
when the student is missing, in addition to any additional contact 
person designated by the student; and
    (vi) Advise students that, regardless of whether they name a 
contact person, unless the local law enforcement agency was the entity 
that made the determination that a student is missing, the institution 
will notify the local law enforcement agency that the student is 
missing.
    (2) The procedures that the institution must follow when a student 
who resides in an on-campus student housing facility is determined to 
have been missing for 24 hours include--
    (i) If the student has designated a contact person, notifying that 
contact person within 24 hours;
    (ii) If the student is under 18 years of age and is not 
emancipated, notifying the student's custodial parent or guardian and 
any other designated contact person within 24 hours; and
    (iii) Regardless of whether the student has identified a contact 
person, is above the age of 18, or is an emancipated minor, informing 
the local law enforcement agency that has jurisdiction in the area that 
the student has been reported to be missing within 24 hours.
* * * * *


Sec.  668.48  [Amended]

    20. Section 668.48(b) is amended by removing the parenthetical 
``(d)'' and adding, in its place, the parenthetical ``(e)''.
    21. Section 668.49 is added to subpart D of part 668 to read as 
follows:


Sec.  668.49  Institutional fire safety policies and fire statistics.

    (a) Additional definitions that apply to this section.
    Cause of fire: The factor or factors that give rise to a fire. The 
causal factor may be, but is not limited to, the result of an 
intentional or unintentional action, mechanical failure, or act of 
nature.
    Fire: Any instance of open flame or other burning in a place not 
intended to contain the burning or in an uncontrolled manner.
    Fire drill: A supervised practice of a mandatory evacuation of a 
building for a fire.
    Fire-related injury: Any instance in which a person is injured as a 
result of a fire, including an injury sustained from a natural or 
accidental cause, while involved in fire control, attempting rescue, or 
escaping from the dangers of the fire. The term ``person'' may include 
students, faculty, staff, visitors, firefighters, or any other 
individuals.
    Fire-related death: Any instance in which a person--
    (1) Is killed as a result of a fire, including death resulting from 
a natural or accidental cause while involved in fire control, 
attempting rescue, or escaping from the dangers of a fire; or
    (2) Dies within one year of injuries sustained as a result of the 
fire.
    Fire safety system: Any mechanism or system related to the 
detection of a fire, the warning resulting from a fire, or the control 
of a fire. This may include sprinkler systems or other fire 
extinguishing systems, fire detection devices, stand-alone smoke 
alarms, devices that alert one to the presence of a fire, such as 
horns, bells, or strobe lights; smoke-control and reduction mechanisms; 
and fire doors and walls that reduce the spread of a fire.
    Value of property damage: The estimated value of the loss of the 
structure and contents, in terms of the cost of replacement in like 
kind and quantity. This estimate should include contents damaged by 
fire, and related damages caused by smoke, water, and overhaul; 
however, it does not include indirect loss, such as business 
interruption.
    (b) Annual fire safety report. Beginning by October 1, 2010, an 
institution that maintains any on-campus student housing facility must 
prepare an annual fire safety report that contains, at a minimum, the 
following information:
    (1) The fire statistics described in paragraph (c) of this section.
    (2) A description of each on-campus student housing facility fire 
safety system.
    (3) The number of fire drills held during the previous calendar 
year.
    (4) The institution's policies or rules on portable electrical 
appliances, smoking, and open flames in a student housing facility.
    (5) The institution's procedures for student housing evacuation in 
the case of a fire.
    (6) The policies regarding fire safety education and training 
programs provided to the students, faculty, and staff. In these 
policies, the institution must describe the procedures that students 
and employees should follow in the case of a fire.
    (7) For purposes of including a fire in the statistics in the 
annual fire safety report, a list of the titles of each person or 
organization to which students and employees should report that a fire 
occurred.
    (8) Plans for future improvements in fire safety, if determined 
necessary by the institution.
    (c) Fire statistics. (1) An institution must report statistics for 
each on-campus student housing facility, for the three most recent 
calendar years for which data are available, concerning--
    (i) The number of fires and the cause of each fire;
    (ii) The number of injuries related to a fire that resulted in 
treatment at a medical facility, including at an on-campus health 
center;
    (iii) The number of deaths related to a fire; and
    (iv) The value of property damage caused by a fire.
    (2) An institution is required to submit a copy of the fire 
statistics in paragraph (c)(1) of this section to the Secretary on an 
annual basis.
    (d) Fire log. (1) An institution that maintains on-campus student 
housing facilities must maintain a written, easily understood fire log 
that records, by the date that the fire was reported, any fire that 
occurred in an on-campus student housing facility. This log must 
include the nature, date, time, and general location of each fire.
    (2) An institution must make an entry or an addition to an entry to 
the log within two business days, as defined under Sec.  668.46(a), of 
the receipt of the information.
    (3) An institution must make the fire log for the most recent 60-
day period open to public inspection during normal business hours. The 
institution must make any portion of the log older than 60 days 
available within two business days of a request for public inspection.
    (4) An institution must make an annual report to the campus 
community on the fires recorded in the fire log. This requirement may 
be satisfied by the annual fire safety report described in paragraph 
(b) of this section.

(Approved by the Office of Management and Budget under control 
number 1845-NEW3)

(Authority: 20 U.S.C. 1092)


    22. Appendix A to subpart D of part 668 is amended by:
    A. Revising the introductory text.
    B. Under the heading, ``Crime Definitions From the Uniform Crime 
Reporting Handbook,'' revising and

[[Page 42442]]

renaming the definition of Weapon Law Violations, as Weapons: Carrying, 
Possessing, Etc. and revising the definitions of Drug Abuse Violations 
and Liquor Law Violations.
    C. Adding a heading at the end of the appendix, ``Definitions From 
the Hate Crime Data Collection Guidelines of the Uniform Crime 
Reporting Handbook'' followed by definitions for larceny-theft (except 
motor vehicle theft), simple assault, intimidation, and destruction/
damage/vandalism of property.
    The revisions and additions read as follows:

Appendix A to Subpart D of Part 668--Crime Definitions in Accordance 
With the Federal Bureau of Investigation's Uniform Crime Reporting 
Program

    The following definitions are to be used for reporting the 
crimes listed in Sec.  668.46, in accordance with the Federal Bureau 
of Investigation's Uniform Crime Reporting Program. The definitions 
for murder; robbery; aggravated assault; burglary; motor vehicle 
theft; weapons: carrying, possessing, etc.; law violations; drug 
abuse violations; and liquor law violations are excerpted from the 
Uniform Crime Reporting Handbook. The definitions of forcible rape 
and nonforcible sex offenses are excerpted from the National 
Incident-Based Reporting System Edition of the Uniform Crime 
Reporting Handbook. The definitions of larceny-theft (except motor 
vehicle theft), simple assault, intimidation, and destruction/
damage/vandalism of property are excerpted from the Hate Crime Data 
Collection Guidelines of the Uniform Crime Reporting Handbook.
* * * * *

Crime Definitions From the Uniform Crime Reporting Handbook

* * * * *

Weapons: Carrying, Possessing, Etc.

    The violation of laws or ordinances prohibiting the manufacture, 
sale, purchase, transportation, possession, concealment, or use of 
firearms, cutting instruments, explosives, incendiary devices, or 
other deadly weapons.

Drug Abuse Violations

    The violation of laws prohibiting the production, distribution, 
and/or use of certain controlled substances and the equipment or 
devices utilized in their preparation and/or use. The unlawful 
cultivation, manufacture, distribution, sale, purchase, use, 
possession, transportation, or importation of any controlled drug or 
narcotic substance. Arrests for violations of State and local laws, 
specifically those relating to the unlawful possession, sale, use, 
growing, manufacturing, and making of narcotic drugs.

Liquor Law Violations

    The violation of State or local laws or ordinances prohibiting 
the manufacture, sale, purchase, transportation, possession, or use 
of alcoholic beverages, not including driving under the influence 
and drunkenness.
* * * * *

Definitions From the Hate Crime Data Collection Guidelines of the 
Uniform Crime Reporting Handbook

Larceny-Theft (except motor vehicle theft)

    The unlawful taking, carrying, leading, or riding away of 
property from the possession or constructive possession of another. 
Attempted larcenies are included. Embezzlement, confidence games, 
forgery, worthless checks, etc., are excluded.

Simple Assault

    An unlawful physical attack by one person upon another where 
neither the offender displays a weapon, nor the victim suffers 
obvious severe or aggravated bodily injury involving apparent broken 
bones, loss of teeth, possible internal injury, severe laceration, 
or loss of consciousness.

Intimidation

    To unlawfully place another person in reasonable fear of bodily 
harm through the use of threatening words and/or other conduct, but 
without displaying a weapon or subjecting the victim to actual 
physical attack.

Destruction/Damage/Vandalism of Property

    To willfully or maliciously destroy, damage, deface, or 
otherwise injure real or personal property without the consent of 
the owner or the person having custody or control of it.

    23. Section 668.161 is amended by:
    A. Revising the section heading.
    B. Revising paragraph (a)(4).
    The revisions read as follows:


Sec.  668.161  Scope and purpose (cash management rules).

    (a) * * *
    (4) 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 Sec. Sec.  668.164(a), (b), 
and (d) through (g), and 668.165.
* * * * *


Sec.  668.184  [Amended]

    24. Section 668.184(a)(1) is amended by removing the word ``If'' 
and adding, in its place, the words ``Except as provided under 34 CFR 
600.32(d), if''.
    25. Subpart O, consisting of Sec. Sec.  668.230 through 668.233, is 
added to part 668 to read as follows:

Subpart O--Financial Assistance for Students With Intellectual 
Disabilities

Sec.
668.230 Scope and purpose.
668.231 Definitions.
668.232 Program eligibility.
668.233 Student eligibility.

Subpart O--Financial Assistance for Students With Intellectual 
Disabilities


Sec.  668.230  Scope and purpose.

    This subpart establishes regulations that apply to an institution 
that offers comprehensive transition and postsecondary programs to 
students with intellectual disabilities. Students enrolled in these 
programs are eligible for Federal financial assistance under the 
Federal Pell Grant, FSEOG, and FWS programs. Except for provisions 
related to needs analysis, the Secretary may waive any title IV, HEA 
program requirement related to the Federal Pell Grant, FSEOG, and FWS 
programs or institutional eligibility, to ensure that students with 
intellectual disabilities remain eligible for funds under these 
assistance programs. However, unless provided in this subpart or 
subsequently waived by the Secretary, students with intellectual 
disabilities and institutions that offer comprehensive transition and 
postsecondary programs are subject to the same regulations and 
procedures that otherwise apply to title IV, HEA program participants.

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

Sec.  668.231  Definitions.

    The following definitions apply to this subpart:
    Comprehensive transition and postsecondary program means a degree, 
certificate, nondegree, or noncertificate program that--
    (1) Is offered by a participating institution;
    (2) Is delivered to students physically attending the institution;
    (3) Is designed to support students with intellectual disabilities 
who are seeking to continue academic, career and technical, and 
independent living instruction at an institution of higher education in 
order to prepare for gainful employment;
    (4) Includes an advising and curriculum structure;
    (5) Requires students with intellectual disabilities to have at 
least one-half of their participation in the program, as determined by 
the institution, focus on academic components through one or more of 
the following activities:
    (i) Taking credit-bearing courses with students without 
disabilities.
    (ii) Auditing or otherwise participating in courses with students 
without disabilities for which the student does not receive regular 
academic credit.
    (iii) Taking non-credit-bearing, nondegree courses with students 
without disabilities.

[[Page 42443]]

    (iv) Participating in internships or work-based training in 
settings with individuals without disabilities; and
    (6) Provides students with intellectual disabilities opportunities 
to participate in coursework and other activities with students without 
disabilities.
    Student with an intellectual disability means a student--
    (1) With mental retardation or a cognitive impairment characterized 
by significant limitations in--
    (i) Intellectual and cognitive functioning; and
    (ii) Adaptive behavior as expressed in conceptual, social, and 
practical adaptive skills; and
    (2) Who is currently, or was formerly, eligible for special 
education and related services under the Individuals with Disabilities 
Education Act (IDEA) (20 U.S.C. 1401), including a student who was 
determined eligible for special education or related services under the 
IDEA but was home-schooled or attended private school.

(Authority: 20 U.S.C. 1091, 1140)

Sec.  668.232  Program eligibility.

    An institution that offers a comprehensive transition and 
postsecondary program must apply to the Secretary to have the program 
determined to be an eligible program. The institution applies under the 
provisions in 34 CFR 600.20 for adding an educational program, and must 
include in its application--
    (a) A detailed description of the comprehensive transition and 
postsecondary program that addresses all of the components of the 
program, as defined in Sec.  668.231;
    (b) The institution's policy for determining whether a student 
enrolled in the program is making satisfactory academic progress;
    (c) The number of weeks of instructional time and the number of 
semester or quarter credit hours or clock hours in the program, 
including the equivalent credit or clock hours associated with 
noncredit or reduced credit courses or activities;
    (d) A description of the educational credential offered (e.g., 
degree or certificate) or identified outcome or outcomes established by 
the institution for all students enrolled in the program;
    (e) A copy of the letter or notice sent to the institution's 
accrediting agency informing the agency of its comprehensive transition 
and postsecondary program. The letter or notice must include a 
description of the items in paragraphs (a) through (d) of this section; 
and
    (f) Any other information the Secretary may require.

(Approved by the Office of Management and Budget under control 
number 1845-NEW4)

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

Sec.  668.233  Student eligibility.

    A student with an intellectual disability is eligible to receive 
Federal Pell, FSEOG, and FWS program assistance under this subpart if--
    (a) The student satisfies the general student eligibility 
requirements under Sec.  668.32, except for the requirements in 
paragraphs (a), (e), and (f) of that section. With regard to these 
exceptions, a student--
    (1) Does not have to be enrolled for the purpose of obtaining a 
degree or certificate;
    (2) Is not required to have a high school diploma, a recognized 
equivalent of a high school diploma, or have passed an ability to 
benefit test; and
    (3) Is making satisfactory progress according to the institution's 
published standards for students enrolled in its comprehensive 
transition and postsecondary programs;
    (b) The student is enrolled in a comprehensive transition and 
postsecondary program approved by the Secretary; and
    (c) The institution obtains a record from a local educational 
agency that the student is or was eligible for special education and 
related services under the IDEA. If that record does not identify the 
student as having an intellectual disability, as described in paragraph 
(1) of the definition of a student with an intellectual disability in 
Sec.  668.231, the institution must also obtain documentation 
establishing that the student has an intellectual disability, such as--
    (1) A documented comprehensive and individualized psycho-
educational evaluation and diagnosis of an intellectual disability by a 
psychologist or other qualified professional; or
    (2) A record of the disability from a local or State educational 
agency, or government agency, such as the Social Security 
Administration or a vocational rehabilitation agency, that identifies 
the intellectual disability.

(Approved by the Office of Management and Budget under control 
number 1845-NEW4)

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

PART 675--FEDERAL WORK-STUDY PROGRAMS

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

    Authority: 3 20 U.S.C. 1070g, 1094; 42 U.S.C. 2751-2756b; unless 
otherwise noted.


Sec.  675.2  [Amended]

    27. In Sec.  675.2(b), paragraph (1) of the definition of community 
services is amended by adding the words ``emergency preparedness and 
response,'' after the words ``public safety,''.
    28. Section 675.16 is revised to read as follow:


Sec.  675.16  Payments to students.

    (a) General. (1) An institution must follow the disbursement 
procedures in this section for paying a student his or her wages under 
the FWS Program instead of the disbursement procedures in 34 CFR 
668.164(a), (b), and (d) through (g), and 34 CFR 668.165. The 
institution must follow 34 CFR 668.164(c) on making direct FWS payments 
to students and 34 CFR 668.164(h) on handling the return of FWS funds 
that are not received or negotiated by a student.
    (2) An institution must pay a student FWS compensation at least 
once a month.
    (3) 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 and when the FWS compensation will be paid.
    (4) Regardless of who employs the student, the institution is 
responsible for ensuring that the student is paid for work performed.
    (5) A student's FWS compensation is earned when the student 
performs the work.
    (6) An institution may pay a student after the student's last day 
of attendance for FWS compensation earned while he or she was in 
attendance at the institution.
    (7) A correspondence student must submit his or her first completed 
lesson before receiving a payment.
    (8) The institution may not obtain a student's power of attorney to 
authorize any disbursement of funds without prior approval from the 
Secretary.
    (9) An institution makes a disbursement of FWS program funds on the 
date that the institution credits a student's account at the 
institution or pays a student directly with--
    (i) Funds received from the Secretary; or
    (ii) Institutional funds used in advance of receiving FWS program 
funds.
    (b) Crediting a student's account at the institution. (1) If the 
institution obtains the student's authorization described in paragraph 
(d) of this section, the institution may use the FWS

[[Page 42444]]

funds to credit a student's account at the institution to satisfy--
    (i) Current 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 educationally related charges incurred by the student at 
the institution; and
    (ii) Prior award year charges with the restriction provided in 
paragraph (b)(2) of this section for a total of not more than $200 
for--
    (A) Tuition and fees, room, or board; and
    (B) Other institutionally related charges incurred by the student 
at the institution.
    (2) If the institution is using FWS funds in combination with other 
title IV, HEA program funds to credit a student's account at the 
institution to satisfy prior award year charges, a single $200 total 
prior award year charge limit applies to the use of all the title IV, 
HEA program funds for that purpose.
    (c) Credit balances. Whenever an institution disburses FWS funds by 
crediting a 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 credit balance occurs 
on the account.
    (d) Student authorizations. (1) Except for the noncash 
contributions allowed under paragraphs (e)(2) and (3) of this section, 
if an institution obtains written authorization from a student, the 
institution may--
    (i) Use the student's FWS compensation to pay for charges described 
in paragraph (b) of this section that are included in that 
authorization; and
    (ii) Except if prohibited by the Secretary under the reimbursement 
or cash monitoring payment method, hold on behalf of the student any 
FWS compensation that would otherwise be paid directly to the student 
under paragraph (c) of this section.
    (2) In obtaining the student's authorization to perform an activity 
described in paragraph (d)(1) 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.
    (3) A student may authorize an institution to carry out the 
activities described in paragraph (d)(1) of this section for the period 
during which the student is enrolled at the institution.
    (4)(i) If a student modifies an authorization, the modification 
takes effect on the date the institution receives the modification 
notice.
    (ii) If a student cancels an authorization to use his or her FWS 
compensation to pay for authorized charges under paragraph (b) of this 
section, the institution may use those funds to pay only those 
authorized charges incurred by the student before the institution 
received the notice.
    (iii) If a student cancels an authorization to hold his or her FWS 
compensation under paragraph (d)(1)(ii) of this section, the 
institution must pay those funds directly to the student as soon as 
possible, but no later than 14 days after the institution receives that 
notice.
    (5) If an institution holds excess FWS compensation under paragraph 
(d)(1)(ii) of this section, the institution must--
    (i) Identify the amount of funds the institution holds for each 
student in a subsidiary ledger account designed for that purpose;
    (ii) Maintain, at all times, cash in its bank account in an amount 
at least equal to the amount of FWS compensation the institution holds 
for the student; and
    (iii) Notwithstanding any authorization obtained by the institution 
under this paragraph, pay any remaining balances by the end of the 
institution's final FWS payroll period for an award year.
    (e)(1) Timing of institutional share and noncash contributions. 
Except for the noncash contributions allowed under paragraph (e)(2) or 
(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.
    (2) If an institution pays a student its FWS share for an award 
period in the form of tuition, fees, services, or equipment, it must 
pay that share before the student's final payroll period.
    (3) If an institution pays its FWS share in the form of prepaid 
tuition, fees, services, or equipment for a forthcoming academic 
period, it must give the student a statement before the close of his or 
her final payroll period listing the amount of tuition, fees, services, 
or equipment earned.

(Authority: 20 U.S.C. 1091, 1094; 42 U.S.C. 2753)


    29. Section 675.18 is amended by:
    A. Adding paragraph (g)(4).
    B. Adding paragraph (i).
    C. Revise the authority citation at the end of the section.
    The additions and revisions read as follows:


Sec.  675.18  Use of funds.

* * * * *
    (g) * * *
    (4)(i) In meeting the seven percent community service expenditure 
requirement in paragraph (g)(1) of this section, students may be 
employed to perform civic education and participation activities in 
projects that--
    (A) Teach civics in schools;
    (B) Raise awareness of government functions or resources; or
    (C) Increase civic participation.
    (ii) To the extent practicable, in providing civic education and 
participation activities under paragraph (g)(4)(i) of this section, an 
institution must--
    (A) Give priority to the employment of students in projects that 
educate or train the public about evacuation, emergency response, and 
injury prevention strategies relating to natural disasters, acts of 
terrorism, and other emergency situations; and
    (B) Ensure that the students receive appropriate training to carry 
out the educational services required.
* * * * *
    (i) Flexibility in the event of a major disaster. (1) An 
institution located in any area affected by a major disaster may make 
FWS payments to disaster-affected students for the period of time (not 
to exceed the award period) in which the students were prevented from 
fulfilling their FWS obligations. The FWS payments--
    (i) May be made to disaster-affected students for an amount equal 
to or less than the amount of FWS wages the students would have been 
paid had the students been able to complete the work obligation 
necessary to receive the funds;
    (ii) May not be made to any student who was not eligible for FWS or 
was not completing the work obligation necessary to receive the funds, 
or had already separated from their employment prior to the occurrence 
of the major disaster; and
    (iii) Must meet the matching requirements of Sec.  675.26, unless 
those requirements are waived by the Secretary.
    (2) The following definitions apply to this section:
    (i) Disaster-affected student means a student enrolled at an 
institution who--
    (A) Received an FWS award for the award period during which a major 
disaster occurred;
    (B) Earned FWS wages from an institution for that award period;
    (C) Was prevented from fulfilling his or her FWS obligation for all 
or part of the FWS award period because of the major disaster; and

[[Page 42445]]

    (D) Was unable to be reassigned to another FWS job.
    (ii) Major disaster is defined in section 102(2) of the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 
5122(2)).

(Authority: 20 U.S.C. 1095, 1096; 42 U.S.C. 2753, 2755, 2756(b))


    30. Section 675.26 is amended by:
    A. In paragraph (d)(2)(iii), removing the word ``or'' that appears 
after the punctuation ``;''.
    B. In paragraph (d)(2)(iv), removing the punctuation ``.'' and 
adding, in its place, the word ``; or''.
    C. Adding paragraph (d)(2)(v).
    The addition reads as follows:


Sec.  675.26  FWS Federal share limitations.

* * * * *
    (d) * * *
    (2) * * *
    (v) The student is employed in community service activities and is 
performing civic education and participation activities in a project as 
defined in Sec.  675.18(g)(4).
* * * * *
    31. Section 675.41 is amended by:
    A. Revising paragraph (a).
    B. Revising the paragraph heading and introductory text in 
paragraph (b).
    C. In paragraph (b)(2), removing the word ``, participation,''.
    D. In paragraph (b)(5), removing the words ``work-learning'' and 
adding, in their place, the words ``work-learning-service''.
    E. In paragraph (b)(6), removing the words ``work-learning'' and 
adding, in their place, the words ``work-learning-service''.
    The revisions read as follows:


Sec.  675.41  Special definitions.

* * * * *
    (a) Work-college: An eligible institution that--
    (1) Is a public or private nonprofit, four-year, degree-granting 
institution with a commitment to community service;
    (2) Has operated a comprehensive work-learning-service program for 
at least two years;
    (3) Requires resident students, including at least one-half of all 
students who are enrolled on a full-time basis, to participate in a 
comprehensive work-learning-service program for at least five hours 
each week, or at least 80 hours during each period of enrollment, 
except summer school, unless the student is engaged in an 
institutionally organized or approved study abroad or externship 
program; and
    (4) Provides students participating in the comprehensive work-
learning-service program with the opportunity to contribute to their 
education and to the welfare of the community as a whole.
    (b) Comprehensive student work-learning-service program: A student 
work-learning-service program that--
* * * * *


Sec.  675.43  [Amended]

    32. Section 675.43 is amended by removing the words ``work-
learning'' and adding, in their place, the words ``work-learning-
service''.


Sec.  675.44  [Amended]

    33. Section 675.44(b) is amended by removing the words ``work-
learning'' and adding, in their place, the words ``work-learning-
service''.


Sec.  675.45  [Amended]

    34. Section 675.45 is amended by:
    A. In paragraph (a)(1), in the introductory text of paragraph 
(a)(4), and in paragraph (a)(4)(i) removing the words ``work-learning'' 
and adding, in their place, the words ``work-learning-service''.
    B. In paragraph (a)(5), removing the words ``work service 
learning'' and adding, in their place, the words ``work-learning-
service''.

PART 686--TEACHER EDUCATION ASSISTANCE FOR COLLEGE AND HIGHER 
EDUCATION (TEACH) GRANT PROGRAM

    35. The authority citation for part 686 continues to read as 
follows:

    Authority: 20 U.S.C. 1070g, et seq., unless otherwise noted.


Sec.  686.12  [Amended]

    36. Section 686.12(c)(1) is amended by adding the words ``, a 
suspension approved under Sec.  686.41(a)(2), or a military discharge 
granted under Sec.  686.42(c)(2)'' after the words ``teaching 
service''.
    37. Section 686.41 is amended by:
    A. In the introductory text of paragraph (a)(2), removing the words 
``and (ii)'' and adding, in their place, the words ``, (ii), and 
(iii)''.
    B. Revising paragraphs (a)(2)(ii), (b), and (c).
    C. Adding an OMB control number at the end of the section.
    The revisions and addition read as follows:


Sec.  686.41  Periods of suspension.

    (a) * * *
    (2) * * *
    (ii) Does not exceed a total of three years under paragraph 
(a)(1)(iii) of this section.
    (b) A grant recipient, or his or her representative in the case of 
a grant recipient who qualifies under paragraph (a)(1)(iii) of this 
section, must apply for a suspension in writing on a form approved by 
the Secretary prior to being subject to any of the conditions under 
Sec.  686.43(a)(1) through (a)(5) that would cause the TEACH Grant to 
convert to a Federal Direct Unsubsidized Loan.
    (c) A grant recipient, or his or her representative in the case of 
a grant recipient who qualifies under paragraph (a)(1)(iii) of this 
section, must provide the Secretary with documentation supporting the 
suspension request as well as current contact information including 
home address and telephone number.

(Approved by the Office of Management and Budget under control 
number 1845-0083)
* * * * *
    38. Section 686.42 is amended by:
    A. Adding paragraph (c).
    B. Adding an OMB control number at the end of the section.
    The additions read as follows:


Sec.  686.42  Discharge of agreement to serve.

* * * * *
    (c) Military discharge. (1) A grant recipient who has completed or 
who has otherwise ceased enrollment in a TEACH Grant-eligible program 
for which he or she received TEACH Grant funds and has exceeded the 
period of time allowed under Sec.  686.41(a)(2)(ii), may qualify for a 
proportional discharge of his or her service obligation due to an 
extended call or order to active duty status. To apply for a military 
discharge, a grant recipient or his or her representative must submit a 
written request to the Secretary.
    (2) A grant recipient described in paragraph (c)(1) of this section 
may receive a--
    (i) One-year discharge of his or her service obligation if a call 
or order to active duty status is for more than three years;
    (ii) Two-year discharge of his or her service obligation if a call 
or order to active duty status is for more than four years;
    (iii) Three-year discharge of his or her service obligation if a 
call or order to active duty status is for more than five years; or
    (iv) Full discharge of his or her service obligation if a call or 
order to active duty status is for more than six years.
    (3) A grant recipient or his or her representative must provide the 
Secretary with--
    (i) A written statement from the grant recipient's commanding or 
personnel officer certifying--

[[Page 42446]]

    (A) That the grant recipient is on active duty in the Armed Forces 
of the United States;
    (B) The date on which the grant recipient's service began; and
    (C) The date on which the grant recipient's service is expected to 
end; or
    (ii)(A) A copy of the grant recipient's official military orders; 
and
    (B) A copy of the grant recipient's military identification.
    (4) For the purpose of this section, the Armed Forces means the 
Army, Navy, Air Force, Marine Corps, and the Coast Guard.
    (5) Based on a request for a military discharge from the grant 
recipient or his or her representative, the Secretary will notify the 
grant recipient or his or her representative of the outcome of the 
discharge request. For the portion on the service obligation that 
remains, the grant recipient remains responsible for fulfilling his or 
her service obligation in accordance with Sec.  686.12.

(Approved by the Office of Management and Budget under control 
number 1845-0083)
* * * * *

PART 690--FEDERAL PELL GRANT PROGRAM

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

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

    40. Section 690.63 is amended by:
    A. Adding paragraph (h).
    B. Adding an OMB control number and authority citation at the end 
of the section.
    The additions read as follows:


Sec.  690.63  Calculation of a Federal Pell Grant for a payment period.

* * * * *
    (h) Payment from two Scheduled Awards. (1) In a payment period, a 
student may receive a payment from the student's first Scheduled Award 
in the award year and the student's second Scheduled Award in the award 
year if--
    (i) The student is an eligible student who meets the provisions of 
Sec.  690.67; and
    (ii) The student's payment for the payment period is greater than 
the remaining balance of the first Scheduled Award.
    (2) The student's payment for the payment period--
    (i) Is calculated based on the total credit or clock hours and 
weeks of instructional time in the payment period; and
    (ii) Is the remaining amount of the first Scheduled Award plus an 
amount from the second Scheduled Award for the balance of the payment 
for the payment period.

(Approved by the Office of Management and Budget under control 
number 1845-NEW5)

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


    41. Section 690.64 is revised to read as follows:


Sec.  690.64  Calculation of a Federal Pell Grant for a payment period 
which occurs in two award years.

    If a student enrolls in a payment period that is scheduled to occur 
in two award years--
    (a) The entire payment period must be considered to occur within 
one award year;
    (b)(1) Except as provided in paragraph (b)(2) of this section--
    (i) For a full-time or a three-quarter-time student--
    (A) An institution must assign the payment period to the award year 
in which the student receives the greater payment for the payment 
period based on the information available at the time that the 
student's Federal Pell Grant is initially calculated; and
    (B) If, subsequent to the initial calculation of the student's 
payment for the payment period, the institution receives information 
that the student would receive a greater payment for the payment period 
by reassigning the payment to the other award year, the institution 
must reassign the payment to the award year providing the greater 
payment; and
    (ii) For a half-time or less-than-half-time student, an institution 
may assign the payment period to either award year if the student is 
enrolled for the payment period as a half-time or less-than-half-time 
student; and
    (2) Upon request of a student, an institution must assign the 
payment period to the award year in which the student can be expected 
to receive a greater amount of Federal Pell Grants over the two award 
years in which the payment period is scheduled to occur;
    (c) Except as provided in paragraph (b)(1)(i) of this section, the 
institution shall place a payment period with more than six months 
scheduled to occur within one award year in that award year;
    (d) If an institution places the payment period in the first award 
year, it shall pay a student with funds from the first award year; and
    (e) If an institution places the payment period in the second award 
year, it shall pay a student with funds from the second award year.

(Approved by the Office of Management and Budget under control 
number 1845-NEW5)

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


    42. Section 690.67 is revised to read as follows:


Sec.  690.67  Receiving up to two Scheduled Awards during a single 
award year.

    (a) Eligibility. An institution shall award up to the full amount 
of a second Scheduled Award to a student in an award year if the 
student--
    (1) Has successfully completed the credit or clock hours of the 
first academic year in the award year;
    (2) Is enrolled in an eligible program leading to a bachelor's or 
associate degree or other recognized educational credential except as 
provided in 34 CFR part 668, subpart O for students with intellectual 
disabilities; and
    (3) Is enrolled at least as a half-time student.
    (b) Transfer student. If a student transfers to an institution 
during an award year, the institution must--
    (1) Assume that a student has completed the credit or clock hours 
in the first academic year of the award year if the first Scheduled 
Award was disbursed at other institutions during the award year; or
    (2) If less than the first Scheduled Award has been disbursed at a 
prior institution that the student attended during the award year, the 
institution must determine the credit or clock hours the student is 
considered to have previously earned in the award year by--
    (i) Multiplying the amount of the student's Scheduled Award 
disbursed at a prior institution during the award year by the number of 
credit or clock hours in the institution's academic year and dividing 
the product of the multiplication by the amount of the Scheduled Award 
at the prior institution; and
    (ii) If the student previously attended more than one institution 
in the award year, adding the results of paragraph (b)(2)(i) of this 
section for each prior institution.
    (c) Special circumstances. (1) The financial aid administrator at a 
student's institution may waive the requirement in paragraph (a)(1) of 
this section, if the financial aid administrator--
    (i) Determines that, in the period during which the first Scheduled 
Award was disbursed, the student was unable to complete the clock or 
credit hours in the student's first academic year in the award year due 
to circumstances beyond the student's control; and
    (ii) The determination is made and documented on an individual 
basis.
    (2) For purposes of paragraph (c)(1) of this section, circumstances 
beyond a student's control--
    (i) May include, but are not limited to, the student withdrawing 
from classes due to illness or being unable to register for classes 
necessary to complete his or

[[Page 42447]]

her eligible program because those classes were not offered during that 
period; and
    (ii) Do not include, for example, withdrawing to avoid a particular 
grade or failing to register for a necessary class that was offered 
during the period to avoid a particular instructor.
    (d) Nonapplicable credit or clock hours. To determine the student's 
eligibility for a second Scheduled Award in an award year, an 
institution may not use credit or clock hours that the student received 
based on Advanced Placement (AP) programs, International Baccalaureate 
(IB) programs, testing out, life experience, or similar competency 
measures.

(Approved by the Office of Management and Budget under control 
number 1845-NEW5)

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


    43. Section 690.75 is amended by:
    A. Adding paragraph (e).
    B. Revising the OMB control number at the end of the section.
    The additions read as follows:


Sec.  690.75  Determination of eligibility for payment.

* * * * *
    (e) A student is considered to have an expected family contribution 
of zero if--
    (1) The student's parent or guardian was a member of the Armed 
Forces of the United States and the parent or guardian died as a result 
of performing military service in Iraq or Afghanistan after September 
11, 2001; and
    (2) At the time of the parent or guardian's death the student--
    (i) Was under the age of 24; or
    (ii) Was enrolled at an institution of higher education.

(Approved by the Office of Management and Budget under control 
number 1845-NEW6)
* * * * *

PART 692--LEVERAGING EDUCATIONAL ASSISTANCE PARTNERSHIP PROGRAM

    44. The authority citation for part 692 is revised to read as 
follows:

    Authority: 20 U.S.C. 1070c-1070c-4, unless otherwise noted.


Sec.  692.10  [Amended]

    45. Section 692.10 is amended by:
    A. In paragraph (a)(1), adding the words ``for the programs under 
this part'' after the number ``1979''.
    B. In paragraph (a)(2), removing the word ``If'' and adding, in its 
place, the words ``For the programs under this part, if''.
    C. In paragraph (a)(2), removing the word ``LEAP'' each time it 
appears.
    D. In paragraph (b), removing the word ``-appropriated'' after the 
word State, both times it appears.
    E. In the authority citation at the end of the section, adding ``, 
1070c-2'' after the number ``1070c''
    46. Section 692.21 is amended by:
    A. In paragraph (c), removing the figure ``$5,000'' and adding, in 
its place, the words ``the lesser of $12,500 or the student's cost of 
attendance under section 472 of the HEA''.
    B. In paragraph (j), removing the word ``and'' that appears after 
the punctuation ``;''.
    C. Redesignating paragraph (k) as paragraph (l).
    D. Adding a new paragraph (k).
    E. Adding an OMB control number at the end of the section.
    The additions read as follows:


Sec.  692.21  What requirements must be met by a State program?

* * * * *
    (k) Notifies eligible students that the grants are--
    (1) Leveraging Educational Assistance Partnership Grants; and
    (2) Funded by the Federal Government, the State, and, where 
applicable, other contributing partners; and
* * * * *
(Approved by the Office of Management and Budget under control 
number 1845-NEW7)
* * * * *
    47. Section 692.70 is revised to read as follows:


Sec.  692.70  How does the Secretary allot funds to the States?

    For fiscal year 2010-2011, the Secretary allots to each eligible 
State that applies for SLEAP funds an amount in accordance with the 
provisions in Sec.  692.10 prior to calculating allotments for States 
applying for GAP funds under subpart C of this part.

(Authority: 20 U.S.C. 1070c-3a)


    48. Subpart C, consisting of Sec. Sec.  692.90 through 692.130, is 
added to part 692 to read as follows:
Subpart C--Grants for Access and Persistence Program

General

Sec.
692.90 What is the Grants for Access and Persistence Program?
692.91 What other regulations apply to the GAP Program?
692.92 What definitions apply to the GAP Program?
692.93 Who is eligible to participate in the GAP Program?
692.94 What requirements must a State satisfy, as the administrator 
of a partnership, to receive GAP Program funds?

How Does a State Apply To Participate in GAP?

692.100 What requirements must a State meet to receive an allotment 
under this program?
692.101 What requirements must be met by a State partnership?

What Is the Amount of Assistance and How May It Be Used?

692.110 How does the Secretary allot funds to the States?
692.111 For what purposes may a State use its payment under the GAP 
Program?
692.112 May a State use the funds it receives from the GAP Program 
to pay administrative costs?
692.113 What are the matching requirements for the GAP Program?

How Does the Partnership Select Students Under the GAP Program?

692.120 What are the requirements for student eligibility?

How Does the Secretary Approve a Waiver of Program Requirements?

692.130 How does a participating institution request a waiver of 
program requirements?

Appendix A to Subpart C of Part 692--Grants for Access and Persistence 
Program (GAP) State Grant Allotment Case Study

Subpart C--Grants for Access and Persistence Program

General


Sec.  692.90  What is the Grants for Access and Persistence Program?

    The Grants for Access and Persistence (GAP) Program assists States 
in establishing partnerships to provide eligible students with LEAP 
Grants under GAP to attend institutions of higher education and to 
encourage increased participation in early information and 
intervention, mentoring, or outreach programs.

(Authority: 20 U.S.C. 1070c-3a)

Sec.  692.91  What other regulations apply to the GAP Program?

    The regulations listed in Sec.  692.3 also apply to the GAP 
Program.

(Authority: 20 U.S.C. 1070c-3a)

Sec.  692.92  What definitions apply to the GAP Program?

    The definitions listed in Sec.  692.4 also apply to the GAP 
Program.

(Authority: 20 U.S.C. 1070c-3a)

Sec.  692.93  Who is eligible to participate in the GAP Program?

    (a) States. States that meet the requirements in Sec. Sec.  692.94 
and 692.100 are eligible to receive payments under the GAP Program.
    (b) Degree-granting institutions of higher education. Degree-
granting

[[Page 42448]]

institutions of higher education that meet the requirements in Sec.  
692.101 are eligible to participate in a partnership under the GAP 
Program.
    (c) Early information and intervention, mentoring, or outreach 
programs. Early information and intervention, mentoring, or outreach 
programs that meet the requirements in Sec.  692.101 are eligible to 
participate in a partnership under the GAP Program.
    (d) Philanthropic organizations or private corporations. 
Philanthropic organizations or private corporations that meet the 
requirements in Sec.  692.101 are eligible to participate in a 
partnership under the GAP Program.
    (e) Students. Students who meet the requirements of Sec.  692.120 
are eligible to receive assistance or services from a partnership under 
the GAP Program.

(Authority: 20 U.S.C. 1070c-3a)

Sec.  692.94  What requirements must a State satisfy, as the 
administrator of a partnership, to receive GAP Program funds?

    To receive GAP Program funds for any fiscal year--
    (a) A State must--
    (1) Participate in the LEAP Program;
    (2) Establish a State partnership with--
    (i) At least--
    (A) One public degree-granting institution of higher education that 
is located in the State; and
    (B) One private degree-granting institution of higher education, if 
at least one exists in the State that may be eligible to participate in 
the State's LEAP Program under subpart A of this part;
    (ii) New or existing early information and intervention, mentoring, 
or outreach programs located in the State; and
    (iii) At least one philanthropic organization located in, or that 
provides funding in, the State, or private corporation located in, or 
that does business in, the State;
    (3) Meet the requirements in Sec.  692.100; and
    (4) Have a program under this subpart that satisfies the 
requirements in Sec.  692.21(a), (e), (f), (g), and (j).
    (b) A State may provide an early information and intervention, 
mentoring, or outreach program under paragraph (a)(2)(ii) of this 
section.

(Authority: 20 U.S.C. 1070c-3a)

How Does a State Apply To Participate in GAP?


Sec.  692.100  What requirements must a State meet to receive an 
allotment under this program?

    For a State to receive an allotment under the GAP Program, the 
State agency that administers the State's LEAP Program under subpart A 
of this part must--
    (a) Submit an application on behalf of a partnership in accordance 
with the provisions in Sec.  692.20 at such time, in such manner, and 
containing such information as the Secretary may require including--
    (1) A description of--
    (i) The State's plan for using the Federal funds allotted under 
this subpart and the non-Federal matching funds; and
    (ii) The methods by which matching funds will be paid;
    (2) An assurance that the State will provide matching funds in 
accordance with Sec.  692.113;
    (3) An assurance that the State will use Federal GAP funds to 
supplement, and not supplant, Federal and State funds available for 
carrying out the activities under Title IV of the HEA;
    (4) An assurance that early information and intervention, 
mentoring, or outreach programs exist within the State or that there is 
a plan to make these programs widely available;
    (5) A description of the organizational structure that the State 
has in place to administer the program, including a description of how 
the State will compile information on degree completion of students 
receiving grants under this subpart;
    (6) A description of the steps the State will take to ensure, to 
the extent practicable, that students who receive a LEAP Grant under 
GAP persist to degree completion;
    (7) An assurance that the State has a method in place, such as 
acceptance of the automatic zero expected family contribution under 
section 479(c) of the HEA, to identify eligible students and award LEAP 
Grants under GAP to such students;
    (8) An assurance that the State will provide notification to 
eligible students that grants under this subpart are LEAP Grants and 
are funded by the Federal Government and the State, and, where 
applicable, other contributing partners.
    (b) Serve as the primary administrative unit for the partnership;
    (c) Provide or coordinate non-Federal share funds, and coordinate 
activities among partners;
    (d) Encourage each institution of higher education in the State 
that participates in the State's LEAP Program under subpart A of this 
part to participate in the partnership;
    (e) Make determinations and early notifications of assistance;
    (f) Ensure that the non-Federal funds used as matching funds 
represent dollars that are in excess of the total dollars that a State 
spent for need-based grants, scholarships, and work-study assistance 
for fiscal year 1999, including the State funds reported for the 
programs under this part;
    (g) Provide an assurance that, for the fiscal year prior to the 
fiscal year for which the State is requesting Federal funds, the amount 
the State expended from non-Federal sources per student, or the 
aggregate amount the State expended, for all the authorized activities 
in Sec.  692.111 will be no less than the amount the State expended 
from non-Federal sources per student, or in the aggregate, for those 
activities for the second fiscal year prior to the fiscal year for 
which the State is requesting Federal funds; and
    (h) Provide for reports to the Secretary that are necessary to 
carry out the Secretary's functions under the GAP Program.

(Approved by the Office of Management and Budget under control 
number 1845-NEW7)

(Authority: 20 U.S.C. 1070c-3a)

Sec.  692.101  What requirements must be met by a State partnership?

    (a) State. A State that is receiving an allotment under this 
subpart must meet the requirements under Sec. Sec.  692.94 and 692.100.
    (b) Degree-granting institution of higher education. A degree-
granting institution of higher education that is in a partnership under 
this subpart--
    (1) Must participate in the State's LEAP Program under subpart A of 
this part;
    (2) Must recruit and admit participating eligible students and 
provide additional institutional grant aid to participating students as 
agreed to with the State agency;
    (3) Must provide support services to students who receive LEAP 
Grants under GAP and are enrolled at the institution;
    (4) Must assist the State in the identification of eligible 
students and the dissemination of early notifications of assistance as 
agreed to with the State agency; and
    (5) May provide funding or services for early information and 
intervention, mentoring, or outreach programs.
    (c) Early information and intervention, mentoring, or outreach 
program. An early information and

[[Page 42449]]

intervention, mentoring, or outreach program that is in a partnership 
under this subpart shall provide direct services, support, and 
information to participating students.
    (d) Philanthropic organization or private corporation. A 
philanthropic organization or private corporation in a partnership 
under this subpart shall provide non-Federal funds for LEAP Grants 
under GAP for participating students or provide funds or support for 
early information and intervention, mentoring, or outreach programs.

(Approved by the Office of Management and Budget under control 
number 1845-NEW7)

(Authority: 20 U.S.C. 1070c-3a)

What Is the Amount of Assistance and How May It Be Used?


Sec.  692.110   How does the Secretary allot funds to the States?

    (a)(1) The Secretary allots to each State participating in the GAP 
Program an amount of the funds available for the GAP Program based on 
the ratio used to allot the State's Federal LEAP funds under Sec.  
692.10(a).
    (2) If a State meets the requirements of Sec.  692.113(b) for a 
fiscal year, the number of students under Sec.  692.10(a) for the State 
is increased to 125 percent in determining the ratio in paragraph (a) 
of this section for that fiscal year.
    (3) Notwithstanding paragraph (a)(1) and (2) of this section--
    (i) If the Federal GAP funds available from the appropriation for a 
fiscal year are sufficient to allot to each State that participated in 
the prior year the same amount of Federal GAP funds allotted in the 
prior fiscal year, but are not sufficient both to allot the same amount 
of Federal GAP funds allotted in the prior fiscal year to these States 
and also to allot additional funds to additional States in accordance 
with the ratio used to allot the States' Federal LEAP funds under Sec.  
692.10(a), the Secretary allots--
    (A) To each State that participated in the prior year, the amount 
the State received in the prior year; and
    (B) To each State that did not participate in the prior year, an 
amount of Federal GAP funds available to States based on the ratio used 
to allot the State's Federal LEAP funds under Sec.  692.10(a); and
    (ii) If the Federal GAP funds available from the appropriation for 
a fiscal year are not sufficient to allot to each State that 
participated in the prior year at least the amount of Federal GAP funds 
allotted in the prior fiscal year, the Secretary allots to each State 
an amount which bears the same ratio to the amount of Federal GAP funds 
available as the amount of Federal GAP funds allotted to each State in 
the prior fiscal year bears to the amount of Federal GAP funds allotted 
to all States in the prior fiscal year.
    (b) The Secretary allots funds available for reallotment in a 
fiscal year in accordance with the provisions of paragraph (a) of this 
section used to calculate initial allotments for the fiscal year.
    (c) Any funds made available for the program under this subpart but 
not expended may be allotted or reallotted for the program under 
subpart A of this part.

(Authority: 20 U.S.C. 1070c-3a)

Sec.  692.111  For what purposes may a State use its payment under the 
GAP Program?

    (a) Establishment of a partnership. Each State receiving an 
allotment under this subpart shall use the funds to establish a 
partnership to award grants to eligible students in order to increase 
the amount of financial assistance students receive under this subpart 
for undergraduate education expenses.
    (b) Amount of LEAP Grants under GAP. (1) The amount of a LEAP Grant 
under GAP by a State to an eligible student shall be not less than--
    (i) The average undergraduate in-State tuition and mandatory fees 
for full-time students at the public institutions of higher education 
in the State where the student resides that are the same type of 
institution that the student attends (four-year degree-granting, two-
year degree-granting, or non-degree-granting); minus
    (ii) Other Federal and State aid the student receives.
    (2) The Secretary determines the average undergraduate in-State 
tuition and mandatory fees for full-time students at public 
institutions in a State weighted by enrollment using the most recent 
data reported by institutions in the State to the Integrated 
Postsecondary Education Data System (IPEDS) administered by the 
National Center for Educational Statistics.
    (c) Institutional participation. (1) A State receiving an allotment 
under this subpart may restrict the use of LEAP Grants under GAP only 
to students attending institutions of higher education that are 
participating in the partnership.
    (2) If a State provides LEAP Grants under subpart A of this part to 
students attending institutions of higher education located in another 
State, LEAP Grants under GAP may be used at institutions of higher 
education located in another State.
    (d) Early notification to potentially eligible students. (1) Each 
State receiving an allotment under this subpart shall annually notify 
potentially eligible students in grades 7 through 12 in the State, and 
their families, of their potential eligibility for student financial 
assistance, including a LEAP Grant under GAP, to attend a LEAP-
participating institution of higher education.
    (2) The notice shall include--
    (i) Information about early information and intervention, 
mentoring, or outreach programs available to the student;
    (ii) Information that a student's eligibility for a LEAP Grant 
under GAP is enhanced through participation in an early information and 
intervention, mentoring, or outreach program;
    (iii) An explanation that student and family eligibility for, and 
participation in, other Federal means-tested programs may indicate 
eligibility for a LEAP Grant under GAP and other student aid programs;
    (iv) A nonbinding estimate of the total amount of financial aid 
that an eligible student with a similar income level may expect to 
receive, including an estimate of the amount of a LEAP Grant under GAP 
and an estimate of the amount of grants, loans, and all other available 
types of aid from the major Federal and State financial aid programs;
    (v) An explanation that in order to be eligible for a LEAP Grant 
under GAP, at a minimum, a student shall--
    (A) Meet the eligibility requirements under Sec.  692.120; and
    (B) Enroll at a LEAP-participating institution of higher education 
in the State of the student's residence or an out-of-State institution 
if the State elects to make LEAP Grants under GAP for attendance at 
out-of-State institutions in accordance with paragraph (c)(2) of this 
section;
    (vi) Any additional requirements that the State may require for 
receipt of a LEAP Grant under GAP in accordance with Sec.  
692.120(a)(4); and
    (vii) An explanation that a student is required to file a Free 
Application for Federal Student Aid to determine his or her eligibility 
for Federal and State financial assistance and may include a provision 
that eligibility for an award is subject to change based on--
    (A) A determination of the student's financial eligibility at the 
time of the student's enrollment at a LEAP-participating institution of 
higher education or an out-of-State institution in accordance with 
paragraph (c)(2) of this section;
    (B) Annual Federal and State spending for higher education; and
    (C) Other aid received by the student at the time of the student's 
enrollment at the institution of higher education.

[[Page 42450]]

    (e) Award notification. (1) Once a student, including a student who 
has received early notification under paragraph (d) of this section, 
applies for admission to an institution that is a partner in the 
partnership of the State of the student's residence, files a Free 
Application for Federal Student Aid and any related State form, and is 
determined eligible by the State, the State shall--
    (i) Issue the student a preliminary award certificate for a LEAP 
Grant under GAP with estimated award amounts; and
    (ii) Inform the student that the payment of the grant is subject to 
certification of enrollment and eligibility by the institution.
    (2) If a student enrolls in an institution that is not a partner in 
the partnership of the student's State of residence but the State has 
not restricted eligibility to students enrolling in partner 
institutions, including, if applicable, out-of-State institutions, the 
State shall, to the extent practicable, follow the procedures of 
paragraph (e)(1) of this section.

(Approved by the Office of Management and Budget under control 
number 1845-NEW7)

(Authority: 20 U.S.C. 1070c-3a)

Sec.  692.112  May a State use the funds it receives from the GAP 
Program to pay administrative costs?

    (a) A State that receives an allotment under this subpart may 
reserve not more than two percent of the funds made available annually 
for State administrative functions required for administering the 
partnership and other program activities.
    (b) A State must use not less than ninety-eight (98) percent of an 
allotment under this subpart to make LEAP Grants under GAP.

(Authority: 20 U.S.C. 1070c-3a)

Sec.  692.113  What are the matching requirements for the GAP Program?

    (a) The matching funds of a partnership--
    (1) Shall be funds used for making LEAP Grants to eligible students 
under this subpart;
    (2) May be--
    (i) Cash; or
    (ii) A noncash, in-kind contribution that--
    (A) Is fairly evaluated;
    (B) Has monetary value, such as a tuition waiver or provision of 
room and board, or transportation;
    (C) Helps a student meet the cost of attendance at an institution 
of higher education; and
    (D) Is considered to be estimated financial assistance under 34 CFR 
part 673.5(c); and
    (3) May be funds from the State, institutions of higher education, 
or philanthropic organizations or private corporations that are used to 
make LEAP Grants under GAP.
    (b) The non-Federal match of the Federal allotment shall be--
    (1) Forty-three percent of the expenditures under this subpart if a 
State applies for a GAP allotment in partnership with--
    (i) Any number of degree-granting institutions of higher education 
in the State whose combined full-time enrollment represents less than a 
majority of all students attending institutions of higher education in 
the State as determined by the Secretary using the most recently 
available data from IPEDS; and
    (ii) One or both of the following--
    (A) Philanthropic organizations that are located in, or that 
provide funding in, the State; or
    (B) Private corporations that are located in, or that do business 
in, the State; and
    (2) Thirty-three and thirty-four one-hundredths percent of the 
expenditures under this subpart if a State applies for a GAP allotment 
in partnership with--
    (i) Any number of degree-granting institutions of higher education 
in the State whose combined full-time enrollment represents a majority 
of all students attending institutions of higher education in the State 
as determined by the Secretary using the most recently available data 
from IPEDS; and
    (ii) One or both of the following--
    (A) Philanthropic organizations that are located in, or that 
provide funding in, the State; or
    (B) Private corporations that are located in, or that do business 
in, the State.
    (c) Nothing in this part shall be interpreted as limiting a State 
or other member of a partnership from expending funds to support the 
activities of a partnership under this subpart that are in addition to 
the funds matching the Federal allotment.

(Authority: 20 U.S.C. 1070c-3a)

How Does the Partnership Select Students under the GAP Program?


Sec.  692.120  What are the requirements for student eligibility?

    (a) Eligibility. A student is eligible to receive a LEAP Grant 
under GAP if the student--
    (1) Meets the relevant eligibility requirements contained in 34 CFR 
668.32;
    (2) Has graduated from secondary school or, for a home-schooled 
student, has completed a secondary education;
    (3)(i) Has received, or is receiving, a LEAP Grant under GAP for 
each year the student remains eligible for assistance under this 
subpart; or
    (ii) Meets at least two of the following criteria--
    (A) As designated by the State, either has an EFC equal to zero, as 
determined under part F of the HEA, or a comparable alternative based 
on the State's approved criteria for the LEAP Program under subpart A 
of this part;
    (B) Qualifies for the State's maximum undergraduate award for LEAP 
Grants under subpart A of this part in the award year in which the 
student is receiving an additional LEAP Grant under GAP; or
    (C) Is participating in, or has participated in, a Federal, State, 
institutional, or community early information and intervention, 
mentoring, or outreach program, as determined by the State agency 
administering the programs under this part; and
    (4) Any additional requirements that the State may require for 
receipt of a LEAP Grant under GAP.
    (b) Priority. In awarding LEAP Grants under GAP, a State shall give 
priority to students meeting all the criteria in paragraph (a)(3)(i) of 
this section.
    (c) Duration of eligibility. (1) A student may receive a LEAP Grant 
under GAP if the student continues to demonstrate that he or she is 
financially eligible by meeting the provisions of paragraph 
(a)(3)(ii)(A) or (B) of this section.
    (2) A State may impose reasonable time limits to degree completion.

(Authority: 20 U.S.C. 1070c-3a)

How Does the Secretary Approve a Waiver of Program Requirements?


Sec.  692.130  How does a participating institution request a waiver of 
program requirements?

    (a) The Secretary may grant, upon the request of an institution 
participating in a partnership that meets the requirements of Sec.  
692.113(b)(2), a waiver for the institution from statutory or 
regulatory requirements that inhibit the ability of the institution to 
successfully and efficiently participate in the activities of the 
partnership.
    (b) An institution must submit a request for a waiver through the 
State agency administering the partnership.
    (c) The State agency must forward to the Secretary, in a timely 
manner, the request made by the institution and may include any 
additional information or

[[Page 42451]]

recommendations that it deems appropriate for the Secretary's 
consideration.

(Authority: 20 U.S.C. 1070c-3a)

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[FR Doc. E9-18550 Filed 8-20-09; 8:45 am]

BILLING CODE 4000-01-C

Maintained for Historical Purposes

Subject: Publication of Title IV NPRM